Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD709 PROJECT PAPER ON A PROPOSED ADDITIONAL CREDIT IN THE AMOUNT OF SDR1.7 MILLION (US$2.5 MILLION EQUIVALENT) TO THE REPUBLIC OF CONGO FOR THE AGRICULTURAL DEVELOPMENT AND RURAL ROADS REHABILITATION PROJECT JANUARY 6, 2014 Agriculture, Rural Development and Irrigation (AFTA2) Sustainable Development Department Country Department AFCC2 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective November 30, 2013) Currency Unit = XOF 486.3 XOF = US$1 US$ 1.48 = SDR 1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing CAT Center for Technical Support for Livestock (Centre d'Appui Technique/Elevage), CDTA Center for Demonstration of Agricultural Technologies (Centre de Dimonstration des Techniques Agricoles) CNSA National Center for Improved Agricultural Inputs (Centre National des Semences Ambliories) CPS Country Partnership Strategy CRAL Loudima Center for Agricultural Research (Centre de Recherches Agricoles de Loudima) CDTA Center for Demonstration of Agricultural Technologies (Centre de Dimonstration des Techniques Agricoles) CVTE Center for Dissemination of Livestock related Technologies (Centre de Vulgarisation des Techniques d'Elevage DA Designated Account ECOM Survey of Living Conditions in Congolese Households (Enquite sur les Conditions de vie des Mnages aux Congo) FAO Food and Agriculture Organization of the United Nations FM Financial Management GDP Gross Domestic Product ICT Information and Communication Technology IDA International Development Agency IFAD International Fund for Agricultural Development IITA International Institute for Tropical Agriculture IPF Investment Project Financing IPPF Indigenous People's Planning Framework KPIs Key Performance Indicators M&E Monitoring and Evaluation MAE Ministry of Agriculture and Livestock (Ministre de I'Agriculture et de I'Elevage) MPA Ministry of Fishery and Aquaculture (Ministre de la P6che et de ii l'Aquaculture) MTEF Medium Term Expenditure Framework NGO Non-Governmental Organization ORAF Operational Risk Assessment Framework OTF On The Frontier Group PAD Project Appraisal Document PCN Project Concept Note PDARP Agricultural Development and Rural Roads Rehabilitation Project (Projet de Diveloppement Agricole et Rhabilitation des Pistes Rurales) PDO Project Development Objective PIU Project Implementation Unit PND National Development Plan (Plan National de Diveloppement) PRSD Project for the Rehabilitation and Recovery of pisiculture Stations (Projet de Rhabilitation et de Relance des Stations piscicoles Domaniales) PRSP Poverty Reduction Strategy Paper SIL Specific Investment Lending USD United States Dollars Vice President: Makhtar Diop Country Director: Eustache Ouayoro Country Manager: Sylvie Dossou Sector Manager: Severin Kodderitzsch Task Team Leader: Amadou Oumar Ba 111 REPUBLIC OF CONGO ADDITIONAL FINANCING FOR AGRICULTURAL DEVELOPMENT AND RURAL ROADS REHABILITATION PROJECT CONTENTS SINTRODUCTION ...................................................... 1 II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING IN THE AMOUNT OF US$2.5 MILLION. ......................................... ................1 III. PROPOSED CHANGES .............5................ .................5 IV. APPRAISAL SUMMARY ..................................... ......... 13 ANNEX 1: REVISED PROJECT RESULTS FRAMEWORK................ ........19 ANNEX 2: DISCLOSABLE OPERATIONAL RISK ASSESSMENT FRAMEWORK.....26 ANNEX 3: INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS ... ......29 1v ADDITIONAL FINANCING DATA SHEET Congo, Republic of Additional Financing for the Agricultural Development and Rural Roads Rehabilitation Project (P145627) AFRICA AFTA2 Basic Information - Parent Parent Project ID: P095251 Original EA Category: B - Partial Assessment Current Closing Date: 31-Mar-2014 Basic Information - Additional Financing (AF) Project ID: P145627 Additional Financing Scale Up Type (from AUS): Regional Vice President: Makhtar Diop Proposed EA Category: B - Partial Assessment Country Director: Eustache Ouayoro Expected Effectiveness 29-Apr-2014 Date: Sector Director: Jamal Saghir Expected Closing Date: 31-Oct-2015 Sector Manager: Severin L. Kodderitzsch Report No: PAD709 Team Leader: Amadou Oumar Ba Borrower Organization Name Contact Title Telephone Email Project Financing Data - Parent ( Agricultural Development and Rural Roads Rehabilitation Project-P095251) Key Dates Approval Effectiveness Original Revised Project Ln/Cr/TF Status DaeSigning Date Date Date Closing Date Closing Date Effectiv P095251 IDA-H3020 05-Jun-2007 06-Sep-2007 03-Apr-2008 31-Dec-2012 31-Mar-2014 e Disbursements % . Cancelle Disburse Undisbur% Project Ln/Cr/TF Status Currency Original Revised C di sed Disburse d d sed d d P095251 IDA-H3020 Effectiv XDR 13.50 13.50 0.00 13.50 0.00 100.00 e V Project Financing Data - Additional Financing Additional Financing for the Agricultural Development and Rural Roads Rehabilitation Project ( P145627) [ ] Loan [ ] Grant [ ] IDA Grant [X] Credit [ ] Guarantee [ ] Other Total Project Cost: 10.50 Total Bank Financing: 2.50 Financing Gap: 0.00 Financing Source - Additional Financing (AF) Amount BORROWER/RECIPIENT 8.00 International Development Association (IDA) 2.50 Total 10.50 Policy Waivers Does the project depart from the CAS in content or in other significant No respects? Explanation Does the project require any policy waiver(s)? No Explanation Team Composition Bank Staff Name Title Specialization Unit Michael Morris Lead Agriculture Lead Agriculture AFTA2 Economist Economist Juvenal Nzambimana Senior Operations Operations Officer AFTA1 Officer Alexandra C. Bezeredi Regional Environmental Regional Environmental AFTSG and Safeguards Advisor and Safeguards Advisor Alexandre K. Dossou Sr Transport. Spec. Sr Transport. Spec. AFTTR Amadou Oumar Ba Sr Agricultural Spec. Team Lead AFTA2 Antoine V. Lema Senior Social Senior Social AFTCS Development Specialist Development Specialist Marie Jeanne Senior Executive Senior Executive AFTA2 Uwanyarwaya Assistant Assistant Bella Lelouma Diallo Sr Financial Sr Financial AFTMW Management Specialist Management Specialist Aissatou Diallo Senior Finance Officer Senior Finance Officer CTRLA vi Louis Jean De Marigny Finance Analyst Finance Analyst CTRLA Christine Makori Senior Counsel Counsel LEGAM Clement Tukeba Lessa Senior Procurement Senior Procurement AFTPW Kimpuni Specialist Specialist Karine N. MOUKETO- Team Assistant Team Assistant AFMCG MIKOLO Henri Joel Nkuepo E T Consultant E T Consultant LEGAM Faly Diallo Financial Officer Financial Officer CTRLA Non Bank Staff Name Title Office Phone City Franz Schorosch Agricultural Specialist Locations Country First Administrative Location Planned Actual Comments Division Congo, Region du Niari Yaya Republic of Congo, Region de la Yamba Republic of Bouenza Congo, Pointe-Noire Pointe-Noire Republic of Congo, Region des Plateaux Ollombo Republic of Congo, Region du Kouilou Nzambi Republic of Congo, Region de la Ntokou Republic of Cuvette Congo, Region du Niari Nyanga Republic of Congo, Region de la Ngoko Republic of Cuvette Congo, Region des Plateaux Ngo Republic of Congo, Region de la Ngbala Republic of Sangha Congo, Region des Plateaux Mpouya Republic of Vii Congo, Region du Niari Mougoundou Republic of Congo, Region du Niari Moungoundou-sud Republic of Congo, Region de la Mokeko Republic of Sangha Congo, Region du Pool Mindouli Republic of Congo, Region de la Mfouati Republic of Bouenza Congo, Region des Plateaux Mbon Republic of Congo, Region du Niari Mbinda Republic of Congo, Region du Pool Mayama Republic of Congo, Region des Plateaux Makotipoko Republic of Congo, Region de la Madingou Republic of Bouenza Congo, Region de la Mabombo Republic of Bouenza Congo, Region du Pool Louingui Republic of Congo, Region du Niari Dolisie Republic of Congo, Region du Niari Londela-Kayes Republic of Congo, Region du Pool Kimba Republic of Congo, Region du Kouilou Madingo-Kayes Republic of Congo, Region du Kouilou Hinda Republic of Congo, Region du Pool Ngoma Tse-Tse Republic of Congo, Republic of the Republic of Congo viii Congo, Commune de Brazzaville Republic of Brazzaville Congo, Region du Pool Mbanza-Ndounga Republic of Congo, Region du Niari Banda-Kayes Republic of Congo, Region des Plateaux Alembe Republic of Congo, Region de la Etoumbi Republic of Cuvette-Ouest Congo, Region de la Etoumbi Republic of Cuvette-Ouest Congo, Region de la Etoumbi Republic of Cuvette-Ouest Congo, Region du Pool Loumo Republic of Congo, Region du Kouilou Nzassi Republic of Congo, Region de la Tsiaki Republic of Bouenza Congo, Region de la Mayeye Republic of Lekoumou Congo, Region du Niari Moutamba Republic of Congo, Region de la Oyo Republic of Cuvette Congo, Region de la Souanke Republic of Sangha Congo, Region de la Sembe Republic of Sangha Congo, Region de la Ouesso Republic of Sangha Congo, Region de la Mossaka Republic of Cuvette Congo, Region des Plateaux Gamboma Republic of Congo, Region des Plateaux Djambala Republic of lx Congo, Region du Pool Ngabe Republic of Congo, Region du Pool Kinkala Republic of Congo, Region du Pool Boko Republic of Congo, Region de la Boundji Republic of Cuvette Congo, Region de la Loukolela Republic of Cuvette Congo, Region de la Makoua Republic of Cuvette Congo, Region de la Owando Republic of Cuvette Congo, Region du Kouilou Madingo-Kayes Republic of Congo, Region du Kouilou Kakamoeka Republic of Congo, Region du Kouilou Mvouti Republic of Congo, Region de la Bambama Republic of Lekoumou Congo, Region de la Komono Republic of Lekoumou Congo, Region de la Sibiti Republic of Lekoumou Congo, Region de la Zanaga Republic of Lekoumou Congo, Region du Niari Divenie Republic of Congo, Region du Niari Kibangou Republic of Congo, Region du Niari Kimongo Republic of Congo, Region du Niari Louvakou Republic of Congo, Region du Niari Mayoko Republic of x Congo, Region du Niari Mossendjo Republic of Congo, Region des Plateaux Abala Republic of Congo, Region des Plateaux Lekana Republic of Congo, Region du Pool Kindamba Republic of Institutional Data Parent (Agricultural Development and Rural Roads Rehabilitation Project-P095251) Sector Board Agriculture and Rural Development Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Transportation Rural and Inter-Urban 40 Roads and Highways Agriculture, fishing, and forestry Crops 27 Public Administration, Law, and Central government 17 Justice administration Agriculture, fishing, and forestry Animal production 8 Industry and trade General industry and 8 trade sector Total 100 Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Rural development Rural services and infrastructure 29 Rural development Rural markets 29 Rural development Rural non-farm income generation 14 Rural development Rural policies and institutions 14 Public sector governance Public expenditure, financial 14 management and procurement xi Total 100 Additional Financing Additional Financing for the Agricultural Development and Rural Roads Rehabilitation Project (P145627) Sector Board Agriculture and Rural Development Sectors / Climate Change Sector (Maximum 5 and total % must equal 100) Major Sector Sector % Adaptation Mitigation Co- Co-benefits % benefits % Transportation Rural and Inter-Urban 40 Roads and Highways Agriculture, fishing, and forestry General agriculture, 27 fishing and forestry sector Public Administration, Law, and Central government 17 Justice administration Agriculture, fishing, and forestry Agricultural extension 8 and research Agriculture, fishing, and forestry Crops 8 Total 100 NI certify that there is no Adaptation and Mitigation Climate Change Co-benefits information applicable to this project. Themes Theme (Maximum 5 and total % must equal 100) Major theme Theme % Rural development Rural markets 29 Rural development Rural non-farm income generation 29 Rural development Rural policies and institutions 14 Rural development Rural services and infrastructure 14 Rural development Other rural development 14 Total 100 xii I. INTRODUCTION 1. This paper seeks the approval of the Executive Directors to provide an additional credit to the Republic of Congo for the Agricultural Development and Rural Roads Rehabilitation Project (PDARP) (P095251). The proposed additional credit will help finance the costs associated with scaling up of the project's activities to enhance the impact of a well-performing project. 2. The proposed Additional Financing (AF) will be structured as an Investment Project Financing (IPF) for an IDA amount of US$2.5 million equivalent and with the Government's co- financing contribution of US$8 million, for a total amount of US$10.5 million to be implemented over a 21-month period. The proposed AF will devote a concerted effort to achieve real synergy between its components which will remain the same as those of the parent project. The only changes that the AF will bring to the design of the parent project are: (i) to limit and target interventions to well-defined geographic areas and agricultural products; (ii) to introduce a value chain approach; and (iii) to revise performance indicators (reflecting increased funding becoming available). 3. The parent project is performing satisfactorily and has delivered concrete results on the ground. Nevertheless, past implementation support missions have noticed limited synergy between the project's activities under each component especially due to the fact that these activities were scattered on almost the entire territory of the country and did not constitute a coherent development program. For example, the micro-projects that are expected to lead to increased agricultural production were selected in geographic areas independently of where the rehabilitation of rural roads and market infrastructure took place. 4. The proposed Additional Financing is consistent with OP10.00 (Investment Project Financing) under which the International Development Association (IDA) may provide additional financing for investment lending for scaling-up the development effectiveness of a well performing project. The overall project performance of the parent project is currently rated satisfactory for both the Development Objective (DO) and Implementation Progress (IP). The project closing date was extended from June 30, 2013 to December 31, 2013 and from December 31, 2013 to March 31, 2014. The extensions of closing dates were sought to ensure that ongoing studies that fed into the preparation of the AF are completed and are feeding into the preparation of a much larger agriculture operation under IDA 17. Project management and implementation capacity have been satisfactory for the last twelve months. The closing date of the proposed AF is set for October 31, 2015. II. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING IN THE AMOUNT OF US$2.5 MILLION. 5. Relationship with CPS. A Country Partnership Strategy (CPS) for the Republic of Congo was approved on May 2012 by the Board. It lays out how the World Bank intends to support the implementation of the Republic of Congo's Poverty Reduction Strategy Paper (PRSP) over the period 2012 - 2016. The PRSP and the CPS have identified the agriculture sector as one of the country's major growth sector with high potential for shared prosperity and poverty reduction. The proposed AF is closely aligned with the Pillar 1 of the CPS 1 "Competitiveness and Employment". The proposed AF will seize the momentum of the current political dynamic launched by the Government to put in place an economic diversification policy for the country based on the rural sector in general and the agricultural sector in particular, and capitalize on the achievements of the PDARP, to secure a longer term commitment of public investments in the sector. The government's request for an additional financing to this project is justified by the good results materialized by a Satisfactory rating of the Implementation Progress and Progress toward the development objective over the past twelve months as stated in the Implementation Status and Results reports (ISR). In addition, the AF will help consolidate the project results, fully achieve the project development objectives and allow the project to remain economically justified. Additional IDA resources into this project will help maintain and reinforce the good policy dialog the Bank has engage in this sector with the authorities during the recent years. The AF will serve to leverage more domestic resources for the sector, and also as a bridge for the preparation of a larger operation in the sector within IDA17 envelop. 6. Country context. As the aftermaths of civil strife of the 1990s fade, Congo continues to strengthen its state institutions. Congo expects to become an emerging economy over the next 15 years. After reaching middle-income country status in 2006, the country's economic growth averaged 4.7 percent during 2006-2011. During this period, oil output grew by 2 percent a year, compared to almost 6 percent for the non-oil sector, which was led by the construction and public works sector. The fiscal situation remains strong following Heavily Indebted Poor Countries (HIPC) debt cancelation in 2010. 7. However, the country remains fragile. The high poverty rate, unemployment, and inequality remain significant threats to the country's regained peace. Although preliminary data from the 2011 Household Survey (ECOM 2011) reveal that, over the 2005-2011 period, the poverty rate dropped by 4 points to 46.5 percent, the decline masks important regional differences. Urban poverty declined rapidly and is now below 30 percent in the main urban centers of Brazzaville and Pointe Noire while rural poverty increased by 10 points. About three quarters of the rural population are poor and findings show that this is due to the high and rising poverty levels among subsistence farmers. The country's principal challenge is how to use its large oil revenues to stimulate broad-based non-oil growth that can generate employment and reduce poverty. 8. Sector policy and strategy. The agricultural sector employs about 40 percent of the population but only contributes 6.8 percent to the GDP and 1-2 percent to exports (2012). Large, commercial farms, previously owned by the State have disappeared and today, Congo's agriculture is basically based on smallholder agriculture. Small producers occupy 80 percent of the land under cultivation and produce 90 percent of agricultural output. The productivity of these small holders (mostly 1-2 ha) is low compared to international and even Sub-Saharan African standards. In general, they practice extensive agriculture with little use of purchased input and are oriented primarily towards satisfying their subsistence needs. Numerous farmer groups and associations exist but their degree of organization is very low and they are unable to provide their members with services and to assist them with processing and marketing of their production. The sector is unable to cover the food needs of the country and, unless the productivity is greatly increased and living conditions in rural areas are improved, outmigration from rural areas to urban centers will continue. Agricultural production will further decline and, 2 as consequence, the country will become more and more dependent on imported food. 9. The main weaknesses of the sector are the following: (i) weak asset base of farm households and rural producers and low degree of mechanization; (ii) inadequate market infrastructure and services; (iii) inadequate rural road infrastructure; (iv) ineffective sector policies and insufficient resources allocation to the agricultural sector (the budget for agriculture is less than 1 percent of the total government budget); (v) very weak supporting institutions for agriculture (research and extension); and (vi) weak implementation capacity of public institutions. 10. Despite good agricultural potential with an estimated 10 million ha of arable land, only less than 10 percent of it is farmed. The country is increasingly dependent on imports for its food needs (more than FCFA 100 billion per year -US$200 million equivalent-). From independence till the end of 1980s, the country's agricultural production was able to cover 75 percent of the population's food needs. During the period of 1990-2010, with the state's disengagement from the production and marketing functions, and the reduction in the agricultural work force due to rural - urban migration, and in the absence of a strong private sector investments to replace public investments in the sector, agricultural production declined dramatically. 11. Cognizant of these challenges, particularly those affecting the agricultural sector, the government produced a new PRSP for the period 2012-2016. The PRSP addresses the challenge of how to use the country's large oil revenues to stimulate broad-based non-oil growth that would generate employment and reduce poverty. The objective of the government's strategy paper is to stimulate inclusive economic growth aimed at diversifying the economy from its oil dependence. In its PRSP, the Congolese government has put greater emphasis on the agriculture and fishery sectors, having strengthened regulations and earmarked a greater percentage of the budget for agriculture programs. 12. In recent years, with the support of the PDARP, the government has prepared an Agriculture Strategy Note (ASN) which was approved in 2012 and complemented in 2013 with a Sector Policy Letter together with a sector Mid-Term Expenditure Framework. The ASN builds on three main pillars to boost the efficiency of the agriculture sector, notably (i) Pillar 1: Rural development (to improve the development of agriculture and living conditions in rural areas); (ii) Pillar 2: Urban and peri-urban agriculture with market orientation (to create a formal, productive and modern commercial agriculture); and (iii) Pillar 3: Strategic investment (to promote specific agro-industrial value chains and attract direct investments in the sector). 13. The proposed AF is in line with the ASN and will particularly contribute to Pillars 1 and 2. The design of the AF has benefited from the logical framework suggested to implement the Strategy Note whose overall objective is to contribute to food security and poverty reduction through the development of the agriculture sector. In particular, the project design reflects the specific objectives of the ASN aiming at improving the living conditions in rural areas (social infrastructures, rural roads rehabilitation, access to market, etc...), increasing revenues for rural producers (through better access to inputs, revenue generating micro-projects, processing, etc.), and supporting the development of the peri-urban agriculture. In addition, the government is engaged in the Comprehensive Africa Agriculture Development Program (CAADP) since 2010. 3 The AF will contribute to supporting activities linked to the CAADP program which are fundamental to increase the government resources allocation for the agriculture sector to progressively reach the NEPAD commitment, of a 10 percent budget allocation to the Agriculture sector and 6 percent agricultural growth per annum. The existing Mid-Term Expenditure Framework (MTEF) will be a good basis to guide medium term budgeting for the agriculture sector, and was already used for the 2014 budget provision. 14. Background and Results of the Parent Project. The Republic of Congo received an IDA grant of SDR13.5 million (US$20 million), which was approved by the Board on June 5, 2007 and became effective on April 3, 2008. The grant is currently scheduled to close on March 31, 2014. The total disbursement as of December 20, 2013 is US$19.9 million (99.5 percent). The project had four components: (i) building capacity in the then Ministry of Agriculture, Livestock, and Fisheries (now Ministry of Agriculture and Livestock and Ministry of Fisheries and Aquaculture); (ii) rehabilitating rural roads and market infrastructure; (iii) supporting productive activities and sustainable livelihoods in rural areas; and (iv) conducting project coordination and management. No change is envisaged in the PDO and in the components. 15. Project performance. PDARP has been successful with tangible achievements in the Congo's Agriculture sector. PDO achievement and implementation support ratings have been consistently rated Satisfactory since 2011. Monitoring and evaluation data reveals that the Project's impact has been consistent with expectations as set out at the beginning of project implementation. There are no outstanding financial audits and all audit reports are unqualified. As a result of the project's Mid-Term Review, the Indigenous Peoples policy (OP/BP 4.10) was retroactively triggered as project investments for components II and III included and affected areas inhabited by indigenous communities. An Indigenous People's Planning Framework (IPPF) was consequently prepared between July 12, 2011 and June 1, 2012, then cleared and disclosed on December 7, 2012. Implementation of the safeguards requirements is rated also satisfactory. Legal covenants have been complied with. 16. Overall and Specific results. The number of direct project beneficiaries amounts to around 314,000 of which around 52 percent are female. One key outcome indicator i.e. increase in income of project beneficiaries participating in micro-projects by the end of the project has been achieved; while another key outcome indicator namely increased productivity of key agricultural products (cassava, banana and maize) has been largely achieved. According to the June 2013 project survey and the project's M&E data, the following results were achieved: (i) regarding income of beneficiaries of micro-projects there was an increase of 45 percent from an original target of 10 percent; and (ii) regarding productivity of traditional crops, productivity increased from 5.6 to 8.4 ton per hectare for cassava (32 percent), from 40 to 60 ton per hectare for banana (50 percent), and 1.6 to 2.5 ton per hectare for maize (56 percent). The project also contributed to an increase in yearly use of the Ministry of Agriculture's budget which has gone from 45 percent in 2010 to 62 percent in 2012. 17. Overall, and most importantly, the project has served as a catalyst for results on the ground and for raising Government's awareness on the potential of the agriculture sector to contribute to the country's economic growth and to improve livelihoods in rural areas. The following specific results on the ground are worth mentioning: 4 a) opening up "enclave" villages that hitherto were cut off from the rest of the country by rehabilitating a total of 1,251 km of rural roads as recorded in June 2013 survey out of 1,321 km planned at appraisal, serving 221 villages and remote areas where more than 300,000 people live; b) 367 km of the rural roads are being maintained to avoid degradation and to correct roads' weak points; c) completion of 36 market infrastructures out of 24 planned at appraisal; d) 814 micro-projects were completed benefiting 10,247 people, of which more than 50 percent are women; 614 micro-projects were planned at appraisal; these micro- projects allowed the above mentioned income increases; e) rehabilitation of two centers for fish breeds production, capacity building of fishermen and provision of tool kits to fishermen; and f) tangible support to the National Center for Improved Seeds (CNSA) and the Agricultural Research Center of Loudima (CRAL) which has resulted in improved production of seeds and plants' cuttings and enhanced capacity of professional staff to advise and assist farmers. 18. Rationale for Additional Financing. The aim of the proposed AF is to scale up the activities of the PDARP and to devote a concerted effort to focus interventions in specific high potential agricultural areas; to capitalize on the achievements of the parent project and increase synergy between the components in order to achieve more development impact on the ground. Concomitantly with greater area focus, the AF will also be used to introduce a value chain approach for a few carefully selected agricultural commodities and to ensure that micro-projects that are being financed follow the logic of developing these value chains. These concepts are new to the Government and the AF will allow their introduction, testing and subsequent up- scaling. The AF is also leveraging a much larger government co-financing which ensure government commitment and sustainability in the long run. III. PROPOSED CHANGES 1 Lending instrument 19. The AF will be structured as an IPF for an IDA amount of US$2.5 million and with the Government's co-financing contribution of US$8 million. The AF is expected to be implemented over a twenty one (21) month period. 2. Project development objective and key indicators 20. The AF will keep the original PDO of the parent project which is to assist the Republic of Congo to increase the ability of the rural poor to raise their income through the generation and promotion of improved agricultural technologies, the provision of market infrastructure, and the formulation and implementation of poverty-focused agricultural policies and expenditure programs. 21. The key performance indicators are presented in detail in the Results Matrix in Annex 1. PDO level indicators for measuring and monitoring the AF's achievements are: * PDO Indicator one: Increase in number of direct project beneficiaries from 314,614 to 321,600 of which 51.6 percent will be female; 5 * PDO Indicator two: Increase in income of all project beneficiaries participating in micro- projects from 45 percent to 50 percent; and * PDO Indicator three: Increased productivity of key agricultural products (banana: 33 percent from baseline, cassava: 25 percent from baseline and maize: 40 percent from baseline). Summary of Proposed Changes Change in Implementing Agency Yes[ ] No [X] Change in Project's Development Objectives Yes [ ] No [ X ] Change in Results Framework Yes [ X ] No [ ] Change in Safeguard Policies Triggered Yes [ X ] No [ ] Change of EA category Yes [ ] No [ X ] Other Changes to Safeguards Yes [ X ] No [ ] Change in Legal Covenants Yes [ ] No [ X ] Change in Loan Closing Date(s) Yes [ ] No [ X ] Cancellations Proposed Yes [ ] No [ X ] Change in Disbursement Arrangements Yes [ ] No [ X ] Reallocation between Disbursement Categories Yes [ ] No [ X ] Change in Disbursement Estimates Yes [ X ] No [ ] Change to Components and Cost Yes [ X ] No [ ] Change in Institutional Arrangements Yes [ ] No [ X ] Change in Financial Management Yes [ ] No [ X ] Change in Procurement Yes [ ] No [ X ] Change in Implementation Schedule Yes [ ] No [ X ] Other Change(s) Yes [ ] No [ X ] Development Objective/Results Project's Development Objectives Original PDO The primary objective of the project is to assist the Republic of Congo to increase the ability of the rural poor to raise their income through the generation and promotion of improved agricultural technologies, the provision of market infrastructure, and the formulation and implementation of poverty-focused agricultural policies and expenditure programs. Change in Results Framework Explanation: In consultation with the Government, the Result Framework was updated to reflect changes in some 6 performance indicators which were found not relevant for the project and to some extent difficult to measure. The two PDO indicators of the original project were reformulated to make them better measurable and attributable to the project. In addition "Direct project beneficiaries" was added as core PDO indicator. Due to additional financing, the target values of the Key Performance Indicators (KPIs) have been adjusted accordingly. Compliance Change in Safeguard Policies Triggered Explanation: The original project was classified as Category B. An Environmental and Social Management Framework (ESMF), Resettlement Policy Framework (RPF), and Pest Management Plan were prepared, consulted upon and disclosed in October/November 2006. Between 2010 and 2013, 26 Environmental and Social Management Plans (ESMPs) were prepared and implemented for 36 road segments financed in the original project. During the same period, 20 ESMPs for 22 market infrastructures financed by the project. Between March and December 2011, as part of the mid-term review of project implementation, twelve environmental audits were undertaken, 9 focused on road segments and the other 3 on market infrastructures. The audits of the road segments concluded that, while the ESMPs were satisfactorily implemented in about half of the road segments, a number of measures (e.g. site clean-up, waste management, drainage, and awareness-raising with local communities) were found lacking in several segments. The audits of market infrastructures found that ESMPs had been partially implemented and that measures related to security and safety of work sites, waste management, adequate facilities and equipment for workers, and awareness-raising with local communities had not been adequately implemented. The safeguards instruments have been updated to include additional guidance on due diligence. During implementation of the AF, the project will undertake environmental audits in some of the longer road segments to ensure that environmental management measures have been implemented; remedial measures will be undertaken if necessary. The envisaged nature of the activities to be supported under the proposed AF is not expected to generate any different and/or additional negative environmental and social impacts than initial activities. The PIU is responsible for ensuring that operators of new technologies and micro-projects comply with safeguard obligations. The PIU environmental and social specialist is responsible for the implementation of all the provisions of the safeguard instruments. In that respect, the specialist will ensure inter alia that: (i) the micro-projects are duly screened for their environmental impact, and, where required, their ESMPs are prepared and executed in a timely manner; (ii) the bidding documents for the constructions include the relevant environmental and social aspects the contractors must consider in their proposals, and (iii) the building contracts include appropriate descriptions of the management of potentially dangerous wastes. To date, it has not been necessary to prepare Resettlement Action Plans, but, if they are needed, they will be prepared, consulted upon and disclosed according to the guidance in the RPF. At the mid-term review, Management decided that OP 4.10 (Indigenous Peoples) should be triggered, as certain aspects of the project could apply to all "departments" in the country, including areas inhabited by indigenous communities . An Indigenous Peoples Planning Framework (IPPF) was prepared, consulted upon and disclosed in 2012. The IPPF has guided consultations and helped communities with benefit- sharing for the micro-projects. Indigenous Peoples Plans will be prepared during project implementation. This AF triggers OP 4.04, as some of the project activities involve or affect some natural habitats (e.g. roads in forest areas). The updated ESMF includes guidance for mitigating impacts on natural habitats. The environmental and social mitigation measures summarized in the ESMF, PMP, and the RPF, as well as the approved specific mitigation measures, will be executed, monitored and reported in: (i) a specific 7 Safeguard Monitoring Report and (ii) the Environmental and Social Safeguards section of the periodic project progress reports. Follow-up responsibility for the above is vested in the PIU. Current and Proposed Safeguard Policies Current Proposed Triggered: Environmental Assessment (OP) (BP 4.01) Yes Yes Natural Habitats (OP) (BP 4.04) No Yes Forests (OP) (BP 4.36) No No Pest Management (OP 4.09) Yes Yes Physical Cultural Resources (OP) (BP 4.11) No No Indigenous Peoples (OP) (BP 4.10) Yes Yes Involuntary Resettlement (OP) (BP 4.12) Yes Yes Safety of Dams (OP) (BP 4.37) No No Projects on International Waterways (OP) (BP No No 7.50) Projects in Disputed Areas (OP) (BP 7.60) No No Other Changes to Safeguards Explanation: This Additional Financing triggers OP 4.04 Natural Habitats, as some of the project activities involve or affect some natural habitats (e.g. roads in forest areas). The updated ESMF includes guidance for mitigating impacts on natural habitats. Covenants - Additional Financing (Additional Financing for the Agricultural Development and Rural Roads Rehabilitation Project - P1 45627) Source of Finance Description of Funds Agreement CovenantsDate Due Recurrent Frequency Action Reference Effectiveness condition: The Recipient shall Article 4.01 deposit into the (a) and Project 29-Apr- IDA New Section I.F of Counterpart 2014 Schedule 2 Funds Account an amount of 2,000,000,000 CFA Francs. Article 4.01 Effectiveness 29-Apr- IDA (b) Section I.B condition: The 2014 E New of Schedule 2 Recipient has 8 updated the Project Implementation Manual. Dated covenant: The Recipient has deposited IDA Section I.F of 2,000,000,000 30-Apr- E New Schedule 2 FCFA Francs 2015 into the Project Counterpart Funds Account. Dated covenant: The Recipient shall, not later than three (3) IDA Section III 29-Jul-2014 months after the Effective Date, appoint an external auditor Dated covenant: The Recipient shall, not later than three (3) months after the effective date, appoint in accordance with the provision of the Legal Agreement, and thereafter IDA Section III maintain at all 29-Jul-2014 New time during project implementation, a procurement specialist, a Monitoring and evaluation specialist and an accountant with qualifications, experience and terms of 9 reference acceptable to the Association. Finance Loan Closing Date - Additional Financing (Additional Financing for the Agricultural Development and Rural Roads Rehabilitation Project - P145627) Source of Funds Proposed Additional Financing Loan Closing Date International Development Association (IDA) 31-Oct-2015 Change in Disbursement Estimates (including all sources of Financing) Explanation: The project will continue to use the transaction-based disbursement procedures. The existing DA at the Credit du Congo will also be used for the additional financing. The designated account will receive an initial advance equivalent to CFAF 150 million upon project effectiveness. In addition to advances to the designated account, other disbursement methods will be available for use under the project, such as the direct payment, reimbursement, and special commitment methods. Further instructions on the withdrawal of proceeds will be outlined in the disbursement letter. The Program will be financed in an amount of US$10.5 million, US$2.5 million of which will be financed by IDA and US$8 million by the Government. The Government will disburse his financing part in two tranches (2,000,000,000 FCFA Francs by April 30, 2014 and 2,000,000,000 FCFA Francs by April 31, 2015) to the Project Account pursuant to a schedule specified in Section I (F.2) of Schedule 2 to the Financing Agreement, while IDA will advance funds to the Designated Account. Expected Disbursements (in USD Million) Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 Annual 0.50 1.60 0.40 0.00 0.00 0.00 0.00 0.00 0.00 Cumulative 0.50 2.10 2.50 0.00 0.00 0.00 0.00 0.00 0.00 Allocations - Additional Financing (Additional Financing for the Agricultural Development and Rural Roads Rehabilitation Project - P145627) Disbursement % (Type Source of Category of Allocation Total) Fund CurnyExpenditure Proposed Proposed IDA XDR 1 200,000.00 33.00 IDA XDR 2 650,000.00 19.00 IDA XDR 3 500,000.00 50.00 4 350,000.00 50.00 IDA XDR Total: 1,700,000.00 10 Components Change to Components and Cost Explanation: Geographical areas of focus Based on the current location of the parent project, an analysis of the agro-ecological potential, market demand, and accessibility to markets (road network) was undertaken to narrow the geographical targeted areas of the AF. The following areas of project concentration have been selected: * Departments of Brazzaville/Pool (Peri-urban areas of Brazzaville, Boko, Louingui, Goma Tse-Tse, Igni6 and Ngab6); * Departments of Plateaux/Cuvette (Ngo, Gamboma, Ollombo, Abala, Oyo, Owando and Makoua); * Departments of Kouilou/Niari/Pointe Noire (Hinda, Mvouti, Dolisie, Louvakou, Peri-urban areas of pointe Noire); and * Departments of Bouenza/Lekoumou (Madingou, Mfouati, Mabombo, Yamba, Sibiti and May6y6). The following principles in designing the AF were kept in mind: - Geographic concentration of project activities (local agricultural growth areas / areas of concentration) and limitation of the number of commodities (value chains) being dealt with (2-3 per area of concentration) in order to avoid a dispersion of efforts and to have significant and visible impacts; - Selectivity of project activities to make sure that: a) there is no duplication with other donor investments but synergy with existing interventions, and b) only those beneficiaries who want to succeed in their activities are selected; - Putting the emphasis on making quality seeds/fish breeds, seedling and animal feed available to farmers and fish breeders; and - Capacity strengthening of all the actors in the public and private sector that intervene in a given value chain. The targeted commodities and value chains are: cassava, plantain, maize, banana, vegetables in rural areas, horticulture and poultry in peri-urban areas, and fish farming. However, only two to three main agricultural commodities and value chains will be supported for each targeted areas. The commodities and their value chains were selected based on the following criteria: (i) strategic importance to cover the food needs of the country; (ii) the production potential that exists for these products; and (iii) the possibilities for value addition available to small farmers and their organizations through better storage, agro-processing and marketing. There are no fundamental changes in the design of the proposed additional financing. The AF has the same four components as the parent project, which are: Component 1: Building capacity in the Ministry of Agriculture and Livestock, and the Ministry of Fisheries and Aquaculture, (Original Grant US$2.36 million, AF Credit US$2.86 million). The objective of this component continues to be the strengthening of capacities in pro-poor policy formulation, budgeting, and public expenditure management of the ministries, respectively, in charge of Agriculture and livestock and Fisheries and aquaculture, so that they can increase the efficacy and efficiency of their expenditure programs. The AF will strengthen the staff's basic skills in policy planning, budgeting, and implementation (technical capacity) as well as the public expenditure management system, including monitoring and evaluation, public finance management, and procurement. Of the total IDA funding under the AF, US$0.5 million is earmarked for this component. This Component has 2 sub-components: Sub-component 1.1: Support to Ministries' central and decentralized key services. The sub-component will 11 support services in charge of planning and monitoring and evaluation at central level to ensure adequate monitoring of project activities and on the other hand, a specific and targeted support will be given to decentralized services of the Ministries to deliver agricultural services to beneficiaries. This support will especially cover the three departmental directorates of agriculture, livestock and fisheries and their decentralized services ("secteurs"). Sub-component 1.2: Support to specialized executing entities and NGOs. The sub-component will support two entities involved with research, production and distribution of seeds and cuttings, namely the CNSA (Centre National des Semences Am6lior6es) and the CRAL (Centre de Recherches Agricoles de Loudima). The sub-component will also finance Ministries' entities which are involved in agriculture extension services, smallholders' support and other agricultural public services, namely the CAT (Centre d'Appui Technique/Livestock), AGRI-CONGO, CDTA (Centre de D6monstration des Techniques Agricoles), the Project for the Rehabilitation and Recovery of pisiculture stations (PRSD) , and the CVTE (Centre de Vulgarisation des Techniques d'Elevage). Component 2: Rehabilitating rural road and market infrastructure (original Grant US$7.97 million, AF Credit US$8.97million): The objective of this component continues to be the provision and maintenance of reliable all-season rural road infrastructure that connects rural communities to markets (and other social services) so that they can sell marketable production at remunerative prices and have access to affordable agricultural inputs. To achieve this objective, the project will finance two types of activities: rehabilitation of rural roads and construction and rehabilitation of rural market infrastructure. More specifically, in the selected areas of concentration, the AF will finance activities related to rehabilitation and maintenance of rural roads, construction and maintenance of market infrastructure. Under the AF, 80 km of rural roads will be rehabilitated and some four market infrastructures will be constructed or rehabilitated. Of the IDA funding under the AF, US$1.0 million is earmarked for this component. Component 3: Supporting productive activities and sustainable livelihoods in rural areas (original Grant US$3.80 million, AF Credit US$4.8 million): The objective of this component continues to be the increase in capacity of rural producers, especially subsistence-oriented farmers, in targeted areas to raise their productivity and income. This objective will be achieved by financing complementary activities that meet the specific needs of farmers, livestock raisers, fish breeders, and selected non-farm producers. Project support will be in the form of micro-projects which will be selected according to a value chain logic, i.e., micro-projects that reinforce and benefit each other and that cover activities from production, to processing, storage, transportation, and marketing. The project will provide financial incentives through a matching grant mechanism to fund Producer Associations to ease the adoption of improved technologies. The typical bundle of complementary activities will include generating and disseminating improved production technologies (including accessing improved agricultural, fisheries and livestock inputs, dissemination and demonstration of new technologies), drying facilities, acquisition of small transformation and processing equipment, collection and distribution platforms for agricultural and fisheries products, and market information, and strengthening the capacity of Producer Associations. This component will strengthen the capacity of Producer Associations through training and easy access to ICT. It will also support the development and intensification of horticulture and poultry production in the vicinity of urban areas of Brazzaville and Pointe Noire, and also pursue the rehabilitation of centers of production and multiplication of fish breeding. To make improved seeds and planting material available to farmers and to demonstrate their benefits, and to encourage the diffusion and adoption on a large scale of these improved technologies, agricultural extension advice will be provided to select Producer Associations. The PIU will pass a contract with the Chefs de Secteur of MAE and private extension advisors if necessary to establish nurseries and demonstration plots. These sites will be used to familiarize farmers with new production technologies. The matching grants are one-time capital grants awarded to Producer Associations for the adoption of 12 superior technologies in the production and post-harvest areas. The matching grant is open to all eligible Producer Associations or cooperatives organized around given productive and/or commercial activity. The following criteria will guide the selection of proposals: (i) the beneficiary shall be a Producer Association organized around given productive and/or commercial activity; (ii) the proposed innovative activity must be technically viable; (iii) it must have a public good element; and (iv) it must be economically and financially viable. The formula for the matching grant will build on the existing mechanism of the parent project (with a 5-10 percent beneficiary contribution). For the introduction of new more market oriented technology like processing equipment and production of fish food, the matching grant will be a maximum of 85 percent contribution from the project, depending on the costs and economic and financial viability of the particular technology. More details on the framework and modalities of support through matching grants (and/or leasing arrangements) are described in the project implementation manual. Component 4: Project Coordination and Management (Original Grant US$2.98million, AF Credit: allocation unchanged): The objective of this component is to finance: (i) the operating costs of the PIU and of the different project executing agencies; (ii) the monitoring and evaluation of project activities; (iii) the communication of project activities to different audiences; (iv) the hiring of staff (in addition to the existing staff), consultant services, workshops, and training. Current Component Proposed Component Current Cost Proposed Action Name Name (US$M) Cost (US$M) Component 1: Building Component 1: Building Capacity in the Capacity in the Ministry 4.71 0.50 Revised Ministry of Agriculture of Agriculture and and Livestock Livestock Component 2: Component 2: Rehabilitating Rural Rehabilitating Rural 15.94 1.00 Revised Roads and Market Roads and Market Infrastructure Infrastructure Component 3: Supporting Productive Component 3: Supporting Supon P v Productive Activities and Activities and Sustainable Livelihood in 7.60 1.00 Revised Sustainable Livelihood Rural Areas in Rural Areas Project Component 4: Project Component 4: Coordination and Coordination and 5.96 0.00 Revised Management Management Total: 34.21 2.50 IV. APPRAISAL SUMMARY Economic and Financial Analysis Explanation: Development impact: The economic rationale for the Project stems from the fact that investments financed under the Project will contribute obviously and directly to the Project Development Objective, following 13 explicit causal pathways that link Project-supported activities to targeted outcomes. The analytical work, capacity building activities, and institutional reforms financed under Component 1 will improve the ability of the Government to design and implement poverty-focused agricultural policies and expenditure programs. The rural roads and market infrastructure financed under Component 2 will allow rural households to sell greater proportions of their production at more attractive prices. And the improved farm inputs and advisory services provided under Component 3 will allow thousands of poor rural households to raise their income through adoption of improved agricultural technologies. Rationale for public funding: The activities to be financed under the Project merit public support, although the rationale differs somewhat by component. The activities to be financed under Component 1 (analytical work, capacity building, and institutional reforms) relate directly to strengthening of govermment functions and can be financed only with public funding. The activities to be financed under Component 2 (construction of basic infrastructure, including rural access roads and markets) will provide services that can be expected to benefit the general public and from which non-paying users could be excluded only at considerable cost to the overall economy, making public provision desirable. The activities to be financed under Component 3 (provision of advisory services and improved farm inputs) are unlikely to attract private suppliers as long as agricultural markets remain underdeveloped and highly risky. Over time, as agriculture becomes more commercialized, more stable, and more profitable, private suppliers will be expected to come in, making continued public support unnecessary. World Bank value added: World Bank support for the Project is justified for three main reasons. First, by allocating IDA resources to the agricultural sector, the World Bank is signaling its readiness to support with financing the priorities identified in the Country Partnership Strategy. Second, World Bank involvement has leveraged greater government commitment for rural road maintenance as indicated by the increased funding of the sector. Third, through its participation in the Project, the World Bank is able to maintain a seat at the table where the national agricultural policy dialogue takes place, allowing it to play a visible and influential role in shaping the national agricultural development strategy. Fourth, with respect to the activities being financed under Component 1, the World Bank is able to mobilize leading international experts who can bring cutting-edge global knowledge to bear on the analytical activities and institutional reform efforts being undertaken by the government. Returns to investments: The Project supports many different types of activities-knowledge generation, institutional reform, incentive restructuring, and provision of a range of goods and services with different degrees of "public" and "private" characteristics. Evidence collected during the initial phase of the Project provides reassurance that Project-supported investments will deliver attractive returns. For example, data collected from a sample of micro-projects financed under Component 3 during the initial phase of the Project were used to assess the profitability of the investments being made in production of food staples (maize and cassava), horticultural crops (onions, cabbage, peppers), bananas, small ruminants (sheep), and aquaculture. Farm budget analysis indicates that the micro-projects have generated attractive returns on the resources invested, including the IDA financing, the Government own financing, and the beneficiaries' contributions. As for activities financed under component 2 (rural roads and market infrastructures), the final survey indicated 4-16 percent reduction in transport costs (depending on the location) between 2010 and 2013, a reduction in transportation time to evacuate agricultural produce, from 6.5 days in 2010 to 2.5 days in 2013, and a better access to markets due the construction of market infrastructures now closer to the producers. Technical Analysis Explanation: The revised project strategy and approach under the AF has been developed jointly with the Govermment 14 of Congo and was supported by a FAO/CP preparation mission. The objective was to arrive at greater geographic concentration, greater synergy between the project components and to encourage emergence of micro-projects within the framework of a few selected value chains. Together, these measures will address the weaknesses in the parent project. Care was taken to fully involve stakeholders in Congo in all preparation stages. For the agricultural production aspects, staff of the national directorates of the two ministries, from various specialized agencies such as the agricultural research center at Loudima (CRAL) for production of basic seeds, the National Center for Improved Seeds (CNSA) for seed multiplication, and AGRI-CONGO for vegetable growing and the Project for the Rehabilitation and Recovery of Pisciculture Stations (PRSD) was directly involved in project formulation. These institutions are technically competent to provide the services and technologies expected from them. Also, the direct involvement of the decentralized services of the Ministry of Agriculture and Livestock and the Ministry of Fisheries in supervising field activities will ensure that the necessary technical support to farmers and their organizations will be available. Concerning the micro-projects related to the development and promotion of market access and value addition, the PIU has accumulated several years of experience with this approach. For the construction and maintenance of rural roads, the PIU has learned how to manage all the necessary contracting and supervision. As part of the preparation of the AF, the elaboration of a strategy for rural road maintenance has been launched and will be finalized in early phase of project implementation. For training needs of farmers and small entrepreneurs, the PIU will resort to external operators for the implementation of training programs. Social Analysis Explanation: The project objective of raising poor people income by making them more productive and making their activities more remunerative continues being by itself an important determinant of social stability. But the contribution of the AF to social development goes beyond the strategic development objective that it pursues. Over two thirds of the AF financing supports community-based productive investments and access to basic road, marketing, and agro processing infrastructure. Selection of micro-projects with a value chain orientation is on a demand basis that allows the local population and community organizations to fully participate. In addition to increasing the cost-effectiveness and sustainability of project activities, this approach also fosters social integration and stability by highlighting the socioeconomic benefits of collective action. Finally, the AF was designed to address the specific needs of female farmers and fishers. Agricultural extension advice will be specifically targeted towards women farmers and their needs. Through its contracts with extension providers the PIU will encourage the use of female extension advisors and the work with women groups. Environmental Analysis Explanation: The AF does not include activities that aim specifically to meet predetermined environmental or natural resource management objectives. However, the agricultural advisory services will include the promotion of low-cost integrated crop and soil fertility management farming practices (such as intercropping and cover crops) that increase yields, while preserving the productivity of the natural resource base. For all micro- projects for the processing of agricultural products there will be an environmental screening and mitigation plan. Details of this will be elaborated in the project implementation manual. Risk Explanation: Key risks associated with the AF and proposed mitigation measures are described in the Operational Risk Assessment Framework (ORAF) worksheet. Three main key risks for the AF are worth singling out. They are: (i) the slow release of counterparts' funds due to the Congo lengthy process of the budget cycle which 15 could substantially impact the project objectives. One of the mitigation measures for this risk will be to make the initial deposit of a substantial advance of the counterpart funds a condition of effectiveness. (ii) The limited capacity of the Ministry staff at the central and decentralized levels could also lead to implementation difficulties and delays. Investing in training, on-job training, demonstration sessions and other means of building capacity will limit the risk. And (iii) selection of limited focused areas for AF interventions may raise equity issue. To address this risk, the Ministry of Agriculture, at the Bank recommendation, has appointed a task force (comprising representatives from Ministries of Agriculture, Fishery, Plan and Finance, respectively) to further develop the rationale for and endorse the balance in the choice of areas of focus for the proposed AF. The project areas under the AF have been identified and endorsed by the Government. The Government ownership of this process will be part of mitigation of the risk. 22. The revised financing plan and project costs by component for the AF are shown below: Table 1: Revised Financing Plan (US$ million) Source Original Project Additional Total Revised Financing Project Recipient 20.00 8.00 28.00 IDA 20.00 2.50 22.50 Total 40.00 10.50 50.50 16 Table 2: Revised Project Costs by Component (US$ million) REVISED PROJECT COSTS BY COMPONENT Changes with Revised costs Components Original Costs AF (US$m) (US$m) (US$m) US$ US$ IDA IDA IDA Gov. Total (IDA+Gov.) 1. Capacity building for MAE and MPA 2.36 0.50 2.86 3.35 6.21 - Support to Ministries' central and decentralized key services - Support to specialized executing entities and NGOs 2. Rural roads rehabilitation and market infrastructui 7.97 1.00 8.97 12.47 21.44 - Rural roads rehabilitation - Market infrastructure 3. Support to productive activities and sustainable livelihood in rural areas 3.80 1.00 4.80 4.80 9.60 4. Project coordination and management 2.98 - 2.98 4.48 7.46 Project Preparation Facility 0.29 0.29 0.30 0.59 Total baseline costs 17.40 2.50 19.90 25.40 45.30 Contingencies 2.60 2.60 2.60 5.20 Total project cost 20.00 2.50 22.50 28.00 50.50 4. Lessons learned and reflected in the design of the Additional Financing 23. Although PDARP achieved its intended objectives which are appreciated by beneficiaries and the authorities, there is limited synergy between the project's components and between the micro-projects that were financed. This shortcoming limited the impact on the ground. The specific actions under each component were scattered over large areas of the country and did not constitute a coherent development program. Component 1 on capacity building of the Ministries enabled the elaboration of the agriculture sector strategy and implementation of the fisheries strategy. Technical assistance was also given on procurement and monitoring and evaluation. However, the impact on executing entities and decentralized agencies of the ministries were limited since these were only oriented to specific activities. The realizations under component 2 on rehabilitation of rural roads and market infrastructure were very appreciated by the different stakeholders as it helped unlock about 300,000 inhabitants from 221 villages and ease access to markets to more than 50,000 people. Activities under component 3 on supporting productive activities and sustainable livelihoods in rural areas generated income increase for participating project beneficiaries and a 56 percent yield increase for the targeted commodities. The micro- projects were standalone investments that did not reinforce each other along a value chain. It is therefore the aim of the AF to scale up the activities of the PDARP by introducing the approach of focused interventions in specific and high potential agricultural areas and increase synergy between the components in order to achieve more development impact on the ground. At the same time, the AF seeks to support micro-projects along selected value chains that reinforce each other and allow to tackle bottlenecks from agricultural production to storage, transportation, processing and up to marketing. 17 24. PDARP started in an operating environment characterized by the absence of a government strategy for rural roads maintenance. Successive supervision missions emphasized the need for the Government to pay specific attention to the maintenance of the rehabilitated rural roads to avoid losing the investment at the following rainy season. The project is the first one to have had a significant intervention in the rehabilitation of the rural network transportation since 1996. Through this project, 20 percent of 5,708 km rural roads network identified by the Ministry of Agriculture have been rehabilitated. During the past three years, through the policy dialog around rural roads maintenance, the government earmarked FCFA 450 million (almost US$1 million) in the 2013 budget, and has allocated FCFA 5 billion (US$10 million) for rural roads upgrading and maintenance in the 2014 budget. 25. A study conducted on the maintenance of rural roads during the identification mission showed the devastating effect on the rural road network due to lack of proper maintenance. The study found out that of the total 5,708 km priority rural roads identified by the Ministry of Agriculture, about 20 percent have been rehabilitated by the project. In addition, only 45 percent of this priority network is practicable throughout the year, 55 percent experience regular cuts, of which 23 percent cuts all year round. 26. The envisioned rural roads maintenance strategy aims to entrust the departmental councils (decentralized entities) with the management of the rural roads maintenance as established by the National Transport Plan adopted by the National Assembly since 2003, but yet to be implemented. In the short term, this transfer cannot be performed because the councils are not ready yet to take over this responsibility as they lack necessary resources and skills. To ensure proper maintenance in the future, the study suggests a strategy based on a progressive approach around three main axis: (i) assign the management of the maintenance of the priority rural roads network to the Ministry of Agriculture with a gradual transfer to the departmental councils as they become capable; (ii) adoption of a technical approach adapted to the transport demand to minimize maintenance burden and costs; and (iii) securing the required funding for rural road maintenance as planned through the Roads Maintenance Funds. 27. To achieve the objective of the strategy which aims at ensuring a sustainable level of service of the entire priority network, it is necessary to rehabilitate the entire network with permanent maintenance. The AF will consider financing initial steps towards implementation of this strategy through: (a) the assessment of the capacities of the ministry (i.a. its department of rural engineering) and the departmental councils, and elaboration of a capacity building program for these entities; (b) the consolidation of the rural roads network rehabilitation and catching up with the maintenance delay ; (c) piloting of a permanent manpower maintenance at the level of the departmental councils; and (d) implementation of a "on-the-job" training operation to maintain rural roads through "chantiers-6coles" supported by SMEs involved in rural roads construction/rehabilitation. 5. Policy exceptions and readiness 28. No exceptions are envisaged. The Project is fully operational so that the proposed activities can start being implemented as soon as the AF becomes effective. 18 ANNEX 1: REVISED PROJECT RESULTS FRAMEWORK Project Additional Financing for the Agricultural Development and Project Additional Financing Status: DRAFT Name: Rural Roads Rehabilitation Project (P145627) Stage: Team Amadou Oumar BaRequesting AFCC2 Created by: Marie Jeanne Uwanyarwaya on 19-Jul-2013 Leader: Unit: Product IBRD/IDA Responsible AFTA2 Modified by: Marie Jeanne Uwanyarwaya on 30-Dec-2013 Line: Unit: Country: Congo, Republic Approval FY: 2014 Regin: ARICALending Region: AFRICA Investment Project Financing Instrument: Parent Project Parent Project Agricultural Development and Rural Roads Rehabilitation Project (P095251) ID: Name: Project Development Objectives Original Project Development Objective - Parent: The primary objective of the project is to assist the Republic of Congo to increase the ability of the rural poor to raise their income through the generation and promotion of improved agricultural technologies, the provision of market infrastructure, and the formulation and implementation of poverty-focused agricultural policies and expenditure programs. Proposed Project Development Objective - Additional Financing (AF): The primary objective of the project is to assist the Republic of Congo to increase the ability of the rural poor to raise their income through the generation and promotion of improved agricultural technologies, the provision of market infrastructure, and the formulation and implementation of poverty-focused agricultural policies and expenditure programs. Results Core sector indicators are considered: Yes Results reporting level: Project Level Project Development Objective Indicators 19 Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target New Direct project beneficiaries Number Value 0.00 314614.00 321600.00 Date 30-Apr-2008 15-Nov-2013 3 1-Oct-2015 Comment New indicator for AF. Baseline data collected by June 2013 project survey New Female beneficiaries X Percentage Value 0.00 51.60 51.60 Sub Type Supplemental Revised Increased in income of project E Percentage Value Agr: 635,365 45% 50% beneficiaries participating in Horticulture: micro-projects by end of 1,992,366 project Livestock: 374,987 Fisheries/Aqua :1,466,844 Processors: 2,013,864 Date 30-Apr-2008 15-Nov-2013 3 1-Oct-2015 Comment This is the result of the end survey published in June 2013 Revised Increased productivity of key Ton per hectare Value cassava: 5.6 cassava: 8.4 cassava: 10.6 agricultural products (cassava, ton/ha ton/ha ton/ha banana and maize) banana: 40 banana: 60 ton/ha banana: 75 ton/ha maize: 2.5 ton/ha ton/ha maize: 1.6 maize: 3.5 20 ton/ha ton/ha Date 30-Apr-2008 15-Nov-2013 3 1-Oct-2015 Comment The productivity for cassava has increased for 32%, banana for 50% and maize 56% Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Revised Increase rate of annual sectoral E Percentage Value 45 MAE: 62%; MAE: 80% budget execution/use of the MPA: 55.1% MPA: 70% MAE and MPA Date 30-Apr-2008 15-Nov-2013 31 -Oct-2015 Comment As recorded from the ministries own sources Revised After PY2, the Ministry of Text Value 0 3 documents 3 Agriculture and Livestock has available prepared and adopted result- Date 30-Apr-2008 15-Nov-2013 3 1-Oct-2015 based sub-sector programs to guide the preparation and Comment Agriculture execution of the sectoral annual Sector Note; budget. Agriculture Policy Note; and MTEF adopted at the end of June 2013 Revised At least 60% of farmers are Percentage Value Agr.: 2.7% trad. Agr.: 10.4% Agric. 20% satisfied with the services Livestock: Livestock: 16.5% Livestock: 20% received from the extension 8.9% Fisheries: 47.6% Fisheries: 50% workers and the Ministry of Fisheries: 24% Horticulture: Horticult.: 50% Agriculture by the end of the Horticulture: 43.5% 21 project (EOP) 13% Date 30-Apr-2010 15-Nov-2013 3 1-Oct-2015 Comment results of the As determined by 2010 baseline the end survey survey published in June 2013 Revised By EOP, at least 80% of the E Percentage Value 0 28% 80% procurement of goods and Date 30-Apr-2008 15-Nov-2013 31-Oct-2015 services is handled by the Ministry's procurement unit in Comment As recorded from conformity with public the Ministry's procurement guidelines. records Revised 50% of the annual budget of Percentage Value 5% 33.6% 50% the Ministry's regional offices Date 30-Apr-2008 15-Nov-2013 31-Oct-2015 is transferred to regional offices Comment This is the result of the end survey published in June 2013 Revised Percentage of farmers Percentage Value 5.00 32.2% 40% associations/groups receiving Dt Date 30-Apr-2008 15-Nov-2013 31-Oct-2015 agricultural extension services from MAE and MPA Comment This assessment was done for all producers which also include fisheries households. Revised Roads rehabilitated, Rural Kilometers Value 0.00 1251.00 1331.00 Date 30-Apr-2008 15-Nov-2013 31-Oct-2015 Comment A total of 1251 km of rural roads 22 have been rehabilitated and handed over, almost 95% of target by EOP. Revised Number of market Number Value 0 36 40 infrastructure rehabilitated Date 30-Apr-2008 07-Feb-2013 31 -Oct-2015 Comment Revised At least 90% of built market Percentage Value 0 90% 90% infrastructure is properly used an mitand y eefcare .Date 23-May-2008 15-Nov-2013 3 1-Oct-2015 and maintained by beneficiaries Comment As per end project survey results published in June 2013 Revised At least 50% of upgraded rural E Kilometers Value 26.00 50.00 roads are maintained at approriat stanardsDate 03-Apr-2008 15-Nov-2013 3 1-Oct-2015 appropriate standards Comment per end survey Revised Number of producers with Number Value 0 84396 88343 access to rehabilitated market Date 30-Apr-2008 15-Nov-2013 31-Oct-2015 infrastructure Comment The number was revised according to the end survey published in June 2013 (the previous one was project estimates that includes all populations) Revised Percentage of beneficiaries E Percentage Value 5% 48% 60% 23 adopting production and Date 30-Apr-2008 15-Nov-2013 3 1-Oct-2015 processing advice/technology Comment These are direct package project beneficiaries, of which almost 52.6% are women (Source: Project end survey) Revised Number of farmers Number Value 0 10247 11247 associations/households of which 51% are of which 51% benefitting from matching (Percentage) female are female grants (% of which are female and 25% are and youth) youth Date 30-Apr-2008 15-Nov-2013 31-Oct-2015 Comment As per end project survey results published in August 2013 Revised Number of micro-projects E] Number Value 0 814 914 financed by the project Date 30-Apr-2008 15-Nov-2013 3 1-Oct-2015 Comment Revised Periodic progress reports and E Text Value 0 3 4 IFRs are produced and Date 30-Apr-2008 15-Nov-2013 31-Oct-2015 submitted timely Comment This is the case in 2013 Marked for Project Steering Committee E] Text Value 0 2 2 Deletion meets at least twice a year Date 30-Apr-2008 15-Nov-2013 31-Dec-2013 Comment Complied with Marked for At least 95% of procurement Percentage Value 70% 100 95% 24 Deletion (goods, services and work) Date 30-Apr-2008 15-Nov-2013 3 1-Dec-2013 processes are in compliance Comment Complied with IDA procedures. 25 ANNEX 2: DISCLOSABLE OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) Congo, Republic: Additional Financing for the Agricultural Development and Rural Roads Rehabilitation Project (P145627) Stage: Additional Financing ProectStaeholder Risks Stakeholder Risk Rating Moderate Risk Description: Risk Management: Selection of limited value chains and focused areas for AF As a result of the identification mission wrap up meeting, the Ministry of Agriculture, at the interventions may raise equity issue. Stakeholders, including Bank recommendation, has appointed a task force (comprising representatives from farmers, political leaders, and agro-industries in areas or value Ministries of Agriculture, Fishery, Plan and Finance, respectively) to further develop the chains not selected for AF intervention could express discontent or rationale for and endorse the balance in the choice of areas of focus for the proposed AF. The frustration. project areas under the AF have been identified and endorsed by the Governent. The Government ownership of this process will mitigate the risk. Also, the PDARP, and subsequently the AF, has invested substantially in strengthening the weak links of the value chains (namely farmers' organizations) to enhance their negotiation capacity and their role along the activities of the value chains. Resp: Stage: Recurrent Due Date: :Frequency Status: Both Preparation 09-Dec-2013 Completed PDARP has experienced slow release of counterparts' funds due to Risk Management: the Congo lengthy process of the budget cycle. This could Release of a substantial amount of counterpart funds will be a condition of effectiveness. substantially impact the AF's objectives especially because the Government is co-financing the AF at 80 percent. Resp: Stage: Recurrent Due Date: Frequency Status: Both Both 29-Apr-2014 In Progress CapteCo engthy dc e b udrcyce.iThi could 26 Risk Description: Risk Management: The PDARP PIU, which will oversee the implementation of the AF's The PIU has initiated the recruitment of departing staff to ensure that replacements are on activities, has lost some of its fiduciary staff (FM, M&E and board before the end of the calendar year 2013. To even mitigate further this risk, the PIU has Procurement) to other appointed public functions. The recruitment of ensured that a handover process is undertaken between departing staff and those who are still new and inexperienced staff could impact the speedy implementation around to avoid disruption of implementation of activities in the field. of AF activities. Resp: Stage: Recurrent Due Date: Frequency Status: Client Both In Progress Risk Management: Past experience with ineligible expenses in PDARP and possibility of For the past two years, the PDARP PIU, which will also implement activities of the AF, has recurrence. shown noticeable improvements in fiduciary matters especially in (i) recruiting an internal auditor who has helped in improving PIU's accounting system and internal control resulting in the production of good quality quarterly financial reports which meet Bank requirements; and (ii) in procurement with a more reliable and organized hard and electronic archiving system which allows easy and transparent access to information related to past and ongoing procurement contracts. Implementation support missions and regular contacts with PIU staff have been monitoring closely all aspects related to fiduciary. These frequent checks and discussion will continue in order to mitigate this risk. Resp: Stage: Recurrent Due Date: Frequency Status: Client Both In Progress Project Risks Design Rating Moderate Risk Description: Risk Management: A change in the Ministries' leadership or configuration The project team and Bank country leadership has invested in sustained dialogue and active consultation with, not only implementing ministers of Agriculture and Fishery, but also at the level of the Ministry in charge of Plan, Finance and Integration. This has resulted in a national awareness of the benefits of the PDARP achievements and has raised Government interest in investing in the Agriculture sector. Such a dialogue will be continued through the AF to further mitigate this risk. 27 Resp: Stage: Recurrent Due Date: Frequency Status: Both Both In Progress Risk Management: Absence of Government strategic, long term and data supported WB/PDARP and FAO have financed the elaboration of few analytical studies in the development agenda for the Sector. Such guidance could provide Agriculture sector (Agric. Sector Note, MTEF exercise, Agric. Policy note, FAD study on detailed information on current state of the sector and help determine Cassava Commercialization ...). The AF will finance a restitution workshop, to review and most appropriate and sound policy needed to achieve targeted goals evaluate the conclusions and outcomes of these studies, which could help as well as enlighten further the AF's contribution to the sector shape and inform a longer term development agenda for the Agriculture sector in Congo. development. Resp: Stage: Recurrent Due Date: lFrequency Status: Both Both In Progress Social and Environmental Rating Low Risk Description: Risk Management: Overall safeguard performance of parent project of the AF is An ESMF, RPF, and PMP were prepared, consulted upon, and disclosed in currently satisfactorily. AF activities trigger one additional safeguards October/November 2006; they were subsequently updated, following the project mid-term policy - OP 4.04 (Natural Habitats) - as some of the project activities review in January 2011. At this same review, the Indigenous Peoples policy (OP/BP 4. 10) are taking place in or near natural habitats. These risks are addressed was triggered, as project investments of components 11 and III included and affected areas in the updated ESMF. inhabited by indigenous communities. An Indigenous Peoples Planning Framework (IPPF) was consequently prepared in 2011 -2012, cleared and disclosed in 2012. To date 46 ESMPs have been prepared (26 for road segments and 20 for market infrastructures). The project has also undertaken 12 environmental audits. ESMPs, RAPs, and/or IPPs will be prepared as and when necessary during project implementation; the project will undertake additional environmental audits. The project implementation unit supported the safeguards training of the agronomist and the monitoring and evaluation unit, to strengthen project safeguards capacity and compliance. Such training will be continued. Resp: Stage: Recurrent Due Date: Frequency Status: Both Both cIno Progress Overall Implementation Risk: Moderate 28 ANNEX 3: INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS 1. The current institutional and implementation arrangement under PDARP will be maintained with an improvement towards the use of country institutions. The same steering committee composed of representatives from the private sector, beneficiary organizations, selected ministries, public institutions, and civil society will be maintained and chaired by the Ministry of Agriculture and Livestock (MAE). It will have the same mandate including approving annual work plans and budgets, and approving annual progress reports. The Ministry of Fisheries and Aquaculture (MPA) will be in charge of direct supervision of activities related to the fisheries sector in close collaboration with the MAE. 2. The Project Implementation Unit currently in place will ensure effective coordination of project activities while implementation on the ground will continue to be executed by the technical directorates of the MAE and MPA and by these implementing agencies whose capacities are strengthened under component 1 of the project including; CRAL, CNSA, Agri- Congo, CDTA, and CVTE1. These agencies will provide critical agricultural services such as foundation seeds/cuttings, commercial seeds, technical advice to farmers and livestock breeders to support project activities. The current PIU is comprised of an experienced team of professionals, with technical and engineering skills, who have been involved in the PDARP activities for the past 5 years. PIU staff also demonstrated strong commitment and improved managerial and coordination skills, which will be of great value for the implementation of the AF. As some staff (Procurement, M&E and Accountant) left in anticipation of the initial closing date of the project, internal arrangements have been made to fill the few gaps by using the assistants who remained in place. However, these essential positions will be appointed during the first three months following Board approval. The recruitment process has been launched. 3. At the same time, the implementation capacities and skills of public services and executing agencies that participate under the project will need to be reinforced as part of project's component 1. In the framework of improving country systems and institutions, the following adaptations will be made in the existing arrangement: * Strengthening of the collaboration between the four Regional Implementation Support Units and the decentralized entities of the MAE and MPA to progressively integrating of and mainstreaming their functions and roles within these units taking into account the defined areas of concentration of activities; * Capacity building of the decentralized units of the two ministries which will implement the project activities on the ground; and * Better integration of specialized national institutions that have played only a limited role in the past. 4. Details on the operating procedures have been revisited to adapt to the AF specificities and are included in the Project Implementation Manual. 1 These are technical government institutions under the authority of the MAE and Ministry in charge of scientific research. 29 5. Reporting and quality control. The AF will continue to produce monthly, quarterly, semiannual, and annual monitoring and evaluation reports of differing scope and depth. Staff from the Project Coordination Unit, selected regional units, and staff from involved non- governmental organizations will be trained in monitoring and evaluation and other project management aspects. The Project Implementation Unit will support community-based monitoring and evaluation as a means of strengthening community skills and ownership of project interventions and of creating a space for positive questioning that will enhance accountability and governance in project management. Complete monitoring and evaluation procedures (data collection, processing, reporting formats, and the like) are spelled out in detail in the revised Monitoring and Evaluation Manual. 6. Financial management. The project management (including financial management) has been rated Satisfactory over the past twelve months. Quarterly financial reports are of good quality, audit reports are being completed on time, recommendations are largely complied with, and the accounting system has been also improved. Existing financial management arrangements will be used under the AF. The IFR and audit arrangements will build on the foundation of the original project. 7. Auditing. The AF will also require an external auditor. A firm of qualified independent auditors with terms of reference acceptable to IDA will be selected on a competitive basis to carry out an external audit of the AF's financial statements on an annual basis. In addition, an internal auditor function already exists within the PIU and will continue to ensure that the AF's fiduciary procedures and requirements are adhered to by all implementing units. 8. Disbursements. The project will continue to use the transaction-based disbursement procedures. The existing DA at the Credit du Congo will also be used for the additional financing. The designated account will receive an initial advance equivalent to CFAF 150 million upon project effectiveness. In addition to advances to the designated account, other disbursement methods will be available for use under the project, such as the direct payment, reimbursement, and special commitment methods. Further instructions on the withdrawal of proceeds will be outlined in the disbursement letter. 9. The Program will be financed in an amount of US$10.5 million, US$2.5 million of which will be financed by IDA and US$8 million by the Government. The Government will disburse his financing part in two tranches (2,000,000,000 FCFA Francs by April 29, 2014 and 2,000,000,000 FCFA Francs by April 31, 2015) to the Project Account pursuant to a schedule specified in Section I (F.2) of Schedule 2 to the Financing Agreement, while IDA will advance funds to the Designated Account. 10. The disbursement schedule will be as follows: 30 Amount of the Percentage of Financing Expenditures to Category Allocated be Financed (expressed in SDR) (inclusive of Taxes) (1) Goods, consultants' services, and non-consulting services Training and Operating 200,000 33 percent Costs under Part 1 of the Project (2) Goods and works and non- consulting services under Part 2 of the Project 650,000 19 percent (3) Matching Grants under Part 3(c) of the Project 500,000 50 percent (4) Goods, Works, consultants' services, non-consulting services, Training and Operating 350,000 50 percent Costs under Part 3 (a), (b) and (d) of the Project TOTAL AMOUNT 1,700,000 11. Procurement performance has been rated Satisfactory during the past twelve months. For the proposed AF project, procurement for goods, works and non-consulting services will be carried out in accordance with the World Bank's "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" published by the World Bank in January 2011 (Procurement Guidelines"). In the case of consultancy services, the World Bank's "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credit and Grants will apply. Furthermore, the World Bank's "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006, and revised in January 2011 will apply. For each contract financed by the AF Credit, the different procurement or consultant selection methods, the need for pre-qualifications, estimated costs, prior review requirements and time frame will be agreed between the Recipient and the Bank as part of the Procurement Plan. This plan will be updated as least annually, and as required to reflect the actual project implementation needs and improvements in institutional capacity. 31