Document of The World Bank Public Disclosure Authorized

Report No: 25227-ET

PROJECT APPRAISAL DOCUMENT

ON A Public Disclosure Authorized

PROPOSED GRANT

IN THE AMOUNT OF SDR 22.0 MILLION (US$30.0 MILLIONEQUIVALENT)

TO THE

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

FOR THE

Public Disclosure Authorized PASTORAL COMMUNITY DEVELOPMENT PROJECT IN SUPPORT OF THE FIRST PHASE OF THE PASTORAL COMMUNITY DEVELOPMENT PROGRAM

April 22, 2003

Rural Development Operations Eastern & Southern Africa, AFTRl Africa Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective 2003)

Currency Unit = Ethiopian Birr 8.58 = US$1 US$0.117 = 1 Birr

FISCAL YEAR July 8 -- July 7

ABBREVIATIONS AND ACRONYMS

AfDB African Development Bank APL Adaptable Program Lending BOA Bureau of Agriculture CAHW Community Animal Health Worker CAS Country Assistance Strategy CBW Community-Based Workers CDD Community-driven Development CHA Community Health Assistant CIF Community Investment Fund CF Contact Farmer CFFA Country Financial Accountability Assessment CPAR Country Procurement Assessment Review DA Development Agent DFID Department for International Development - UK DPCF Drought Preparedness and Contingency Fund DPPB Disaster Prevention and Preparedness Bureau (Regional) DPPC Disaster Prevention and Preparedness Commission (federal) DPPO Disaster Prevention and Preparedness Office (wereda) EAMF Environmental Assessment and Management Framework EAR0 Ethiopian Agricultural Research Organization EMP Environmental Management Plan ESW Economic and Sector Work FA0 Food and Agriculture Organization FIB Federal Interministerial Board FMR Financial Monitoring Report FPCU Federal Project Coordination Unit FY Fiscal Year GIS Geographic Information System GoE Government ofEthiopia IDA International Development Association IFAD International Fund for Agricultural Development IGA Income Generating Activity ILRI International Livestock Research Institute JSDF Japan Social Development Fund MDB Multilateral Development Bank M&E Monitoring and evaluation MOA Ministry of Agriculture MoFA Ministry of Federal Affairs MOT Mobile Outreach Teams MST Mobile Support Teams NGO Non-governmental organization NRM Natural Resources Management PA Peasant Association PDO Pastoral Development Office PCDP Pastoral Community Development Project PCT Pastoral Community Teacher PDD Pastoral Development Department PET Pastoral Extension Team PHRD Policy and Human Resource Development (Japanese project preparation grant) PIM Project Implementation Manual PLA Participatory Leaming and Action PME Participatory monitoring and evaluation PRA Participatory Resource Analysis PRSP Poverty Reduction Strategy Paper RME Responsive Monitoring and Evaluation RPCU Regional Project Coordination Unit RPDO Regional Pastoral Development Office RRC Regional Research Center RTC Regional Training Center SA Special Account SIL Specific Investment Loan SNNPR Southem Nations, Nationalities, and Peoples Region SOE Statement of Expenditure TBA Traditional Birth Attendant TCL Training Community Leaders TGE Transitional Government ofEthiopia TOR Terms ofReference UNDP United Nations Development Program WAO Wereda Administration Office WDC Wereda Development Committee WDO Wereda Development Office

Vice President: Callisto Madavo Country Director: Ishac Diwan Sector Manager: Karen Brooks Task Team Leader: Daniel Sellen

ETHIOPIA PASTORAL COMMUNITY DEVELOPMENT PROJECT

CONTENTS

A. Program Purpose and Project Development Objective Page

1. Program purpose and program phasing 3 2. Project development objective 3 3. Key performance indicators 4

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2. Main sector issues and Government strategy 3. Sector issues to be addressed by the project and strategic choices 4. Program description and performance triggers for subsequent loans

C. Program and Project Description Summary

1. Project components 11 2. Key policy and institutional reforms supported by the project 14 3. Benefits and target population 16 4. Institutional and implementation arrangements 17

D. Project Rationale

1. Project alternatives considered and reasons for rejection 21 2. Major related projects financed by the Bank and/or other development agencies 23 3. Lessons learned and reflected in the project design 24 4. Indications ofrecipient commitment and ownership 24 5. Value added ofBank support in this project 25

E. Summary Project Analysis

1. Economic 26 2. Financial 26 3. Technical 26 4. Institutional 29 5. Environmental 30 6. Social 32 7. Safeguard Policies 35 F. Sustainability and Risks

1. Sustainability 37 2. Critical risks 38 3. Possible controversial aspects 39

G. Main Grant Conditions

1. Effectiveness Condition 39 2. Other 39

H. Readiness for Implementation 40

I.Compliance with Bank Policies 40

Annexes

Annex 1: Project Design Summary 41 Annex 2: Detailed Project Description 44 Annex 3: Estimated Project Costs 63 Annex 4: Summary ofthe Social Impact Analysis 64 Annex 5: Financial Summary 71 Annex 6: (A) Procurement Arrangements 72 (B) Financial Management and Disbursement Arrangements 81 Annex 7: Project Processing Schedule 88 Annex 8: Documents in the Project File 90 Annex 9: Statement ofLoans and Credits 91 Annex 10: Country at a Glance 92 Annex 1 1: Summary ofthe Environmental Assessment and Management Framework 94 Annex 12: Letter ofDevelopment Policy 96 Annex 13: IFAD Key File Tables 102

MWS) IBRD 32435: Zones ofproject intervention ETHIOPIA Pastoral Community Development Project Project Appraisal Document Africa Regional Office AFTRl

Date: April 22, 2003 Team Leader: Daniel M. Sellen Sector Manager: Karen Mcconnell Brooks Sector(s): General agriculture, fishing and forestry sector Country Director: Ishac Diwan (70%), Other social services (30%) Project ID: PO75915 Theme(s): Natural disaster management (P), Civic Lending Instrument: Adaptable Program Loan (APL) engagement, PuticiPation and community driven development (P), Other environment and natural resources management (S), Water resource management (S)

US$ m % US$ m US$ m Date Date- APL 1 30.00 50.0 29.96 59.96 0710 112003 06/30/2008 Government ofEthiopia

4PL 2 35.00 53.8 30.00 65.00 07/01/2007 06101/2012 Government of Ethiopia

I I I I I I I 4PL3 I 45.00 I 54.2 I 38.00 I 83 .OO 1 0710 1/20 11 I 0610 1/20 16 /Governmentof Ethiopia rota1 1 110.00 1 97.96 207.96

LOCAL COMMUNITIES 4.00 0.00 4.00 LDA GRANT FOR DEBT VULNERABLE 19.63 10.37 30.00 [NTERNATIONAL FUND FOR AGRICULTURAL 13.08 6.92 20.00 DEVELOPMENT rotal: 38.83 21.13 59.96 BorrowerlRecipient: GOVERNMENT OF ETHIOPIA Responsible agency: MINISTRY OF FEDERAL AFFAIRS Address: Ministry ofFederal Affairs Contact Person: Ato Lulseged Ageze, Head, Pastoral Area Development Department Tel: 251-1 51 33 55 Fax: 251-1 51 26 39/51 12 00 Email: [email protected]

Cumulative I 4.34 I 10.86 I 17.73 [ 24.49 I 30.00 I Project implementation period: Expected effectiveness date: 07/01/2003 Expected closing date: 06/30/2008

-2- A. Program Purpose and Project Development Objective 1. Program purpose and program phasing: The Pastoral Community Development Program seeks to sustainably improve the livelihoods of pastoralists living in the arid and semi-arid Ethiopian lowlands. A "livelihood" is a people-centered concept comprising four key elements related to the well-being of individuals and families -- (i)growth and stability of income; (ii)access to social and public services, (iii)the social relations, institutions, and natural environment that facilitate or constrain standards of living; and (iv) reduction ofvulnerability to disaster.

Over a fifteen-year period, the Program's interventions are designed to empower communities and district (weredu) and Regional governments to better manage local development in pastoral areas, with the aim of increasing, stabilizing, and diversifying incomes, improving infrastructure, and increasing access to public services. This will be achieved through a community-based development planning process linked to a community investment fund which flows through local government. The Program will also support a participatory disaster management program to reduce the risk ofpastoral communities to drought and other natural threats to livelihoods. These efforts will be supported through policy reform, investment in health, education, and veterinary services, and applied research into dryland agriculture and natural resource management. While recognizing the central role that animal production plays and will continue to play in pastoral life, the PCDP would not place exclusive emphasis on increasing incomes and productivity from livestock. Rather, the Program would also identify and develop alternative livelihoods, including sedentary agriculture and non-farm income generation, with a view to better integration of pastoral communities into the national economy.

The Program will be multi-phased, using the Adaptable Program Lending (APL) instrument. Early in the Program, emphasis will be placed on capacity-building and policy development. Models ofparticipatory development and local level planning will be tested over the first two to three years, where communities and local governments work together, supported by the Program-financed staff. In parallel, the Program will support further definition of the pastoral development strategy, in close collaboration with communities and other stakeholders. Increasingly over time, depending on the success ofearlier efforts, greater responsibility for implementation will shift from Program-financed staff to Regional and local governments. In addition, the geographic scale ofthe Program will expand to cover additional areas. Ultimately, the Program is intended to support widespread ownership of local development by Regional States, weredus, and communities, enabling them to lead the development work in close partnership.

2. Project development objective: (see Annex 1) The development objective of the Pastoral Community Development Project (PCDP), which is the first phase ofthe Program (and the subject of this Project Appraisal Document) is, for a selected set of weredus, to provide capacity-building and establish effective models of public service delivery, investment, and disaster management in pastoral areas that address communities' priority needs and reduce their vulnerability.

If achievement of this development objective is likely (according to performance triggers), a new phase will be prepared. Subsequent phases will expand the program geographically to a larger set of weredas (see below) to provide access of all pastoral communities to the program's benefits, and deepen the Program's effectiveness with policy and institutional reforms.

-3- 3. Key performance indicators: (see Annex 1) ....of Program purpose: Attainment in sustainable livelihoods may be measured through (i)increases in the level, diversity, and stability ofhousehold income and assets from both agricultural and non-agricultural sources; (ii)the productivity of crops and livestock; (iii)access and use ofhealth and education services; (iv) a set of indicators related to the condition, diversity and use of the natural resource base; (v) the degree to which community priorities are reflected in development initiatives.

....of Project development objective: In the first phase of the Program, performance indicators relate primarily to institutional development. The Project will be successful if, in targetted communities and weredas, (i)at least 80 percent of funds allocated to the Community Investment Fund were used for approved community micro-projects and inter-community sub-projects; (ii)at least 80 percent of funds allocated to the Disaster Preparedness and Contingency Fund were used for approved sub-projects; (iii) at least 75 percent of community subprojects requiring government support receive it in a timely and adequate fashion, as measured by beneficiary assessments; and (iv) at least 75 percent ofresults of participatory M&E meetings are used in decision-making for community investments, pastoral risk management plans, and other Project activities, as measured by M&E reports. Higher order indicators, such as poverty impact of micro-projects and contingency plans, will also be measured.

B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 25591-ET Date of latest CAS discussion: March 24, 2003 The current CAS is based on the recent PRSP. It outlines several structural features ofthe Ethiopian economy that constrain development: (i)lack ofemployment opportunities in agriculture and the modem economy; (ii)limited human capital; (iii)vulnerability to disaster, particularly drought; and (iv) weak capacity in the public sector and limited involvement ofcommunities in the decisions that determine their own development. The PCDP will address each ofthese constraints in pastoral areas by (a) promoting income-generating activities in livestock, agriculture, and non-farm productive sectors, (b) investing in health and education where it is a priority for communities, (c) developing early warning systems, drought preparedness plans, and mitigation strategies; and (d) supporting weredas in meeting the needs of their constituents and enabling civil society to participate actively in development.

2. Main sector issues and Government strategy: Sector issues and government strategy were the focus of sector work camed out in FYOl (Pastoral Community Development in Ethiopia: Issues paper, June 2001). This section summarizes portions of this document.

Main Sector Issues

In Ethiopia, pastoralism is extensively practiced in the Somali and Afar national Regional states (Regions), in the Borana zone ofthe Oromia national Regional state, and in the South Om0 zone ofthe Southern Nations, Nationalities and Peoples (SNNPR) national Regional state. Pastoralists are also found in areas of Tigray, Benshangule and Gambella Regions. These lowlands encompass almost seven million people, in excess of 500,000 h’(6 1 percent of the area of Ethiopia) and over eleven million animals. People living in the lowland areas ofEthiopia comprise both the comparatively wealthy who hold

-4- substantial assets in the form of livestock, a larger number of poor people who have small herds and flocks, and those who, to a greater or lesser extent, depend upon cropping or sale of their labour ("agropastoralists"). Although the climatic conditions and hardships are similar for most pastoral areas, the people inhabiting these areas differ in their social structure, herd composition, coping strategies and in the extent oftheir integration in the market economy. The following sector issues dominate:

(a) Good governance and community participation are preconditions for sustainable development anywhere, and pastoral areas are no exception. The establishment of the National Regional States with their underlying wereda (district) and local kebele (sub-district) administrations has improved the opportunity for more participatory development. However, civil society, in its broader sense beyond clan loyalties, is embryonic in lowland Ethiopia. The governance process, despite its devolution, lacks transparency, suffers from heavily bureaucratic administrative procedures, is dominated by local elites where women's rights are poorly represented, and lacks an enabling environment for private investment;

(b) Periodic drought has always been central challenge to the livelihoods ofpeople living in Ethiopia's lowland pastoral production systems. However, as a result of increasing human and livestock population pressure and an apparent increasing frequency of drought, the capacity to cope with drought has declined to the point where there is a growing threat to the survival of viable pastoral production systems. Government has established a disaster prevention and preparedness system through its Disaster Preparedness and Prevention Commission (DPPC) and Regional Bureaus (DPPBs). However, its primary focus is on upland agricultural systems, with lowland ahnistration lacking both the resources and knowledge to effectively protect pastoralist livelihoods;

(c) Rangeland degradation, driven by rising human and livestock populations, is increasing in Ethiopia as evidenced by soil loss, encroachment of bush, reduced bio-diversity, and deforestation close to urban and refugee concentrations. Traditional range management systems, based on indigenous knowledge, mobility, reciprocity agreements, fluid boundaries and traditional law are facing new pressures, which require different institutions, technologies and systems for their redress;

(d) Livestock marketing continues to constrain the economic potential ofthe lowlands. Ethiopian pastoralists, whose customary grazing lands extend into Somalia, Kenya, Sudan and Eritrea, have traditionally engaged in cross-border livestock trade, mostly directed at Kenyan and Gulf markets. Recent restrictions to both these markets, primarily due to sanitary and phytosanitary concerns, caused prices to plummet, and have greatly curbed, but not eliminated trade to the Gulf states. Key constraints are (i) weak sanitary control systems, resulting in import bans from several countries; (ii)deficient market and transport infrastructure, leading to high marketing costs and widespread contraband; (iii)cumbersome documentation needs, which are in particular significant in the case of a perishable products such as meat; and (iv) insufficient banking systems. In the hides and skins sub-sector, quality is the key constraint, caused by disease, flaying, and processing problems.

(e) Animal health services rarely extend beyond lowland wereda town boundaries and information on disease incidence and risk, essential to high value export markets, is not systematically available. Drug supply, now privatized, has improved in recent years. However, the problem ofdrug quality, including dilution and unregistered imports remains. Government recognizes these issues and is presently investing in veterinary laboratories, quarantine centers and border control points in the lowland areas. It is also progressively privatizing veterinary services and has integrated the use ofCommunity Animal Health Workers (CAHWs) into the national animal health delivery system. These steps provide a sound platform for investment in a comprehensive animal health service for pastoral communities;

-5- &I Human health services are undergoing a similar transition. Government has developed curricula for Traditional Birth Attendants (TBA) and Community Health Assistants (CHA) training in pastoral areas and is about to commence a training-of-trainers program for pastoral region health specialists. Further investment in capacity building and in community-based pastoral health and posts is required to institutionalize these services. HIV/AIDS is a major health concern in Ethiopia since it is one of the most seriously affected countries in the world. The 2001 estimate ofHIV prevalence in Ethiopia is 6.6 percent. Urban HIV prevalence rates is 13.7, while that ofrural is about 3.7 percent. The highest prevalence of HIV is in the group 15 to 24 years of age. Given that this age group encompasses the most economically productive segment of the population, the epidemic is negatively impacting labour productivity. Unfortunately, little is known outside of anecdotal evidence on the degree ofHIV infection in pastoral populations;

(g) Education services reach less than one-fifth of pastoralists, severely limiting opportunities for livelihood diversification. Government has recognized this constraint and is about to launch a pastoralist education initiative focused on mobile primary education services. The Somali Region has, with NGO support, already developed and legislated such a curriculum, which it is implementing on a pilot basis. The need for further investment in teacher training facilities and capacity and community schools is indicated. In the longer term, higher education services will also be required close to pastoral communities;

(h) Agricultural advisory services are virtually non-existent in pastoral areas and market information services are inadequate. Government's new thrust to decentralize to wereda levels for political and economic decision-making will see a progressive increase in staffing at this level. However, serious skill and technology gaps will remain, particularly with respect to support for agro-pastoralism. Government is investing in lowland research centers to help redress this balance, yet further investment in staff capacity, socio-economic analysis and participatory applied research and extension is required before any significant improvement in lowland agriculture can be realized;

(i) Rural infrastructure in Ethiopia's pastoral areas is notoriously inadequate. While roads in rangelands are difficult to justify according to normal assessments of economic viability, often the most tangible economic and social benefit these areas have experienced has resulted from road development. Stock routes and watering points for livestock off-take are either nonexistent or poorly planned with resultant weak ownership and maintenance. Voice communication systems are equally weak, isolating pastoralists, traders and the supporting government agencies from the national mainstream.

0) Land use issues: Ethiopia has seen a steady increase in its farming population and area under cultivation, to the detriment of the remaining pastoral communities, who are losing their dry season grazing areas. Customary law and natural resource management practices are giving way to population pressure and landlessness. Conflicts between farmers and pastoralists are common and widespread, and claim many lives. Land use security also constitutes a major factor for achieving increased investment and productivity, while providing relief for, among other things, land degradation and poor management of water resources.

-6- e) Settlement of pustorulists, and non-livestock sources of income: The emergence of dryland agriculture and some irrigated agriculture has produced increasing numbers of “agropastoralists”. While rainfed farming is equally at the mercy of drought as is livestock, it provides some diversity of income sources and synergies with livestock systems. Many in Government believe in accelerating this trend by promoting sedentary livelihoods for pastoralists. The PCDP will promote crop production and non-farm sources ofincome in response to demands from communities.

Government Strategy

The strategy for development in pastoral areas is contained in several documents, including the Poverty Reduction Strategy Paper (PRSP), the Rural Development Strategy, and the Food Security Strategy. Elements of these documents have been summarized, for the purposes of supporting the PCDP, in the Government’s Letter of Development Policy (MOFA, 2003), which appears in Annex 12 of this document.

The PRSP states that “the problem of food security and apcultural growth in the nomadic areas is being conceived in terms of the development of the pastoral economy in its entirety.’’ The PCDP corresponds with the central features of the Government’s rural development strategy for pastoral areas by promoting an integrated and holistic approach that focuses on people, not merely their animals or the rangeland which they inhabit. The Project will also pursue several of the recommendations proposed in the Food Security Strategy, such as those pertaining to animal health, marketing, water supply, agropastoralism, and early warning systems.

Decentralization is now a well established policy of the Government, which has made significant progress in the highlands. Such progress, however, has yet to be felt in the lowlands, where this Project will operate. To promote and accelerate this process, the Federal Government is committed to ensuring that this Project would rest firmly with the Regions, which would receive substantial capacity-building efforts from the Project. The PCDP would also support the PRSP emphasis on community empowerment, by enabling communities to identify their own priorities, propose modest development plans, and gain access to the financial resources and training necessary for their implementation. Government also proposes to deconcentrate service delivery and channel more resources directly to wereda administrations and to strengthen the chain oftechnical and regulatory authority from national to Regional and wereda level. These reforms provide an opportunity for buildingpastoral advocacy at the national level, strengthening technical service delivery, and improving community participation in resource allocations at the wereda level.

Land use policy is a politically-charged issue in Ethiopia. The fundamental principle behind land ownership in Ethiopia is provided in the Constitution, which stipulates that land is owned by the State with the underlying assumption that it is to be administered by the Regions for the benefit of the local communities. While power to regulate on land allocation, management, and tenure has been devolved 0 the Regions, those with pastoral populations have not passed relevant laws. Currently the 1997 proclamation ofthe Federal Rural Land Administration provides that “demarcation of land for house building, grazing, forests, social services and such other communal use, shall be carried out in accordance with the particular conditions of the locality and through communal participation.“ There appears to be growing consensus within Government with respect to recommending communitylclan certification ofrural land to ensure access, subject to concurrence from the Regional governments.

Settlement of pastoralists is another sensitive issue. The Ministry of Federal Affairs, which has a mandate for emerging Regions, openly promotes settlement of pastoralists, while recognizing that this

-7- must be voluntary and implemented over a long time period. The PRSP acknowledges the right of pastoral groups not to be coerced into any form ofresettlement, just as the 1994 Constitution provides for pastoralists “not to be displaced without their wish”.

Government has a policy ofbudget offsetting, whereby Project resources for particular Regions entail a corresponding reduction in the block grant allocation from the Federal budget. However, exceptions to this policy are made in the cases of food security andor capacity-building interventions. IDA has received notification (on March 11,2003) from the Ministry of Federal Affairs that the PCDP funds would not substitute for block grants on the grounds that the the Project constitutes food security support.

Government has recently revised its institutional framework for rural development in general and pastoral development in particular. This has involved the appointment ofa Minister of Rural Development, who is also the Deputy Prime Minister. The Minister has overarching responsibility for agricultural and rural development. In addition, the Ministry of Federal Affairs (MoFA) has been delegated to address the governance and administrative needs of “emerging regions” which comprise, among others, the larger pastoral areas ofAfar and Somali Regions. MoFA also chairs a new “Federal Interministerial Board” (FIB) which has a mandate that includes lowland development. Because of this mandate, and the multi-sectoral nature of the PCDP, this ministry will provide the high-level institutional support to the PCDP as required.

3. Sector issues to be addressed by the project and strategic choices: The Project will address all ofthe aforementioned sector issues. The proposed Project will thus include three components to:

achieve sustainable livelihoods through economic and social development investments owned and managed by communities and local governments. Activities underpinningthis outcome will include capacity building in community leadership; participatory development to include women and youth; local development planning; resources to finance such plans; the development ofcommunity-based health, education, agricultural production, and veterinary services; and participatory research and technology transfer programs. The Project could support small business development through training and access to credit where available. This component will also improve public service delivery by strengthening the capacity ofweredas and Regions to play a transparent and accountable role in the development of their constituent communities. reduce risk through improved knowledge ofpastoralist economies, the natural resource base and traditional coping mechanisms; early warning systems designed to protect livelihoods as well as lives; community-based disaster preparedness and contingency planning; improved rural infrastructure to deliver services and diversify and broaden the scope of economic opportunities, and limited rapid response in the event ofdisaster. strengthen policies which promote pastoral area development covering, inter alia, pastoralists’ land use rights and settlement, Regional trade and water use agreements, community-based health, education and veterinary service delivery, rural infrastructure policy, and the role oftraditional law and institutions.

Within these components, and consistent with the PRSP and the new rural development strategy, Government and the Project preparation team have made several strategic choices with respect to addressing constraints and opportunities in pastoral areas.

-8- The development approach will be holistic, embracing infrastructure, social services, agriculture and income diversification, in addition to the traditional livestock and rangeland dimensions of previous pastoral development programs; The Project will focus on community-based approaches to natural resource management, building on traditional law and institutions, so that all local stakeholders participate in and benefit from the sustainable environmental management. With respect to land, the Project will not dwell on the respective merits of public versus private ownership, but will instead focus on ascertaining land access for pastoral groups with a view to securing their livelihoods. The Project will provide an institutional base for discussion of land policy in pastoralist areas, and at the more local level, rely on traditional conflict-resolution mechanisms and arrangements that will allow locally-elected government officers to serve as honest brokers. A community-driven development (CDD) approach will be used to articulate local priorities and allocate development resources. This would help ensure local ownership and sustainability of Project interventions. As well as the management oftheir own investment funds, communities will participate directly in disaster preparedness planning and the development of support services at wereda levels; Project management will be devolved to Regional and wereda levels with a central Project coordination unit limited to responsibility for policy reform, pastoral advocacy and program coordination; The Project will support a long-term, phased approach to pastoral community development consistent with the Adaptable Program Lending (APL) approach of the World Bank, with successive phases based on realizable outcomes programmed in accordance with the experience ofpreceding phases and the availability ofthe necessary fiscal, institutional and human resources.

4. Program description and performance triggers for subsequent loans: Three five-year phases are foreseen for the PCDP. In accordance with the APL's flexible approach, the "horizontal" form is chosen, i.e. each new phase will comprise a set ofnew weredas approximately every four years or so, while maintaining the previous communities' access to the program's community investment fund (CIF). As such, two phases may run concurrently. Grant financing from IDA is not guaranteed beyond the first phase. Ifperformance triggers described below are not met, subsequent phases may not take place.

Aside from geographic expansion, subsequent phases are expected to reflect increased emphasis on fiscal management by weredas. Early in the Project, community investment funds will be earmarked for release through a process that requires community groups, rather than the local governments, to decide on how the funds should be used, with financial and administrative oversight resting largely in the Regional Project Coordination Units (RPCUs). Over time, as the capacity of local governments increases, they will be able to assume greater fiduciary responsibility including auditing and financial oversight.

Phase 1: Introduction

The first phase ofthe PCDP will target approximately one-third ofpastoral weredas in four Regions of Ethiopia (i.e. Afar, Somali, Oromia, and SNNPR). Implementation will be managed by Project-financed RPCUs, located in the respective pastoral development offices. The basic approach will focus on

-9- community empowerment and demand-driven micro-investments, while simultaneously providing support for local governance at the Regional and weredu in terms of capacity-building in participatory planning, and fiscal and administrative management. Mobile Support Teams, who will be contracted by the Project to provide community capacity-building and facilitation, will start with a few weredus and expand to cover the larger target area. A matching grant will form the basis ofthe Community Investment Fund for micro-investment and intercommunity sub-projects. In addition, support to line ministries providing sectoral packages tailored to pastoralists' needs will be phased in. Technical training and participatory research will complement these packages. The Project will also make available to Regions and weredus funding dedicated to larger infrastructure investment aimed at reducing the impact of disasters, particularly drought. During this time, the Project will continue to coordinate with active NGOs and donors, thus reinforcing and expanding a network of agencies working in pastoral area development. This network will meet on a regular basis in a pastoral forum to compare methods and experience and to encourage harmonization of approaches. A participatory M&E system, based on community input, will also be tested and consolidated at this time. At the mid-term review, the PCDP will evaluate participating Regional and local governments with a view to shifting increased responsibility for fiscal management and development planning. This evaluation will be based on the following criteria: (i)demonstrated ability in transparent and effective fiscal management in terms of human resources and a financial management system, as measured by an independent reviewer approved by the Auditor General's office; (ii)dedication to participatory approaches to guiding local development, as indicated by beneficiary assessments; and (iii)existence of an overarching pastoral area development strategy, which has been validated at Regional levels with a broad spectrum of stakeholders.

Triggersfor moving to u second Project

Moving from phase 1 to phase 2 will depend on achieving certain performance triggers related to the satisfactory implementation of the PCDP's activities and the readiness ofthe Project and national capacity to expand geographically. These triggers are the following:

Beneficiary assessments indicate that eighty percent of communities and local stakeholders are satisfied with the PCDP and wish it to continue. At least one half of communities in weredus targetted in the first phase have received capacity-building support and have formally articulated their local development plans; At least two-thirds ofweredus have submitted approved disaster preparedness plans; At least one-half of the Community Investment Fund has disbursed for micro-projects which were approved and successhlly implemented; At least one-half ofthe Disaster Preparedeness and Contingency Fund has disbursed for sub-projects which were approved and successfully implemented;

The Pastoral development network is active and operational and has made substantial progress towards harmonization of decentralized development approaches; Government, through its reforms and support to phase 1, continues to demonstrate strong support for decentralization and community-based development in pastoral areas, and has produced a pastoral area development strategy that has been validated at the Regional and local level through consultation with a broad spectrum ofstakeholders.

-10- Phase 2 :Expansion

Ifit occurs, phase 2 will build on successful models of local development and risk management tested in the first phase. Based on satisfactory results in strategic planning and fiscal management by the Regions, this phase will expand the PCDP geographically to approximately two thirds ofpastoral communities, respectively, by annexing new wevedas, and spreading to Regions with smaller pastoral populations. Such expansion would be done directly through PCDP financing, but also in partnership with other donors who use a similar approach. Weredas involved in phase 1 will continue to be supported by the Project in phase 2, and thus communities in phase 1 who have satisfactory performance will continue to have the Community Investment Fund at their disposal, although it will require an increasingly larger contribution to be accessible. During this phase, income-generating activities would be financed by savings-based credit and village banking services, in support of the emerging rural financial sector. The network of PCDP partners would be expanded. Communities and weredas would play an increasingly leading role in initiating and overseeing the process of local development, including the contracting of service providers for facilitation and approval of local development plans. Research findings from the first phase which are tested and accepted by pastoralists would be scaled up in this expansion phase via line ministries and farmer-to-farmer and pastoralist-to-pastoralist exchanges. Disaster preparedness and contingency plans would be fine-tuned according to their effectiveness in mitigating drought that would likely occur in the first phase.

Triggers from phase 2 to 3 would be similar to those presented above, but based on the larger target area.

Phase 3: Consolidation

The final phase would complete geographic expansion to 100 percent ofEthiopian pastoral communities and would aim at ensuring that the institutional framework and capacity is in place to ensure sustainability ofprogram impact. At this point, most Phase 1 and 2 communities would no longer require the support services provided initially to provide intensive capacity-building. They would also be strongly linked to support agencies and service providers in the public, private, and NGO sector. Similarly, most weredas would have the necessary capacity to facilitate local development. Moreover, Regional governments and weveda administrations would assign the required budget to ensure sustainability of the Project. Drought preparedness and contingency plans developed by the PCDP would have achieved widespread support by donors and relief agencies in averting and coping with disaster.

C. Program and Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

Component 1. Sustainable Livelihoods

This component will establish decentralized and participatory planning procedures at the community/ kebele and weveda levels, operating within the Regional government structure. Women and men in pastoral communities will identify, prioritize, design, and implement micro-projects that reflect their development priorities. Under the Capacity Building sub-component, Regions and communities will be supported by Project-financed Mobile Support Teams (MSTs) consisting ofa Team Leader (specialized

- 11 - in Pastoral Community Development), a Training, Communication and Facilitation Specialist, and a Gender and Small-scale Enterprise Specialist, who will work with wereda administrations and their technical and social services support offices. The MSTs will employ participatory learning and action (PLA) tools to facilitate participatory situation analysis and to help communities develop modest, local development projects. The experience in planning, implementing and evaluating these micro-projects will gradually build up local capacities to develop integrated community development plans (CDPs). Using simple micro-project application forms, communities will clearly define their objectives, propose activities and budgets, while taking into consideration the environmental implications of their projects.

Proposed community investments will be forwarded to weredas for funding through the Community Investment Fund (CIF) sub-component. A Vereda Development Committee (WDC), comprising representatives ofthe wereda administration, civil society and the private sector, will appraise the CIF requests and make funding recommendations to the wereda administrator. In order to preserve the multi-sectoral nature of the Project and to respect the diverse priorities of the pastoral communities, giving particular attention to poorer subgroups and to women, investments covered under the CIF will not be limited to specific sectors. This component could finance micro-projects related to livestock, crops, water supply, micro-scale irrigation, health care, education, rangeland management, etc. -- a choice constrained only by a short negative list. Approval of CIF proposals will be judged at the wereda level against transparent criteria known in advance to all stakeholders, and evaluated according to technical standards from line ministries. The development plans, which will require at least a 20 percent community cash or in-kind contribution to demonstrate commitment, will be implemented directly by communities to build capacity, ensure correspondence ofinvestments to needs, and guarantee accountability to the community.

The Support Services sub-component will finance strategic infrastructure investments and strengthen public service delivery at Regional and wereda levels as well as supporting targeted research into rainfed and irrigated cropping, range management, livestock production and non-agricultural issues relevant for pastoral livelihoods. Wereda technical specialists covering non-formal education (literacy and numeracy), primary health care (first aid, hygiene, sanitation, midwifery and HIV/AIDS awareness), livestock production (husbandry and veterinary), crops (irrigated and rainfed), land use, and natural resource and range management will be transferred by Regions to weredas according to local demand and staff availability. There, they will be incorporated into multi-disciplinary wereda Mobile Outreach Teams (MOTs) to function at kebele and community level, initially with the support of MSTs. Once fully trained, MOTs will provide ongoing technical support to pastoral communities in formulating CDPs for funding. They will also provide technical backstopping and training to government staff appointed to Kebele Development Stations (Nursing Assistant, Education Assistant and Polyvalent Development Agent) and - to the extent that these services are prioritized by the pastoral communities - to Community-Based Workers (CBW), namely, Community Animal Health Worker (CAHW), Traditional Birth Attendant (TBA), Community Health Assistant (CHA), Pastoral Community Teacher (PCT) and Contact Farmers (CFs). As (agro)pastoral women play a major role in human and animal health care and in crop farming in the Project areas, the Project will strongly encourage the building ofwomen’s capacities as CBWs. Wereda technical staff will provide the link between the public sector wereda administration, pastoral communities and community-supported CBWs. Participatory research in the pastoral milieu will be supported with a view to generating innovations appropriate for improved natural resource management, livestock husbandry, and rainfed and irrigated cropping in semi-arid and arid environments.

-12- Component 2. Pastoral Risk Management

This component includes a community-based early warning system which will build upon ongoing efforts by the DPPC and NGOs to establish at the weredu level the collection and analysis ofbasic household welfare data using a survey instrument designed for pastoral production systems. Using part-time data monitors at community levels, weredus will be able to compile and analyze trends in household, and environmental, economic and social (including conflict) conditions in discrete areas. The DPPBs (the Regional bureaus of the DPPC) will then receive these, initially quarterly, reports, which will assist in planning and ultimately the implementation of a better system oftargeting early reaction to declines in the welfare of pastoralist communities. The component will begin in year one in the focus Project weredus, but as the early warning system should be Region wide as soon as possible, it may be able to scale up to most, pastoral weredus in the four Regions. The early warning system will provide the information to assign each participating weredu to one of five "warning stages", with appropriate responses corresponding to each stage.

In the Disaster Contingency Planning subcomponent, the Project will invest in capacity building at in weredu and Regional levels to prepare contingency plans including both disaster mitigation and rapid response activities, monitor local disaster indicators, and manage funds made available for drought and other disaster response, primarily from other donors and government, but also with modest amounts made available under the Project. Rapid response activities will be prepared in advance and held as 'shelf plans' for timely implementation at the appropriate warning stage. This should result in improved response as a result of the implementation of appropriate disaster and drought mitigation, management, and recovery activities. As this process is intensive in terms of human capacity, the Project will only aim to produce functioning disaster contingency plans for the initial focus weredus.

Finally, the Disaster Preparedness and Contingency Fund (DPCF) will provide the initial thirty weredus and others with development grants to finance activities identified in their contingency plans. It is expected that weredu level disaster contingency plans will include both investments to better mitigate drought, such as small feeder roads, improved water management, fodder banks, and range improvement, as well as funds set aside for rapid response, such as destocking, water tankering, response to human and animal disease outbreaks, and the like. An acceptable contingency plan, including documentation of the participatory process and environmental assessment, if applicable, will be a condition for release of fund resources. It is expected that other government and donor resources will be the prime source of funds for major infrastructure investments. Investments could include roads, livestock water points, flood control structures, grain stores and electronic communication systems. Local labor will be employed and paid, providing an injection of cash into the local economy.

Component 3. Project support andpolicy reform

This component will provide operational support and training resources to the federal Project coordination unit (FPCU) in Addis Ababa and Regional project coordination units (RPCUs) in the four Regions. The Project support and coordination subcomponent will ensure that these units will effectively perform the following functions: (i)fiduciary obligations; (ii)policy analysis and liaison with stakeholder groups; (iii)multisectoral coordination at the federal and Regional levels; (iv) Project communication; (v) Project monitoring; and (vi) mobilization of technical backstopping. The monitoring and evaluation subcomponent will finance the information management system and Project liaison activities. This will comprise (i)an aggregate-level Management Information System; and (ii)a local-level system that combines community-derived impact assessment ofmicro-projects with an

- 13- information base that tracks pastoral livelihoods at the wereda and Regional level. The M&E will be able to provide timely feedback to program management on how effectively interventions are reaching the intended beneficiaries and how well Project resources are being used, in order that rapid corrective action can be taken if necessary. The communication program includes development and dissemination of information concerning program activities, approaches and results, using a variety of media. It is envisaged that extensive use ofradio networks will be made for public awareness creation, for the transmission oftechnical messages, and for the sharing of experiences. The policy analyses and reform sub-component will address policy and institutional reforms to strengthen pastoral livelihoods and reduce risk, and will consist mainly on targetted studies, training, and outreach activities. Resources will be earmarked for strategic policy work and programming at the Regional and federal levels.

1Sustainable Livelihoods 36.52 60.9 18.00 60.0 2.Pastoral Risk Management 1 16.43 I 27.4 I 8.07 I 26.9 1 3.Project Support and Policy Reform 7.01 I 11.7 1 3.93 1 13.1

I TotalFinancing Reauiredl 59.96 I 100.0 I 30.00 I 100.0 I

2. Key policy and institutional reforms supported by the project: The proposed Project must explicitly support and be firmly rooted in Government's efforts to promote pastoral area development via a holistic, people-centered approach. The PCDP may be used to realize some ofthe institutional reforms already addressed in Government strategy.

Decentralization is a prominent feature of Government policy. The primary thrust ofGovernment activity in this respect involved the demarcation and federalization of the Regional states. This has now been accomplished, although the restructuring ofgovernment institutions, the adoption of appropriate micro and macro economic policies, devolution ofpower to local governments, and capacity building of communities remains largelly incomplete. The PCDP will support Regional Governments in the latter by financing at wereda levels the some infrastructure and provision of equipment and transport, thereby facilitating the transfer of key support service staff. The Project is also expected to generate greater demand for public services through the implementation of micro-projects financed by the CIF and DPCF.

Similarly, with respect to livestock trade and marketing, the PCDP will assist government to review and revise its livestock sanitary and phytosanitary and export policies with a view to developing more efficient and transparent trade. These actions will be based on the Bank's current work for the Diagnostic Trade Integration Study (DTIS) on the Ethiopian livestock and meat sub-sector and a study on the cost-of-compliance impact ofthe import ban on different classes of producers, traders, processors, government and consumers. It will also estimate the cost of compliance with the sanitary requirements in disease surveillance, quarantine (in particular the establishment of disease-free zones) and control and their benefits.

To address land rights issues, Government will be encouraged to formally recognize sustainable pastoral land-use as a land management practice analogous to sustainable cultivation and move to ensure the land use rights ofpastoralists, if necessary through the specific zoning ofpastoral lands, pending the negotiation of a longer-term solution. The Project will assist Government and pastoralist

-14- and agropastoralist communities to integrate these concepts into new and innovative strategies for the peaceful, efficient and sustainable use of rangelands. Under the policy reform component, the Project could support the establishment of a formal panel to hold consultative meetings leading to legal and policy reforms and harmonization of Regional legal frameworks for land security issues in the overall context of conflictinglcomplementary rights of sedentary and nomadic communities over rural land.

Riparian water rights in the east, southeast, and southern lowlands are crucial for sustainable rural development. Limited opportunities are available for income generation, rural enterprise diversification, household food security, improved human health in pastoral areas in isolation of exploiting perennial rivers which flow across international borders. Command area development for micro- and small-scale irrigation is crucial for improved community livelihoods in areas where major water resources are available. The Project would sensitize development planners to benefits arising from irrigated crop production on environmentally friendly schemes in selected areas, and assist government in initiating dialogue with and reaching agreements on riparian rights.

Rangeland management issues are paramount where government policy can impact negatively on carefully planned development and environmental protection. The encroachment ofbush is a major problem in large areas of the rangeland, transforming open grassland to inpenetratable bushland, with invasive species which are noxious, thorny and unsuitable for browsing. Together with overgrazing, Government regulations outlawing the traditional method of control over the past 20 years (Le. recurrent and controlled burning) have permitted the invasion to move onto the more fertile lands and destroy the productive pastures. Given that economic considerations are considered fundamental to sustainable programs of clearing bushland and maintaining rejuvenated pasture, the PCDP will support revisiting government policy in view of developing coherent and environmentally sensitive strategies for reclaiming prime rangeland areas. The Project will also finance community-managed action research to identify methodologies -- mechanical, manual and chemical -- and assist local governments in formulating and promoting community-based self regulation and management of reclaimed rangelands. A land use planning process has been bypassed in the conversion from pastoral to ago-pastoral and mixed farming production systems. Apart from blocking access to traditional stock watering points and to migratory transhumance routes, unregulated land grabbing is a prime cause of ethnic conflict and poorly planned farming systems are an underlying cause of environmental degradation (water and wind erosion). The Project would assist govemment in formulating policy related to land use planning and providing technical assistance to local government and communities in the formulation of community development plans.

Development partners, specifically local and international NGOs, have been at the vanguard of formulating strategies and approaches for sustainable rural development in the pastoral lowlands, operationalizing methods for social service and agricultural extension delivery, and generating technologies to address local production constraints. Government, nonetheless, has viewed this development with an element of suspicion and has occasionally curtailed NGO activity in the rangelands, particularly in border areas. The PCDP's emphasis on community-driven development will be difficult for government agencies to implement without the backstopping of experienced NGOs. The Project, with Government and Bank support, will assist partner NGOs to identify additional support from bilateral and multilateral donors as well as their parent organizations, such that their involvement will complement PCDP investments rather than being dependent on them.

- 15- 3. Benefits and target population: The benefits of the PCDP for pastoral areas are expected to be as follows:

* Improved living conditions: Increased access to key social and economic services and infrastructure will improve levels of health, education, and food security, which will in turn improve the productivity ofcommunity members; Reduced risk The development of better early warning systems and participatory drought preparedness plans will substantially reduce risk at the household level and above. The Project will also encourage alternatives to livestock raising and thus decrease the pressure on rangelands and strengthen the ability of households to cope with disaster;

Employment and income generation: Increased income is expected from many categories of micro-projects, either directly (as in the case of a livestock fattening centre or handicraft production), or indirectly (as in the case of soil conserved or pasture recovered);

Natural resource management: The Project aims at establishment of efficient and sustainable use of rangelands combined with disaster mitigation programs. Such a strategy should improve soil fertility, reduce erosion, contain bush encroachment, and increase vegetative cover and bio-diversity.

Improved technical and social services: The Project will strengthen technical and social service delivery at Regional and wereda levels by, first, facilitating the transfer of staff, provision of equipment (agricultural extension, elementary education, and first aid) and, second, improving service outreach capability. When appropriate, the Project’s strategy for the effective delivery of extension support will be underpinned by providing mobility so that technical and social service staff accompany pastoralists and their herds during trans-migration.

Community empowerment: In order for the Project’s impact to be sustainable, sufficient capacity must be built at the local level to enable communities to execute and evaluate local development plans, improve their management capabilities, and engage in securing, planning and management of financial resources. While this capacity is a means to achieve other benefits, the empowerment of communities created in the process may be seen as a benefit in itself.

. Regional and wereda institutional capacity: The Project aims to improve local governance through institutional reform that will establish and strengthen multi-disciplinary teams at the wereda level, improve vertical linkages in decision-making between wereda and Regional governments, and build capacity in participatory needs assessment, development planning and program implementation. It is anticipated that it will take considerable time and investment to shift administrative culture from top-down to participatory, but that it is both an essential and achievable objective within the long-term programmatic approach.

Advocacy and access to policy makers: A crucial PCDP innovation will be to provide the platform for advocacy in support and promotion ofissues which affect pastoral communities, such as public service delivery and land access. In addition, strengthening and training ofwereda administrations will encourage accountability to their constituents through capacity building, local planning and provision of CFs. These efforts will encourage pastoralists to propose and follow-up on issues of local importance with policy makers and legislators at wereda, Regional and federal levels.

The primary target population for PCDP is about 450,000 rural households making up poor pastoral and agropastoral communities in 30 weredas of the Afar, Somali, Southern Nations, and Oromia Regions,

- 16- while acknowledging that there are pastoral peoples living in other Regions. The beneficiaries derive most of their livelihoods from the transhumant husbandry of livestock on natural pastures. They also supplement household incomes by engaging in opportunistic crop farming, trading, handicrafts, salt excavation, and labour migration. The average household consists of five to twelve people with per capita income estimated at USD 110 equivalent. Thus, the majority ofbeneficiaries live significantly below the internationally recognized poverty threshold of less than one dollar a day. Project beneficiaries include female-headed households (about 20 percent) and a limited number of destitute refugees dependent on food aid, especially where traditional social safety net mechanisms have failed.

The reason for the selection of these four Regions is as follows: (i)they contain the greatest numbers of pastoral weredas and people; (ii)implementing the Project through all Regions with pastoralists will initially overstretch the capacity ofthe Project; and (iii)subsequent phases of the Project will expand to include these other Regions. Other, smaller concentrations ofpastoralists in locations such as Gambella and Benshangul-Gumz Regions will be engaged in the later phases of Program implementation. Ultimately, the Program is expected to have a positive impact on the income and well-being ofwhat could potentially be several million people living throughout the rangelands of Ethiopia. Secondary target groups will include community associations and local and Regional governments.

As an initial five-year phase of the longer Program, the Project proposes worlung in approximately one-third of pastoral and ago-pastoral weredas in the four Regions. Criteria to select these weredas were discussed at the Regional level and include: (i)equitable selection across different zones; (ii)a minimum level of capacity in terms of human resources, communications, and road access; (iii)a combination of pastoral and agro-pastoral weredas; (iv) adequate security conditions, and (v) the need to avoid weredas where other donors are already highly active.

The following preliminary list was established by the Regions after appraisal. In Somali Region, the 14 weredas are Shinelle, Gode, West Imi, Kelafo, Kebri Dahar, Fiq, Deghabur, DihdHamero, Chereti, Aysha, Kebribeyah, Dolo Odo, Warder, and Jijiga. In Afar Region, the 9 weredas are Koneba, Dubti, Afambo, Gulina, Awra, Artuma, Telalak, Gewane, and Argoba Special Wereda. In Southern Region, there are two weredas: Benetsemay and Hamer. Finally, in Oromia Region the five weredas are Areero, Dire, Raytu, Seweina and Fentale.

4. Institutional and implementation arrangements: Communities

Community-driven development is central to the proposed program and communities themselves constitute the true implementing agencies for the PCDP. As such, they will identify, appraise, implement, monitor, and evaluate micro-projects which are financed through the first component ofthe Project. They will also be closely involved, with the support of their respective weredas, in the design and implementation of disaster preparedness plans through the second component of the Project. In addition, they will participate in the monitoring and evaluation of local development through the third component.

The PCDP design is based on the assumption that pastoral livelihoods can be improved by strengthening the self-management capacities of indigenous institutions found within communities. Successful introduction of CDD principles will require a substantive change in attitude and way of operating within government services. This means greater vertical integration ofinformation flow and decision-making within government agencies. At the interface with the community, a multi-disciplinary team (the Mobile Support Team, MST) will share responsibility with communities and facilitate technical backstopping as required.

-17- The success of the Project‘s core programs depends on strong community-based organizations. The Project will pay particular attention to existing social-territorial organization, so that this knowledge can be applied to the identification of groupings and forms of organization that can carry the development process. No community-based interventions will proceed without a thorough, participatory analysis of local and overlapping socio-economic structures in a Project area. It is intended that a coalition of community groups, including traditional organizations and groups representing specific interests (women, youth, environment, culture, etc) will work together to set community development priorities and, together with interested NGOs, to manage their implementation. A community’s commitment to this process and its subsequent management of Project resources will be closely monitored with persistently delinquent communities forfeiting their rights to Project participation.

The definition of ”community” varies from Region to Region and also within Regions. This calls for a flexible approach to identifying social groupings with which the Project can work.

Among the Somali, a “qoys ” is a nuclear family composed of a man and his wife or wives and their dependent children. A “reer ” is composed of several qoys of a senior male family head and a few close kin or dependents, usually younger brothers and/or married sons. The reer is the smallest social unit in Somali society that might be regarded as a “community”. Depending on the location within the Somali Region, the Project may work with a reer or several of these living together (“reero“) or a ‘“do“ (a somewhat larger grouping in a village). Afar people identify in different contexts and for different purposes with different social units based on shared kinship, descent and shared residence. The Project would most likely interact with the cooperative group known as “ganta”, which is a collection of nuclear (“burra”) and extended (“ dahla”) families that travel and camp together or form a hamlet ofonly a handful ofhouseholds or as many as 60. The Project may also sometimes work with a lineage (“gulub”) or clan (“kidoh”, “ked0 ”), still larger groupings ofrelated people who may be living and moving together. These groupings may subdivide or reform in a different constellation depending on a variety ofsocio-political, economic or environmental factors. Among the Boran in southern Oromia, the smallest unit that would be considered a “community” would be the “olla”, an encampment or hamlet with usually 15-30 households that cooperate in herding and watering animals and may include people from several different clans. Several ollas may use common grazing resources in an “ardha” (neighbourhood or locality). This unit is, in turn, nested within larger territorial or social units such as the “dedha” (grazing area used by several ardha) or “ madda” (a term now often used interchangeably with kebele or PA). In South Omo Zone of the SNNF’RS, there are 13 distinct pastoral groups with different languages and cultures. Their forms of social organization also differ and are in a state of flux. Compared to the larger pastoral groups in the other Regions, these groups are more confined in herd movements. In recent years, small-scale cultivation has become more widespread around more or less temporary hamlets that may include women, children and older men from several clans. These hamlets will be the initial entry points for the community development support by the MSTs, after agreement with the traditional male and female leaders of the ethnic group concerned.

Not only in South Omo but even in different parts ofthe Somali, Afar and Borana areas, the local institutions and social groupings may take different forms and name. Therefore, at each location, the MSTs will have to learn about the existing social organization, then approach the people through their traditional leadership and relate to the most appropriate community groupings. More details on the structure and dynamics of the pastoral communities are given in Annex 4.

- 18- Regional and wereda administration To the extent possible, no new institutions will be created to implement the Project. Instead, the focus will be on strengthening existing structures at Regional and wereda levels. Most rural development activities in Ethiopia are now implemented by National Regional State administrations. Throughout preparation, broad consensus was achieved in establishing that the PCDP will be implemented at the Regional level. Multi-sectoral bodies already exist in each Region to administer the Project, i.e. the Pastoral Development Commission (Oromia); the Pastoral Development Coordination Office (Somali), the Pastoral and Rural Development Bureau (Afar), and the Food Security and Pastoral Development Office (Southern Nations). The Project will establish Regional Project Coordination Offices (RPCUs) within these offices to coordinate each Regional program. However, even Regions are too distant from most pastoral communities to effectively implement CDD. The PRSP views the wereda as "a suitable point of merger between political empowerment and economic development at the grass root level." A process ofestablishing multi-disciplinary teams at the wereda level has already been initiated in all rangeland zones and will be expanded and strengthened by the Project and coached to work in a more mobile manner. Sufficient numbers of staff are already assigned to most ofthese agencies, however, a substantial investment in capacity building and equipment is required before these entities could become effective program management units. It is anticipated that experienced national consultants employed on fixed-term contracts will be required to strengthen these agencies in the initial years ofthe Project. The following and operational modalities were established during preparation:

0 Each Region will establish a Regional Project Coordination Unit (RPCU) within the existing pastoral/rural development office. The role of the RPCUs will be to (i)manage Project fund flows, report and liaise with relevant Bureaus and the Federal level, and coordinate Project annual planning; (ii)introduce an interactive learning process between government institutions and civil society; (iii) promote the development of the Pastoral Risk Management Component; and (iv) facilitate capacity-building activities at the community, kebele, and wereda levels to improve planning and provision of support services. The RPCU will be composed of (a) a Regional Project Coordinator; (b) a communications/training specialist; (c) an Accountant; (d) a Procurement Officer, (e) a monitoring and evaluation specialist, and (0 and support staff.

0 The RPCUs will be supported by Project-financed Mobile Support Teams (MSTs) operating within selected weredas. MSTs provide capacity-building with the objective of filling existing capacity gaps at the local level to both communities and local governments. They are accountable to the Regions, will operate within the existing Government structure, and will be partners with Government staff. Once capacity has been built, they will cease to be necessary and be phased out, moving their expertise to new weredas. The role of the MSTs will be to (i)provide initial orientation and training using a "learning-by-doing" approach and to introduce weredas and communities to the Project; (ii) facilitate communication between communities and formal government structures and (iii)assist weredas to develop criteria for analysing and approving community micro-proj ects; and (iv) assist with wereda funding mechanisms. The MST will be composed of three core members: (a) a Team Leader; (b) a training officer; (c) a Gender/Small business development specialist; and (d) support staff such as drivers and a Camp Leader. They will likely have technical qualifications (in veterinary, range, education, water andlor health) but will be primarily experienced communicators, and would draw upon technical staff at Regional and zonal bureaus for training and technical backstopping as required.

- 19- Federal Project coordination and policy formulation

A lean Federal Project Coordination Unit (FPCU) will be maintained in Addis to perform the following functions: (i)fiduciary obligations; (ii)policy analysis and liaison with stakeholder groups; (iii) multisectoral coordination at the federal level; (iv) Project communication; (v) aggregate Project monitoring; and (vi) mobilization of technical backstopping. The FPCU will be composed of(a) a Project coordinator; (b) a Monitoring and Evaluation specialist; (c) a Financial Management Specialist; and (d) a Procurement Specialist, (e) a Pastoral Policy and Research Advisor, and (0 appropriate support staff. Substantial Project management experience will be required for professional staff. Terms of reference for these posts will be appended to the Project Implementation Manual.

The Coordinator of the FPCU will report to the Head of the Pastoral Development Department in the Ministry ofFederal Affairs and the new Federal Interministerial Board (FIB), which is chaired by the Minister of Federal Affairs. This Board is composed of the Ministers of Rural Development, Water, Health, Education, Water, Agriculture, Infrastructure, and also the Livestock Marketing Authority. As such, it will help ensure that the PCDP is able to implement a multi-sectoral approach and receive high-level support and technical back-stopping when necessary. The FIB will receive backstopping from a multi-ministerial Technical Committee, which has representation from several line ministries who have sectoral specialists in pastoral development.

Project oversight

Oversight and advice for the Project will come from the Parliamentary Standing Committee on Pastoral Development, which is composed of nine Members of Parliament, the majority of whom are representatives from pastoral consituencies. This Committee has been closely involved in the preparation ofthe PCDP and remains highly interested in continued support to and from the PCDP.

Link with other IDA-.nancedprojects

As a multi-sectoral project, coordination with other operations is critical. The preparation of this Project coincides with other initiatives -- the Food Security Project (FSP) and the Public Service Delivery Capacity Building Program (Public Service Delivery Capacity Building Program (PSCAP)). The Food Security Project (FSP), which is aimed at drought-prone weredas in the highlands, provided many ofthe design elements for the PCDP, given that both aim at channelling fungible resources to communities via block grants at the wereda level. Geographic coverage ofthe two projects will be mutually exclusive, even though both will work in Oromia and Southern Regions. The Public Service Delivery Capacity Building Program's (PSCAP) emphasis on decentralized service delivery performance through capacity building directly complements the PCDP (and Food Security Project (FSP)) although it will not probably work in lowland weredas. The Public Service Delivery Capacity Building Program (PSCAP) will focus on reforms, policy, and administrative and financial management at the wereda level, while the PCDP concentrates on micro-proj ects, participation, and community-local government linkages. The Multisectoral HIV/AIDS Project (MAP), signed on October 12,2000 (Credit # 3416-ET), is another important project with an overall objective ofincreasing access to HIV/AIDS prevention, care, and treatment programs, with emphasis on vulnerable groups (such as youth, women ofchildbearing age, and other groups of high risk). It also emphasizes the utilization of a variety of services and activities provided by public and private sector entities, the NGOs and Community-Based Organizations. The Medicinal Plants project, although located in the highlands, is expected to provide valuable lessons on traditional methods to improve human and livestock health. The Information and Communication

- 20 - Technology Capacity Building (ICTCB) project has as one of its objectives communication outreach for improved service delivery in rural areas in the form ofpilots. Such pilots may be implemented in one or more of the pastoral Regions, building upon the institutional base provided by the PCDP. Finally, the Emergency Drought and Rehabilitation Project, which was recently prepared, has the objective of: (i) maintaining the availability of critical economic inputs (particularly those needed in rural areas) and support the economic recovery process; (ii)rehabilitating and creating communal assets using community labor within the affected population, and (iii)providing income supplements, and protect private assets of affected population.

Links with donors and research organizations Current donor activity in pastoral area development is very low but this will soon change (several NGOs are present but covering a limited geographical area -- these are described in annex 13). The PCDP proposes a phased national approach to pastoral area development that invites participation of a range of donors funding integrated or geographically distinct components of the Project. The International Fund for Agricultural Development (IFAD) is co-financing the Project with the Bank and has participated fully from identification through to appraisal. FA0 has also played an important role throughout preparation using FAO/CP resources. The Project will collaborate with the FAO-led "Horn of Africa'' initiative in the Region and FA0 Technical Cooperation Program funding will support parallel wereda investment programs in Afar (Chifra) and Somali (Harshin). The DFID-financed "Pastoral Communication Initiative", which is implemented by the University of Sussex, is co-financing pilot operations and has proved to be an important partner during preparation, particularly in its ability to promote and facilitate dialogue among pastoral Parliamentarians and other stakeholders. The African Development Bank (AfDB) has committed grant funds for a major pastoral area study and the preparation of two pastoralist development projects for 2005. AfDB has been closely consulted during preparation and their findings are expected to provide a valuable information base upon which the PCDP and other operations can build. USAID is planning investment in pastoral areas under its "Southern Tier Initiative". Finally, the European Union completed in 2002 their own assessment ofopportunities for pastoral area development and are expected to development project proposals that share the PCDP's approach. The International Livestock Research Institute (ILRI) has been closely consulted during preparation and will be a valuable partner with respect to developing disseminating new technologies, drought preparedness strategies and data, and information on pastoral development. Possibilities will be explored to collaborate with ILRI's new research theme II (Enabling Innovation) so as to enhance learning from pastoral-led innovation and experimentation processes support by the PCDP. Similarly, the Ethiopian Agricultural Research Organization (EARO) is has been transforming its research agenda from highland cropping to more of an emphasis on agro-pastoral and livestock systems. Both ILRI and EARO are likely candidates to undertake targetted applied research under the Support Services subcomponent.

D. Project Rationale 1. Project alternatives considered and reasons for rejection: APL vs. SIL: The rationale for using a flexible, long-term, lending instrument is that decentralization, capacity-building, and ambitious geographical coverage are long-term processes, many of which would not bear fruit within the time span ofa SIL (Specific Investment Loan). The criteria for using an APL are largely satisfied, i.e. (i)a long term strategy and development program has been agreed with GoE; (ii)the livelihoods emphasis in the statement of program purpose presents a realistic and desirable vision for the future of pastoral areas; (iii)the end of program indicators are meaningful; (iv) the phasing leads to achievement of the program purpose; (v) the development objective is feasible considering the time and resource constraints; (vi) a Letter of Development Policy has been drafted; and (vii) bilaterals, MDBs,

-21 - and NGOs active in pastoral area development have been brought into the dialogue and/or have actively participated in the proposed program.

Sectoral vs. holistic focus: Past Bank interventions in Ethiopia's rangelands have been sectoral, focussing on livestock health, natural resource management and rural infrastructure. While successful in providing services in the short-term, the lack of community participation in the management of these programs seriously compromised their sustainability. Government policy now favors more holistic and participatory approaches to pastoral development and recent NGO experience confirms the efficacy of this approach.

Centralized vs. decentralized implementation: Past rangeland projects have been centrally managed, but this Project proposes the devolution ofmost management decisions to Regional, woreda and particularly community levels with the federal government assuming coordination, advocacy and policy reform responsibilities. Decentralized implementation supports Government's recent decision to strengthen the role of woredas in development planning and implementation and the importance of community empowerment with participatory development.

IDA grant vs. IDA credit: Five criteria have been set out by IDA donors as part of the IDA 13 replenishment framework: (i)HnT/AIDS, (ii)natural disaster, (iii)post-conflict, (iv) poorest IDA-only country, or (v) particularly debt-vulnerable poorest IDA-only country. Ethiopia qualifies under the fifth criterion. As such, the PCDP has been allocated 100% grant financing from IDA.

Financing of Income-generating Activities: Financing of income-generating activities (IGAs) should normally be carried out by rural finance institutions. However, these are largely absent from pastoral areas. Pending the establishment ofrural and micro-finance institutions in pastoral areas within the framework of a joint IFAD/AfDB funded Rural Financial Intermediary Program and the need to encourage livelihoods outside of pastoralism, the PCDP will support IGAs with its Community Investment Fund. It will do so on the following basis (i)evidence is provided that the IGA is a community choice; (ii)the beneficiary contribution is in cash; (iii)individuals do not receive the CIF; (iv) women and vulnerable groups are favoured; and (v) there must be no functioning micro-credit service providers otherwise available. The effectiveness of this stop-gap measure will be reassessed during the Mid-Term Review.

- 22 - 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). I Latest Supervision Sector Issue Project (PSR) Ratings I (Bank-finance projects only) Implementation Development Progress (IP) Objective (DO) Bank-financed Education Education SIP (active) S S Health Health SIP (active) S S HIVIAIDS Multi-sectoral HIVIAIDS S S project (active) Agriculture Agricultural Research and S S Training (active) Agriculture National Fertilizer Project S S (closed) Agriculture National Seeds Project (closed) S Transport Road SIP (active) S Transport Road rehabilitation (active) S Water Water Supply Dev & Rehab S (active) 3mergency Emergency Recovery and S S Rehabilitation (active) 3nergy Energy I1(active) S S Social funds ESRDF I(active) S S 4griculture Food Security Project (active) S S 3ender Women Development Project (preparation) 3ovemance Public Service Delivery Capacity Building Program (preparation) Zommunication ICT Capacity Building Project (preparation) NaterlSani tation Water and Sanitation Project (preparation) %her development agencies See Annex 13 '/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HL Highly Unsatisfactory)

- 23 - 3. Lessons learned and reflected in the project design:

A series of rangeland and livestock projects since the 1960s - most ofthem involving the World Bank - have received widespread criticism. Some of this criticism isjustified. Past interventions were top-down and largely failed to provide sustainable technical, institutional and financial support. On the other hand, they made considerable progress in water development and disease control and in accumulating a wealth of knowledge on pastoral society and economy. Nor did the projects attempt the folly ofintroducing large-scale ranches, ill-suited exotic breeds, or untenable efforts to change pastoralist institutions. Success or failure ofpast investments must also be viewed in the context of several constraints, including the almost total lack of social and economic infrastructure in the rangelands, massive shifts in the political climate, the absence ofNGO support, and insecurity from civil conflict and war.

While perhaps more positive in their impact than they are credited for, the past interventions in Ethiopia's rangelands nonetheless had a number of serious shortcomings. These included:

A primary focus on the development and delivery of infrastructure and services with too little and too late consideration oftheir maintenance or sustainability;

Insufficient consultation with pastoralist communities or organizations, with little attempt to (i) specifically address the needs of women or the disadvantaged, (ii)to shift the culture of the implementing agency from top-down to participatory or (iii)to engage local administrations or Ministry of Agriculture staff in program planning or implementation;

No attention paid to the emergence of agro-pastoralism and agriculture as major activities in the project areas;

Weak engineering services, particularly soil testing, leading to a high failure rate in project-funded surface water storage, and persistence with programs (ranching, livestock marketing and some forage introductions) when their technical, social and financial underpinning was known to be erroneous;

Insufficient attention to drought early warning systems, risk identification and disaster mitigation strategies;

Insufficient attention to the role ofthe private sector, particularly with respect to infrastructure development, livestock marketing and lowland-highland agricultural linkages;

Failure to recognize the adverse impact of local and regional conflict and to propose ways for its mitigation.

4. Indications of recipient commitment and ownership The welfare of people in pastoral areas is a top priority for the Ethiopian Government. The project stems from a request from the Office ofthe Prime Minister for advice and support for pastoral area development. The resulting pastoralism issues paper and project proposal have been read by the highest levels of Government in Ethiopia and helped bring forward the agenda for pastoral community development, including the current Project. The PCDP corresponds with the central features ofthe Government's new strategy for pastoral areas by promoting an integrated and holistic approach that focuses on people, not merely their animals. It would also pursue several ofthe recommendations proposed in the Food Security Strategy, such as those

- 24 - pertaining to animal health, marketing, water supply, agropastoralism, and early waming systems. The Project also fits closely with Government’s PRSP, which states that “the problem of food security and agricultural growth in the nomadic areas is being conceived in terms ofthe development of the pastoral economy in its entirety” and would support the PRSP’s emphasis on community empowerment. The Project proposals are based on extensive discussions with pastoral communities in all main pastoral areas and have been formulated in close collaboration with the Ministry of Agriculture, the Ministry of Finance and Economic Development, the Ministry ofFederal Affairs, and the Office ofthe Prime Minister. The Regional administrations, in particular, have expressed overwhelming support for the Project’s approach.

5. Value added of Bank support in this project: Dialogue on poverty reduction policy: With support to the PRSP, IDA is well positioned to push forward discussion on how to coordinate and strengthen Government’s commitment to poverty reduction. However, this will have to involve all other major development partners. Together with IFAD, IDA collaboration is expected to make a significant contribution to the goals of the PRSP, including the development of community-driven initiatives and the decentralization of service delivery to the wereda. The close collaboration between the IDA and IFAD specialists and the senior Government officials responsible for Project implementation has already paved the way for a strong consensus on Project design and approach. Scaling up CDD efforts: IDA has the ability to mobilize sufficient funding to undertake such an ambitious national program. With the wide range and large scale of many of its operations, IDA is well positioned to link the PCDP goals with the national reforms and financing mechanisms required to support them. The involvement ofIDA in the Project also provides a framework, as evidenced by IFAD’s and FAO’s involvement, within which other donors and NGOs can complement IDA’s support, ensuring the linkages between and within on-going and planned programs. International experience: IDA brings intemational experience in the areas of social funds, decentralization, and demand-driven rural investment funds. Aside from experience in Ethiopia listed above, IDA now has many similar operations ongoing in the region, and the PCDP may draw from the positive and negative lessons of this experience. Examples include the many West African CDD projects, the Kenya Arid Lands Project, the Mongolia Sustainable Livelihoods project, and the many examples of social funds. In addition, the growing focus and debate in the World Bank on community-driven development will help to consolidate lessons and experience which the PCDP can use to its advantage. Sectoral experience: IDA has projects in every sector, which can contribute technical solutions and facilitate institutional linkages with line ministries. The PCDP will benefit from the experience ofthe ESRDF in terms of community participation and implementation ofmicro-projects. The sector investment programs in health, education, and transport will help in coordinating and ensure technical standards when pastoral communities and weredaschoose investment in these sectors. Limitations of Bank support: While recognizing IDA’s comparative advantage, it is equally important to acknowledge that we are relatively weak in several areas, particularly conceming on-the-ground experience in community-driven approaches in pastoral areas and in working with NGOs. In this respect, it will be vitally important for the PCDP to collaborate with development partners who possess diverse strengths and considerable operational experience.

- 25 - E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): 3 Cost benefit NPV=US$ million; ERR = % (see Annex 4) P u Cost effectiveness 0 Other (specify)

The Bank's Concept Review for this Project concluded that, given the demand-driven nature of the micro-investments under this Project, conventional calculations ofnet present values and economic rates of return would have little meaning. This type ofproject does not easily lend itself to economic evaluation for various reasons. First, benefits ofthe capacity-building components (support to communities and local governance) cannot easily be quantified in monetary terms. Second, the investment component cannot be known ex ante, since it is demand-driven and defined in the course of the Project. Third, many of the benefits from anticipated investments (such as in natural resource management, education, health, etc.) similarly defy quantification.

2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4)

The rationale for not carrying out conventional economic analysis on the CDD dimension of the Project also holds for financial analysis. The assessment of financial management systems in the PCDP may be found in Annex 6.

Fiscal Impact: There are several dimensions to the fiscal impact of this Project. First, because the bulk of the Project financing is an IDA grant, the debt burden imposed by the Project is significantly reduced. Second, since the Project would be working mainly through existing institutions, the fiscal burden ofcreating costly new ones would be minimized. Third, given that micro-investments under the first component are aimed at promoting sustainable livelihoods, and that the sustainability ofinvestments is a major criterion for approving community proposals, government assistance to these communities could be reduced in the long run. Finally, and probably most significantly, the expected impact of the risk management component would reduce the need for and dependency of pastoral communities for government-financed relief in times of crisis.

3. Technical:

The following issues are likely to feature importantly during the implementation ofthe PCDP, particularly in the context ofthe Support Services sub-component. The specific types oftechnical innovations that will be addressed by the Project will depend on the interests and needs identified by the pastoral communities and weredas.

0 Rainfed farming in semi-arid regions has received scant resources from past national research programs, although this is expected to change (through EARO, for example). The PRSP states that "the acquisition and adoption of suitable technological packages to moisture-deficit drought prone areas merges with the overall effort to address the country's food security problem at the rural

- 26 - household level, which remains as an outstanding task for the coming years”. The potential for improved productivity and opportunities for investment in the rainfed farming sector is apparent to most observers. The generation of dryland farming technologies supporting rainfed farming system packages would focus on three facets of the production system. The first facet is cultural practices, with research into (i)crop rotations, crop water use efficiency, field sanitation, soil fertility maintenance; (ii)fallow periods; (iii)soil and water conservation measures; (iv) fallow efficiency; (iv) fallow maintenance methodology; and (v) crop management. The second aspect is land husbandry and tillage techniques, covering: (i)tyned implement and share selection (ii)timing of field operations (iii)the application of zero/minimum tillage and deep ripping practices; and (iv) adapting tractor drawn implements to suit local conditions. The final aspect concems devising crop packages with crop calendars indicating (i)timeliness of operations; (ii)recommended drought-tolerant varieties; and (iii)crop suitability for specific environments, for example, resistance to pests such as the quela bird.

0 Irrigated farming, linked to voluntary pastoralist sedentarization, is an important long-term government strategy and offers potential for pastoralists’ food security, however, a number of constraints require further investigation. High river banks along many lowland rivers limit opportunities for run-of-river schemes, frequently necessitating pumped irrigation, although water spreading technology, primarily for fodder production, also offers opportunity. The cost ofpumped irrigation must be carefully evaluated when used for necessary, but low value, food or fodder production. Reliable water supply can also be a constraint. In the South Eastern rangelands rivers are few and highly seasonal, carrying the risk that water supply fails in drought years when most is expected of it. Successful irrigation, when combined with ill-defined individual land use, rights also carries the risk ofelite capture and/or lack of ownership and maintenance. These difficulties must be recognized and integrated into a holistic food security and rural development policy, of which irrigation will be an important element. Further study is required on catchment and water management, crop and forage husbandry and market opportunities, supported by financial and economic analysis.

0 Animal health is ofprimary concem to pastoralists. Effective interventions in this sub-sector are dependent upon a sound understanding ofdisease epidemiology, particularly when related to disaster-based interventions. Although Ethiopia has epidemiological capabilities, these have been severely constrained by on-going ethnic conflicts, poor border security, inadequate resourcing, poor technical service outreach, and lack of community-based disease surveillance capability. Consequently, impact has been minimal in pastoral areas for well over a decade. Poor coverage of lowland herds (an average of 50-80 percent) during transhumance and the unregulated cross-border movement of livestock continuously thwart the impact ofvaccination campaigns. The Project would fund an integrated approach to animal health services in pastoral areas through support to (i)training of community-based “paravets“ in traditional ethno-veterinary and clinical procedures, and as front-line disease surveillance scouts at community level; (ii)promoting private veterinary practices in weredas; (iii)consolidating public sector epidemiological, diagnostic and regulatory services; (iv) establishing linkages between central public sector support services and private sector wereda- and community-based practitioners and; (v) strengthening the policy and legal framework of the sub-sector.

0 Forage supply is central to livestock performance, yet pastoralists have not accepted or have been slow to adopt innovations such as the expanded use of indigenous fodders, establishing set-aside pasture areas for range rehabilitation and drought reserves, pasture rejuvenation and drought proofing, use of exotic fodder species, strategic feeding strategies for immature and lactating females, and the benefits of intensive fodder production and conservation. Conversely, some forage introductions, notably Prosopis juliflora (Afar) and Opuntia spp (Somali), are causing severe

-27- environmental degradation in the most fertile soils of the rangelands. The Project’s participatory research program would attempt to identify the underlying constraints to community rejection of these strategies and develop technological packages that are culturally acceptable and capable of spontaneous adoption. Natural resource management. Two inter-dependent components ofthe traditional form ofrangeland management which have maintained a sustainable pastoral production system are (i)controlling access to water resources, and (ii)the management of wet season and dry season pasture. For the most part, past interventions involving water resource exploitation have been relatively prudent with the rangelands having escaped the worst excesses ofunfettered access. On the other hand, commercial ranching interventions involving rangeland enclosures with fencing have proven unsuccessful for pasture management, and have been made without watershed mangement plans or environmental assessments. Water and pasture management are also essential elements for effective disaster preparedness. Remote sensing and the participatory planning processes at wereda and community levels to be instigated by the PCDP will facilitate and make affordable the preparation of such assessments which in turn will permit water and pasture resources across the rangeland to be more effectively managed. Livestock and animal product marketing are central to consolidating improvements to pastoralists livelihoods, implementing environmentally sound NRM practices, and formulating plans for disaster preparedness. Timely herd offtake and easy access to markets are essential elements of drought preparedness planning and capitalise upon indicators generated by the Project’s early warning system. Despite popular perception that livestock traders in pastoral areas are exploitive, marketing and risk analyses studies generally show modest margins relative to the risk involved. A certain degree of myth surrounds the extent to which livestock trading and warm milk sales impacts on community livelihoods. The Project will facilitate the incorporation ofpastoralist production systems in the national economy through financing studies into the requirements of regional markets (carcass quality, export specifications, sanitary requirements); improved marketing services (price broadcasting, regulatory meat inspection and quarantine); and will encourage herding communities to develop more efficient and culturally acceptable strategies for de-stocking in the event of drought, and for re-stocking during the drought recovery phase. The PDCP will also address issues of technology generation to improve women’s labour efficiency in the processing ofmilk and meat products. Bush encroachment is now considered by many as the most critical problem in rangeland management with invasive species advancing onto the highly fertile riverine soils of the Awash Valley (Afar) and into the more productive valley bottoms (Borena). Studies have shown over 40 percent ofthe southern lowlands in general, and 83 percent offormer native pastures in Borena valley bottoms have been invaded. Limited scientific knowledge exists in-country on the cause of the ecological shift or the means of regulation. While manual, chemical, and mechanized packages have been successfully employed elsewhere for bush control, the government policy on bush burning, tree felling and charcoal making has constrained control investigations. Although pastoralists are adapting to their changing environment through shifts in the mix of species in herds, the accelerated rate ofbush encroachment now seriously threatens the sustainability ofpastoral systems. The PCDP will support the investigation ofthe role of fire, rangeland set-aside procedures, and various forms of clearing, and will provide advocacy in policy reform where required. e Micro-project plans involving simple infrastructure would require careful planning prior to presentation for financing approval from the CIF. The plans would be assessed according to technical, financial, environmental, operation and maintenance, and sustainability criteria. This

- 28 - would require communities complying to guidelines related to procurement and the contracting of local artisans and entrepreneurs. Communities would be required to accept and conform to PCDP pre-conditions before micro-projects would be eligible for approval. The capacity ofcommunities to finance, expedite repairs and carry out maintenance would be carefully assessed thereby ensuring recurrent demands are not made on future public sector budgets. Criteria, guidelines, and standards of a technical and environmental nature will be incorporated into the Project Implementation Manual. As ministries such as health, public works, education, roads, environment and agriculture would be involved, protocols would be drawn up to formalise collaborative guidelines. Wereda-based technical staff, as required, will be closely associated with the entire process providing support - from initial planning and design stage, to implementation and commissioning, and finally to on-going management of micro-projects.

4. Institutional:

4.1 Executing agencies: As described in section C above, the principal executing agencies for the PCDP are the pastoral communities themselves. They will articulate, implement, and monitor micro-projects under the first component, and to some extent under the second. Implementation would also involve the Wereda Development Committees, and Regional Pastoral Development Boards, which comprise several line ministries. 4.2 Project management: Project coordination and central financial management will be carried out by the Federal Project Coordination Unit (FPCU), which will be housed in the Pastoral Area Development Department ofthe Ministry of Federal Affairs. The FPCU's functions will be fiduciary obligations, policy analysis, liaison with central stakeholder groups, Project communication, aggregate Project monitoring, and mobilization of technical backstopping. Given the decentralized structure of the PCDP, true Project management will occur at the Regional level and wereda levels. At Regional levels, the Pastoral Bureaus will house the Regional Project Coordination Units (RPCUs), with chief responsibility for PCDP management and who will coordinate Project activities and the Mobile Support Teams (MSTs), which provide Project outreach at the local level. 4.3 Procurement issues: Capacity constraints constitute the main procurement issue. The MOFA is a new Ministry, with no prior experience ofmanaging projects for international financial institutions. The PCDP will address this issue by recruiting an experienced national procurement specialist to manage the procurement program and through refresher training for the procurement specialist and procurement awareness training for the Project Coordinators. A substantial proportion of the procurement will be made in isolated wereda where there will be little competition for the supply of services. The RPCU will employ an experienced government procurement officer who will monitor Regional and wereda procurement activities, aggregating wereda level procurement contracts wherever possible with a view to attracting wider competition. The RPCU procurement officers will train wereda PDO staff in local procurement management and receive refresher training at the national level. Late payment ofimport taxes and duties by Government frequently delays delivery ofgoods, particularly now that most goods are imported through Djibouti, a foreign port. The FPCU will prepare detailed annual estimates ofProgram tax and duty liabilities and present them to MoFA in a timely manner to ensure their inclusion in the annual government budget.

-29- 4.4 Financial management issues: The Project will need to ensure that (i)an accounting and financial management system is carefully planned, keeping in mind that much of the Project implementation will take place at the weredu level and below; (ii)procedures and capacity building programs are developed to support the accounting of community-based contracts under the CIF and at higher levels with the DPCF; (iii)the experience of other IDA-financed and other multilateral donor-funded projects is taken into account; (iv) the planned flow of funds is consistent with Government procedures; (v) the capacity of staff likely to handle Project finance is adequately appraised and skill gaps addressed; (vi) the accounts of the entities which shall implement the Project are current and have been duly audited; and (vii) arrangements for cost sharing, investment maintenance and any cost recovery are in place. Financial management issues are discussed in more detail in Annex 6(b).

The Project will be implemented with a new FPCU to be established before the project effectiveness. As a result of this, the project will need to ensure that the financial management system is carefully planned and developed as is indicated in the action plan shown in annex 6B, keeping in mind that much of the project implementation will take place at the weredu level and below. To coordinate the project at the federal level, a Federal Project Coordinating Unit (FPCU) will be established in the Ministry of Federal Affairs. Its role in financial management will be to release funds against agreed plans, disburse funds to all implementing levels, and co-ordinate monitoring and evaluation ofthe project as a whole. In each Region, the Pastoral Development Office (PDO) will be strengthened by the addition ofspecialized staff dedicated to the project. The PDOs vary in staff numbers and capacity among the four Regions, and will need to be strengthened under the project. The flows of funds to communities will be overseen by the Weredu Development Committee (WDC), which includes officers ofrelevant bureaus (agriculture, health, labor and social affairs), and representatives ofthe private sector and civil society. The weredu Finance Office will be responsible for handling the financial transactions of the project at the weredu and kebele levels. An additional finance officer may be required for a wereda.

IDA, IFAD, GOE and the communities will finance the project. The FPCU will open two Special Accounts (SAs) at the National Bank ofEthiopia, one for IDA and the other for IFAD. IDA and IFAD then, from the Credit Account, will transfer money to the SAs. The FPCU may effect payments directly to a supplierkontractor from the credit accounts. The government will transfer the counterpart portion to the local currency account maintained by the FPCU. The FPCU will transfer money to each ofthe Regional Pastoral Development Offices (PDOs), from which funds will flow to Weredu Administration Offices (WAOs) to cover eligible project expenditures. The transfer will be on the basis of annual project budget. On the recommendation ofthe Wereda Development Committee and with approval of the WAO, the weredu Finance Offices will transfer money to the Community Based Organizations having approved micro-projects. The Federal Auditor General will assign external auditors, acceptable to the Bank, to conduct the audit ofthe project financial transactions. The annual audited financial statements, along with the management letter, will be submitted to IDA not later than six months after the end ofthe fiscal year.

5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. Environmental issues associated with activities to be financed under the PCDP have been identified by

- 30 - the PHRD-financed Environmental Assessment and Management Framework (EAMF) undertaken during the pre-appraisal of the Project. The assessment concluded that the Project is not anticipated to result in significant adverse impacts. The Executive Summary provided of the EAMF (see Annex 11) briefly outlines the main environmental issues and the measures recommended to mitigate them.

Of the three proposed components, the Sustainable Livelihoods component has the most positive environmental impacts as it aims to provide communities with support to articulate their priority needs in a local development planning process. Although it is not possible to establish precisely what the environmental impacts of these micro-projects will be at this stage, they are not anticipated to be negative as the projects will be small in scale and geographically dispersed. Moreover, a component of the EAMF is the provision of an environmental screening process which will be used to evaluate micro-projects as part ofappraisal.

The Pastoral Risk Management component includes a community-based early warning system, drought contingency planning, and a drought preparedness and contingency fund. The majority of fund resources would be dedicated to long-term preparedness interventions, with a small amount earmarked to jump-starting initial mitigation activities in the event of severe drought. As with the case of the CIF, there are potential minimal environmental risks associated with activities to be financed under the DPFC. Hence, the proposed environmental screening and appraisal forms will also be used to assess these investments and to recommend mitigation measures.

The Project Support and Policy Reform component will provide operational support and training resources to the FPCU and RPCUs. There are no negative environmental impacts associated with this component. On the contrary, this component will also support the environmental training and capacity building which has been recommended under the EAMF.

5.2 What are the main features of the EMP and are they adequate? A review process has been established to ensure screening of all micro-projects proposed under the CIF and risk management interventions, particularly under the Drought Preparedness and Contingency Fund. The process includes an environmental screening process which will be used to assess whether or not the proposed subproject will result in negative environmental impacts and, if so, to what extent these impacts will impact the livelihoods ofpastoralists. The choice of category and the need for mitigation measures is based on a checklist of environmental impacts which reflect World Bank and IFAD guidelines (including guidelines on environmental impact assessment in social funds and CDD) as well as the Ethiopian Government’s own regulations (including guidelines for agricultural sector development projects). In addition to the screening process, an environmental monitoring and reporting process has been designed for weveda and Regional supervision ofmicroprojects. The Project will finance a training program for local government officials and other stakeholders on how to use the screening and monitoring process. Moreover, an Environmental Management Plan (see Annex 11) has been prepared to outline the training and capacity building measures needed to ensure that environmental concerns have been mainstreamed into Project design and has been fully costed. The Borrower is responsible for ensuring that the measures outlined in the EMP are implemented.

-31 - 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: January 20,2003

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? Stakeholder consultation was the primary means to achieve the EA objectives. An intensive schedule of interviews with key stakeholders and resource people was carried out. A typical agenda of a meeting would include a brief overview of the Project, views and comments of the participants, and specific questions from the EA team regarding the details of environmental and social sensitivities, people's interaction with the environment, and potential impacts of the Project. Key stakeholders consulted on the Project included (i)the Ministry of Agriculture's Pastoral Extension Team, and other federal government agencies; (ii)Regional bureaus; (iii)weredu and kebele administrations; (iv) pastoralists in Afar, Oromia (Borana zone), and Somali Regions; (v) environmental NGOs; (vi) research institutes; and (vii) international development agencies. The EA team included one trip in October 2002 and a second visit a month later, working in close cooperation with the World BanWIFAD pre-appraisal mission. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? Monitoring of environmental issues will be undertaken using the monitoring and reporting process provided in Annex 5 of the EAMF. This process has been designed for use at the weredu and Regional levels to ensure that micro-projects are being supervised at both levels, and that pertinent issues are reported to ensure that the appropriate technical input can be provided.

6. Social: 6. I Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. Over the centuries, pastoral communities have devised coping mechanisms and strategies, including mobility ofhouseholds and herds, that are best suited to the fluctuating climatic conditions in which they live, In this context, the Project is more likely to succeed if it respects and builds on these indigenous mechanisms and strategies, to the degree that they can still be practised. However, progress in decentralizing social and technical support services and in implementing pastoral community-driven development in an equitable and inclusive way will be impeded by several constraints. These include: conflicting traditional and modem systems for access to and tenure ofnatural resources; expansion of crop farming into key grazing-resource areas; reduced mobility and greater concentration ofpeople and livestock around permanent waterpoints; displacement of pastoral peoples; few opportunities for employment and income generation outside ofagriculture; the weak economic position of women in pastoral society; erosion of traditional social safety nets; scarcity or absence ofsocial and technical support facilities; low levels of formal education and literacy; the likelihood ofa rising incidence of HIV/AIDS; poor access to market, financial services and information; and incidences of violent conflict, in part as a result of changes in resource-tenure policies. In addition, the Project must seek to redress the history of insufficient consultation with pastoral communities by authorities, low levels of participation by the communities in decisions that affect them, and the pastoralists' general lack of confidence in government bodies.

- 32 - The Project is expected to contribute to the following social development outcomes: (i)improved living conditions ofpastoral communities, through diversifying and increasing production and income of pastoral households and increasing their access to social and technical services from both the government and the private sector; and (ii)increased capacity of the communities to manage their own development in an equitable and sustainable way, through promoting gender and poverty-sensitive decision-making and implementation ofdevelopment-oriented activities under their ownership and governance. Under the PHRD grant, various social studies have been carried out to gain insight into the indigenous social structures and use of resources by communities in targeted areas, and into differences in socio-economic conditions and livelihood strategies ofpastoral, agropastoral and destitute groups. These studies have provided the basis for establishing indicators to facilitate the implementation of participatory monitoring and evaluation of social development outcomes.

Attention to women's issues will be an important feature of the PCDP. Women in pastoral societies have heavy physical tasks not only related to home-making (e.g. fetching water and fuel, building and dismantling huts) but also in caring for livestock, milking cattle and goats, and processing and selling milk products. Some agropastoral women are also involved in petty trading and other income-generating activities such as teashops, handicrafts and small-scale gardening. However, men control factors of production in livestock keeping and crop farming, and dominate decision-making in the traditional socio-political structures. The Project will seek ways to involve women in situation analysis and planning of development, so that community projects will address also women's needs. Separate meetings will be held with women's groups, and traditional and informal leaders among the women will be identified: these are often strong personalities who are past child-bearing age. They will be supported in facilitating women's organisation and in speaking for women in community-level management of development activities. The Project team will be trained and will train others in gender awareness, together with the Office of Women's Affairs and NGOs. It will support relevant organisations, also at community level, to articulate women's concerns. 6.2 Participatory Approach: How are key stakeholders participating in the project? The Project will promote participatory planning, implementation, monitoring and evaluation in five main ways: (i)institutionalising participation by building the capacities of communities and support services to engage in community-led planning based on indigenous knowledge, coping mechanisms, skills, social structures and riorities; (ii)use of Participatory Learning and Action (PLA) methods to ensure that all members of the community (men, women, young, old, rich, poor) are provided the space to express their views and needs; (iii)strengthening local leadership to ensure that community leaders, both male and female, have the knowledge, contacts and eloquence to present their views confidently; (iv) enabling participation ofall natural resource users, including the more mobile and the displaced groups that may use the resources on only a seasonal or temporary basis; and (v) use of community-based monitoring and evaluation methods that enable the communities to evaluate the impact of Project activities on their lives and allow appropriate responses from outside support services. In order to institutionalise participation, the Project will invest in training in and support for participatory processes and enabling government procedures and policy change. A strategy for participatory planning, implementation, monitoring and evaluation will be developed and will be the guiding operational framework to ensure that the Project is responsive to local priorities and needs. The strategy will define the mechanisms by which the Project design ensures that development activities are owned by the communities yet do not exclude women and vulnerable groups that may not be able to make substantial contributions to costs on their own.

In close collaboration with pastoral communities, local administrations and local enterprises, the Project will invest substantially at the wereda level and below in training for community empowerment and leadership. The Wereda Development Committees (WDCs), comprising representatives of the weredu

- 33 - administration, civil society and the private sector, will meet at least twice yearly, according to their own schedule, to appraise CIF requests and to make funding recommendations to their respective wereda administrators. They will also monitor the progress of the activities funded.

Consultations during preparation was undertaken in the Somali and Afar Regions, the Borana Zone of Oromia Region and South Om0 in the Southem Region. Discussion has been initiated with NGOs, bilateral projects and indigenous organizations in each of these areas, as well as with federal and Regional government agencies. Initial proposals for the Project were reviewed and discussed during workshops with key stakeholders at preparation, pre-appraisal, and appraisal missions (records of these workshops are annexed to the respective mission Aides MCmoires). Further consultation is planned during Project preparation, including a series ofNGO-facilitated meetings with community leaders in the proposed Project areas.

6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? Government has traditionally been wary ofNGO participation in publicly-funded projects. However, recent NGO participation in the Bank's HIVIAIDs, Women's Development and ESRDF projects has opened a new window of opportunity. The PCDP includes activities that would be difficult for government agencies to implement without the backstopping ofNGOs with experience in the pastoral areas. In fact, it would be perilous to proceed with Project implementation without drawing on the accumulated knowledge of the non-governmental and bilateral development-support agencies already operating in the proposed Project areas. Partnerships with experienced and successful NGOs and bilateral projects will therefore be sought, and the PCDP will align its programs and resources with those already put in place by these NGOs and bilateral projects. The PCDP, with Govemment and Bank support, will encourage and assist partner agencies to identify additional support from bilateral and multilateral donors as well as their parent organisations, such that their involvement would complement PCDP investments rather than being dependent on them. For example, an application to the Japan Social Development Fund has been submitted to provide such funding for NGO involvement.

During the pre-appraisal mission, the proposed Project and key issues arising were discussed in a half-day workshop with representatives from NGOs and bilateral projects. Discussions were deepened in subsequent meetings with individual NGOs operating in the proposed Project areas. Further consultation is planned, particularly to identify ways in which the NGOs can contribute to capacity building in the form of hosting persons from the Project staff and government support services to learn first-hand about the development approach of the NGOs, as well as in facilitating training courses and mentoring. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? Project institutional arrangements were the subject of several preparation studies. Project-supported empowerment of communities is expected to lead to a new dynamic in the relationship between communities and government administrations at kebele level (where community leaders are represented in many locations), wereda and Regional levels. The community empowerment process will also enable women and other disadvantaged groups to express their needs and be involved in planning, implementing, monitoring and evaluating local development activities. A participatory approach to research, development and dissemination ofinnovations will enable communities to choose and adapt labour-saving, resource-conserving and income-generating technologies that suit their needs and circumstances. These institutional arrangements were elaborated by communities and Government during an iterative process of developing the PIM and were reviewed by the Project appraisal mission.

- 34 - 6.5 How will the project monitor performance in terms of social development outcomes? A IFAD-funded socio-economic and production systems study, a forthcoming AfDB-financed study of pastoralism in Ethiopia and a review of existing baseline studies will establish baseline social conditions in the Project areas. The Participatory M&E system to be established together with the beneficiaries will allow them to measure Project performance in terms of social development outcomes. This system will use simple social and economic indicators to monitor natural resource utilisation, livestock and crop production, social impacts and equity, power and leadership, environmental impact, market information and other changes that the pastoralists may define as being of concern to them. This will enable male and female members of pastoral communities to measure the progress they are making towards planned objectives and outputs.

7. Safeguard Policies:

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

Environmental assessment: An Environmental Assessment and Management Framework was camed out, as described above, and provisions to ensure compliance are summarized in Annex 11.

Natural habitats: Pastoral areas encompass some natural habitats which are protected by law, such as the Awash and Yangudi Rasa National Parks (Afar), Yabello Wildlife Sanctuary (Borana), and the Babille Wildlife Sanctuary (Somali). It is conceivable that the Project may operate in weredus that include or border upon these areas, or other areas that qualify as natural habitats under OP 4.36. As a contingency, the EAMF has provided measures in the screening process to identify the potential for impacts on natural habitats. During early Project implementation, the PCDP will establish, with the help ofthe Environmental Protection Agency, an working definition to identify natural habitats and thus ensure that the Project interventions will not impact them negatively

Forestiy: Forests are not a common feature of lowland areas. As a contingency, the EAMF has provided measures in the screening process to identify the potential for impacts on forests (for example, the use of bush for charcoal or fuelwood) which would require a formal environmental review. Therefore this safeguard policy is not triggered.

Pest management: Promotion of rainfed andor irrigated farming, where feasible and profitable, is part ofpromoting sustainable livelihoods, and may indirectly involve use of pesticides. In addition, it is conceivable that Project funds would be used for animal pesticides directly or indirectly (such as

- 35 - construction of livestock dips). Again, the EAMF has provided measures in the screening process to identify the potential for impacts and, if triggered, then an Integrated Pest Management Plan will be required to ensure compliance with the World Bank‘s policy.

Culturalproperty: Unlike many areas in the the highlands, there are few areas in pastoral areas that consitute cultural property in the sense described in OP 11.03. Where they might occur, micro-projects would be unlikely to involve excavation or inundation. Furthermore, the Project activities will be carried out only in areas selected by the local citizens in the pastoral zones, who would give great importance to safeguarding their cultural property. Therefore, this safeguard policy is highly unlikely to be applicable.

Indigenouspeoples: As an integrated set of Regional projects, the PCDP will be implemented by and with the pastoral peoples that form the dominant society in the respective Project areas. They will be the beneficiaries of the Project investment. Therefore, they cannot be regarded as “indigenous peoples” in terms ofOD 4.20, i.e. social groups distinct from the dominant society that are vulnerable to being disadvantaged by the Project. Therefore, this safeguard policy is not applicable.

Involuntary resettlement: The Project will not be causing or promoting involuntary resettlement. As a demand-driven project, decisions about movement or settlement will be made by the pastoral groups themselves, either as a normal part ofthe dynamics of pastoral households or as a decision of the clan or subclan in the process of their own development planning. Furthermore, given the vast amounts of land available to pastoralists and land’s low marginal cost, any small parcels acquired through the construction of micro-projects (such as a school or health post) are unlikely to impose a signficant cost to a pastoral community. Therefore, this safeguard policy is not applicable.

Safety of dams: This Project will not finance large investments aimed at dam construction and is in accordance with this safeguard policy.

Projects in international waters: This principle applies specifically to irrigation with water use from international waterways or which risks polluting them. The Project does not foresee extensive use of irrigation water or practices which would abstract significant amounts nor pollute water sources and therefore this policy is not triggered. However, notification ofintended water use has been sent to Somalia and Kenya, in consideration of the rivers which flow out from Ethiopia to those countries.

Projects in disputed areas: PCDP does not foresee any possible activities in disputed areas and is in accordance with this safeguard policy.

- 36 - F. Sustainability and Risks 1. Sustainability: First, institutional sustainability of the PCDP will depend primarily on capacity-building and community ownership. While PCDP development plans will be implemented with technical and financial assistance from some external sources, decisions on the content of such plans will rest ultimately with communities who will be responsible for managing implementation. Once communities acquire the knowledge, awareness, and necessary skills to design and implement local development plans and micro-projects, sustainability of institutional objectives will be assured, provided that financing is available. It is also anticipated that government administration at all levels would become adherents to the participatory approach, although this is expected to take time and require considerable capacity-building and experiential learning. Government ownership ofthis approach, if linked to better vertical integration in administrative decision-making, would appreciably improve its overall effectiveness and sustainability.

Second, fiscal sustainability will depend on whether revenues continue to flow through channels established via the PCDP. Financing for community development in Ethiopia, for the foreseeable future, will continue to rely on central and donor sources, since the level ofpoverty is such that substantial local revenue generation is impossible in the majority ofcommunities. The PCDP's financing flows are intended to "prime the pump" of fiscal decentralization through weuedas. The potential for cost recovery will be exploited when possible to minimize dependence on intergovernmental transfers. In addition, effective early warning systems (EWS) and contingency plans would be expected to offset substantially the monetary costs ofproviding relief to drought-stricken areas.

Third is the issue of environmental sustainability. The development of a comprehensive EWS, including remote-sensed and community-sourced information will significantly improve knowledge of the state of the range environment. The EWS will be linked to a disaster preparedness plans that will facilitate early and appropriate disaster responses, particularly de-stocking to relieve rangeland pressure. Integration of the implications of the ecological status of the rangeland into resource planning and research programs will provide range users and administrators with a better toolbox for the sustainable management of Ethiopia's range resources. The project will also develop environmentally safe and sustainable strategies for managing bush encroachment and reducing noxious plant invasion.

Finally is the issue of operations and maintenance and financial sustainability of micro-projects. Capital investments will be identified by stakeholders and are likely to address high priority needs. While that alone should ensure their maintenance, this will be reinforced by conditions in the CIF and DPCF contracts committing communities to identify funding mechanisms and set aside funds for the future repair and maintenance ofproject financed capital investments. Technical innovation, both existing and anticipated under the participatory research and extension program will be relevant, low cost and, to the extent possible, dependent on locally available resources and skills. In sharp contrast to past livestock and rangeland focused investments, the PCDP will take a holistic approach to pastoral area development, including education and health services, dryland cropping, income diversification, risk identification and mitigation and disaster early warning and preparedness. This approach, underpinned by community participation, is expected to improve the financial and social impact of the investment and to appreciably enhance its sustainability.

- 37 - 2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1): Risk is inherent to any project implemented in remote arid and semi-arid regions. That risk is heightened in Ethiopia by the relatively poor infrastructure in the pastoral zones and by periodic insecurity. However, these risks have, in most instances, been managed and mitigated in past interventions in the pastoral zones. The PCDP's community-based development approach is expected to further mitigate risk by focussing on appropriate, demand-driven project interventions, largely owned and managed by communities. Key risk and mitigation strategies are summarized below.

Risk Risk Ratina1, I Risk Mitiaation1 Measure :ram Outputs to Objective zompetition for a diminishing natural S The project will support conflict resolution 'esource base (land and water) will through the application of customary law at the :xacerbate tribal conflict. local level, supported by the creation of new fora on resource use. 3overnment is reluctant to engage NGOs M Project preparation has stressed the need to n the implementation of the project. capitalize on NGO experience. In addition, supplemental funding to support NGOs has been sought. 'olicy reform measures are poorly M PCDP will work carehlly with government and mderstood or poorly timed. communities to fine tune desired policy interventions. There is already significant consensus on many issues. fromComponents to Outputs 'articipatory development in pastoral M The NGO movement has accumulated a wealth treas is relatively new. ofvaluable lessons in the application of participatory approaches amongst pastoral communities. Government expresses commitment to the application ofthis approach and the project will invest heavily in capacity building and experiential learning at both government and community levels to build confidence and competence in its application.

,ack of capacity exists to staff project H Staffing at Regional and federal levels is nanagement structures at each level. largely adequate. Government is in the process of devolving resources, including staffing, to woreda level. The provision ofproject resources, including training, at woreda level is expected to further strengthen staff supply. In particularly weak cases, targetted NGO support may be enlisted with supplemental financing.

The privatization of veterinary services H The project will support the training and :ould reduce animal health cover for establishment ofcommunity-based animal emote areas leading to epizootic health workers, provide a more amenable nndemics. environment for the proliferation ofprivate veterinary services and support the evaluation

- 38 - of more effective vaccinations.

:ommunity-based funds are captured by M Capacity building in participatory oca1 elites development, the establishment of new institutional arrangements, local review of development proposals, participatory M&E, and various empowerment programs all mitigate against elite capture.

)vera11 Risk Rating S

3. Possible ControversialAspects: The issues of land tenure and settlement are possibly controversial and have been described in Section B.

G. Main Grant Conditions 1. Effectiveness Conditions (a) The Government will have established the project accounting and financial management system satisfactory to IDA.

(b) The Government will have opened the Project Account in a commercial bank and deposited therein the initial deposit of Birr 3,210,000.

(c) The Government will have adopted the Project Implementation Manual in form and substance satisfactory to IDA.

(d) The Government will have completed the work program, including the budget and procurement plan for the first year of project implementation, in form and substance satisfactory to IDA.

(e) The Government will have staffed the FPCU with personnel having experience and qualifications satisfactory to IDA, including the Federal Project Coordinator, an Administrative and Financial Officer, a Procurement Officer, a Monitoring and Evaluation Officer. Similarly, all four RPCUs will have recruited their Regional Project Coordinators.

2. Other [classify according to covenant types used in the Legal Agreements.] (f) As a condition ofBoard presentation, the Government will have appointed a consultant to establish the Financial Management System for the Project. (g) The Government will, not later than three months after effectiveness, have appointed independent auditors, with experience and qualifications satisfactory to IDA. (h) The Government willl, not later than six months after effectiveness, have appointed the Pastoral Policy and Research Adviser in the FPCU, with experience and qualifications satisfactory to IDA.

(i) The Government willl, not later than nine months after effectiveness, have carried out and furnished to IDA, satisfactory in form and substance to the IDA, a participatory research and social analysis with a view to enhance the participation of women and more vulnerable groups in pastoral

- 39 - community development, and shall promptly thereafter implement the recommendations of these studies.

H. Readiness for Implementation 1. a) The engineering design documents for the first year's activities are complete and ready for the start ofproject implementation. 1. b) Not applicable.

3 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. d 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 4. The following items are lacking and are discussed under loan conditions (Section G):

The procurement documents are currently being prepared by a PHRD-financed consultant and will be ready in May 2003. A full draft Project Implementation Manual and implementation plan has been prepared. It has been reviewed by the Bank and found satisfactory, but it has not been submitted formally by Government as of April 25.

I. Compliance with Bank Policies 1. This project complies with all applicable Bank policies. i L 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies.

<

Daniel M. Seilen Karen Mcconnell Brooks Ishac Diwan Team Leader Sector Manager Country Director

- 40 - Annex 1 : Project Design Summary ETHIOPIA Pastoral Community Development Project

Sector Indicators: Sector1 country reports: from Goal to Bank Mission) Reduced poverty, food insecurity, Per capita GDP National statistics Human morbidity and Poverty surveys mortality rates Percentage of vulnerable population

Ind-of-Program Indicators: 'rogram reports: from Purpose to Goal) To promote sustainable livelihoods Growth and stability of Household surveys No sustained, multi-year throughout the lowlands of agricultural and Sectoral studies drought non-agricultural ilncome and Beneficiary assessments No sustained armed conflicts asset levels Project and program No major outbreaks of Environmental stabilization evaluations human or livestock disease and improvement WFP, FA0 and DPPC No major market disruptions, Human and livestock health reports e.g. due to disease, war, or improvements economic health of Droughffcrisis mitigation neighboring countries capacity enhanced Macroeconomic and political stability

htcome I Impact 'roject reports: From Objective to Purpose) ndicators: ected weredas in pastoral :or targetted communities and Household surveys Government committment to veredas at the end of PY05: Sectoral studies the community-driven Beneficiary assessments developmet in pastoral areas To provide capacity-building and at least 80 %of funds Final and mid-term project persists establish effective models of allocated to the Community evaluations Partnerships between donors public service delivery, Investment Fund were used and NGOs are strengthened investment, and disaster for approved community and expanded to address a management in pastoral areas micro-projects and wider geographic area. that address communities needs inter-community sub-projects Success of first phase of and reduce their vulnerability. PCDP justifies a subsequent at least 80 %of funds phase, as determined by allocated to the Disaster triggers Preparedness and Contingency Fund were used for approved sub-projects: at least 75 % of community subprojects requiring government support receive it in a timely and adequate fashion, as measured by beneficiary assessments.

-41 - Data Collection Strategy Critical Assumptions Output from each lutput Indicators: Project reports: from Outputs to Objective) Component: Sustainable Livelihoods (a) Capacity-building for a Increased delegation of a Regional and district a Capacity exists to staff community empowerment authority to weredas, kebeles development plans project management and communities a Beneficiary assessments structures at each level Community needs are articulated Existence and use of a Training assessments a Political system accepts in a way that reflects broad transparent, accountable, devolvement of decision participation, including women anc demand-driven, and making toward communities other vulnerable groups. decision-making processes at community level i) Regions and weredas implemen a Broader representation of development through participatory hitherto marginalized groups processes; in local affairs ii) male and female pastoralists better manage their resources through organization at grass roots level.

(b) Community lnvestment Fund a Number of community a Community reports a Government does not offset (CW development plans a Beneficiary assessments PCDP financing with reduced developed and approved a Project MIS funding to Regions Micro-investments for a Number of micro-investments a Financial audits a Micro-investments are viable communities and weredas to and inter-community and benefits shared broadly improve social and economic sub-projects executed infrastructure are planned and executed.

(c) Support Setvices

Sustainable, community-based a New technologies developed a Project reports a New technologies social and economic services are and existing technologies a Line ministry annual reports. successfully adopted by established, supported by adapted to local conditions a NGOreports target beneficiaries demand-driven research. a Technology adoption rate a Line ministries provide a Literacy rates support when needed i) Public services strengthened a Access and use of mobile a Privatization of veterinary ii) Community-based workers in and stationary health and services will not result in place and operational education services reduced animal health iii) Participatory research system a Training programs completed coverage for remote areas, established. a Research contracts granted leading to epizootic pandemics.

2. Pastoral Risk Management a) Community-basedEWS Timely delivery of remote a Project reports Weak communications sensed information to a DPPBIDPPC reports systems prevent timely Remote sensed and weredas. delivery. :ommunity-based early warning a Food security assessment a Insufficient recurrent budget system that forewarns threat to applied in threatened areas for food security assessment. iastoralist livelihoods established. Insufficient baseline socio-economic data (b) Disaster preparedness a Disaster plans implemented a Woreda and Regional a Seriousness of drought does as necessary disaster preparedness plans not overwhelm capacity of 3PPC disaster preparedness a Cereal stocks used when a Project reports relief efforts nethodology strengthened for necessary a DPPB reports iastoral areas and wereda CDBs irepare disaster plans.

‘c) Disaster Preparedness and a Number of Regional plans a Community reports Infrastructure investments Zontingency Fund (DPCF) developed and approved a Beneficiary assessments are viable and benefits a Number of investments a Project MIS shared broadly

- 42 - Capital infrastructure investments executed (e.g. feeder roads Financial audits Central government does not to minimize disaster impact constructed, ponds dug, override authority of Regional including water, market access markets built, etc.) decision-makers and social services

3. Proiect Support and Policv Reform (a) Monitoring and evaluation Frequency of reports PCDPreports Accuracy of reports Project MIS M&E system established and Beneficiary assessments providing timely and accurate information between project and beneficiairies

(b) Policy Analysis and Reform Number of policies Policy study reports Traditional attitudes forestall promulgated and effectively Project M&E reports policy reform Policy issues covering, infer alia, implemented. Limited capacity for effective natural resource management, Effective advocacy for policy research land and water rights, studied and pastoralists at all levels of resolved. government: Clear vision and strategy for pastoral area development c) Project support and Adoption of transparent and Government prepared to coordination inclusive planning and strengthen pastoralists development activities in political clout PCPD central and Regional office2 Regions government staff prepared to are efficiently and effectively at least 75 percent of results share power performing on schedule and within of participatory M&E government budget available budget meetings are used in for incremental staffing decision-making for community investments, pastoral risk management plans, and other Project activities, as measured by M&E reports. Project Components / nputs: (budget for each 'roject reports: from Components to Sub-components: :omponent) 3utputs) 1. Sustainable Livelihoods 86.52 million USD Project MIS Communities willing and able to provide counterpart contribution. 2. Pastoral Risk Manaaement 6.43 million USD Project MIS Funds not captured by local elites Government is willing to rely on NGOs to provide project support at the community level 3.Proiect Supoort and Policv .01 million US Project MIS Government willing and able Reform to provide counterpart contribution.

-43- Annex 2: Detailed Project Description ETHIOPIA: Pastoral Community Development Project

By Component:

Project Component 1 - US$36.52 million

Sustainable Livelihoods

The Sustainable Livelihoods Component will support decentralization by empowering weredas and rural communities, whereby Project beneficiaries are able to take charge of rural development in lowland pastoral areas. This component will initiate and strengthen a decentralized and participatory development process at the community and wereda levels, linked to the Regional Government framework. This will enable pastoral men and women to identify, design and implement community driven development (CDD) investments at multiple levels according to demand. Three subcomponents have been identified: (i)Capacity Building for Community Empowerment; (ii)the Community Investment Fund, and (iii) Support Services.

(a) Capacity Building for Community Empowerment

Capacity-building at the community and wereda levels will create the enabling environment for the introduction and promotion ofparticipatory planning procedures, such that communities are able to identify, prioritize, design, implement and manage their own development. This will involve skills training in key areas such as basic literacy and numeracy, primary education, primary health, hygiene and sanitation, conflict resolution and management, natural resource management, environmental screening, and investment management. Needs assessment methods including participatory learning and action (PLA) tools, consensus-building techniques and constraint analyses will be used to formulate community investment plans, which will be amalgamated into wereda Development Plans. NGOs, Regional government officers and PCDP staff will be central to the delivery ofthis sub-component by providing training to beneficiaries.

An initial capacity building process using PLA tools will facilitate dialogue between community groups and local government technical services in order to promote participatory interaction and consensus building and to train communities and government personnel in basic analysis and planning techniques. Individual communities will use simple micro-project application forms that make clear their objectives, proposed activities and budgets. These will take into consideration the environmental implications of all activities. A micro-project will take the form of any activity that the community regards as a priority and will incorporate a 15 percent contribution of their own resources in cash or kind to ensure ownership of the process and the outcome. Communities will be able to directly implement their micro-projects themselves or will collaborate with a government department, an NGO or both, according to a written memorandum of understanding. Individual and joint community investment fund (CIF) subprojects (see (B) below) will be appraised by communities to Wereda Development Committees (WDCs) made up of relevant line departments (typically: agriculture, water, health, education and cooperatives), representatives of local communities, NGOs and the private sector operating in the wereda. Procedures for assessing and approving each community sub-project and for disbursing funds and monitoring progress and quality are described in the Project Implementation Manual (PIM).

Capacity-building will be delivered through the Project's institutional structure. The Regions have already established Pastoral Development Offices, which will manage Project-financed Regional Project

-44- Coordination Units (RPCUs). The role of the RPCU is to manage the Project at the Regional level including fund flows, reporting, monitoring and liaison with relevant Bureaus and with the Federal level FPCU. The RPCU will be the focal point for initiating the capacity-building process and will liaise with and contribute to the DPPB and emerging Regional risk management network. This will include supporting the development ofthe community-based early warning system and the development and coordination of wereda level data collection, collation and interpretation activities and their links to the Region wide system. The RPCU will also facilitate communication between the community group level and the Regional level, identify staff skill gaps and coordinate specialized training in these areas (e.g. gender, conflict, environment).

Each RPCU will be composed of a Regional Project Coordinator; an Environmental/ Training specialist; a Monitoring and Evaluation specialist, an Accountant, and a procurement officer, together with appropriate support staff including 1 accounts assistant, 2 secretaries, and 2 dnvers.

Given the distance between RPCUs and the large population they must serve, they will in turn manage one or more Mobile Support Teams (MSTs) that will move throughout the different Project weredas in each Region in direct contact with pastoral families and wereda technical staff. The role of the MSTs will be:

to provide initial orientation and training to the staff of selected weredas and kebeles on PLA methods, to create awareness of the Project approach, methods and procedures and to make a training needs assessment of technical capacity at these levels of government; to be the initial front line linkage with individual community groups and, as such, will, in collaboration with wereda mobile outreach teams (MOTS), engage in relationship building, carry out baseline studies using PLA tools, and seek to understand the decision making processes of communities, their problems and priorities, to explain the purpose and procedures ofthe Project and jointly develop action plans, priority micro-project proposals and explain the procedures of requesting CLF funding through their wereda; to assist wereda development committees to develop criteria for analyzing and approving proposals and the mechanisms for requesting the wereda to disburse fundingiresources to the Communities, and

to assist communities and weredas to develop a community-based Risk Management System (under component 2) to inform the Regional system and to develop wereda level contingency plans to be implemented during drought, conflict, and disease outbreak events. The Mobile Support Teams will be composed of three "core" members including a Team Leader, a training officer and a gendedsmall business development officer and appropriate support staff including a camp manager and a driver. The team members will have relevant technical qualifications (veterinary, range, education, water and/or health), but will be primarily experienced communicators.

The RPCU will be recruited and established in each RPCU Office. RPCU management will then be involved in recruiting the MST staff. The combined units will, together with heads ofBureaus at the Regional level, undergo orientation and debate as to the objectives of the Project, its principles and methods ofworking, including the need for close collaboration between key Bureaus and other Regional Institutions. The MSTs will undergo intense training together with Heads of the Pastoral Development Departments at wereda level from the targeted weredas. This will take the form of a 3-phase Training of Trainers program spread over the first year of the Project and led by experienced facilitators. The three phases combined will cover, inter alia, group dynamics, leadership styles, PLA Tools, Log Frame tools, CAP planning, community and inter-community sub-project proposal writing, environmental screening,

- 45 - risk management systems, weredu sub-project approval criteria and financial and administrative procedures.

A consortium ofEthiopian Training Organizations combining both Government and NGO expertise will lead the training process. They will be initially contracted to review the objectives ofthe PCDP, to analyze the training needs and to design the training package. Each TOTsession will last 5-10 days and will be followed by a Training of Community Leaders (TCL) course in the selected weredus led by the new trainers at the weredu level. A TCL training course is parallel in content to the TOTcourse, but introduces the Project and all its details to the kebele staff and community leaders. It thus provides experience for the TOT'Sand new knowledge for the TCL's. Part of the TCL training will be carried out in the field and include direct contact with communities using the MST system, the identification of sub-project proposals and their submission to the weredu Development Office (WDO) for appraisal and recommendation to the wereda government for funding. Once a sub-project has been approved the weredu will be requested to release resources (cash, procurement of goods and services - trainers, contractors) to the community concerned for implementation ofthe project. Thus training in procedures and practice will be immediate, but small and focussed to allow stakeholders to become accustomed to the approach and its methods. This will also allow fine-tuning ofthe approach in order to overcome the inevitable operational difficulties of doing something new.

The MSTs will initially focus in one weredu. They will approach a particular community unit and request to be allowed to camp in the area. Most community units (both encampments and herding units) usually come together in the evening's to discuss the days events and to pursue debates that have been ongoing for some time and to make decisions. A major topic will surround the coming of the MST, where these people came from, what they want and whether or not they are a threat. This will require discussion with the strangers and is the opportunity for the MST to engage in discussion and make it clear they are there as friends. Other more substantive debates will follow over time. A MST will circulate through several camps in the same local area over a six-week period then will take a two-week break (six weeks on two weeks out). They will then move to a different local area (another kebele ) and repeat the process and then a third local area (a third kebele). Following the third kebele cycle they will return to the original (first kebele) community units to follow up on work done earlier. During this systematic movement, weredu and kebele technicians will join and leave the MST according to skill needs and physical location. During the wider cycle (between weredus A-B-C) micro-projects will be identified, processed and implemented, testing the administrative procedures and capacity to deliver. Over time, government technicians at weredu level and trained community leaders will come to understand the system to the extent that they can involve other communities remotely from the MST and this will allow the MST to move on to other groups in the same three kebeles and ultimately to move to another weredu.

@) Community Investment Fund

The purpose of the Community Investment Fund (CIF) is to make available rapid sources of counterpart funding to enable quick implementation ofcommunityhnter-community prepared and WDC appraised subprojects according to agreed and tested criteria and procedures. During the start up phase, the priority issues will be to put in place an effective and acceptable fund delivery system that can cope with rapidly expanding demand from communities as awareness ofthe Project and improved planning and implementing skills of both communities and local government staff increase. While this is taking place, the Regions and weredus will need to design and test models of fund transfer to communities through approving the first subprojects and testing and improving methods oftransfer, monitoring and accounting. This will require considerable support and backstopping from Regional and Federal Authorities to establish sound management systems so that expanded flows in the future will not be unnecessarily delayed.

- 46 - Weveda Development Committees (WDCs) comprised ofrepresentatives from local administration, community interest groups, NGOs the private sector, will review community and inter-community development plans and recommend capital investments considered eligible for project financing. These investments will be prioritized and assessed against transparent criteria including nature and type, environmental screening and scoping guidelines (including mitigation of environmental impacts), future sustainability prospects, etc. prior to acceptance for financing from the Community Investment Fund. A 15 percent community cash contribution will be required to guarantee self-help, promote vested by communities and full beneficiary participation and accountability, thereby ensuring the needs of pastoralists are met.

Beneficiary contributions will be levied on an increasing sliding scale - the initial investment being struck at 15%, the second and third at 40%.

The eligibility criteria for financing under the CIF will be kept as broad as possible to respect the needs of the poor. It may include investment in social infrastructure, such as revolving drug funds; community health workers, and community drug shops; TBA's and kits; a mobile school, a static school or hostel or part of one; a static health clinic or part of one; a domestic water point or part of one; small enterprise groups with revolving loan funds. It may involve funds for building capacity in government technical extension services and communities and includes exposure to both community and external technical innovation and practice. Through planning carried out in the second component, it may include measures for disaster preparedness, mitigation or recovery: such as drought grazing reserves; grazing rehabilitation; catchment protection or rehabilitation; livestock watering points; animal health posts; animal health certification posts; market centers and mobile irrigation schemes. Finally, it may include emergency response measures, such as vaccinations for humans and livestock; boosting revolving drug funds for humans and animals; rapid malnutrition monitoring in known severe situations; water tankering; fodder trucking; etc.

While adhering to the demand-driven principle for access to the CIF, it will be important for the project staff to be trained on the issue ofHIV/AIDS so that they can adequately engage with communities. Myths about disease transmission prevail, and communities may be reluctant to acknowledge the threat and discuss mitigation strategies for reasons of denial and fear. Several new projects, including the IDA-funding AIDS project, are already established to address the growing threat and may be contacted to provide technical assistance and training for stakeholders in the PCDP. In addition, these projects may find it useful to capitalize on the PCDP's presence at the community level to get their message and resources out.

For community units that are the size ofa veer among the Somali, a ganta among the Afar, an olla among the Borana or a similar unit among each ethnic group in South Om0 (units that are assumed, for budget planning purposes, to include about 100 persons), the amount of funds available per micro-project from the Community Investment Fund (CIF) will be up to about US$600, not counting the community's own contribution to project costs. For social units as large as a Tuulo, Kido, or Dedha (assumed to be up to up to 500 households), up to US$l5,000 will be available. Several Dedhas or equivalent social units could negotiate plans for a project serving a still larger number offamilies and will have access to a correspondingly larger amount of funds. Community subprojects recommended by the WDC will be approved for funding by the wereda govemment.

The project will also make available up to US$4,000,000 ofCIF resources for inter-community subprojects. These will be capped at US$75,000 and are likely to be larger social infrastructure that cannot be afforded by individual or small groups of communities. Inter-community subprojects will be

- 47 - identified by male and female community leaders when they meet periodically at the wereda level to monitor and appraise Project activities and will require the same 15 percent community contribution as the smaller community level subprojects. MSTs and MOTSwill assist participating communities to prepare inter-community subprojects for appraisal by WDCs. Inter-community subprojects recommended for funding by the WDC will be approved by the Wereda Council during its annual meeting.

The decision-making process for clearance of sub-project investments will be as follows. When communities have designed their individual or inter-community subprojects, they will go with them to the wereda center they consider being their wereda for the purpose of a project and submit the proposal for consideration by the Wereda Development Committees. The wereda 's principal tasks vis a vis the Project are to plan the strategic development of the wereda, to monitor levels ofrisk and to approve CIF Projects submitted by communities, initially from the CIF, but ultimately from regular government funds. With respect to the CIF, WDC's will review the basic sub-project criteria given in section 7 and adopt their own criteria for recommending projects for funding. They will also establish the mechanisms by which funds will be disbursed to communities throughout the Project in collaboration with the RPCU and the Regional Bureau of Finance. Weredas that demonstrate their capacity to support communities will attract higher levels of funding. Those that demonstrate poor interaction with communities and poor levels of implementation will attract lower levels of support. Details ofthe procedures and criteria for CIF use appear in the PIM.

(c) Support Services

While the GoE has developed a strategy for support service delivery to pastoral communities, the PCDP at wereda, kebele and community levels will inter alia, operationalize the Participatory Pastoral Extension System by financing strategic investments and establish decentralized and participatory planning procedures, operating within the government structure. Local government service cadre covering social, economic and environmental sectors and in the arena ofconflict resolution will be deployed, trained and sufficiently resourced to ensure availability and accessibility to rural communities by:

providing technical input for development planning; responding to community planned interventions under the CIF; taking a pro-active role in human health, hygiene and HrVIAids awareness and household sanitation; providing basic literacy and numeracy training and primary education; identifying opportunities for diversification; introducing, testing and promoting, through participatory programs, options and appropriate technologies for risk minimization in rainfed crop production; generating crop packages for micro-scale irrigation; providing technical backstopping for management and sustainability ofCIF investments; and contracting mediators for conflict resolution and management.

PCDP financing will provide for (i)a framework and platform within which competing ethnic groups are able to harmonize access to resources; (ii)strengthening district planning capabilities, technical capacity and extension outreach; (iii)the delivery offield level economic and social services; and (iv) the provision of community primary education, first aid and health awareness, primary animal heath care and farmer crop production knowledge and skills. Farmer managed action research programs coordinated by and in support ofnational and regional programs will be funded. Intervention delivery is sequenced and phased to the CDD approach.

- 48 - Pastoral Development Office (PDO).

The PDO is the generic term used for the wereda office that provides the support services. The actual name of the office changes from region to region. In support of decentralization, technical services are being redeployment from zones and regional levels for wereda capacity building. Additional staff will be drafted from ongoing education and training programs as they become available. Given that few weredas have facilities to accommodate restructuring, staff transfers are unlikely before basic facilities are in place. PCDP support to local government will involve strategic investments in PDOs to support capacity building for planning and service delivery (generated from community expressed needdemand) following CIF investments. Capital works covering essential infrastructure, extension equipment and material, transport and training will be financed, ensuring accessibility and accelerated transfer of core specialist staff tailored to meet local needs. This will include expertise in land use planning, natural resource and rangeland management, livestock husbandry, animal health, rainfed cropping and forage, women's affairs, environment, community first aid, basicinon-formal education and conflict mediation. Staff will receive in-service, refresher and on-the-job training (by MST staff) to improve their skills, as they relate to the pastoral production systems. This will include training in technical skills, communication and community capacity building covering techniques for participatory resource analysis (PRA), participatory approaches to problem solving, constraint analyses, arid and semi-arid production systems as well as acquiring skills for responding to demand driven development. Wereda specialists will be trained to supervise the work of community based workers (CBWs) in accordance with national quality standards. Available staff will be formed into wereda multi-disciplinary Mobile Outreach Teams (MOTs) which will:

0 provide on-going technical support and training to kebele level development agents (DAs), educators, and public health staff;

0 provide on-going technical support to pastoral communities in formulating and implementing CDPs and, where appropriate, managing subprojects;

0 provide the on-going linkage between, on the one part, the traditional institutions and their appointed CBWs and, on the other part, the Projects MSTs and the public sector wereda administration;

0 organize kebele level workshops and

0 function as resource persons at Rangeland Training Centers (RTCs).

The PCDP will finance offices, furniture and equipment in PDOs and RTCs; the latter strategically located as required in the rangeland with each center servicing around four weredas. The centers will provide practical instruction, on a demand driven bases, in management of natural resources, herds and pasture and in animal husbandry. Land-useienvironmental planning will identify areas suitable for rainfed farming, irrigation potential, wildlife management and communal forestry. Wereda PDO staff will participate in in-country and Africa study tours. The MOT, rotating monthly on field duty and resourced with camping and animal husbandry equipment and mobile extension aids will trail herds at community levels rotating monthly between kebeles. This will provide field staff, CBWs and migratory communities with mobile extension support in livestock, rangeland management, basic literacy and numeracy, and human health. The PCDP will consolidate groundwork in the mediation and conciliation process between ethnic groups in conflict resolution. Funds are allocated to transport pastoralists to field days, training courses, cross-visits etc. Each wereda PDO will be provided with a 4WD double cabin vehicle to enable field outreach by MOTs. Two motorcycles will also be provided to weredas for use by PDO staff.

-49- Development StationsKamps (DS).

Disease and parasites cause morbidity and poor animal performance in terms of recovery from stress, post dry season body weight gains, reproductive rates and milk production. Minimal technical support in terms ofanimal health care, access to diagnostic and clinical services, and availability ofdrugs, particularly acaracides and anthelmintics, is crucial for pastoral systems. Illiteracy rates approach 1OO%, HIV/AIDS has gained a strong foothold, information on hygiene and health is distant and access to first aid is poor in rural communities. Few kebeles have DSs to accommodate field staff. Given the PCDP concept offocusing on pastoralist's livelihoods and adoption of a holistic approach to rural development, the support service role dependent upon community priorities and needs, will be expected to cover:

agricultural extension: crops, animal husbandry/animal health and rangeland (Polyvalent Extension Agent), and women's affairs(women' s affairs, poverty and small business development); and, 0 social services: primary education (pastoral community teacher), and health and first aid (Traditional Birth Assistant and Animal Health Assistant).

The PCDP will finance renovation of oldconstruction ofnew strategically located development stations (DSs). Facilities will cover staff accommodation, office and storeroom and posts for animal health, first aid and non-formal education. DSs will be resourced as required with basic office furniture and equipment, extension aids, veterinary utensils, animal and crop husbandry equipment, and inputs and equipment for crop and processing demonstrations, teaching aids and community first aid and primary health care equipment. Where appropriate staff will manage seed exchange and herd upgrading schemes to facilitate community based organizations (CBOs) access to improved (drought resistant) seed varieties and to enable the exchange ofnondescript for improved sires to deficient herds during the drought recovery phase. Nurses will provide AIDS awareness, hygiene and sanitation education and pastoral community teachers (PCTs) will provide primary education. Transport (motor cycles) will be supplied. Funds are set aside for training CBWs, workshops, community cross-visits, posters and pamphlets and radio communication. Weredu PDO staff will provide technical backstopping.

Community-Based Services.

Through training and institutional strengthening the PCDP will establish community-based services that will support decentralization and community empowerment. Such services, underpinned by user-pays systems, will ensure long term sustainability of service delivery. Traditional institutions or CBOs sensitized to self-help development by the MST and MOT will nominate members for training as "first-stop" CBWs. As women play a major role in human and animal health care and in rainfed and irrigated farming activities in the pastoral lowlands, the Project will actively encourage the development of women's capacities as CBWs. Training by regional and weredu trainers will be conducted at locations as close as practicable to trainees homes, probably at the RTCs, to facilitate women's participation. The PCDP will implement programs that deliver at community level including:

0 trained Community Health Assistants and Traditional Birth Attendants for the delivery of first aid, community health, sanitation and hygiene, AIDSawareness and midwifery services, together with first aid kits ofmedicines and basic utensils;

0 trained Pastoral Community Teachers to provide non-formal primary education to children and impart basic literacy and numeracy skills to adults, supplied with basic teaching and learning aids;

0 Community Animal Health Workers (CAWS)trained, to deliver primary animal health care and

- 50 - charged with other duties -including disease surveillance, collection of epidemiological specimens and collection offecal samples and feed back on pasture conditions for disaster mitigation feeding into the EWS. CAHWs will be provided with Project financed Starter Kits ofbasic equipment and drugs, to be replenished through the profitable sale of service and medicines;

0 Contact Farmer (CF) in agro-pastoral and mixed farming communities, provided with demonstration hand tools and equipment to anchor demonstrations, manage community seed banks and maintain demonstration crop protection equipment and implements. All inputs including new crop varieties, agro-chemicals etc will be supplied.

Agro-pastoralists will be introduced to new techniquesltechnologies through community cross-visits, farmer conducted demonstrations, field days and mini-kits locally prepared to promote and enable farmers to self evaluate (i)crop packages; (ii)improved cultural practice for dryland farming using tyned implements for dryland agriculture production (DAP) (also hamess) in Borana and 3pl in Jijiga; and (iii) improved storage to reduce post harvest losses. A similar program of introducing a range ofnew technologies - micro-scale irrigation, fodder crops, etc. - will be targeted to food and cash crop orientated peri-urban mixed farming communities. Conditional upon full beneficiary participation (planning, execution and evaluation), the PCDP will finance investigations into different techniques of clearing bush encroachment. A key activity will be to provide on demand training ofbeneficiary farmers in new technologies following their introduction and promotion by kebele DAs with technical backstopping provided by specialists from the wereda PDO.

Research Support.

The PCDP will support targeted research into rainfed and irrigated cropping, range management, livestock production as well as investigations into non-agricultural issues relevant to the livelihoods of pastoral Communities. In the past, few resources have been directed to livelihoods of communities ofthe lowland production systems, including rainfed farming and pastoralism. The Agricultural Research and Training Project’s (ARTP) establishment ofregional research centers (RRCs) at Dubti, Jijiga, Yavello, its post-graduate training of researchers, and the mandating ofthe Dryland Agmultural Research Directorate to implement the dryland research program, will provide more focus in the lowland research effort. Fundamental technological weaknesses and financing gaps, however, present major hurdles to technology generation. Pressing deficiencies include (i)insufficient resources to equip the RRCs; (ii) poorly targeted training of research staff; (iii)weaknesses in the sub-program selection; and (iv) poor donor support for defined sub-programs. Given that rainfed farming systems and crop packages appropriate for semi-arid environments are important to the PCDP sustainability, research will finance a Dryland Husbandry Technology (DHT) Sub-program including some equipment for RRCs. The Dryland Husbandry Technology (DHT) Sub-program will have three elements: (i)Farming Systems investigations; (ii)Action Research conducted on-farm and farmer managed; and (iii)targeted training of and technical support for research staff in dryland farming technologies.

0 Farming systems. Contestable research contracts up to the value of $50,000 annually will be offered to identify and formulate farming systems tailored to particular semi-arid environments in relation to soil type and mono-modal and bimodal rainfall pattems. Key areas for investigation under farming system packages will include, inter alia: (i)appropriate cultural practices viz. crop rotations (crop water use efficiency, field sanitation, soil fertility maintenance), fallow period, soil and water conservation measures, fallow efficiency, fallow maintenance methodology, crop management systems (skip-row sowing, wide row planting and deep ripping); (ii)land husbandry and tillage techniques covering: tyned implement selection, timing offield operations, the application of

-51 - zero/minimum tillage, adapting tractor drawn implements to suit dryland agriculture production (DAP); (iii)crop packages with crop calendars showing timeliness of operations, recommended drought resistant varieties (short season, quick maturing), crop suitability for specific environments e.g. quela. Action Research. A participatory program, conducted on-farm and farmer managed, will cover (i) testing and adapting known and proven technologies from similar environs (varieties); (ii)field testing technologies generated under the farming system program; and (iii)an Innovation Fund, available to farmers for testing local cultural and crop husbandry practices. Training and Support. The Agricultural Research and Training Project (ARTP) has not addressed the lack of knowledge especially in reference to developing skills in dryland farming technologies for semi-arid environments. The PCDP will finance institutional "twinning" with an institution of higher learning in similar environments and production systems. This initiative will provide an opportunity to assess relevant tried and tested technologies and adapt them to the local production systems. The Project will also support curricula development at selected universities for semi-arid and arid natural resource management, pastoralist production systems and community livelihoods. The program will also finance study tours and short courses, short-term consultancies and exchange visits related to the above.

Knowledge Systems

The knowledge ofEthiopia's rangelands and pastoralist livelihoods accumulated through development and research effort over the last 30 years is no longer concentrated in government policy, research and education institutions, in fact, much ofit is no longer available in the entire Ethiopian knowledge system. A similar situation exists with dryland farming where, despite a large investment in dryland research infrastructure, the current shortage of expertise is severely constraining research and technology development. Dryland agriculture and pastoral curricula in tertiary institutes is also outdated and teaching capacity in these disciplines is limited. This knowledge gap severely constrains policy and institutional reform in pastoral areas, limiting pastoralist's options and choices in the process. The Project will address this issue by:

reviewing and refreshing course content in pastoralism and dryland agriculture and livestock husbandry at leading tertiary education centers and resourcing its delivery; financing a medium-term (three year) twinning ofselected research centers and universities with an internationally recognized agricultural university or institution for the development and delivery of in-country post-graduate training in pastoralism and dryland agriculture and natural resource management and collaborative, participatory research into pastoralism, dryland agriculture and natural resource management and associated policies; funding a limited number ofin-country research-based Masterate training programs for technicians, scientists and policy makers in pastoralism, dryland agriculture and natural resource management; funding a biennial conference on pastoralism and pastoralist development that engages the concerned Ethiopian public services, the Ethiopian political hierarchy and domestic and international scientific and civil organizations in discussion on appropriate paths toward pastoralist development.

- 52 - Pastoral DeveloDment Office I Other Offices I

Kebele

......

v Community I

Mobile Extension social &Technical Community Based --* Outreach Team ' suppo~sul.icfs (MOET) Organizations --

Community Based Workers: *Community Animal Health Worker /------. I- *Community Health Assistant -I,.- Supervision ,'* *Traditional Birth Attendant -_-______- ---' .Pastoral Community Teacher .Demonstration Farmer

Project Component 2 - US$16.43 million

Component 2: Pastoral Risk Management

The key activities to address pastoral risk management are (i)the creation of a credible early warning system (EWS); (ii)the definition of 'waming stages,' summing up different levels ofthreat; (iii)the preparation, in advance ofa drought, of a wereda disaster contingency plan containing long-term activities to mitigate risk and reduce vulnerability, as well as 'shelf projects' to be rapidly implemented in response to specific warning stages; (iv) the preparation of a wereda disaster preparedness and

- 53 - prevention manual which outlines procedures to be followed in setting up and managing the early warning, contingency planning and rapid reaction system; and (v) a wereda drought contingency fund which enables such activities to be funded rapidly. These elements are contained in three sub-components: (a) a Community-based Early Warning System; (b) Disaster Contingency Planning; and (c) the Disaster Preparedness and Contingency Fund.

(a) Community-based Early Warning System

The Early Warning System (EWS) sub-component includes a community-based early warning system that will build on ongoing efforts by the DPPC and some NGOs to establish, at the wereda level, systems for the collection and analysis of basic household welfare and natural resource, economic and conflict-related data, using a survey instrument designed for pastoral production systems. Using part-time data monitors at the kebeZe and community levels, weredas will be able to compile and analyze trends in household, and environmental, economic and social conditions in discrete areas. This information will be collected and collated by the wereda Disaster Preparedness and Prevention Desk (DPPD) officer in the form of a wereda early warning report and passed, on a monthly basis, to both the Wereda Development Committee and upwards to the Zonal Disaster Preparedness and Prevention Office (DPPO) for compilation and review on a zonal basis. These reports will initially be prepared quarterly, but may be increased to monthly if conditions warrant. The DPPBs (the Regional bureaus ofthe DPPC) will then receive these reports, which will assist in planning and, ultimately, the implementation of a better system of targeting of early reaction to declines in the welfare ofpastoralist communities, their livestock and their environment. The component will begin in year one in the focus Project weredas, but as the early warning system should be Region wide as soon as possible, it will scale up to most, if not all, pastoral weredas in the four Regions. The household welfare and natural resource data monitoring will be supported at zonal and regional levels through improved access to normalized differentiated vegetation index (NDVI) information and other remote sensed data and training in its interpretation.

The Project will finance international technical assistance to support the design ofthe EWS and train federal and regional staff in its use. The Project will also support the employment of 12 part-time household monitors at each wereda, phased in over the Project, a food security analyst for each participating DPPO from project Year 1 to coordinate the development ofhousehold food security monitoring systems and two regional food security analysts in each ofthe 4 Project DPPBs form project Year 2 onwards. Disaster Preparedness and Prevention Desk (DPPD) staff in participating weredas will be provided with a motorcycle to track field monitors. Participating DPPB Regional offices will each be provided with a 4WD double cabin pickup to support community monitoring and disaster contingency planning. Wereda, zonal and regional disaster preparedness and prevention offices will also be equipped with computing and office equipment and provided office and field operating expenses related to managing the EWS. Project resources are also provided for training programs in EWS management.

Early warning reports will assign each wereda to one of The EWS will trigger responses to one ofthe 5 levels of disaster threat summarized below.

- 54 - Normal All the main indicators - rainfall, pasture production and availability, pastoral terms oftrade, conflict - are likely to remain within normal ranges for the time ofyear. Dry season preparations have been carried out satisfactorily. Alert Some indicators are outside their normal range and there are reasons for concem. Specific preparations are required locally. Alarm Most indicators are outside their normal range and the rural economy is under heavy stress. National support is required to overcome upcoming disaster Emergency There is widespread disruption and suffering. Animal deaths are increasing, and normal patterns of life have been abandoned.

Recovery All the main indicators are returning to their normal ranges, but livestock numbers are reduced and communities need continuing support to maintain purchasing power and entitlements.

Each warning level will trigger appropriate rapid reactions to mitigate the threat to household welfare, prepared in advance as 'shelf plans' under the disaster contingency planning sub-component.

(3) Disaster Contingency Planning

In this sub-component, the Project will invest in capacity building in weredu, zonal and Regional levels to prepare disaster contingency plans and manuals, monitor local disaster indicators, and manage funds made available for drought and other disaster response, primarily from other donors and government, but also with modest amounts made available under the Project. This should result in improved response as a result of the implementation of appropriate disaster and drought mitigation, management, and recovery activities. As this process is intensive in terms of human capacity, the Project will only aim to produce functioning disaster contingency plans for the initial focus weredus. It is expected that wereda level disaster contingency plans will include both disaster mitigation activities, such as small feeder roads, improved water management, fodder banks, and range improvement, to be implemented at any time, as well as rapid response activities, such as destocking, water tankering, response to human and animal disease outbreaks and the like. Rapid response activities will be planned in detail with community participation, and held as 'shelf plans' for rapid implementation when the appropriate warning stage is reached. Wereda disaster contingency plans will be reviewed at the zonal level, leading to recommendations for cross-weredu integration of DPCF investments where practicable. A weredu disaster contingency manual will be prepared as a focus for the cumulative experience in that weredu of putting the contingency plan into practice. The manual will contain a description of the strategy, the early warning and rapid reaction system and the drought contingency fund. The manual will contain inventories of equipment and supplies (such as vaccines, or tools for public works projects) needed in an emergency so no time is lost in ordering these. It will contain instructions for emergency cash for work or feeding programs. A consultant will draft an initial manual with help from a working group at federal level led by DPPC and supported by the Federal Inter-ministerial Board (FIB) technical committee. It will then be completed in each Project weredu. The manual will be updated regularly.

(c) Disaster Preparedness and Contingency Fund (DPCF)

Finally, the DPCF will provide the initial thirty weredus with development and rapid reaction grants to finance activities identified in their disaster contingency plans. It is expected that weredu level disaster contingency plans will include both investments to better mitigate drought, such as small feeder roads, improved water management, fodder banks, and range improvement, as well as funds set aside for rapid response, such as destocking, water tankering, response to human and animal disease outbreaks, and the

- 55 - like. An acceptable disaster contingency plan, containing both mitigation and rapid response activities, including documentation of the participatory process and environmental assessment, if applicable, will be a condition for release of fund resources. DPCF funds will also be available during the 'recovery' waming stage for livelihood rehabilitation activities, such as provision of tools and seeds, or strategic restocking. Wereda disaster contingency plans will be reviewed at the zonal level, leading to recommendations for cross-wereda integration of DPCF investments where practicable. It is expected that other govemment and donor resources will be the prime source of funds for major infrastructure investments. Investments could include roads, livestock water points, flood control structures, grain stores and electronic communication systems.

Project Component 3 - US$7.01 million

Project support and policy reform

This component will provide operational support and training resources to the Federal Project Coordination Unit (FPCU) in Addis Ababa and implementation units in the four Regions, as well as funding the monitoring and evaluation system and studies and training on policy issues and institutional reform.

(a) Project support and Coordination

The Project support and coordination sub-component will ensure that these units will effectively perform the following functions: (i)fiduciary obligations; (ii)policy analysis and liaison with stakeholder groups; (iii)multisectoral coordination at the federal and Regional levels; (iv) Project communication; (v) Project monitoring and evaluation (M&E); and (vi) the mobilization oftechnical backstopping.

A project manager, a pastoral policy and research advisor, a monitoring and evaluation specialist, an accountant and financial clerk, a procurement officer and three secretariesloffice administrators will staff the FPCU. Supporting intemationally recruited technical assistance will include a pastoral policy specialist (9 person months), a participatory development specialist (9 person months), a pastoral gender specialist (5 person months) and a monitoring and evaluation specialists (2 person years). National technical assistance will include an information management specialist (3 person months) and a gender specialist (12 person months). The FPCU will be provided with three 4WD station wagons for field work and a 4WD double cabin pickup for procurement and other duties in Addis Ababa. Drivers will be financed for all vehicles. The project will also provide a comprehensive set of office furniture and equipment, including equipment for audio-visual presentations. Senior staff will be provided with mobile phones. Staff and consultant field perdiem and the operating costs of all vehicles and equipment will be covered by the project together with those for office rental and consumables.

A regional project manager, a communications and training advisor, a monitoring and evaluation officer, an accountant and financial clerk, a procurement officer and two secretariesloffice administrators will staff each RPCU. The RPCU will be provided with a 4WD station wagons for field work and a 4WD double cabin pickup for project monitoring and evaluation. Drivers will be financed for all vehicles. The project will also provide a comprehensive set of office furniture and equipment, including equipment for audio-visual presentations. RPCU office will have base radio stations and all field vehicles will be provided with two-way radio communications. The operating costs of all vehicles and equipment will be covered by the project together with those for office rental and consumables.

- 56 - (6) Monitoring and Evaluation

This subcomponent will finance the information management system and Project liaison activities. This will comprise (i)a Management Information System; and (ii)a system that combines community derived impact assessment ofmicro-projects with a system that tracks pastoral livelihoods at the wereda and Regional level. The M&E system will provide timely feedback to program management on how well interventions are reaching the intended beneficiaries and how effectively the Project resources are being used, in order that rapid corrective action can be taken if necessary. The communication program includes development and dissemination of information concerning program activities, approaches and results, using a variety of media.

Capacity-building: A central aspect of this Project will be the building of capacities for pastoral community development among support services and the pastoral communities themselves. Capacity is understood here as the ability of individuals and organizations in terms of skills, knowledge, attitudes and behavior to be able to perform functions to achieve their objectives. Capacity grows from within through a process of learning and change, building on existing capacities, but the process can be stimulated and enhanced through interventions. The entire pastoral community development (community-driven development) process involves capacity building. In addition to time-bound training events that build on each other, the process ofparticipatory M&E will be an integral part of capacity building. The main reason for monitoring and evaluating progress and impact is to improve performance. Through actually planning development activities, making use of the CIF and then reflecting on the process and outcomes, the pastoral communities will leam and enhance their self-management capacities and external services will learn how best to support the communities. In view ofthe central importance of participatory M&E for capacity building, the FPCU in Addis Ababa, the RF'CUs in the four Regions and the MSTs working with pastoral communities and wereda/ kebele staff will each have training in participatory M&E and will have the capacity to guide all Project participants in this process. Effective participatory M&E is far more than merely compiling information; it is inspiringparticipants to want to seek and use this information as a source of learning.

A three-level monitoring and evaluation system will be used for the Project:

At the grassroots level, a beneficiary monitoring and evaluation system in which men and women participants record their activities and monitor and evaluate the results themselves. This so-called responsive M&E (RME) system will enable pastoralists to evaluate the impact ofthe Project activities on their own lives and help to improve future activities. It is expected that Development Agents will also monitor the beneficiaries and have access to this information, providing a dual process ofsystematic and on-going data collection and learning. At the implementation level, Project staff will provide a two-way linkage between the RME system at pastoralists' level and a Project Benefit Monitoring and Evaluation (see below) at the Project management level. It is expected that they will manage a pastoral area information system to collect range condition, animal health crop production and yield information, data on commodity prices and trade, information on the rangeland resource and climate, and pastoralist social organization, and will carry out analysis of these data together with data from socio-economic surveys and RME systems. The main purpose of M& E at this level will be to improve Project delivery, to monitor natural resource conditions and provide information in two directions to inform pastoralists, technical counterparts and donor partners. At the Project management level a Project benefit monitoring and evaluation (PBME) system will be used to measure inputs, activities and outputs (results and achievements) for various partners in

- 57 - the Project including the Project beneficiaries, the Project Steering Committee(s), the Government of Ethiopia, and the supporting International Financial Institutions.

System Description: The proposed participatory monitoring and evaluation system will play a central role in Project implementation through its ability to assure regular review and appropriate decision-making. It requires involvement of all relevant stakeholders, primarily community members, and their leaders, government staff and members ofparliament. The system has two parallel mechanisms, one written and one oral. The first mechanism (written and tabulated data) is implemented by Government of Ethiopia staff, including mobile teams and weredu, regional and federal staff and is based on systems already in use by the Government of Ethiopia. The second, oral, mechanism is designed and implemented by the people themselves according to traditional and locally evolving mechanisms of monitoring and evaluating change. These two systems come together in a set of stakeholder meetings at weredu, regional and federal levels held at twelve-monthly intervals. Stakeholders analyze what has been done, what impacts have been observed and arrive at decisions for ways forward for the Project. The M&E system is then subject to checks and balances by World Bank supervision missions, external consultants' reviews, Members of Federal and Regional Parliaments and finally an overall livelihood tracking system coordinated at Federal level.

System Elements: Pastoralist and government leaders at regional and Ilevel have stated that the potential effectiveness ofthe Project is primarily related to its responsiveness to the end-users and their realities on the ground. The following activities and formats for monitoring and evaluating the process and impact ofthe CIF, DPCF and policy aspects of the Project are therefore proposed:

M&E Element DescriDtion Monitoring a) Written formats for recording and analyzing Consistent Project, wereda, regiodspecial zone and federal level record keeping, progress and implementation reporting and analysis;

b) Pastoralist oral formats for monitoring progress Consistent community and community leader reporting and analysis of program and implementation progress and implementation;

c) Pastoralist early warning system Situation monitoring and analysis by pastoralist network integrated with government early warning system (see Pastoral Risk Management Component);

d) Parliamentary oversight Situation monitoring and oversight of PCDP plans and implementation by pastoralist members of parliament as part of their constitutional duties.

Co-ordination of information and analysis at regional and federal level on e) Livelihood tracking situation of sustainable livelihoods in the four regions to inform policy and for use in stakeholder events and external reviews. Evaluation a) End user evaluations Written formats recording community plans, indicators, opinions on impact and recommendations for further action for both CIF and PRM expenditures.

b) Stakeholder events Facilitated meetings with decision-making powers between stakeholders at all levels, primarily community elders, line ministry representatives, and parliamentary representatives. c) External reviews Regular external reviews to audit the Project as a whole ~ System Oversight a) Monitoring and evaluating the M&E A small steering group, with representation from community, govemment and the system itself donor, oversees the M&E system, develops the terms of reference for meetings and evaluations and acts as ombudsman.

Stakeholder Events: Meetings between government and community are central to the M&E system as they ensure that links between analysis and action are based on participation. Meetings will be convened

- 58 - by the Project co-ordination units at each of three levels: wereda, regional and federal, and will be minuted. Wereda meetings may be called every six to twelve months and the regional and federal level events may be annual. Locations for the federal meetings would be in the regions, in rotation. This would include opportunity for federal staff to visit and stay with pastoralists and the mobile support teams in the kebeles and to hold review meetings with them. Participants should be drawn from among the main stakeholder groups: (i)governing agencies (both state and traditional), (ii)service delivery agencies (governmental and non-governmental); and (iii)community members. The difference in the system proposed here to other systems, is the active participation of the traditional pastoralist leadership in reviewing progress, analyzing impact and discussing ways forward including inter-community investments. It is therefore crucial to determine who is considered to be an adequate representative of pastoralist men and women by pastoralists, rather than assuming this from outside.

Terms of Reference for the Meetings would include the following:

1. Review the recommendations of the previous meetings and account for what was done and not done and why. 2. Review the progress of the various CIF and DPCF subprojects since the last meeting. 3. Evaluate the impact ofthe projects and processes of PCDP. 4. Analyze the causes of successes and failures in terms of both the Project processes and the external environment. 5. Consider the ways forward for consolidating successes and dealing with problems including the identification of inter-community subprojects for CIF financing. 6. Make recommendations for action. 7. Agree on how, when, by whom and where such recommendations should be pursued. 8. Publicize the meeting content and decisions.

In preparation for the meeting, it will be expected that the traditional leaders will have consulted their constituencies using their own systems ofdialogue. The government staff will have made use ofthe monitoring and evaluation formats. Both groups will therefore arrive at the meeting ready to analyze and make recommendations together with the community members and civil society and private sector representatives who also attend.

The recommendations fulfill one of the prime objectives of the M&E system in ensuring change. They also fulfill the principle that both formal and traditional perspectives are included in accounting for achievements and failures and in decisions about what is actually done next. Therefore it is crucial that Project staff and community leaders are accountable for pursuing the decisions within their subsequent activities, strategies and policies. Mechanisms to ensure this accountability are the regularity ofreview meetings themselves as well as normal sanctions including withholding offunds.

- 59 - (c) Policy analyses and Reform

ParticipatoryPolicy and Knowledge Development: Ethiopia’s weak policy environment in lowland areas, both declared and implicit, provides ample scope for further study and informed, participatory policy development. Uncertain land use rights and associated periodic insecurity, natural resource degradation, a low revenue base and associated deteriorating infrastructure, disorganized markets and asymmetrical market information, the weak institutional framework and supporting social services and the rising physical and mental dependency on food aid are major concerns for pastoralists and policy makers alike. While these policy constraints are broadly recognized, a knowledge gap exists amongst national policy planners concerning the dynamics of pastoralism, regularly leading to poor policy choices. Combined with the scarcity of endogenous pastoralist organizations with the capacity to represent and defend their interests at the national policy level and an often-inappropriate institutional environment for pastoral development, this has created a situation where effort toward improvement in the livelihoods ofpastoral people frequently fails.

The PSDP will address these constraints by: (i)empowering pastoralist leadership to understand the dynamics of their own livelihood strategies in relation to the broader policy environment and to articulate this at both the grassroots and national political levels; (ii)funding a series of policy studies that accurately inform policy decision making of the dynamics and diversity of Ethiopian pastoral systems; and (iii)investment in the knowledge system that will ensure that lessons learned in pastoralist development, past and present, will be retained and transferred.

Pastoralist Empowerment: While pastoralists have many advocates, particularly in the NGO and donor community, they are not a substitute for a dynamic and articulate pastoralist civil society determining their own future. The recent establishment of the parliamentary Pastoralist Standing Committee is but the first step toward the emergence ofa strong pastoralist civil society in Ethiopia. The newly visible Federal pastoralist leadership must be mirrored in the Regions by strong, articulate rural leadership, conversant with local and national body politics and the policies, institutions and processes that impinge on their livelihoods. Rural pastoralist leadership must not only articulate to power centers, it must also learn to listen and communicate with its people, women, youth and the poor, and broaden their representation, both in their own communities and in the wider socio-economic environment. These outcomes can be achieved through participatory learning and action programs that build skills and knowledge, improve self analysis, strategic planning and monitoring capacity and raise understanding ofenvironment, gender and rights issues within pastoral communities. They also require new opportunities for dialogue between an empowered, networked pastoral lobby and informed local and national policy makers, from which sound policy choices should emerge.

The PCDP will support pastoralist empowerment by: e designing and delivering a generic, awareness raising training course on the dynamics ofpastoral systems and policy options for senior regional and federal government policy makers and service managers; e building rural leadership and conflict management capacity and improving rights, social and environment awareness amongst pastoralist men, women and youth at the grassroots level, combined with experiential visits to local and national government agencies and political bodies; e sponsoring networking amongst pastoral groups (men, women and youth) and between them and

- 60 - other interest groups, both locally and regionally; a sponsoring meetings, preferably field-based, that facilitate a two-way flow of information and ideas between pastoralist civil society and policy makers on the ways forward for Ethiopian pastoralist society; a facilitating conflict resolution amongst pastoralist communities a ensuring the development, legislation and community-based delivery ofpastoralist-friendly literacy, education, health and veterinary services and their integration into the corresponding national service system;

Policy studies: The PCDP will fund the cost ofabout 6 major policy studies (>US$75,000) and approximately 6 policy research initiatives up to the value ofUS$ 10,000 each, the design of which will be finalized in the course of the Project. The FPCU will be responsible for preparing the terms of reference (TORS) for policy studies, which may involve the use ofdomestic or international technical assistance. TORSfor major policy studies will be subject to Bank review prior to their being put to competitive tender. Invitations to bid for all policy studies will be advertised in national newspapers. Major studies will be open to domestic and international bidders. All policy studies and resulting recommendations will be pro-poor and gender and environment sensitive. Possible areas ofpolicy study include:

Pastoral drought management, to identify, in collaboration with DPPC and interested NGOs and donors, appropriate local indicators of stress as perceived by pastoralists and determine how they can be collected and reported in a timely manner within a national lowland early waming system (EWS) that gives adequate warning of a forthcoming crisis. The study will also identify appropriate rapid reaction strategies and associated EWS triggers to preserve livestock or its capital value; to maintain adequate cereal availability at reasonable prices throughout drought affected areas; and for maintaining pastoralists’ health, purchasing power and entitlements in famine situations. The study would generate EWS and field monitor’s manuals and a format for the preparation of wereda disaster contingency plans. Land use rights and conflict resolution including the role of traditional law and historical rights, reciprocity and duties in pastoral land policy; the use oftraditionally owned land for commercial purposes (ranching, irrigation, settlement); land taxation; coping strategies for land dispute resolution; and the unequal power relations within communities as a result of growing social and economic stratification; Natural resource conservation covering sustainable land use including woodcharcoal off-take, the role offire in range management, bush and weed control, range resting and forage conservation, and forest and endangered species protection; watershed protection and management; water storage, irrigation and use rights; river access; wildlife conservation and management; Livestock and grain marketing with a view to improving disease monitoring and control including livestock quarantine, streamlining livestock export institutions and processes; improving trade credit and cross-border financial services; improving market infrastructure and reducing asymmetry in market information; improving transport schedules and reducing costs; taxation; strengthening meat industry associations; expanding grain marketing and strategic grain storage; and livestock and grain marketing strategies during emergencies.

-61 - Food security with a view to developing improved approaches to lowland early warning systems, disaster preparedness planning and risk management; linking disaster warning to response; income diversification including agropastoralism and irrigated agriculture; forms ofdisaster assistance including food aid and cash for work; Revenue generation and use including deconcentration of government revenues; small and micro-enterprises in pastoral towns; local taxes and rates and their collectiodevasion; taxation of traded goods; user charges for services and service privatization; budgetary planning and infrastructure operation and maintenance; Economic and$nancial analysis of the contribution ofthe lowlands to the national economy, capturing formal and informal production and trade, household consumption ofnon-marketed commodities (especially milk), the contribution of the natural resource base (especially energy and minerals) and that of wildlife and tourism.

A format for policy recommendations is contained in the PIM. Policy recommendations resulting from Project policy studies must clearly articulate the rationale for a new policy and demonstrate how the recommendation differs in relation to already existing policies. It must define who are the groups expected to benefit from the policy and what the expected benefits are in terms of income, employment, prices, trade, poverty reduction, budget cost, the environment and gender equity. It must also consider the costs ofthe policy in terms of, inter alia, ofFederal and Regional State budgets, regional balance, employment, environment, price stability, poverty and vulnerability, social stability and gender. The policy time frame -the expected time for the policy to be implemented and the time to realize its effects -will be described, as will the risks associated with the policy. Risk analysis will examine who are the key groups affected by the policy, the level of government support for the policy, the level of donor support, the institutional capacity for policy implementation and the level ofbudgetary support for the policy. Policy recommendations described within these parameters will provide a comprehensive framework for policy decisions at both Federal and Regional State levels.

- 62 - Annex 3: Estimated Project Costs ETHIOPIA: Pastoral Community Development Project

Pastoral Risk Management 3.40 12.14 15.54 Project Support and Policy Reform 5.45 1.13 6.58 Total Baseline Cost 18.25 37.94 56.19 Physical Contingencies 1.22 0.55 1.77 Price Contingencies 1.65 0.35 2.00 1 Total Proiect Costs 21.12 38.84 59.96 Total Financing Required I 21.12 1 38.84 I 59.96 I

Identifiable taxes and duties are 0 (USSm) and the total project cost, net of taxes, is 59.96 (US$m). Therefore, the project cost sharing ratio is 0% of total project cost net of taxes.

- 63 - Annex 4 Summary of the Local-level Institutional Analysis ETHIOPIA Pastoral Community Development Project

Approach to pastoral community development The PCDP seeks to strengthen both the capacities ofpastoral communities to determine and manage their own development, and the capacities of Government institutions to support this process.

The Project-funded Mobile Support Teams (MSTs), working with weredu or kebele staff, will facilitate participatory situation analysis in pastoral communities to identify opportunities and problems and ways to address them. The communities will review changes they have observed in their lives, formulate their visions for the future, identify stakeholders and their stakes, assess the effectiveness oftheir institutions in managing development, and set priorities for action in any sector of development. They will be guided through discussions ofcost-benefit analysis of proposed activities, identifying sources of inputs and expertise, assessing environmental and social impacts, and agreeing on roles and responsibilities. They will be supported in preparing brief written proposals for micro projects for submission to the Community Investment Fund (CIF). Community institutions will be responsible for supervising implementation ofthe micro projects. Their own monitoring and evaluation (M&E) of the activities will be an integral part ofimplementation, in a leaming process of action, reflection and re-planning.

Community activities can also take the form ofparticipatory research to investigate, test and adapt promising innovations that could improve local livelihoods. The innovations being tried by community groups can serve as bases for demonstration and discussion by visiting pastoral groups. An Innovation Fund will be made available to groups within the pastoral communities to support their own research related to livestock and crop husbandry and natural resource management (NRM). The MSTs and Government technical services, ideally with the support of formal research institutions in Ethiopia, will give the groups guidance in conducting their research. The groups will make their own decisions as to which person(s) in their midst will actually carry out experiments on their behalf. The possibility will be explored of converting the Innovation Fund into community-managed revolving funds for local research.

Information dissemination and management From the outset of the PCDP, information will be spread as widely as possible about the approach, so that pastoral communities and decision-makers in modem and traditional institutions are aware of the possibilities the Project offers. In order to address the problem of finding technical expertise to support community initiatives, the Project will facilitate creation ofa database of approaches and activities in pastoral development and sources ofrelevant information and expertise. Also information on community-led projects and experiments supported by the Project will provide ideas for other communities and support services. The information will be spread in local languages via radio and in posters, brochures, leaflets and booklets that can also be used in literacy training. Study tours will be organised for weredu-level Government staff and community leaders to visit development activities in their own and other regions. Dissemination ofinformation on the Project experiences will play an important role in the learning process for the Project partners and for other organisations involved in pastoral development. The Project approach and outcomes will be made known via mass media (radio, newspapers, television) as well as seminars and workshops involving stakeholders in pastoral development at regional and national levels.

- 64 - Indigenous institutions and their links with Local Government The PCDP is based on the assumption that pastoral livelihoods can be improved by strengthening the self-management capacities of indigenous institutions. As the MSTs will be working through these structures, some understanding of the institutions for social organisation and resource management was sought. Traditional institutions among the Somali, Afar, Borana and various pastoral ethnic groups in South Om0 are described in the Working Paper on “Local-level socio-institutional issues and capacity building in pastoral community development”. However, the relative strength of the institutions, the details of their structure and the local terminology may differ within the ethnic groups. It will be part of the participatory situation analysis and development planning process during Project implementation to: 1) identify the local institutions that actually exist in that area; 2) assess their strengths and weaknesses; and 3) decide jointly with community members whether to work within these institutions, to modify them in the light of present conditions and local visions for the future, or to create new organisations for new tasks.

The smallest unit that could be called a “community” is a group of households that liveimove together, cooperate in certain tasks such as herding or watering animals, and share resources in some way such as using a common source ofwater. Small “communities” ofthis type are nested within larger ones that use resources jointly on a larger scale, such as a broad grazing area that a group (e.g. a subclan) is entitled to use. Male leaders of the group, usually together with a council ofmale elders, decide on how these resources are used and are responsible for organising protection of grazing areas and for designing seasonal movements, particularly for reserving dry-season pasture. Access to pasture is traditionally controlled via access to water, but interventions in construction of additional water sources in past decades appear to have weakened the control mechanisms. Changes in access to resources have also resulted from the construction of bevkado (underground cisterns) by rich individuals as well as from Government policies for land development that favoured expansion of cultivation into grazing areas, particularly those near dry-season water sources. Also large influxes of refugees have led to considerable disturbance of grazing land.

The traditional leaders and elders frequently deliberate on political matters and have traditionally played a key role in arranging self-defence and resolving conflicts. Also pastoral women played a role in conflict resolution. However, these traditional mechanisms do not seem able to deal with the recent expansion ofdryland farming and competition with outside investors for land.

The kebele (Pastoral Association, PA) should be the main communication link between the community and the State, but has remained marginal to community affairs in most pastoral regions. Many Borana regard the Local Government structure as a political imposition that threatens their indigenous mechanisms for social organisation and resource management. The MSTs seeking contact with Boran communities will, in most cases, enter at the level ofthe olla (small village or encampment with usually 15-30 households that cooperate in herding and watering animals and may include people from several clans) and approach first its traditional leader (Aba Olla). Several ollas may join to plan a larger project. For example, community planning to rehabilitate pasture or to improve a water source would be done on the level ofthe dedha or madda, i.e. a group that uses a large common grazing area or well.

Among the Afar, the PAScoincided largely with clans that traditionally have more or less strong control over local resources, but were enlarged in 1994 to include several clans that compete for the same resources. This makes it more difficult to reach consensus in planning development. The Afar people identify in different contexts and for different purposes with different social units based on

- 65 - kinship, descent and residence. The level of “community” with which the PCDP would most likely interact would be that of the cooperative group known as the “ganta”, a collection of nuclear (burra) and extended (dahla) families that travel and camp together or form a hamlet of only a handkl of household or as many as 60 households. For wider cooperation in managing natural resources or establishing social services, the Project may also work with a lineage (gulub) or clan (kidoh, kedo), still larger groupings ofrelated people who share common resources and concerns. These groupings may subdivide or reform in different constellations depending on a variety of socio-political, economic or environmental factors.

The PASin Somali Region likewise used to be organised on the basis of clan membership but were re-organised in the mid-90s. In the northern part of the Region, it appears advisable for community-based projects to work through the head and advisors ofthe qolo (subsubclan) or bee1 (subclan), who can interact well with the PA admmistration. The reer, which is composed ofthe households of a senior male head and ofa few close kin andor dependents, would be the smallest social unit that might be regarded as a “community”. Depending on the location within Somali Region and the types of concerns being expressed by the local people, the MST may work with several reer living together (reero) or with a tuulo (somewhat larger grouping of households in a village). In southern Somali Region, the pastoral communities may prefer to collaborate in planning micro projects through the wereda rather than the PA.

In South Om0 Zone of the Southern Nations, Nationalities and Peoples Regional State (SNNPRS), there are 13 distinct pastoral groups with different languages and cultures. Their forms ofsocial organisation differ from each other to some extent and are in a state of flux. Compared to the larger ethnic groups in the other Regions covered by this first phase ofthe Project, the groups in South Omo are more confined in herd movements. In recent years, small-scale cultivation has become more widespread around more or less temporary hamlets that may include women, children and older men from several clans. Women play a major role in cultivation, even to the extent that some women use draught animals for ploughing in the few areas in South Om0 where this technology has been adopted. These hamlets would be the initial entry points for community development support by the MSTs, after consultation and agreement with the traditional male and female leaders of the ethnic group concerned.

Socio-economic differentiation in pastoral communities Relative wealth. There is a marked differentiation within pastoral society in terms of livestock holdings, the most common measure of relative wealth. There are few very rich households, with large mixed herds of camels andor cattle, equines and small ruminants. The households that are more or less viable are those ofpastoralists who can live mainly from their livestock and the agropastoralists who have enough animals to buffer against crop harvest shortfalls. Very poor agropastoral households have only a small flock of small nuninants, a couple of cattle, and uncertain harvests from rainfed crops. The destitute have access to neither livestock nor land. They depend on selling charcoal and firewood, fetching water for town dwellers, tending herds for the rich, working as watchmen or labourers, charging tourists for handicrafts or photographs (particularly in South Omo) and traditional social welfare networks, where these still function. Many “modern” destitute are refugees, former pastoralists who live partly from food aid. The agropastoralists and destitute have settled at least temporarily in towns and refugee camps. The very poor do not send their children to school, have little or no access to health facilities, suffer from food shortage and take no part in community decision-making. They eat wild foods in a normal year, not just during crises. Female-headed households tend to be among the very poor and destitute. As a very rough estimate based on wealthipoverty ranking results in recently published reports, about 5-10% ofpastoral peoples in the

- 66 - proposed project areas could be considered rich to very rich, about 25-35% viable, about 40-50% poor to very poor, and about 15-20% destitute.

The pastoral groups have various institutions for mutual aid, e.g. making a contribution for a clan member with a severe problem, loaning milk animals for a short period, or helping a family to restock when it loses animals through misfortune. The pastoralists’ ideal self-image of their society and the reality often differ. Movement of family members to towns to seek work in non-pastoral sectors may create new types of socio-economic links between rural and urban areas, but it is not clear to what extent these offer new types of social safety nets. During Project implementation, it will be an important part of situation analysis in the communities to examine to what extent the traditional redistribution networks still function or can be revived, or new ones have developed. Attention must also be paid to the extent that certain artisan groups outside the pastoral social structure are marginalised from community decision-making.

Gender. It will be a major challenge in the PCDP to give men and women equal opportunities to take part in and benefit from the Project activities. Pastoral men have the rights to own livestock, the main factor ofproduction in pastoralism. A woman’s economic status depends on her relationship with livestock-owning men. The situation of widows is especially weak. If a widow is not inherited by her deceased husband’s brother, as is a tradition in many ofthe pastoral groups, she lacks access through men to critical productive resources such as labour for managing camels, clearing land etc.

Pastoral men are normally responsible for herding and watering the large stock, milking camels, acquiring and selling or slaughtering animals, representing the household, and defending the family and kin. They dominate community-level decision-making. The workload of most pastoral women is far greater than that ofmen and includes the tasks ofbuilding huts, preparing meals, fetching water and fuel, child care, caring for young animals, helping to water stock, milking goats and cattle, and processing milk. Although women do much livestock-related work and may be consulted about the disposal of animals, men usually make the final decisions in this regard. Women provide water for the family and young animals, but men control the waterpoints. Generally, women sell milk products and control the proceeds, whereas men control the proceeds from animal sales.

On account of cultural attitudes about women’s role and the custom of early marriage, participation of pastoral girls in formal education is very low and the few girls who do attend school rarely go beyond the fourth grade. Pastoral families are reluctant to allow their daughters to attend a school far from the home.

Boys and girls, men and women of all ages in the pastoral communities are concerned with water, health, nutrition, animal husbandry and access to natural resources. From the outset ofthe PCDP, it will be important to incorporate gender analysis into the work with the communities. Some pastoral groups, particularly in the south of Ethiopia, recognise traditional women leaders. Some older women past child-bearing age assume leadership and community-service functions. Several NGOs and bilateral projects operating in pastoral areas in Ethiopia are addressing the challenge of gender issues in development. A more thorough study oftheir approaches is needed, as they could provide good examples to communities, support services and the PCDP. In any case, to give pastoral women a better chance to be involved in the discussions - whether in the public sphere or not -both traditional and modem information channels should be used to make the women aware ofthe PCDP approach and the opportunities it offers.

- 67 - Expected socio-institutional benefits, constraints and risks Potential benejts. The design ofthe PCDP, with its use of MSTs to facilitate pastoral community planning and capacity building and its focus on working through indigenous social structures, is compatible with the organisation and livelihood strategies of pastoral people. If successful, the Project will contribute to increased or more stable income ofpastoral households, increased access to social and technical services, and wider community involvement in decision-making about local development. Local organisations will develop better skills in planning, accessing information and other inputs, and recognising the social and environmental impacts ofdifferent activities. To the extent that the communities give priority to education and health services, these will contribute to improving the well-being ofpastoral men, women, boys and girls. The attention given in the Project to early warning systems using local indicators through community-based monitoring should help pastoral communities and supporting organisations to react more quickly to avoid disaster and reduce vulnerability to drought, animal disease and other risks.

The lessons learnt during Project implementation should have a positive effect on subsequent work, also in other pastoral areas. This learning can be achieved through self-assessment based on participatory M&E, external evaluations, and analysis and documentation of the Project experiences.

Potential constraints and risks. The PCDP will face several constraints and risks including: dominance ofmore powerful and better informed individuals in benefiting from the Project; exclusion of the poorest; gender and age bias; exclusion ofmore mobile pastoralists; inability oftraditional institutions to manage natural resources under changed political and economic conditions; increased conflict; incompatibility with activities of other agencies (Government and NGO) working in the same areas; biased perceptions by communities and supporting services of fundable projects; poor functioning and high turnover in Government services; and World BanklIFAD impatience with slow draw-down of funds. In the Working Paper, several recommendations are made concerning measures to reduce these risks.

During Project implementation, the following issues will need further study and monitoring:

Pastoral women in community development: analysis ofexperience in improving the socio-economic situation ofpastoral women and strengthening their contribution to community development

Pastoral information and communication systems, including attention to inclusion or exclusion of certain groups from different channels of information

Concepts ofpastoral settlement from the pastoralists’ point of view, and linkages between more sedentary and more mobile groups, also between those in urban and rural areas

Dynamics of indigenous knowledge: innovations that pastoral communities have developed and incorporated into their practices and local institutions to improve their livelihoods

Degree of equity within and between pastoral communities, with particular attention to women, youth and minority groups traditionally marginalised from pastoral society, and existing

- 68 - mechanisms of mutual aid for the misfortunate and impoverished.

Participatory approaches to pastoral development are already being taken by some NGOs and bilateral projects. More information is needed about their effectiveness in strengthening community capacities to manage their own development. This would allow the PCDP to learn from these experiences and select suitable sites for learning visits by policymakers, Government staff and members ofpastoral communities. It would also allow the Project to harmonise its approach with the promising activities already on the ground, and to help scale them up.

Local capacity building for pastoral community development Building capacities for pastoral community development among support services and the communities themselves is central to the Project. Capacity is understood here as the ability of individuals and organisations in terms of skills, knowledge, attitudes and behaviour to be able to perform functions to achieve their objectives. It grows from within through a process of learning and change, building on existing capacities, but can be stimulated through interventions. In addition to time-bound learning events that build on each other, the process of participatory M&E will play a key role in capacity building. The learning events to support capacity building at all levels will take place as close to the field of action as possible and will be alternated with periods of application in day-to-day work. The sessions will start on the basis ofthe existing knowledge ofall participants, allowing exchange and critical analysis ofthis knowledge and introduced information.

Preparation of the Project team will include participation in the work of existing Mobile Support/ Outreach Teams (e.g. operated by NGOs such as FARM-Africa) in the field, followed by training in: teamwork and project management; facilitation and communication; training of trainers; participatory approaches and techniques; awareness ofgender and other differences in communities; participatory innovation development through community-led experimentation; local organisational development; and use ofthe Environmental Assessment Management Framework.

Orientation and capacity building in Government institutions will be carried out through various activities, with different emphases at different levels, and will include seminarslworkshops on: the PCDP approach, pastoral livelihoods and coping strategies, principles and practices ofNRM in the drylands, Participatory Learning and Action (PLA), participatory innovation development through community-led experimentation, facilitation and communication, gender awareness, local organisational development, participatory M&E, information management, and training of trainers. Government staff will visit development activities and experiments planned and carried out by pastoral and farming communities. An important component ofcapacity building at all levels will be the promotion ofmulti-stakeholder learning fora on pastoral development, providing occasions to reflect on the PCDP process. This will be linked with participatory M&E and process documentation.

Depending on the demands being expressed by pastoral communities, wereda and kebele support staff will take part in short-term training courses, exchange visits, workshops etc on topics such as improving water supplies, low-external-input rainfed agriculture, micro-scale irrigation, basic animal andor human health care, literacy and numeracy training etc. Additional training needs will doubtless be identified during the course ofthe Project.

In pastoral communities, much ofthe capacity building will take place in the process of meetings and discussions for planning and implementing activities. It will include: information and awareness-raising among elders and other community members about the Project approach; training/coaching ofmale and female leaders in participatory situation analysis, action planning,

- 69 - project formulation and M&E; training in leadership and organisational management; travelling seminars to local innovations and initiatives and visits to sources of information on relevant externally-developed technologies; accompaniment of community-led research; short-term technical training in innovative technologiesiservices in which local groups express interest; seminars on principles and practices ofNRM in dryland areas; and guidance in use of environmental screening forms and assessing impacts ofproposed micro projects.

Wherever possible, training will be given by experienced institutions and NGOs working in Ethiopia. If training expertise is brought in from outside, this will include training of trainers, together with an Ethiopian organisation that will continue the training activities. Government institutions for education and training will be involved with a view to developing appropriate courses and curricula in these institutions.

Various organisations within Ethiopia can provide support to the PCDP in building capacities for pastoral community development, both in providing living examples for learning and in the more conventional sense of training and coaching. Ethiopian training institutes, NGOs and bilateral projects with experience in capacity building for community development will be invited to a planning workshop to design capacity development within the PCDP. The ideas in this report will then be reviewed, expanded and refined, on the basis ofthe workshop participants’ experience.

- 70 - Annex 5: Financial Summary ETHIOPIA: Pastoral Community Development Project Years Ending

IMPLEMENTATION PERIOD I Year1 I Year2 I Year3 I year4 I Year5 I Year6 I Year 7 Total Financing Required Project Costs Investment Costs 7.8 11.6 11.8 11.1 8.4 0.0 0.0 Recurrent Costs 0.6 1.4 2.0 2.6 2.7 0.0 0.0 Total Project Costs 8.4 13.0 13.8 13.7 11.1 0.0 0.0 Total Financing 8.4 13.0 13.8 13.7 11.1 0.0 0.0 Financing I B RDllDA 4.3 6.5 6.9 6.8 5.5 0.0 0.0 Government 0.9 1.2 1.2 1.4 1.1 0.0 0.0 Central 0.7 0.8 0.8 0.9 0.7 0.0 0.0 Provincial 0.2 0.5 0.5 0.5 0.5 0.0 0.0 Co-financiers (IFAD) 2.9 4.4 4.6 4.5 3.7 0.0 0.0 Beneficiaries 0.3 0.9 1.1 1.o 0.8 0.0 0.0 Total Project Financing 8.4 13.0 13.8 13.7 11.1 0.0 0.0 Main assumptions:

-71 - Annex 6(A): Procurement Arrangements ETHIOPIA Pastoral Community Development Project

Procurement

General. A Country Procurement Assessment Review (CPAR) was carried out in June 2002. The findings of this review are valid for the PCDP. Public procurement in Ethiopia is regulated by Financial Administration Proclamation No. 57/1996 and Council of Ministers Financial Regulations No. 1711997. In general, Ethiopia’s laws and regulations do not conflict with IDA Guidelines and the procurement regulations apply only to activities for which funds come directly from the Ministry ofFinance.

Capacity Assessment and Proposed Procurement Arrangements. An assessment of the capacity of the Pastoral Development Department of MOFA has been carried out. The assessment has addressed the main issues and recommendations. In accordance with the findings of the assessment the following action plans have been agreed: (i)The procurement planning and management process will be strengthened through adequate training and guidance to key staffs involved in the procurement process (ii)a detailed procurement manual will be developed and adopted; (iii)procurement staff with acceptable capacity and qualification will be employed. The training shall be provided by sending staffs to regional training centers and conducting appropriate trainings at local level. The training shall include the whole procurement process in addition to records management with emphasis on community procurement.

In the procurement arena, the main role of the project coordination staff in the FPCU will be to assist weredas and Regions to carry out any procurement done at those levels. The FPCU will be strengthened with additional specialized staff dedicated to the project as a condition of Effectiveness. Its procurement staff will have prior experience in executing IDA financed procurement and will receive additional training as needed. The situation will be closely monitored during project implementation. The main procurement that will take place at the Regional and wereda level is directly related to operation and maintenance (office supplies, gasoline, transportation material maintenance and repair). Procurement for beneficiary executed micro-projects will be executed using procedures described above and detailed in the Project Implementation Manual. As capacity to execute these types of micro-projects will be weak initially, substantial efforts will be made to train beneficiaries before the start-up of the investment program. The procedures take into account the lessons learned from similar projects in other countries. Beneficiaries need training in the selection of service providers. It is also important to avoid trying to overload beneficiaries -- the investment program will proceed at a pace consistent with the implementation capacity of the beneficiaries.

Procurement Issues. The MoFA is a new Ministry, with no prior experience ofmanaging projects for international financial institutions. The PCDP will address this issue by recruiting an experienced national procurement specialist to manage the procurement program and through refresher training for the procurement specialist and procurement awareness training for the Project Director and FPCU Manager. A substantial proportion of the procurement will be made in isolated wereda where there will be little competition for the supply ofservices. The RPCU will employ an experienced government procurement officer who will monitor Regional and wereda procurement activities, aggregating wereda level procurement contracts wherever possible with a view to attracting wider competition. The RPCU procurement officers will train wereda PDO staff in local procurement management and receive refresher training at the national level. Late payment of import taxes and duties by Government frequently delays delivery of goods, particularly now that most goods are imported through Djibouti, a foreign port. The FPCU will prepare detailed annual estimates ofProgram tax and duty liabilities and present them to MoFA in a timely manner to ensure their inclusion in the annual government budget.

- 72 - Funds for communities will be at the heart of the Sustainable Livelihoods component. Most of the procurement involved in the Community Investment Fund (CIF) will be in the form ofvery small transactions carried out by communities and kebeles, and will take place locally within selected weredas. Community micro-projects shall be on a grant basis, not to exceed US $10,000 per grant, subject to the community contributing at least 20 percent of the total micro-project costs. Participating communities will not be eligible for more than one grant per year. Only grants approved by the Wereda Development Committees can be financed. Community contributions will rise to 40 percent for second and subsequent grants.

Disaster preparedness and contingency funding will be available to weredas and, to a limited degree, Regions, to meet investments in infrastructure and other risk management programs specified in wereda disaster preparedness and contingency plans approved by the Wereda Development Committee and integrated into a zonal risk management strategy. All such programs shall be assessed for their environmental impact and include environment mitigation activities where required. Wereda risk management projects shall be on a cost-sharing basis with 20% of the costs met in cash and kind by the participating weredaslRegions. Individual wereda contracts shall not exceed US$50,000 except where adjoining weredas let joint contracts (e.g. interconnecting roads or watershed management programs) where the contract shall not exceed US$lOO,OOO. It is expected that the majority of these funds will be expended on minor works valued at less than US$20,000 each, predominantly using local labor.

Flexible procurement arrangements: Special attention has been given to providing procurement arrangements and procedures commensurate with the experimental and learning nature of the project, as well as with the central focus on the CIF. The need has been recognized for simple mechanisms to ease purchase ofmaterials and resources by households and communities in dispersed locations. The arrangements will be aimed at efficient procurement that underpins quick disbursement and distribution of goods and money, mixing procurement on the local market in pastoral areas with procurement and distribution from Regional, national and international levels. Where they fit with the needs expressed by communities, simplified procurement, disbursement, accounting and auditing procedures would be used for communities (Africa Region’s Guidelines for Simplified Procurement and Disbursement, March 1998; see also Bank Procurement Guidelines, Jan. 1999, Section 3.15 Community Participation in Procurement). Local shopping, single-source selection, obtaining quotations, and direct contracting would all be allowed under specified procedures. Random audits would be undertaken to review the use of funds. A manual of Procurement Procedures under the PCDP will be prepared by the Recipient with assistance from the PHRD Grant and be complete before effectiveness. Bank procurement guidelines and policies will be followed.

Throughout pastoral areas, infrastructure and markets are poorly developed. Accessing resources does not guarantee that communities will be able to access the materials they require. There is no single solution to this, and each wereda may devise its own solution. The following are proposals regarding the options that may be available; in all cases the communities retain control over the financial resources for purchase of materials:

. open market: where the market is strong, or where the wereda includes or is near towns, communities should be able to access resources; . service co-operatives: on a commercial basis these could stock commodities that the community requires;

- 73 - . community groups come together to buy similar commodities from more distant markets; * communities contract local merchants to provide materials and supplies.

The program elements by disbursement category and procurement methods are summarized in Table A below. Consultant selection methods and thresholds for procurement methods are summarized in Table B below.

The Community Investment Fund (CIF) for micro-projects (US$18.0 million, including beneficiary contribution). The project provides funds for beneficiary executed projects at the community level. Financing will depend on applications received from communities and the types of activities to be financed and their procurement details will depend on the needs identified by the communities. In addition, beneficiaries contribute at least 20 percent of the cost of the micro-project in cash or in kind. Therefore, it is not possible to determine ex ante the mix ofgoods, small works, and services to be procured under these activities due to their demand-driven nature and financing mix.

Procurement of items for the implementation of micro-projects would be carried out in accordance with simplified procurement procedures referred to in Section 3.15 of the Guidelines and in accordance with the Project Implementation Manual. The manual will contain a special chapter describing the procedures and tools in accordance with those found in the Bank’s Guidelinesfor Simplijied Procurement and Disbursement for Community-Based Investments (February 1998). The Regional Project Coordination Units (RPCUs) will be responsible for ensuring compliance with these guidelines. Ex-post reviews of random micro-proj ects will be conducted periodically by the Bank and through independent technical audits (about 20 percent of all subprojects over the life ofthe project) carried out by independent consultants.

The Disaster Preparedness and Contingency Fund (DPCF) (US818 million including wereda/Regional contribution). The project provides funds for disaster preparedness and prevention investments and for contingency funds held in reserve for short-term interventions in the event ofa disaster. An acceptable wereda disaster preparedness and prevention plan, approved by the wereda Development Committee and including documentation of the participatory process and, if applicable, environmental assessment and mitigation strategy, will be a condition for release of DPCF resources. A relatively small portion of the DPCF will be earmarked to jump-start investments in critical infrastructure identified in the Regional inventory. As these investments will be the product of a community consultation process, approved at wereda level and consolidated at the zonal level, it is not possible to determine ex ante the mix of goods, small works, and services to be procured under the DPCF due to their demand-driven nature and financing mix. A large proportion of this work, however, is expected to be locally implemented, small scale, labor intensive and carried out with community participation. Activities with a value less than US$20,000 in response to local disaster situations, or where the major input will be employed local labor, will be implemented under Force Account by the wereda Pastoral Development Office. Procedures for the implementation of labor intensive disaster preparedness public works programs and disaster contingency financing are detailed in the Project Implementation Manual. In view of the remoteness of many project weredas, DPCF activities in excess of US$20,000 and up to the maximum ofUSS100,OOO will be procured using Local Competitive Bidding. The Regional Project Coordination Units (RPCUs) will be responsible for ensuring compliance with these procurement conditions. Ex-post reviews of random DPCF-activities will be conducted periodically by the Bank and through independent technical audits (about 30 percent of all subprojects over the life ofthe project) carried out by independent consultants.

Civil Works (US$O. 77, including contingencies). The IDA grant and IFAD credit will finance the

- 74 - procurement ofminor civil works for rehabilitation and construction of simple office, training and storage facilities at wereda and kebele administration centers. Procurement will be through prudent shopping on the basis of a comparison of quotations from at least three reputable suppliers. Civil works will also be constructed under the DPFC, mainly in the form ofpublic employment programs, where procurement will be through Force Account.

Goods (US$5.4 million, including contingencies). The IDA grant and IFAD credit will finance the procurement ofvehicles, motorcycles, office equipment (including computers), and field equipment. To the extent practicable, goods will be lumped into lots estimated to cost US$lOO,OOO or more and will be procured under ICB procedures. Goods that cannot be easily lumped into lots ofUS$lOO,OOO or more for a variety ofreasons (timing, specificity, etc.), but are expected to cost no less than US$30,000 and are available locally can be procured using NCB procedures up to an aggregate amount ofUS$2,000,000. Procurement for readily available off-the-shelf goods and/or standard commodities that cannot be grouped in lots ofsufficient size, expected to cost no more than $30,000 per contract, and not exceeding an aggregate amount ofUSS500,OOO over the life ofthe Project, will be procured through prudent local shopping, on the basis ofa comparison ofquotations from at least three reputable suppliers. In the rare event that these goods would not be available in the country, intemational shopping procedures will be followed. Goods may also be procured from UN agencies (UNIPAC or IAPSO) provided each contract does not exceed US$lOO,OOO and the aggregate amount does not exceed US$l.O million over the life of the Project.

Consultant Services, Training and Audits (US$9.6 million, including contingencies). Consulting services financed by IDA will be for: (i)studies, preparation of bidding documents, financial management support, financial and technical audits; and (ii)technical matters (monitoring and evaluation, environmental impact, technical assistance to communities, etc.) and training (skills gap analysis, skills development and training of staff and local communities).

Consultant services will normally be procured through the selection of short-listed firms on the basis of Quality and Cost-Based Selection (QCBS), except where noted below. All consultant assignments estimated to cost the equivalent ofUS$lOO,OOO or more will seek an expression of interest through an advertisement in at least one national newspaper with wide circulation, in Development Business on line (UNDB), and/or in an intemational newspaper or technical magazine. In addition, all such consulting assignments will be listed in the annual GPN.

The following other methods will also apply. For audits (financial and technical) and other services of a standard nature, the Least Cost Selection (LCS) method will be used up to an aggregate amount of US$ 1.O million. The firm with the lowest price will be selected, provided its technical proposal will receive at least the minimum qualifying score.

Consulting services for preparation ofbidding documents and training (estimated to cost less than US$75,000 per contract and not to exceed $2,000,000) will be based on the consultant’s qualifications (CQ), i.e. based on work experience and competence relevant to the assignment.

Single Source Selection (SSS) will be used only under exceptional circumstances for the selection of services for simple tasks not expected to cost more than US$lO,OOO or for local community support services, such as technical assistance and training, provided the aggregate amount of such services do not exceed the equivelent ofUSS250,OOO over the life ofthe Project.

- 75 - Services for tasks, such as the organization of seminars and small studies, that are generally of low-cost (generally less than US$20,000) and do not require the use of support systems shall be procured under contracts awarded to individual consultants or local organizations.

Short-lists ofconsultants for contracts estimated to cost less than US$lOO,OOO each may comprise entirely national consultants provided at least three qualified firms are locally available at competitive costs. However, if foreign firms have expressed an interest for those contracts, they will not be excluded from consideration.

The training program is geared towards the strengthening of the managerial and technical capacities of the Government agencies assisting communities with their implementation. The Project's training program will be reviewed annually and will be subject to IDA'Sprior review and approval, as will be all participation in workshops and seminars.

The FPCU, one of whose functions will be to assist the RPCUs and weredas with their procurement, will establish a roster of consultants for carrying out studies, provide technical assistance to communities, preparation of bidding documents and construction supervision. The FPCU will publicize each year procurement notices in the local press to get expressions of interest from consultants. Based on the criteria detailed in the Project Implementation Manual, the FPCUwill maintain and update the roster of consultants, which will be used to establish short-lists or select firms with the required qualifications. The FPCU will also maintain a list of qualified construction companies and engineers, with agreed upon rates that can be accessed by Project beneficiaries. Updates to this database will also be made annually, at which time interested qualified construction companies and consultants in different fields of expertise can be added and poorly performing ones removed. Performance will be rated based on feedback from the beneficiaries and the results ofthe technical audits.

Procurement Procedures and Guidelines. All IDA financed contracts for Works and Goods will be procured in accordance with the World Bank guidelines on procurement of goods, works and services: " Guidelinesfor Procurement under IBRD Loans and IDA Credits, January 1995, revised January and August 1996, September 1997, January 1999, and May 2002" hereafter called the Goods and Works Guidelines, for goods and works, and "Guidelinesfor the Selection and Employment of Consultants by World Bank Borrowers, January 1997 and revised September 1997, January 1999 and May 2002," hereafter called the Consultant Guidelines. A domestic preference will apply to the procurement of goods under International Competitive Bidding (ICB) procedures, in accordance with the provisions ofAnnex 2 ofthe Guidelines.

National Competitive Bidding (NCB) and Local Competitive Bidding (LCB) will be carried out in accordance with Ethiopia's procurement laws and regulations provided that: (i)any bidder is given sufficient time to submit bids (at least 30 days); (ii)bid evaluation criteria and bidder qualification requirements are clearly specified in the bidding documents; (iii)no preference margin is granted to domestic manufacturers; (iv) eligible firms are not precluded from participation; (v) award will be made to the lowest evaluated bidder in accordance with predetermined and transparent methods described in the bidding documents; (vi) bid evaluation reports will clearly state the reasons for rejecting any non-responsive bid; and (vii) the first two (2) contracts will be submitted to IDA and found acceptable. Ethiopian procurement regulations shall only be followed if they do not contradict the Bank's procurement policies and procedures. If such a contradiction, then World Bank procedures shall prevail.

- 76 - The Bank's standard bid documents will be used for the procurement of all goods and works, except for those used for the execution of the community and inter-community micro-projects and disaster preparedness and contingency fund activities valued at less than $20,000 For these exceptions, the Bank's standard documents will be simplified and included in the Project Implementation Manual. For all consulting assignments, the Bank's standard Request for Proposals will be used for the recruitment of consulting firms. Simplified contracts will be used for short-term time-based or simple assignments not exceeding six months and carried out by individual consultants or firms.

A General Procurement Notice (GPN) will be published in the UnitedNations Development Business and in a national newspaper as provided for under the guidelines. The GPN will be updated each year in December and show all expected ICB tenders for works, goods and international consulting contracts for the following years. In addition, a Specific Procurement Notice is required for all ICB and an Expression of Interest (EOI) is required for all consulting services in excess of US$ 100,000, prior to the preparation of the shortlist.

Prior Review. All goods and works contracts (i)estimated to cost US$lOO,OOO or more (ii)the first 3 contracts for either goods or works procured under National Competitive Bidding estimated to cost the equivalent of $30,000 or more; (iii)the first three contracts procured using the Consultant's Qualification (CQ) method; and (iv) all Single Sourced (SS) contracts, will be subject to IDA'Sprior review of bidding documents, including draft contracts and technical specifications prior to inviting bids and bid evaluation prior to contract award

Prior Bank review will also be required for contracts for consulting services valued at US$lOO,OOO or more for firms and US$30,000 or more for individuals. In these cases, the draft Request for Proposals and the shortlist of consultants must be cleared with IDA prior to inviting proposals from the short-listed consultants. In addition, the evaluation of the technical proposals must be cleared with IDA before the financial proposals ofthe qualifying firms are opened. With respect to each contract for the employment of individual consultants estimated to cost the equivalent ofUS$30,000 or more, the qualifications, experience, terms of reference and terms ofemployment of the consultants shall be furnished to the Association for its prior review and approval. The terms ofreference for consulting assignments and training, single source recruitment, and assignments of a critical nature as determined by IDA, as well as amendments to contracts raising them above the above mentioned prior review thresholds, will be subject to IDA prior review regardless ofcontract amount. All the procedures in Appendix 1 ofthe Consultant Guidelines will apply.

Post Review. All contracts not subject to the thresholds listed in the preceding paragraph will be subject to an ex-post review. Once a year, procurement accredited staff will either independently or in the company of a supervision mission, conduct a post review of a sample ofcontracts not subject to prior review. The Recipient will maintain all documents related to procurement below the prior review threshold for such an ex-post review and for a review by project auditors for up to one year after project completion. The Project will hire engineers to perform technical audits of a random sample of micro-projects. The technical audit will focus on quality of execution and adequacy ofprocurement procedures followed. The results of the technical audit will be included in the annual reports.

Frequency of procurement supervision. One supervision mission every twelve months will include a procurement accredited staff to carry out post-reviews ofprocurement. This mission will also review the technical audit reports prepared by independent consultants.

- 77 - Modification or waiver of the scope and conditions of contracts. Before agreeing to any material extension of contracts subject to prior review, or any modification or waiver of the conditions of such contracts that will increase the aggregate cost by more than 15 percent of the original price, the FPCU will need to specify the reasons thereof and seek IDA’s prior no-objection for the proposed modification.

Monitoring and Filing. The project staff in FPCU will set up monitoring and filing procedures to prepare the Project for Financial Monitoring Reports (FMR). The reporting requirement for FMR is that a completed report for each quarter shall be received by the Bank within 45 days after the end of each quarter. In order to achieve compliance, procurement planning and monitoring (procurement progress, unit costs, etc.) will become an integral part of the annual work program and reporting cycle. The annual work programs and progress reports will include the updated procurement plan, an overview of all procurement to date and by procurement method, and an evaluation ofprocurement problems encountered during the year under review.

Manuals. A draft Project Implementation Manual is being prepared and will be finalized before project effectiveness. It consists of a main manual with reference to manuals for specific procedures (e.g., Administrative and Financial Procedures, Community Investment Fund Procedures, Drought Preparedness and Contingency Fund procedures, Monitoring and Evaluation). The manual for Administrative and Financial Procedures will be completed under a PHRD grant and finalized before effectiveness. The manuals clearly detail: (i)eligibility criteria; (ii)procedures for calling for bids, selection of contractors, service providers and vendors, and contract award; (iii)supervision procedures; and (iv) financial management and disbursement procedures.

Assurances to be obtained ut negotiations. The following assurances will be sought at negotiations: (a) the use ofIDA’s standard bid documents and standard evaluation reports; (b) application ofthe procurement procedures as outlined above and detailed in the Project Implementation Manual; (c) adherence to a target processing schedule as outlined in the table below; (d) annual review ofthe procurement plan and procurement arrangements as part ofthe annual reports; (e) the procurement plan will be updated quarterly and submitted to IDA; and (fl procurement information will be collected as follows: (i)prompt recording of contract information by the Recipient; and (ii)annual and semi-annual progress reports to IDA by the Recipient showing revised cost estimates for individual contracts and the program as a whole, updated procurement time table, compliance with aggregate limits on specified methods ofprocurement, and review ofprocurement issues during the preceding year with proposals on how to address these.

Procurement Phase Time Delay (weeks) Preparation of bidding documents 4 (6 weeks for large contracts) Preparation ofbids by bidders 4 (6-10 for ICB) Bid evaluation 4 (6 for large contracts) Sirmature of contracts 2 I Pavment 13 I

The following will be conditions of effectiveness: the Government has: (i)adopted the Project Implementation Manual in form and substance satisfactory to the Association; (ii)completed the work program, and associated budget and procurement plan for the first Project Year, and (iii)recruited one project procurement specialist with qualifications acceptable to the Bank.

- 78 - Procurement methods (Table A)

Table A Project Costs by Procurement Arrangements (US$ million equivalent)

(2.24) (0.95) (0.95) (0.00) (4.14) 3. Services 0.00 0.00 4.35 0.09 4.44 (0.00) (0.00) (2.29) (0.00) (2.29) 4. Training 0.00 0.00 3.17 0.00 3.17 (0.00) (0.00) (1.62) (0.00) (1.62) 5. Funds for Micro-projects 0.00 0.00 30.60 0.00 30.60 and Disaster Preparedness (0.00) (0.00) (14.69) (0.00) (14.69) 6. Miscellaneous and 0.00 0.00 12.75 0.00 12.75 Unallocated (0.00) (0.00) (6.79) (0.00) (6.79) Total 4.38 1.85 53.63 0.09 59.95 (2.24) (0.95) (26.81) (0.00) (30.00)

- 79 - Prior review thresholds (Table B) Table B: Thresholds for Procurement Methods and Prior Review'

1. Works Below 75 Minor works based on quotations contracts 2. Goods 100 and above ICB Prior Review Above 30 and below 100 NCB 1st three contracts Below 30 LS Post Review 3. Services All TORSor sole source contracts subject to IDA Prior Review 3a. Individuals Above 30 Individual Consultants Prior Review of all

Below 30 Individual Consultants Post Review 3b. Firms

Above 100 QCBS Prior review of all

Below 70 CQ First three contracts

Audits and Services of a ss Prior Review of all Standard Nature below us$10.000 4. Funds for Community Conform to procedures None; 20% on a random Micro-projects detailed in Project sampling basis will be ImplementationManual subject to ex post reviews 5. Disaster Preparedness and Contingency Fund Conform to procedures None; 20% on a random a) Labour intensive Below 20 detailed in Implementation sampling basis will be works and disaster Manual subject to ex post reviews contingency funds

b) Major works Above 20 and below 100 LCB Post review of all

Total value of contracts subject to prior review: US$2,500,000 million Overall Procurement Risk Assessment: High Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits)

I\ Thresholds generally differ by country and project. Consult "Assessment ofAgency's Capacity to Implement Procurement" and contact the Regional Procurement Adviser for guidance.

- 80 - Annex 6(B): Financial Management and Disbursement Arrangements ETHIOPIA: Pastoral Community Development Project

Financial Management 1. Summary of the Financial Management Assessment

Introduction: The Bank's policy (OP 10.02) requires borrowers and project implementing agencies to maintain financial management systems, including accounting, financial reporting and auditing systems, adequate to ensure that they can provide to the Bank accurate and timely information regarding project resources and expenditures. The assessment ofthe financial management systems of this project is done in line with the guidelines issued by the Financial Management Sector Board in June 2001.

Country Issues: A draft report on the Country Financial Accountability Assessment (CFFA)-Ethiopia was issued on 10 November 2002. The final report is expected to be issued at the end of March 2003. The overall conclusion is that considerable progress has been made in the rationalization and strengthening ofbudgeting process at the Federal level. Various capacity building efforts are being undertaken at the Regional levels as well. Despite some progresses made in last three years, there are weaknesses in medium term planning, accounting, auditing and reporting. Remedial actions on the weaknesses will be taken through the Expenditure Management and Control Program (EMCP), the Capacity Building Project for Decentralized Service Project (CBDSD) and Public Service Delivery Capacity Building Program (PSCAF').

Implementing entities: To coordinate the project at the federal level, a Federal Project Coordinating Unit (FPCU) will be established. The FPCU will be located in the Ministry of Federal Affairs. The FPCU will have a Project Coordinator, Financial Officer and Assistant, a Procurement Office, a Monitoring and Evaluation expert, a Pastoralist Expert, and a Participatory DevelopmenKommunications Specialist. Its roles would be to release funds against agreed plans, disburse funds to all implementing levels, and co-ordinate monitoring and evaluation of the project as a whole. It would not be an implementing agency. Its functions would be confined to facilitating and accounting for the flows offunds, and it will not be responsible for judging the merits of applications for funds or the uses to which they were put.

In each Region, the Pastoral Development Office (PDO) will be strengthened by the addition of specialized staff dedicated to the project. The PDOs vary in staff numbers and capacity among the four Regions, and will need to be strengthened under the project.

The flows of funds to communities will be overseen by the Wereda Development Committee (WDC), which includes officers of relevant bureaus (agriculture, health, labor and social affairs), and representatives ofthe private sector and civil society. The wereda Finance Office will be responsible for handling the financial transactions of the project at the wereda and kebele levels. An additional finance officer may be required for a wereda.

Communities, in collaboration with kebele staff will prepare community development plans for appraisal by their respective WDCs. Funds for approved plans will flow from weredas to communities in appropriately sized and phased tranches. Expenditure on any tranche must be completed before a new tranche is released.

The flow of the US$12 million for disaster risk management will be overseen by the RPCU in collaboration with the Regional DPPB, in response to disaster preparedness and prevention planning at the community level. Communities expressed needs

-81 - will be integrated into wereda disaster preparedness and prevention plans by the Wereda Disaster Preparedness and Prevention Desk (DPPD) officer, with support from the zonal DPPO. The resulting plan and budget will be submitted to the WDC for approval and thereafter forwarded to the the zonal DPPO for consolidation. Zonal disaster preparedness and prevention plans will be forwarded to the Regional DPPB. An acceptable disaster preparedness and prevention plan, including documentation of the participatory process and environmental assessment, if applicable, will be a condition for release of fund resources. On the basis of approved plans and budgets, hnds will flow from the RPCU to the wereda Finance Office, which will be responsible for the procurement of local goods and services to effect the plan. The participating Region will contribute not less than twenty percent ofthe total cost of an approved investment, including the use of equipment and civil works, staff salaries and operating costs. Local labor will be employed and paid, providing an injection of cash into the local economy.

Strengths and Weaknesses: The country’s discipline in executing budget and compliance with the existing government regulations is the major strength in implementing this project. The wereda Finance Offices will be involved in processing most ofthe project financial transactions in which the weredas are strictly following-up the budgetary discipline and regular government reporting mechanism.

Significant Weaknesses Resolutions The project is implemented by various agencies Strengthen the monitoring capacity at the federal and Regional level and regular supervision by the Bank Auditing the project financial statements may take Agree with the selected auditors on the timetable to time to complete as the RPCUs are various and complete the audit well in advance. The FPCU dispersed all over the country should close the accounts immediately after the end of the fiscal vear. Regular financial reports may not be received on time Design ofa good system of monitoring fund transfer from kebele, weredas and Regions should be based on the receipt ofregular financial reports.

Flow of funds: IDA, IFAD, GOE and the communities will finance the project. The FPCU will open two Special Accounts (SAs) at the National Bank ofEthiopia, one for IDA and the other for IFAD. IDA and IFAD then, from the Credit Account, will transfer money to the SAs. The FPCU may effect payments directly to a supplier/contractor from the credit accounts. The government will transfer the counterpart portion to the local currency account maintained by the FPCU.

The FPCU will transfer money to each of the Regional Pastoral Development Offices (PDOs), from which funds will flow to Wereda Administration Offices (WAOs) to cover eligible project expenditures. The transfer will be on the basis ofannual project budget.

On the recommendation ofthe Wereda Development Committee and with approval ofthe WAO, the wereda Finance Offices will transfer money to the Community Based Organizations having approved micro-projects. The flow of funds is indicated below.

- 82 - I I I I

f f Special Special Account A Account B

1 Community-based Organizations

Staffing: The FPCU, the PDO, and wereda Finance Offices should be staffed with adequate and trained people, who are capable of handling and managing the project financial resources.

Accountingpolicies andprocedures: The accounting policies and procedures to be designed should be able to produce reliable, relevant and timely information for informed decision making and monitoring.

Internal Controls: Internal control comprises the entire systems of control, financial or otherwise, established by management in order to (a) carry out the project activities in an orderly and efficient manner; (b) ensure adherence to policies and procedures; and (c) safeguard the assets of the project and secure as far as possible the completeness and accuracy of the financial and other records.

The project is expected to design and install internal control systems, which will help the management of the project in achieving the project objectives in an orderly and efficient manner. Since the project will not have an internal audit section, the control systems to be designed should compensate for the non-existence of the internal audit. Thus, the main focus of the internal control is placed on the following:

Segregation of duties Physical control of assets Authorization and approval Clear channels of command Arithmetic and accounting accuracy Integrity and performance of staff at all levels Supervision

Reporting and monitoring: The FPCUwill establish adequate accounting and reporting systems, which will produce accurate and reliable information regarding project resources and expenditures. The systems

- 83 - should provide reliable records and reports on all assets and liabilities and financial transactions ofthe project, and sufficient financial information for managing and monitoring activities. The accounting and reporting systems will, among other things, include the preparation of a financial management manual, design ofgood internal control systems, and appointment of qualified personnel at each level of project implementing agencies. The manual will, inter alia, include:

Flow of funds Accounting policies to be followed Accounting systems Chart of accounts Reporting mechanism Budgeting process Auditing arrangements Staffing requirements

The manual should specifically mention how documents at PDO, WDC and kebelelcommunity committee levels will be maintained and consolidated with the FPCU. The flow offunds and flow of reporting should be mentioned in simple, but clear language. The manual should contain the formats to be used by each implementing agency and the frequency of reporting.

The FPCU will be responsible for preparing consolidated quarterly and annual reports. The PDOs, WDCs and other implementing agencies will keep records ofall financial transactions of their respective units. Regular financial reports should be sent to the FPCU, including the sources and uses of funds and statements of expenditures. All the documents at the PDOs and WDCs (by the weredu Finance Office) will be kept in their respective units and be available to the Bank staff during supervision missions and to the external auditors during their annual audits.

Each kebelelcommunity committee will maintain a simple accounting book, which shows the amount of money received and the expenditures made. All the supporting documents from the kebelelcommunity should be submitted to the wereda Finance Office along with regular financial reports. The financial management manual will describe all the systems ofrecording, filing and recording all project related financial transactions.

The FPCU will produce quarterly Financial Monitoring Reports (FMRs) and submit the same to IDA 45 days after the end ofeach quarter. The FMRs will include financial, physical progress and procurement information. At a minimum, the financial reports must include the sources and uses of hds, expenditures by main expenditure classifications, beginning and ending cash balances and other supporting schedules. The formats of the FMRs will be agreed during negotiation.

No later than November 30 of each year, the FPCU will submit to the project steering committee (the Emerging Regions Development Board), with a copy to IDA, the proposed Annual Work Programs and Financial Report. The report format will detail activities, associated unit costs and an implementation timetable. It will also include monitorable progress indicators for each proposed activity. In addition, the FPCU will submit semi-annual progress reports to its Board showing budgeted and actual expenditures, source of hdsused, statements of progress achieved on the basis ofthe agreed upon indicators and the (revised) objectives and financial reports for the forthcoming six months.

Impact ofprocurement arrangements: Community based procurement method will be used widely; this implies that local currency is used, and that SOEs will be the basis for replenishment ofthe Special Account on a regular basis.

- 84 - Action to be taken Expected completion date Responsibility 1 Preparation of a financial management manual describing the flow offunds, accounting, reporting and auditing arrangements Before effectiveness Recipient 2 Appointment of a financial manager at the FPCU Before effectiveness Recipient 3 Appointment offinance officers at all the Regions implementing the project Before effectiveness Recipient 4 Opening ofbank accounts at the national and Regional levels Before effectiveness Recioient

Conditions: The establishment of satisfactory financial management systems, including a financial management manual, would be one ofthe conditions of effectiveness. The appointment of a finance officer at the FPCU would also be a condition of effectiveness.

Financial Covenants: The borrower shall maintain a financial management system and prepare project financial statements in accordance with International Accounting Standards. The borrower shall submit audited project financial statements no later than six months after the close of each fiscal year. The borrower will also submit additional financial reports as required by the Bank.

Supervisionpian: Considering the nature of the project, the Bank’s supervision mission should be as regular as possible. Each year, there should be at least two main supervision missions and another two interim supervision missions by the country office staff and FPCU. These should explain the FMS supervision needs based on the risk analysis. There would be two missions by the FMS in the first year and one a year subsequently.

2. Audit Arrangements

The consolidated annual financial statements ofthe project, the movement in the special accounts (SA) and Statements of Expenditures (SOEs) will be audited by an external auditor acceptable to IDA. The annual audited financial statements, along with the management letter, will be submitted to IDA not later than six months after the end of the fiscal year.

Since the Federal Auditor General is responsible for auditing all government funds, it will conduct the audit or assign another extemal auditor to the project. The terms ofreference for the external auditors will be developed immediately after effectiveness. To ensure proper accountability of funds managed by beneficiaries, technical and financial audits will be carried out on a sample basis. These audits will focus on the technical execution ofthe works (technical quality and progress), systems in place to ensure appropriate maintenance, and that basic information is available to track the use ofthe funds (receipts, contracts, comparison ofpriceshids, etc.). Where funds are inappropriately used, the Project will cease supporting activities until all funds have been accounted for. In cases where fraud is suspected, local authorities will be notified.

- 85 - 3. Disbursement Arrangements

The closing date ofthe proposed grant will be December 31,2008. The proposed IDA grant would be disbursed against the categories shown in Table C. Disbursements will be made in accordance with procedures and policies outlined in the Bank's Disbursement Handbook.

There are two ways to disburse funds from the Bank. The first one is the traditional disbursement method, which uses SA, SOE procedures and direct payment procedures. The second one is the report-based method, in which regular Financial Monitoring Reports (FMR) plus additional statements will be the basis for disbursement.

Since not all the project implementing agencies at all levels have yet been established, it was not possible to assess their capacities and the traditional disbursement procedures will be used by the project. Ifthe borrower is interested in following the second method, it is possible to switch to a report-method of disbursement after a full assessment has been made by the Bank.

Uses of Statement of Expenditures (SOEs): Disbursements made on the basis of SOEs will be as follows: (a) for goods, grants and consulting firms on all contracts less than US$ 100,000; (b) for individual consultants on all contracts less than US$50,000; and (c) for training and workshops, and operating costs on all contracts regardless ofthe amount. The borrower will retain all the supporting documentation for SOEs, including completion reports and certificates. The supporting documents will be made available to IDA during project supervision and will be audited annually by independent auditors acceptable to the Association. Disbursements for expenditures above these thresholds will be made against presentation of full documentation relating to those expenditures. During the project launch workshop, there will be a session on proper preparation of withdrawal applications, including the preparation and submission of required supporting documents.

Special Account: To facilitate disbursements against eligible expenditures under the Grant, the Federal Project Coordination Unit (FPCU) of the Ministry of Federal Affairs will establish a Special Account (SA) in the National Bank of Ethiopia. The authorized allocation for the Special Account will be US$ 3,000,000. Upon effectiveness, IDA will deposit an initial deposit up to US$ 1,500,000 into the Special Account. Once the total disbursements from the Credit account, including commitments, have reached an aggregate amount of SDR 5,000,000, the initial allocation may be increased up to the authorized allocation. The FPCUwill submit replenishment applications at least once a month. The Special Account will be audited annually by independent auditors acceptable to IDA.

Counterpart fund: The Government of Ethiopia will open a local currency account in a commercial bank acceptable to IDA and will deposit Birr 3,210,000 (USE 375,000 equivalent) for the first project year and subsequent deposits at the beginning ofeach project year based on the annual budget ofthe project.

- 86 - Allocation of grant proceeds (Table C)

Table C: Allocation of Grant Proceeds

Expenditure Category Financing Percentage I Works 0.47 I 100% of foreign-- expenditures and 90% of local expenditures Goods 4.13 100% of foreign expenditures and 90% of local expenditures Consultant services, audits and training 2.29 100 % of the amounts disbursed and 85% oflocal expenditures Training 1.62 100 % of the amounts disbursed Grants 14.69 90% of amounts disbursed Operating Costs 2.00 90% of total cost Unallocated 4.80 Total Project Costs with Bank Financing 30.00 30.00

- 87 - Annex 7: Project Processing Schedule ETHIOPIA Pastoral Community Development Project

I Planned Date of Effectiveness I 06/01/2003 I I

Prepared by: Pastoral Extension Team, Agricultural Extension Department, Ministry of Agriculture Pastoral Area Development Department, Ministry of Federal Affairs

Preparation assistance: Consultants (see below), financed by IFAD, FAO, DFID, and a PHRD grant.

Bank staff who worked on the project ncluded: Name Speciality Daniel Sellen, AFT= Task team leadership from HQ Assaye Legesse, AFTRl Task team leadership from Country Office Christine Cornelius, AFTRl Drought management, links with Kenya Arid Lands Project Josef Toledano, AFTR2 Community-driven development Almaz Teklesenbet, AFTR1 Program assistance from HQ Rahel Lulu, AFC06 Team assistance from Country Office Graeme Donovan, AFTRl Links with Food Security Project Michelle Phillips, AFC06 Sustainable livelihoods, donor coordination Robin Mearns, EASRD Peer reviewer Tjaart Schillhorn, ECSSD Peer reviewer Cees De Haan, ARD Peer reviewer Solange Alliali, LEGAF Legal issues, land issues Samuel Haile Selassie, AFCO6 Procurement Eshetu Yimer, AFC06 Financial management Steve Gaginis, LOAG2 Disbursement Tesfaalem Gebreiyesus, AFTPC Procurement

- aa - Other members of the preparation team included:

D'Arcy Gibbs IFAD consultant, dryland agriculture and food security Ann Waters-Bayer IFAD consultant, local level institutions Johan Helland IFAD consultant, rural sociologist Michael Wales FA0 task team leader /GamSmith /FA0 consultant. livestock and ranee management I Vittorio Silvestri FA0 consultant, project costing John Fox PHRD consultant, project implementation manual Jeremy Swift PHRD consultant, drought management Kurt Lonswav PHRD consultant. environmental assessment 1Tania Mansour IPHRD consultant. environmental assessment I Douglas Smith PHRD consultant, environmental assessment Patta Scott-Villiers DFID consultant, monitoring and evaluation lTom Hocklev IDFID consultant. monitorinn and evaluation I

- 89 - Annex 8: Documents in the Project File* ETHIOPIA: Pastoral Community Development Project

A. Project Implementation Plan "Project Implementation Manual." John Fox (PHRD consultant), March 2003 "Financial Management, Procurement, and Project Manuals", (PHRD consultant), May 2003.

B. Bank Staff Assessments "Pastoral Area Development in Ethiopia: Issues Paper." December 7,2001 "Country Procurement Assessment Review (CPAR)" August 1998.

C. Other SMO (Statment of Mission Objectives) Identification mission, September 7,200 1 BTOR (Back to Office Report) and Aide MCmoire, Identification mission, October 10,2001 SMO Preparation mission, January 2002 BTOR and Aide MCmoire, Preparation mission, February 18,2002 Minutes of Concept Review Meeting, April 17,2002 SMO pre-appraisal mission, November 15,2002 BTOR and Aide Mkmoire, pre-appraisal mission, December 10,2002 Minutes of the Decision Meeting, February, 2003 SMO Appraisal mission, February 1 1, 2003 BTOR and Aide Mtmoire, appraisal mission, March 5, 2003 Minutes of Negotiations, March 29,2003.

"Pastoral Community Assessment and Review -- Yabello Weredu (Oromia Region)", Johan Helland (consultant), March 2002. "Pastoral Community Assessment and Review -- Jijiga Weredu (Somali Region)", Johan Helland (consultant), March 2002. "Pastoral Community Assessment and Review -- Chifra Weredu (Afar Region)", Johan Helland (consultant), March 2002. "Capacity Building for Community Empowerment" Johan Helland (IFAD consultant), May 2002. "Food Security and Sustainable Livelihoods" D'Arcy Gibbs, (IFAD consultant), May 2002. "Environmental Assessment and Management Framework", ERM consulting (PHRD consultants) January 2003. "Monitoring and Evaluation for the PCDP", Tom Hockley and Patta Scott-Villiers (DFID consultants), March 2003. "Institutional Analysis of Pastoral Risk Management in the PCDP", Jeremy Swift (PHRD consultant), April 2003. "Local-level socio-institutional issues and capacity building for pastoral community development", Ann Waters-Bayer (IFAD consultant), January 2003. *Including electronic files

- 90 - Annex 9: Statement of Loans and Credits ETHIOPIA: Pastoral Community Development Project 26-Mar-2003 Difference between expected and actual Original Amount in US$ Miliions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO49395 2003 ENERGY ACCESS PROLCT 0.00 132.70 0.00 0.00 138.12 1.27 0.00 PO50938 2003 Capadly Building for Dec.Sew.De1 0.00 26.20 0.00 0.00 27.31 2.92 0.00 PO50383 2002 E1hiopia:FOODSECURITY PROJECT 0.00 85.00 0.00 0.00 89.75 -2.00 0.00 PO57770 2002 CULTURALHERITAGE 0.00 5.00 0.00 0.00 5.43 0.48 0.00 PO74585 2002 Ethiopia Structural Adjustmnt Credit 0.00 120.00 0.00 0.00 0.01 -7.44 0.00 PO52315 2001 CONSERVATION OF MEDICINAL PLANTS 0.00 2.60 0.00 0.00 2.25 -0.45 0.00 PO73196 2001 Dembilization and Reintegration Prqect 0.00 170.60 0.00 0.00 49.38 30.95 0.00 PO69886 2001 ETHIOPIA MULTBECTOPAL HIV/AIDS PROJ 0.00 59.70 0.00 0.00 43.91 17.19 0.00 PO50342 2001 WOMEN'S DEVELOPMENT INITATIVES PROJ 0.00 5.00 0.00 0.00 4.70 1.42 0.48 PO69083 2001 GLOBAL DISTANCE LEARNING 0.00 4.90 0.00 0.00 4.81 2.99 0.00 PO35147 2001 C0NSERV.B SUSTAIN. USE OF MEDIC. PLAN 0.00 0.00 1.80 0.02 1.75 0.50 0.00 PO67084 2001 EMERGENCY RECOVERY AND REHAB. PROJECT 0.00 230.00 0.00 0.00 142.15 132.59 0.00 PO00756 1999 HEALTH SECTOR 0.00 100.00 0.00 0.00 42.43 42.26 0.00 PO00733 1998 AG. RESEARCH 8 TRANING 0.00 60.00 0.00 0.00 29.04 23.07 0.00 PO00732 1998 EDUCATION SECTOR INVESTMENT 0.00 100.00 0.00 0.00 19.36 21.26 0.00 PO00755 1998 ROAD SEC. DEV. PROG. 0.00 309.20 0.00 0.00 123.37 129.47 78.50 PO00736 1998 ET ENERGY II 0.00 200.00 0.00 0.00 56.33 51.18 0.00 PO00764 1996 WATER SUPPLY DEVBREH 0.00 35.70 0.00 0.00 4.83 8.66 0.00 PO00771 1996 Social Rehab (ESRDF I) 0.00 120.00 0.00 11.48 38.88 33.67 9.73

Total: 0.00 1766.60 180 11.50 823.81 490.00 88.71

ETHIOPIA STATEMENT OF IFC's Held and Disbursed Portfolio JLKI 30 - 2002 In Millions US Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

Total Portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic

Total Pending Commitment: 0.00 0.00 0.00 0.00

-91 - Annex 10: Country at a Glance ETHIOPIA Pastoral Community Development Project Sub POVERTY and SOCIAL Saharan Low- Ethiopia Africa income I Development diamond' 2001 Population, mid-year (millionsl 65.8 674 2.51 1 Life expectancy GNI per capita (Aflas method, US$) 100 470 430 GNI (Atlas method, US$ billions) 6.7 317 1,069 T Average annual growth, 1995-01 I I n Population 1%) 2.5 2.5 1.9 Labor force (%) 2.2 2.6 2.3 GNI

Most recent estimate (latest year available, 1995-01) capita Poverty (% ofpopulatbn below nafionalpoveriy line) Urban population (% of total populafion) 16 32 31 Life expectancy at birth (years) 42 47 59 Infant matality (Der 1,000 live births) 98 91 76 Child malnutrition(% of children under 5) 47 Access to improved water murce Access to an improved water source (% ofpopulation) 24 55 76 Illiteracy (% ofpopulation age 15+) 60 37 37 Gross primary enrollment (% of school-age population) 71 76 96 -Efhiopia Male 85 85 103 ~ow-~ncomegroup Female 57 72 88 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1981 1991 2000 2001 Economic ratlos' GDP (US$ billions) 5.2 9.5 6.4 6.2 Gross domestic investmentGDP 13.3 9.9 15.3 18.0 Trade Exports of goods and servicesiGDP 10.7 5.7 15.5 15.4 Gross domestic savingdGDP 7.3 2.7 -0.1 2.2 Gross national savinqsiGDP 8.1 4.4 10.0 13.7 Current account balance/GDP -4.8 -5.5 -5.3 -4.4 interest papentslGDP 0.3 0.4 0.8 1.o Total deWGDP 35.6 95.9 86.2 91.4 Total debt servicelexports 10.3 25.2 13.8 18.9 Present value of debffGDP 51.3 Present value of debvexports 326.5 lndettedness 1981-91 1991-01 2000 2001 2001-05 (average annual growth) GDP 1.0 5.3 5.4 7.7 6.3 -Efhiopa I GDP per capita -2.1 2.9 2.9 5.2 3.5 Low-income group Exports of goods and services 0.8 11.9 23.6 -1.6 6.7 I STRUCTURE of the ECONOMY 1981 1991 2000 2001 1 Growth of Investmentand GDP (X) (% of GDP) I Agriculture 56 1 591 523 Industry Manufacturing 79 54 70 70 io Services 31 6 308 365 365 I .IO 1 96 97 99 O' Private consumption 79.0 81.8 76.8 80.3 ' I General government consumption 13.7 15.5 23.2 17.5 -GDI -GDP lmporb of goods and services 16.7 12.9 30.8 31.2

1981-91 1991-01 2000 2001 Growth of exports and Imports (Oh) (average annual grow) I Agriculture 0.7 2.3 2.2 11.5 40 Industry -1.0 6.4 1.8 5.8 20 Manufacturing -2.5 7.6 2.1 21.7 Services 2.5 8.2 9.5 4.6 0 Private consumption 0.6 2.7 -1.9 11.4 General government consumption 30 130 293 -185 201 Gross domestic investment 02 109 -12 274 -Exports -Imports lmoorb of ooods and services 12 71 63 -18

Note: 2001 data are preliminary estimates. *The diamonds show four key indicators in the countiy (in bold) compared with its Income-group average. if data are missing, the diamond wll be incomplete.

- 92 - PRICES and GOVERNMENTFINANCE 1981 1991 2000 2001 Domestlc prlces (% chanF) Consumer prices 6.1 20.9 4.2 -7.2 Implicit GDP deflator 16.1 1.7 -7.0 Government finance (% of GDP, includes currant grants) Current revenue 16.4 13.7 18.3 19.6 Current budst balance -0.2 -4.7 -8.2 -0.4 -GDP deflator I'OICPI Overall sutplusideficit -4.9 -10.9 -14.8 -10.0

TRADE 1981 1991 2000 2001 Export and import levels (US$ mlll.) (US$ mi//ionsJ Total expo~s(fob) 41 1 276 486 441 Coffee 130 262 175 12,wo - Leather and leather products 45 35 38 Manufachires Total impork (a9 744 1,029 1,611 1,553 Food 152 116 241 Fuel and energy 102 21 3 265 Capital goo& 466 755 589 Export price index (1996100) 82 77 64 59 Impat price index (1995=100) 112 99 116 117 Terms of trade (1995=100) 73 78 55 50

BALANCE of PAYMENTS 1981 1991 2000 2001 Current account balance to GDP (%) (US$ mi//ions) Expork of goods and sewices 554 543 984 957 2- lmpds of gmds and services 845 1,226 1,960 1,945 Resource balance -291 -683 -976 -987 Net income -7 -73 -MI -59 Net currenttransfers 50 229 70 1 774 Current acmunt balance -249 -528 -335 -272 Financing items (net) 190 881 110 259 Changes in net reserves 59 -153 225 13 Memo: Reserves includinggdd (US$mi//ions) 370 106 Conversion rate (DEC. /oca//US$l 2.1 2.1 8.2 8.3

EXTERNAL DEBT and RESOURCE FLOWS 1981 1991 2000 2001 (US$ mdiions) 1 Composition of ZOO1 debt (US$ mill.) Total debt outstanding and disbursed 1,842 9,119 5,483 5,697 IBRD 52 20 0 0 IDA 276 883 1,779 2,151 Total debt service 58 138 138 183 IBRD 7 9 0 0 IDA 2 11 34 36 Composition of net resource flows Official grants 135 78 1 Official creditors 894 145 122 435 Private creditors 63 212 -8 -10 Foreign dired investment 0 6 50 0 Portfolio equity 0 0 0 0 D L6 World Bank progam Commitments 76 0 465 202 A - IBRD E. Bilateral Disbursements 28 59 137 455 B -IDA D - Other multtlateral F -Private Principal repqmenb 4 12 21 22 C- IMF G - Short-term Net flows 23 46 116 433 Interest paymen6 5 8 13 14 Net transfers 18 38 103 419

- 93 - Additional Annex 11 Summary of the Environmental Assessment and Management Framework ETHIOPIA Pastoral Community Development Project

Introduction

This is the report of a study to produce an environmental assessment management framework for the proposed Pastoral Community Development Project (PCDP) for which the Government of Ethiopia has requested IDA and PAD financing. The objectives of this study are:

To assess the potential environmental impacts ofthe proposed Project, whether positive or negative, and propose mitigation measures which will effectively address these impacts; a To inform the project preparation process of the potential impact of different alternatives, and relevant mitigation measures; To establish clear directives and methodologies for the environmental screening ofsub-projects to be financed under the proposed Project.

The study was carried out from October-December 2002, which included two consultancy team missions to Ethiopia from 20-30 October 2002 and 18 November - 6 December 2002, the second of which coincided with the World Bank pre-appraisal mission, and subsequently the preparation ofthis draft EA report.

The Project will consist of three components:

Sustainable Livelihoods component. This component focuses on community driven development. It will establish decentralized and participatory planning at wereda and community levels, and finance community development projects through a Community Investment Fund (CIF), identified by communities with the support ofwereda administrations, Regional governments, and NGOs. Pastoral Risk Management component. This component will support disaster contingency planning, community-based early warning systems, strategic infrastructure, and a Disaster Preparedness and Contingency Fund (DPCF). Project Support and Policy Reform component. This component includes (i)project coordination, field services, financial management, communication and monitoring and evaluation, and (ii)policy and institutional reforms.

The PCDP will focus on a selected set of weredas in Afar, Somali Regions, the Borana area of Oromiya Region, and the South Omo zone of SNNPR, with a view to gradual scaling up as the project progresses.

Major EA findings

Environmental sustainability is fundamental to sustainable pastoral livelihoods, and lowered vulnerability to drought. Therefore environmental sustainability is fundamental to the success or failure of the PCDP. There is a precarious balance between two very different scenarios:

On the one hand, under a scenario of a successful PCDP which works in accordance with the vision and approach set out in project documents, the PCDP would make a significantly positive contribution to environmental sustainability in pastoral areas; On the other hand, under a scenario of a failing project, the PCDP would contribute to marked

- 94 - further decline in environmental sustainability in pastoral areas.

Discussions with the World Bank pre-appraisal mission indicates that they are fully appreciative of this conclusion. Indeed, the institutional, social, land reform and other analyses that are being carried out during preparation will lay the ground for the first, successful, scenario. This conclusion emphasizes the importance of the Environmental Assessment Management Framework, set out in this report, to ensure that environmental sustainability is fully mainstreamed into PCDP design, appraisal, and implementation.

Mitigation of Potential Negative Impacts

The potential ofthe PCDP to deliver positive improvements in reduced land degradation should far outweigh any localized environmental impacts of activities to be supported by the project. But in spite of the overall positive impact, certain of the project activities could have localized negative impacts.

Most ofthe developments under the Sustainable Livelihoods component and Pastoral Risk Management components will be small in scale, and the significance of the direct negative environmental impacts is likely to be small. However, there is a risk of cumulative impacts of numerous small projects: for instance, a cumulative impact of building construction on forest resources, or of wells on groundwater.

Learning on Environmental Impact

There is an opportunity to build a learning approach on environmental sustainability into the strategic management and direction of the PCDP. The report sets out an environmental management plan (EMP), with an associated environmental management system (EMS), that are intended to be fully integrated into the Project Implementation Manual. This integration will ensure that environmental sustainability is not considered in isolation of social, economic and institutional sustainability in the rural space.

The environmental management system (EMS) is based on a number offocal points at the federal, Regional, wereda and kebele levels. However the bulk of inputs to the environmental management system (EMS) are required at wereda and community levels. In addition, at the community level, there is an opportunity to reinvigorate traditional environmental governance, through its use in training and sensitization and the application ofthe environmental management system (EMS).

Capacity-building and training are central to the EMP. This report proposes that this should include: sensitisation among Regional and weveda staff concerning pastoral livelihoods and pastoralists’ coping strategies towards drought; sensitisation among communities and kebele leaders on how to integrate local traditional knowledge with modem administration, particularly as it relates to the protection and management ofnatural resources and drought contingency planning; training for community leaders, wereda and Regional officers on the use of the environmental screening and reporting system; training for Regional bureau officials on environmental impact assessment, its application to small-scale activities, and the use of environmental guidelines in identifying and costing mitigation measures; bringing together groups of officers from wereda levels, to encourage inter-wereda and inter-Regional learning.

- 95 - Additional Annex 12 Letter of Development Policy ETHIOPIA Pastoral Community Development Project

Statement on Pastoral Development Policy

Ethiopia is the third most populous country in Africa with a projected population of 67 million in July 2002. The country has reasonably good resource potential for development: agricultural biodiversity, water resources, minerals etc. Yet Ethiopia is faced with complex poverty that is broad, deep and structural.

The 1980s was marked by a state ofcrisis with nation wide civil wars. But by the turn ofthe 1990s a change ofregime led to changes in economic policies and management from command economic system and protracted civil war to a free market economy and relative peace. Under the command economy growth plunged in most ofthe years, accompanied by loss of productive capacity, competitiveness and increased food insecurity. Severe macroeconomic imbalance and instability and social crisis involving millions of displaced persons, refugees, demobilized soldiers, homelessness and unemployed people were at their climax.

It was against this backdrop that the then Transitional Government of Ethiopia (TGE) initiated broad economic reform measures to address both the immediate needs of economic recovery and reconstruction to jump start the economy. It is to be recalled that the World Bank played a commendable role in those critical years.

The primary notable achievement ofEthiopia in the early 90s was the end of internal conflict followed by successful transition from a command economy to a free market one. Since then, a federal system of government has been put in place with the 1994 constitution guaranteeing democratic and human rights as well as laying the basis for devolution of decision malung power and responsibilities to states, and lower echelons of government, creating as it does, conditions for participatory development and empowerment.

Ethiopia began the 1990s with a clear vision of reversing the socio- economic crisis ofthe 1980s and rapidly transforming the economy. In 1992193, the government began its first series of economic reform programs. The reform programs were aimed at reorienting the economy from command to market economy, rationalizing the role ofthe state and creating legal, institutional and policy environment to enhance private sector development.

Adjustment policies were focused on liberalization ofprices and markets, removal of subsidies, reduction of tariffs and current account convertibility. These measures were underpinned by fiscal and monetary policy discipline. The favorable policy environment created by the economic reform, coupled with macro-economic stability invigorated the domestic private sector, which was suppressed during the previous regime.

To further consolidate the gains of the 199Os, the government has come up with detailed policies and strategies recently; Rural and Agricultural Development policy and strategy, (wherein the pastoral development policy is outlined) the Food Security Strategy, Capacity Building Strategy and Programs, Strategy for Democratization, a Sustainable Development and Poverty Reduction Program which tries to tie up the thrust ofthe above mentioned polices and strategies.

- 96 - In all these policies and strategies the govemment has tried to give due emphasis to the question of pastoral development. To that end it has come up with an outline ofpastoral development and good governance policy as the basis for program and project formulation since last year.

A. The Existing Conditions in Pastoral Areas Pastoralists inhabit over half of the Ethiopian territory. There are at least 120 districts (Woredas) in all, 51 in Somali state, 29 in Afar state, 33 in Oromia state and 7 in the Southem Nations and nationalities state. The total population of Pastoralists in Ethiopia is estimated to be over 7 million.

Pastoral areas have numerous natural resource potential. The fertile soil and water deposited by big rivers such as Awash, Wabishebelle, Genale, Dawa, Om0 and others create the potential for irrigated pasture and farming. It is therefore possible to obtain sufficient water for human consumption and irrigation. The water resource is also essential for the production of fodder, trees, vegetables and fruits. Moreover, the recurrent drought in the pastoral areas is a testimony of the insufficiency ofthe rainfall. The evidence is abundantly clear that no meaningful development is possible without water resources. Pastoralists in Ethiopia are mobile in search ofwater and pasture. Indeed, it is only a portion of the household, consisting of young boys and adult men who travel long distances and stay with the herds long. Women, children and older folks stay behind with the frail stock and lactating cows in semi-permanent residences.

Furthermore, among the Somali and Afar, a significant number ofpastoralists have been naturally settling down along the banks ofmajor rivers, and their livelihood has gradually been converted into agro-pastoralism. This suggests that a good portion of these pastoralists would undergo voluntary sedenterization. Opportunities for such are created by perennial rivers flowing from highland areas of the country and carrying rich soil deposited along the river banks. Issues of upper and lower riparian states are expected to be handled bilaterally, but since no big dams' construction is envisaged, the question may not arise at all. Most of our major rivers do not cross the border, anyway.

Marketing is also another critical problem for pastoralists. More often than not, pastoralists are unable to find fair prices for their livestock. There are no markets where they could get consumer goods. Pastoralists are forced to sell their products at an illicit market in which they get exorbitantly low prices. More importantly, the pastoralist states have become the dumping grounds of contraband goods or the launching pads for illicit cross border trade in Ethiopia.

A feature ofall pastoral areas is lack of access to roads. Where there is access to main roads like the Addis Ababa Djibouti road, there are no feeder roads specifically designed to reach the pastoral communities.

Yet another important aspect ofpastoral life in Ethiopia is the absence of basic services. For example, the gross enrollment ratio in primary schools for the country is now nearly 62 percent. In the pastoral states it is 12.6% for Afar and 13.1% for Somali. It is not only that there are fewer schools and fewer teachers in the pastoral states but also less pupils coming to attend in the already existing schools. This calls for different arrangements including boarding schools, hostels, school meals and other support systems for the children of pastoralists. The same is true for health posts and clinics. In short, we have phantom schools and phantom clinics. Ofcourse, there are ways to overcome these initial bottlenecks by providing hostels and boarding schools, although the local resource is meager. Particular attention could be given to female education in this context. Denying access of modem education to pastoralist children is not only unacceptable but also unconstitutional. Furthermore, modem education is possible only in a settled environment. Without modem education,

- 97 - there are no prospects ofchanging pastoral life and livelihood.

B. The Development Policy for Pastoralists

L Policy, vision and issues

Phased voluntary sedenterization along the banks of the major rivers as the main direction of transforming pastoral societies into ago-pastoral system, from mobility to sedentary life, from rural to small pastoral towns and urbanization.

Complementing sedenterization by micro and small enterprises development in the urban centers and off farm activities in the rural areas.

Undertakmg integrated development with irrigation as the basis and livestock production as the focus, complemented by static and mobile education and health services as well as rural roads, rural energy and water supply, rural telephone service etc.

Coordinated and concerted federal support, program ownership by the Regional States and communities, enabling them through support in capacity building, to lead the development work at all levels. Allow, enable and coordinate private sector and NGO to play positive role in line with the policy direction within the framework ofthe broad program and strategy, after mobilizing their own resources.

Tap indigenous knowledge and skills on animal husbandry and rangeland management.

IL Objectives

a) Transforming the pastoral societies to agro-pastoral life complemented by urbanization.

b) Promote integrated rural development and rural urban link by way of sustainable growth of agriculture-especially-livestock productivity geared to market needs to raise income and overall living standards ofthe pastoralists.

c) Promote modern education to over 90% primary education coverage by 2015 and vocational training as well as access to tertiary and higher education. Vocational training as well as higher education is needed in order to produce skilled human resources to promote development and full transformation.

d) Promote urbanization and industrialization by way of micro and small enterprises, agro-processing, trade and others, and reduce poverty among the pastoralists.

IIL The Establishment of a Fair Market System

The life of the pastoralist is based on livestock production. But viable marketing outlet where the pastoralists could sell their livestock and in exchange obtain the necessary industrial consumer items for their needs has not been established. Making information on prices and livestock market outlet for the pastoralists should be part of the development program. Border trade deprives them from getting fair prices for their livestock. Their economy has not been integrated into the national economy at large. In order to improve the problem of marketing one alternative to consider is to

- 98 - organize the pastoralists into co-operatives. The private sector is expected to get involved heavily in this system. Small market centers will soon grow into pastoral towns, where small and micro enterprises related to dairy, meat and other animal products could be semi-processed. Consumer items and services from bigger cities and towns would also be available improving the urban- rural linkage. IV. Provision of Suitable Social Services to the Pastoralists

The livelihood of pastoral communities is based on livestock production for which they are forced to move from place to place in search ofpasture and water. There have been some efforts in the provision of social services to date but these have been quite meager and inadequate.

Provision of social services to the pastoral communities, require adequate needs assessment prior to establishment and that services be utilized to the maximum degree. The government is committed to the provision of sufficient social services both for the settled and mobile ones, especially first cycle primary education to be taught in vernacular languages by recruiting teachers from the communities and primary health care. Intermediate and vocational training on animal husbandry, marketing, processing of small-scale dairy, leather and meat could continue thereafter. Pastoral towns where service provision and markets are the main activities will lead to urbanization.

V. The Expansion of Infrastructure to Improve Livestock Marketing The existing provision of road transport, electricity, telecomm-unication and water is insignificant judging from the size of the population to be served. Mainly due to lack of infrastructure, pastoralists were unable to get the necessary social services. Pastoralists are endowed with vast natural resources and yet due to lack of infrastructure, investors were not attracted to these areas. The government ofEthiopia thinks that roads and other infrastructure should focus on those areas where future settlements will take place. Major and perennial riverbanks should in turn be linked to major roads and towns.

1. Priority should be given to areas that have already settled

In both Somali and Afar States, agro-pastoralism has been going on spontaneously for decades. It is estimated that around 20% ofAfars and more than 30% of Somalis are already settled. The settlement sites have been almost invariably along the banks ofmajor rivers such as the Awash and Wabi Shebelle. There is no stronger proof to voluntary settlement than the spontaneous sedentarization witnessed in the last 30-40 years. What the government needs is to augment and accelerate the process already charted out by the pastoralists themselves.

2. Policies and strategies should be tested through pilot studies

The Modus Operandi of development policies and strategies in pastoral areas should be based on field studies. When and where success is scored, the experience could be disseminated and scaled up with some adjustments to specific local conditions. For the year 2002103, the federal and state governments have selected 3 districts (Woredas) in Afar, 3 districts in Somali state, 2 districts in Oromia and one district in Southern Nations and Nationalities state to verify and try out the new strategy ofpastoral development. In each Woreda, a number of villages (clans) have already been selected and the implementation program already begun in December 2002. Project offices specifically organized to follow the pilot sites are already in place and quarterly assessments to monitor and evaluate activities need to be done.

- 99 - 3. All government interventions should ensure the participation and full consent of the pastoralists

Although pastoralists do have a huge potential ofnatural resources and a stock of assets in terms of livestock, a consensus has to be reached that they have never had the chance to realize their full potential because of lack ofgood governance and appropriate development policies and strategies.

It is imperative that consensus be reached between the pastoralists and the government on the importance of sedentarization since the pastoral way oflife can no more become a sustainable means of livelihood. Government effort in this respect will be limited to force ofexamples, to results and demonstrative outcomes in situ, to learning by doing.

4. The main entry point for pastoral development intervention is a clan or a number of associated clans

Although there may be some important interventions at the level of the household, clan is the entry point to introduce new technologies for livestock development. In this regard, clan and traditional elders are expected to have a major part in the overall attempt to change pastoral life.

Clans will set priorities and their traditional wisdom and skills could be made use of to the utmost possible. The direction is to enable clan members to have a sense of ownership in all development efforts.

5. All development interventions shall be undertaken by the joint and coordinated effort of the federal and state governments The federal inter-ministerial board members include: (a) Ministry ofFederal Affairs (b) Ministry of Agriculture (c) Ministry ofWater Resources (d) Ministry of Rural Development (e) Ministry of Education (0 Ministry of Health (g) Ministry of Revenues (h) Ministry ofTrade and Industry (i) Ministry of Infrastructure. There is also an inter-ministerial technical committee whose main responsibilities are focused on capacity building ofpastoral states at all levels.

6. Combining good governance andpastoral development The role of the state in our context is developmental. It sets the vision, policy and direction. It is both bottom up and top down in unison.

- 100- The civil service reform unfolding all over the country is all-inclusive. It has a strong human resource development program amongst others. The pastoral states need a competent civil service at the state level to start with. This needs recruitment ofable and experienced civil servants from other parts of Ethiopia in the short and medium-term. The long-term solution, however, is to train the indigenous people from the states. So far, the civil service college has trained several hundred for Somali but much less for Afar. While the efforts of the college needs redoubling, local capacities in each state should be developed.

The training ofveterinary technicians, water technicians, health workers and teachers for primary schools should be done locally.

7. Supporting the local government structure at the district level Good governance ultimately means a government that is corruption free, responsible and sensitive. It is meaningless to talk about kebeles in pastoral areas. What we have instead is clans (communities) and their leaders. Empowering and recognition ofthe traditional leadership and blending them to democratic rules and procedures is mandatory if some real steps towards economic and social development is to be attained. The level ofgovernment where modem and traditional leadership can be blended is the district. While the clan (Kebele) administration can be mobile, the district government will of necessity be static. In building institutions at the local level, the district governments’ capacity should be supported through short courses for its elected andlor appointed officers as well as with resources to improve its social and physical infrastructure.

8. Donors and NGOs involved in pastoral development are expected to work in line with government polices.

Government policy in pastoral development is gradual settlement along the banks ofmajor rivers, an economy based on animal husbandry, the integration of the pastoral economy with that ofthe farmers and industrial development in the urban areas. Non- govemmental organizations and the private sector have a major role to play particularly in the areas ofservice provision and creating a market favorable to the pastoralists and the national economy. All donors, NGOs and the private sector are expected to work together in line with the said policy. Furthermore, they are expected to solicit their own resources in order to work in partnership.

Finally, the proposal is to support the 29 districts of Afar state, 5 1 districts of Somali state, 33 districts in Oromia and 7 districts in Southem region. With this, the road map for pastoral development has been charted, but the real first steps need to be taken as yet.

- 101 - Additional Annex 13 IFAD Key File Tables ETHIOPIA Pastoral Community Development Project

Table 1: Rural Poverty & Pastoral and Agropastoral Sector Issues.

Priority Area I Major Issues Actions Needed 1. Land Tenure National policy ambiguous Documentation of land tenure system for each ethnic group Sedenterization policy unclear in pastoral areas Unplanned enclosures and fencing Harmonise traditional customs with localhegional Transfers to commercial interests government and federal law Undefined wildlife management Build on the existing platform of modus operandi Legislation to respect traditional community access rightshange management Declaration of Wildlife Management Areas and related I protocols for eco-tourism 2. Land Degradation 1- Maladjusted farming systems I* Carry out land-use planning according to international Improper use of land standards Crop suitability mapping in concert with existing arid and semi-arid environment 3. Water Resources Poor access to dry season pasture Regulate demand on water storage - rivers, ponds, Low yields from ground-water lakes, cistern, dams, tanks Reduced surface storage capacity Develop existing bore holes Uncharted aquifer recharge rates Establish reason(s) for short-falls (surface run-off, Limited development of private ponds, erosion, siltation, evaporation) birkas, wells (ellas) b Improve techniques for in-situ water harvesting and Ground/surface abstraction licences surface storage's b Promote dry season abstraction from alternate sources - sand-river beds . Encourage water point group ownership, control, management and maintenance Herd diversification through introduction of drought

4. Rangeland Forage I* Diminishing resources of forage 1- Review current systems of rangeland natural resource Increasing population of livestock management and use. Escalating human population . Strengthen authority of traditional institutions/elders for Steady depletion of soil fertility rangeland management Reduction of bio-diversity Identify and classify different stakeholders exploiting Increasing bush encroachment rangeland resources Deforestation in settlement areas b Build on existing local knowledge as a platform for Semi arid area crop extensification formulation of new strategies Land degradation from over grazing Document alternative feed sourceshesources used by different user groups Develop modalities for establishing foddedforage reserves & rangeland resting . Limit stocking rates by applying livestock tax and promoting increased off-take b Revisit policy on land tenure legislation in favour of pastoral/agropastoraI areas b Secure access rights, user rights of communities, encourage investment on land . Sod seeding and hand broadcasting of rangeland with proven pasture species b Organize and formalize community grazing systems with access and user fees) b Sourcing, storage and utilization of agro-industrial by-products during droughts. . Community formulated program to plan and provide , emergency feed support I I

- 102 - 5. Animal Health Excessively high mortality in calves Diagnostic survey to establish a health l disease Overall high morbidity in smallstock profiles of all specieslbreeds . Inadequate support service delivery Document and elaborate common local medicinal . Incomplete vaccination programme materials and practices . Cross infection of disease to wildlife Paravets trainedlequipped to provide b Cross-border disease infections conventionallethno-veterinary health care Unreliable availability of animal drug CBW trained to provide improved animal husbandry and prophylactic care I. Targeted planning/ and resourcing of regular national vaccination campaigns Regional co-operation for disease control and epidemiological surveillance Livestock registration for statistical data base and improved analyses 6. Livestock Undeveloped systems operating . System in place for monitoring livestock off-take rates Marketing . Low off-take rates during stress by species, sex and age -cb Poor quality stock /carcase value b Regionallinternational marketing study to formulate . Meeting export sanitary requirement strategy to supply markets . Poor access to market information Market development by providing . Methodologies for milk processing infrastructurelconstruction of access roads b Preservation of dairy produce Promote regular culling and off-take of non breeders prior to onset of drought b Regulate cross-border informal and formal trade for certified livestock . Promote co-operative development for livestock retailing b Promote adoption of improved techniques for processing milk/dairy products b Develop and promote preservation techniques to prolong dairy produce shelf life b Support establishment of market information exchange for price trendslyardings Promote produce associations and establish collection points for market trekking b Micro-credit to support fattening programmes and livestock retail trade 7. Rainfed Cropping Moisture stress of arable crops In-situ water harvestingladoption of technologies for Satisfy Crop Water Requirements soil moisture conservation Appropriate machinery and hand tools for mechanised and animal traction 8. Dry-land Farming Techniques applicable to rainfed Adaptive research to modify techniques to suit Technology mechanised cropping smallholder production systems Farmer managed action research to field test packages under farm conditions 9. Extension Delivery Poorly trainedlresourced service Provision of extension aids and equipment, camping Immobility of staff at field level equipment Skill level incomplete Supplying transport and improved mobility at all levels Promotion of tested crop packages Developing curricula for in-service training and skills improvement Mount demonstrations, field days, provision of mini-kits, organise cross visits IO. Action Research Poor crop production packages Design and supervision of farmer managed on-farm

11. Community Poor community consultation Review and analyse community structurelauthority and Empowerment Weakening of traditional institutions clan relationships Illiterate/innumerate communities Enhanced participatory mechanism for community Weak linkages between local regional decision making and taking and central government Community leadership training Skills training for livestock husbandry and IGAs 12. RuraVSocial Outreach of human health services Expansion of district road networks Infrastructure Poor access to potable water Develop a public transport system (especially for Unreliable public transport system haulage) Low education and literacy levels Invest in formal vocationallfunctional education

- 103- Erratic rainfall (literacy, numeracy) Responsiveness of famine relief Establish human health care facilities Poor medical facilities/information Improve child and maternal primary health care facilities Improve source of potable water Emergency action planning to provide for food, shelter, public health 13. Conflict Access and use of range resources Understand existing conflict resolution mechanisms Resolution Loss of resources (land and water) Improve conflict resolution - concentrate on conflict Unstable ecosystem prevention strategies Socio-political unrest Improve access to rangeland - principally forage and Natural disasters water resources External aggression Defined responsibilities and expectations of clan and community members Improved and accessible weather forecast and information dissemination Improved livestock early warning system for drought preparednesshitigation 14. Policy Development & Revision a) Sedenterization Restricted mobility of communities Review current policies and strategies on nomadicltranshumant life styles Influence government position vis-a-vis fragility of pastoral ecosystem b) Surface Water Riparian rights of perennial streams Irrigation International agreements protocols Unrecorded river flow rates c) Bush Charcoal making/transport licenses Develop strategy for addressing bush encroachment and Encroachment Tree cutting and clearing draft supporting legislation. Selective burning Incentives promoting a CDD approach to program implementation and NRM

- 104- Table 2: Target Group Identification, Priority Issues & Potential Response

Household Typology Priority Project Causes NeedslSupport ResponselSupport I. Very Poor (Below poverty line) Female headed Hlholdz .No arable land Community support 4cquiring handicraft skill .Set up retail .No livelihood .Wage labour 3reeding animals trade (petty) No livestock .Unemployed .Piece work ncome-generation opportunities ,Provide livestock No arable cropland .No livestock .Petty trading enterprise Unemployed ,Drought victim Begging .Facilitate skill Drought victim .Single parent ,Hunting & gathering acquisition Destitute ,Petty theft .Revolving animal Disabled ,Migration to peri-urban fund Peri-urban ,Accessing emergency assistance - I. PQQr Moderate 'Hardly above poverty he) Few livestock ,Drought Support from neighbours GA training Credit for IGA Large families ,Erratic rainfall 4ccess to credit for livestock Cereal banks Agropastoralists ,Infertile land .Periodic wage labour Education support for children Seed Exchange Barely surviving on .Low crop yield Seasonal wage labour -abour saving methods - dairy Schemes ?xistinglivelihood ,Poor animal ,Grain and money lendin! roduction/household chores Butter storage performance .NWFP - gum diable planting seed .Poor genetic crop arabichncense material .Drought tolerant crops II. Less Poor &

.Adequate livestock .Low animal productivity .Animals produced from ,Credit - income .Facilitate input .Additional income .Poor animal health local resources diversification procurement source .Low sale price for .Engage in informal .Livestock input .Animal husbandry 'Pastoralists stock sector activities procurement packages ,Meet needs from .Technology to Crop packages present livelihood improve ,Marketing livestock source productivity and dairy produce

- 105- Table 3: Institutional Capabilities Matrix

Institution Strengths Weaknesses OpportunitieslThr Remarks eats BilateralsiNGOs ,Accumulated ,Limited area to .Donor knowledge of the coverage collaboration for functioning of CBOs wider and more .Cultural difference comprehensive awareness coverage for extension activities .EAR0 .High trained scientists .No experience in dryland .Loss of staff to ARD44 Dryland ,Establishment of farming technologies overseas institutes jricultural Research RARC in pastoral related to cultural and crop.Poor selection of rectorate. lowlands husbandry practises venues for study tours and skills training .No institutional twinning .MOFA ,Emerging Regions ,Poor outreach Untested relations Development Board .Lack of presence at with regional Chair regional and disrict levels gonernments ,Mandate for regional of government ,Operationalise and cooperation .No implementation coordinate pulic sevice ,Functioning Pastoral capacity for national delivery Development programmes at fie1 level. Department Covers and coordinates across all technical and social service ministries .MOA .Pastoral Extension .Poor backup/MOS ,Guide/supervise 4ppoint coordination Team in place support community program taff .Pastoral area .Low incentives .Inject new ideas after experience .Weak professional and skill acquisition .Production system managerial skills for Competition from knowledge community work other line ministry staff .Poor mobilityloutreach Regional Agriculture Cadre of well trained .Distance to target group .Deployment staff to ireau staff .No development budget districts Under-employed staff .Poor pay/conditions . Zonal Agriculture Cadre of well trained .No development budget ,Dissolution of zonal levelopment Department staff .Poor paylconditions service Under-employed staff ,Redeployment of staff to districts 7. Local government .Locally recruited ,Poorly .Knowledge of staff trainediresou rces district resources .Appointed .Limited outreach ,Familiarity with administrator production system .Pastoral Communities .Social organizations ,Strong traditional .Open to accept .Traditional authority community proven technologies .Thorough area hierarchyiauthority Community knowledge structure sensitisation ,Traditional knowledgel .Inexperience community ,Reluctance to . resource management program initiationim'ment relinquish previously .Animal husbandry .Low literacy level held authority position5 experience ,Reluctance to de-stock ,Strong gender views and attitude for conflict resolutionhnamgemenl Zonal, Regional, .Well placed for normal .No environmental .PET feed back can tional Administration routine administrative knowledge influence policy to functions .Poor pastoral favour pastoralists understanding

- 106- Table 4A: Complementary Donor InitiativedPartnership Potential55 Refer to Working Paper 2, Chapter V.

Donor/Agency Nature of Programme Programme Status Complementarity Coverage A. Multilateral Programs

1. World Bank .National Fertiliser Project Highlands Ongoing Co-financed .National Seeds Priject O ngoing IFAD Highlands Ongoing IFAD ,ARTP Lowlands Ongoing Co-financed .PCDP Pastoral areas Confirmed IFAD Co-financed IFAD 2. IFAD ,Rural Financial Intermediation Project Uplands 0 ng o in g Special Country Program Uplands Ongoing ,Southern Regions Cooperative Development Ongoing Regional Project 3. ADB ,Animal breeding, forage production and animal Upland areas Ongoing Strong health Programme area Limited Strong ,Production system study of pastoral areas 4. FA0 .Food Security in the Horn (1999/2000) Horn of Africa Ended Strong .TCP support to Local Government Project area Confirmed Strong E. Bilateral Programs 1. DFiD ,Sustainable livelihoods of pastoral peoples Horn of Africa Planned Probable ,Technical support for cross border animal health programs trade 2. Cooperazione ,Veterinary services Borana Zone Ended n/a lnternazionale (COOPI) .Infrastructure rehabilitation (water) E nded n/a -Liben Ended n/a .Micro-scale irrigation development for home Planned Probable gardens 3. USAID cross-border livestock marketing Pastoral areas Ongoing Strong micro-finance institutions .nomadic education .conflict management techniques for communities ,humanitarian assistance to pastoralists 'some aspects of animal health 4. GTZ Borana Lowland Pastoral Development Program 4 Woreda Ongoing Strong (self-help capacity building, CAHW drought mitigation, education services, market information, dryland farming, rural finance C. NGOs 1, FARM Africa .food security amongst pastoralists Afar Ongoing Strong mobile animal health/extension delivery divestock marketing .small-scale irrigation schemes 2. CARE .rangeland and pastoralist development Borana Ongoing Strong .well development - Yabello 'women savings and loan pilot Dire .animal health services - Teltelle .HIV awareness .early warning systems Awash Valley marketing and coping mechanisms 3. Hope for the Horn .Natural resource management Somali Ongoing Strong ,Environmental awareness training -tree planting (fruit, fodder, reforestation) -gully plugging 1-terracing

- 107- ,Water development (hafir, birka) Completed CAHW traininglRevolving Drug Fund Completed 4. Save the Children - UK ,Retraining CAHW Somali Ongoing Strong .Drug store construction (12) .Restocking prog. (Revolving Animal Scheme) .Water development .Birkas 5. Save the Children (USA) .Animal health group formation Borana Zone Ongoing Strong ,Livestock marketing Somali NRS Planning Strong 6. ACDANOCA Cooperative formation Southern Ongoing Strong rangelands 7. ClSP .Water development Borana Zone Ongoing Moderate - Teltelle 8. Action for Development ,Service cooperatives Borana Zone Ongoing Strong .Savings & Loan Pilot - Yabello ,Rangeland development Borana Zone -

Yabello 9. Afar Pastoral Development .Livestock water development Borana Zone Ongoing Strong Assn. 10. Dutch Inter-church Aid .Restocking programmes Afar Ongoing Strong 11. LVlA .Water development Borana Zone Ongoing Strong - Mayale 12. LWF ,Water development Borana Zone Ongoing Strong 13. SOSSahel ,Forestry extension Borana Zone Ongoing Strong 14. Ogoden Welfare Service .Veterinary Clinics Construction Somali Ongoing Strong Small-scale irrigation development Shallow-well construction ,Irrigation command area (2 500 ha) development Planned Minimal .Restocking program Strong .Water development 15. Oxfam .Veterinary services Somali .Water development 16. Ethiopian Pastoral ,Southern Ethiopian Pastoral Project (education, South Omo /Ongoing /Sfrang Research & Development research animal health, crops, conflict resolution) Association D. Government of Ethiopia

1, Integrated Pastoral Develop. Shallow-well rehabilitation BoranalSouth Ongoing Strong Project .Ranch development (Oronake, Hamer) Omo Minimal Small-scale Irrigation Strong

/E. Research I I I I 1, ILRl (Research projects) ,asset diversification Pastoral areas Ongoing Strong

.health delivervI. svstems .milk yield improvement and marketing .food storage option for milk surpluses 2. EAR0 .research on early warning Borana Ongoing Moderate system, risk diversification

- 108-