Document of The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 39359-A0
PROJECT APPRAISAL DOCUMENT
ON A
Public Disclosure Authorized PROPOSED CREDIT
IN THE AMOUNT OF SDR 18.5 MILLION (US$30 MILLION EQUIVALENT)
TO THE
REPUBLIC OF ANGOLA
FOR A
Public Disclosure Authorized MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
June 24,2008
Agriculture and Rural Development, AFTAR Sustainable Development AFCS2, Angola Africa Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS
(Exchange Rate Effective May 12,2008)
CurrencyUnit = Kwanza 75.00AOA = US$1 US$1.61 = SDRl
ANGOLA FISCAL YEAR January 1 - December31
ABBREVIATIONS AND ACRONYMS AD1 Agricultural Development Institute of MINADER COSOP County Strategic Opportunities Paper (IFAD) CPAR Country Procurement Assessment Review ECB Estrategia de Combate a Pobreza - Poverty Reduction Strategy EDA Agricultural Development Office of AD1 EMRP Emergency Multisector Recovery Project (WB) EMTA Economic Management technical Assistance Project (WB) ESMF Environmental and Social Management Framework FA0 Food and Agriculture Organization of the United Nations FAS Social Action Fund ICR Implementation Completion Report IFAD International Fund for Agricultural Development ISN Interim Strategy Note (WB) MDG Millennium Development Goal MINADER Ministry of Agriculture and Rural Development MINUA Ministry ofUrban Affairs and the Environment PAD Project Appraisal Document PC Project Coordinator PCC Project Coordination Committee PPCC Provincial Project Coordination Committee PEDR Rural Extension and Development Program AD1 PHRD Poverty and Human Resources Development (Japan) PISC Project Implementation Sub-committee PIU Project Implementation Unit PPISC Provincial Project Implementation Sub-committee PPIU Provincial Project Implementation Unit
.. 11 FOR OFFICIAL USE ONLY
PRODECA Northern Region Food-crops Development Project (IFAD) PRSP Poverty Reduction Strategy Paper RPF Resettlement Policy Framework TSS Transitional Support Strategy (WB) UNDP United Nations Development Program WB World Bank WFP United Nations World Food Program
Vice President: Obiageli Katryn Ezekwesili Country Managermirector: Albert0 Chueca/Michael Baxter Sector Manager: Karen Mcconnell Brooks Task Team Leader: Aniceto Tim6teo Bila
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.
iii
ANGOLA Market Oriented Smallholder Agriculture Project
CONTENTS
Page
A . STRATEGIC CONTEXT AND RATIONALE ...... 1 1. Country and sector issues ...... 1 2 . Rationale for Bank involvement ...... 2 3 . Higher level objectives to which the project contributes ...... 3 B. PROJECT DESCRIPTION ...... 5 1. Lending instrument ...... 5 2. Project development objective and key indicators...... 5 3 . Project components ...... 6 4 . Lessons learned and reflected in the project design ...... 10 5 . Alternatives considered and reasons for rejection ...... 11 C. IMPLEMENTATION ...... 11 1. Partnership arrangements ...... 11 2 . Institutional and implementation arrangements...... 11 3 . Monitoring and evaluation of outcomeshesults ...... 13 4 . Sustainability.,...... 14 5 . Critical risks and possible controversial aspects ...... 15 6 . Loadcredit conditions and covenants ...... 16 D. APPRAISAL SUMMARY ...... 18 1. Economic and financial analyses ...... 18 2 . Technical...... 19 3 . Fiduciary ...... 20 4 . Social...... 21 5 . Environment ...... 22 6 . Safeguard Policies ...... 23 7 . Policy Exceptions and Readiness...... 23
iv Annex 1: Country and Sector or Program Background...... 24 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 38 Annex 3: Results Framework and Monitoring ...... 42 Annex 4: Detailed Project Description...... 51 Annex 5: Project Costs ...... 62 Annex 6: Implementation Arrangements ...... 64 Annex 7: Financial Management and Disbursement Arrangements ...... 71 Annex 8: Procurement Arrangements ...... 82 Annex 9: Economic and Financial Analysis ...... 92 Annex 10: Safeguard Policy Issues ...... 99 Annex 11: Project Preparation and Supervision ...... 110 Annex 12: Documents in the Project File ...... 112 Annex 13: Statement of Loans and Credits ...... 113 Annex 14: Country at a Glance ...... 115 Annex 15: Maps IBRD 35537 and 35570 ...... 117
V ANGOLA
MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
PROJECT APPRAISAL DOCUMENT
AFRICA
AFTAR
Date: June 24,2008 Team Leader: Aniceto Timoteo Bila Country Director: Michael Baxter Sectors: Agricultural extension and research Sector ManagerDirector: Karen M. BrookdInger (34%); Crops (33%); Irrigation and drainage (33%) Andersen Themes: Rural markets (P);Rural policies and institutions (P) Project ID: PO93699 Environmental screening category: Partial Assessment Lending Instrument: Specific Investment Loan
Project Financing Data [ 3 Loan [XI Credit [ 3 Grant [ 3 Guarantee [ 3 Other:
For Loans/Credits/Others: Total Bank financing (US$m.): 30.00 Proposed terms: The credit would be on hard IDA terms, with a maturity of 35 years, including 10 years of grace period, interest rate at 200 basis points below IBRD lending rate in fixed-rate terms, as defined in “IDA’SNon-Concessional Borrowing Policy: the Case ofAngola”, discussed by the Board of Executive Directors on April 5,2007.
Financing Plan (US$m) Source I Local Foreign Total BORROWERRECIPIENT 3.20 0.92 4.12 Beneficiaries 3.03 3 -03 International Development Association (IDA) 27.80 2.20 30.00 International Fund for Agriculture 7.34 0.86 8.20 Development (IFAD) JAPAN: Ministry ofFinance - PHRD Grant 3.55 0.45 4.00 Total: 44.92 4.43 49.35
Borrower: Republic ofAngola
Responsible Agency: Ministry ofAgriculture and Rural Development Luanda Angola
vi Expected effectiveness date: October 1,2008 Exuected closing. date: Seutember 30.2014
Does the project depart from the CAS in content or other significant respects? Re$ []Yes [XINO PAD I.C Does the project require any exceptions from Bank policies? []Yes [XINO Re$ PAD IC.:G Have these been approved by Bank management? []Yes [INo Is approval for any policy exception sought from the Board? []Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [XIYes []No Re$ PAD III.E Does the project meet the Regional criteria for readiness for implementation?Re$ [XIYes []No PAD IKG
Project development objective Re$ PAD II.B, Technical Annex 3 The project development objective is to increase agricultural production through provision of better services and investment support to rural smallholder farmers in selected comunas and municipios of targeted Provinces ofBie, Huambo and Malanje.
Project description : Re$ PAD II.C, Technical Annex 4
Component 1: Capacity Building The objective of this component is to strengthen the technical, institutional, managerial and marketing skills of smallholders and their organizations, as well as of services providers and other stakeholders involved in agricultural production and value chains, to more effectively operate in a market-driven environment and to prepare for the agricultural investment support opportunities under component 2.
Component 2: Agricultural Investment Support This component will provide demand-based support, in the form of matching grants, to rural communities and smallholder groups and associations, for village productive infrastructure and agricultural production, processing and marketing sub-projects
Component 3: Project Management The objective of this component is to manage the project and use resources in accordance with the project objectives and procedure.
Which safeguard policies are triggered, if any? Re$ PAD IC.:F, Annex 10 Environmental Assessment (OP/BP/GP 4.01) Involuntary Resettlement (OPBP 4.12)
vii Significant, non-standard conditions, if any, for: Re$ PAD III.F
Effectiveness conditions:
0 PIU and PPIUs are established, operational and staffed, including appointment of project coordinators;
0 Financial Management Specialist and Procurement Specialist, with qualifications and experience acceptable to the Bank, have been recruited;
0 The Project Implementing Entity has established an accounting information system.
0 The Project Implementation Entity has finalized the implementation operations manual, including financial management and procurement;
0 Terms of Reference, to select independent auditors, have been prepared and are acceptable to the Bank;
0 The FAD Co-Financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals under it (other than the effectiveness of this Agreement) has been fulfilled; and
0 The Japan PHRD Co-Financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals under it (other than the effectiveness of this Agreement) has been fulfilled.
Disbursement conditions for component 2:
At least 30 (10 in each province) qualified service providers and public agents are certified and equipped under the project’s Capacity Building program;
The baseline survey has been completed; and
The administrative capacity ofProvincial Project Implementation Units is in compliance with the Bank’s fiduciary requirements, as certified by the Association.
Covenants applicable to project implementation:
0 Any resettlement that cannot be avoided under the project will be undertaken in accordance with the Resettlement Policy Framework. 0 The Government will carry out annual procurement audits of the project. These audits will be carried out under terms and conditions and by independent consultants whose qualifications are acceptable to the Bank. The audits will include an action plan to improve performance, where required, which will be submitted to the Bank and discussed with Government.
... Vlll Not later than three months of effectiveness:
0 The Project Implementing Entity has recruited one project coordinator, one financial management specialist, an accountant, monitoring and evaluation officer, procurement specialist, and communication specialist in each targeted province (Bie, Huambo and Malange) with qualifications and experience acceptable to the; and
A consulting firm, to complete the baseline survey, hired.
Not later than six months of project effectiveness:
Selection of independent auditors with experience and qualifications satisfactory to the Bank; and Establishment of a monitoring and evaluation system to monitor implementation progress and results.
ix A. STRATEGIC CONTEXT AND RATIONALE
1. Country and sector issues
1. The Republic ofAngola covers an area of 1.25 million km’ and is located on the Atlantic coast of south-western Africa. It became independent from Portugal in 1975 after years of fighting and was immediately engulfed in a devastating civil war, which only ended in 2002. Angola is one of Africa’s most resource-rich countries, with tremendous economic potential, endowed with many mineral resources and vast fertile lands. Yet it is considered a Low Income Country Under Stress, largely because of the after-effects of the civil war. Some 750,000 Angolans (7% of the population) died; about 4.5 million were displaced, and another 450,000 became refugees. At the end of the war, Angola was left with a devastated physical and social infrastructure, some of the world’s worst human development indicators, weak governance, and fragile human and institutional capacity.
2. According to the 2007 Human Development Report ofthe United Nations Development Program (based on 2005 data), Angola is ranked 162 out of 177 countries in the human development index, with indicators for health, education and nutrition among the worst in Africa. This is in spite ofthe fact that Angola’s per capita income is one ofthe highest among the Low Human Development countries with US$2,180 per capita (based on the purchasing power parity measure of income in 2004). However, there is an acute inequality in income and consumption distribution. In rural areas large percentages of the population are living in extreme poverty, especially in the Central Highlands, where up to 68 percent were reported to be food insecure in 2005. On the health side, HIV/AIDS prevalence is relatively low and it is estimated to be about 4 percent ofthe adult population aged from 15 to 49 years.
3. The oil sector dominates the Angolan economy, accounting for about 57 percent of GDP in 2006 and for 80 percent of Government fiscal revenue. Angola is currently the second sub- Saharan Africa’s biggest oil exporter after Nigeria and oil output is expected to rise from 1.2 million barreldday (b/d) in 2005 to 1.4 million b/d in 2006 to 2.0 million b/d in 2007 and a projected 2.3 million b/d in 2010. GDP growth averaged 10.9 percent for the period of 2001- 2005 and reached 20.6 percent in 2005, 18.6 percent in 2006 and estimates point to a rate around 23 percent in 2007. The agriculture, forestry and fisheries sectors also represent a vast and still largely untapped potential for the local economy, accounting for an estimated 7.8 and 9.8 percent of GDP in 2006 and in 2007 respectively, while annual growth in these sectors averaged 14.8 percent over the period 2001-2005 and reached 17.0 percent in 2005.
4. The inflation rate has steadily declined, from 116.8% over 2001 to 11.78% by December, 2007 and an estimated 10% over 2008. This has been achieved essentially through a heavy intervention in the foreign exchange market to remove excess liquidity although recent increase in the rediscount rate has also been used by Angola’s Central Bank, the Banco Nacional de Angola. Heavy interventions in foreign exchange markets have kept the nominal exchange rate relatively stable in 2006, and the monetary tightening in 2007 resulted in an appreciation ofthe Kwanza (Angola’s currency). However, the strong Kwanza has made imports cheaper and this in turn, combined with high transportation costs due to the poor status of the road network, is severely hampering the development of domestic non-oil sectors, such as manufacturing and
1 agriculture. Angola has consistently run a large trade surplus due to the growing sales of crude oil and diamonds.
5. The agriculture and rural sector. While agriculture accounts only for about 8 percent of GDP, it is the main source of employment in the country. It provides employment to about 63 percent or some 4.7 million people out of a total workforce of 7.5 million. Only some 600,000 of the workforce find employment outside the agricultural sector and 2.2 million remain unemployed. Over the past few years, the agriculture sector has re-absorbed an estimated 4.4 million of (previously) internally displaced people. In 2001 close to 1.9 million people received food aid but this number was reduced by more than a half to some 0.8 million by 2006.
6. Prior to independence, agricultural production in general and food production in particular was high and the country was a major exporter of maize and coffee. Smallholders in the Central Highlands, the agricultural heartland ofAngola, were firmly embedded in the market economy and were the main producers for both local and export markets. During the war agriculture fell to an almost subsistence level in most areas. The country had to rely on commercial food imports and food aid. In 2000/01 some 420,000 tons of cereals were imported on a commercial basis and an additional 330,000 tons were received as food aid. By 2005/06 commercial imports had risen to 780,000 tons and food aid had decreased to 60,000 tons.
7. Since the end of hostilities in April 2002, many of the returnees have gone back to farming. The improved mobility of people and products throughout the country and the rapidly growing economy has had positive impact in revitalizing the local agricultural markets. Major infrastructure rehabilitation programs are now under way, reconstructing roads, bridges and railways, and reconnecting the countryside to markets, cities and harbors. This will drastically reduce transportation costs, and will provide an opportunity to re-establish rural-urban commercial circuits. It will also provide an enabling environment for increased agricultural production and improved access to markets.
8. The poverty levels and number of vulnerable people in the rural areas of the highlands remain very high. A 2005 WFP food security survey in the Central Highlands identified high levels of vulnerable groups, most of who depend on agriculture as their main source of livelihood. The survey found that: (i)an estimated 19% of households were chronically food deficient, mainly internally displaced and/or recently resettled families; (ii)some 30% were considered to be highly vulnerable households, consuming just one insufficiently balanced meal per day, they have low asset ownership and are often female headed households; and (iii)an additional 19% were moderately vulnerable households with more than one source of income, but still consuming just one meal a day.
2. Rationale for Bank involvement
9. The rationale for Bank involvement in the proposed project is four-fold. First, the Government of Angola has requested the Bank to support this agricultural development project that links smallholders to markets. This is consistent with the Bank’s Interim Strategy (ISN): (i) helping to strengthen institutional capacity; (ii)supporting public services for poverty reduction; and (iii)as means for promoting growth of non-mineral sectors. In addition, the ISN recognizes
2 that agricultural productivity and competitiveness will help to both reduce rural poverty and promote growth, and the proposed Market Oriented Smallholder Agriculture Project will also build on work started under the Emergency Multisector Recovery Project (EMRP).
10. Second, Bank involvement brings in considerable global experience and knowledge on supporting pro-poor agriculture programs for smallholders, including income and employment generating activities for rural households in countries emerging from conflicts such as Angola. The civil war resulted in a virtual collapse of market-oriented production as large numbers of rural inhabitants either fled or reverted to subsistence production. Infrastructure also suffered greatly with widespread destruction of roads, bridges and warehouses. The project design therefore adopts community demand-driven (CDD) approach to ensure that project beneficiaries do have a say in determining the project activities that best meets their needs and can be sustained.
11. Third, Bank involvement will help facilitate a harmonized framework among donors for supporting smallholder agriculture in Angola. Because of its convening power, the Bank could attract and work with other development agencies active in smallholder agriculture in Angola. For example, IFAD has agreed to support the project and work within the same framework to reduce possible duplication and improve the impact of development assistance. In addition, the Bank’s involvement adds credibility to investment in the agricultural and rural sector and has a positive impact on the mobilization of additional donor support, such as a PHRD grant. It also has a catalytic effect on public sector reform and transparency of governance in the agriculture sector. The co-financing arrangement with IFAD further strengthens this catalytic effect and the associated opportunities for policy dialogue.
12. Fourth, this project will consolidate gains of the EMRP and of other IFAD programs in the same provinces. The EMRP, has helped reestablish institutional capacity of Angola’s two agriculture research centers and of rural extension services in Malanje and Bie. It is also supporting the revitalization of capacity to produce and multiply seeds and vegetative planting material. EMRP phase two will support the rehabilitation of some 600 km of feeder roads in Malanje and Bik, most ofthese feeder roads are located in the same comunas and municipios that are also selected by this project.
3. Higher level objectives to which the project contributes
13. The proposed project is consistent with Angola’s poverty reduction strategy and constitutes a key element ofthe Bank’s Interim Strategy in Angola.
14. A Poverty Reduction Strategy paper (PRSP) - the Estrategia de Combate a Pobreza (ECB), - was approved by the Council ofMinisters in December 2003. Its main goal is to cut the country’s poverty level in half by 2015, including consolidation of peace and national unity through the sustained improvement of the living standards of all Angolans. The ECB highlights rural development, with a focus on the improvement of food security and the re-vitalization of the rural economy. The key proposed actions are: (i)the strengthening ofthe production capacity of the traditional sector, particularly food crops and fisheries; (ii)the re-launching of rural commerce; (iii)a sustainable development ofnatural resources; and (iv) the reorganization ofthe
3 legal framework and public institutions. Some basic principles are outlined: a focus on smallholders; the importance of community participation; the concentration of planning, implementation and monitoring at the municipality level; complementary activities with donors, the private sector and NGOs; specific targeting of women, including access to land; and HIV/AIDS as a cross-cutting concern.
15. The objectives ofthe World Bank Group’s interim strategy (ISN) for Angola are to (a) help strengthen public sector management and institutional capacity; (b) rebuild critical infrastructure and support delivery of public services for poverty reduction; and (c) promote growth of non-mineral sectors. The Bank aims to achieve these three objectives through continued support for the activities started under the previous ISNand modest new lending. The ISNrecognizes that agricultural productivity and competitiveness will help to both reduce rural poverty and promote growth, and proposes a Market Oriented Smallholder Agriculture Project to build on work started under the EMRP.
16. The project strategy is to enable smallholders in the project area to increase their productivity and competitiveness and to benefit from improved access to market by focusing on the establishment of rural-urban commercial circuits that can generate a self-sustaining growth. Producing for expanding food markets in cities as well as supplying inputs to emerging agro- based manufacturing enterprises will facilitate integration of the rural economy in the country’s overall economy. This strategy is in line with the basic principles outlined in the food security and rural development section of the Poverty Reduction Strategy of the Government. These principles are reflected in the project design as follows:
Already existing and newly created participatory farmer organizations will facilitate the increase in yields and production by smallholders, marketing of their agricultural surpluses, undertake agricultural investment sub-projects and pool demand for agricultural services. The formation and capacity building of smallholder groups and associations is a key factor in project strategy: it needs to start early in the project and be rapidly scaled-up.
All smallholders in the targeted comuizas should get the opportunity to participate in the project, vulnerable groups should not be left out, and special attention should be given to women and female headed households, as well as to households with a high dependency rate and households ofphysically impaired persons.
Flexibility in project implementation is needed to reflect the rapidly evolving social and commercial environment in rural Angola resulting from: (a) the peace process, (b) the rehabilitation of transport infrastructure, (c) the need to compete with the wide range and high volume of food and agriculture imports, (d) the potential volatility in prices and exchange rates related to oil production and prices, (e) the possible demographic growth and the urbdrural migration trend, and (f) the variety and diversity of socio-economic situations existing at the local level.
Address infrastructure and safety issues by building on potential synergies. The needs in the project area are enormous. The rehabilitation (and de-mining) of roads and bridges
4 alone could easily consume the whole project budget. Hence, the project proposes to focus on those areas that will already benefit from infrastructure rehabilitation activities from various other sources.
B. PROJECT DESCRIPTION
17. The project area consists of 25 Commas in 12 Municipios in the targeted provinces, including Bie, Huambo and Malanje. The selection of the project area has been guided by the following criteria: high agricultural potential, based on favorable ecological and climatic conditions; high population density; market access; existence of some supporting infrastructure; and potential synergies with other operations. The number ofrural households in the project area is estimated at 200,000, or about one million people. Of these, 126,000 households are expected to be direct project beneficiaries. The smallholder farmers (familias camponesas) targeted' cultivate, on average, 1-2 hectares ofcropland. A large proportion of these households consist of recently returned (formerly) internally displaced persons, who have taken up farming as a means of providing for their livelihoods. Though most smallholders are currently producing at the subsistence level with high incidence of poverty and food insecurity, there is a significant potential for production increases, both in terms of expansion of cultivated area per farmer and increasing productivity per unit of labor. With a proper enabling environment, adequate supply of agricultural inputs (including fertilizer), diffusion of labor-saving technology and access to markets, agricultural incomes of smallholders could rise significantly over a relatively short period. A small minority of smallholders cultivates 2-5 hectares and they are considered to be potential change agents. The most vulnerable farmers are those who farm less than 1 hectare, they often consist of female headed households, which in some villages, make up an important part of the overall population. (hex 1 includes a more detailed description ofthe project area and target beneficiaries).
1. Lending instrument
18. The proposed lending instrument is a Specific Investment Loan (SIL). The total cost of the Project is US49.35 million and the project would be financed by IDA Credit of US$30.00 million equivalent, an IFAD Credit of US8.20 million, and a US4.00 million Japan PHRD grant. The Government contribution would be equivalent to US4.12 million and the beneficiaries contribution would be equivalent to US3.03 million.
2. Project development objective and key indicators
19. The project development objective is to increase agricultural production through provision of better services and investment support to rural smallholder farmers in selected comunas and municipios oftargeted Provinces ofBiC, Huambo and Malange.
20. The key outcome ofthe project at the end ofthe six years implementation would be (i)an increased agricultural production ofparticipating smallholder farmers; (ii)improved smallholder
A smallholding is a farm of small size used to grow crops and supporting a single family. In the framework of this project a shallholder is defined as a single family or household with holdings of less than 5 hectares.
5 access to markets; and (iii)improved infiastructure and productive assets for rural smallholders. Annex 3, provides a detailed discussion ofthe project outcome indicators and other performance parameters .
3. Project components
21. The project includes three components: (i)capacity building, (ii)agricultural investment support; and (iii)project management. The project is expected to be completed over a six-year period.
Component 1: Capacity Building- US$11.26 million (US$3.42m IDA; US$3.20m IFAD; US$4 m Japan PHRD Grant; and US$ 0.64m GOA)
22. The objective of this component is to strengthen the technical, institutional, managerial and marketing skills of 126,000 smallholders and their organizations, as well as of services providers and other stakeholders involved in agricultural production and value chains2, to more effectively operate in a market-driven environment and to prepare for the agricultural investment support opportunities under component 2. The expected results under this component include: (i) improved technical skills of beneficiary stakeholders involved in agricultural production; (ii) improved participation of smallholder farmers in farm organizations; (iii)improved community capacity to prepare agricultural investments support opportunities; and (iv) improved government capacity to support smallholder fanners in the project area. The component also takes a gender and vulnerable group sensitive approach to capacity building.
23. There are three sub-components, focusing on smallholders and their groups and associations, relevant government institutions, and private and non-government agricultural service providers:
(i) Building and strengthening capacities of smallholder groups and associations. This includes: (a) assisting smallholders to form groups and associations and to strengthen existing smallholder groups and associations; (b) assisting smallholder groups and associations to identify, prepare and manage their productive agricultural investment activities to be funded through component 2; (c) improving smallholders agricultural and marketing skills and ability to access extension services; and (d) building capacities of vulnerable groups and empowering them to participate in productive activities supported by the project.
(ii) Strengthening capacities of relevant government institutions and introducing or strengthening participatory processes that support project implementation, focusing on building skills ofstaff in institutions involved in the project:
(a) The Agricultural Development Institute (ADI) at local and central level will be given periodic training and the means (office, equipment, transport - depending on the local situation) to assist smallholders to form and strengthen groups and
Value chain can be understood as the full range of activities encompassing the agricultural production, storage, processing, transportation and any other service to add value to the farm production.
6 associations, to strengthen their farming and marketing skills, and to assist them to prepare development plans and investment proposals (sub-projects) for support under component two. AD1 and its extension workers will also be assisted to develop a communication strategy and equipped with the skills to implement it, to reach the targeted communities and beneficiaries;
(b) Local government capacity building aims at increasing transparency and accountability in project implementation. This will include information and training regarding: (1) the project and its different components and their implementation, (2) financial management, procurement, monitoring and evaluation, (3) land tenure and water management issues, and (4) gender mainstreaming;
(c) Specific policy and strategy planning and formulation units of the Ministry of Agriculture and Rural Development and other relevant institutions will be provided with skills to develop an appropriate policy framework for agricultural intensification and marketing (including fertilizer market improvement); and they will also be provided with tools, as necessary to carry out their functions.
(iii) Strengthening capacities of private and non-governmental agricultural service providers. This includes: (a) strengthening the capacities of private sector agencies, NGOs and CBOs to support smallholder groups and associations to prepare development plans and investment proposals (sub-projects) for finding under component two; and (b) strengthening the managerial and business capacities oflocal micro-enterprises that support farming activities (small processors, craftsmen and local traders).
Component 2: Agricultural Investment Support-US$29.34 million (US$23.46m IDA; US$2.85m IFAD; and US$3.03 m beneficiaries)
24. The objective of this component is to improve the productivity, competitiveness and market access of24,000 smallholders in the project area.
25. This component will provide demand-based support, in the form of matching grants, to rural communities and smallholders groups, for small-scale agricultural infrastructure, production, processing and marketing sub-projects. The key results expected from the implementation of this component are (i)enhanced agricultural productivity; and (ii)enhanced access to agricultural markets. The sub-projects will be initiated upon the request ofcommunities and smallholder groups and will be prepared with the assistance ofservices providers that will be trained and equipped for this task through component one. The sub-projects will then be screened for technical, financial, social and environmental feasibility, before they are approved for funding. To be approved for funding, the sub-projects will have to meet stringent eligibility criteria, which are spelled out in Annex 4 (detailed project description), Annex 6 (implementation arrangements) and in the implementation operations manual. The matching grant ratios and finding ceilings that apply will be periodically reviewed and recalibrated to take account ofchanging circumstances and lessons learned during implementation.
7 26. Rural communities/villages (aldeias), will be eligible to receive support, provided that the sub-project proposals result from a community-level participatory planning exercise with a cross section of the population, including women and young people. Smallholders groups or associations will also be eligible for support, provided that are either registered or informally recognized by the local community and authorities, that they have a democratic structure and have the ability to keep records.
27. Three categories of sub-projects have been defined (see annex 4 for a more detailed description):
(i) Sub-projects with a high public value and/or use content, for which the matching grant ratio will (initially) be set at 90% project contribution and 10% beneficiary contribution (either in cash or in kind). These sub-projects include: (a) rural infrastructure sub-projects (for instance small-scale irrigation, drinking water, dip-tanks, stores, spot improvement of feeder roads, etc); and (b) sub-project that have a positive impact on the environment, such as erosion control and reforestation;
(ii) Sub-projects that naturally reproduce and can be further distributed, for which the matching grant ratio will (initially) be set at 90% project contribution and 10% beneficiary contribution (either in cash or in kind), under the condition that the beneficiary group agree to a further distribution mechanism under which the whole group or the whole community will eventually benefit. These sub-projects include: (a) livestock (cattle, goats, sheep, pigs, etc.); and (b) seed multiplication;
(iii) Sub-projects that largely consist of equipment that requires a business-type use and management to be sustainable and profitable, for which the matching grant ratio will (initially) be set at 90% project contribution and 10% beneficiary contribution (either in cash or in kind), under the condition that the beneficiary group has a contractual agreement with one or more ofits members to use and manage the equipment as a micro- enterprise, providing services to the whole group andor community. These sub-projects include: (a) agricultural production equipment, such as tractors, animal traction equipment (ploughs), sprayers, pumps, etc.; (b) agricultural processing equipment, such as grain mills, oil presses, milk chillers, etc.; and (c) agricultural marketing equipment, such as transport equipment (ox-cart, trailer), etc.
28. Expenditures under this component will be subject to a disbursement condition that stipulates that subprojects will only be financed from proceeds ofthe IDA Credit once a number ofperformance triggers have been met, including: (i)at least 30 qualified service providers and public agents are certified and equipped under the project’s Capacity Building program; (ii)the baseline survey has been completed; and (iii)the administrative capacity of Provincial Project Implementation Units is in compliance with Bank fiduciary requirements, as certified by the Association. Further details are available in hexes4 and 6 and the implementation operations manual.
8 Component 3: Project Management-US$8.75 million (US$3.12m IDA; US$2.15m IFAD; and US$3.48m GOA)
29. The objective ofthis component is to manage the project and use resources in accordance with the project objectives and procedures.
Management. MINADER is responsible for project implementation and has delegated AD1 to be accountable for the management and oversight ofthe project in order to attain its objectives. At the specific request ofMINADER, a Project Implementation Unit (PIU) will be established within the AD1 framework and the Director General of AD1 will be the executive level public manager of the project. The PIU will be responsible for the management of fiduciary issues, in conformity with the standards and requirements agreed upon with the World Bank and FAD and in conformity with the legal agreements. It will handle the day to day management of all project activities, including technical supervision and coordination, overall project planning, quality oversight, procurement, financial management communication and monitoring ofproject activities. The PIU will include a Project Coordinator, a financial manager, a procurement specialist, communication specialist and an (ADI-staff) accountant, as well as a monitoring and evaluation officer. A national level Project Coordination Committee, will monitor project progress and make decisions in line with the objectives and institutional arrangements defined. The project will finance the salaries of externally hired staff, limited technical assistance and training, office equipment and vehicles, project monitoring and evaluation costs and operational costs;
At the provincial level, MINADER will establish three Provincial Project Implementation Units (PPIUs) within ADI, to conduct the operational management of the project. Each PPIU will include a Provincial Project Coordinator, a financial accountant, a procurement office, communication specialist and a monitoring and evaluation officer. A team ofthree technical staff, including an agronomist, an agribusiness specialist and a rural infrastructure specialist, will be based at provincial level (one based in each province), and will be supplemented by short term consultants according to needs. Three Provincial Project Coordination Committees will monitor local project progress and make decisions in line with the objectives and institutional arrangements defined. Similarly, at the provincial levels, the project will finance the salaries of externally hired staff, limited technical assistance and training, office equipment and vehicles, and operational costs. The project will also finance the costs ofperiodic financial audits;
At the start of the project, a Communication Strutegy will be designed to stimulate demand for project support and increase participation by vulnerable groups. The design of the communication strategy will be contracted out to a specialized service provider. The implementation of the communication strategy will be largely through component one, capacity building,
Monitoring and evaluation focuses on data collection and reporting on key performance output and impact indicators, including targeted data collection, surveys, participatory assessments and mid-term and final evaluations. Relevant data will be gender-
9 disaggregated and attention given to social inclusion. A specialized monitoring and evaluation section will be set up within the PIU, and a management information system will be prepared to the satisfaction of the World Bank and IFAD, as well as procedures for data collection and reporting. Two evaluations ofproject output and impact indicators will be commissioned, at mid-term and at completion. The project will finance M&E costs, including the mid-term review and project completion review. The baseline survey will be completed during first year ofproject implementation.
4. Lessons learned and reflected in the project design
30. The design of the project takes into account lessons learned from the implementation of the Transitional Support Strategy from 2003-2005 and the first Interim Strategy from 2005-2006, as well as from IFAD’Sexperience in implementing projects in the rural sector from 1991-2007. The most relevant lessons include (see also Annex 1):
The importance of early, decisive, and visible on-the-ground activities backed by sustained and unequivocal political commitment both before and after reintegration ofthe demobilized and displaced, so as to reduce the risk of renewed conflict. Inputs were solicited from all the key stakeholders and were used in the project design. In addition, the project adopts the CDD approach which allows project beneficiaries to influence both project activities and implementation arrangements;
The process ofreform and rebuilding ofnational institutions is not an over-night effort; it is likely to be protracted and difficult, requiring sustained political will on the part of the authorities, who need a clear vision and road map of what needs to be done over a realistic timeframe. The challenge ofreform and rebuilding is particularly apparent in the areas of governance, transparency, and accountability. Angola has embarked on a course of reform and rebuilding, but requires sound institutions to implement them. The project will build capacity of existing institutions and will supplement with short-term technical assistance to fill skill gaps and ensure accountability of project fimds. In addition, the project design envisages close collaboration with NGOs and private service providers as strategic partners in the implementation ofthe project;
Effective project implementation requires good project management and intensive supervision, including functioning and sound monitoring evaluation system. This is particularly important in Angola given the limited managerial capacity experience within MINADER to implement donor assisted projects and programs. This is taken into account in the project design by establishing PIU to handle day to day project implementation issues while building the capacity of MINADER and providing short- term technical assistance support. The project will also support monitoring and evaluation systems, including gender-sensitive baseline surveys;
In a country like Angola where institutional capacity to implement projects is limited, it is better to avoid project complexities in terms of scope and coverage. Thus the project design is kept simple and a geographic focus rather than national coverage approach is
10 adopted. In addition, flexibility is built-in the project design to allow for potential adjustments to address unforeseen events during the course ofproject implementation.
5. Alternatives considered and reasons for rejection
The following alternatives were considered and rejected in project design: Implementing agency. There were three or four potential alternatives as Project implementation agency, including: (i)linking the project to FAS (the Social Action Fund); (ii)the Provincial Administration; (iii)or MINADER. The first two options were rejected because of the risk of diluting the core agricultural focus of the project. Within MINADER again several options were considered for the location of the PIU, but in view of the synergies with ADIs Rural Extension and Development Program (PEDR), and given its presence in all project municipalities, it was felt that the Director General of AD1 would be the best placed executive public manager of the Project, with the PIU located in ADI; Focus on more advanced pre-commercial smallholders, with larger than average holdings. However, it was felt that this would - in the post-conflict situation - leave behind large groups of potential pre-commercial smallholders, who have simply not yet had the time, means and opportunity to develop their enterprises; while it would also be at odds with one of the main reasons to justify investment in the agricultural sector, to ensure social stability in rural areas; Expanded focus on complementary rural development activities like land administration and natural resources management. However, it was felt that this would exacerbate project complexity and increase implementation risks.
C. IMPLEMENTATION
1. Partnership arrangements
32. FAD will co-finance the proposed operation with US$ 8.20 million. FAD has been funding the Northern Region Food crops Development Project 1999-2007 (PRODECA), in Uige, Cuanza Norte and Malanje Provinces, and has gained considerable experience in the rural sector of Angola since 1991. IFAD’s overarching goal in Angola from 2005-2011 is “to ensure food security and increase incomes, particularly among the most vulnerable groups in the food- insecure areas ofthe Central Highlands”.
33. The Japan PHRD Technical Assistance Program has agreed to co-finance the Capacity Building component (component 1) ofthe proposed operation with US$4 million.
2. Institutional and implementation arrangements
34. National. MINADER will be responsible for the overall implementation ofthe project, in consultation with the other Ministries at the national level that are involved, in order to ensure that the project activities are consistent with national policies. A Project Coordination Committee (PCC), chaired by the Minister (or, by delegation, the Vice Minister) will have the overall decision making responsibility regarding the management of the project, including approval of
11 work plans and budgets. The Director General ofAD1 (within MINADER) will be the executive level public manager of the project. A Project Implementation Unit, headed by a Project Coordinator will be established within AD1 and charged with (national level) day-to-day management ofthe project. A small executive Project Implementation Sub-committee (PISC) of the PCC will be established to speed-up decisions and procedures.
35. Provincial. AD1 will be responsible for project implementation, in coordination and consultation with the provincial government and provincial level representatives of the other Ministries that are involved. A Provincial Project Coordination Committee (PPCC), chaired by the Vice-Governor (economic development) will oversee project implementation, including monitoring local project progress and making decisions in line with the objectives and institutional arrangements consistent with the project document and legal agreements. The Provincial Director of AD1 will be responsible for project implementation. A Provincial Project Implementation Unit, headed by a Provincial Project Coordinator will be established within the provincial AD1 and charged with (provincial level) day-to-day management of the project. A small executive Provincial Project Implementation Sub-committee (PPISC) ofthe PPCC will be established to speed-up decisions and procedures.
36. Municipio. The local EDA (Agricultural Development Office ofADI) will be responsible for project implementation, in coordination and consultation with the Municipio administration. The EDA will obtain the consent of the Municipio administration before forwarding sub-project proposals to the provincial level. Given the nature of the project, implementation at the field level is the most important. However, the administrative and technical capacities at these levels are generally weak to very weak. It is for this reason that the project will assist in capacity building of the EDAs, put technical assistance at the disposal ofthe EDAs, and engage services providers to assist the EDAs in their work.
Project Implementation
37. Administrative arrangements for implementation and fiduciary aspects of the project are being arranged. The government is in the process of establishing a central project implementation unit as well as provincial project implementation units. Given weak implementation capacity, the project would strengthen implementation capacity during the first year. This will be done at all levels, including government agencies, services providers and the smallholder farmers. This would create the institutional environment necessary to implement sub-projects under component 2.
38. Sub-projects. Component 2 of the project will provide demand-based support, in the form of matching grants to rural communities and smallholder groups, for small-scale agricultural infrastructure, production, processing and marketing sub-projects. The sub-proj ect implementation arrangements include the following steps and elements: (i)Identzjkation, which originates at the beneficiary level, through a facilitated participatory development planning exercise, resulting in an identified sub-project proposal. Component 1 will support the formation and capacity building of smallholder groups and associations to identify and prepare sub- projects, and will strengthen the capacity of service providers, primarily the EDA’s, to facilitate participatory planning exercises. The sub-project proposals are submitted to the local EDA. (ii)
12 Appraisal, EDA and/or selected service providers prepare the respective sub-project documentation for submission to the PPIU, mobilizing technical assistance from the PPIU. All sub-projects are screened for technical, financial, social and environmental feasibility. With the consent ofthe municipio administrator, the EDA submits the sub-project document to the PPIU. (iii)Evaluation, All sub-project proposals are evaluated by the PPIU. This includes verification of all eligibility and feasibility criteria. Based on the dimension, and following due local procedure, certain sub-projects will be classified as “sub-projects for central level decision”, and will be referred to the PIU for further processing and evaluation. (iv) Approval, depending on the project cost, and based on criteria described in Annex 4, and the implementation operations manual, the sub-projects will be approved either by the PISC or the PPISC. (v) Implementation, depending on the classification ofthe sub-projects, either the PIU or the PPIU will be responsible for the administrative procedures (financial and procurement) of sub-project implementation. Whenever possible and justifiable, procurement will be done with the full involvement of the beneficiaries.
3. Monitoring and evaluation of outcomes/results
39. The outcome indicators, as described in Annex 3, will be used to measure project performance at the end of the project. The project will make use of existing data sources, supplemented by regular routine data collection, and special survey and assessment updates carried out by contracted specialists. Both quantitative and participatory monitoring and evaluation methods will be used to assess social and gender inclusion ofproject participants. The results framework and the arrangements for results monitoring are presented in Annex 3.
40. Result monitoring will include two main components: (i)impact assessment surveys, focusing primarily on the degree of achievement ofthe project’s overall development objective; and (ii)ongoing management information system (MIS) for assessment of the intermediate results of the project components. Result monitoring will be complemented by outputs and activities monitoring. Monitoring will focus on changes on key variables, such as production and surpluses marketed by participating smallholders, including breakdowns by gender before and during implementation.
41. A specialized monitoring and evaluation section will be set up within the PIU, and a management information system will be prepared to the satisfaction of the World Bank and IFAD, as well as procedures for data collection and reporting. A national level Project Coordination Committee and three Provincial Coordination Committees will monitor project progress and make decisions in line with the objectives and institutional arrangements defined.
42. A baseline survey will be commissioned during the first year ofproject implementation. Two evaluations of project outputs and impact will be commissioned, at mid-term and at completion. No later than 6 months after the credit closing date, MINADER will provide the World Bank and IFAD with a Project Implementation Completion Report (ICR). The completion report would include: original and revised project targets and actual achievements; project impact assessments focusing on results; and performance of project management and World Bank and IFAD in fulfilling their respective obligations under the credit.
13 4. Sustainability
43. Sustainability ofthe project will be achieved in the following manner:
(i) By specifically targeting smallholders, and by ensuring that vulnerable groups will not be left out, the project will not only contribute to poverty reduction and improved food security. It will also significantly contribute to the peace dividend by improving social stability in those rural areas that were strongest affected by the war. In addition, the government has embarked on a decentralization program that will eventually have a big impact on provincial and especially municipal level governance structures and procedures. These are taken into account in project design and foster stakeholders’ ownership and commitment to successful project outcomes that are essential for sustainability;
(ii) Priority will be given to capacity and institutional strengthening of farmer and community-based organizations, ofprivate sector operators, as well as local government institutions. Project investments are demand driven and the capacity of project beneficiaries will be strengthened to manage them, including providing possible short- term technical assistance where necessary. Since most project activities will be demanded, owned and managed by project beneficiaries, the prospects are good that they will be sustained long after project completion;
(iii) The project will stimulate the private operators to take over roles and functions that should normally be within the private sector domain, but which are currently provided by government institutions and/or NGOs. Thus the project will reduce implementation burden on weak public institutions and foster long-term fiscal sustainability; (iv) Finally, by anchoring project implementation within AD1 and strengthening and giving it full responsibility for project management, and by linking the project to ADI’s rural extension and development program, the project will have a catalytic effect on public sector reform and transparency of governance in the agriculture sector. The project is therefore building capacity and experience within AD1 to implement the proposed project and future public sector programs which are necessary for the sustainability of public sector investments in agriculture.
14 5. Critical risks and possible controversial aspects
44. The potential risks ofthe project are presented in the table below.
Risks Risk Rating I Risk Mitigation Measures Operational Smallholders are unwilling or unable to share Moderate 0 The project will adopt a participatory the costs ofsub-projects. demand-based approach in the identification ofsub-projects to increase ownership 0 The project will permit in-kind contributions, such as own labor 0 The cost-sharing criteria and levels will be reviewed and recalibrated from time to time Little or no demand for sub-projects Moderate 0 The project will facilitate the formation of new smallholder groups and strengthen existing groups. 0 A communication strategy will be put in place to inform project beneficiaries about project support. 0 Assist beneficiaries with sub-project identification, preparation and implementation. 0 Empower beneficiaries to choose their sub-proj ects. 0 Calibrate beneficiary contribution ofthe matching grant to ensure affordability and encourage effective demand. Matching grants to be captured by elite (or Moderate 0 Establishment of low ceilings collusion) Decision made by Provincial and Central Committees (depending on the amount) Funds will not be granted to individuals. Beneficiaries will be involved in decision making, including choice ofsub-projects. Effective supervision and monitoring to ensure that the benefits are going to the intended target group. Representatives ofCBO/NGOs, civil society and private sector will be represented as part ofthe approval committees; Appointment ofa technical auditor to review quality ofservice providers in the sub-projects as well as the management of funds by beneficiaries; Transparency in the use offunds for sub-
projects would be ensured through~~ proper ~
I accounting and auditing.
15 Pressure on smallholders to link-up to the Moderate The project will offer smallholders National Union ofFarmers and Peasants of alternative organizational options and will Angola not use membership of the national union as an eligibility criterion. Procurement: given the lack ofprevious High A procurement management action plan experience under bank operations the overall to mitigate procurement risk is part ofthe project risk for procurement is high project (see Annex 8) Procurement related conditions for project negotiations and effectiveness (see IV.F), including recruitment ofprocurement specialist and preparation ofprocurement procedures, filing and record keeping, and contract execution monitoring system. Training ofPIUPPIU and AD1 staff on Bank procurement and contracts management procedures.
Focus on agricultural producing for the agricultural competitiveness. growing internal market, rather than for export markets.
The project will build capacity within including smallholder have limited experience MINADER and AD1 to implement public with implementing a Bank financed project sector programs. While this capacity is being built, the PIU with TA will provide implementation support. The project will provide extensive training and technical assistance to services providers, including extension agents, NGOs, CBOs and smallholder farmers. Intensive supervision by the Bank AD1 may not have the required extension staff Substantial The project will support hiring, training to provide efficient extension services. and equipping AD1 extension staff and will promote alternative extension service moviders. including the Drivate sector.
The project would focus primary in those Roads and land mines may become a areas that have minimum level of rural constraint infrastructures and where the land mines have already been cleared
6. Loadcredit conditions and covenants
45. Board condition: . There is no Board condition.
46. Effectiveness conditions: 0 PIU and PPIUs are established, operational and staffed, including appointment of project coordinators;
16 0 Financial Management Specialist, and Procurement Specialist, with qualifications and experience acceptable to the Bank, have been recruited; The Project Implementing Entity has established an accounting information system 0 The Project Implementation Entity has finalized the implementation operations manual, including financial management and procurement; Terms ofReference to select independent auditors are prepared and are acceptable to the Bank; 0 The IFAD Co-Financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right ofthe Recipient to make withdrawals under it (other than the effectiveness ofthis Agreement) have been fulfilled; and 0 The Japan PHRD Co-Financing Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right ofthe Recipient to make withdrawals under it (other than the effectiveness ofthis Agreement) has been fulfilled.
47. Disbursement condition for component 2: that there are at least 30 qualified service providers and public agents certified under the project’s Capacity Building program; 0 the baseline survey has been completed; and 0 that the administrative capacity ofProvincial Project Implementation Units is in compliance with Banks fiduciary requirements, as certified by the Association.
40. Covenants applicable to project implementation: 0 Any resettlement that cannot be avoided under the project will be undertaken in accordance with the Resettlement Policy Framework. 0 The Government will carry out annual procurement audits ofthe project. These audits will be carried out under terms and conditions and by independent consultants whose qualifications are acceptable to the Bank. The audits will include an action plan to improve performance, where required, which will be submitted to the Bank and discussed with Government
49. Not later than three months of effectiveness: 0 The Project Implementing Entity has recruited one project coordinator, one financial management specialist, an accountant, monitoring and evaluation officer, procurement specialist, and communication specialist in each targeted province (Bie, Huambo and Malange) with qualifications and experience acceptable to the Bank; and 0 A consulting firm to complete the baseline survey hired.
50. Not later than six months ofproject effectiveness: 0 Selection ofindependent auditors for the first three years ofproject implementation with experience and qualifications satisfactory to the Bank; and 0 Establish a monitoring and evaluation system to monitor implementation progress and results.
17 D. APPRAISAL SUMMARY
1. Economic and financial analyses
5 1. Project benefits. The project should be able to extend capacity building, including group formation and strengthening, as well as basic agricultural andor marketing knowledge to 126,000 smallholder households (an estimated 830,000 beneficiaries). Out ofthese, some 40,000 smallholders are expected to benefit from more intensive participatory farmer group-based agricultural extension support (an estimated 200,000 beneficiaries), and an estimated 24,000 smallholders (120,000 beneficiaries) will benefit directly from productive investment sub- projects.
52. The project will have both direct and indirect benefits. Improved livelihoods for the poor will be the main direct project benefit, stemming from increased sustainable agriculture and agriculture related production and incomes. Improved social stability in the project areas, and improved food security at household, local and national level will also be major project benefits. The project will also have a positive impact on women and female headed households and vulnerable households in general, while also enhancing the role of returned internally displaced person, refugees and others affected by the long conflict in social and economic development. Poor men and women will be participating in and managing their own social and economic development. The total estimated number of direct beneficiary rural smallholder households will be around 126,000 or approximately 830,000 people.
53. Economic and financial analysis. The analysis is based on agricultural production increases that would be realized by these 126,000 smallholder households, using conservative estimates of (i)actual production increases (yield and area) as compared to potential increases, (ii)the time it will take for the project to effectively reach the targeted smallholders; and (iii)the time it will take these smallholders to realize these production increases. The project is assumed to lead to production increases as a result of: (a) higher productivity per unit of labour and land in the crop and farm models as applied to smallholders with project as compared to smallholders without project; and (b) an increase ofthe cropping intensity (i.e. area cropped) for smallholders with project as compared to without project. It is assumed that cropping patterns will not change and are the same for smallholders with and without project, and that no high value crops will be produced in new irrigated areas. The prices ofnon tradable products, inputs and services adopted for the economic analysis are 50% lower than the ones used for the financial analysis, taking into consideration the existing approximately 100% overvaluation of the Kwanza against the US currency. The results ofthe analysis are included in Annex 9.
54. Depending on location and levels of benefits, the financial net return per smallholder household day of on-farm labour will increase from US$1.5-2.4 in the situation without project to US$2.6-6.4 with project. Annual increases of smallholder household incomes range from US$47-890.
55. The Net Present Value (NPV) of the flow of annual increasing incomes ofthe project is US$18.76 million; the Economic Rate of Return (ERR) is 21%. The project appears little sensitive to the effects of increasing incremental costs, reducing incremental incomes, and delaying the benefits. A 25.2% increase in the incremental costs would reduce its internal return
18 rate to 12%; a 20.2% reduction in the projected incremental incomes would reduce the ERR to 12%; and if the achievement of the expected incremental benefits were delayed a year the ERR would drop to 14.7%.
56. Fiscal impact. Due to increasing oil production and rising international oil prices, Angola has been realizing fiscal surpluses since 2005, and these are projected to grow. However, the country has one of the most unequal societies, with the bulk of the population in rural areas among the 68% of the population that lives below $1 a day. Moreover, with the rising real exchange rate pushed by oil revenues, there is a real concern that non-oil exports, especially in the agricultural sector, will lose their competitiveness under the so-called Dutch disease. Under these circumstances, the project has been designed under the assumption that the agricultural sector would be a net recipient of government revenue. Consequently, the project will receive (rather than generate) budget resources from the Government, on a net basis over the planning horizon ofthe project.
2. Technical
57. Alternative technical approaches were considered in the design of the proposed project components, utilizing experience from other projects in Angola, but also from other post-conflict countries and from countries with comparable large oil sectors. Extensive consultations were carried out with Government and key stakeholders to improve the technical integrity of the proposed design.
58. Given the weak (but improving) governance in the country and the fragile human and institutional capacity, training and capacity building is a critical ingredient to implement the project and to increase agricultural production. Based on both local and international experience, the project will support farmer groups to facilitate the increase in yields and production, market agricultural surpluses, undertake agricultural investment sub-proj ects and pool demand for agricultural services. Capacity building of government institutions is limited to the staff and institutions that are involved in the project and is particularly aimed at introducing participatory processes that support project implementation and increase transparency and accountability. The agricultural extension service will be trained and equipped for its changing role from managing supply driven programs to facilitating and supporting demand-driven agricultural development.
59. Over the past few years, the agricultural sector has re-absorbed an estimated 4.4 million people and many of these are living in the project area. Virtually all productive rural infkastructure and agricultural assets have been lost during the civil war, and most smallholders are currently farming at the subsistence level. The agricultural investment support component is designed to increase agricultural production of smallholders through both increased productivity and expansion of cultivated land; it will also reduce post-harvest losses, stimulate local processing and improve market access. The cost-sharing mechanism that will be put in place to support investment sub-projects is based on best-practice experience from elsewhere in Africa, and will ensure local ownership as well as a (self) selection ofthe most profitable sub-projects.
19 3. Fiduciary
60. Procurement: The last Country Procurement Assessment Review (CPAR) for Angola was conducted in October 2002. The Action Plan of the CPAR provided for (i)Identifying a champion to spearhead the Procurement reform and organize a high-level workshop; (ii) Activate/empower the task force to pilot the reform implementation and the creation of a comprehensive procurement framework; (iii)Review procurement legal and regulatory framework; (iv) Establish a directorate at Ministry of Finance to undertake procurement policy formulation and procurement analysis; (v) Introduce record keeping to establish a transparent procurement system in at least three Ministries during a first year pilot program; (vi) Propose sound reorganization of procurement processing and train procurement staff in pilot ministries and (vii) Strengthen National Inspectorate of Finance, the High Authority Against Corruption and the external controls by the Tribunal ofAccounts.
61. In March 2004 the Government of Angola produced and sent to the Bank its own procurement reform document which is based on the CPAR and which provides for the creation ofa regulatory body.
62. The Bank is supporting the Procurement Reform under the Economic Management Technical Assistance Project (EMTA). The reform is still in the early stage ofimplementation, a task force was appointed by government and a firm to draft the New Procurement Code was selected in late 2005 but performance to date was rated unsatisfactory by the Government. Government efforts are ongoing to the replacement ofthe firm.
63. Procurement activities within the Ministry of Agriculture and Rural Development are done centrally under the Secretaria Geral and under national regulations that, as per the last CPAR, were found as inadequate for use by IDA-financed projects. In addition, the Ministry, as well as the Agricultural Development Institute (ADI), does not possess previous experience under Bank financed project, nor there is staff within the Ministry and AD1 with prior experience with Bank fiduciary requirements and consequently the risk for carrying out procurement is high. To address the high risk, a central Project Implementation Unit will be staffed with a qualified Procurement Specialist, to be recruited by Effectiveness, and Procurement Audits to be carried out annually. Given the decentralized approach ofthe project, three provincial PIUs will also be established to ensure adequate support to rural communities and smallholder groups. A procurement assistant will be identified within the AD1 staff to support the Central Level Procurement Specialist.
64. Other measures to mitigate the associated risk ofthe project include the completion ofthe project implementation OperationsProcurement Manual, acceptable to the Bank. The final version ofthe Manual will be an Effectiveness condition. The project implementation operations manual should establish (a) a documentation flow which should be put in place and should mainstream the procurement staff in the process of payment certification of invoices; (b) a contract executing monitoring system; and (c) establish an acceptable procurement filing and record keeping system
20 65. Financial management: The public expenditure management and financial accountability review carried out by IDA in collaboration with the government in 2004 revealed weaknesses in country Public Financial Management (PFM). The government has achieved some progress in PFM reforms, including of roll-out of “Sistema Integrado de GestcZo Financeira do Estado (SIGFE)”. However, the PFM environment remains weak. Given the complexity of the project, widely dispersed spending units with large number of small value transactions, limited capacity of the government, weak financial management capacity, and the government of Angola intention, the “ring-fenced” approach to mitigate fiduciary risks will be used.
66. Overall management of the project (including fiduciary) will be undertaken by the PIU, headed by a project coordinator who will be reporting to the Director General of ADI. At provincial level, the project will be managed by PPIU, headed by a provincial project coordinator. Given the need to build financial management capacity within ADI, accountants at PIU and PPIUs will be appointed under government employment conditions. The accountants at provincial level will be reporting to the provincial coordinator. And they will be guided and coached by a qualified and experienced Financial Management Specialist. The project funds will be used to train the accountants responsible for financial management ofthe project. Government officials and staff handling financial management issues ofthe projects will be supported to gain more exposure of World Bank Financial Management, Procurement, and Disbursements procedures by attending training events in the region, for example, the training conducted by Malawi Institute ofManagement or Lagos Business School.
67. The project’s accounting records will be maintained using cash basis of accounting. The project will comply with International Public Sector Accounting Standards (under the Cash Basis of Accounting), as promulgated by the International Federation of Accountants (IFAC). The accounting policies and procedures, including chart of accounts, will be documented in the Financial Procedures Manual to be prepared by project effectiveness. A financial management system to be established for the project will also be documented in the Financial Procedures Manual to be prepared by project effectiveness. The Project Implementation Entity should make operational an accounting information system by effectiveness.
68. The overall conclusion of the financial management assessment is that the project’s financial management arrangements have overall rating of substantial which do not satisfy the Bank’s minimum requirements under OPBP 10.02. To establish an acceptable control environment and to mitigate financial management risks the measures included in financial management action plan should be taken by the due dates (see Annex 7). The government has already initiated the recruitment of a financial management specialist who would support the recruitment of other financial management staff and help set up the new financial management system.
4. Social
69. During preparation, the project carried out an initial socioeconomic study in the target areas (25 comunas in 3 provinces). The methodology included desk review of existing documents and statistical data, meetings with stakeholders, and focus group interviews with farmer associations and women organizations. A comprehensive quantitative and qualitative
21 baseline survey will be undertaken during first year of the project, which will include social profiling and an assessment offarmer’s organizations.
70. In addition, it prepared an Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF), both ofwhich are briefly summarized below.
71. The ESMF will help the PIU to identify and understand the local impacts of subproject activities on the livelihoods of different stakeholder groups at the community level and how the community is organized to manage these impacts. It highlights the criteria to be used in the process of preparation, approval, implementation, and monitoring of subprojects, as well as the official institutions that should be involved, depending on the nature and contents of the subprojects. Subprojects with potential negative environmental and social impacts are required to formulate environmental impact assessments and be subject to public consultations.
72. Regarding the social safeguards, the ESMF will evaluate the subprojects’ possible adverse effects on the population of the selected areas of intervention such as involuntary displacement or loss of productive assets and income sources and examine alternatives where adverse effects may be significant. The ESMF is summarized in the PAD (Annex 10) and has been disclosed in the project area and to the Infoshop.
73. The Project will support community investments in various types of subprojects that may require land for the construction of small-scale infrastructure. To ensure that current landowners or users are properly compensated, a Resettlement Policy Framework (RPF) is included as part ofhex 10 ofthis PAD. The RPF provides the framework for determining the need and content ofa Resettlement Action Plan for subprojects.
74. The RPF presents: (a) an overview of the potential impacts of investment subprojects, particularly those that involve land acquisition; (b) the legal framework that governs the acquisition of land in Angola; (c) the principles and objectives of the resettlement policy to be applied in subproject execution; (d) the procedure for the preparation ofabbreviated resettlement plans; (e) eligibility criteria ofpolicy beneficiaries; (f) monitoring and evaluation arrangements, and (g) institutional arrangements and sources offunding.
5. Environment
75. The ESMF is in line with the national environmental legislation as well as the Bank’s operational policies. Its main objectives are related to the establishment ofclear mechanisms and procedures for environmental and social planning, review, appraisal and implementation of sub- projects to be financed through this project, as well as the definition of appropriate roles and responsibilities and the description of management and monitoring reports of the environmental and social issues related to the subprojects.
76. According to the environmental legislation of the country, certain activities are automatically exempt from environmental impact assessment (EIA), if they are of a certain type and size. This typically applies to small projects that usually have minimal adverse environmental and social impacts. Although most MOSAP sub-projects are unlikely to require
22 EIA, the ESMF for the project requires that all sub-projects be subject to the environmental screening process. The screening process will identify potential environmental and social impacts ofsubproject activities.
77. During the preparation of sub-project proposals or applications the applicant will complete an environmental screening form or checklist, an example of which is included in the ESMF. Municipio technical staff, primarily those in the EDA, will be trained in the application of the checklist in order to train and assist sub-project applicants to complete them. Assistance will also be provided through the ESMF that is to be become part of the project management program. The screening process provides an opportunity for sub-project applicants to change sub-project designs and locations in order to reduce the impacts caused.
6. Safeguard Policies
78. The Region Safeguard Specialists performed an environmental screening of the places were the proposed Project will be implemented, and after careful review and analysis determined that the MOSAP will trigger only two Bank Safeguard Policies, namely: Environmental Assessment (OP 4-01), and Involuntary Resettlement (OP 4.12). To ensure full compliance with Bank's Safeguards Policies, screening mechanisms have been built in the Project design including environmental screening of all sub-proj ects under the Agricultural Investment Support component. Hence, before grants are awarded under their corresponding sub-project agreements every proposal will undergo an environmental screening as set forth in the EMSF and in the RPF for the Project. This screening process will provide an opportunity to review design and location ofeach subproject to avoid harmful impact to the environment and adverse social effects.
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP 4.0 1) [XI [I Natural Habitats (OPBP 4.04) [I [X 1 Pest Management (OP 4.09) [I [X 1 Physical Cultural Resources (OPBP 4.1 1) [I [X 1 Involuntary Resettlement (OPBP 4.12) [XI [I Indigenous Peoples (OPBP 4.10) [I [XI Forests (OPBP 4.36) 11 [XI Safety of Dams (OPBP 4.37) [I [XI Projects in Disputed Areas (OPBP 7.60). [I [XI Projects on International Waterways (OPBP 7.50) [I [XI
7. Policy Exceptions and Readiness
79. Currently, there are no policy exceptions and the project meets the implementation readiness requirements.
* By supporting theproposedproject, the Bank does not intend to prejudice thefinal determination of theparties' claims on the disputed areas
23 Annex 1: Country and Sector or Program Background ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
A. Country and Sector Context and Issues
1. General context. The Republic of Angola covers an area of 1,25 million km2 and is located on the South Atlantic coast of western Africa, bordering Namibia to the south and the Democratic Republic of the Congo and Zambia to the north and east. Angola became independent from Portugal in 1975 after years of fighting and was immediately engulfed in a civil conflict, which only ended in 2002. Angola is one ofAfrica’s most resource-rich countries, with tremendous economic potential, endowed with many mineral resources and vast fertile lands. Yet it is considered a Low Income Country Under Stress (LICUS), largely because ofthe after-effects of the devastating civil war. Some 750,000 Angolans (7% of the population) died; about 4.5 million were displaced, and another 450,000 became refugees. At the end of the war, Angola was left with a devastated physical and social infrastructure, some of the world’s worst human development indicators, weak governance, and fragile human and institutional capacity. The end ofthe war exposed very high levels ofpoverty and destruction in rural areas.
2. According to the 2007 Human Development Report of the United Nations Development Program (based on 2005 data), Angola is ranked 162 out of 177 countries in the human development index, with indicators for health, education and nutrition among the worst in Africa. This is in spite ofthe fact that Angola’s per capita income is one of the highest among the Low Human Development countries with US$2,180 per capita (based on the purchasing power parity measure of income in 2004). However, there is an acute inequality in income and consumption distribution. In rural areas, large percentages of the population are living in extreme poverty, especially in the Central Highlands, where up to 68 percent were reported to be food insecure in 2005. On the health side, HIV/AIDS prevalence is relatively low and it is estimated to be about 4 percent ofthe adult population aged from 15 to 49 years.
3. Economy3. The oil sector dominates the Angolan economy, accounting for about 57 percent of GDP in 2006 and for 80 percent of Government fiscal revenue. Angola is currently sub-Saharan Africa’s second biggest oil exporter after Nigeria and oil output is expected to rise from 1.2 million barreldday (b/d) in 2005 to 1.4 million b/d in 2006 to 2.0 million b/d in 2007 and a projected 2.3 million b/d in 2010. GDP growth averaged 10.9 percent for the period of 2001-2005 and reached 20.6 percent in 2005, 18.6 percent in 2006 and estimates point to a rate around 23 percent in 2007. The agriculture, forestry and fisheries sectors also represent a vast and still largely untapped potential for the local economy, accounting for an estimated 7.8 and 9.8 percent of GDP in 2006 and in 2007, respectively, while annual growth in these sectors averaged 14.8 percent over the period 2001-2005 and reached 17.0 percent in 2005.
Based largely on the draft Public Expenditure Review of the Agriculture Sector, prepared by the FAO/WB Cooperative Program in December 2006.
24 4. The inflation rate has steadily declined, from 116.8% over 2001 to 11.78% by December, 2007 and an estimated 10% over 2008. This has been achieved essentially through a heavy intervention in the foreign exchange market to remove excess liquidity although recent increase in the rediscount rate has also been used by Angola’s Central Bank, the Banco Nacional de Angola. Heavy interventions in foreign exchange markets have kept the nominal exchange rate relatively stable in 2006, and the monetary tightening in 2007 resulted in an appreciation of the Kwanza (Angola’s currency). However, the strong Kwanza has made imports cheaper and this in turn, combined with high transportation costs due to the poor status of the road network, is severely hampering the development of domestic non-oil sectors, such as manufacturing and agriculture. Angola has consistently run a large trade surplus due to the growing sales of crude oil and diamonds.
5. Agriculture. Although agriculture accounts only for about 8 percent of GDP, it is the main source of employment in the country. It provides employment to some 4.7 million people out of a total workforce of 7.5 million, while only some 600,000 find employment outside the agricultural sector and 2.2 million remain unemployed. Over the past few years, the agriculture sector has re-absorbed an estimated 4.4 millions of (previously) internally displaced people. While, for instance, in 2001 close to 1.9 million people received food aid, this number has declined to some 0.8 million by 2006.
6. Prior to independence, agricultural production in general, and food production in particular, was high and the country was a major exporter of maize and coffee. Smallholder farmers in the Central Highlands, the agricultural heartland ofAngola, were firmly embedded in the market economy and were the main producers for both local and export markets. During the war, agriculture fell to an almost subsistence level in most areas. Instead, the country relied on commercial food imports and food aid. In 2000/0 1, some 420,000 tons of cereals were imported on a commercial basis; a hrther 330,000 tons were imported as food aid. By 2005/06, commercial imports had risen to 780,000 tons and food aid imports had decreased to 60,000 tons.
7. Since the end of hostilities in April 2002, the return of so many people to farming, the improved mobility of people and products throughout the country, and the rapidly growing economy, local agricultural markets have gradually started to resume their activities. Major infrastructure rehabilitation programs are now under way, reconstructing roads, bridges and railways, and reconnecting the countryside to markets, cities and harbors. This will drastically reduce transportation costs, and will provide an opportunity to re-establish rural-urban commercial circuits, but it also provides an opportunity for imported agricultural products to penetrate even further into Angolan markets.
8. Still, the poverty levels and number of vulnerable people in the rural areas of the highlands remain very high. A 2005 WFP food security survey in the Central Highlands identified high levels of vulnerable groups, all depending on agriculture as their main source of income: (i)an estimated 19% of households were chronically food deficient, mainly internally displaced andor recently resettled families; (ii)some 30% were considered to be highly vulnerable households, consuming just one insufficiently balanced meal per day, they have low asset ownership and are often female headed households; and (iii)an additional 19% were
25 moderately vulnerable households with more than one source ofincome, but still consuming just one meal a day.
9. Governance. Angola is governed by a three-tier system of 18 provinces, 194 municipios and 509 comunas, each headed by officials appointed by the next-higher level, resulting in a weak sense of accountability to the population. Power at the sub-national level is concentrated among the 18 provincial governors, who are appointed by the President. Provincial governments are budget management units and negotiate directly with the Ministry of Finance without needing to involve sector ministries. The municipios and comunas are effectively departments of the provincial governments. Recent legislation permits the municipio to be a budget holder, which is a reflection ofthe Government’s stated commitment to decentralization.
10. Below the comuna, the prevailing administration organization is community-based or with a traditional local administration system. Under this system, the smallest unit is the village, which is headed by a traditional chief known as seculu or village councilor. A group ofvillages, varying from 10 to 20, depending on the size ofthe villages, form the second tier of a traditional administrative system, called ombala, and is headed by a soba. Both the soba and seculu are traditional hereditary chiefs, and are most important in the social and economic life of the communities, particularly in land administration matters.
B. Government’s Poverty Reduction Strategy and the Bank’s Interim Strategy
11. Government’s Poverty Reduction Strategy. Angola’s 2004-08 Estrategia de Combate a Pobreza (ECP), was approved by the Council ofMinisters in 2003. In line with the MDGs, the main target is to reduce the poverty level in half by 2015. The goal of the ECP is the consolidation of peace and national unity through the sustained improvement of the living standards of the most vulnerable and poorest people in Angola. The ECP highlights rural development, with a focus on the improvement of food security and the re-vitalization of the rural economy. The key proposed actions are: (i)the strengthening ofthe production capacity of the traditional sector, particularly food crops and fisheries; (ii)the re-launching of rural commerce; (iii)a sustainable development ofnatural resources; and (iv) the reorganization ofthe legal framework and public institutions. Some basic principles are outlined: a focus on smallholders; the importance of community participation; the concentration of, planning, implementation and monitoring at the municipality level; complementary activities with donors, the private sector and NGOs; specific targeting ofwomen, including in relation to access to land; and HIV/AIDS as a cross-cutting concern.
12. The objectives of the World Bank Group’s 2007 Interim Strategy Note (ISN) for Angola are to (a) help strengthen public sector management and institutional capacity; (b) rebuild critical infrastructure and support delivery of public services for poverty reduction; and (c) promote growth of non-mineral sectors. The Bank aims to achieve these objectives through continued support for the activities started under the previous ISN and modest new lending. The ISNrecognizes that agricultural productivity and competitiveness will help to both reduce rural poverty and promote growth, and proposes a Market Oriented Smallholder Agriculture Project to build on work started under the Emergency Multisector Recovery Project.
26 C. Rationale to Invest in the Agriculture and Rural Sector4
13. Angola has a long history ofpre-independence agricultural exports, having been once the third largest exporter of coffee in the world. Exportable surpluses, such as coffee and maize, were for the most part produced by smallholders. During the colonial period, agriculture had a dual structure with a commercial sector of large holdings totalling about 800,000 ha and managed by Portuguese settlers using inputs and mechanized technologies, and a more traditional sector primarily composed ofsmallholders cultivating about 3.4 million ha.
14. After independence, most of the settlers left the country and many of the former commercial farms and plantations were converted into state farms, which have now been privatized. The civil war resulted in a virtual collapse of market-oriented production as large numbers of rural inhabitants either fled or reverted to subsistence production. Infrastructure suffered greatly with widespread destruction ofroads, bridges and warehouses together with the presence of many thousands of land mines in rural areas. Agricultural exports are currently negligible, and the country has become a net importer for almost all products, except for roots and tubers.
15. With the resettlement process and the beginning of the rehabilitation of infrastructure, agricultural production is restarting. Nevertheless, yields are still remarkably low, even compared to other countries in Sub-Saharan Afiica. This implies that there is substantial room for improvement through modernization and technical change; “off-the-shelf” varieties and technologies are readily accessible and can be adapted to Angolan conditions within a relatively short time and low cost, which represents a major opportunity.
16. The reactivation of agricultural value chains and the rural-urban commercial circuits can generate a self-sustaining growth dynamic. Rural producers, both large and small, need assistance in realizing the country’s underlying comparative advantage in agricultural production. Producing for already existing food markets in cities as well as supplying newly reactivated manufacturing will ensure integration ofrural areas into the economy on the output side. On the input side agricultural development will increasingly rely on purchased inputs while rising incomes will generate demand for manufactured consumer goods.
17. Agriculture can be one ofthe engines ofthe economic growth in this post-conflict period, provided that macroeconomic issues and agricultural policies are appropriately addressed. On the macroeconomic side, there is a high risk that the impact of an overvalued exchange rate undermines agricultural competitiveness, while the agricultural sector budgets still remain extremely low. Government should avoid policies and measures that could be detrimental to market development. The current distribution and subsidized sales of fertilizer, for instance, should be revised and replaced by less market-distorting ways ofintervention.
18. Given this natural potential for agriculture in the country, at least three major reasons justify investments in this sector:
Based largely on: Angola, Towards a Strategy for Agricultural Development: Issues and Options. July 2005, WB Report No.33 113AO.
27 (0 To reduce poverty and ensure social stability in rural areas. With large numbers of persons displaced, and many farming systems and agricultural value chains destroyed by the war, social stability is likely to be fragile at best unless and until food security and surplus production can be restored and rural populations believe that they, too, have a stake in Angola’s future. Thus ensuring stability and a minimum level of food security in rural areas may be ofcritical long term political importance. It is in the long term interest ofthe country to demonstrate the importance of these peoples’ welfare by assisting their return to pre-conflict levels of production and welfare and to integrate them into the national economy as much as possible;
(ii) To promote for economic growth and diversification. While the role ofthe rural sector in the national economy is currently minor, Angola possesses a large and well-endowed rural sector. Moreover, between 60% and 70% of Angolans earn their living from agriculture, a sector that can be one of the engines of economic growth in this post- conflict period, provided that the correct incentives are put in place. National economic growth and diversification - including employment and foreign exchange earnings - will be seriously constrained unless investment and the correct incentives are made now to lay the appropriate foundations for future rural sector growth; and
(iii) To ensure a sustainable use of natural resources. Despite the low levels of economic activity, the country already faces various pressures on its natural resources, such as the overuse of pastures and subsequent soil erosion, largely attributable to population pressure, desertification, and deforestation of tropical rain forest, in response to both international demand for tropical timber and to domestic fuel use. The promotion ofagro- forestry approaches, for instance, can support the export diversification strategy of the government, while protecting the biodiversity.
19. A realistic vision ofthe future for Angolan agriculture includes a mix of large and small farms. This is appropriate and to be encouraged given that it is a reflection of the present situation as well as a forward looking vision. All need improved transport infrastructure, a modem marketing system and an enabling regulatory environment. Indeed, large farms may well provide growth poles for smaller producers in some areas and are often well positioned to respond rapidly to market opportunities. However, there is good reason for this project to emphasize assistance to smallholders: these households constitute a majority of the Angolan population and are currently less able to make needed investments than larger farms unless they benefit from support programs. Moreover, there are already a number of initiatives that benefit the latter, and this project can establish an important model to support these less assisted producersin a more sustainable way.
20. The Bank is one ofthe Government’s most important partners in revitalizing agricultural productivity and competitiveness. Through phase one of the Emergency Multisector Recovery Project (EMRP) it has helped reestablish institutional capacity of Angola’s two agriculture research centers and of rural extension services in Bie and Malanje. It is also supporting the revitalization ofcapacity to produce and multiply seeds and vegetative planting material, and the rehabilitation offeeder roads. This project will build on the work started under the EMRP.
28 21, The Bank’s involvement adds credibility to investment in the agricultural and rural sector and has a positive impact on the mobilization of additional donor support. It also has a catalytic effect on public sector reform and transparency of governance in the agriculture sector. The co- financing arrangement with IFAD further strengthens this catalytic effect and the associated opportunities for policy dialogue.
D. Lessons Learned
22. A number of lessons have emerged from the implementation of the Transitional Support Strategy and the first ISN. Perhaps the key lesson ofthe Angolan experience is the importance of early, decisive, and visible on-the-ground activities backed by sustained and unequivocal political commitment both before and after reintegration ofthe demobilized and displaced, so as to reduce the risk ofrenewed conflict: quick, visible results are vital. Other lessons include:
In acute, pots-conflict situations such as Angola’s, the process of reform and rebuilding ofnational institutions is not an over-night effort; it is likely to be protracted and difficult, requiring sustained political will on the part of the authorities, who need a clear vision and road map ofwhat needs to be done over a realistic timeframe. Angola has embarked on a course ofreform and rebuilding, but still has a long way to travel;
The challenge of reform and rebuilding is particularly apparent in the areas of governance, transparency, and accountability. Reforms have been initiated in these areas, but much more needs to be done, and this will take time and sustained political commitment;
In an environment such as Angola’s, in addition to clear government leadership of reform, there is a crucial need for strong partnership with domestic and international stakeholders;
Effective project implementation initially requires intensive supervision efforts, responsiveness to fiduciary needs, a focus on capacity building, including proactive networking among projects, and regular portfolio reviews with Government’;
Given the limited capacity at all levels and the fragility of the social environment, early, comprehensive, and well coordinated responses are needed;
There is a need for good up-front analysis to inform optimal government and investment responses; and
Coordinating work with other development partners and sharing knowledge and experience improves the effectiveness ofaid.
Lessons learned from IFAD. IFAD, which will co-finance this project, has financed several projects in the agricultural and rural sector since 1991, including three lending operations: the Malanje Smallholder Sector Rehabilitation Project (1991 -1992), the Northern Region Food-crops Development Project (PRODECA, 1997-2007), and the Northern Fishing
29 Communities Development Program (PESNORTE, 1999-2007). In addition, IFAD was also involved in non-lending operations in dealing with food security, rural financial services and HIV/AIDS. The lessons learned from IFAD’s experience are taken into account in the design process ofthe project, these lessons include5:
The major challenge in the post-war period is to ensure that support for rebuilding the livelihoods of the rural poor is based on the actual constraints and aspirations ofthe rural poor;
Implementation capacity is extremely weak and demands substantial external support both through technical assistance and tight supervision;
A geographic focus is necessary because management capacity is limited, and the needs and opportunities in various parts ofthe country vary greatly;
Working with NGOs as strategic partners in implementation and as service providers and technical advisers is beneficial;
Monitoring and evaluation systems, including gender-sensitive baseline surveys, should be in place from the start; and
The construction and rehabilitation ofinfrastructure can have a quick and positive impact on the lives ofthe poor.
Project Area
Selection criteria. The selection of the project area has been guided by the following criteria: favorable agro-climatic conditions; significant population density; market access; existence of some supporting infrastructure; and potential synergies with other operations. These criteria point at the Central Highlands and its transitional zones. The Central Highlands represent the area ofAngola that has been most vulnerable to poverty, characterized by high levels of food insecurity and a high proportion of vulnerable groups, but also with a significant potential for long term sustainable development.
25. Potential synergies. The Central Highlands and its transitional zones also provide major potential synergies with other operations, in particular:
(a) The Agriculture and rural development component of the Emergency Multisector Recovery Project 2005-2008 (EMRP), including: (i)production and multiplication of seeds and planting material, mainly in Huambo; (ii)rehabilitation of EDAs (agricultural extension offices), mainly in Bi6 and Malanje; and (iii)rehabilitation of feeder roads in BiC and Malanje.
(b) FAD’s overarching goal in Angola from 2005-2011 “to ensure food security and increase incomes, particularly among the most vulnerable groups in the food-insecure
’ Based on: IFAD 2005 - Republic of Angola Country Strategy and Opportunities Paper.
30 areas of the Central. Highlands” and its stated intention to develop a new loan-fimded rural development project accordingly.
(c) The FAO’s: (i)Special Project for Food Security in Angola 2006-2008 (funded by Spain), which will assist the Agricultural Development Institute (ADI) and its municipal offices for agricultural development (EDAs) in establishing innovative participatory agricultural extension methods, better known as Farmer Field Schools, mainly in BiC and Huambo; and (ii)Institutional support to decentralized land tenure and management institutions to promote equitable rural development in the Provinces of Benguela, Huila and Huambo (funded by the European Community).
(d) MINADEWADI’s Rural Extension and Development Program 2004-2008 (PEDR), which is executed through the EDAs, and which focuses to a large extent on the distribution of inputs, including fertilizers, and for which the Central Highlands and its transitional zones are an area ofthe highest priority.
(e) The UNDP supported Decentralization and Local Governance Project (2006-2009), which has three components: (i)establishment of a legal and institutional framework for decentralization and its dissemination; (ii)capacity development for participatory planning, budgeting and municipal development; (iii)fiscal decentralization through the pilot experience ofa Municipal Development Fund. The project targets the municipalities of Sanza Pombo (Uige), Kilamba Kiaxi (Luanda), Camacupa (Bie) and Kalandula (Malanj e).
26. The project area selected consists of 25 Comunas in 12 Municipios in the targeted provinces, including the Central Highlands provinces of Bik, Huambo and the Malanje Highlands province of Malanje (see Table 1). Of these, 126,000 households are expected to be direct project beneficiaries. The smallholder farmers Vamilias camponesas) targeted cultivate on average 1-2 hectares of cropland. A large proportion of these households consist of recently returned (formerly) internally displaced persons, who have taken up farming as a means of providing for their livelihoods. Though most smallholders are currently producing at the subsistence level with high incidence of poverty and food insecurity, there is a significant potential for production increases, both in terms of expansion of cultivated area per farmer and increasing productivity per unit oflabor. With a proper enabling environment, diffusion oflabor- saving technology and access to markets, agricultural incomes of smallholders could rise significantly over a relatively short period. A small minority of smallholders cultivates 2-5 hectares and they are considered to be potential change agents. The most vulnerable are those who farm less than 1 hectare, they often consist of female headed households, which in some villages, make up an important part ofthe overall population.
27. These three provinces have been most strongly affected by the war: rural infrastructure has been destroyed; farming, processing and transport equipment has not been maintained, is dilapidated or has disappeared; seed stocks and planting material ofhigh producing varieties has largely disappeared; farm animals have been consumed; soil fertility has not been maintained (though in some areas soil fertility may have improved as a result of long war-induced fallow
31 periods); credit mechanisms have become dysfunctional, etc. Significant progress has been made over the past few years, but there is still a long way to go in recapitalizing productive systems.
28. Another set of shared characteristic is that they are part of the highlands of Angola (Central Highlands and Malanje Highlands), and that they are crossed by the old railway structures. These railways are currently being repaired with the assistance of a Chinese development cooperation initiative.
29. It is difficult to estimate the actual population in the target area, mainly because ofa lack of reliable data and statistics. Nevertheless, an estimate is presented in Table 1, according to which the total population ofthe project area would be 1,056,754 persons. Assuming 5 persons on average per household, this would be equivalent to 211,352 households. Assuming further that 95% of these households engage in agriculture, the total number of fanning households’ amounts to 200,785. About two-thirds ofthese are estimated to be living below the poverty line. The distribution of the targeted population among the three provinces is: approximately 50% in Bik (100,000 smallholder households), and 25% each (50,000 smallholder households) in Huambo and Malanje.
32 Table 1: Provinces, Municipalities, and Communes selected as Project Area, and Estimated Population, Household and Smallholder Numbers
Province
Bi6 Andulo
Catabola Chipeta 20,138 4,028 3,826 Chinguar Cangote 72,972 14,594 13,865 Cutato 94,414 18,883 17,939 Camacupa Muinha 39,727 7,945 7,548 Kuanza 20,722 4,144 3,937 Sub-total project 542,806 108,562 103,134 area Bik Huambo Bailundo Bailundo 77,118 15,424 14,652 45,889 9,178 8,7 19 Londuimbali Alto Hama 27,327 5,465 5,192 Soque 13,411 2,682 2,548 Mungo Mungo 87,763 17,553 16,675 Sub-total project 251,508 50,302 47,787 area Huambo Malanje Cacuso Cacuso 22,800 4,560 4,332 Lombe 18,390 3,678 3,494 Kalandula Kuale 15,500 3,100 2,945 Kota 32,800 6,560 6,232 Kalandula 29,200 5,840 5,548 Caculama Caculama 23,765 4,753 4,515 Caxinga 1 1,020 2,204 2,094 Muquixe 13,175 2,635 2,503 Kiwaba- Mufuma 2 1,245 4,249 4,037 Nzoji Kiwaba- 39,750 7,950 7,553 Nzoji Malanje Cambaxe 18,800 3,760 3,572 N’gola- 15,995 3,199 3,040 Luije Sub-total project 262,440 52,488 49,864 area Malanje TOTAL project 1,056,754 211,352 200,785 area I I I Source: based on ita provided y MINADER.
33 30. Household food insecurity. A 2005 WFP food security survey in the Central Highlands defined categories ofvulnerability to food insecurity and estimated their prevalence:
(0 Food insecure households are chronically food deficient. They eat one meal per day and consume less than three food groups. These households have the highest risk of exposure, rely exclusively on agriculture as source of food and have the least diverse income sources. They have almost no assets. In 2005 up to 19% of all households in the central Highlands fell in this category. The category consists mainly of internally displaced and/or recently resettled families.
(ii) Highly vulnerable households eat one meal per day and only three food groups. They are generally unable to manage medium risk exposure, and have just one additional source of food income besides their own agricultural production. They have low asset ownership and diversity, and are often female headed households. This group makes up 30% of households in the Central Highlands, and is particularly concentrated in the Andulo, Mungo and Bailundo municipios.
(iii) Moderately vulnerable households eat at least one meal per day and consume more than three food groups. They are exposed to more than three risks, but more than one source of income including their own agricultural production. They constitute 19% of households in the Central Highlands.
31. The vulnerability of women in the household context is quite evident. They tend to be vulnerable because they depend on their husbands for their basic means ofproduction (land) and the fact that they lose their means of livelihoods should they divorce. This is even more so for the wives of demobilized soldiers, who are often also isolated geographically from their own families as they went to live far away from their original homesteads by following their husbands, and they end up living as foreigners in far away provinces.
32. The project area and population are not homogeneous. Apart from ago-ecological differences, there are differences related to the length of residence. Many villages were de- populated during the war, and though most displaced people have returned in recent years, some continue to arrive. Many, but not all, have benefited from starter-packs, including for instance seeds and some tools, but some have not. Some villages are strategically located on or near to main roads to near cities and markets. Opportunities for quick-wins therefore depend on location and situation ofthe farmers. In some cases the quickest win would be in establishing appropriate storage facilities for perishable products (potatoes for instance), in other cases it may be in post- harvest processing (e.g. cassava mills), but in substantial areas the quickest wins are likely to be gained from more basic provisions, such as animal traction for tillage and transport, or the rehabilitation ofneglected small-scale irrigation infrastructures.
33. The agricultural knowledge base of the smallholders can substantially be improved. Whole farming populations had to flee during the war to take rehge in cities for years. Many young returnees, ex-combatants and other vulnerable groups have little knowledge on good farming practices. This implies that effective agricultural extension methods that use practical local knowledge and that target groups of farmers rather than individuals, such as the farmer
34 Field School methodology, could have a major impact on smallholder production, productivity and incomes.
34. Smallholder households cultivate small plots of land, with little diversification. The average smallholder household consists of 5 people and is at present able to cultivate only about 1.O ha in Bie and 1.7 ha in Huambo and Malanje. In Bib and Huambo, the major crop in terms of area is maize, while Irish potato is the main cash crops, in Malanje cassava predominates. Current production levels are very low, and an indication ofpotential increases in production as a result of improved practices, seeds and fertilizer use are indicated in Table 2.
Table 2. Crop responses to improved practices, seed quality and fertilizers; fertilizer recommendations, Central Highlands, Angola
maize, sole 097 135 4s 80-60-30 bean, sole 033 0,4 056 30-50-30 sweet potato 430 690 14,O 40-60-80 cassava 890 990 13,O 50-50-50 moundnut 0.4 0.5 0.9 30-60-30 sorghum 0,4 096 1,3 60-40-40 Irish potato 295 490 820 80- 120-120
35. FAD has undertaken a more detailed target group identification, describing poverty levels and causes, coping actions, priority issues and potential responses. These are included in Table 3.
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fQ a am a ea a a ma a a aaaaaaa Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
PrograWroject Sector Issues Addressed I Impl. Status I Performance rat Igs I TP DO World Bank financed Angola Demobilization Improving labor markets, social safety and Reintegration Project nets, conflict prevention and post conflict reconstruction, HIV/AIDS Active MS MS Third Social Action Fund Participation and civic engagement (FAS 111) conflict prevention and post conflict reconstruction, other social protection and risk management, municipal governance and institutional capacity building and rural services and infrastructures Active S S
AO-Emergency MS Conflict prevention and post-conflict Recovery ERL (FY05) reconstruction, Rural services and infrastructure, HIV/AIDS, Education for all, Decentralization Active MS Economic Management Economic statistics, modeling and Technical Assistance forecasting, Public expenditure, Project financial management and procurement, Macroeconomic management, Tax policy and administration, Poverty
AO-IDF MINADER Strengthening Agency reform (MINADER) Active LI NIA N/A ANGOLA EMERGENCY MULTI-SECTOR RECOVERY - PHASE 1 Conflict prevention and post-conflict and 2 reconstruction Active S S
38 OTHER SECTOR ISSUESADDRESSED IMPL. DONOR 1 STATUS 1 PRODECA - Northern Agriculture: Rural Extension, Adaptive IFADBelgian Region Food Crop Research, Community Rehabilitation Survival Fund Development Project Closing Proagro Agriculture, Agri-business, Financial USAID/Chevron Services Active
1. The Emergency Multisector Recovery Project (Phase I)is assisting the Borrower in building a foundation for long-term reconstruction, economic rehabilitation, and the reestablishment of state administration throughout the Borrower's territory by assisting the Borrower to: (a) improve rural incomes and enhance food security in the provinces most affected by the conflict; (b) improve access to essential education and health services in the provinces most affected by the conflict, (c) rehabilitate and reconstruct critical infrastructure; and (d) strengthen capacity of government at all levels to formulate, prepare, implement, and manage medium and long-term development programs.
2. The Emergency Multisector Recovery Project (Phase 11) is supporting the Borrower to build the foundation for long-term reconstruction, economic rehabilitation, and the reestablishment of state administration throughout the country. The specific objectives of the EMRP 2 are to assist the government to: (a) facilitate agricultural marketing in specific areas with high agricultural potential that have been affected by the conflict, (b) reconstruct and rehabilitate critical infrastructure, and (c) strengthen capacity of participating ministries and agencies for improved governance and transparency and of local governments for future decentralization. These objectives build on the objectives and activities of EMRP 1 and are consistent with the ECP and the PPMRRP.
3. The 3rd Social Action Fund (FAS 111) supports the Recipient achieve improved, expanded and sustainable utilization of basic social and economic services through: (a) the provision or rehabilitation of social and economic infrastructure at the community level; (b)
39 capacity building at the level of communities, Implementing Partners, local government and FAS; and (c) strengthening and improving networks to facilitate collective action among community members, including vulnerable groups.
4. The Emergency Demobilization and Reintegration Project provides support to Angola to consolidate economic stability in the country and in the greater Great Lakes region. The program focuses on demobilization ofex-combatants, and helps support their return into civilian life, and, facilitates the reallocation of Government expenditure from military, to social and economic sectors. The main components include: a) demobilization through specific modules, based on an identification card system, a program benefit card, and socioeconomic profiling, to provide transitional assistance in cash or in-kind; b) reintegration through the provision of counseling, and information for potential job opportunities, assistance in securing employment, as well as educational or skills improvements within vulnerable groups; and c) institutional and program development, supervised through a program coordinator at high Government levels, but whose implementation is the responsibility ofa single civilian agency.
5. The International Fund for Agricultural Development (IFAD) funded Northern Region Food Crop Development Project, PRODECA, was implemented in the provinces of Malanje, Kwanza Norte and Uige. Its main objectives were to intensify smallholder agricultural production, increase levels of food security, and reduce poverty through marketing surpluses, capacity building and rehabilitation of social infrastructure. FAD’s overarching goal in post- conflict Angola will be to ensure food security and increase incomes, particularly among the most vulnerable groups in the food-insecure’ areas of the central highlands. The country programme will have three objectives: (a) greater household production of basic food crops among food-insecure groups in the central highlands; (b) empowered rural organizations and vulnerable groups that can require appropriate services and infrastructure in municipios, including schools, health centres and wells; and (c) informed pro-poor policies based on improved knowledge about rural poverty.
6. The USAID/Chevron funded program ProAgro is an agriculture development and finance program with four components: a) expanding access to financial services for farmers and other agribusiness enterprises; b) enhancing the production and productivity of selected crops enhanced; c) improving processing practices; and d) improving market strategies. The program will facilitate sustainable relationships between commercial banks and agricultural enterprises.
7. The African Development Bank. In its Country Strategy, the Bank assigned priorities in line with the ECP and indicated its intention to allocate resources to rehabilitation and reconstruction programs. Specifically, it will (i)support the improvement of human resources and the development of basic socio-economic infrastructure in rural areas; (ii)strengthen production, sector competitiveness, and promote income generating activities among the rural population; (iii)encourage the diversification of agriculture activities; (iv) support the development ofthe inland fisheries; (v) support the sustainable management ofnatural resources. Presently, the Bank has two ongoing projects within the agricultural sector: the Artisanal Fisheries Development Project, US$7 million (2003-2009); and the Environmental Study Project, US$0.85 million, just starting.
40 8. Food and Agriculture Organization of the United Nations (FAO). A number of Emergency and food security projects have been under implementation by FA0 for a total of US$7.4 million (2003-2006) in nine provinces. The activities comprised seed multiplication and distribution, provision oftools and restocking of livestock. In the area of capacity building, FA0 is also assisting MINADER in land administration through a project known as Capacity Building and Land Delimitation (2000-2005). A second phase of this project financed by European Union started in January 2007 for three-year project implementation. In addition, during 2004, FA0 assisted MINADER in carrying out an agricultural sector review, with the objective of formulating appropriate development policies and strategies, and is involved in supporting the Ministry in developing the food security program for Angola. FA0 supported also MINADER in the preparation ofthe National Medium Term Investment Program (NMTIP) in the context ofthe New Partnership for Africa (NEPAD).
9. The European Union. The Government of Angola and the European Commission have agreed on a Cooperation Strategy Document (CSD) for the next five years, in which food security is the main priority. As part of a strategy that links the emergency to rehabilitation and development (Link Relief to Rehabilitation and Development, LRRD), the EC is providing support to the GOA with the objective of reducing food insecurity and, in parallel, reactivating agriculture and livestock activities. This includes the following elements: institutional support at local and central level, support to increasing rural trade and support to developing and applying land tenure legislation and regulations. The program also supports agriculture and livestock, at community level through NGOs and with support to relevant government institutions. The program is based mainly in the provinces ofBenguela and Huila.
10. The World Food Programme. The WFP has shifted its recovery approach to support return and resettlement initiatives. The WFP aims to develop and continue strategic partnerships with other UN agencies in food security related sectors. In partnership with FAO, WFP has used the Foodfor Work Program to support the production of food and other agricultural products. It also takes a key role with respect to access by beneficiaries to markets and social services. The setting of priority areas is based on community vulnerability assessments conducted during the transition period (2002-2005) by the WFP Vulnerability Assessment Management Unit. A massive assistance of food supply, US$254 million, was provided by WFP during the period mentioned above. The funds were spent as direct food aid or food-for-work programs in support ofagricultural production and rural infrastructure, in partnership with FA0 and NGOs.
41 Annex 3: Results Framework and Monitoring ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
Results Framework
Project Outco nformation Increased agricultural Percentage of agricultural production Monitor and evaluate the project production increase based on crop production index of contribution to agricultural participating smallholder farmers production ofparticipating smallholder farmers in selected comunas and municipals of targeted Provinces.
Improved access to Percent ofparticipating smallholder farmers Monitor increased services markets with secured market access through provision contractual arrangements with agribusinesses or traders
Percent ofparticipating smallholder vulnerable groups with secured market access through contractual arrangements with agribusinesses or traders
Improved productive Percent of communities and /or associations Monitor increased investments infrastructure and assets that benefited from grants and completed to communities and smallholder for rural smallholder their sub-projects under agriculture farmer groups farmers investment support component
Intermediate Results per component Component 1: Capacity Building Improved technical skills Number of smallholder farmers that Monitor coverage of capacity ofbeneficiary benefited from training building support and assess stakeholders involved in learning effectiveness agricultural production Percent ofparticipating smallholder farmers who benefited from capacity building support and are applying the new knowledge/skills in their day-to-day activities
Improved participation Percent of participating smallholder farmers Monitor participation of of smallholder farmers in in the target project areas that belong to smallholder farmers in farmers’ farm organization farmers’ organizations organizations
42 Improved community Percent of trained communities and Monitor the capacity capacity to prepare associations that qualify for investment development to provide services agricultural investment under component 2 to rural smallholder farmers support opportunities
Improved efficiency of Ratio of smallholder farmer organizations to Monitor capacity development Government institutions an extension officer of extension officers over time to support smallholder farmers in the project areas
~~ Component 2: Agricultural Investment Support Enhanced Average yield for major crops (maize, Assess the effectiveness of agricultural cassava, beans and potato) ofparticipating project financial assistance in productivity promoting smallholders farmers’ productivity, and competitiveness
Enhanced access to Percent of agricultural production marketed Monitor market share of agricultural markets by participating smallholder farmers agricultural products sold by the smallholder farmer groups
Component 3: Project Management
~~~ Improve project Level ofproject implementation according Monitor the progress ofproject reporting and to annual plan implementation management
B. Arrangements for results monitoring
1. Result monitoring will assist project management in making implementation decisions and generate lessons to effectively implement the project. Result monitoring will include two aspects:
(i) Impact assessment surveys, focussing primarily on the degree of achievement of overall project development objective; and
43 (ii) Ongoing management information system (MIS) for assessment of intermediate results ofproject components
2. A detailed description of project’s output and activities monitoring procedures will be developed in the project implementation operations manual. A draft of the project implementation operations manual is already available.
1. Impact assessment surveys:
3. Impact assessment surveys aim to collect information about project’s contribution to the enhancement ofparticipant smallholder farmers’ agricultural production and income as well as to appraise how this is distributed by gender, social groups and geographical area.
4. The surveys will also monitor household income using indirect measures (proxies), focusing on household expenditure and welfare, such as food security (“lean season” duration), housing conditions (including source of household water supply), children at school, ownership ofcattle, and ownership ofagriculture machinery.
5. In addition to the household surveys, a direct appraisal of income generated by participation in project activities will be carried out by collecting annual official accounting data (e.g. revenue, capitalization), of a sample of farmer associations and cooperatives. Perception of change in income and capitalization will also be explored in further detail through in-depth interviews or focus groups with project participants.
6. Triangulation among these sources (surveys, farmer association accounts and in-depth interviews/focus groups) is expected to enhance the validity of the overall impact assessment findings.
2. Periodic management information system
7. Achievement of intermediate results for Component I (capacity building) will be monitored by keeping track of (i)the number of participants (and proportion of the targeted population) enrolled in different training events since the inception of the project; and (ii)the number ofthe above participants that have successfully gone through appropriate and acceptable end-of-training “formative” tests6. Special attention will be given to the latter, both as an indicator of the effectiveness of the project capacity building strategy, and as a diagnostic tool for assessing the adequacy of the teaching-learning curricula. Actual coverage, relevance and learning impact (i.e. post-training use of the new knowledge and skills) of project capacity- building component will be assessed by the mid-term and final surveys.
The purpose of such “formative testing” would not be to “approve” or “disapprove” participants (as certifying testing does), but: (i)to check to what extent the training event (curriculum + trainers performance + trainees) has allowed participants to achieve the learning objectives; (ii)to identify end-of-training gaps and give participants suggestions for further learning; and (iii)to improve training curriculum and trainers performance.
44 8. Achievement of intermediate results for Component 2 (agricultural investment support) will be monitored by comparing crop yields per unit of land (productivity), amount ofmarketed surplus (market access) and selling price (competitiveness) of selected crops and agricultural products among project assisted and non-assisted (control) farmer associations. These data will be collected annually in each of the 12 project Municipios (or EDA catchments areas) from a small sample of about 9 project-beneficiary “monitoring” farmer associations of different size and under different intensity and type of assistance. Performances of this highly diversified sample of beneficiary-farmer associations will be compared against that of a similar control group, including at least 3 project non-beneficiary farmer associations.
9. A strong project management information system is required to deal with the geographical dispersion of this project. Beyond regular monitoring meetings, an annual internal evaluation and re-planning workshop among the PIU and its main institutional partners is recommended to assess progress made by the different project components and draft the work plan for the forthcoming year. Participants in these workshops would assess in a participatory and formative manner, project managerial performance according to quality standards for project operation (identified by the project implementation operations manual), timeliness of implementation, and use ofthe M&E information for decision making.
3. Organizational set up of the result monitoring system
10. To manage the above data collection, processing and use procedures, an M&E unit will be established in the national level PIU as well as within each Provincial PIU, with a full-time professional in M&E. Provincial core M&E staff should be responsible for (i)overseeing data collection; (ii)storing, consolidating and analyzing data, and providing feedback at all levels (project manager, collaborating public institutions, private outsourcers, farmers associations etc.); (iii)providing training on specific M&E tasks to colleagues and partners (including ADVEDA field staff); and (iv) facilitating project management self-assessment during yearly and mid-term evaluation workshops.
11. The “formative” role ofproject’s provincial M&E staff is ofcrucial importance because, according to the studies conducted to design this project, capacity for collecting data and managing information in support to decision making is rather weak in project areas and most local institutions do not share an “evaluation culture”. In light of this, training and involving local professionals, service providers and farmers in project M&E operations would become an important opportunity to create at the provincial and local levels a critical mass of knowledgeable and competent people that would be able to sustain the catalytic contribution of this project.
12. To this end, the three suggested M&E positions at the provincial level should be given preferentially to Angolan professionals, with study and experience in M&E abroad. These three professionals should be based in the Provincial capitals, and be equipped for frequent travels to project-selected Municipios and Comunas. The overall coordination of these three M&E staff should be assigned to the M&E officer in the central PIU.
45 13. Angolan universities and research centres (and in particular Huambo’s Agriculture University) should be involved in project M&E operations, as outsourcers of specific activities (e.g. survey interviewing and findings analysis). The development of appropriate and acceptable adult education tests for assessing effectiveness of capacity-building events is an additional area for which collaboration with high level educational institutions would be beneficial. Partnerships with other Lusophone and African universities and evaluation research centres, that have already significant experience in this and other areas, should be encouraged. Ad hoc international consultancies should be made available, privileging as much as possible a Lusophone South- South exchange (in particular with Brazil and Mozambique).
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0 0 0 Annex 4: Detailed Project Description ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
1. The project development objective is to increase agricultural production through provision of better services and investment support to rural smallholder farmers in selected comunas and municipios oftargeted Provinces.
2. The project area consists of 25 Commas in 12 Municipios in the targeted provinces of BiC, Huambo and Malanje. The number of rural households in the project area is estimated at 200,000, or about one million people. Of these, 126,000 households are expected to be direct project beneficiaries. The key outcome indicators, which will be used to measure project performance at the end of the six year project period, would be: (a) increased agricultural production of participating smallholder farmers; (b) improved access to markets; and (c) improved productive infrastructure and assets for rural smallholder farmers. The details for the results and other performance indicators are provided in Annex 3. The project includes three components: (i)capacity building; (ii)agricultural investment support; and (iii)project management.
Component 1: Capacity Building (US$11.26 million) (US$3.42m IDA; US$3.20m IFAD; US$4 m Japan PHRD Grant; and US$0.64m GOA)
3. The objective of this component is to strengthen the technical, institutional, managerial and marketing skills of 126,000 smallholder farmers and their organizations, as well as of services providers and other stakeholders involved in agricultural production and value chains, to more effectively operate in a market-driven environment and to prepare for the agricultural investment support opportunities under component 2, agricultural investment support. The component also takes a vulnerable group, including gender, sensitive approach to capacity building.
4. The formation and capacity building of smallholder farmer groups and associations is a key factor in project strategy. It needs to start early in the project and be rapidly scaled-up. This requires a design \that is based on a “training oftrainers’’ methodology. The component has three sub-components, focusing on smallholder farmers and their groups and associations, relevant government institutions, and private and non-governmental agricultural service providers.
Sub-component 1.1 : Building and strengthening capacities of smallholder groups and associations.
5. This sub-component aims to: 0 Assist smallholder farmers to form groups and associations and to strengthen existing smallholder farmers groups and associations. This will also enable these groups and associations to meet criteria for eligibility for further support under component 2; 0 Assist smallholder farmer groups and associations to identify, prepare and manage their productive agricultural investment activities to be funded through component 2;
51 a Improve smallholder agricultural and marketing skills and ability to access extension services; and a Build capacities of vulnerable groups and empowering them to participate in productive activities supported by the project.
6. To achieve these aims, three distinct activities will be supported:
(i) Formation and capacity building of farmer groups and associations to enhance their technical, managerial and marketing skills, and to improve organizational arrangements and legal status. This will benefit 126,000 smallholder farmer members of new and existing groups. Capacity building modules will include four sets of topics: organizational skills, basic farming skills, basic marketing skills, and information, education and communication (IEC) regarding agricultural investment support under component 2, and how access can be obtained. This activity will be organized and carried out by “effective” (trained and equipped) extension workers ofthe EDA offices (see sub- component 1.3). Specific gender sensitive provisions include the facilitation of women participation in group formation and capacity building activities by budgeting for child- care arrangements. It is assumed that one “effective” extension worker will initially be able to service four smallholder organizations with, on average, 100 members each, and that he/she will be able to increase this number to 12 by the end ofthe project. It is also assumed that during the first project year only seven EDAs would have at least one “effective” extension worker, and that it would take three years to have six effective extension workers in these EDAs. The other seven EDAs would lag one year behind the first group. Based on these assumptions, approximately 1,260 smallholder groups or associations will be formed or strengthened. In each of the three provinces a single service provider with extensive experience in forming and training smallholder groups and associations, participatory methods and agro-marketing would be engaged to manage the development oftraining material and to organize networks through which these materials will be effectively delivered to target beneficiaries.
(ii) Strengthening the farming and marketing knowledge base of smallholders through improved agricultural extension delivery services, including an up-scaling of the Farmer Field School (FFS) initiative that is currently underway in the project area. This will benefit 40,000 smallholder farmers (a sub-set of the beneficiaries of sub-component 1.1 .i).The FFS methodology empowers smallholder farmers to set their own agenda and take steps to change their situation. The FFS initiative currently underway in the project area is jointly implemented with the local ADI/EDA extension service. It includes the training of master trainers, elaboration of a training curriculum, and the setting up ofthe very first FFSs in the project area. The scaling-up ofthis FFS initiative involves:
(a) Increasing training capacity, including Training Coordinators at Municipio level (two in the local EDA office, and two in the locally most active NGO) and Farmer Facilitators at community level (farmers selected by farmers) who will become
52 paid FFS facilitators, backstopped by the Training Coordinators. Each Training Coordinator would train up to 4 Farmer Facilitators each year; (b) Smallholder farmer groups will require extension support, and the EDAs will then (directly or indirectly - through farmer groups) pay Farmer Facilitators to provide the requested assistance; (c) A FFS group will consist of, on average, 25 smallholder farmers (both men and women) from the same village or community, and the training will be conducted within the village itself. These could be existing or new groups, while women farmers are expected to form about 50 percent ofall trainees; (d) Training Coordinators and Farmer Facilitators will each train up to two FFSs in one year; (e) Soil fertility management will be part ofthe FFS training packages; (f) HIV/AIDS, land-mine and gender awareness will be systematically integrated in the FFS training packages as cross-cutting issues. Over a 6 year period, the project will train approximately, 600 FFSs, effectively reaching about 40,000 smallholders:
(iii) Functional literacy and numeracy training to increase the capacity levels of groups lacking such basic skills (9,000 beneficiaries) and will empower them to participate in productive activities supported by the project. High levels of illiteracy persist in the project area. Literacy is particularly low among women who have had fewer opportunities to attend school - either because priority is given to literacy for boys or because girls leave school to marry at a very young age. Vulnerable households are often headed by women or men who lack basic literacy and numeracy skills. The project will support vulnerable groups in the acquisition of basic skills in order to: (a) increase their ability to actively participate in smallholder farmer group formation and leadership; (b) increase their chances to benefit from further project support under component 2; and (c) more effectively operate in a market environment. Courses will be delivered to targeted communities that include large numbers of needfbl members. Within each of these communities potential “facilitators” will be identified, who will each receive 10-days oftraining, in groups of about 25. The project will fund the training for 30 facilitators per Province per year for the first 4 years. When they return to their own communities, facilitators will work with groups of 30 people. The program will therefore reach 2,250 people in the first year, with new intakes in the first 4 years, so about 9,000 people during the life of the project. This training activity would be sub- contracted to a specialized service provider. Training materials will deal with topics directly related to the target group’s livelihoods. Reading and calculation exercises may deal with cropping systems or market access or the structure and management of associations. Other cross-cutting topics, such as gender and HIV/AIDS, and mines awareness, will also be included in the curriculum. Over three years, participants in the program will reach a level equivalent to the 4th year literacy in the formal school curriculum.
53 Sub-component 1.2: Strengthen capacities of relevant government institutions
7. This sub-component aims to strengthen the capacities ofrelevant government institutions at municipio, provincial and central level and introduce or strengthen participatory processes that support the decentralization process, focusing on building staff skills in institutions involved in the project:
(i) The Agricultural Development Institute (ADI) at local and central levels will be given periodic training and the means (office, equipment, transport - depending on the local situation) to assist smallholder farmers to: (a) form and strengthen groups and associations, (b) strengthen their farming and marketing skills, and (c) assist them to prepare development plans and investment proposals (sub-projects) for support under component 2. AD1 and its extension workers will also be assisted to develop a communication strategy and equipped with the skills to implement it, to reach the targeted communities and beneficiaries. This activity is designed to complement the existing AD1 extension program (PEDR). One or two EDA’s operate in each Municipio, with each supposedly having 7 full time extension workers as well as a vehicle and 6 motorbikes, although not all of them do. Extension workers are expected to possess the technical qualifications (tkcnico mkdio) of university-trained agronomists. However, the knowledge base remains low and none of them possesses the marketing or business skills necessary to promote market-oriented smallholder agriculture, or skills in participatory methods through which to empower smallholder farmers and which facilitate demand-led service delivery. Training this corps of potential trainers is critical to increasing the knowledge base of smallholder farmers and strengthening their groups and associations. Basic training-for-trainers will be provided in all 12 Municipios (14 EDAs) during the first three years ofthe project. This would mean training approximately 30 people in each province. Each training session would have a five-day duration, There would be three sessions on the following topics: (a) participatory needs assessment methodologies; (b) participatory planning, project development and basic budgeting skills; (c) establishment, structure and management of smallholder farmer groups and associations. The training would be repeated every other year. One of the results will be that extension workers will engage local communities in participatory exercises to identify and plan agricultural development and investment activities that can be supported under component 2. At provincial and central levels, the technical and managerial capacities ofAD1 managers require strengthening, particularly as these capacities relate to project planning, implementation and monitoring. To this end, a services provider will be contracted to organize project management training for 14 EDA Directors, 5 staff from each Provincial AD1 and 3 from the central ADI, on monitoring and evaluation; management; procurement; and financial management. Gender training would also be targeted at these institutions. There would be facilitated discussions, between extension workers of each Province, to analyze different approaches to delivery of extension services. The sessions would be based on the experience of the participants, as a starting point for establishing a clear methodology that is relevant to local needs. Participants would be exposed to different examples, such as farmer field schools, training and visit, community development, etc,
54 which introduce concepts of participatory facilitation of farmers groups. Throughout the period ofproject implementation, regular exchanges would be held, feeding into national planning and strategy. The project will also fund the physical capacity building of those offices and units that are essential for project implementation, including, for instance, infrastructure, office and training equipment, and transport and communication facilities. It will be important to establish effective communication systems (telephone, internet and e-mail facilities) in EDAs and provincial AD1 offices, linking these to each other and to the PIUs.
(ii) Local government (municipios and provinces) aims at increasing transparency and accountability in project implementation. This will include information and training regarding: (a) the project and its components and their implementation; (b) financial management, procurement, monitoring and evaluation; (c) land tenure and water management issues; and (d) gender mainstreaming. At Municipio-level, training will be in the form of 4 annual workshops for 30 people in each municipio, the first workshop would serve as a project start-up. Overall training topics would include: (a) information regarding the project and its components, with special attention to component 2; (b) financial management, procurement and monitoring and evaluation; (c) land tenure issues; and (d) gender mainstreaming. At Provincial level, training will be for representatives of the Provincial Government, local representatives of central state institutions and agricultural departments of the 3 Provinces, as well as other project stakeholders in the Provincial Council ofConsultation and Coordination. Training would be in the form of2 annual workshops for 30 people in each Province. Topics would reflect those discussed at Municipio level. In addition, support would also be given to local land administration and the units that keep property records. This would be in the form of equipment and training for the Geographic and Cadastre Institute ofAngola (IGCA) offices in the three provinces. IGCA, in turn, would map the community land within the project areas. This would facilitate communities to process land registration.
(iii) Specific policy and strategy planning and formulation units of the Ministry of Agriculture and Rural Development and other relevant institutions will be provided with skills to develop an appropriate policy framework for agricultural intensification and marketing, and they will also be provided with the tools, as necessary, to carry out their functions. An appropriate policy framework needs to be developed if market-oriented smallholder agriculture is to take off in Angola. This sub-component will apply the experience and lessons learned from various other project interventions to inform and reform national policy-making. This objective will be pursued by providing specific policy analysis support (in training and equipment) to those national level units responsible for policy and strategy planning and formulation. It may also involve study tours to expose policy makers to successful policy interventions in comparable contexts. Building-up the capacities of these units should enable them to more effectively define: (a) policies and strategies that support access to agricultural inputs (seeds, fertilizers, etc.) by smallholders; (b) other relevant policies directly related to the project objectives (land and natural resources management, rural extension, decentralization, irrigation,
55 environment, etc.); and (c) strategies for supporting priority production chains (based on information systems which include costs, yields, prices, market intelligence import- export, macroeconomic behavior, cost benefit analysis, etc.). The needs for capacity building will be identified throughout the project, but the following could be envisaged: (a) Office of Studies, Planning and Statistics (GEPE) of MINADER, in particular to strengthen the capacity to gather and analyze information and to properly monitor and evaluate their programs and projects, including this project; (b) National Directorate of Agriculture, Livestock and Forestry (DNAPF), particularly for strategies relating to improving smallholder access to fertilizers; (c) Agricultural Research Institute (IIA), to develop research strategies which are relevant and meet the needs of smallholders; (d) National Directorate for Water Resources (DNRH), for strategies relating to smallholder irrigation; (e) Directorate of Rural Planning and the Geographic and Cadastre Institute of Angola (IGCA) for land tenure issues and responsible for promoting and executing the mapping of the territory. (according to its 2007/8 Plan ofAction, it aims to do community mapping but does not have the necessary resources); (f) Food Security Office; (g) The national office of ADI, to develop and improve its services to smallholders; and (h) Ministry of Commerce, for marketing issues.
Sub-component 1.3: Strengthen capacities of private and non-governmental agricultural service providers.
(i) Strengthening the capacities of NGOs and CBOs to support smallholder farmer groups and associations to prepare development plans, and investment proposals (sub-projects) for support under component 2. This will include information, education and communication (IEC) regarding investment support under component 2, and how access by rural communities and smallholder farmer groups and associations can be facilitated by these NGOs and CBOs.
(ii) Strengthening the managerial and business capacities of local micro-enterprises that support farming activities (small processors, craftsmen and local traders), including the ability to properly handle contracts and money, and how to keep accounts, how to create networks and form professional organizations. This training activity would be contracted to a specialized services provider. There would be annual five-day training in each Municipio, including 25 women and men in each, for a total 300 beneficiaries per year and up to 1,800 beneficiaries during the whole project period. Training topics would include: (a) organizational skiZZs essential for starting and strengthening small scale businesses (legal registration, owning vs. renting, asset management, cash flow management, trade credits and their use, joint ownership, governance and control, banking relationships, planning and budgeting, pricing and market monitoring, etc.); (b) business skiZZs essential for small business people in the merchandising trades (ways of securing market information, pricing, contract negotiating and the management of financial records, strategic alignment and collaboration with commercial partners, network development and working with and through professional associations; (c) market opportunity awareness to provide a dynamic perspective to small businesses and a sense of strategic direction. As one of the results, these trained groups
56 will also be better able to identify investment opportunities and submit sub-project proposals for consideration under component 2. As far as the eligibility and selection of private and non-governmental agricultural services providers are concerned, preference will be given to those who have the relevant experience, skills, and mandate to work with local communities and smallholder farmer groups or associations.
Component 2: Agricultural Investment Support (US$29.34 million) (US$23.46 m IDA; US$2.85 m IFAD; and US$3.03 m benejkiaries)
8. The objective of this component is to improve the productivity, competitiveness and market access of24,000 smallholder farmers in the project area.
9. Expenditures under this component will be made subject to a disbursement condition that stipulates that sub-projects will be financed from proceeds of the IDA Credit only after the performance triggers have been met that are critical for effective use of the financial resources. These triggers are: (i)at least 30 (10 per province) qualified service providers and public agents are certified under the project’s Capacity Building program; (ii)the baseline survey has been completed; and (iii)the administrative capacity ofProvincial Project Implementation Units is in compliance with Bank fiduciary requirements, as certified by the Association. This component will provide demand-based support, in the form of matching grants, to rural communities and smallholders’ farmer groups, for small-scale agricultural infrastructure, production, processing and marketing sub-projects. The sub-projects will be initiated upon the request of communities and smallholder farmer groups and will be prepared with the assistance ofservices providers that will be trained and equipped for this task through component 1. The sub-projects will then be screened for technical, financial, social and environmental feasibility, before they are approved for funding. To be approved for funding, the sub-projects will have to meet stringent eligibility criteria. The matching grant ratios and funding ceilings that apply will be periodically reviewed and recalibrated to take account of the changing circumstances and lessons learned during project implementation. The sub-project implementation arrangements and eligibility criteria are further detailed in Annex 6 and the project implementation operations manual.
10. Rural communities/villages (aldeias) will be eligible to receive support, provided that the sub-project proposals result from a community-level participatory planning exercise with a cross section of the population, including women and young people. Smallholder farmer groups or associations will also be eligible for support, provided they are either registered or informally recognized by the local community and authorities; they should have a democratic structure, with elected president, secretary and treasurer, as well as regular meetings, and should be able to keep records.
11. Eligibility Criteria: Three categories of sub-projects, that are eligible for financing under the project, have been defined:
(4 Sub-projects with a high public value andor use content: for which the matching grant ratio will (initially) be set at 90% project contribution and 10% beneficiary contribution (either in cash or in-kind). These sub-projects include:
57 (a) Productive rural infrastructure sub-projects, such as the establishment or rehabilitation and improvement of small-scale irrigation and drainage works (maximum 50 hectares), small-scale earth dams to harvest and store water (maximum dam height less than 10 m), shallow wells and boreholes for (drinking) water, dip-tanks for livestock parasite control, rural market facilities, simple livestock slaughter facilities, small-scale storage structures, spot-improvement of feeder roads, river crossing points such as fords or small bridges, etc.
(b) Sub-project that have a positive impact on the environment, such as gully and erosion control and reforestation, etc.
(ii) Sub-projects that naturally reproduce and can be further distribute:, for which the matching grant ratio will (initially) be set at 90% project contribution and 10% beneficiary contribution (either in cash or in-kind), under the condition that the beneficiary group agree to a further distribution mechanism under which the whole group or the whole community will eventually benefit. These sub-projects include:
(a) Livestock, including cattle (for meat, milk and animal traction), as well as small animals, such as goats, sheep and pigs (particularly appropriate to assist female headed households), etc. (b) Seed multiplication, multiplication ofvegetative planting material (cassava, sweet potato), hittree nurseries and orchards, etc.
(iii) Sub-projects that largely consist of equipment: that requires a business-type use and management to be sustainable and profitable, for which the matching grant ratio will (initially) be set at 90% project contribution and 10% beneficiary contribution (either in cash or in kind), under the condition that the beneficiary group has a contractual agreement with one or more ofits members to use and manage the equipment as a micro- enterprise, providing services to the whole group andor community. These sub-projects include:
(a) Agricultural production equipment, such as tractors and animal traction equipment (ploughs, disc harrows, rippers, etc.), sprayers, pumps, etc. (b) Agricultural post-harvest treatment and value adding processing equipment, such as: maize/cereal/cassava mills, hullers and huskers, oil presses, hithegetable dryers, milk chillers, honey extractors, etc. (c) Agricultural marketing equipment, such as transport equipment (ox-cart, trailer), etc.
(iv) Negative list: The implementation operations manual of the project will include a negative list ofactivities that will not qualify for funding support, this would include:
(a) Sub-projects that would disturb or distort the market and its development. For instance, farm inputs, such as seeds and agro-chemicals would not qualify for
58 support, with one exception: seed multiplication and multiplication of vegetative material sub-projects; (b) Sub-projects that have a negative impact on the environment and/or do not comply with the Environmental Safeguards, such as: (i)any sub-projects not screened for environmental or social impacts; (ii)sub-projects with any activities inside protected areas; (iii)dams more than 10 meters high; (iv) sub-projects requiring the use of agro-chemicals in WHO categories LA, IB or H; (v) sub- projects that would damage non-replicable cultural property; (vi) sub-projects involving logging in natural forests, or processing of timber other than from plantations; and (vii) sub-projects that require the use ofwater from international rivers; (c) Sub-projects for private or non-agriculture related use, such as houses, schools, health centers, etc.; and (d) Sub-projects in which the beneficiaries are members or staff of (i)the Project Coordination Committees at all levels; (ii)the PIU, ADI, and EDAs; (iii)local government (administrators, assistant administrators, etc).
12. Approval Criteria: The ceiling for funding support for a sub-project will be equivalent to US$lOO,OOO. Based on experience elsewhere in Africa, it is estimated that the average rural community-level sub-project cost will be about US$50,000 and the average cost of smallholder group-level sub-projects will be about US$25,000. Some of these sub-projects may consist of a combination of smaller (micro-) projects that have been grouped together and consolidated for practical reasons.
13. The approval process for sub-projects proposals is as follows:
(i) PISC will approve sub-projects between US$50,000 and 100,000, with prior review and clearance by the Bank; and
(ii) PPISC will approve sub-projects up to US$50,000, with the first two proposals in each category to be cleared by the Bank.
14. The PPISC must include representatives ofNGOsKBOs and the private sector in order to ensure that there is full transparency in the selection process for the sub-project proposals. In order to achieve the PDO, minimize or mitigate the risk of elite capture, and make a rapid positive impact on the beneficiaries for each of the categories of the sub-projects, the following criteria will be used to prepare, prioritize and approve the potential sub-project proposals: (i) economic and financial return to investment; (ii)impact on agricultural production (particularly food crops) and/or value added ; (iii)impact on poverty reduction, including positive impact on income generation and job creation; (iv) low cost (proposal that are less than US$25,000 will be preferred); (iv) simplicity and feasibility of implementation; (vi) full support from the local community, smallholder farmer groups or associations. At least 25 percent of the proposals should be awarded to vulnerable target groups, including ex-combatants, widows and returnees. Further details are provided in the project implementation operations manual. 15. It is tentatively estimated that these sub-projects would result in some 5,000 hectares of (small-scale) irrigated land, 2,000 pairs ofoxen and animal traction equipment (or the equivalent in tractors and tractor equipment), 10,000 small livestock (goats, sheep and pigs) to female
59 headed households. It is also estimated that these sub-projects would include about 500 units of simple post-harvest processing equipment and marketing or storage structures.
Component 3: Project Management (US$8.72 million) (US$3.12m IDA; US$2.15 m IFAD, and US$3.45 m GOA)
16. The objective of this component is to manage the project effectively and use the resources in accordance with the project’s objectives, procedures and fiduciary guidelines. .
Sub-componen t 3.1 :Management:
17. MINADER, responsible for project implementation, has delegated project implementation to AD1 which is accountable for the management and oversight ofthe project in order to attain its objectives. At the specific request of MINADER, a national level Project Implementation Unit (PIU) will be established within the AD1 framework and the Director General ofAD1 will be the executive level public manager ofthe project.
18. The national PIU will be responsible for the management of fiduciary issues, in conformity with the standards and requirements agreed upon with the World Bank and IFAD and in conformity with the legal agreements. It will handle the day to day management ofall project activities, including technical supervision and coordination, overall project planning, quality oversight, procurement, financial management, and monitoring ofproject activities.
19. The national PlU will include a Project Coordinator, a financial manager, a procurement specialist and an (ADI-staff) accountant, as well as a monitoring and evaluation officer, and communication specialist. . A national level Project Coordination Committee will monitor progress in project implementation and make necessary decisions that are in line with the objectives and institutional arrangements for the project. The project will finance the operational cost, including salaries of externally hired staff, limited technical assistance and training, office equipment and vehicles, project monitoring and evaluation costs and any other operational costs.
20. At the provincial level, MINADER will establish three Provincial Project Implementation Units (PPIUs) within ADI, to manage the project at the provincial level. Each PPIU will include a Provincial Project Coordinator, a financial accountant, a procurement officer, monitoring and evaluation officer, and a communication specialist. A team of three technical staff, including an agronomist, an agribusiness specialist and a rural infrastructure specialist, will be based at the provincial level (one team based in each province), and will be supplemented by short-term consultants, according to needs. Three Provincial Project Coordination Committees will monitor local progress in project implementation and make decisions in line with the project objectives and institutional arrangements. Similarly, at the provincial levels, the project will finance the operational cost, including the salaries of externally hired staff, limited technical assistance and training, office equipment and vehicles, and any other operational costs. The project will also finance the costs ofperiodic financial audits.
21. At the start of the project, a Communication Strategy will be designed to stimulate demand for project support and increase participation by vulnerable groups. The design of the
60 communication strategy will be contracted out to a specialized service provider. The implementation of the communication strategy will be largely through component 1, capacity building.
Sub-component 3.2: Monitoring and evaluation:
22. The monitoring and evaluation sub-component focuses on data collection and reporting on key performance output and impact indicators, including targeted data collection, surveys, participatory assessments and mid-term and final evaluations. Relevant data will be sex- disaggregated and special attention given to social inclusion. A specialized monitoring and evaluation section as well as a management information system will be set up within the PIU, as per the guidelines of the World Bank and FAD. Two evaluations of project output and impact indicators will be commissioned, at mid-tern and at completion. The project will finance M&E costs, including costs associated with the mid-term review and project completion review. The project will also support the baseline survey for the project which would provide a basis for measuring the outcome and impact ofthe project.
61 Annex 5: Project Costs ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
Project Cost Estimates:
1. The overall project cost estimates, by project components, are reported in Table 1. The financing plan for the project is reported in Table 2.
Table 1: Estimated Project Costs by Components
~ Local Foreign Total Project Cost By Component and/or Activity US$ million US$ million US$ million Component 1: Capacity Building 7.30 2.29 9.59 Component 2: Ag&ul&al Investment Support 29.45 29.45 Component 3: Project Management 5.70 1.86 7.56
Total Baseline Cost 42.45 4.15 46.60 Physical Contingencies 0.10 0.15 0.25 Price Contingencies 2.30 0.20 2.50 Total Project Costs' 44.85 4.50 49.35
Project Cost By Component IDA FAD Japan Beneficiaries Borrower Total and/or Activity Component 1: 3.42 3.20 4.00 - 0.64 11.46 Capacity Building
Component 2: 23.46 2.85 - 3.03 - 29.34 Agricultural Investment Support Component 3 : 3.12 2.15 3.48 8.75 Project Management Total Financing 30.00 8.20 4.00 3.03 4.12 49.35 Required
Basis of cost estimates:
2. The estimated project costs have been compiled and calculated based on the information obtained during the technical mission in June 2007. Angola is eligible for 100% IDA financing, including taxes. IDA financing and the government contribution varies by each sub-component. Prices and taxes for goods and services were collected from government agencies, NGOs and individuals with first-hand country experience, and differentiated into local and foreign costs.
62 3. The project is also benefiting from co-financing from IFAD (US$8.20 million) and the Government of Japan (GOJ) through an implementation PHRD grant (US$4.02 million) it was agreed with IFAD to use their funds to finance activities under all three components, although its contribution would be more concentrated on Component 1, Capacity Building. The PHRD funds, on the other hand, were solely to be used for capacity building activities, and have thus been exclusively allocated to Component 1. Furthermore, activities under Component 2 “Agricultural Investment Support” will benefit from beneficiary contributions which would be 10% ofthe sub- project cost.
4. Disbursements were calculated on the assumption that only little expenditure would be incurred during the first year of project implementation, with the majority occurring in the second half ofproject implementation. The first year would mainly see expenses in components dealing with capacity building (Component 1) and project management (Component 3) in order to lay the proper foundation to allow subsequent expansion ofproject activities. It should also be noted that activities under Component 2 are demand-driven, which makes calculating the exact amount ofannual expenditures difficult and thus possibly subject to change after project start-up.
5. Contingencies, inflation and exchange rate: All costs have been estimated in US dollars, and the foreign inflation rate was calculated at 2%. Local inflation rate, based on information from the IMF and World Bank country database, have been estimated at 8.3% for 2007, 5.9% for 2008, 5.0% for 2009 and 2010, and 4.7% for the last 2 years. Furthermore, a constant exchange rate was used for the duration of the project. Physical contingencies were adjusted to the specific expenditure category and range from 5 - 15 percent.
6. Taxes and duties: Taxes and duties range from 10 - 40%, depending on the type of expenditure, but no taxes are levied on local consultant services. The project costs are inclusive oftaxes.
7. Project financing: The project will benefit from different sources of funding, some of which are directed to specific components. The borrower will also contribute in terms of personnel and office space/equipment, in addition to cash contribution of US$4.12 million as counterpart funds. The PHRD funds are specifically tied to capacity building activities, and have hence been used in their entirety to help fund activities under Component 1. Beneficiary contributions have been limited to Component 2 as a matching grant scheme. Given the types of eligible sub-projects, a cash andor in-kind contribution of 10% were deemed reasonable (based on the experience in other countries in Africa as well as discussions with stakeholders). Furthermore, Operation and Maintenance (O&M) was calculated over the life of the project as a percentage of the value of vehicles (25%), office equipment (1O%), construction/ rehabilitation (5%) and sub-projects (2%).
63 Annex 6: Implementation Arrangements ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
Project Implementation Levels:
1. The project will be implemented at four levels: national, provincial, municipio, and comunallocal. Although the project is fully integrated in the Agricultural Development Institute (ADI) ofthe Ministry of Agriculture and Rural Development (MINADER), from the national to the municipio level, there will be strong coordination and consultation mechanisms with the relevant government stakeholders and authorities at these different levels:
(iii) At the National Level. MINADER will be responsible for the overall implementation of the project, in full consultation with the other relevant Ministries at the national level that are involved, in order to ensure that the project activities are consistent with national policies:
e A Project Coordination Committee (PCC), chaired by the Minister (or -by delegation- by the Vice Minister) will have the overall decision making responsibility regarding the management of the project, including approval of work plans and budgets;
e The Director General ofADI (within MINADER) will be the executive level head responsible for strategic direction ofthe project;
e A Project Implementation Unit (PIU), headed by a Project Coordinator, will be established within AD1 (within MINADER) and will be responsible for day-to- day management ofthe project;
e A small executive Project Implementation Sub-committee (PISC), under the PCC, will be established to speed-up decisions and procedures.
(ii)At the Provincial Level. ADI will be responsible for project implementation, in coordination and consultation with the provincial government and provincial level representatives ofthe other Ministries that are involved.
e A Provincial Project Coordination Committee (PPCC), chaired by the Vice- Governor (economic development) will oversee project implementation, including monitoring local project progress and making decisions in line with the objectives and institutional arrangements that are consistent with the project document and legal agreements. The Provincial Director of AD1 (within the provincial government) will be responsible for strategic direction of the project at the Provincial level;
e A Provincial Project Implementation Unit (PPIU), headed by a Provincial Project Coordinator, will be established within the provincial AD1 (within the provincial
64 government) and will be responsible for (at the provincial level) day-to-day management ofthe project;
A small executive Provincial Project Implementation Sub-committee (PPISC), under the PPCC, will be established to speed-up decisions and procedures.
(iii) Municipio. The local EDA (Agricultural Development Office ofADI) will be responsible for project implementation, in coordination and consultation with the Municipio administration. The EDA will obtain the consent of the Municipio administration before forwarding sub-proj ect proposals to the provincial level.
(iv) Comundocal. The main level for the implementation of sub-projects is at the level of rural communities/villages (aldeias) and smallholder farmer groups and associations.
Project Implementation Arrangements:
2. During project preparation, it was considered to design project implementation arrangements that would fully respond to the government’s nascent decentralization program. However, it was felt that the policy, institutions and disbursement mechanisms associated with the decentralization program were not yet sufficiently clear and mature. Nevertheless, the proposed project implementation arrangements include coordination and consultation mechanisms (committees) that could fairly easily be transferred to similar mechanisms (councils) that would be established under the decentralization program. This is to avoid that project implementation would depend on the decentralization process; while at the same time ensuring that it is compatible with the decentralization process.
3. The Project Implementing Agency. At the Government level, MINADER is the project implementer. This Ministry will be accountable to the Government of Angola, the World Bank and IFAD for the management and oversight of the project in order to attain its objectives. This will include the management of resources in a transparent and effective manner. Within MINADER, however, the project will be implemented by and integrated in ADI.
4. Project Coordination Committee. The PCC, chaired by the Minister ofAgriculture and Rural Development (or by the Vice-Minister to whom he delegates this task), will: (i)provide strategic guidance; (ii)promote inter-ministerial coordination.; (iii)review and approve the Annual Plan and Budget prepared by the PIU; (iv) review and approve the annual reports ofthe project and decide on corrective measures to solve problems and issues; (v) review decisions made by the PISC and the PPISCs; and (vi) issue directives to guide future project interventions, methods and criteria. The Director General of AD1 will be the Secretary of the PCC. The PCC will be composed of the National Directors and the Director Generals of MINADER, and representatives of the following Ministries: Planning, Finance, Commerce and Trade, Urban Affairs and Environment, Family and Women. The composition and tasks of the PPCCs will reflect the composition and tasks of the PCC, including the provincial level representatives of MINADER and the other Ministries represented in the PCC.
65 5. Project Implementation Unit. At the specific request of MINADER, a national level Project Implementation Unit (PIU) will be created in MINADER, which will: (i)be responsible for project coordination and management of fiduciary issues in conformity with the standards and requirements agreed upon with the World Bank and IFAD; and (ii)manage the project in accordance to the project document (PAD). It will consist of a central PIU and three provincial project implementation units (PPIUs).
6. The PIU will be accountable to the Director General of ADI. The PIU will include: a Project Coordinator a Financial Manager, a Procurement Officer and an (ADI-staff) Accountant, as well as a Monitoring and Evaluation Officer, a Communication Specialist and a Logistical Assistant. In case where these positions are filled by international consultants, each international consultant must have a local counterpart to improve sustainability and continuity after the international consultant has completed hisher assignment.
7. The three PPIUs will be accountable to the Provincial Directors ofADI. Each PPIU will include: a Provincial Project Coordinator, a Financial Accountant, a Procurement Officer, a Communication Specialist and a Monitoring and Evaluation Officer. These will all be recruited locally. It is proposed that the Provincial Project Coordinator would also take up the role of Training Coordinator. In addition, a team of three locally recruited technical specialists, consisting ofan Agronomist, an Agribusiness Specialist and a Rural Engineer, will be hired. One specialist would reside in each provinceFPIU, and they would travel to the other provincesPPIUs, as needed. Additional short-term consultants will be hired, as required.
8. Project Implementation Sub-committee of the PCC. The PISC is a small executive and technical sub-committee ofthe PCC that will consist of (at least) the AD1 Director General, the Project Coordinator and the Financial Manager. Its task will be to: (i)speed-up decisions and procedures; (ii)approve sub-project under component 2 (agricultural investment support) that require central level decision making (based on the feasibility studies prepared by the PlU); (iii) propose the agenda for the PCC meetings and prepare the support documents; (iv) propose the Annual Plan and Budget to PCC for analysis and decision; and (v) submit the Annual Report of the project. The PISC will, in addition, include a representative of NGO or civil society and a representative ofthe private sector when deciding on the approval ofsub-projects
9. The PPISC will include the Provincial Director of Agriculture, the Provincial Director of AD1 and the Provincial Project Coordinator. Its task will be to: (i)speed-up decisions and procedures; (ii)approve sub-projects under component 2 that require provincial level decision making (based on the feasibility studies prepared by the PPIU), (iii)recommend for approval to the central level those sub-projects that require central level decision making; (iv) approve the provincial level Annual Plan and Budget prepared by the PPIU for submission to the PIU; and (v) approve the provincial level Annual Report prepared by the PPIU for submission to the PIU. The PPISC will, in addition, include a representative of civil society or NGO and a representative ofthe private sector when deciding on the approval ofsub-projects.
10. EDAs. The agricultural activities and marketing take place on the farms and in the villages, at comuna and municipio level. Given the nature of the project, implementation at the field level is the most important. However, the administrative and technical capacities at these
66 levels are generally weak to very weak. It is for this reason that the project will provide both capacity building and targeted technical assistance. To make the project work, the local EDAs will have to carry out their work in accordance with their usual hctions (training, extension, technical advise, fertilizer program, etc.). However, many or most EDAs will require substantial capacity building before they are actually capable to do so. To speed-up and facilitate this process, the project will: (i)assist in capacity building of the EDAs; (ii)put technical assistance at the disposal of the EDAs; and (iii)where necessary or desirable, engage services providers (including NGOs) to assist the EDAs in their work.
Sub-proiect Cvcle Manapement and Implementation Arranpements:
11. Component 2 ofthe project will provide demand-based support, in the form ofmatching grants, to rural communities and smallholder farmer groups, for small-scale productive agricultural infrastructure, production, processing and marketing sub-proj ects.
12. Eligible to receive support to finance agricultural sub-projects:
(9 Rural communities/villages (aldeias), will be eligible to receive support, provided that the sub-project proposals are the outcome of a facilitated community-level participatory planning exercise with a cross section of the population, including women and young people.
(ii) Smallholders farmer groups or associations will also be eligible for support, provided that they are either registered or in-formally recognized by the local community and authorities; they should have a democratic structure, with elected president, secretary and treasurer, as well as regular meetings, and should be able to keep records. The sub-project proposals should result from a facilitated participatory planning exercise in which all (or almost all) members ofthe group participate.
(iii) Not eligible for project supports are:
(a) Individuals;
(b) NGOs, these can facilitate a participatory planning exercise at group or community level, and they can be contracted by these communities to provide services and assistance, but they do not themselves qualify for funding support of sub-projects;
(c) Groups that include in their list of members staff or members of: (1) the Project Coordination Committees at all levels; (2) the PIU, AD1 and EDAs; and (3) local government (administrators, assistant administrators, etc.).
13. The sub-project cycle includes the following steps and elements:
(0 Identijkation, which originates at the beneficiary level, through a facilitated participatory development planning exercise, resulting in an identified sub-project
67 proposal. The sub-projects would be initiated upon request by the communities and smallholder fmer groups and would be prepared with the assistance of service providers, either the EDA extension workers or NGOs/CBOs that have been trained for this task under component 1'. Component 1 will also support the formation and capacity building of smallholder farmer groups and associations to meet eligibility criteria and qualify for sub-project support. The sub-project proposals are submitted to the local EDA
(ii) Appraisal, EDA prepares, in coordination with the municipio administration, the sub- project documentation for submission. It will obtain the municipio's consent for any sub- project proposal before forwarding it to the provincial level. The EDA can mobilize technical assistance from the PPIU to assist in the sub-project preparation. All sub- projects are screened for technical, financial, social and environmental feasibility. Sub- projects prepared with the assistance of NGOs andor CBOs should be in compliance with the Project Implementation Operations Manual and should be channeled through the EDAs, The submission would include references to the expected technical, social, financial, economic and environmental aspects ofthe sub-project proposals;
(iii) Evaluation, all sub-project proposals are evaluated by the PPIU. This includes verification of all eligibility and feasibility criteria. Based on the total project cost, projects will be referred to different levels ofapproval, as described below;
(iv) Approval, depending on the project cost, the sub-projects are approved either by the PISC or the PPISC. Initially, sub-projects up to US$50,000 will be approved at the provincial level by the PPISC (first two proposals for each category to be cleared by the Bank), and sub-projects in the range ofUS$50,000-100,000 will be approved at the central level by the PISC (with prior review and clearance by the Bank);
(v) Implementation, depending on the classification ofthe sub-projects, either the PIU or the PPIU will be responsible for the administrative procedures (financial and procurement) of sub-project implementation. Whenever possible and justifiable, procurement will be done with the full involvement ofthe beneficiaries.
14. Three Categories of sub-projects are defined:
(0 Sub-projects with a high public value and/or use content, for which the matching grant ratio will (initially) be set at 90% project contribution and 10% beneficiary contribution (either in cash or in kind). These sub-projects include:
(a) Productive rural infrastructure sub-projects, such as the establishment or rehabilitation and improvement of small-scale irrigation and drainage works (maximum 50 hectares), small-scale earth dams to harvest and store water (maximum dam height less than 10 m), shallow wells and boreholes for (drinking) water, dip-tanks for livestock parasite control, rural market facilities, simple livestock slaughter facilities, small-scale storage structures, spot-improvement of feeder roads, river crossing points such as fords or small bridges, etc.
68 (b) Sub-projects that have a positive impact on the environment, such as gully and erosion control and reforestation, etc.
(ii) Sub-projects that naturally reproduce and can be further distributed, for which the matching grant ratio will (initially) be set at 90% project contribution and 10% beneficiary contribution (either in cash or in kind), under the condition that the beneficiary group agree to a fbrther distribution mechanism under which the whole group or the whole community will eventually benefit. These sub-projects include:
(a) Livestock, including cattle (for meat, milk and animal traction), as well as smaller animals, such as goats, sheep and pigs (particularly appropriate to assist female headed households), etc.
(b) Seed multiplication, multiplication ofvegetative planting material (cassava, sweet potato), fruit tree nurseries and orchards, etc.
(iii) Sub-projects that largely consist of equipment that requires a business-type use and management to be sustainable and profitable, for which the matching grant ratio will also be set at 90% project contribution and 10% beneficiary contribution (either in cash or in kind), under the condition that the beneficiary group has a contractual agreement with one or more of its members to use and manage the equipment as a micro-enterprise, providing services to the whole group andor community. These sub-projects include:
(a) Agricultural production equipment, such as tractors and animal traction equipment (ploughs, disc harrows, rippers, etc.), sprayers, pumps, etc. (b) Agricultural post-harvest treatment and value adding processing equipment, such as: maize/cereal/cassava mills, hullers and huskers, oil presses, fruithegetable dryers, milk chillers, honey extractors, etc. (c) Agricultural marketing equipment, such as transport equipment (ox-cart, trailer), etc.
(iv) Negative list. The operational manual of the project will include a negative list of activities that will not qualify for funding support, this would include:
(a) Sub-projects that would disturb or distort the market and its development. For instance, farm inputs, such as seeds and agrochemicals would not qualify for support, with one exception: seed multiplication and multiplication of vegetative material sub-proj ects; (b) Sub-projects that have a negative impact on the environment andor do not comply with the Environmental Safeguards, such as: (i)any sub-projects not screened for environmental or social impacts; (ii)sub-projects with any activities inside protected areas; (iii)dams more than 10 meters high; (iv) sub-projects requiring the use of agrochemicals in WHO categories IA, E3 or H; (v)sub- projects that would damage non-replicable cultural property; (vi) sub-projects involving logging in natural forests, or processing of timber other than from
69 plantations; and (vii) sub-projects that require the use of water from international rivers; (c) Sub-projects for private or non-agriculture related use, such as: houses, schools, health centers, etc. (d) Sub-projects in which the beneficiaries are members or staff of: (i)the Project Coordination Committees at all levels; (ii)the PIU, ADI, and EDAs; (iii)local government (administrators, assistant administrators, etc).
Cost-sharing Ratios and Funding Ceilings:
15. The cost sharing ratios for these three categories of sub-projects will initially be set at 90% project contribution and 10% beneficiary contribution. The ceiling for funding support for a sub-project will be equivalent to US$lOO,OOO, and some of sub-projects may consist of a combination of smaller (micro-) projects that have been grouped together and consolidated for practical reasons. The matching grant cost-sharing ratios, funding ceilings, and the decision- making levels that apply will be periodically reviewed and recalibrated to take account of changing circumstances and lessons learned during implementation.
70 Annex 7: Financial Management and Disbursement Arrangements ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
1. The financial management assessment was carried out in accordance with the Financial Management Practices Manual issued by the Financial Management Board on 3 November 2005. The objective of the assessment was to determine whether the implementing entity has acceptable financial management arrangements, which will ensure: (1) the hnds are used only for the intended purposes in an efficient and economical way, (2) the preparation of accurate, reliable and timely periodic financial reports, and (3) safeguard the entities’ assets.
2. The overall conclusion of the financial management assessment is that the project’s financial management risk has an overall rating ofsubstantial. The current financial management arrangements do not satisfy the Bank’s minimum requirements under OP/BP 10.02. In order to establish an acceptable control environment and meet the Bank’s FM requirements, the measures included in the FM action plan should be implemented by the dates indicated.
Country Issues:
3. The public expenditure management and financial accountability review carried out by IDA in collaboration with the government in 2004 concluded that there are major institutional weaknesses which raise the fiduciary risk related to the management of public bdsin the country. And, revealed also that deficiencies in country’s public financial management impair good macroeconomic management and perpetuate a situation of fiscal fragility. At same time, the government has achieved some progress in public financial management reforms, including roll-out ofthe “Sistema Integrado de Gestlio Financeira do Estado (SIGFE)”. However, a PFM environment remains weak. Therefore, for management of the project a “ring-fenced” approach to mitigate fiduciary risks will be used.
Risk Assessment and Mitigation:
4. The key financial management related risks that project management may face, and the mitigation measures are summarized below.
Risk Risk Risk Mitigating Measures Conditions of Residual Rating incorporated into the Project Design Negotiations, Risk Board or Effectiveness Inherent Risk Country Level H The government is undertaking a H Country FM number of PFM reforms initiatives, systems would including roll-out of SIGFE. However, not be adequate country PFM system remains weak. to encourage use of country systems
71 Entity Level S MINADER will be responsible for the Effectiveness S Entity would overall project implemintation. (hiring of FM not have Project Implementing Units (a Central Specialist)- Project PIU and three Provincial PIUs) will be Implementation established within AD1 under capacity MINADER. Qualified and experienced (including Financial Management Specialist and inadequate FM two Accountants will be appointed to systems) to the PIUs before credit becomes manage the effective, and the Central PIU will be project responsible for the overall financial management operations of the project. Project Level S The FM specialist recruited for the Effectiveness S The project Central PkJwill be required to design, (preparation of may not have document (in an FM procedures FM Manual)- adequate FM manual) and implement a satisfactory systems to FM system acceptable to the Bank for Manage project use by the project. Funds Control Risk S Budgeting M The annual budget will be prepared None M Annual Budget based on the government policy may not cover guidelines and regulations. The all project procedures for the preparation of the activities, be at annual budget and cash forecast (to be variance with included in the interim un-audited Government financial reports) will be documented in Policy or the Financial Procedures Manual. The procedures for budget will cover all project activities its preparation and will be prepared two months before may not be the commencement of the period to documented. which it relates. Accounting S The accounting policies and procedures, Effectiveness S Accounting including chart of accounts, will be (preparation of Policies and documented in the Financial Procedures FM manual) Procedures Manual. may not be documented Internal H Policies and procedures to be employed Effectiveness S Control by PIU in accounting and managing the (preparation of Project project funds will be documented in FM manual) Management project Financial Procedures Manual and and a Project Implementation Manual. Implementation procedures may not be documented to guide project staff.
72 Funds Flow S The management of finds will be S Disbursements centralized in the Central PIU. may be slow Transfers will eventually be made to because of Provincial PrcTs once they have been delayed separately assessed and certified as submission of capable of handling their own FM and Withdrawal treasury activities. Advantage will be Applications taken of IT facilitation where it is possible to speed up submission of provincial returns and replenishments. Financial S The financial reporting system will be Effectiveness S Reporting documented in the Financial Procedures (Preparation of Quarterly Un- Manual and formats ofinterim un- FM manual) audited audited financial reports were agreed Financial during negotiations. Advantage will be Reports may taken of Information Technology not be whenever possible to speed up submitted on preparation ofreports. time Auditing M Terms of reference to select Agreed during M Audit Reports independent auditors with relevant Negotiations may delay qualifications and experience (TORSfor audit satisfactory to IDA it is a condition for and format of effectiveness. Selection ofauditors is a annual financial dated covenant and should take place statements). Dated within four months after effectiveness. Covenant (Within four months of project effectiveness) - appointment of auditors ~ Overall Risk S S
5. In view of the general country financial management issues and the issues peculiar to the project, the overall financial management risk rating for the project is substantial. The overall residual financial management risk remains substantial due to the fact that the agreed actions have not been addressed. Once the mitigating actions are implemented and assessed, the residual risk is expected to be no greater than moderate.
Implementation Entity:
6. Given the scope of the project, widely dispersed spending units with large number of small transactions, limited capacity ofthe government, weak financial management capacity, and the government of Angola intentions, a PIU will be established to be responsible for overall management of the project (including fiduciary aspects). This unit will be within the ADUMINADER, and the project coordinator will be reporting to Director General of ADI. PPIUs will be established within AD1 provincial department in each participating province. Given the need ofbuilt the capacity within ADI, accountants at PIU and PPIUs will be appointed under government employment conditions. The accountants at provincial level will be reporting
73 to the provincial coordinator. And, they will be guided and coached by a qualified and experienced international level Financial Management Specialist. The project hnds may be used to train accountants responsible for financial management of the project. The Bank encourages government officials and staff handling financial management issues of projects to have greater exposure to the World Bank Financial Management, Procurement, and Disbursements procedures by attending training events in the region, e.g. training conducted by Malawi Institute ofManagement or Lagos School ofBusiness.
Budgeting:
7. The annual budget will be prepared based on the government policy guidelines and regulations. The procedures for preparation of annual budget (to be monitored using the interim un-audited financial reports) will be documented in the Financial Procedures Manual to be prepared by project effectiveness.
Accounting:
8. The project’s accounting records will be maintained using the modified cash basis of accounting. The project will comply with International Accounting Standards (under the Cash Basis of Accounting), as promulgated by the International Federation of Accountants (IFAC). The accounting policies and procedures, including chart of accounts, will be documented in the Financial Procedures Manual to be prepared by project effectiveness.
9. The Project Implementation Entity will make operational an accounting information system by effectiveness.
Internal Control and Internal Auditing
Staffing:
10. The overall responsibility for financial management matters for the project will rest with the project Financial Management Specialist who will report to the Project Coordinator. During the assessment, GOA and the Bank agreed that the project will finance the recruitment of a qualified and experienced Financial Management Specialist. The project Financial Management Specialist will be appointed before effectiveness ofthe project. In order to build capacity within ADUMINADER, the project Financial Management Specialist will also train ADUMINADER accounting staff, to which project FM responsibilities will be allocated. It was also agreed that the ADUMINADER will appoint an accountant (ADUMNADER staff) for the PIU at central level to understudy the project Financial Management Specialist.
11. For each participating province, an accountant will be appointed for the project, under government compensation conditions. The satisfactory appointment of accountants at this level will be a condition for achieving transfer of funds to the province, as opposed to management of the funds from the Central level. The project provincial accountants will report to the provincial coordinator and supervised by the project Financial Management Specialist. They will benefit from training courses to be paid under project finds.
74 Internal Controls:
12. The accounting systems, policies and procedures to be employed by PIU in accounting and managing the project funds will be documented in the project financial procedures manual. The manual will describe the accounting system, internal control procedures, basis of accounting, standards to be followed, authorization procedures, financial reporting process, budgeting procedures, financial forecasting procedures, and contract management. In addition, the manual should document procedures to be undertaken for the replenishment of the Designated Accounts and auditing arrangements. The preparation of the Financial Procedures Manual is a condition of effectiveness.
Internal Auditing Function:
13. Internal audit function in Angola is mostly carried out by the National Inspectorate of Finance (INF). The INF is weak; therefore the impact on internal controls mechanism of the project may be limited. And, considering weak INF capacity, overall financial management risk of the project, and widely dispersed spending units, there is need to put in place a strong internal control mechanism and quality control assurance system at all levels. Therefore, the project will appoint qualified internal auditor with relevant experience with donor-financed projects within four months after project effectiveness.
Funds Flow and Disbursement Arrangements:
14. The diagram below depicts the funds flow mechanism that will be deployed for the project.
75 IDA/MTNADER - PTU
4 A
Suppliers of Goods and Services and sub-projects
Kev -F Flow of funds (USD for IDA, PHRD and FAD funds) Withdrawal applications ------+ Reportshvoices
...... F
* All payments will be made by the PIU to suppliers of all goods and services and no funds will be advanced to the PPIU bank accounts until such time that each PPIU is staffed with an accountant and has been assessed by the Bank as ready to handle its own jnancial management requirements.
76 15. Funds will flow from IDA, PHRD, and IFAD to specific bank accounts to be opened and managed by the Central PIU within ADI/MINADER. IDA and IFAD funds will finance all three project components, based on an agreed sharing basis; while PHRD funds will finance only activities ofComponent 1: Capacity building.
16. The Central PIU will initially handle payments for project expenditures incurred at both central and provincial levels. Provincial PIUs will be expected to engage a full compliment of staff, including high level provincial accountants. The Bank will carry out FM assessments of each province when the necessary accounting staff is in place, in order to certify the province as ready to handle its own FM requirements. Upon certification, the Central PIU will advance funds to dedicated project bank account at the certified provincial PIUs in respect of expenditures at that level. Transfers will be for monthly expenditure requirements only as reflected in the Annual Action Plan and will be reconciled back to the Designated Accounts at month end, so that provincial balances are as close to zero as possible each month.
17. Concerning fbnds flow arrangements for matching grants, the four envisaged alternatives are: (i)funds will be transferred to specific bank accounts to be opened and maintained by the organization, in cases where there is capacity to manage resources; (ii)PIU or PPIU will make direct payments to providers ofgoods and services on behalf ofthe beneficiary organization; (iii) funds will be transferred to specific institutions, such as NGOs and local reliable associations, that will manage resources on behalf ofthe community; and (iv) PPIU will issue a bank check to the organization and representatives of the organization will withdraw funds at nearest commercial bank, this alternative will be used in exceptional cases and when amounts involved are not significant. For all envisaged alternatives, funds will be made available to the organizations based on agreement to be signed between them and the project. Details of financial management arrangements for matching grant are documented in the Implementation Operations Manual.
Disbursement Arrangements:
18. The financing plan and disbursement for the project are summarized below in Table 1.
Table 1: Disbursement by Co-financiers
77 19. Disbursement ofthe IDA, and PHRD, project fund will be done on transaction basis. The project will have the option to transit to the report-based disbursement once the FM system and project’s forecasting capacity have been assessed as satisfactory for that mode of disbursement. Once in the report-based disbursement mode, quarterly interim un-audited financial reports will be acceptable as the basis for disbursements. These reports will include information under three main categories: (i)project financial statement which includes a summary of sources and uses of funds, an updated six-month forecast, Designated Account activity and reconciliation statements; statements of eligible expenditures by disbursement category for contactdother expenditures abovehelow the procurement prior review thresholds (ii)a project progress report explaining variances between actual physical and financial progress versus forecasts; and (iii)a procurement management report showing procurement status and contract commitments.
20. An advance will be made into Project Designated Accounts (one each for IDA and PHRD funds), to be maintained by the Central PIU, at the inception of the project. The Designated Accounts shall be denominated in United States Dollars. The advances will be used for eligible project expenditures financed by the respective donors. After every subsequent quarter, the project will submit IFRs no more than 45 days after the end ofthe quarter. The project will also be required to submit Withdrawal Application every month to replenish any eligible expenditures incurred during the period and to ensure project has adequate resources to execute project activities.
Banking Arrangements:
21. PIU will open and maintain three separate bank accounts in a Commercial Bank acceptable to IDA, for the purposes ofimplementation ofthe project:
e Desimated Account A: Denominated in US dollars, disbursements from the IDA credit will be deposited in this account to finance activities under the relevant components;
e Designated Account B: Denominated in US dollars, disbursements from the PHRD grant will be deposited in this account to finance activities under component 1: Capacity Building; and
e Designated Account C: Denominated in US dollars, disbursements from IFAD will be deposited in this account to finance activities under the relevant components.
22. In addition to these, once certified, PPIU shall establish an operational bank account at each participant province for deposit offunds from the main three accbunts maintained at central level. Transfer to provincial bank accounts will be based on monthly plans to be prepared by each province. The reports to central level will be also on monthly basis. And, the supporting documentation will be kept at provinces and in case a province is not submitting its monthly report, the transfer for the following month to that province should not be made.
78 Financial Reporting:
23. The project will establish a financial management system capable of producing required financial reports to manage and to monitor the project. Interim un-audited financial reports will be produced on a quarterly basis. The contents of these reports should at least consist of the following: a statement of sources and uses of funds, a statement of uses of funds by project components and activities, and a summary variance report explaining financial performance for the period.
24. The Central PIU will also produce annual project financial statement, which will comprise of:
a. A Statement of Sources and Uses of Funds / Cash Receipts and Payments which recognizes all cash receipts, cash payments and cash balances controlled by the entity for this project; and separately identifies payments by third parties on behalf ofthe entity;
b. The Accounting Policies Adopted and Explanatory Notes. The explanatory notes should be presented in a systematic manner with items on Statement of Cash Receipts and Payments being cross referenced to any related information in the notes. Examples of this information include a summary offixed assets by category ofassets.
A Management Assertion that IDA/PHRD funds have been expended in accordance with the intended purposes as specified in the relevant World Bank legal agreement.
25. Once certified, each PPIU will produce on regular basis financial reports required to manage and monitor the implementation of project activities at provincial level. The PPIU will produce and submit quarterly financial reports to the project implementation unit at central level. The financial reports to be produced by PPIU will be used to produce consolidated interim un- audited financial reports to be submitted to Bank within 45 days after the end ofcalendar quarter. The formats and contents of quarterly financial reports to be produced by PPIU will be documented in Financial Procedures Manual.
External Audit:
26. The project financial statements will be audited by independent auditors in accordance with International Standards on Auditing as promulgated by the International Federation of Accountants (IFAC) and the audit report will be submitted to IDA within 6 months after the financial year-end. The costs incurred for the audit will be borne by the project funded by IDA. The arrangements for the appointment ofthe external auditors ofthe project financial statements shall be communicated to IDA through agreed terms ofreference.
27. The auditors will be required to express a single opinion on the project financial statements, as per the guidelines “Financial Management Practices in World Bank-Financed Investment Operations”, of November 3, 2005 and the audit report will be submitted to IDA within 6 months after the financial year-end. In addition, a detailed management letter containing the auditor’s assessment of the internal controls, accounting system and compliance with
79 financial covenants in the IDA Financing Agreement, and suggestions for improvement will be prepared and submitted to management for follow-up.
28. The compliance rate of Angola portfolio is below to the Afr-ica Region due to delays in submission ofaudit reports. In order to ensure that the first audit report ofthe proposed project is submitted to Bank within 6 months time frame, appointment of external auditors should take place following effectiveness of the project. Therefore, by effectiveness the Project Implementing Entity has furnished to the Association terms of reference, in form and substance satisfactory to the Association, for the selection of independent auditors for the Project.
29. The chart below identifies the audit reports that will be required to be submitted by the project implementing entity and the due date for submission.
Audit Report Due date 1) Continuing entity financial statement Not applicable 2) Project specific financial statements 30" June of each following year 3) Special Opinions Not applicable 0 SOE 0 Designated Account
Conditionality:
Apreed durinp Negotiations:
The formats ofIFRs 0 Agreement on the format ofAnnual financial statements
For Effectiveness:
0 Qualified and experienced Financial Management Specialist appointed; 0 The Project Implementing Entity has established an accounting information system.; and 0 The Project Implementing Entity has adopted a financial management manual that documents a financial management system acceptable in form and substance to IDA.
Dated Covenants:
0 Appointment ofInternal Auditor for the project - not later than 6 months after effectiveness 0 Appointment ofExternal Auditor for the project - not later than 6 months after effectiveness
Action Plan:
80 30. In order to establish an acceptable control environment and to mitigate financial management risks the following measures should be taken by the due dates as indicated in the financial management action plan below.
Responsibility ComDletion date ADyMINADER Agreed during I Negotiations ADyMINADER I Effectiveness ADIRMINADER I Agreedduring Negotiations I 4 I Qualified and experienced Financial Management has ADyMINADER Effectiveness I been appointed 5 I Preparation of FM Manual acceptable in form and substance to the Bank 6 Establish a financial management and accounting system, 7 Hiring of External Auditor. months after effectiveness 8 Hiring ofInternal Auditor ADIMINADER Not later than 6 I months after effectiveness ADyMINADER Not later than 3 months after effectiveness to achieve
Supervision Plan:
31. Financial management supervision will be risk based and conducted by the Bank Financial Management Specialist (FMS), initially at the rate of two field visits per year in line with the substantial risk rating. The FMS will also:
Conduct an initial FM field visit to confirm the successful disposal of effectiveness/disbursement conditions; Review the financial component of the quarterly interim un-audited financial reports; and
32. Review the Audit Reports and Management Letters from the external auditors and follow-up on material accountability issues by engaging with the TTL, Client, and/or Auditors.
81 Annex 8: Procurement Arrangements ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
A. General
1. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised October 2006; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, revised October 2006, and the provisions stipulated in the Legal Agreement. The Project is co-financed by the International Fund for Agriculture Development (IFAD) and the Japan PHRD Grant. Procurement for the co-financing will also be carried in accordance with the Bank Procurement and Consultants Guidelines. The various items under different expenditure categories are described in general below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan.
2. The last Country Procurement Assessment Review (CPAR) for Angola was conducted in October 2002. The Action Plan of the CPAR provided for (i)Identifying a champion to spearhead the Procurement reform and organize a high-level workshop; (ii)Activate/empower the task force to pilot the reform implementation and the creation of a comprehensive procurement framework; (iii)Review procurement legal and regulatory framework; (iv) Establish a directorate at Ministry of Finance to undertake procurement policy formulation and procurement analysis; (v) Introduce record keeping to establish a transparent procurement system in at least three Ministries during a first year pilot program; (vi) Propose sound reorganization of procurement processing and train procurement staff in pilot ministries; and (vii) Strengthen National Inspectorate of Finance, the High Authority Against Corruption and the external controls by the Tribunal ofAccounts.
3. In March 2004, the Government of Angola produced and sent to the Bank its own procurement reform document which is based on the CPAR and which provides for the creation of a regulatory body. The Bank is supporting the Procurement Reform under the Economic Management Technical Assistance Project (EMTA). The reform is still in the early stage of implementation, a task force was appointed by government and a firm to draft the New Procurement Code was selected in late 2005 but performance to date was rated unsatisfactory by the Government. Efforts are ongoing to the replacement ofthe firm.
4. Procurement activities within the Ministry of Agriculture are done centrally under the Secretaria Geral and under national regulations that, as per the last CPAR, were found as inadequate for use by IDA-financed projects. In addition, the Ministry, as well as the Agricultural Development Institute (ADI), do not possess previous experience under Bank financed project, nor there is any staff within the Ministry and AD1 with prior experience with Bank fiduciary requirements and consequently the risk for carrying out procurement is high. To address the high risk, at national level Project Implementation Unit will be staffed with a qualified Procurement Specialist, to be recruited by effectiveness and Procurement Audits to be
82 carried out annually. Given the decentralized approach ofthe project, three provincial PIUs will also be established to ensure adequate support to rural communities and smallholder groups.
5. With the measures above, the Procurement arrangements for the Project are considered adequate. The Procurement Plan will be updated at least annually, or as required, to reflect the actual project implementation needs and improvements in institutional capacity.
Procurement of Works:
6. Works procured under this project would include: Rehabilitation and extension of buildings and agricultural infrastructure, construction of new infrastructure. The procurement will be done using the Bank’s Standard Bidding Documents (SBD) for all ICB and National SBD agreed with or satisfactory to the Bank. Small simple works may be procured by requesting at least three written quotations from qualified contractors.
Procurement of Goods:
7. Goods procured under this project would include: office furniture, office equipment, information technology equipment, extension equipment, vehicles, motorcycles and didactic materials (including books), among others. Vehicles and motorcycles may be procured through IAPSO (United Nations agency). The procurement will be done using the Bank’s SBD for all ICB and National SBD agreed with or satisfactory to the Bank. Small value goods may be procured under shopping procedures. United Nations Agencies and Direct Contracting may also be considered with the Bank prior review and approval.
Procurement of Services (other than consultants’ services):
8. Services (other than consultants’ services) to be procured under the project will include services for contracts for management of fertilizer voucher schemes, installation and technical support of computerized systems, awareness campaigns, distribution of didactic materials, field surveys. The procurement will be done using the Bank’s SBD for procurement of services for all ICB and National SBD agreed with or satisfactory to the Bank.
Selection of Consultants:
9. Consultants’ services required would cover consultancies for: works, supervision of agricultural infrastructure; production and post-harvest extension, agribusiness and market development, sustainable managed agricultural, monitoring and evaluation systems and communications, training providers and advisory services.
10. Service providers, including NGOs, may be employed, in partnership with smaller local organizations at community level, to provide facilitation and community capacity development services across the project area.
11. All consulting service contracts costing more than US$ 150,000 equivalent for firms will be awarded through Quality and Cost Based Selection (QCBS) method. Contracts for highly
83 specialized assignments estimated to cost less than US$ 150,000 equivalent may be contracted through Consultants’ Qualification (CQS).
12. Least-Cost Selection (LCS) will be used for selecting consultants for assignments of a standard or routine nature (audit services) where well-established practices and standards exist estimated to cost less than US$ 100,000.00.
13. Single Source Selection (SSS) may be employed with prior approval ofthe Bank and will be in accordance with paragraphs 3.9 to 3.12 ofthe Consultant Guidelines.
14. All services of individual consultants (IC) will be procured under individual contracts in accordance with the provisions ofparagraphs 5.1 to 5.4 of the Guidelines. Only the selection of Project Implementation Unit Staff and other long term advises shall be subject to Prior Review by the Bank.
15. Short lists of consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely ofnational consultants in accordance with the provisions ofparagraph 2.7 ofthe Consultant Guidelines.
Grants under Community Participation:
16. Under the component Agricultural Investment Support, rural communities and smallholders groups, will receive matching grants. A total ofUS$26.4 million (US$23.55 million from IDA, and US$2.85 million from FAD) will be available to be accessed by established rural communities and smallholders groups. The grant amounts for approved sub-projects will have a ceiling of US$lOO,OOO equivalent with contributions, in kind or cash, from the beneficiaries ranging between 10% and 15% of the sub-project costs. Nevertheless, it is anticipated that the sub-project will have an average amount ofUS$24,000. The procedures for procurements in the sub-projects will be implemented by the grant beneficiaries and will follow community participation methods in accordance with procedures acceptable to the Association, which may include direct contracting whenever competition will not be readily available, as further elaborated in the Project Implementation Operations Manual. Due to the expected limited capacity of the rural communities to handle large contracts in the initial period of the project, procurement activities within a sub-project, estimated to cost more than US$50,000 will be implemented with the support ofthe Provincial PIUs.
Training:
17. This category would cover all costs related to the carrying out of the literacy programs, study tours, training courses and workshops, i.e. hiring of venues and related expenses, stationery, and resources required to deliver the workshops as well as costs associated with financing the participation of farmers in short-courses, seminars and conferences, including associated per diem and travel costs. Training programs would be part ofthe Annual Work Plan and Budget and will be included in the procurement plan. Prior review of training plans, including proposed budget, agenda, participants, location of training and other relevant details, will be required only on annual basis.
84 Operating Costs:
18. “Operating Costs” means reasonable expenditure directly related to the implementation, management and monitoring of the Project, consisting of expenditure for office rental, utilities, communication, insurance, fuel, salaries for the Recipient’s Staff in charge of the Project, and office supplies;.
19. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are included in the draft Implementation Operations Manual that has been prepared by the Borrower.
B. Assessment of the agency’s capacity to implement procurement:
20. The overall responsibility of carrying out Procurement activities will rest with the Agricultural Development Institute (ADI) ofthe Ministry ofAgriculture and Rural Development (MINADER).
21. AD1 will establish a Project Implementation Unit (PIU), headed by a Project Coordinator who will respond to the AD1 Director in his capacity of Project Director. For guidance and methodological support, AD1 Director will respond to a Project Coordination Committee headed by the Minister of Agriculture. At the Provincial level, a Provincial Project Implementing Unit (PPIU) will also be created under the Provincial Directorate ofADI.
22. The Project Coordinator at national level will be supported with full time staff, which will include a Financial Management Specialist, a Procurement Specialist, an Accountant, a Monitoring and Evaluation officer and a pool of short-term consultants, including an Agricultural specialist. The PPIU will include, among others, a Provincial Coordinator, a Finance Officer and a Procurement Officer.
23. Procurement activities will be managed by the Procurement Specialist, who will be supported by a procurement assistant identified within AD1 to ensure adequate capacity building within the Ministry ofAgriculture. The Procurement Specialist should possess qualifications and experience acceptable to the Bank, and will be responsible for the overall procurement activities including the coaching and training of the procurement assistant at the central level, and overseeing the implementation of activities by each of the three procurement officers located at the Provincial level.
24. The Procurement Specialist at the central level will be recruited by the Credit effectiveness. The disbursement for component 2 will be subject to the recruitment of procurement officers at provincial as part of the administrative capacity of local agriculture development offices while the provincial procurement officers are being recruited, all procurement activities shall be carried out by the national level Procurement Specialist.
85 25. The overall Country context for procurement is rated high risk, as per the last CPAR. Given the lack of previous experience under Bank operations the overall project risk for procurement is also high. When the above measures and the Action Plan below are filly implemented the project risk will be moderate to high. After one year ofproject implementation, an assessment ofthe agency capacity to carry out procurement will be made and the Project Risk will be re-assessed. The procurement thresholds may, if warranted, be reviewed accordingly.
Procurement Management Action Plan to Mitigate Procurement Risk: kisk 'MitigatiodAction bue Date 1.Implementing Agency (central level) capacity in Recruit the procurement specialist Effectiveness procurement not established Condition for 2' Units Recruit the three provincial procurement isbursements to provide officers with qualifications and experience support ,"f finds for acceptable to the Bank component 2 3. Procurement Establish an acceptable procurement filing- documentation not filed and record keeping system. Procedure Effectiveness systematically described in the Operations Manual. 4. Procedures for Produce an OperationsProcurement procurement not properly Effectiveness Manual, acceptable to the Bank established 5. PIUPPIU procurement Operations Manual should establish a staff not involved in all documentation flow, with procurement Effectiveness stages ofprocurement staff mainstreamed in the process of payment certification ofinvoices 6. No adequate controls and accurate knowledge of Establish a Contract execution monitoring Effectiveness contract execution system (part ofthe procurement manual) information 7. Weak internal capacity to PIUPPIU and key AD1 staff to Attend carry out procurement training on Bank procurement and Early in Project efficiently contracts management procedures; Implementation
26. It was agreed with the Government that prior to Project Effectiveness the Government will provide evidences ofhaving recruited, satisfactory to the Bank, a Procurement Specialist at National Level and prepared an Operations Manual that details all applicable procurement procedures and arrangements under the Project Implementation, inclusive of a record keeping and filing system and a contract monitoring system.
C. Procurement Audits:
27. Given the anticipated large number of relatively small contracts that will not require Bank prior review, the country context and the project risk above indicated, the need of a more systematic ex-post review is high. In addition to the semi-annual supervision missions by the Bank, the Government will carry out annual procurement audits ofthe project. These audits will
86 be carried out under terms and conditions and by independent consultants whose qualifications are acceptable to the Bank. The audits will include an action plan to improve performance, where required, which will be submitted to the Bank and discussed with Government.
D. Procurement Plan:
28. The Borrower, at appraisal, has developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team in May 2008 and is available at the Agricultural Development Institute, in the Ministry ofAgriculture and Rural Development (MINADER), in Luanda. It will also be available in the project’s database and in the Bank’s external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity, and should cover at least the next 18 months.
E. Frequency of Procurement Supervision:
29. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended semi-annual supervision missions to visit the field. Missions in the first 18 months shall include a Bank Procurement Specialist or a Consultant.
30. The thresholds for the use of the various procurement and selections methods are summarized below:
31. Procurement activities will be managed by central PIU until such time that PPIUs have been certified to be Procurement compliant.
87 Thresholds for Procurement Methods and Prior Review:
~~~ Expenditure Contract Value Threshold Contracts Subject to Prior Procurement Method Category (UW Review (US$) 1. Works >1,000,000 ICB All >500,000 - 1,000,000 NCB All 100,000 - 500,000 NCB Post Review <100,000 3 quotations Post Review (small works)
2. Goods and >500,000 ICB All Services (other 75,000-500,000 NCB First two contracts; and all than above $300,000 Consultants’ <75,000 Shopping None Services) DC
3. Consultants’ > 150,000 QCBS All Services <150,000 QCBS, LCS and CQS First two contracts Firms sss All
Individuals Procurement Specialists; IC All Project Units Staff IC All Other Type of individuals IC None sss All
F. Details of the Procurement Arrangements Involving International Competition
1. Goods, Works, and Services (other than Consultants’ Services)
1 2 3 4 5 6 7 Ref. No. Contract Estimated Procure Review by Expected Description cost Method Bank Bid-Opening Comment $000 PriorLPost Date S 1W C 1 Const 3 Building 420 NCB Prior ApriW2009 for EDAs 2W C1 Const 8 houses for 240 NCB Prior ApriW2009 Ext workers in Bie Province 3W C1 Const 8 houses for 240 NCB Prior ApriV2009 Ext workers Huanbo Province 3W C1 Const 8 houses for 240 NCB Prior ApriV2009 Ext workers Malange Provinces 1W C4 Rehabilitation 20 Shopping Post ApriW2009 Room for PIU-Luanda 2W C4 Rehabilitation 15 Shopping Post ApriV2009
88 (a) Contracts estimated to cost above $500,000 for works and $300,000 for goods and services per contract and all direct contracting will be subject to prior review by the Bank.
89 2. Consultants’ Services
2 3 4 6 7 8 Description of Estimated Selection Review by Expected Assignment cost Method Bank Proposals Comments PriorPost Subm Date Cap Building for 240 QCBS Prior Feb.12009 Farmers, Dealers, Associate Leaders, Facilitators, Extension workers Bit Province Cap Building for 240 QCBS Prior Feb. I2009 Farmers, Dealers, Associate Leaders, Facilitators, Extension workers Huambo Province Cap Building for 240 QCBS Prior Feb.12009 Farmers, Dealers, Associate Leaders, Facilitators, Extension workers Malange Province Training of 90 Post ApriV2009 smallholders 3 Provinces Functional 420 QCBS Prior May12009 Literacy Program Consultant for 100 IC Post May12009 Identify soil fertility Field Research 10 IC Post Marchl2009 fertility management
Communication 180 QCBS Prior SeptJ2009 Strategic PIU Punctual 40 IC Post Sept.12009 Technical Assistance (2) PPIU Punctual 60 IC Post Sept.12009 Technical Assistance (3)
90 1 2 3 4 6 7 8 Ref. Description of Estimated Selection Review by Expected No. Assignment cost Method Bank Proposals Comments Prior/Post Subm Date 1P C4 PIU Project 60 IC Prior Sept.12009 Coordinator 2P C4 PIU Finance 540 IC Prior Sept.12009 Management Spec 3P C4 PIU Procurement 540 IC Prior Sept.12008 Specialist 4PC4 PIULocal 35 IC Prior Sept.12008 I Procurement I I I I I Specialist 5P C4 PIU Sr. M&E 30 IC Prior Sept.12008 Specialist 6P C4 PIU Logistical 12 IC Prior Sept.12008 Assistant 7PC4 PIUOffice 12 IC Prior Sept.12008 Secretary 8PC4 PIUGOA 12 IC Prior Sept.12008 Accountant 9P C4 PPIU Project 118 IC Prior SepV2008 Coordinator(3) 1OP PPIU local 72 IC Prior Sept.12008 c4 Accountant 12P PPIU Local 72 IC Prior SepV2008 c4 M&E Specialist (3) 13P PPIUOffice 18 IC Prior Sept.12008 c4 Secretary(3) 14P Agronomist - one 30 IC Prior Sept.12008
(a) Consultancy services estimated to cost above US $150,000 equivalent per contract for firms and individuals selected for the position of Project Unit Staff and single source selection (SSS) ofconsultants will be subject to prior review by the Bank
(b) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.
91 Annex 9: Economic and Financial Analysis ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
1. Introduction. The economic and financial feasibility of the Project is determined through the application of the evaluation method commonly known as “discounted funds flow cost- benefit analysis”. FARMOD software, developed by the World Bank and FAO, is used for the application of this methodology. The financial analysis is conducted to assess if the targeted smallholders (see Annex 1 for description of beneficiaries) will get financial benefits that justify their adherence to and participation in the project. The economic analysis is carried out to determine the profitability of the project as a whole from the perspective of the country’s economy and the general interest. The discount rate adopted is 12% per year, considering that it reflects the cost of capital opportunity in Angola, and the period of time taken into account to make the projections of the discounted finds flow is set at 20 years.
2. Assumptions adopted to analyse the project. It is assumed that the project will benefit approximately 126,000 rural smallholder households, out of a total of200,000 families located in 25 commas of 12 municipios of the provinces of Bid (100,000 households), Huambo (50,000 households) and Malanje (50,000 households).
3. These 126,000 beneficiary smallholders have, on average, a 2.5 ha farm, of which they are at present cultivating, on average, 1.5 ha under rain-fed conditions, while using exclusively family labour at a (very) basic technology level. The total farmland of these 126,000 smallholders, i.e. the situation without Project, is estimated at 315,000 ha and the total cultivated area at 189,500 ha, the cultivation intensity is estimated at 60%.
4. The analysis is based on agricultural production increases that would be realized by these 126,000 smallholders, based on conservative estimates of (i)actual production increases (yield and area) as compared to potential increases, (ii)the time it will take for the project to effectively reach the targeted smallholders; and (iii)the time it will take these smallholders to realize these production increases. The 126,000 beneficiary smallholders would have three assumed levels of benefit:
(9 An approximate 24,000 smallholders will benefit from capacity building of the groups and organizations to which they belong (Component 1.1.i), as well as from on-farm productive agricultural investments (Component 2);
(ii) An approximate 40,000 smallholders will benefit from both capacity building of their groups and organizations (Component 1.1.i), as well as from more intensive, Farmer Field School-type, agricultural extension services (Component 1.1i);
(iii) The remaining 62,000 smallholders will only benefit from capacity building ofthe smallholder groups and organizations to which they belong (Component 1.1 .i).
92 5. The project is assumed to lead to production increases as a result of: (i)higher productivity per unit of labour and land in the crop and farm models as applied to smallholders with project as compared to smallholders without project (see below); and (ii)an increase ofthe cropping intensity (Le. area cropped) for smallholders with project as compared to without project. It is assumed that cropping patterns will not change and are the same for smallholders with and without project. Consequently, it is also assumed that no high value crops will be produced in new irrigated areas, but that only the irrigated area will increase in the with project as compared to the without project situation.
6. Given the generally low production levels - even by sub-Saharan standards - and the previous relatively high production levels, the dynamic situation in project area (with most ofthe farmers only recently returning to their land), and the large market for agricultural products in urban centres, agricultural smallholder production could rise significantly over a relatively short period. The assumed production increases for the different categories ofbeneficiary smallholders are presented in Table 1, and the phasing in ofbeneficiary smallholder in Table 2.
7. Prices. The analysis uses 2006 prices. The financial prices ofthe agricultural products to be sold by the smallholders represent “farm gate” prices and reflect the average value obtained over the last years. The prices ofinputs (operational and investment), services and labour, reflect the present market value for each of these. The market prices were determined by the project preparation team, based on information provided by: (i)other ongoing projects in the area; (ii) surveys conducted by MINADER; and (iii)farmers consulted during field validation visits.
8. All prices used are based on an assumed exchange rate ofUS$ 1 = Kwanzas 80.
9. The prices of “non marketable” products, inputs and services adopted for the economic analysis are 50% lower than the ones used for the financial analysis, taking into consideration the existing approximately 100% overvaluation of the Kwanza against the US dollar. The prices of family labour was corrected by a 0.2 factor, considering that in the rural zones ofAngola there is a high level ofsub-occupation and that its market prices, in dollars, are also overestimated due to overvaluation ofthe Kwanza. The economic price of a ton ofmaize at farm gate is set at US$95, considering that the CIF price ofimported maize in Luanda is US$190 per ton.
10. Project investment costs considered in the analyses. In the analysis of the financial results of the farm models, only the costs ofthe on-farm investments that will be made through Component 2 are taken into consideration (US$800 per smallholder). It was estimated that the total amount of these investments will be around US$19.2 million, and that 90% of the costs of these on-farm investments will be provided by the project (matching grant). The economic analysis ofthe project uses the economic costs ofall three project components as included in the cost tables (COSTAB). The economic costs ofthe project amount to US$49.35 m.
11. Crop production models. (see Working paper on Detailed cost estimates, financial and economic analysis) are defined to represent the four most common crops (maize, beans, potato and cassava), with and without project situations (Table 3). These crop models represent the most common crops, but they do not cover all crops and production situations in project area.
93 They actually stand for the crop groups (cereals, pulses, roots and tubers) that make up 98% of the cultivated areas ofsmallholders in the project area.
12. Farm models. A set of farm models is defined, based on a combination ofcrop models, location, and with or without project situations. Two general locations are used: (a) HuamboBie and (b) Malanje. The location determines the assumed size ofthe area by crop (see Table 4). The intention is to work on general crop and farm models that reflect the most common situations and therefore can be used to represent all targeted smallholders without going into the details of the multitude oflocal variations and specific conditions.
13. Financial profitability of the farm models. It is important to stress that in the financial budgets ofthe farm models the family labour used was not taken into consideration as part ofthe production cost. But in the farm models reflecting the highest level of benefits (category 1 in the tables), the costs of on-farm investments were included and they were estimated at an amount of US$800 per smallholder, and also the amount with which the project will subsidize these investments (the matching grant will be US$720 and US$80 equivalent will be the contribution of the beneficiary). Table 5 compares the results that will be achieved by the farm models simulating the three different beneficiary situations with the project, in the year 10 of the with- project situation, and the results that will be attained by the same farm models in year 10 ofthe situation without-proj ect.
14. As can be seen from table 5, the project will generate important increases in the incomes of the 126,000 beneficiary smallholder households. The annual increases will be growing, year after year, and will reach, with the full development ofthe impact ofthe project (defined as a 10 years with-project situation), between US$46 and US$890 per smallholder household per year.
15. The financial net return per smallholder household day of labour will increase in general terms in all farm models considered in the present analysis. The minimum (average) return will be an increase from US$1.5 in the situation without project to US$2.6 with project. The maximum return per family day labour will be increase from US$2.4 to US$6.4.
16. The 62 000 smallholder households represented by the models of the 3'd (least benefits) category will have increases incomes that range from US$46 to US$87 per year, the 40,000 smallholders of the 2nd category will have increases in their annual incomes ranging from US$303 to US$327; while the 24,000 smallholders of the lStcategory (most benefits) will see annual increases in income from US$668 to US$890.
17. The Net Present Value (NPV) ofthe increasing incomes ofthe with-project farm models in the analysis is between US$282 and US$5,234. The financial internal revenue rates (FIRR) are all very positive and range from 190% to 9,101%.
18. Physical aggregates of the project. The aggregated data provided by the FARMOD program can be used to estimates the increases in quantities for each group of crops produced by the smallholders (see Table 6). The percentages of these increases range from 27% to 144%. Biggest increases are seen to be in potato and maize, since these show a higher response to the use of fertilizers and other inputs, improved practices and improved technology services. The
94 project will also generate an annual increase of smallholder household on-farm labour required of around 4.6 million persoddays. This increasing labour demand will create employment for an equivalent of about 18,400 persons, considering an availability of 250 days a year per person. The total cultivated area will grow from a total of 189,000 ha at present to a total of228,200 ha in the situation with the project, representing a modest increase of 21%. Consequently, the cropping intensity will rise from 60% to 72%.
19. Monetary aggregates of the project. A comparison between the financial results which will be achieved by the project as a whole in year 10 ofthe situation, as compared to year 10 of the situation without the project is presented in Table 7, including the gross value and costs of the production (without considering family labour) and on the net incomes of the project, as a consequence of the changes derived from the works and action which will be carried out by the project. The average net financial income or “revenue” per day worked on-farm by the smallholder household will increase from US$2.0 in the situation without project, to US$3.36 in the situation with project.
20. Economic Analysis of the Project. The Net Present Value (NPV) ofthe flow of annual increasing incomes ofthe project is US$19,627,820; and the Economic Rate ofReturn (ERR) is 21.1%.
21. Sensitivity analysis. The sensitivity analysis of the project consists in determining the effects of increasing incremental costs, reducing incremental incomes, and delaying the benefits on the ERR ofthe project (see Table 8). The project appears little sensitive to the three analyzed situations. A 25.2% increase in the incremental costs would reduce its internal return rate to 12%; a 20.2% reduction in the projected incremental incomes would reduce the ERR to 12%; and if the achievement ofthe expected incremental benefits were delayed a year the ERR would drop to 14.7%.
22. Conclusion. According to this analysis, the project is economically and financially viable, especially if it is taken into account that it will be developed in rural communities that have recently had a high degree of social mobility due to the reintegration of a high number of previously displaced families. Besides, the sensitivity analysis indicates that the project faces no serious challenges that could drastically reduce its economic and financial impact. All targeted smallholder families should be motivated to participate in the project, since the project will increase their net benefits per year by some 115%, including 68% from the increasing returns per household day ofon-farm labour, while some ofthem will also receive matching grants for their farm productive investments.
95 Table 1: Assumed Agricultural Production Increases by Category of Beneficiary Smallholders
Category of beneficiary smallholders Number of Average yield increase in YOIncrease beneficiaries YOper ha. cultivated area 1: Beneficiaries of ComDonents 1.1 .iand 2 24.000 138% 53% 2: Beneficiaries Components 1.1 .iand 40,000 69% 33% 1.1 .ii 3 : Beneficiaries of only Component 1.1 .i 62,000 21% 0%
Table 2: Assumed Phasing of Smallholders Entering the Project
Type of Beneficiary Year1 Year2 Year3 Year4 Year5 Year6 1: Beneficiaries of Components 1.1 .iand 2 750 2,250 6,750 12,750 18,750 24,000 2: Beneficiaries of Components 1.l.i and 0 600 4,200 12600 25,800 40,000 1.1.ii 3 : Beneficiaries of only Component 1.1.i 6,250 25,150 59,050 65 650 81,450 62,000 Total 7,000 28,000 70,000 91,000 126,000 126,000
96 Table 3: Crop Production Models (with/without Project uses Beneficiary Categories of Tables 1 and 2)
With or Crop without Maize Beans Potato Cassava' project Yield todha, 0 0.50 0.30 2.50 2.80 year 3 of with 1 1SO 0.40 7.50 3.10 project 2 1.oo 0.35 5 -00 3 .OO situation 3 0.65 0.32 3.25 2.90 Yield increase 0 0 0 0 0 in YO,year 3 1 200 33 200 11 2 100 17 100 7 3 30 7 30 4 Price US$/ton 190 650 450 350 Income in 0 17 80 571 668 US$ per ha, 1 179 157 2 587 808 without family 2 70 100 1561 718 labour, year 3 3 46 93 906 702 Income 0 0 0 0 0 increase in YO 1 953 96 353 21 per ha, 2 3 12 25 173 7 without family 3 171 16 59 5 labour, year 3 Income in 0 0.36 1.60 5.83 2.57 US$ per day 1 3.09 2.80 16.91 3 .OO of family 2 1.37 1.89 11.31 2.73 labour used, 3 0.98 1.86 9.24 2.70 year 3 Income 0 0 0 0 0 increase in YO 1 758 75 190 17 per day of 2 280 18 94 6 family labour 3 171 16 59 5 used a: Cassava flour
Table 4: Cropping pattern of farm models (with/without Project Categories of Tables 1 and 2)
Withlout Huambomie model; area in ha Malanje model; area in ha project Maize Beans Potato Total Maize Beans Cassava Total 0 1.20 0.15 0.15 1SO 0.40 0.10 1.oo 1SO 1 1.80 0.25 0.25 2.30 0.60 0.20 1.50 2.30 2 1.60 0.20 0.20 2.00 0.60 0.10 1.30 2.00 3 1.20 0.15 0.15 1SO 0.40 0.10 1.oo 1SO
97 Table 5: Financial profitability of the farm models (with/without Project Categories of Tables 1 and 2)
crease in income
Table 6: Physical Aggregates of the Project by crop/group of Products
Annual production Annual production Increase Groups of Products w/o the project - mt with the project - mt YO Cereals (maize) 63,000 148,300 135 Pulses (beans) 5,198 7,458 43 Tubers (potatoes) 35,438 86,419 144 Roots (cassava flour) 88,200 111,850 27
Table 7: Monetary Aggregates of the Project
Total Project W/o Project With Project Increase (126,000 families) US$ per year US$ per year YO Gross production value 62 165 000 111 061 000 78 Production Costs 29 478 000 40 795 000 38 Net financial Incomes 32 687 000 70 266 000 115
Simulated Situation ERR Increase 25.2 % incremental economic costs 12.0 % Increase 30.0 % incremental economic costs 10.4 % Decrease 20.2 % incremental economic incomes 12.0 % Decrease 25.0 % incremental economic incomes 9.4 % Delay of 1 year in getting the incremental economic incomes 14.7 % Delay of 2 years in getting the incremental economic incomes 10.4 %
98 Annex 10: Safeguard Policy Issues ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
A. Social Issues
1. As part of the preparatory studies, the project carried out a socioeconomic baseline survey in the target areas (22 comunas in 3 provinces). The methodology included a desk review of existing documents and statistical data, meetings with stakeholders, and focus group interviews with farmer associations and women organizations. In addition, it prepared an Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF), both ofwhich are listed in the Project Files.
2. The socioeconomic baseline survey and Wher adjustments made during preparation indicate that the project will work in 12 municipios and 25 comunas, with an estimate a population of 1,056,754 inhabitants, most of which engage in agricultural activities, both for cash and internal consumption. A large proportion of the target population is made of people who were (previously) internally displaced during the civil war and have returned to the rural areas, partly for their own desire to go back to their places of origin or encouraged by government programs. Most ofthe returnees and residents are considered vulnerable groups.
3. In 2005, the Planalto Central (which includes the three target provinces) had a 19% of food insecure households, 30% of highly vulnerable households, 19% of moderately vulnerable households and 32% with low vulnerability. In geographic terms, the area at a highest risk, the most vulnerable, includes West Andulo, North Mungo and North Bailundo. This area has the highest proportion of returnees (since almost 87% of the populations had been displaced during the war), the road infrastructure is very poor and practically blocked for at least 7 months a year, and their livelihoods depend on traditional agricultural practices (with little or no chemical inputs) .
4. Among vulnerable groups, women deserve special attention. Thus, women who were backing the troops during the war had developed skills in logistics and many concerns but have not become acquainted with the usual activities that civilian women normally perform, such as informal trade, small business, horticulture, sewing, etc. Yet, as non registered ex-combatants the majority of them do not receive any special support, such as training on skills that would allow them to work in other occupations.
5. Farmers are organized at the community and national level. At the community level, there are farmers associations and cooperatives. The most important social organizations at the national level are UNACA (ConfederapTo das AssociaC6es de Camponeses e Cooperativas Agropecudrias de Angola) and OMA (Organizaqio de Mulheres Angolanas). Apparently, there are almost no middle level organizations (unions of associations) to represent the interests of farmers at the municipal and provincial levels. Therefore, there is a need to focus part of the capacity building efforts into strengthening ofsecond and third level farmer organizations.
99 B. Resettlement Policy Framework
6. The Project will support community investments in various types ofsubprojects that may require land for the construction of small-scale infrastructure. The RPF provides the framework for determining the need and content ofa Resettlement Action Plan or Abbreviated Resettlement Plan for subprojects.
Investment Subprojects:
7. The Agricultural investment support component includes demand-based support to agricultural investment sub-projects by groups, associations and communities of small-holds farmers. This demand is generated through the capacity building component. Project support will be provided to priority new investments through a cost-sharing (matching grant) mechanism according to pre-established positivehegative lists. Subproject proposals are initially screened at the municipio level (through the local ADI/EDA office) and subsequently submitted to the provincial level (PPlU), and in some cases the central level (PlU), where it is reviewed and approved by separate authorities for grant financing.
Potential Impacts:
8. In general, rehabilitation of existing infrastructure should not require the permanent acquisition of additional land. Possible sub-projects that may require land to be acquired, either permanently or temporarily, and which may adversely affect the assets or livelihoods of people include:
Construction or rehabilitation of small buildings and structures, such as rural markets; crop collection, storage, grading and packaging facilities; and small agro-processing units; Livestock feedlots, poultry-houses and cattle dip-tanks; Improvement to existing local earth feeder roads and construction or repair of culverts, small bridges and drainage channels; Construction or repair of small earth dams for small-scale irrigation or livestock watering; Construction offishponds; Construction of small community irrigation schemes with ancillary infrastructure, such as intake structures, buildings, water conveyance structures (e.g. pipelines and canals) and access roads; Construction ofmedium size irrigation schemes Establishment oflivestock grazing schemes; and Establishment ofcommunity woodlots.
100 Land Acquisition:
9. The establishment of any infrastructure should, in the first instance, be located on unoccupied or unused land. This should be made a requirement for any request for project support to individuals or corporate bodies that hnction as individual operators. In other cases, however, land that is currently being used or occupied by other people, entities or the community itself will have to be acquired for sub-project infrastructure. The land may be acquired through the voluntary donation by individuals, the community or by the state. In such cases, the land should be donated in return for alternative land and fair compensation for any loss resulting from the installation ofthe infrastructure.
10. Other possible sub-projects, which have technical limitations with respect to site selection, include fishponds, canals for irrigation schemes, woodlots, road culverts and small bridges, although the severity of the limitations is variable. In such cases it may be necessary to acquire land that is occupied or used by another person or entity. Such land acquisition is necessarily involuntary. Voluntary land donation is not possible in such cases because the owner or occupier has no option but to release his or her land to the project. As with voluntary land donation, the affected person will permanently lose the land, access to resources on the land (e.g. livestock grazing and timber resources) and any structures, crops, valuable trees (e.g. hittrees) and other fixed assets on the land. In some circumstances these losses will result in the loss of accommodation (residence) and in adverse impacts on food supplies and income sources. Losses and the resultant displacement ofpeople are expected to be small. Depending on the nature and extent ofthe impacts, the affected person will need to be relocated to another site, provided with compensation for losses suffered and provided with other rehabilitation measures.
11. For some sub-projects, such as small dam construction, losses may become more significant if other land within the catchments area is needed for conservation and protection purposes. The development of a small-scale irrigation scheme may also result in the reduction in stream flow where the stream is diverted. For people who currently rely on such stretches for water supplies this would represent a reduction in access to resources.
The Legal Framework for Involuntary Resettlement and Land Acquisition in Angola:
12. There is no specific legislation that concerns involuntary resettlement in Angola. In terms of the environmental law, certain projects are subject to the process of environmental impact assessment. This law obliges the project proponent to apply to the environmental authorities for environmental screening by, among other requirements, providing relevant project description and documentation to enable the authorities to assess the need for environmental impact assessment. If the environmental impact assessment is required, one of its important requirements is the undertaking ofa comprehensive public consultation process.
I 13. With regard to the use and exploitation of land, the law is somewhat inconsistent with a number of different legal instruments being applied by a number of agencies in different situations and geographical areas. The Land Law passed by the parliament in 1992 stipulates that all land belongs to the state. However, it recognizes the traditional land ownership and exploitation systems that exist in rural areas of the country and stipulate that land in traditional
101 communal areas must be approved only after the recommendation ofthe local Soba or traditional chief (also known in some places as Regidor). Individuals or associations and related corporate bodies requiring land below 1,000 hectares can obtain authorization of land use and exploitation rights by formally applying for the same from the Soba. The Soba has the responsibility of identifying, demarcating and allocating the land by issuing the recipient with a no-objection certificate. The applicant is then required to present this no-objection certificate from the Soba to the provincial offices of the Ministry of Urbanization and Environment who issue provisional land use title. This provisional title is valid for five years after which the title holder will apply for an Intermediate Title that is valid for a further 18 years and which is issued upon verification of actual use of the land. It is after the expiration of 18 years and upon evidence ofproper use that a definitive title for 45 years can be obtained. Land in excess of 1,000 up to 9,999 hectares must be authorized by the Minister of Urbanization and Environment and beyond 10,000 hectares by the Cabinet.
14. The same law makes provision for individuals to buy land from the state, although the process can be very bureaucratic, obscure and expensive in practice. Thus, it is very likely that most of potential project beneficiaries do not possess official title to the land they occupy and use. Most people in rural areas rely on informal arrangements, including an unofficial land market, to obtain land. While the arrangements are not strictly legal, they are usually recognized by communal authorities.
15. Land use rights can be withdrawn by the state in the public interest and in such situations the land reverts to the state. However, the state has the responsibility for paying fair compensation for any losses and improvements.
16. There is no specific resettlement policy and regulatory framework. The Land law only specifies compensation payment for expropriated land, which is done in the public interest. It is silent on compensation issues such as the principles, forms, eligibility, valuation, adequacy, procedures, timing and responsibilities.
17. There is no legal mechanism for affected persons to appeal against compensation paid or other resettlement measures. The only legal recourse available to affected persons is the courts of the country. Fortunately, there are well-established local mechanisms for conflict resolution concerning land among local communities.
18. In the absence of a comprehensive resettlement legal and policy mechanism in the country, the requirements of WB OP 4.12 will become the operational policy framework on all sub-projects.
Objectives of the RPF:
19. This RPF has the following objectives: (a) Involuntary resettlement will be avoided where feasible or minimized, exploring all viable alternative sub-proj ect designs; (b) where resettlement is unavoidable resettlement activities will be conceived and executed as sustainable development programs, prepared and implemented in a participatory way; (c) APs will be assisted in their efforts to improve their livelihoods and standards of living or at least to restore
102 them, in real terms, to pre-displacement levels or levels prevailing prior to the beginning of project implementation, whichever is higher; and (d) displacement of people, property and livelihoods will be minimized as much as possible by employing appropriate design technologies and locating project infrastructure in such a manner so as to minimize the need to acquire land and property and to cause as little disturbance and disruption as possible.
Procedure for the Preparation of Abbreviated Resettlement Plans:
20. According to the environmental legislation of the country, certain activities are automatically exempt from environmental impact assessment (EIA), which also includes social impact assessment, if they are of a certain type and size. This typically applies to small projects that usually have minimal adverse environmental and social impacts. Although most MOSAP sub-projects are unlikely to require EIA, the ESMF for the project requires that all sub-projects be subject to the environmental screening process. The screening process will identify potential environmental and social impacts of sub-project activities, including impacts on land, assets and socio-economic activities.
21. During the preparation of sub-project proposals or applications the applicant will complete an environmental screening form or checklist, an example of which is included in the ESMF. The checklist contains sections relating to the need for land acquisition and the likely extent of displacement caused by the sub-project. Technical staff at the Municipality level, primarily those in the EDA, will be trained in the application ofthe checklist in order to train and assist sub-project applicants to complete them. Assistance will also be made available through the ESMF that is to be become part of the project management program. The screening process provides an opportunity for sub-project applicants to change sub-project designs and locations in order to reduce the area of land that needs to be acquired and thus minimize the scale of displacement caused.
22. Completed checklists will then be forwarded to the Provincial Directorate of MINUA which will determine whether further EIA studies and resettlement planning is required. If the environmental screening process determines that no privately held land needs to be acquired or that small areas of land need to be acquired but that there will be no displacement of people or acquisition ofland, no further resettlement planning will be required. This is likely to be the case for the majority ofMOSAP sub-projects.
23. If any ofthe questions in the check list concerning land acquisition and displacement are answered in the affirmative, this will signal that resettlement planning, in accordance with the requirements of legislation ofthe country and the WB OP 4.12 is required. An exception will be in the cases where land needs to be acquired but will be donated voluntary.
24. However, the determination of informed consent can sometimes be difficult. The following criteria are presented as guidelines to help ensure that any donation or relinquishment of land or assets for a sub-project is done voluntarily:
103 e the infrastructure is not site specific; e the impacts are minor (i.e. involve no more than 10% of the area of any holding and do not require any physical relocation; e the land required to meet technical project criteria is identified by the beneficiary community, not by line agencies or project authorities (nonetheless technical authorities can help ensure that the land is appropriate for project purposes, and that the project will not produce health or environmental safety hazards); e the land in question must be free of squatters, encroachers or other claims or encumbrances; e verification (e.g., notarized or witnessed statements) of the voluntary nature of land donations must be obtained from each person donating land and accompany the application; e if any loss of income or physical displacement is envisaged, verification of voluntary acceptance ofcommunity-devised mitigation measures must be obtained from those to be adversely affected; e if community services are to be provided under the project, land title is vested in the community, or appropriate guarantees of public access to services must be given by the private title holder; and e grievance mechanisms are available.
25. With assistance from the municipality administration, negotiations will be conducted between the AP and the community leaders concerning the voluntary ceding of the land and assets by the AP to the community and the subsequent replacement, relocation or restoration measures to be applied. Negotiations will include inspecting any replacement land to be offered.
26. Once the details ofland and other asset donation or loss have been agreed to, APs and the authorized community leaders will sign entitlement agreement contracts. These will record any final agreed measures for replacing or restoring lost assets and relocation of entitlements. The entitlement agreement contracts will be included in the sub-project dossier.
1. Where the land is in the public domain or is officially recognized, as belonging to the community the community leaders will issue a certificate stating that the land to be used for the sub-project is not encumbered. This will be included in the sub-project dossier.
27. In situations where it is determined that land will be required for a sub-project, which will cause involuntary resettlement, resettlement planning will be necessary. The size and complexity of the sub-project will determine the complexity of the resettlement plan. For any sub-project that causes a significant amount ofdisplacement a full RAP will be needed.
28. However, WB OP 4.12 allows for an Abbreviated Resettlement Plan (e)to be prepared for situations where the impacts on the entire displaced population is minor @e. affected people are not physically displaced and less than 10% oftheir productive assets are lost) or fewer than 200 people are displaced. This is likely to be the case for most MOSAP subproject that requires a resettlement plan.
104 29. All resettlement plans must cover the same topics, i.e.: number ofaffected people; type of impact; eligibility criteria; compensation packages; institutional arrangements; participatory and grievance approaches; timeline; monitoring program; and budget.
Eligibility Criteria of Policy Beneficiaries:
30. The Conselho MunicipaZ de AuscuZtaqGo e ConcertaqGo (CMAC), through its Resettlement Planning Team, will be responsible for establishing the eligibility criteria for compensation of affected persons. The RPT will be guided by the framework eligibility criteria in the RPF in performing this task. It is important that this activity involves local community leaders who will be able to confirm the bona fides of affected persons to be compensated per each category ofassets as well as the assets involved.
Institutional Arrangements and Sources of Funding:
31. In line with the ongoing decentralization program, there is to be established a provincial organ to be known as the ConseZho Provincial de AuscuZtaqGo e ConcertaqGo (CPAC) as well as its municipality level equivalent, to oversee a number of activities including MOSAP. The CPAC will have the function of reviewing and approving proposals submitted by the EDAs in the municipality areas. The provincial delegation ofAD1 together with contracted private service providers (where necessary) will constitute the technical wing ofthe CPAC and therefore will be responsible for resettlement issues. The CMAC is to be set up and to have the power to receive proposals, prepare and submit them to the province for approval. The EDA will act as the technical organ of the CMAC regarding project matters (including resettlement) due to its technical expertise, even if there may be need for improvement through training. It will be chaired by the Municipality Administrator and will include representatives from various sectors as well beneficiary groups. The EDA will, for each subproject, establish an RPT that will include representatives offarmers and other key stakeholder groups.
32. The RPT will undertake the following functions:
Ensure that the RAP is as inclusive as possible and transparent. Facilitates communication and participation ofstakeholder groups. Provide adequate information to the technical team. Set eligibility criteria for specific subprojects. Verify eligibility. Approve eligibility methodology. Verify entitlements Ensure delivery ofentitlements. Establish procedures and monitor compliance with grievance mechanisms.
33. It is not envisaged that many sub-projects will require land acquisition, which will cause displacement and lead to the need to relocate andor compensate affected people. Nevertheless, an indicative budget is provided below to ensure that funds are allocated for resettlement should the need arise. Without knowing the number of sub-projects that will be put forward, planned and implemented, it is difficult to estimate possible costs. For the purpose of the indicative
105 budget it is assumed that an average of 50 sub-projects (2 per comuna) will be proposed per year over a five year implementation period from Year 2 to Year 6 of the project (as it is not envisaged that any sub-projects will be identified and planned during the first year). It is, therefore, assumed that some 250 sub-projects will be submitted for funding during the full project period.
34. Provision is included in the budget for training provincial ADI, municipality, EDA and other government staff in aspects of resettlement plan preparation, implementation and monitoring. This is based on training ten staff members in Year 1 or 2 and a mher ten in Year 3 (as other districts are included in the project). The estimated cost per group often is estimated to be US$8,250, calculated from ten trainees for five days at US$165 per day for accommodation, allowances and materials. To this is added US$1,650 for contracted trainer input to give a total estimated cost ofUS$9,900 per group often. The total estimated training cost for both groups is US$19,800. Funds will be provided from the Project Implementation Support or ESMF budgets.
35. Based on the global training cost and the average resettlement cost per sub-project the total resettlement budget is estimated to be US$555,650.
Monitoring and evaluation arrangements:
36. Following the requirements of the Bank, during compensation and resettlement implementation, and possibly for some time afterwards, both internal and external monitoring and evaluation exercises will be carried out in order to monitor progress and ensure that APs are adequately catered for and are left in a position no worse off than they were prior to subproject commencement. Draft RAPSwill be required to list the monitoring and evaluation arrangements for individual sub-projects. Monitoring and evaluation should be part of, or be closely aligned to, the monitoring and evaluation process agreed to for monitoring of other environmental impacts in terms ofthe sub-project environmental management plan, where applicable.
C. Environmental Issues.
37. Considering the fact that some ofthe sub-projects might cause potential negative effects both at individual and cumulative level on the environment and on people’s quality of life this document has been prepared in the format of an ESMF. This document is in line with the national environmental legislation as well as the Bank’s operational policies.
Objectives of the ESMF:
38. The main objectives of the ESMF are related to the establishment of clear mechanisms and procedures for environmental and social planning, review, appraisal and implementation of sub-projects to be financed through this project, as well as the definition ofappropriate roles and responsibilities and the description ofmanagement and monitoring reports of the environmental and social issues related to the sub-projects. This document also intends to determine the technical assistance, training and capacity development needed for the successfbl implementation of the ESMF recommendations and to establish the project funding needed for the implementation ofthe ESMF requirements.
106 39. The Region Safeguard Specialists performed an environmental screening of the places were the proposed Project will be implemented, and after careful review and analysis determined that the MOSAP will trigger only two Bank Safeguard Policies, namely: Environmental Assessment (OP 4.01), and Involuntary Resettlement (OP 4.12). To ensure full compliance with Bank's Safeguards Policies, screening mechanisms have been built in the Project design including environmental screening of all sub-proj ects under the Agricultural Investment Support component. Hence, before grants are awarded under their corresponding sub-project agreements every proposal will undergo an environmental screening as set forth in the EMSF and in the RPF for the Project. This screening process will provide an opportunity to review design and location ofeach subproject to avoid harmful impact to the environment and adverse social effects.
Legal and Institutional Framework for Environmental Management:
40. An analysis of the environmental legislation in place in Angola has been provided with an emphasis to the Environment Framework Act, Decree on Environmental Impact Assessment, Water Act, Land Act and Act on Biological Aquatic Resources as well as programs and strategies which are relevant for the sub-projects to be identified. For each legislation and program recommendations are made with regards to the actions that need to be taken into consideration while developing and implementing the sub-projects. The requirements and sub- projects that should undertake an environmental impact assessment are presented.
41. Considering the fact the government institution responsible for the management of the environmental policy in Angola is the Ministry of Urban Affairs and Environment its competencies and institutional chart are provided. This ministry, as well as those responsible for agriculture and rural development; energy and water; fisheries and public works; play an important role in the licensing and implementation of a number of sub-projects, so as to ensure environmental and social protection and to promote the sustainable use of the country's natural and water resources.
Preparation, Approval and Implementation of Sub-projects:
42. The proposed project will be demand-driven by the communities and potential beneficiaries, as they will be responsible for the identification of sub-projects. The sub-project preparation is done in collaboration with local organizations based in the selected communities and with the support from experienced extension workers.
43. The process for the development of sub-projects and its appraisal will follow certain checklists and criteria so as to ensure environmental and social protection as well as technical and economic feasibility. In this ways training and capacity development is vital for the extension teams and people involved in the process of developing, approving and implementation ofsub-projects.
44. The evaluation mechanisms and processes must follow different levels of intervention being at the level of the communal, municipal and provincial authorities. These authorities will be responsible for the preparation of annual information reports on the implementation of the
107 ESMF. Annual revisions on the implementation ofthis Framework will be undertake and for that local independent consultants and other service provides will be contracted provided that they are not involved in the project implementation.
45, The additional management activities could include the preparation of Environmental Management Plans, Pest Management Plans and Resettlement Action Plans. Thus, guidelines for the implementation ofsuch document are provided.
46. As explained above, according to the environmental legislation of the country, certain activities are automatically exempt from environmental impact assessment (EIA), if they are ofa certain type and size. This typically applies to small projects that usually have minimal adverse environmental and social impacts. Although most MOSAP projects are unlikely to require EIA, the ESMF for the project requires that all sub-projects be subject to the environmental screening process. The screening process will identify potential environmental and social impacts of sub- project activities.
47. During the preparation of sub-project proposals or applications the applicant will complete an environmental screening form or checklist, an example of which is included in the ESMF. Municipality technical staff, primarily those in the EDA, will be trained in the application of the checklist in order to train and assist sub-project applicants to complete them. Assistance will also be made available through the ESMF that is to be become part ofthe project management program. The screening process provides an opportunity for sub-project applicants to change sub-project designs and locations in order to reduce the impacts caused. Completed checklists will then be forwarded to the Provincial Directorate ofMINUA which will determine whether further EL4 studies are required.
Capacity Building, Training and Technical Assistance:
48. The training, capacity development and technical assistance to the various stakeholders’ aims at ensuring that the proposed measures in this document related to the Angolan environmental legislation and Bank’s operational policies are fully and successful implemented. These activities have as main objective the integration of environmental component in the different agricultural sub-projects so as to ensure a sustainable use of natural resources in the selected provinces.
49. These activities will be implemented through the running of workshops, refreshment courses and environmental awareness raising activities. For these activities a number of materials, supporting manuals and copies of legislation should be provided and the Bank’s checklists be disseminated. The activities to be implemented at communal, municipal and provincial level are important to ensure the effective implementation of the Environmental and Social Management Framework as well as for the preparation of important management tools such as environmental management programs, pest management programs and resettlement action plans.
108 Indicative Budget for the ESMF:
50. The budget to ensure the implementation of the various proposed activities in the Environmental and Social Management Framework is divided into the following items:
0 Institutional development activities The training program for communities, extension teams and local authorities (at communal, municipal and provincial level) to implement their ESMF responsibilities 0 Technical assistance to local authorities and extension teams including general and specific technical assistance; 0 Allowances for the preparation of sub-project Environmental Management Plan (Ems), Resettlement Action Plans (RAPS),Pest Management Plans (PMPs); 0 Annual reviews.
51. The overall budget for implementation of the ESMF for a five-year (5) period is estimated at US$671,000.
109 Annex 11: Project Preparation and Supervision ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
~ Planned Actual PCN review 11/28/2005 11/28/2005 Initial PID to PIC 02/06/2006 0212712006 Initial ISDS to PIC 02/06/2006 4/10/2006 Appraisal 0413 01200 8 5/9/2008 Negotiations 05/15/2008 6/10/2008 Board/RVP approval 07/15/2008 Planned date of effectiveness lO/O 112008 Planned date ofmid-term review 3/01/2011 Planned closing date 0913 112014
Bank staff and consultants who worked on the project included:
Name Title Unit Aniceto Timoteo Bila Team Leader, Sr. Operations AFTAR Officer Martien Van Nieuwkoop Program Coordinator AFTAR First Ohler Agri and NRM Specialist FA0 Carla Ferreira Country Program Manager IFAD Nwanze Okidegbe Adviser AFm Suzanne Morris Sr. Finance Officer LOAFC Eduardo Brito Sr. Counsel LEGAF Aberra Zerabruk Consultant LEGAF Mohamed Arbi Ben-Achour Sr. Social Scientist AFTCS Mohinder S. Mudahar Consultant World Bank Paul Jonathan Martin Sr. Environmental Specialist AFTEN Roland Kopiclq Agribusiness Specialist WBIFAO Peter Geurts Fertilizer Specialist FAOILFAD-CP Consultant Patrizio Warren M&E Specialist- Consultant FAOILFAD-CP Andrew Osei Asibev Senior M&E Specialist AFTRL Francisco Chimuco Agricultural Economist FA0 Guillermo Wood Economist FAONVB-CP 'Consultant Pedro Arlindo Agricultural Economist AFTAR Jog0 Tinga Financial Management Specialist AFTFM Jonathan Nyamukapa Financial management Specialist AFTFM Antonio Chamugo Procurement Specialist AFTPC Jorge E. Uquilias Rodas Sr. Sociologist AFTCS Fernando Pacheco Project Facilitator IFAD Meseret Kebede Program Assistant AFTAR Domingas Pegado Team Assistant AFMAO Luisa Moises Matsinhe Team Assistant AFcs2 Tanya L. Yudelman Environment Specialist World Bank
110 A Japan PHRD grant was received and used for project preparation partially by the Bank and partially by the recipient. On the Bank-Executed, the Trust-Fund contracted consulting services for the following preparation activities: (a) Identification of farmers’ needs, support to crop diversification/ marketability and evaluation of irrigation and small infrastructure, through the elaboration of the following studies: (i) economic and social baseline survey, (ii)rural financial institutions, (iii)market analysis and development, (iv) irrigation and rural infrastructure, (v) fertilizer market, and (vi) land and natural resources management; (b) Training and workshops to share relevant knowledge and experiences among stakeholders and disseminate the main findings and recommendations of the studies; and (c) Technical Support to the Government at Central and Local levels from FAO, during the Preparation missions, including the consolidation of draft reports, preparation of the Project Implementation Plan, and coordination among stakeholders and consultative dialogue. The Recipient-Executed portion was used to hire consultancies to prepare the safeguards documents, namely the ESMF and the RPF. A Draft Project Implementation Operations Manual was also commended by the Bank.
2. Bank funds expended to date on project preparation: 0 Bank resources: US$789,23 1.01 0 Trustfunds: US$5 22, 1 62 -47 Total: US$1,311,399.48
3. Estimated Approval and Supervision costs: 0 Remaining costs to approval: US$35,000 0 Estimated annual supervision cost: US$150,000
111 Annex 12: Documents in the Project File ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
Bank Documents
0 Angola, Towards a Strategy for Agricultural Development: Issues and Option. July 2005, WB. 0 Japan PHRD Technical Assistance Program - Application for Project Co-financing for Institutional Capacity Building Grant - Angola MOSAP.
IFAD Documents
0 MOSAP Logical Framework and Key File
Government of Angola Documents
0 Environmental and Social Management Framework 0 Resettlement Policy Framework
Working Papers
0 Detailed Cost Estimates, Financial and Economic Analysis 0 Fertilizer Market Improvement Pilot 0 Capacity Building
Study Reports
0 Socio-Economic Baseline Survey 0 Land Tenancy and Natural Resources Management 0 Rural Markets (in Portuguese) 0 Rural Financial Institutions (in Portuguese) 0 Rural Infrastructure 0 Fertilizer Market Improvement
112 Annex 13: Statement of Loans and Credits ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
Difference between expected and actual 1 Original Amount in US$ Millions disbursements Project FY Purpose IBRD IDA SF GEF Cancel. Undisb. ID Orig. 1 Rev’dFrm- PO95229 I 2007 I AO-MS ERL 2 I 0.00 I 102.00 I 0.00 I 0.00 0.00 109.62 10.96 I 0.00 I 0.00 I 21.00 1 0.00 1 0.00 0.00 16.00 2.61 I 0*0° PO83333 2005 AO-Emerg MS 1 0.00 1 50.70 1 0.00 1 0.00 0.00 25.34 1 I Recovery ERL (FY05) 22.91 1 7s1 PO81558 2004 AO-Social Action 1 0.00 1 55.00 I 0.00 I 0.00 0.00 2.04 -3.59 I 0.00 1 1 Fund SIL 3 (FY04) PO72205 2003 AO-Econ Mgmt TA 0.00 16.60 0.00 0.00 0.00 9.10 (FY03) 6*55 I 2-71 PO78288 2003 AO-Emerg Demob & 0.00 33.00 0.00 0.00 0.00 6.63 Reinteg ERL (FY03) 11*19 I 2.94 Total: 0.00 0.00 0.00 0.00 168.73 278.30 50.63 I 13.16
113 ANGOLA STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions of US Dollars
FY Approval 1998 2005 2003 2005
I I I Approvals Pending Commitment FY Company Loan Equity Quasi Partic. Approval
Total pending 0.00 0.00 0.00 0.00 commitment:
114 Annex 14: Country at a Glance ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
Sub. Lower. POVERTY and SOCIAL Saharan mlddle- Angola Afrlca income 2006 Population, mid-year (milllo ns) 6.4 770 2276 Life expectancy GNI per capita (Atlas method, US$) lee0 642 2,037 GNI(AtIasmethod, US$ billions) 32.6 646 4,635 Average annual growth, 2000-06 Population (%) 2.8 24 09 Laborforce(%) 2.9 26 14 oross ::I capita::I i+, enrollmentg:;primary Mort recent eetlmate (latest year available, 2000-06) capita enrollment Poverty (% of population belo wnationalpovertyline) Urban population (%oftotalpopulation) 54 36 47 Life expectancyat birth (pars) 41 47 71 Infant mortallty(per lOOOllve birihs) tjq 98 31 Child malnutrition (%ofchildren under5) 31 30 Q Access to improvedwatersource Access to animprovedwtersource (%ofpopulation) 53 55 81 Literacy(%ofpopulatlonsge 69 67 59 69 Gross primary enrollment (%of school-agepopulation) 92 18 -Angola Male 98 1V ~ Lover-middle-income group Female 66 114 * KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1966 S96 2006 2006 Economlc ratlo.* GDP (US billions) 6.4 7.5 30 6 45 2 I Gross capital formationJGDP 6.2 34.7 61 Q7 Trade E~rlsof goods and services/GDP 36.5 62.4 79 3 73 8 Gross domestic savlngs/GDP 22.6 48.6 37 9 49 5 Gross national savingslGDP R.l 29.9 24 8 37 0 1 Current account balanceIGDP -46 -3.7 188 23 3 Domestic Capital Interest paynentslGDP .. 3.9 08 savings formation Total debt/GDP .. 140.1 384 Total debt service/exports .. 6.0 92 Present value of debt/GDP 37 4 Present value of debtlexports 47 1 Indebtedness 1966-96 199646 2005 2006 2006-14 (average ennual groMh) + GDP -2.3 8.1 20.6 l0.8 15.8 -Angola GDP percapita -5.0 5.2 V.2 15.3 Q.9 Lo veer-rniddle-incomegroup E~rtsof goods and services I
1966 1996 2005 2006 Growth of capltal and GDP (%) (%of GDP) Agriculture 14.4 7.0 7.7 8.9 I industry 34.1 67.8 72.6 69.7 Manufacturing 0.9 3.4 3.5 4.3 Services 515 25.2 8.8 214 Household final consumption expenditure 40.2 General gov't final consumption expenditure 37.2 Imporls of goods and services 32.1 68.3 49.4 37.9
1966.96 l996-06 2006 2006 (average annualgroMh) Agriculture -8.6 111 7.0 9.8 Industry 0.4 9.2 23.4 20.0 Manufacturing -8.9 0.2 24.9 44.7 Services -4.2 2.9 14.3 Household final consumption expenditure General gov't final consumption expenditure 01 02 03 M 05 Gross capitaiformation 1 -Exports -9-lWOrlS I Imports of goods and Services
Note 2008 data are preliminaryesttmates This table was producedfrom the Development Economics LDB database 'Thediamonds showfourkeyindicators in thecountry(in bo1d)comparedwthits incomeqoupaverage Ifdataaremtssing,thediamondvnll
115 Angola ~~ ~
PRICES and GOVERNMENT FINANCE 1986 1996 ZOOS 2006 lnflatlon (K) Domestic prices (%change) I Consumer prices 4,145.1i 24.8 117 Implicit GDP deflator -9.1 5,399.5 34.0 14.7 Government finance (%of GDP, includes current grants) Current revenue 37.5 44.8 40.7 46.4 01 02 03 W 06 OB Current budget balance -0.7 8.7 Q.7 23.7 -GDPddiator -CPi Overall sumlusldeficit -6.2 -19.3 7.3 14.8
TRADE 1986 1996 2005 2006 Export and Import levels (US$ mill.) (US$ millions) Total exports (fob) 1348 5,095 24,09 31882 p.000, Cmdeoil 1195 4,650 22,563 29,929 Diamonds 8 267 1092 155 Manufactures 40 05 242 295 Total imports (cif) 1088 2,040 8,353 9,588 Food 248 275 Fuel and energy Capital goods 351 303 00 01 02 03 W 05 OB E%poltprice Index(2000=WO) 44 74 n3 20 I Import price index (200O=WO) PO P8 DO 01 #Exports m irrporls Terms of trade (200O=aO) 37 57 a3 80 1
BALANCE of PAYMENTS I986 1996 2005 2006 Current account balance to GDP (K) (US$ millions) Eqorts of goods and services 1462 5,388 24286 33,320 30 T Imports of goods and services 1676 4,464 5,144 V,QO Resource balance -2 14 922 9,142 8,190 Net income -230 -1428 -4,031 -5,504 Net current transfers 141 225 27 -148 Current account balance -303 -261 5,QB 0,538 Financing Items (net) 282 528 -3,321 -5,m Changes in net reserves 41 -245 -ten -5,402 Memo: Reserves including goid (US$ millions) 552 3,87 8,599 Conversion rate (DEC, iocai/US$) 2.99E-8 0.1 87.2 60.4
EXTERNAL DEBT and RESOURCE FLOWS 1966 1996 2005 2006 Composltlon of 2005 debt (US$ mlll.) (US$ miiiions) Total debt outstanding and disbursed 0,546 11755 IBRD 0 0 0 B 319 IDA 15 319 347 Total debt service 994 2239 IB RD 0 0 0 IDA 1 7 8 Compositionof net resourceflows Official grants 278 293 Official creditors 21 18 Private creditors m4 1550 Foreign direct investment (net inflows) 81 -1304 Portfolio equity(net inflows) 0 F:6240 World Bank program Commitments 24 25 0 I A. iBRD E-Bliataal Disbursements 36 30 8 B .IDA D ~ Other mdtiiatfrd F .Rivate Principal repayments 0 5 5 C-IMF G-Short-ta Net flow 38 25 P Interest papents 1 3 3 Net transfers 37 23 0
Note:This tablewas pmducedfrom theDevelopment Economics LDB database. 9/28/07
116 Annex 15: Maps ANGOLA: MARKET ORIENTED SMALLHOLDER AGRICULTURE PROJECT
117
MAP SECTION
15°E GABON ANGOLA MARKET-ORIENTED SMALLHOLDER AGRICULTURE PROJECT
PROJECT MUNICIPIOS
CONGO ANGOLA PROJECT PROVINCES
SELECTED CITIES AND TOWNS
PROVINCE CAPITALS
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This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information 0 40 80 120 Miles NAMIBIA IBRD 35537
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HUÍLAH U Í L A This map was produced by the Map Design Unit of The World Bank. CUANDOC U A N D O The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank CUBANGOC U B A N G O Group, any judgment on the legal status of any territory, or any CubangoCubango endorsement or acceptance of such boundaries. 15°E 17°30’E
JUNE 2007