Document of The World Bank
Public Disclosure Authorized FOR OFFICIAL USE ONLY
Report No: 49169-ZR
PROJECT APPRAISAL DOCUMENT
Public Disclosure Authorized ON A
PROPOSED GRANT IN THE AMOUNT OF SDR 77.3 MILLION (US$ 120 MILLION EQUIVALENT)
TO THE.
DEMOCRATIC REPUBLIC OF CONGO
FOR AN
AGRICULTURE REHABILITATION AND RECOVERY SUPPORT PROJECT Public Disclosure Authorized March 4, 2010
Agriculture and Rural Development Unit Country Department AFCC2 Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Public Disclosure Authorized Bank authorization. CURRENCY EQUIVALENTS
(Exchange Rate Effective January 3 1,20 10)
Currency Unit = Congolese Franc (CDF) CDF 915.000 US$ 1 US$ 1.55419 = SDRl
FISCAL YEAR January 1 - December31
ABBREVIATIONS AND ACRONYMS
ACSA Community Animal Health Agent (Agent Communautaire en Sante' Animale) ADRAO West African Rice Development Association , WARDA (Association de De'veloppement de la Riziculture en Afrique de I'Ouest) AfDB African Development Bank ARRSP Agricultural Rehabilitation and Recovery Support Project AS Audit Standard ASR Agriculture Sector Review (WB) BTC Belgian Technical Cooperation CAF Country Assistance Framework (WB) CARDESA Centre for Agricultural Research and Development for Southern Africa CARG Agricultural and Rural Management Council (Conseil Agricole et Rural de Gestion) CAS Country Assistance Strategy (WB) CBO Community-Based Organizations
CDD Community-Driven Development , CFAA Country Financial Accountability Assessment CoNaSem National Seed Council (Conseil National Semencier) (DRC) COPEMECO Confederation of Small and Medium Congolese Enterprises (Confideration des Petites et Moyennes Enterprises Congolaises) CoProSem Provincial Seed Councils (Conseils Provinciaux Semenciers) (DRC) CPAR Country Procurement Assessment Review CQ Consultants' Qualification DflD Department for International Development (UK) DMC Delegated Management Contractor DPCC District Project Coordination Committee DPCU District Project Coordination Unit DRC Democratic Republic ofCongo DSCRP Growth and Poverty Reduction Strategy Paper (Document de la Strategie de Croissance et de Reduction de la Pauvrete') DVDA Directorate ofAgricultural Access Roads (Direction des Voies de Desserte Agricole) (DRC) EITI Extractive Industries Transparency Initiative EMRRP Emergency Multi-sector Rehabilitation and Recovery Project (WB) ERR Economic Rate ofReturn ESIA Economic and Social Impact Analysis ESMF Environment and Social Management Framework ES W Economic Sector Work EU European Union FA0 Food and Agriculture Organization of the United Nations FEC Federation of Congolese Entrepreneurs (Fede'ration des Entreprises du Congo) FIAS Foreign Investment Advisory Service
ii FOR OFFICIAL USE ONLY
FM Financial Management FO Farmers Organization FONER National Road Maintenance Fund (Fonds National d'Entretien Routier) (DRC) FRR Financial Rate of Return GDP Gross domestic product Ha Hectare HIM0 High Labor Intensity Method (Haute Intensite' de Main-d'Guvre) HIPC Highly Indebted Poor Country IA ' Internal Audit IAD International Audit Department IC Individual Consultant ICB International Competitive Bidding IDA International Development Association IFAD International Fund for Agricultural Development IFC International Finance Corporation IFMIS Integrated Financial Management Information System IFR Interim Financial Report IMF International Monetary Fund IMNC Institute ofNational Museums of Congo (Institut des Muse'es Nationaux du Congo) INADES African Social and Economic Development Institute (Institut Apicain pour le DPveloppement Economique et Social) INERA National Institute of Studies and Agricultural Research (Institut National d'Etudes et de la Recherche Agricole) (DRC) IPPF Indigenous Peoples Planning Framework IRR Internal Rate of Return ISA International Standard on Auditing Km Kilometer LCS Least Cost Selection M Million MDR Ministry of Rural Development (Minist2re du De'veloppement Rural) (DRC) MinAgri Ministry ofAgriculture (DRC) MTR Mid-Term Review NGO Non-Governmental Organization NPV Net Present Value PAD Project Appraisal Document PAP Proj ect-Affected Person PC Project Coordinator PCMC Provincial Coordination and Monitoring Committee PCU Project Coordination Unit PDOs Project Development Objectives PEFA Public Expenditure and Financial Accountability PFM Public Finance Management PHRD Poverty and Human Resources Development (Japan) PIM Project Implementation Manual PIU Project Implementation Unit PMP Pesticide Management Plan PMURR Emergency Multi-sector Rehabilitation and Recovery Project (Programme Multisectoriel de Rehabilitation et de Reconstruction) (WB) PPF Project Preparation Facility PRAPE Programme de Relance Agricole de la Province de 1'Equateur PRCG Enhancing Governance Capacity Project (Projet de Renforcement des Capacite's de Gouvernance) PRGF Poverty Reduction and Growth Facility (IMF) PRSP Poverty Reduction Strategy Paper PSD Private Sector Development PUACV Program for Improvement of Living Conditions (DRC)
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. QCBS Quality and Cost Based Selection RAP Resettlement Action Plan RN Route National (National Highway) . RPF Resettlement Policy Framework RVF National Waterways Company (Regie des Yoies Fluviales) (DRC) SBD Standard Bidding Documents (WB) sc Steering Committee SENASEM National Seed Service (Service National des Semences) (DRC) SEZ Special Economic Zone SIA Social Impact Analysis SIL Specific Investment Loan SNV National Extension Service (Service National de Vulgarisation) (DRC) SRFP Standard Request for Proposals (WB) sss Single Source Selection T Ton TAP Transparency, Accountability, and Participation TORS Terms of Reference TTL Task Team Leader (WB) UN United Nations UNDP United Nations Development Program UNOPS United Nations Office for Project Services USAID United States Agency for International Development VG Village Group voc Vehicle Operating Costs vs Veterinary Services (DRC) WB World Bank WECARD West and Central Africa Council for Agricultural Research and Development WFP United Nations World Food Program WUA Water User Association
Vice President: Obiageli Katryn Ezekwesili Country Director: Marie Francoise Marie-Nelly Sector Director: Inger Andersen Sector Manager: Karen Mcconnell Brooks Task Team Leader: Nicolas Ahouissoussi Co-Task Team Leader: Amadou Oumar Ba
iv DEMOCRATIC REPUBLIC OF CONGO DRC .Agriculture Rehabilitation and Recovery Support Project
CONTENTS
Page I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A . Country and sector issues ...... 1 B. Rationale for Bank involvement ...... 3 C . Higher level objectives to which the project contributes ...... 3 I1. PROJECT DESCRIPTION ...... 4 A . Lending instrument ...... 4 B. Project development objective and key indicators...... 4 C . Project areas and components ...... 4 D. Lessons learned and reflected in the project design ...... 11 E. Alternatives considered and reasons for rejection ...... 11 I11. IMPLEMENTATION...... 12 A . Partnership arrangements (if applicable) ...... 12 B. Institutional and implementation arrangements ...... 13 C . Monitoring and evaluation of outcomes/results ...... 14 D. Sustainability ...... 14 E. Critical risks and possible controversial aspects ...... 15 F. Loadcredit conditions and covenants ...... 17 IV. APPRAISAL SUMMARY ...... 18 A . Economic and financial analyses ...... 18 B. Technical ...... 18 C . Fiduciary ...... 19 D. Environment ...... 21 E. Safeguard policies ...... 22 F. Policy Exceptions and Readiness...... 22 Annex 1: Country and Sector or Program Background ...... 24 A . Country and Sector Context ...... 24 B. The Legacy of a Long Period of Economic Decline...... 24
V C . Reversing the Decline ...... 26 D. The Government’s New Agricultural Strategy - Implementation Challenges and Opportunities ...... 28 E. Bank’s Strategy for Support to Agricultural Development in DRC ...... 30 Annex 2: Major Related Projects Financed by the Bank and/or Other Agencies ...... 34 Annex 3: Results Framework and Monitoring ...... 37 Annex 4: Detailed Project Description...... 46 Annex 5: Project Costs ...... 59 Annex 6: Implementation Arrangements ...... 60 Annex 6-A: Institutional Arrangement Chart ...... 69 Annex 6-B Project Implementation Chart ...... 70 Annex 7: Financial Management and Disbursement Arrangements...... 71 Annex 8: Procurement Arrangements ...... 84 Annex 9: Economic and Financial Analysis ...... 94 Annex 10: Safeguard Policy Issues ...... 103 Annex 11: Project Preparation and Supervision ...... 108 Annex 12: Anti-corruption Plan ...... 110 Annex 13: Documents in the Project File ...... 125 Annex 14: Statement of Loans and Credits...... 126 Annex 15: Country at a Glance ...... 128 Annex 16: Maps...... 131
vi CONGO, DEMOCRATIC REPUBLIC OF
DRC - AGRICULTURE REHABILITATION AND RECOVERY SUPPORT
PROJECT APPRAISAL DOCUMENT
AFRICA
AFTAR Date: March 4,2010 Team Leader: Nicolas Ahouissoussi Country Director: Marie Francoise Marie- Sectors: Crops (48%); Agricultural extension Nelly and research (40%); Animal production (7%); Sector Manager/Director: Karen Mcconnel Irrigation and drainage (5%) Brooks Themes: Rural services and infrastructure (47%); Other rural development (45%); Rural markets (5%); Rural non-farm income generation (3%) Pro-iectID: PO92724 Environmental category: Partial Assessment Lending Instrument: Specific Investment Loan Joint IFC: Joint- - .. . - 1,evel:- - . - -. Project Financing Data [ ] Loan [ICredit [ XIGrant [ ] Guarantee [ ] Other:
For Loans/Credits/Others: Total Bank financing (US$ m): 120.00
Recipient: Democratic Republic of Congo
Responsible Agency: Ministry of Agriculture Congo, Democratic Republic of Tel: (243-99) 990-6017 hubert ali@,),vahoo.fr
vii Estimated disbursements (Bank FY/US%m) 7Y 2011 2012 2013 2014 2015 2016 lnnual 5.00 10.00 20.00 30.00 40.00 15.00 hmulative 5.00 15.00 35.00 65.00 105.00 120.00
Component 1 (US$59.42 million): seeks to address efficiency bottlenecks in on-farm and off- farm production and enhance the productive capacity of participating households in farming and agro-processing, It will also support capacity building for producer organizations;
Component 2 (US$50.58 million): supports rehabilitation of feeder roads and market infrastructure in Equateur Province to connect agricultural production zones to markets; and
Component 3 (US$20 million): provides for selected support to the Ministry of Agriculture restructuring program in tandem with other financing and institutional support to the Ministry of Rural Development and to project management, monitoring, and evaluation.
Which safeguard policies are triggered, if any? Re$ PAD IKE., Technical Annex IO Six safeguard policies have been triggered: 1) Environmental Assessment (OPBP 4.01) 2) Pest Management (OP 4.09) 3) Indigenous Peoples (OPBP 4.10) 4) Physical Cultural Resources (OP/BP 4.1 1 5) Involuntary Resettlement (OPBP 4.12) 6) Projects on International Waterways (an exception to the notification requirement applies).
viii Significant, non-standard conditions, if any, for: Re$ PAD III.F. Board presentation: None
Grant effectiveness: (a) The Recipient has established the PCU and the three decentralized PCUs pursuant to an arrCtC, in form and substance satisfactory to the Association, with the following staff at central PCU: a project coordinator, a procurement specialist, and a financial management specialist; at each decentralized PCU: a decentralized project coordinator, an accountant, a procurement specialist, an agronomist, a livestock specialist, a rural infrastructure specialist, a farmer organization specialist; and for the three decentralized PCUs: one environmental and social safeguards specialist. (b) The Recipient has recruited a Delegated Management Contractor with qualification and experience satisfactory to the Association. (c) The Recipient has prepared and adopted a project implementation manual (PIM), including a project financial and accounting management manual (PFAMM), and the Anti-Corruption Plan in a form and substance satisfactory to the Association.
Actions to be undertaken during implementation ofthe Project: Not later than three months after project effectiveness:
(a) The Recipient has recruited at the central PCU a technical adviser, a statistician, a rural engineer, a treasurer and an accountant; (b) The Recipient has recruited an internal auditor with qualifications and experience satisfactory to the Association; (c) The Recipient has recruited an external auditor with qualifications and experience satisfactory to the Association; (d) The Recipient has installed a fully computerized accounting system and trained staff to use the accounting software; and (e) The Recipient has prepared and adopted a monitoring and evaluation manual satisfactory to the Association.
ix
I. STRATEGIC CONTEXT AND RATIONALE
A. Country and sector issues
1. The Democratic Republic of Congo (DRC) is the size of Western Europe with an estimated population of 60 million. More than one-third of DRC’s total area of 228 million hectares could potentially be cultivated, although only one-third of this area is farmed now. Climatic diversity and abundant water allow for two annual rainfed crops. Thirteen thousand hectares are irrigated, a small share ofthe potentially irrigable area (four million hectares). Vast pasture lands could sustain production of an estimated 40 million cattle. Despite this enormous potential, agricultural gross domestic product (GDP) declined by almost 40 percent (from US$ 3.4 billion to US$ 2.1 billion) between 1990 and 2001’. Agricultural exports, which represented 40 percent of GDP in 1960, now account for only 10 percent. About one-third of the food consumed in the country is imported, and the net trade balance of agriculture, including both food and non-food items of agricultural origin, is now strongly negative. Poverty is widespread; 62 percent of urban and 76 percent of rural people live below the poverty line. Much of this poverty originates in the underperforming agricultural sector. Agriculture provides employment for 70-75 percent ofthe active population and, through agro-industries, an additional 10 percent.
2. The poor performance of agriculture has increased the vulnerability ofthe population to recent increases in food prices and heightened the pressure on forest resources. The country was hit hard by food price increases in 2007 and 2008, particularly in Kinshasa, where the weighted average cost of the food basket increased by 19 percent between April 2007 and April 2008. A 50 percent increase in food prices is estimated to increase the incidence ofpoverty at the national level by 5 percent from already high levelsS2Much ofthe impact in Kinshasa arises from a high dependence on imported rice. Elsewhere in DRC, the impact of high and volatile global food prices is blunted by high transport costs, but continuing poverty and low yields in farmed areas fuel agriculture’s encroachment on valuable forest land. Improvements in agricultural productivity and better links between producing and consuming areas would improve trade balances, reduce poverty and related malnutrition, and protect critical forest resources.
3. The country has made progress in economic reform but to date has done very little to support growth in agricultural productivity. The Poverty Reduction Strategy Paper (2006) and the linked Country Assistance Framework (2007) of the development partners identified key development issues, particularly the need to promote macroeconomic stability, deepen structural reforms, improve governance and the business climate, and ensure peace and security in the country. Economic growth returned in 2002 and has remained robust, although the twin shocks of the food and economic crises are taking a toll. Much of the growth since 2002 has resulted from recovering the capacity that existed before the conflict rather than from creating new capacity in trade, transport, construction, agriculture, and selected manufacturing and service areas. Reforms undertaken to attract foreign investors and improve transparency include the adoption of new Investment, Labor, Mining, and Forestry Codes. Private sector investment has
’ The share of agriculture in GDP increased over this period because mining and manufacturing performed even more poorly than agriculture World Bank, AFTPM, “DRC: Implications of Recent Food Price Increases and Policy Options,” internal working paper, May 2008.
1 generated about US$ 2.7 billion in new investments since 2003. Real GDP growth is projected to rise in the future as the mining and manufacturing sectors recover. Agriculture benefits greatly from the cessation of conflict, the improved macroeconomic and governance environments, and construction or reconstruction of the road network. Longer term investments to improve agricultural productivity have not yet started, however.
4. The recovery of DRC’s agricultural sector will be phased, protracted, expensive, and rewarding. The country’s vast expanse ofwell-watered, fertile agricultural land is at once a great asset and a liability-products must be transported over long distances on very difficult terrain. The spatial dimensions ofagricultural recovery are thus as important as the temporal sequencing. To explore how best to address this challenge, in March 2004, with assistance from the Food and Agriculture Organization (FAO) and the Belgian government, the DRC government organized a well-attended roundtable on agriculture, “Towards an Agricultural Strategy, a Solid Basis for Economic Recovery.” The government’s strategy envisages four key initiatives: (i)improving marketing efficiency; (ii) enhancing the productivity of traditional, smallholder-based agriculture; (iii) recapitalization of agricultural and livestock production through farm investments; and (iv) providing decentralized and deconcentrated support services to a broad range of community-led initiatives.
5. To help the government determine the best concrete measures to pursue this general strategy, the Bank undertook an agricultural sector review in 2006. The review identified five geographic areas (domains) with high agricultural potential. Domain 1 is the area extending from Bas Congo to Kabinda; domain 2 encompasses the mining cities and their hinterlands in Katanga; domain 3 is the Great Lakes Region; domain 4 is northern Equateur Province; and domain 5 is the area along the Congo River from Kisangani to Pool Malebo. A subsequent spatial analysis of priorities for investment in infrastructure included agriculture among the activities generating returns and assisted further in identifying areas where investments in infrastructure could unlock high agricultural p~tential.~A Country Economic Memorandum currently in process includes an analysis ofspecific agricultural value chains.
6. The temporal phasing of activities to support agricultural recovery in a given geographic domain will vary. Generally the first phase will emphasize meeting local and regional demand for agricultural products by increasing the productivity and production of commodities that can be marketed with minimal processing. This effort will be complemented by continued investments in road and river transport to reduce marketing costs. Once marketed volumes have increased significantly, commercial agro-industry and food processing on a larger scale will be required and remunerative. The second phase will be marked by the resurgence of agro-industry and development of more sophisticated marketing institutions. When markets function well and agro-industry provides ready outlets for increased production, the third phase begins. Medium- and large-scale commercial producers, both domestic and foreign, enter the sector. Clearly this temporal framework depends on continued macroeconomic and sectoral reform as well as on continued peace and security. The duration of each phase in a particular geographic domain is hard to predict, but the temporal framework does provide guidance on which activities will be most effective in each phase. The temporal framework and detailed spatial analysis of high- potential agricultural areas have powerfully informed the design of the proposed project. While
See the ESW on DRC and Congo - Prioritizing InfrastructureInvestments -A Spatial Approach
2 the proposed project will focus on the first phase of the recovery agenda, it will also support strategic thinking on revitalizing core functions, such as advisory services and agricultural research, and on preparing the way for agro-industrial recovery.
B. Rationale for Bank involvement
7. The Bank has a history of investment projects and analytical work related to agriculture. Assistance to agriculture featured prominently under the Bank’s reengagement in DRC through the Emergency Multi-Sector Rehabilitation and Reconstruction Project (known by its French acronym, PMURR). The agricultural component of PMURR responded to emergency needs in selected provinces, including the distribution of farm inputs and the partial rehabilitation of important rural road networks. The Bank’s analytical work on agriculture in DRC is noted above and further described in Annex 1.
8. The Bank’s involvement provides strong encouragement and support to the Government of DRC in achieving greater coherence in its agricultural programs and greater coordination among the various partners. The government and other partners have high expectations that the Bank will continue to play a leading role in the sector, but coordination is vital, as the Bank is not alone. The African Development Bank (AfDB) and International Fund for Agricultural Development (FAD) support rehabilitation ofthe agricultural sector (AfDB in domains 1 and 2, and IFAD in domains 4 and 5). Belgian Technical Cooperation (BTC) finances selected activities, including fisheries in domain 1, horticultural development in domains 1 and 2, and the restructuring program of the Ministry of Agriculture (MinAgri). The European Union (EU) supports activities related to food security in domains 1, 2, and 3, works with the Bank on rehabilitating the main road network, and is planning improvements in navigation and port facilities along the river. These efforts are not yet closely coordinated (although consultation takes place in the agriculture sector thematic working group), largely because DRC is so large and because these programs focus on emergency, post-conflict recovery. As the country transitions from emergency recovery to growth, and as better coordination of development partners becomes possible and desirable, the Bank’s involvement and commitment to coordination can facilitate improvements in how the many partners work together.
C. Higher level objectives to which the project contributes
9. The long-term objective of the Poverty Reduction Strategy Paper (PRSP) is to enable DRC to meet the Millennium Development Goals and attain the status of a middle-income country within 25 years. The PRSP includes five pillars: (i)promoting good governance and consolidating peace; (ii) safeguarding macroeconomic stability and growth; (iii)improving access to social services and reducing vulnerability; (iv) fighting HIV-AIDS; and (v) supporting community development. The Bank’s Country Assistance Strategy (CAS) for 2008-1 1 is aligned with the first three pillars of the PRSP, and the proposed project is noted in the CAS. A key government development objective under the second pillar (macroeconomic stability and growth) is to achieve food security and alleviate poverty. The proposed project will promote growth in rural agricultural incomes, support institutional capacity building, improve access to basic services for enhancing food security, and provide decentralized support to agriculture and
3 community development. The project will also help indirectly to relieve pressure on forest resources in areas contiguous to project sites.
11. PROJECT DESCRIPTION
A. Lending instrument
10. The lending instrument proposed for the Agriculture Rehabilitation and Recovery Support Project (ARRSP) is a Specific Investment Loan (SIL). A SIL is deemed the most appropriate instrument, given the proposed project's combination of investments in agriculture and infrastructure as well as the technical and institutional capacity building that it finances in conjunction with parallel operations by other donors. The project will be implemented over five years, with total International Development Association (IDA) grant financing of US$ 120 million equivalent.
B. Project development objective and key indicators
1 1. The project development objective (PDO) is to increase agricultural productivity and improve marketing ofcrops and animal products by smallholder farmers in targeted areas.
12. The key indicators of the proposed project will be (i)average seasonal yield per standard area of specific crops by targeted farmers; (ii)number of poultry produced annually by targeted farmers; and (iii)annual sales of specific crops and animal products in targeted markets. The main crops are maize, cassava, and rice. The present baseline data are averages drawn from the project areas. They will be updated through a new survey conducted during the project's first year, after potential beneficiaries are identified more concretely.
13. The primary beneficiaries of the project will be 105,000 households of smallholder farmers in the targeted areas of northern Equateur Province and Pool Malebo. Secondary beneficiaries will include (i)service providers active in project areas, (ii)non-governmental organizations (NGOs), small businesses, and transporters, for example-producers who can obtain improved seed from project participants, and (iii)consumers.
C. Project areas and components
14. Two areas were selected for the project, based on the spatial and temporal framework described earlier and on extensive consultation during project preparation. The first and largest area covers the portion of Equateur Province north of the Congo River, comprising nine territories within three districts. The second is Pool Malebo, an area including seasonally inundated marshlands located in the vicinity ofKinshasa.
15. The 2006 sector review identified Equateur Province as one of five areas "with high agricultural potential, high population density, and high market access"-a finding reinforced by the spatial analysis ofpotential investments in infrastructure. The government has also identified Equateur Province as a priority because of its agricultural potential (for domestic food crops as well as exports, such as rubber and cacao) and in light ofthe equitable and balanced investments required to foster the postwar recovery. The World Bank is investing in main roads linking the
4 province with Bangui to the north and the ports on the Congo River. The EU is planning to finance improvements in navigation and port facilities along the river, which will reduce transport costs from Kisangani to Kinshasa. Even now, despite poor roads and primitive ports, several ports in the province provide access to the river year round, and others permit access for part of the year. Despite its potential, Equateur Province has not seen significant reinvestment in these facilities, and development partners have not been active there. The selection of Equateur Province raised concern, expressed in a review, that the province would be too remote for the project to be implemented adequately, even though transport to Kinshasa is available by river all year. For this reason, the implementation arrangements have been structured to devolve decision making to the local level. Supervision techniques used in other locations where access is difficult, such as Afghanistan, are built into the implementation strategy (see Annex 4).4
16. Near Kinshasa, Pool Malebo offers high potential to increase rice production rapidly. The emergency operation successfully restored 800 hectares of irrigated area there. A full hydrological assessment (currently underway) indicates that irrigation could be developed on 6,000 additional hectares, of which the project proposes to develop 2,000. The investment will be concurrent with IFC’s participation in developing a special economic zone that will be close to Pool Malebo and include agro-industry and food processing. IFC and the Bank will work together to encourage commercial processors of rice and cassava to locate in the special economic zone to serve Kinshasa’s large and active market. Given that global prices for rice are high and could rise even more, the investment in Pool Malebo offers high returns to producers, processors, consumers, and the economy as a whole.
17. The project includes three components. The first focuses on the farm level to raise productivity and give community groups access to basic technology for small-scale processing and storage. The second addresses marketing infrastructure. The third enhances the capacity of the MinAgri and the Ministry of Rural Development (Ministere du DCveloppement Rural, MDR) to implement the project, provide needed services, and prepare the way for revitalizing core sector functions and agro-industry.
Component 1: Improving agricultural and animal production (estimated costs: US$ 59.42 million of which US$49.42 IDA contribution)
18. This component supports activities to enhance the capacity of about 105,000 farm households or about 735,000 people to produce rainfed crops (Equateur), irrigated rice (Pool Malebo), small ruminants, and poultry. Activities include the provision of improved seed, seedlings, and animal breeds; the provision of advice to improve production management; the rehabilitation of irrigation infrastructure to improve water management; and the capacity for basic product transformation. This component will also support activities to develop the capacity of farmer organizations in the project areas, with the view to promoting their effectiveness in marketing agricultural inputs (primarily seed) and outputs and in building linkages with private agri-business. The entry point of this component will be farmer organizations, including women’s groups. Periodic assessments of project outcome and intermediate outcomes will be
The site is not inherently remote, but planning is required to get there. Project staff can reach Equateur Province by commercial airlines. WB staff are required to use UN flights or approved charters rather than scheduled commercial airlines.
5 carried out at least twice during the project, including focusing on gender disaggregated beneficiary information.
19. PPF funds were used to pilot the production of improved seed by farmer groups involved with several NGOs working on agriculture. The groups were well organized, highly motivated, and undertook the effort successfully. Under the proposed project, these NGOs will have the opportunity to contract for support to expand their efforts. Advisers working with and through the NGOs to serve the farmer groups will form the core of a revitalized extension service embodying the good-practice features of such services, particularly public payment for advisory services and pluralistic delivery.
Sub-component 1.1: Improving production by providing seed, planting materials, and advisory services (estimated costs: US$49.00 million)
20. The project will assist the national research institute (Institut National d’Etudes et de la Recherche Agricole, INERA) through its Boketa research station in Equateur Province to resume its activities, beginning with improved seed production. In the first year, the project will provide pre-foundation seed to INERA. Then the project will provide 50 percent matching grants (see details in Annex 4) for trained, specialized farmers (agri-multiplicateurs) to purchase foundation seed from INERA, produce improved seed under the guidance of the NGO advisors, and sell that seed to farmers after it has been certified by the National Seed Service (Service National des Semences, SENASEM). The project will also assist SENASEM in certifying and assessing the quality of the commercial seed that is produced. Based on successful experiences with cost recovery in the pilot activities, under the project the agri-multiplicateurs will promote cost recovery in the distribution of commercial seeds and cassava cuttings, whether through cash payment or through bartering.’
2 1. Farmers groups will be supported to develop the skills, links, and communication needed to evolve into stronger and larger farmer organizations capable ofjoining together for marketing or for addressing key issues affecting members’ welfare. Opportunities will be created to establish higher level associations at the zone (secteur) and territory (territoire) levels. To advise these nascent organizations, the services of specialized organizations, such as INADES Formation-Congo, a Pan-African NGO, will be contracted.6
22. In addition, the project will assist selected groups that grow improved crops to acquire basic, small-scale processing equipment to improve value-addition and storage facilities to reduce loss. The equipment will be acquired by matching an 80 percent maximum IDA contribution (see Annex 4 for details). For example, such equipment could include manioc shredders, small grain mills, and similar items.
In some instances farmers provide a few kilograms of maize, for example, in exchange for one kilogram of certified seed. INADES is the Institut Africain pour le Developpement Economique et Social.
6 Sub-component 1.2: Improving rice production through better water management in Pool Malebo (estimated costs: US$5.42 million)
23. The project will build on PMURR’s experience in irrigated rice production in Pool Malebo to improve irrigation infrastructure on approximately 2,000 hectares near the communes (townships) of N’sClC, Masina, and Limete (from upstream to downstream). The works will focus on reconstructing and cleaning irrigation and drainage channels and a water control weir. Project investments will be informed by the results of the master plan developed for the entire Pool plain, begun in 2009 under the Bank-funded PMURR. The plan is based on technical studies and surveys to determine the most favorable areas for irrigation infrastructure, defined by topography, soils, water supply from Congo tributaries, and other criteria. Water user associations (WUAs), organized around a well-defined hydraulic unit, will manage the infrastructure funded by the project. The project will help to establish these associations and assist them in carrying out effective water management, input delivery, product storage, and processing, as seen in the Macina zone (already developed by other funding).
Sub-component 1.3: Improving animal production capacity for small ruminant and poultry (estimated costs: US$5.00 million)
24. A mechanism similar to that for crops will be used for animals. Farmer groups considered capable of managing improved livestock will receive a few improved parents and distribute the offspring on rotating basis, with the objective of gradually improving small ruminant breeding stocks. These practices are not new in the area. To help manage the animals and improve animal health, advisors will be grouped in a network of community animal health agents (agents cornmunautaires en sante‘ anirnale, or ACSA) at the secteur level, again working through the NGOs. To provide oversight and quality control, the decentralized technical services ofMinAgri will be trained and provided with equipment, office space, and transport to supervise the ACSA network. The Veterinary Services’ capacity to conduct basic health diagnosis will be improved by rehabilitating and equipping a small veterinary laboratory. The project will support: (i)the training of trainers; (ii)the training of ACSA agents, technicians, and veterinary senior staff; (iii) bicycles and veterinary kits for ACSA agents; (iv) the establishment of the first pharmacy/depots; (v) mobility and operating costs; (vi) the management and supervision costs of the subcontracted local NGO; and (vii) strengthening of core mandates of the Veterinary Services (VS) at the central level (see component 3). Again, most ofthis work will be undertaken by contracted NGOs that are already active in the agricultural sector, with modest investment in public agencies for oversight and core functions.
25. The advisory activities supported by the project will form the nucleus of a new extension service. Agents involved in these activities, both from the public sector and NGOs, will be trained from the start not only to deal with technical issues but to give equal importance and time to sociological and organizational aspects of village farmer organizations. The agents will work with existing groups and facilitate formation of additional ones as needed. They will use community land (champs comrnunautaires) to introduce new varieties and agronomic practices. A new partnership between the public sector (MinAgri) and the service providers for extension will be established, with clearly defined operating rules. Because the extension service in DRC virtually ceased operations during the war, the province has the opportunity to rebuild by
7 incorporating good features of newer extension systems. The effort will simply require the project to strengthen and support relationships already in place. Project funding will cover: (i)at the village level, mobility for village facilitators (animateurs), training, and seed and seedlings for a demonstration on communal land; (ii)at the groupement level, mobility for the part-time supervisors, training, extension equipment, and a lump sum payment for work during the two growing seasons; (iii)at the secteur and territoire levels, motorcycles, training, office equipment, and operating costs (as necessary) and incentive payments (the salary is paid by the NGO-service provider under contract); and (iv) at the district level, utility vehicles, office equipment, operating costs, and internet access. Funding will flow through the contracted NGOs and the public sector, depending on the activity financed.
Component 2: Marketing infrastructure improvement (estimated costs: US$ 50.58 million, all IDA)
26. This component includes the rehabilitation of feeder roads and rehabilitatiodconstruction of a few local markets in Equateur Province. The sustainability of this infrastructure will be ensured by requiring evidence that adequate rural infrastructure maintenance and repair facilities are available at the district level, with adequate funding (from district and national funds) to undertake maintenance as needed, either in house (en rkgie) or by contract with local entrepreneurs. The renovated markets will be locally owned and have an organizational and fee structure that will assure their upkeep.
Sub-component 2.1: Improving feeder roads (estimated costs: US$45.76 million)
27. Priorities for investments in feeder roads have been determined by assessing the agricultural potential of isolated zones, commodity-specific marketing constraints, the cost of the works required, and multi-modal linkages to wider transport and marketing networks. These investments will complement road investments by other partners, thus enhancing connectivity within the province and with the Kinshasa and Kisangani markets. Road segments to be rehabilitated or constructed have been determined initially by overlapping the list of priority roads produced in 2007 by the Directorate of Agricultural Access Roads (Direction des Voies de Desserte Agricole, DVDA) with a map of high-potential agricultural zones in the province, by taking into account linkages to trunk roads-especially National Highway 6 (RNB)-that are already being rehabilitated by the World Bank and EU, and DVDA.
28. The total length of roads to be opened or rehabilitated is about 2,500 kilometers, selected on the basis of the following criteria: (i)they belong to the 6,912 kilometers of priority feeder roads identified in the project area in June 2007 by the DVDA; (ii)they lead to areas with high agricultural potential and relatively dense population; (iii)they are connected to operational main roads and/or river ports; and (iv) they do not correspond to sections already taken into account within the framework of road programs financed by other donors. The final list of feeder and district roads to be targeted will be identified following more elaborate technical studies, including environmental and social studies. Project preparation included close contact with the Federation of Congolese Entrepreneurs (FEC). FEC representatives have expressed much enthusiasm with the proposed infrastructure rehabilitation, which they see as an opportunity to resume transport services and possibly to upgrade and expand the shipping fleet. To enhance the
8 sustainability of the rehabilitated infrastructure, the project will provide sufficient resources and practical arrangements for rehabilitation and maintenance, at least for a few years, by combining both activities in one contract.
Sub-component 2.2: Rehabilitationkonstruction of market infrastructure (estimated costs: US$4.82 million)
29. The project will support the rehabilitation of three to four modest local agricultural markets. The work will begin with Mongalo Market, where more permanent storage and covered market sheds will be added, and by year 3 it will include up to three additional markets. The intent is to improve markets rather than identify sites for new ones. The renovations will be modest and can probably be undertaken by the firms contracted to do road work in the area. The management of the renovated markets will be ensured by local committees under the responsibility ofthe municipality.
Component 3: Capacity-building support to the Ministry of Agriculture and Ministry of Rural Development, and project management (estimated costs: US$ 20 million including US$2 million of PPF, all IDA)
30. This component includes three sub-components: (i)capacity-building support to MinAgri and MDR; (ii)project management; and (iii)monitoring and evaluation (M&E).
Sub-component 3.1: Capacity-building support to the Ministry of Agriculture and the Ministry of Rural Development (estimated costs: US$5.44 million)
31. Activities under this sub-component will support: (i)strategic thinking about how to revitalize core functions such as advisory services and agriculture research; (ii)preparations for the recovery of agro-industry; and (iii)implementation of part of the institutional restructuring and strengthening of MinAgri, which has been initiated with assistance from BTC and FAO. Project funding will complement BTC’s current financing. Given the scope of the restructuring program, other financing is needed as well. The capacity-building activities will allow the ministries to fulfill their obligations under the project and will also build a foundation for good management ofthe sector in the future and in other provinces.
32. To assess whether the system developed under the project can be replicated in other parts of the country, the project will finance studies to define a national vision of the advisory services and of agricultural research. It will help create a partnership with regional institutions, such as the West and Central Africa Council for Agricultural Research and Development (WECARD), Africa Rice Center (ADRAO); and the new sub-regional research organization in Southern Africa (CARDESA).
33. A number of large-scale processing facilities are located in the province, but they have ceased to function and have deteriorated severely. The government has asked for assistance in assessing these facilities and formulating options for them. The Bank-financed Private Sector Development Project currently supports such studies, which are conducted under the
9 responsibility of the Ministry of Industry. Further assessments will be done under the proposed project in collaboration with the Ministry of Industry, IFC, PSD, and FEC.
34. At the central level, the project will provide selective support to MinAgri's restructuring program. Activities will focus on (i)improving data collection capacity and analysis for the Directorate of Analysis, Planning, and Forecasting; (ii)improving technical and managerial capacities for the National Service of Planting and Seeds; (iii)enhancing administrative capacity for the Secretariat General of MinAgri; (iv) strengthening the core mandates of the Veterinary Services, such as the National Animal Disease Information System; (v) improving 'the business environment in agriculture, including assistance to carry out additional work to complement the Agriculture Code; and (vi) supporting planning for the staffing and decentralization of MinAgri, in line with the new structure defined under the restructuring program for agricultural service delivery. The preparatiodfinalization of a retirement plan for Ministry staff past retirement age and its implementation will be handled separately.
35. At the provincial and local levels, targeted technical support and equipment will be provided for: (i)strengthening the capacities of the provincial directorate of MinAgri and MDR, specifically its Monitoring and Evaluation Unit and its Division of Production Planning and Statistics; (ii)formulating a provincial agricultural development plan; (iii) establishing a provincial communications and information platform, similar to that established by BTC in MinAgri in Kinshasa; and (iv) supporting the establishment and operation of Agricultural Management Councils in the nine territories that make up the core project zone. These councils are designed to be operational working groups involving government authorities, farmer groups, NGOs, the private sector, researchers, and civil society. For MDR technical and institutional support will be provided to enhance its capacity to fulfill its mandate for planning and management of economic infrastructure.
Sub-component 3.2: Project management (estimated costs: US$I0.56 million)
36. The main outcome expected from this sub-component is the proper administration and use of IDA-allocated resources in achieving the project's objectives. IDA funding will ensure proper capacity for the Project Implementation Unit (PN) to formulate and ensure the implementation of annual activity programs in accordance with the project objectives and mechanisms set forth in the Grant Agreement. Adequate funding will be provided for the PIU, including 'vehicles and equipment, office supplies, operating costs (salaries, utilities, mobility), and audits, operating costs for the coordination committees at the central and provincial levels, consultant services, training, and workshops.
Sub-component 3.3: Monitoring and evaluation (estimated costs: US$2.00 million)
37. This sub-component supports activities managed by the Monitoring and Evaluation (M&E) Unit, whose primary client is the project manager and hisher key staff (housed within the Project Management Unit). These activities involve (i) periodic assessments of the implementation of planned activities (that is, the delivery of project outputs as per the annual activity programs) and (ii)periodic assessments (evaluations) of progress towards reaching intermediate and main outcome targets. Funding will be allocated for the operating costs of the
10 hUE Unit (salaries, utilities, mobility), office supplies, and consultants’ services, including studies on the preparation of the geographic roll-out of successor operations, training, vehicles, and equipment.
D. Lessons learned and reflected in the project design
38. The agricultural component of the PMURR project has been an important source of inspiration and a precursor to the proposed ARRS project. PMURR includes the provision of improved agricultural inputs and the rehabilitation of rural infrastructure. The use of labor- intensive methods for rural road repair and maintenance, and the dissemination of improved planting materials to farmers, have worked well.
39. NGOs in the project area are strong, inclusive in their activities, and already engaged in the work needed under the project. They are eager to participate and can do so successfully, as indicated by the pilot seed production activities.
40. Community groups understand the basic concepts ofthe project and are highly motivated to participate. Efforts to pilot cost recovery for improved seed were successful despite the deep poverty and demonetization of the area, in part because farmers are not spending to purchase fertilizer. The soil is sufficiently fertile to reward the use of improved seed without incremental inorganic fertilizer. High transport costs would make purchased fertilizer prohibitively expensive for smallholders, who presently manage soil fertility through grain-legume rotations. Cost recovery for improved seed thus looks promising, but it will need to be monitored.
41. The capacity ofDRC’s agricultural public institutions is weak, but NGOs in the area have experience and stronger capacity. The project has resources to improve the capacity of public institutions, including their capacity in technical and fiduciary matters. Close partnership in implementation will be required, and the Bank’s task team is appropriately constituted, with requisite expertise based in Kinshasa.
E. Alternatives considered and reasons for rejection
42. Four alternatives for this project were considered and rejected:
(a) Use of an Adaptable Program Loan (APL). This instrument is attractive because it implies a long-term commitment, and DRC’s agricultural recovery will be protracted and require extended assistance. On the other hand, an APL presumes temporal sequencing of a program with identifiable triggers for moving between phases. Given the physical size of DRC and the different progress towards recovery in different parts of the country, it would be difficult to design an APL that would be an appropriate vehicle for a national program. (b) Broadening the scope ofactivities. Fisheries are important in the area, both on the river and in aquaculture. Potential participants strongly requested support for fisheries, but this work requires yet another set of technical skills and would complicate implementation. A small FA0 project in the area already supports fisheries. For these reasons, work on fisheries was excluded from the planned activities
11 Broadening the project’s geographic coverage to address all five priority zones identified under the Agriculture Sector Review. The sheer size of DRC and the poor access to many areas favored the use of a more selective approach. Other donors are active in two of the five domains, and another province is insecure. Including river transport as well as roads. The EU intends to undertake improvements in river transport, and for that reason the project has not been designed to do so. Should the work of the EU be delayed or not materialize, this decision should be reconsidered, because river transport is important for the success ofthe project.
IMPLEMENTATION
Partnership arrangements (if applicable)
Development partners active in rural DRC were consulted during project preparation. Co- financing the project was not considered by those agencies, but all pledged to-collaborate and pay due attention to coordination among donors’ respective interventions. BTC already finances part of the implementation of MinAgri’s restructuring, though on a very limited scale. In Equateur and a neighboring province, IFAD supports projects similar to the proposed project. AfDB also supports projects with similar features in neighboring provinces. The EU is planning to improve navigation on the waterways starting from 2010; as mentioned, this effort is critical to the success of the proposed project because it will ensure full connectivity with river transport. The proposed project will maintain strong collaboration with other Bank-funded projects. These include the Governance Capacity Enhancement Project, which supports the establishment of directorates in charge of statistics, planning, and M&E in several ministries, possibly including Agriculture and Rural Development, and the transport projects (Pro-Route and Emergency Living Conditions Improvement Projects) that finance constructionhehabilitation of trunk roads in the province. Collaboration with the Bank’s Private Sector Department (PSD) and IFC has been actively sought and will be key for promoting agribusiness. PREM plans to provide support on public service reform that is expected to complement institutional reforms in MinAgri.
44. The project will also collaborate with NGOs and other private institutions, including FEC, operating in the province. These organizations may be sub-contracted to implement project activities, particularly activities related to technology improvement for on-farm and off-farm production, and to support farmer organizations. A consulting firm will be also hired to implement the rural infrastructure component.
45. Consistent with the Kinshasa Aid Forum held in June 2009, the project will foster donor harmonization by ensuring the establishment of a single Steering Committee (SC) for the Ministries of Agriculture and of Rural Development addressing all projects assigned to these two ministries. This Steering Committee will be entrusted with a general mandate for development assistance and have oversight of sector projects, including the mapping of donor interventions both thematically and geographically. Furthermore, the line ministries have agreed to use the Project Coordination Unit that will be established under the Secretariat General to host future projects with additional staff as needed. The project, therefore, provides a platform for streamlining donor coordination within the agriculture and rural development sectors.
12 B. Institutional and implementation arrangements
46. The implementation arrangements have been designed expressly to shift decision-making authority down to local levels and to provide needed oversight from the center. This design feature is intended to address the distance between Kinshasa and Equateur Province and avoid delays. To build oversight at the local level, agricultural management councils, comprising representative stakeholders, will be involved in monitoring and assessing the implementation of project activities. Implementation arrangements are integrated into the concerned line ministries and make maximum use of existing structures, including those in the non-public (primarily NGO) sector. Because of the need to shift implementation authority down to lower levels, the arrangements may appear layered and cumbersome, but the layers are defined to foster subsidiarity and accountability. The organizational set-up for project management involves (i)at the central level, a Steering Committee and a Project Coordination Unit serving as a liaison bureau, and (ii)at the decentralized level, a Provincial Coordination Committee and district-level Project Coordination Units.
47. The Steering Committee at the central level, co-chaired by MinAgri and MDR (or their respective delegates) will oversee project implementation, including the approval of work plans, budgets, and periodic supervision. As indicated previously, it will be entrusted with a general mandate for development assistance and will cover both ministries and all their projects. Its permanent members would include representatives from the Ministry of Finance, the Ministry of Transport, the Ministry of Planning, the Ministry of Industry, and the Ministry of Research. Additional variable members would include representatives from the project zone. The project coordinator will be entrusted with secretarial duties.
48. The central Project Coordination Unit (PCU) will be set up under the Secretary General of MinAgri and headed by a Project Coordinator, a locally recruited staff serving as direct interlocutor of the Bank for project management. The PCU is charged with day-to-day management of the project and reports to the Secretary General. The PCU will be staffed with locally recruited technical and fiduciary experts.
49. At the decentralized level, the Provincial Coordination and Monitoring Committee will be chaired by the Provincial Minister of Agriculture or hisher delegate. This committee will make decisions on activities directly implemented by the province, such as capacity building, but it will not have approval authority over decisions at the district level. It will ensure donor harmonization at the provincial level. Its major responsibility will be to monitor project progress within the province and aggregate reports from the districts involved. Members would include relevant staff from the provincial ministries and representatives ofthe territorial Agricultural and Rural Management Councils (Conseils Agricoles et Ruraux de Gestion, CARGs).
50. Given the large size of Equateur Province, the key operating units will be at the district level and include: (i)three Decentralized Project Coordination Units (DPCUs), headed by a district project manager, to be established within MinAgri’s district office and charged with day- to-day management of the project. There will be a DPCU in each of the three target districts, with offices to be located most likely in the capital city of each district; and (ii)a firm-a
13 designated management contractor, DMC-would be contracted to implement the project’s infrastructure activities (for feeder roads, market, and irrigation). The territorial representative of MinAgri will be responsible for monitoring implementation of project activities, in consultation with the territorial administration. This effort will include mobilizing and training field staff at that level. Actual implementation at the territorial level will be undertaken by the contracted NGOs (for work with farmer groups) and the firm or firms identified by DMC (for infrastructure work).
C. Monitoring and evaluation of outcomes/results
5 1. A new baseline survey to update current data for project outcome and intermediate results indicators will be completed during the first year of project implementation. The current project baseline is drawn from data in the Monographie de I’Equateur and annual MinAgri reports and validated during a national stakeholder workshop. Periodic assessments of project outcome and intermediate outcomes will be carried out at least twice during the project, including focusing on gender disaggregated beneficiary information. These assessments will supplement the regular monitoring of expected project inputs and outputs. A detailed description of procedures for project monitoring will be developed in the project implementation manual. The project will serve as a sample area for the poverty assessment currently under design. Participation in the poverty assessment will provide additional information about the initial status of beneficiaries, and allow more thorough tracking of impact in the future.
52. Capacity in the project areas for producing data and managing information relevant to decision making is low. ME specialists locally recruited under the project are expected to provide training and hands-on assistance to their colleagues from MinAgri and MDR, at the central and decentralized levels. This effort will also involve local professionals, service providers, and farmers’ representatives. The project thus offers an important opportunity to generate better capacity, provincially and more locally, to gather information useful for planning and decision making. Where possible, groups will be provided on a pilot basis with telephones to allow them to report directly on their activities.
D. Sustainability
53. Sustainability ofthe project will be achieved in the following manner:
(a) Service delivery by the contracted NGOs will be sustainable because NGOs already perform this function and have a long term commitment to continue. The levels of service that can be sustained when project funding ceases and potential sources of funds for those services will be assessed for planning purposes at the Mid-Term Review (MTR).
(b) Seed multiplication, adoption of higher quality seed, and the management of improved livestock will be sustainable because these activities will be profitable and cost recovery will be built into the project. The extent of cost recovery and success in its implementation will be assessed at the MTR.
14 Sustainability of the renovated markets will be addressed through the local management committees and the fee structure for services at the markets.
Sustainability ofthe capacity ofthe two chief ministries will be enhanced through training, and technical assistance in clarifying options for the management of the sector.
Sustainability of feeder roads will be addressed through contracts that incorporate maintenance for a defined period, definition of the potential role of community groups in labor-intensive maintenance programs, and evaluation in the final year of project implementation of the costs and requirements for maintenance after the build-and-maintain contracts expire. The maintenance will be picked up by the Road Maintenance Fund.
Sustainability of the irrigation facilities at Pool Malebo will be addressed by establishing user associations (WAS), providing training for the associations, and defining the fee structure for operation and maintenance, assuring continued successful operation ofthe renovated structures.
E. Critical risks and possible controversial aspects
54. The proposed project will face systemic risks related to the national context as well as risks specific to the planned activities. The financial management risk is essentially fiduciary-in other words, the risk that funds will be misused. To mitigate this risk which is Substantial, a robust financial management arrangement system is proposed in Annex 7. To ensure that this system continues to operate well over the life of the project, two on-site supervision missions will be carried,out annually in addition to desk reviews of interim financial reports (IFRs), the internal audit function, audit reports, and timely advice to the Task Team on all financial management (FM) issues. The overall risk rating is High. The main risks are summarized below:
Risk Risk Risk Mitigating Measures Residual Rating I Risk Country risk Political instability and H The Bank will continue to work closely with the UN and H conflict resurgence other bilateral partners to monitor the political situation and adjust its program accordingly. - Macroeconomic framework H The authorities have negotiated a new IMF PRGF S program that was approved by the IMF's Board in December 2009. The program aims to enhance macroeconomic stability, fiscal space for priority spending. In close coordination with the IMF, the program will pursue its monitoring of the country's adherence to the PRGF, including the macroeconomic
15 Risk Risk Mitigating Measures tesidual Rating tisk tating Project Risk Inability to sustain funding Progress in assuring sufficient flows to lower levels H requirements for the through the intergovernmental fiscal system is uncertain. operation and maintenance of Current funding provisions in budgetary reforms the new or rehabilitated (Organic Law) are intended to address this risk. The road infrastructure work and renovation of markets will be undertaken with construct-and-maintain contracts, and assessment of maintenance needs and costs at the end ofthe project will assist in providing for continued maintenance. The NGOs active in the area have the capacity to maintain feeder roads if given sufficient resources. Difficulty in finding and The newly appointed Minister of Agriculture has H retaining qualified MinAgri announced ambitious plans to reassign technical staff to staff, especially in the the field. The upcoming Bank-supported public sector decentralized outposts reform is exDected to consolidate this movement towards decentralization. Logistical and capacity The NGOs already have a wide outreach and experience constraints and poverty in the with providing services in the project area. The project project area may be so high will expand and improve on existing efforts and that participants are not able approaches. Communities participating in the pilot phase to respond to opportunities have expressed high enthusiasm for the project, and they inherent in the project. were well able to undertake the activities. The mix of community-supported activities in the project will be based on demand and adjusted based on results. Inappropriate use of project An international firm will be appointed to manage the funds infrastructurecomponent of the project, which accounts for about 50 percent of the costs. Inaddition, mechanisms for inspection and control will be built into the project to ensure proper administration, transparency, and accountability. Adequate technical assistance in financial management, reporting, procurement, and audits will be provided. Lack of implementation Implementationof the infrastructure component will be capacity contracted to private entities. Adequate technical assistance is envisioned, notably during the first few years of project implementation, and implementation support from the Bank, including a field-based staff member, will be provided. The international firm meant to manage the infrastructure S faster than marketing component will speed up the road rehabilitation activities. opportunities, due to delays Arrangements are underway to recruit this firm before in rehabilitating roads, project effectiveness. Given that EU has carried out the waterways, and ports identification studies on the waterways and port rehabilitation, it is expected that these activities could start in 2010 or so. The Project will closely monitor progress in implementingthese activities. 11 Overall risk
16 F. Loadcredit conditions and covenants
55. Conditions of effectiveness
(a) The Recipient has established the PCU and the three decentralized PCUs pursuant to an arrete, in form and substance satisfactory to the Association, with the following staff at the central PCU: a project coordinator, a procurement specialist, and a financial management specialist; at each decentralized PCU: a decentralized project coordinator, an accountant, a procurement specialist, an agronomist, a livestock specialist, a rural infrastructure specialist, a farmer organization specialist; and for the three decentralized PCUs: one environmental and social safeguards specialist. The recruitment process of project staff is quite advanced, with the terms of reference prepared and the selection of the cabinet meant to carry out the recruitment underway; it is expected that this condition be timely met.
(b) The Recipient has recruited a Delegated Management Contractor (DMC) with qualifications and experience satisfactory to the Association. Draft terms of reference for the DMC have been prepared and are being revised based on comments provided by the Bank. A UN agency with a proven record in this domain has been identified as a potential candidate to serve as the DMC.
(c) The Recipient has prepared and adopted a project implementation manual (PIM), including a project financial and accounting management manual (PFAMM), and the Anti-Corruption Plan, in a form and substance satisfactory to the Association. Draft of these manuals has been prepared and discussed during the technical discussions. It is expected that the manual will be timely adopted.
56. Actions to be undertaken during implementation of the Project
Not later than three months after effectiveness:
(a) The Recipient has recruited, at the central PCU: a technical adviser, a statistician, a rural engineer, a treasurer, and an accountant. (b) The Recipient has recruited an internal auditor with qualifications and experience satisfactory to the Association. (c) The Recipient has recruited an external auditor with qualifications and experience satisfactory to the Association. (d) The Recipient has installed a fully computerized accounting system and trained staff on how to use the accounting software. (e) The Recipient shall prepare and adopt a Monitoring and Evaluation Manual satisfactory to the Association.
Other standard financial management covenants
(a) Consolidated IFRs will be prepared on a quarterly basis and submitted to the Bank 45 days after each quarter.
17 (b) Annual audited financial statements will be submitted to the Bank within six months following the end ofthe government’s fiscal year. (c) An annual detailed work program and budget will be prepared each year by the end of December. (d) The overall financial management system will be kept operational during the project’s life.
IV. APPRAISAL SUMMARY
A. Economic and financial analyses
57. The proposed project will generate significant social and economic benefits, some of which are quantifiable (see Annex 9). The project’s contribution to restructuring MinAgri and providing institutional support to MDR will help improve the delivery of services for rural producers. Similarly, by constructing roads and markets, the project will be able to serve many communities that presently have limited opportunities to improve agricultural production. Under the assumptions presented in Annex 9, the average economic rate of return (ERR) is 29 percent. The financial rate of return (FRR)-measuring benefits at the project level-is 25 percent. The corresponding net present values (NPV) are positive and in the order ofUS$ 56-69 million for a 15-year project lifecycle. The project’s returns are nevertheless sensitive to several scenarios. Given the uncertainties with respect to some key parameters, a risk analysis demonstrates that under the most likely scenario the ERR will lie between 12 and 20 percent (with an overall probability of 41 percent). There is a significant probability (37 percent) that the ERR can be below the 12 percent threshold, however. While an acceptable ERR is the most likely outcome, the project appears sensitive to unfavorable changes in price levels, actual yield improvements, and in particular the phasing ofnet project benefits.
B. Technical
58. A wide array of crop varieties and small ruminant and poultry breeds are known to be more productive than those currently used in the project area. The risk that suitable varieties and breeds cannot be found is very low because they are common in the surrounding area. The area has plentifbl rain, and risks ofdrought are less than in other parts of Africa. To mitigate the risks of delayed and low implementation, a dedicated PCU reporting to the Secretary General will attend to implementation. In addition, a DMC will be recruited to implement the infrastructure component. The PCU will be reinforced by technical assistance to support implementation. The project will use external operators to manage challenging activities such as road rehabilitation and maintenance. This arrangement has proved effective and beneficial in other Bank-fbnded investment operations in the country. The technological options for delivering project outputs adequately reflect the needs and capacity of users (for example, farmer-based improved seed production and distribution). The PCU is decentralized to provide effective, need-based technical assistance to beneficiaries and ensure that the implementation ofactivities is monitored closely.
18 C. Fiduciary
Financial Management
59. The financial management (FM) arrangements for the project have been designed in consideration ofthe country’s post-conflict situation and the remoteness ofthe main project sites. The assessment of FM capacity in the Finances Division of MinAgri revealed several weaknesses, mainly in staffing arrangements and accounting systems, and significant fiduciary risks. Given the weaknesses and fiduciary risks associated with the project, the financial management team will be headed by a qualified, experienced FM expert (individual consultant), supported by five experienced accountants (one accountant and one treasurer at the central level and three accountants at the provincial level), all selected on a competitive basis among civil servants already working for MinAgri, other specialized entities ofthe government, or individual consultants. A financial management manual under preparation will be adopted before effectiveness. A computerized accounting system will be set up no later three months after effectiveness. The internal audit function of the project will be under the responsibility of an internal auditor (individual consultant) recruited on competitive basis.
60. The internal auditor will carry out regular internal audit controls, aiming to ensure that the internal control system is performing well. The internal audit function will be outsourced to an experienced internal auditor recruited on a competitive basis. In addition to ensuring that project funds are used for their intended purposes, the internal auditor will have to provide technical assistance to MinAgri to create a robust Internal Audit Department (IAD) within the Ministry. The IAD will be composed of a mix of technical and fiduciary staff. The findings of the internal auditor will be used by project management to make decisions regarding project implementation as well as payments and contracts for service providers and implementing agents.
61, One Designated Account will be opened in US dollars in a commercial bank acceptable to IDA. Disbursements from the IDA grant will be transaction-based (replenishment, reimbursement). This method will be used during at least the first 18 months. Thereafter, the option to disburse against submission of IFRs (known as the Report-based Disbursement method) could be considered, subject to the quality and timeliness of the financial management system deliverables. The option of disbursing the funds through direct payments on contracts above a predetermined threshold will also be available.
62. The Cour des Comptes is DRC’s supreme audit institution, equivalent to the Office ofthe Auditor General. It has been assessed as weak. For this reason, a qualified, experienced, and independent external auditor will be recruited on approved terms of reference. The Cour des Comptes may participate in the selection process ofthe external auditor. The external audit will be carried out according to either International Standards on Auditing (ISAs) or Auditing Standards (ASS). It will cover all aspects of project activities implemented at the central and decentralized levels and will include verification of expenditures eligibility and physical inspection. The audit period will be annual, and reports will be submitted to IDA and the Cour des Comptes six months after the end of each fiscal year.
19 Procurement
63. Procurement 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. “Guidelines on Preventing and Combatting Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006 shall apply to the project.
64. Procurement will be carried out by the PCU of MinAgri, which will be staffed with one senior procurement specialist at the central level, and three procurement assistants at the district level. The three procurement assistants will provide substantive inputs to the team on procurement for project activities in their respective districts. The senior procurement specialist will lead the procurement processing, provide on the job training to other procurement staff (including any other officers assigned by the Ministry), and set up an acceptable procurement system in the PCU. He or she will also (i)reinforce the integrity and internal review of the procurement process and (ii)develop and strengthen capacity within the PCU and MinAgri. An independent procurement board will be created to review major procurement decisions. These arrangements are in line with the provisions proposed by the upcoming Procurement Code, which is under discussion in Parliament.
65. A DMC recruited on a competitive basis, or a UN Agency selected on a single-source basis (SSS), will be hired to procure all contracts regarding the implementation of the component related to infrastructure under the project (feeder roads, market, and irrigation infrastructure). The terms of reference for this activity will be designed in ways that help create long-term capacity within MinAgri and local communities. To this end, the concerned contract has to be performance-based and time bound; it will include a capacity-building dimension and related capacity-building performance indicators; and it will provide an exit strategy. Procurement arrangements will be part of the Project Implementation Manual. This manual will set conservative thresholds for procurement methods and prior review for all activities at the district level.
D. Social 66. Agriculture (subsistence farming and animal production) is the predominant source of livelihood of the people in the areas covered by the proposed project. The project’s main benefits are enhanced food production, income generation, and stronger social cohesion and stability. Other benefits include improvements in the quality of transport services as well as improved access to public services, schools, health clinics, and agricultural inputs such as seeds. The project’s primary beneficiaries are the farmers (men and women) who will participate directly in project operations. The secondary beneficiaries are the consumers who will have improved access to agricultural produce. Project preparation has been consultative and activities were piloted with several groups. No major social problems were encountered, and none are expected.
67. Representatives from the national, provincial, and local governments constitute the decision makers that selected the project areas and components. The preparation of the project included consultations with national, regional, and local governments. The participatory
20 approach initiated during project preparation will also guide project implementation, monitoring, evaluation, and beneficiary assessments. The introduction of improved production and processing technologies and support to farmer organizations as a result of the project will promote community-based productive investments. In addition, consultations with donors in the project area have also been part of project preparation. To create synergies, strong working relationships have been established with IFAD, AfDB, Belgian bilateral aid and CDI-Bwamanda a large NGO sponsored by the Catholic Church that has been operating for several years in northern Equateur and other parts of the DRC).
68. According to preliminary surveys, many farmers in the project areas are already active in groups. They and others willing to join groups will be eligible to participate. In this way, the project’s benefits will be shared by many farmers in the participating territories of Equateur Province and Pool Malebo. The social and poverty outcomes of the proposed project will include: (i)increased incomes; (ii)opportunities to earn non-farming income during road construction; (iii)induced development of infrastructure to promote the growth of small towns and villageshettlements in the road corridor; (iv) connecting export and import products to local markets; (v) reduction oftransport costs for goods and people in remote corners of the province.
69. In terms of gender and vulnerable groups, the project will provide direct benefits to women participants and indirect benefits to other women and vulnerable groups, including children and the elderly, by enhancing and diversifying sources of livelihood and mobility through improved roads, which in turn will attract more providers of transport services. A prerequisite of the training will be that it addresses women’s capacity-building needs. Indigenous people are located in the project area, and a detailed action plan has been prepared, although it is not likely that they will be adversely affected by project activities. Detailed project design and investments decisions will include consultations with female and male producer associations and other informal community groups. It is expected that women’s participation will be concentrated in activities related to crops, livestock, and small-scale processing and marketing, whereas men will take most of the jobs in road construction. In this way, incomes earned by men and women will be raised, and opportunities will increase for both groups.
D. Environment
70. Environmental management will be part of the training provided to participating farmers to strengthen positive environmental practices and discourage negative ones. A pest management plan has been drawn up, although it is not expected that the use of agricultural chemicals in Equateur Province will be significant. The use of fertilizer and plant protection agents will be higher in Pool Malebo than in the northern project zones, and it will be governed by the procedures in the environmental management plan. The irrigated area in Pool Malebo will divert water from tributaries to the Congo River, in amounts not considered to be material. As noted, success in promoting more productive agriculture in the project territories in Equateur Province will relieve pressure on valuable forests to the south ofthe river.
21 E. Safeguard policies
71. The proposed project is rated category B and is not expected to induce significant adverse environmental and social impacts. Some of the planned investments, including rural road rehabilitation and productive investment sub-projects, may nevertheless have localized, temporary environmental and social impacts. To address these risks, four safeguard instruments (frameworks) have been prepared, as site-specific adverse impacts will be identified only after the detailed design of project operations. The four safeguard instruments are: (i)the Environment and Social Management Framework (ESMF); (ii)the Pesticide Management Plan (PMP); (iii) the Resettlement Policy Framework (RPF); and (iv) the Indigenous Peoples Planning Framework (IPPF). Mitigation measures have been identified and costed and will be financed by the project. Although OP 7.50 regarding Projects on International Waterways is triggered, an exception to the notification requirement is applied as provided for under paragraph 7(a) of the Policy for projects involving additions or alterations of ongoing schemes that, in the judgment of the Bank, will not adversely change the quality or quantity of water flows to other riparians and will not be adversely affected by other riparians’ possible water use. This exception applies as the project will neither have a negative impact on the quality or quantity of water flows on the Congo River to the Republic of Congo, Angola, Central African Republic, Zambia, Tanzania, Burundi, and Rwanda, nor affect their capacity to use water. Also, OP 4.11 has been triggered, as there is likely to be significant civil works that may have an impact on physical cultural resources.
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [I Natural Habitats (OP/BP 4.04) 11 [XI Pest Management (OP 4.09) [XI [I Physical Cultural Resources (OP/BP 4.1 1) [XI [I Involuntary Resettlement (OP/BP 4.12) [XI [I Indigenous Peoples (OP/BP 4.10) [XI [I Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP 7.60). [I [XI Projects on International Waterways (OP/BP 7.50) [XI [I
F. Policy Exceptions and Readiness
72. The project complies with all World Bank Policies, but an exception to the notification requirement to riparian is applied as provided for under paragraph 7(a) of the Policy for projects involving additions or alterations of ongoing schemes that, in the judgment of the Bank, will not adversely change the quality or quantity of water flows to other riparians and will not be adversely affected by other riparians’ possible water use. This exception applies as the project will neither have a negative impact on the quality or quantity of water flows on the Congo River to the Republic of Congo, Angola, Central African Republic, Zambia, Tanzania, Burundi, and Rwanda, nor affect their capacity to use water. A procurement plan for the first 18 months of project implementation was prepared by the Recipient and finalized during technical discussions. Draft
* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties’ claims on the disputed areas.
22 bidding documents for the Management Contract of infrastructure activities have been prepared under the project preparation. The Grant effectiveness conditions are expected to be met on time with the draft manuals (project implementation, and financial and accounting) have already been prepared and discussed during the technical discussions. Lastly, an Anti-Corruption Plan has been prepared and discussed during technical discussion. It is expected to be approved before effectiveness.
23 Annex 1: Country and Sector or Program Background CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
A. Country and Sector Context
1. The Democratic Republic of Congo’s agricultural development potential is underutilized, bringing economic loss to the country and hardship to its citizens. The DRC is the size of Western Europe but has an estimated population of only 60 million. It is endowed with abundant natural resources, including the world’s second-largest rainforest. Lands suitable for cultivation represent over one-third of the land area of 228 million hectares, and only one-third of the potentially cultivated land is now farmed. Climatic diversity and abundant water allow for two annual rainfed cropping activities covering a variety of crops. Thirteen thousand hectares are irrigated-a very small share of a total irrigable land area of four million hectares. Vast pasture lands can sustain production of an estimated 40 million cattle. Despite this enormous potential, agricultural GDP declined by almost 40 percent (from US$ 3.4 billion to US$ 2.1 billion) between 1990 and 2001. Agricultural exports, which represented 40 percent of GDP in 1960, now account for only 10 percent. About one-third of food consumed in the country is imported, and the net trade balance of agriculture, including both food and non-food items of agricultural origin, is now strongly negative. Poverty is widespread: 62 percent of urban and 76 percent of rural people live below the poverty line. Much of this poverty originates in the underperforming agricultural sector. Agriculture provides employment for 70-75 percent of the active population and, through agro-industries, an additional 10 percent.
2. DRC’s agriculture features a traditional, smallholder-based system alongside a modern, commercially oriented system. The modern sector comprises large plantations owned by corporations (usually vertically integrated agro-industries) as well as smaller, individually owned farms and cattle ranching. The modern sector covers activities for export and domestic consumption such as rubber, tobacco, coffee, tea, quinine, cocoa, palm oil, sugar, and cattle. Smallholders tend to focus on producing for the domestic markets, mostly growing food crops such as cassava, maize, rice, peanuts, vegetables, and tropical fruits. The modern sector was once a key player in agricultural production, accounting for the bulk of exports, but it has drastically declined. Traditional smallholder farming relies almost exclusively on hand labor and simple tools. Its low-input, low-output production system accounts for the bulk of agricultural production.
B. The Legacy of a Long Period of Economic Decline
3. Weak governance, poor policies, and the consequences of a protracted conflict have devastated the economy and underlie the profoundly poor performance of the agricultural sector. Growth rates in the 1990s averaged -8.0 percent. As a result, per capita GDP in this decade is almost one-third of what it was in the early 1960s (an estimated US$ 139 in 2006 against US$ 380 in 1960). As local food production (Table 1) failed to catch up with domestic demand, the share of food in total imports rose. Food imports (wheat, rice, edible oil, frozen fish, and meat) averaged as much as US$690 million in the 1990s or about 30 percent of the value of domestic food production. Poverty has increased and is widespread. DRC’s Human Development Index
24 ranking has dropped by 10 points over the last 10 years, falling to 167 of 177 countries. About 70 percent ofthe population is below the poverty line. In provinces hit hard by the conflict, such as the East and the North, poverty reaches 80 percent.
4. The poor performance of the agricultural sector has increased vulnerability to food price increases and placed pressure on forest resources. The country was battered by food price increases in 2007and 2008, particularly in Kinshasa, where the weighted average cost ofthe food basket increased by 19 percent between April 2007 and April 2008. Modeling’ the impacts of these increases on the population living in poverty shows that a 50 percent increase in food prices would increase national poverty incidence by 5 percent. Much ofthe impact in Kinshasa is due to high dependence on imported rice. Away from Kinshasa, in the interior, the impact of high and volatile global food prices is blunted by high transport costs, but poverty and low yields are helling agriculture’s encroachment on DRC’s valuable forests. The liberalization of prices improved the availability of food products in major cities, but food shortages and high prices were prevalent even before the recent food price crisis. More than two-thirds ofthe population- more than 35 million people40 not have enough food to meet their minimum daily caloric requirement, and 3 1 percent of children under five years old are malnourished.
5. The main factors influencing access to food have been insufficient domestic supplies, financial constraints to filling the gap through imports, and taxes on food imports. Rising international prices of major staples such as wheat, rice, and maize have reduced the scope for food-deficit countries, including DRC, to use imports to mitigate food insecurity. Although import data are quite variable, Table 1 shows imports increasing over time. These data were collected at the Matadi Port and do not account for other uncontrolled imports. Improved agricultural productivity and improved links between producing and consuming areas would improve trade balances, reduce poverty and related malnutrition, and protect critical forest resources.
Table 1: Food Imports’ (tons)
beef) Poultry 8,812 49,164 27,763 25,160 20,386 414,066 11,975 53,777 Fish 75,127 149,426 94,669 128,357 106,504 115,967 116,503 133,568
6. The demise of privately owned agro-industries has taken a heavy toll on the sector’s performance. Until the early years following independence, privately managed, modem
’ World Bank, AFTPM, “DRC: Implications ofRecent Food Price Increases and Policy Options,” internal working raper, May 2008. The huge variability in imports indicates the lack of reliable data.
25 agriculture was the main driver of agricultural performance. This modern sector, which accounted for 60 percent of agriculture value-added in 1960, contributed less than 4 percent in 1997. In the 1970s, the government’s nationalization policy (Zairisation) transferred ownership of all foreign-owned agricultural, commercial, and transport enterprises to Congolese owners. As the new managers performed poorly, the government exerted direct control over the management of these enterprises. The result was reduced production, the deterioration of plant and equipment, the exodus of skilled managers, and serious disruption of commercial links. During the long conflict, the remaining assets of these enterprises suffered widespread looting. Although the potential to revive agro-enterprises remains good owing to the country’s great natural endowment, the business climate has not been conducive to restoring the confidence of the private sector at a scale commensurate with business development possibilities. Agro-industries are still highly taxed (officially and unofficially). Risks related to insecurity still prevail.
7. Smallholder agriculture also suffered from the decline of private agro-industries. These industries had established important forward and backward linkages with smallholders near their operations and provided basic services such as extension, input provision, and rural transport (including road maintenance). The service delivery vacuum caused by the departure of agro- industries has scarcely been compensated by projects funded by international partners and religious organizations. As a result, smallholder production has become more subsistence based, with limited access to improved farm inputs.
8. The weak state of the transport infrastructure has raised the costs of marketing agricultural produce. Surface transport is estimated to cost US$ 0.16 per ton-kilometer in DRC against US$ 0.05 in southern Africa. Only about 5 percent of the country’s network of classified roads is paved, and most roads require rehabilitation and maintenance. The priority rural road network comprises 17,000 kilometers, of which only 25 percent is functioning. DRC has 15,000 kilometers of navigable waterways provided by the Congo River and its tributaries, which link Kinshasa with the Northwest. At a cost of about US$ 0.05 per ton-kilometer, the river presents a very competitive mode of transport. Important stretches of the river are not navigable for the four months of the dry season, however, because no dredging has been done and because inadequate signaling infrastructure impedes navigability at night. A recent study estimates that by dredging and upgrading the river and increasing the availability of feeder roads, DRC could reduce transport costs, including the cost of transporting agricultural produce, by 50 percent and 70 percent, respectively. A multi-modal transport corridor, combining river, secondary, and feeder roads, is a viable option for transporting agricultural produce from the northwestern Equateur Province and Orientale Province.
C. Reversing the Decline
9. DRC has progressed in economic reform, but very little has been done yet to support growth in agricultural productivity. The PRSP (2006) and the linked Country Assistance Framework (CAF) (2007) of the development partners identified such key issues for development as promoting macroeconomic stability, deepening structural reforms, improving governance and the business climate, and ensuring peace and security across the country. The stabilization measures launched by the government in May 2001 successfully broke hyperinflation (which declined from 630 percent in 2000 to 8.8 percent in 2001) and stabilized
26 the exchange rate. Government revenues have grown, and first steps have been taken to centralize expenditures and budget execution. Economic growth returned in 2002 and has remained robust, although the twin shocks of the food and economic crises have taken a toll. Between 2002 and 2006, compounded economic growth was 30 percent, reversing more than a decade of decline until 2001. However, much of the growth in this period is attributed to recovering existing capacity rather than to creating new capacity in trade, transport, construction, agriculture, and selected manufacturing and service sectors. Reforms have been undertaken to attract foreign investors and improve transparency, including the adoption of new Investment, Labor, Mining, and Forestry Codes. Private sector investment has generated about US$ 2.7 billion in new investments since 2003. Real GDP growth is projected to rise in the fbture as mining and manufacturing recover. Agriculture benefits greatly from the cessation of conflict, the more stable macroeconomic and governance environments, and construction or reconstruction of the road network. Longer term investments in improved agricultural productivity have not yet started, however.
10. The government completed preparation of its PRSP in 2006 but has not reached the Heavily Indebted Poor Country (HIPC) Completion Point. The DRC authorities issued a Governance Compact in early 2007, laying out their commitment to macroeconomic stability, fighting corruption, and implementing governance policies. DRC joined the Extractive Industries Transparency Initiative (EITI) in 2008. It has just concluded a new Poverty Reduction and Growth Facility (PRGF) program, supported by the International Monetary Fund (IMF), which should lead to a much-needed HIPC Completion Point. External debt remains a heavy burden for the DRC, which has an estimated total debt of US$ 12 billion, representing about 225 percent of GDP.
11. To realize even part of its enormous potential, the agricultural sector faces three major challenges. First, the poor physical infrastructure has been a major deterrent to producing beyond subsistence needs, and it has inhibited private initiatives in input and output marketing. Second, years of neglect of agricultural services have resulted in a low-technology, low-productivity agricultural base, compromising the supply response needed to meet growing demand for food and contributing to macro-imbalances. Third, despite an emphasis on agriculture in recent development plans, sector policies and strategies are inadequate and public institutions remain weak. Although several sector strategies and policies exist, their coordination and actual implementation continue to be a challenge. Reasons for this weak policy environment include: (i) poor coordination among the various units within MinAgri as well as between MinAgri and other ministries; (ii)the recurrent dualism between the agricultural and rural sectors; (iii)the lack of skilled and motivated staff in MinAgri (including training on sector policy formulation and impact assessment); and (iv) the weak resource base for collecting and processing data and generating relevant information for decision makers.
12. There is a clear need not only for financial resources but for technical training to reinforce human resources and institutional capacities in policy design, appraisal, implementation, and evaluation. The government, with the help of the international community,
27 has taken a number of practical steps to provide a more coherent environment for agricultural development, as outlined belowSg
D. The Government’s New Agricultural Strategy - Implementation Challenges and Opportunities
13. In March 2004, with assistance from FA0 and the Belgian government, the DRC government organized a roundtable on agriculture, “Towards an Agricultural Strategy, a Solid Basis for Economic Recovery.” Participants included high-level government officials and representatives from Belgium, France, Japan, Germany, the USA, China, the World Bank, FAO, World Food Program (WFP), AfDB, NGOs, the private sector, and civil society. The government pledged to complete the formulation of its agricultural strategy and to meet the Maputo Declaration within five years. loThis emphasis on agriculture was subsequently set forth in the PRSP and the CAF, which regard agriculture as the most efficient vehicle for broad-based poverty reduction. The government considers that rejuvenating agricultural production is a key policy instrument to spur pro-poor economic growth. A more vital agricultural sector is also seen as an important safeguard against Dutch disease. For instance, revival ofthe mining sector before agricultural production is reestablished could increase food imports to the detriment of local production. Once established, reliance on imports could be difficult to reverse. Thus the government’s strategy in the agricultural sector, as articulated in the PRSP, is to promote food security and reduce poverty through four key initiatives: (i)improving marketing efficiency; (ii) enhancing productivity of traditional, smallholder-based agriculture; (iii)attracting new capital into the agricultural and livestock sectors; and (iv) providing decentralized and deconcentrated support services to a broad range of community-led initiatives. In addition, the global financial and economic crisis, especially DRC’s current reliance on food imports-amid precarious foreign exchange receipts-speaks in favor of strong, local agriculture. This project should thus be seen as part of a long-term response to the challenge of high global food prices. A Country Economic Memorandum is underway. It includes an analysis of value chains for selected crops and will further inform medium- to long-term strategies for agricultural development.
14. A multitude of public institutions are involved in agriculture in DRC. Aside from MinAgri, key players include MDR, which is responsible for rural infrastructure and irrigation development, and the Ministry of Research, which is entrusted with national agricultural research. Collaboration among institutions is weak, and they are often poorly organized, lack qualified staff, and lack resources to collect, process, and generate data for decision makers. To reinforce the technical and institutional capacities of MinAgri in policy design, appraisal, implementation, and evaluation, the government has initiated key steps to improve the enabling environment for agricultural development. These include an ongoing formulation, in close consultation with representatives from the private sector, of a regulatory framework (the Agriculture Code), along with the restructuring of MinAgri at the central and local levels, with assistance from BTC and FAO.
The government’s efforts have been supported by donors and UN agencies, among them the EU, US Agency for International Development (USAID), BTC, the UK Department for International Development (DBD), United Nations Development Program (UNDP), and FAO. 10 In July 2003, African Heads of State met in Maputo (Mozambique) and committed to allocate at least 10 percent oftheir national budget for agriculture (the so-called Maputo Declaration).
28 a) The restructuring program has three principle features: (i)MinAgri’s key function involves the definition of the sector strategies, program planning, monitoring/evaluation, and definition and enforcement of the regulatory framework; (ii) production and commercial activities must be transferred to private operators; and (iii)activities such as research and extension may be implemented in partnership between the private and public sector. In this new context, the role of MinAgri will consist of: (i)conceiving and elaborating national agricultural policy and planning national programs and (ii)defining and enforcing the regulatory framework. Another important element ofthe restructuring program is the emphasis on decentralization. The program calls for deconcentrating technical services at the provincial level and decentralizing and transferring program/project management responsibilities to local entities and grassroots professional organizations. A particular emphasis has been put on establishing consultation platforms at the provincial level. The agricultural management councils (CARGs) for each province will involve all key stakeholders in formulating and executing provincial agricultural programs.
b) The management of MinAgri’s personnel reforms, which will be carried out in close coordination with the DRC public administration reform program, is a huge endeavor. An estimated 65 percent of ministry employees are past retirement age, with a low salary base. This staff configuration has been a major impediment to improving service delivery in the agricultural sector. The reform program calls for a 46 percent reduction in the number of MinAgri staff, from 18,500 to 10,000 people, and within this adjustment, the number of staff at the central level will be reduced from more than 2,700 to 300 people. The modalities of this resizing, which will include both exit and new recruitment, have been based on (i)an assessment of human resources at the central and provincial levels and (ii)staffing needs spelled out in the new organizational chart.
c) BTC is financing selected activities in this restructuring program. It is (i)providing support to the reform unit in charge of coordinating reform activities, (ii)providing support to selected services by paying performance incentives to newly recruited staff to ensure minimum functioning of the ministry at the central and provincial levels, as well as equipment and training; (iii)providing support to a communication and information platform at the central level; and (iv) establishing CARGs in selected provinces. Bank- funded initiatives are underway to complement these actions. For instance, the Governance Capacity Enhancement Project is financing capacity building for the financial management, planning, and statistics directorates in key sector ministries, including MinAgri, and handling the definition of an overall strategic framework for the retirement plan across sectors. Another operation under discussion may help implement the retirement plan, once this plan is finalized and adequately costed. The proposed ARRS project includes specific but limited support to planning for staffing, decentralization, and related training (see Annex 4).
15. During the last few years of the transition away from emergency interventions in DRC, a number of initiatives have been underway. These include analytical work and project activities finded by donors and NGOs.
29 (a) With respect to rural road rehabilitation and maintenance, support from international partners has allowed the DVDA to increase its technical capacity as the national institution responsible for programming and overseeing implementation. The general policy framework includes: (i)the identification of a priority rural road (and waterway) network for rehabilitation and maintenance and (ii)implementation arrangements for private and other associative institutions to carry out these works, mostly through labor- intensive methods involving communities and using local materials. DVDA is building greater capacity to monitor and evaluate ongoing activities so that it can hrther refine its policy framework and give attention to sustaining past investments.
(b) Several initiatives have been underway to improve farmers’ access to improved seed and other planting materials. Because many of these activities were designed for the postwar emergency context, the provision of these inputs involved no contribution or a very limited one fiom the farmers who received them, and there is some concern related to sustaining such programs. An important positive outcome, however, has been the emergence of private seed multipliers, who are likely to become important stakeholders in the development of a sustainable farm input distribution program.
(c) Engaging the private sector and clarifvinn and improving; the policv framework. The DRC authorities recognize that the private sector and other associative organizations have a critical role to play in rejuvenating the sector’s development. The approach for engaging these non-governmental partners has been two-fold. First, efforts are underway to complete the formulation of the Agriculture Code, a general regulatory framework that will spell out the obligations and prerogatives of private entrepreneurs. The Code covers fiscal, land tenure, financing, marketing, and trade policies, among others. As mentioned, its preparation has closely involved the private sector and donors. Second, plans to establish a Special Economic Zone on the outskirts of Kinshasa, with assistance from IFC and FIAS are underway. During the preparation of the proposed project, exchanges with private entrepreneurs from FEC and the Confederation of Small and Medium Congolese Enterprises (Confederation des Petites et Doyennes Enterprises Congolese ’s, COPEMECO) revealed interest in developing public-private partnerships to rebuild forward and backward linkages between private entrepreneurs and smallholders. It is expected that MinAgri’s restructuring will give it the capacity to take stock of good practices for such partnerships with a view to replicating them more widely.
E. Bank’s Strategy for Support to Agricultural Development in DRC
16. The temporal phasing of activities to support recovery in the different geographic domains of this very large country will vary. Generally the first phase will emphasize meeting local and regional demand for agricultural products by increasing the productivity and production of commodities that can be marketed with minimal processing. This effort will be complemented by continued investments in road and river transport to reduce marketing costs. Once marketed volumes have increased significantly, commercial agro-industry and food processing on a larger scale will be required and remunerative. The second phase will be marked by the resurgence ofagro-industry and development of more sophisticated marketing institutions.
30 When markets function well and agro-industry provides ready outlets for increased production, the third phase begins. Medium- and large-scale commercial producers, both domestic and foreign, enter the sector. Clearly this temporal framework depends on continued macroeconomic and sectoral reform as well as on continued peace and security. The duration of each phase in a particular geographic domain is hard to predict, but the temporal framework does provide guidance on which activities will be most effective in each phase. The combination of spatial analysis and temporal logic has informed the design of the proposed project.
17. The Bank engagement strategy in DRC is based on findings from the Agricultural Sector Review (ASR), which was completed in 2006 with the fill participation of the Congolese and all active donors involved in the sector. One important consideration is the large size of the country and the weakness of institutions involved in the sector. With the exception of addressing cross- cutting thematic and technical issues (such as cassava mosaic disease) and providing technical assistance to MinAgri, adopting a standard approach to designing comprehensive agricultural programs at the national level and costing them would be operationally too challenging, at least in the foreseeable future. A more realistic approach for achieving visible impacts would be to engage locally (up to the provincial level) and foster close coordination with the central level to ensure complementarities with other initiatives and the recognition of best practices. This approach requires strong donor coordination and close multi-sectoral synergy.
18. The road map for engagement prescribed by the ASR involves: (i)addressing four priority issues/constraints and (ii)concentrating support for agriculture within the five most favorable geographical areas (see the next paragraph and Figure 1). Four priority issues and constraints are to be addressed. The first is to deal with key domestic marketing bottlenecks. Lessening this constraint involves, in close consultation with DVDA, formulating and implementing a priority rural transport network that covers rural roads and waterways and is consistent with the trade flows of agricultural products. At the same time, with the active involvement of stakeholders, it is important to improve the flow of market information for key agricultural commodities and the main markets. A second priority is to enhance on-farm productivity by assisting smallholders to break away from low-input, low-output production technologies by gaining better access to improved planting material and agricultural equipment, more effective extension and research services, and technical and organizational support for developing farmer organizations. A third priority is to address deficiencies in policy formulation, planning, implementation, regulation, and control and in monitoring development programs at the central and provincial levels. Fourth, the policy environment must be improved.
19. In view of DRC’s size, diversity, and limited resources, investments need to be channeled where their impact will be highest on growth as well as the number of beneficiaries. The ARS identified five geographical investment domains on the basis of the following criteria: (i)high agricultural potential, based largely on rainfall patterns, soil conditions, and the agricultural history of the regions; (ii)high population density, based on an analysis of available demographic data (an important dimension of population density is the presence or absence of widespread labor-intensive mining in the zone, because it tends to double or triple rural wage rates and stimulate local demand for food); and (iii)good access (or potentially good access) to product markets. The five investment domains ( Figure 1) include:
31 . Domain 1: Areas extending from the Atlantic Ocean to Kabinda (Kasai Oriental). . Domain 2: Mining cities and their hinterlands in Katanga Province. . Domain 3: Great Lakes Region. . Domain 4: Northern Equateur Province. . Domain 5: Areas from the hinterland ofKisangani to Pool Malebo.
20. A subsequent spatial analysis of priorities for investment in infrastructure included agriculture among the activities generating returns and assisted further in identifying areas where investments in infrastructure could unlock high agricultural potential. l1A Country Economic Memorandum (in process) includes an analysis of selected agricultural value chains.
2 1. The strategy of engagement considers that both smallholders and medium to large farms have important roles to play. The strategy seeks first to capture the relatively easy gains by improving smallholders’ capacity to respond to demand from the domestic market, especially the demand for food crops. Subsequently, the strategy aims to promote incentives and mechanisms that could foster future engagement of medium- to large-scale agro-industries. Entry points that could open up opportunities for backward and forward linkages between agro-industries and smallholders could include improved transport infrastructure and pilot activities to improve smallholders’ crop varieties and crop management practices.
22. The design of the proposed ARRSP closely mirrors this strategy. It focuses primarily on Equateur Province (Domain 4) and includes selected activities in Pool Malebo (Domain 5) near Kinshasa, where PMURR successfully supported irrigated rice production. Both areas have potentially competitive smallholders and large sectors of subsistence agriculture. The project’s implementation in these two provinces is expected to provide a learning opportunity for subsequent expansion elsewhere in the country, preferably in other domains. This expectation implies that progress would be monitored carefully to provide a basis for rolling out the strategy to other agricultural domains.
23. Engaging civil society and the private sector is critical. Important complementarities between Bank-supported activities in agriculture, infrastructure, private sector development, decentralization, and environment need to be coordinated with care. For instance, sustainable efficiency in marketing will require a common vision on the country’s overall transport connectivity program; the promotion of agro-industries needs to be framed within the context of the national engagement strategy for PSD. Furthermore, collaboration with other development partners is necessary to support the policy coherence sought at the national level and to achieve broad geographic coverage. (Annex 2 shows the donor mapping.) The approaches are very similar in terms of activities (which consist most of food security interventions along with agricultural productivity improvement and rural infrastructure development) and geographical occupations (interventions are framed in the five agricultural domains). Finally, close consultation with the private sector (including representatives from FEC and COPEMECO), civil society organizations such as NGOs, and other donors have been developed throughout project preparation and will be observed during implementation as well.
‘I ESW on DRC and Congo - Prioritizing Infrastructure Investments - A Spatial Approach
32 Figure 1: Interaction of Areas with High Agricultural Potential, Market Access, and Population Pressure (HHH) Republique LS)ES.rnocratiquesdu Congo
Les domaines de developpement agricole
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U m (P e VIa E E 3 Annex 3: Results Framework and Monitoring CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
A. Results Framework
Use of Project Outcome 1Indicators The PDO is to increase agricultural Average seasonal yield per standard area of To measure if project productivity and improve marketing of specific crops among targeted farmers. interventions benefit targeted crops and products by smallholder farmers in terms of increased Average number ofpoultry produced farmers in targeted areas. productivity and sales of their annually by targeted farmers. agricultural produce and Average annual sales of specific crops and products. animal products in targeted marketslwarehouses.
~ Intermediate Results Intermediate Result Indicators Use of Intermediate Result Monitoring Component 1: Improving agricultural and animal production
R1.1. Increased access for farming Ind. R1.1.1, Percentage of targeted To determine if targeted households in targeted areas to improv households using package of improved households make use of productiontechnologies for crops and inputs per season. improved inputs, services, and livestock. facilities, and whether the Ind. R1.1.2. Percentage oftargeted management capacity of households benefiting from agricultural farmer organizations is advisory services per season. strengthened. Ind. R1.1.3. Number of direct” beneficiaries of improved technologies for agricultural and animal production. Ind. R1.1.4. Percentage of direct female beneficiaries of improved technologies for agricultural and animal production. Ind. R1.1.5. Number of indirectI3 beneficiaries of improved technologies for agricultural and animal production. Ind. R1.1.6. Percentage of indirect female beneficiaries of improved technologies for agricultural and animal production. Ind. R1.1.7. Number of producers adopting improved animal husbandry practices. Ind. R1.1.8. Average birth interval per female for small ruminants. Ind. R1.2.1. Rice production increase in targeted area at Pool Malebo.
” Direct beneficiaries are producers who are part of groups receiving the matching grants, whether for seed roduction, small-scale processing, livestock, irrigation, or other activities. Indirect beneficiaries include producers who will purchase and use the improved seed.
37 Intermediate Results Intermediate Result Indicators Use of Intermediate Result Monitoring Ind. R1.2.2. Number of hectares developed for rice culture. Ind. R1.2.3. Improved cost recovery of R1.2. Irrigation infrastructure at Pool WUAs for irrigation at Pool Malebo. Malebo developed to increase rice production. 0 Ind. R1.3.1. Percentage oftargeted households using processing equipment per season. 0 Ind. R1.4.1. Number of farmer organizations using common facilities (warehouses, postharvest technologies). R1.3. Increased access for farming ...... households to improved processing OutDut indicator technologies. Ind. R14.2. Number of storage facilities constructedrehabilitated(Target: 16).
R1.4. Increased capacity of farmer xganizations.
Component 2: Marketing infrastructure improvement
R2.1, Rural transportation and market Ind. R2.1.l. Reduced transport time for infrastructure rehabilitated and specific inputs/outputs. ionstructed to improve market access for To measure how farmers Ind. R2.1.2. Number ofdirect14 input supply and product marketing. benefit from improved rural beneficiaries of rehabilitated roads. infrastructure. Ind. 2.1.3. Percentage of direct female beneficiaries of rehabilitated roads...... OutDut indicators: 0 Ind. 2.1.4. Cumulative km ofrehabilitated roads. Ind. 2.1.5. Number of markets for which infrastructure constructedrehabilitated.
I4Direct beneficiaries are the populations within 2 kilometers of improved/rehabilitated roads.
38 Component 3: : Capacity-building support to MinAgri and MDR and project management
R3.1. Improved capacity of government Ind. R3.1.1. Percentage ofhouseholds in Assess the quality of and other actors to deliver essential targeted areas satisfied with agricultural extension services provided agricultural services in targeted zones. advisory services received. by government and civil society. Ind. R3.1.2. Quantity of improved seed Monitor capacity of certified annually. specialized institutions to produce improved seed.
R3.2. Strategy for national advisory Ind. R3.2.1 .National advisory services, Determine if advisory services, agricultural research, and reform agricultural research, and agro-industry services, research, and agro- of agro-industries prepared and adopted. reform adopted by the government. industry reform strategies prepared and adopted by government.
Ind. R3 -3.1. Percentage ofdisbursement Ensure that project meets its R3.3. Project management meets targets achieved per year. goals and that M&E system is technical and fiduciary requirements. Ind. R3.3.2. Percentage ofprocurement of used for planning, decision- goods and services that comply with agreed making and reporting of procurement plan. implementation progress. Ind. R3.3.4. Number of M&E reports produced annually and on time.
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43 0 B. Arrangements for Results Framework Monitoring
1. System design: Monitoring and Evaluation (M&E) is a management and decision- making tool that provides the information needed to support planning and decision making by the PCU and to inform key stakeholders at various levels-including public and private partners, donors, and producerdbeneficiaries-about the project’s activities and results. The M&E system proposed for this project therefore includes the monitoring of progress towards implementation (inputs and outputs) as well as progress towards achieving project outcomes.
2. Implementation monitoring involves the periodic collection of data and development of progress reports to assess project activities against target values. This kind of monitoring regularly updates stakeholders about the project’s physical and financial implementation, helps identify difficulties and issues encountered during implementation, and proposes solutions to those problems. Three types of information can be reported: (i)input or resource utilization and efficiency; (ii)implementation progress (timeliness and problems related to work programs and procurement plans); and tangible project accomplishments (output measurement).
3. Outcome monitoring determines the extent to which the implementation of project activities has contributed to the desired development results, which focus on changed behaviors among the project beneficiaries. Outcome indicators are the best proxies to measure PDO and IR achievement, and they normally require more sophisticated measurement tools than those used for implementation monitoring.
4. Institutional issues: The PCU will be established at MinAgri in Kinshasa under the oversight of the Secretariat General of the Ministry. This unit will include a specialist in monitoring and evaluation and a qualified statistician. They will be responsible vis-his the government for implementing the project’s Results Framework, managing its M&E system, and monitoring the results-based contracts with third-party partners. The M&E Unit will be responsible for the collection, management, and analysis of data utilizing a central database. It will also produce the required M&E reports as defined in the M&E implementation manual. The three decentralized district units will assist the central unit in collecting and managing data concerning project implementation and outcomes. Likewise, the contractor hired to implement the infrastructure activities will be responsible for monitoring and reporting on those activities. Given the country’s financial risk assessment, the project will pay particular attention to financial monitoring, as detailed in Annex 7. The MinAgri directorates in charge of statistics and planning will help coordinate impact analysis of the project and perform other specific tasks. The communication unit within MinAgri will be responsible for disseminating project results to the larger public. Given that NGOs and producers are involved in most project activities, a participatory M&E will be integrated into project management to ensure participants’ direct monitoring and assessment of project results. Details of this participatory M&E will be spelled out in the M&E manual. The project will support capacity building ofthe communities involved.
5. Capacity: The project will continually upgrade and strengthen the capacity of all staff of the M&E Unit, at the central and district levels. The project will also strengthen the capacity of MinAgri’s Statistical and Planning Units, which (through component 3) are key partners in project implementation. Consultants will be hired to support the project M&E Unit as required
44 and build the project’s capacity to improve data ‘collection and analyses for the MinAgri Directorate of Analysis, Planning, and Forecasting. The consultants will also strength the capacity of the provincial directorate of MinAgri and MDR, specifically its M&E Unit and its Division of Production Planning and Statistics.
6. Data collection: The project M&E system will use data collected at different levels, including data collected from farmers and their organizations, CARGs, provincial and district socio-professional groups, NGOs, and national public and private entities. Data collection instruments will include project records (budget and work plans, procurement plans, audits), results of studies, direct measurements and observations, interviews, and, where feasible, self reporting by participants through information technology (mobile telephone). The project relies on primary as well as secondary data collected by project staff and contracted third parties, such as consulting firms, individual consultants, and NGOs. The methods and instruments of data collection, management, and analysis, as well as responsibilities ofpartners, will be set out in the M&E implementation manual. For example, the project M&E Unit will use data collected by MinAgri’s agricultural statistical and planning directorates, other government agencies, implementing agencies, and other projects. Given the extensive project area and the complexity oftravel by land, the project will collaborate with other projects and government entities and use their data as available. A rural and agricultural geographic information system should be established in a permanent public center and integrate various databases. Initial baseline data have been collected for outcome and results indicators. A new baseline study will be conducted during the first year of project implementation to update these data as required. On this basis, annual and final project targets will be set. The new baseline study will also provide recommendations concerning the methods and frequency of subsequent data collection related to project outcomes.
45 Annex 4: Detailed Project Description CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
A. Lending instrument
1. The proposed lending instrument for the ARRSP is a Specific Investment Loan (SIL). A SIL is deemed the most appropriate instrument given the large investments in infrastructure being considered. A SIL is also an appropriate instrument for supporting the technical and institutional capacity building that will be financed, in particular at the provincial level, alongside parallel operations being funded by other donors.
B. Project development objective and key indicators
2. The PDO is to increase agricultural productivity and improve marketing of crops and animal products by smallholder farmers in targeted areas.
3. It is expected that the project will lead to a sustainable increase ofagricultural production among smallholders in the targeted zones and help improve their revenues.
(a) Key outcome indicators ofthe proposed project would be:
0 Average seasonal yield per standard area of specific crops by targeted farmers. 0 Average annual animal production (for example, numbers ofpoultry produced by targeted farmers). 0 Average annual sales ofspecific crops and products in targeted markets.
(b) Key intermediate outcome indicators include: 0 Percentage oftargeted households using package ofimproved inputs per season. 0 Percentage of targeted households benefiting from agricultural advisory services per season. 0 Number ofproducers adopting improved animal husbandry practices. 0 Average birth interval (in months) per female of small ruminants. 0 Quantity of improved seed certified annually. 0 Improved cost recovery ofWUAs for irrigation at Pool Malebo. 0 Reduced transport time for specific crops and animal products. 0 Percentage oftargeted households using processing equipment per season. 0 Percentage oftargeted households using storage facilities per season. 0 Rice production increase at Pool Malebo.
(c) Output indicators include:
0 Number ofkilometers ofroads constructedhehabilitated. 0 Number ofmarket facilities constructedhehabilitated. 0 Number ofstorage facilities constructed/rehabilitated. Number ofhectares developed for rice and cultivated.
46 C. Project area and target beneficiaries
4. Two areas have been selected for the project, based on the application of the spatial and temporal framework described earlier and extensive consultation during project preparation. The first and largest covers the portion of Equateur Province north of the Congo River, comprising nine territories within the three districts of South-Ubagui, North-Ubangui, and Mongala. The second is Pool Malebo, an area including seasonally inundated marshlands located in the vicinity of Kinshasa.
5. Equateur Province was identified in the 2006 sector review as one of five areas “with high agricultural potential, high population density, and high market access.” The selection is confirmed by the analytical work on spatial dimensions of investment in infrastructure. The government has also identified Equateur Province as a priority because of its agricultural potential (for domestic food crops as well as exports, such as rubber and cacao) and in light of the equitable and balanced investments required to foster the postwar recovery. The World Bank is investing in main roads linking the province with Bangui to the north and the ports on the Congo River. The EU is planning to finance improvements in navigation and port facilities along the river, which will reduce transport costs from Kisangani to Kinshasa. Even now, despite poor roads and primitive ports, several ports in the province provide access to the river year round, and others permit access for part of the year. Despite its potential, Equateur Province has not seen significant reinvestment in these facilities, and development partners have not been active there. The selection of Equateur Province raised concern, expressed in a review, that the province would be too remote for the project to be implemented adequately, even though transport to Kinshasa is available by river all year. For this reason, the implementation arrangements have been structured to devolve decision making to the local level. Supervision techniques used in other locations where access is difficult, such as Afghanistan, are built into the implementation strategy.
6. Pool Malebo, contiguous to Kinshasa, is the second site of the project and offers high potential to increase rice production rapidly. The emergency operation successfully restored 800 hectares of irrigated area there. A full hydrological assessment (currently underway) indicates that irrigation could be developed on 6,000 additional hectares, of which the project proposes to develop 2,000. The investment will be concurrent with IFC’s participation in developing a special economic zone that will be close to Pool Malebo and include agro-industry and food processing. IFC and the Bank will work together to encourage commercial processors of rice and cassava to locate in the special economic zone to serve Kinshasa’s large and active market. Given that global prices for rice are high and could rise even more, the investment in Pool Malebo offers high returns to producers, processors, consumers, and the economy as a whole.
7. The project’s targeted beneficiaries are the agricultural households in the project zones who are members of groups receiving the matching grants for seed production, small-scale processing, livestock, irrigation, or other activities. In Equateur Province, these beneficiaries will be self-selected, as most of them already engage in agricultural production, either as agri- multipliers or direct producers, while others focus on fishing. Likewise, in Pool Malebo, the project will focus on households that derive their livelihoods from rice production (PMURR has
47 already identified and worked with these producers). The project expects to reach 105,000 households (103,000 in Equateur Province and 2,000 in Pool Malebo), representing a total population of about 735,000 people. Women constitute 45 percent of producers.”
8. In Equateur Province, it is assumed that: (i)one-half of the 383 Village Groups in the area will be covered by project activities, and about one-third of households will choose to join as direct beneficiaries.” Although benefits of the project are likely to be substantial, not all producers in the target area will choose to join, since participants must make a contribution and commit to certain actions. Participation will thus be determined by geographic targeting and self- selection. Table 2 provides details on these prospective participants. In Pool Malebo, based on the approximately 2,000 hectares to be equipped with irrigation and drainage infrastructure and a maximum allocation of one hectare per household, the project will help about 2,000 households (14,000 people) to at least double their rice productivity.
Table 2: Proposed Number of Ag icultural Households and Aggregate Population to
Estimated Number of and Agricultural Village 40% District Pooulation Groups Average House- nearest 000 (000s) (VGs) Total holds in Pop. Average Households Population holds VG in Closeout Each District II N-Uban i 8.078 378 S-Uban i 1,685 13,089 613 Mon ala 1.043 13,113 614 Total Pro’ect 3 582 383 11,407 1,336 1 193 534 103,000 I 721,000 I Sources: Monographie de I’Equateur - 6
D. Project components
9. The project comprises three components: (i) improving agricultural and animal production; (ii)marketing infrastructure improvement; and (iii)building capacity for MinAgri and MDR and project management. Components (i)and (ii)are designed to address efficiency bottlenecks in marketing and on-farm and off-farm production activities. Component (iii)is designed as a key contribution to implementing MinAgri’s restructuring program.
l7In Equateur Province, about 45 percent of women engage in farming, whereas in Pool Malebo, about 52 percent of women engage in rice production. 18 Population data and demographic profiles in Equateur Province are taken from the 1-2-3- survey, Monographie de I’Equateur -RDC (Ministry of Planning 2005). 48 Component 1: Improving agricultural and animal production (estimated costs: US$ 59.42 million of which US$49.42 million IDA contribution)
10. This component comprises three sub-components that support activities to enhance the capacity of about 105,000 farm households or about 735,000 people to produce rainfed crops (Equateur), irrigated rice (Pool Malebo), small ruminants, and poultry. Related activities include: (i)the provision of improved capacity as well as improved seed and seedlings, more efficient husbandry practices, storage facilities, and post-harvest equipment to small-scale crop producers; (ii)improved water management through improved irrigation infrastructure; and (iii)improved production of small ruminants and poultry. The main expected outcome is enhanced land and labor productivity. Producer organizations, including women's groups, are the centerpiece around which all of these activities will be organized.
Sub-component 1.1: Improving production by providing seed, planting materials, and advisory services (estimated costs: US$49.00 million)
11. Activities to be supported include the provision of improved seed (mainly for rice and maize) and cassava cuttings, advice on better management of production, simple small-scale and basic product transformation, and storage facilities. This sub-component will also develop the capacity of farmer organizations in the project areas so that they can more effectively market agricultural inputs and outputs and build linkages with private agri-business. Key implementation partners will include INERA (the national research institute), SENASEM (the national seed service), NGOs, private operators, and farmer organizations.
12. Local NGOs will be contracted to undertake and'oversee most of the work of this component. A number of NGOs have worked in the province for decades, even during the turbulent years of conflict. Most of these NGOs are affiliated with religious organizations (for example, the largest are affiliated with the Protestant Evangelical churches and the Catholic Church). These NGOs are fully engaged in providing social services, maintaining infrastructure, agricultural advice. They work largely on a territorial basis and are non- exclusionary.
13. PPF funds were used to pilot the production of improved seed by farmer groups involved with several NGOs. The groups were well organized, highly motivated, and undertook the effort successfully. NGOs that already work on agricultural improvement will have the opportunity to contract for support under the project to expand their efforts as designed within the project. Advisers working with and through the NGOs to serve the farmer groups will form the core of a revitalized extension service embodying the good-practice features of such services, particularly public payment for advisory services and pluralistic delivery.
14. The production and distribution of seed and cassava cuttings will occur in three stages. Foundation seed or cassava cutting will be produced under contract with the INERA at its Boketa research station in Equateur Province. The project will provide pre-foundation seed to INERA for the first year. Trained seed producers, mostly in specialized farmer groups (called l9 One of these NGOs oversees 400 schools with a student population of 70,000 (compared, for example, to the 45,000 students in the Washington, DC public schools) and provides other services as well. 49 agri-multiplicateurs), will purchase foundation seed from INERA through a matching grant mechanism to be put in place by the project. Under technical supervision by INERA and following technical guidelines from SENASEM, the groups will use the foundation seed to produce certified seed for distribution to farmers through NGOs and selected farmer organizations. INERA and experienced NGOs in the project area will provide technical assistance to the agri-rnultiplicateurs, and SENASEM will assess the quality of the seed they produce to determine whether it can be certified for sale. The seed price will reflect real production costs to ensure progressive cost recovery. The project will aggressively promote cost recovery (through cash or barter) in the distribution of commercial seed and cassava cuttings to farmers. Cost recovery is critical to ensure that seed producers can sustain purchases of foundation seed from INERA, multiply that seed, and create a viable local seed industry. The viability of the seed industry ultimately will depend on: (i)the cost of certified seed (which is influenced in turn by seed production costs, which must be kept under control so that farmers can afford to buy certified seed) and (ii)farmers’ willingness to buy certified seed (which is influenced by farmers’ familiarity with the benefits derived from growing improved seed). One of the main extension activities will be to demonstrate the benefits of using improved seed and planting material. The pilot operation to test a sustainable multiplication and distribution system, launched in March 2009 by four NGOs in Equateur Province, has informed the detailed operational mechanisms for the seed system that will be established under the project.
15. The production of foundation seed and cuttings financed under the project forms part of the capacity building for INERA and SENASEM at the district level. The project will help to rehabilitate critical physical infrastructure at the Boketa research station and provide equipment to ensure adequate production of basic planting material. The costs of relocating SENASEM staff to the province and ensuring their mobility will be also funded to guarantee proper seed certification. In addition, the project will provide funding to build seed production capacity nationwide, including (i)development of a National Seed Law that will establish national and provincial seed councils-the Conseil National Semencier (CoNaSem) and Conseils Provinciawc Semenciers (CoProSem); (ii)technical and managerial support for INERA and SENASEM; (iii) training for private seed multipliers in the project zone; and (iv) private sector agents, NGOs and other agricultural input suppliers in northern Equateur Province.
16. The advisory activities supported by the project will form the nucleus of a new extension service. MinAgri’s national extension service (Sewice National de Vulgarisation, SNV) is ineffective in the field owing to its lack of human resources, lack of continuous in-service training, the absence of an extension program with clearly defined objectives, and most of all its complete lack of operating funds. In practice, most extension activities are carried out by NGOs and traditional churches, which are present in practically every village. Under the proposed project, advisory service agents from the public sector and NGOs will be trained from the start not only to deal with technical issues but to give equal importance and time to sociological and organizational aspects of the village farmer organizations. The agents will work with existing groups and facilitate the formation of new ones as needed, and they will use community land (chumps communautaires) to introduce new varieties and agronomic practices. A new partnership between the public sector (MinAgri) and extension service providers will be established, with clearly defined operating rules. Because the old-style extension service in DRC basically ceased operations during the war, the province has the opportunity to rebuild by
50 incorporating the good features of newer extension systems. The effort will simply require the project to strengthen and support relationships already in place. Project funding will cover: (a) at the village level, mobility for the facilitators, as well as training, seed, and seedlings for demonstrations on communal land; (b) at the groupement level, mobility for the part-time supervisors, as well as training, extension equipment, and a lump sum payment for work during the two growing seasons; (c) at the secteur and territoire levels, motorcycles, training, office equipment, and operating costs as necessary, as well as an incentive payment (the salary is paid by the NGO-service provider under contract); and (d) at the district level, utility vehicles, office equipment, operating costs, and internet access. Funding will flow through the contracted NGOs and the public sector, depending on the activity financed.
17. The project will seek to enhance small-scale and basic agricultural processing opportunities for smallholder producer groups. Through NGOs, the project will help selected producer groups growing improved crops to acquire basic small-scale processing equipment to improve value-addition and reduce losses. Groups will acquire this equipment (for example, rice processing equipment, manioc shredders, and small grain mills) through a matching grant system with an 80 percent maximum IDA contribution.
18. Under the leadership of the producer organizations-and also through a matching grant system with an 80 percent maximum IDA contribution-the project will support the construction of storage facilities, beginning in year 2, based on a needs assessment carried out in the first year of the project. The selection of sites and the implementation strategy for these works will be based on the following criteria: (i)the existence of viable farmer organizations that are willing to market their produce jointly to obtain optimal prices; (ii)the presence of an adequate infrastructure management group within a legally recognized farmer organization or a federation of producer groups with elected managing boards; (iii)the strategic need for storage facilities, based on proximity to major production sites, key marketing roads, and navigable waterways; and (iv) the consensual choice ofthe site, excluding sites with land title problems.
19. The project will strengthen the organizational and technical capacities of farmer organizations (FOs). These organizations are key players in the decentralization process and the restructuring of MinAgri, where they are expected to play important advocacy roles in the provincial management councils (CARGs). They are potentially well placed, not only as providers of agricultural inputs and services pending stronger involvement of the private sector, but also as an eventual bridge to better collaboration between agri-businesses and smallholders and as an entry point for the project’s sensitization campaigns.
20. Building strong local institutions is central to fostering local development, and the project will contribute to this effort. NGOs and other development partners have made many attempts to help FOs fill the vacuum left by weak public institutions, yet FOs themselves are often weak institutions, suffering from poor organizational and technical capacity. The project will help FOs to become more viable institutions. In particular, it will help them to become strong partners in the provincial management councils, which (under MinAgri’s decentralization agenda) will coordinate activities by private extension providers as well as producer training and organization.
51 21. The project will require strong producer groups capable of exerting ownership and commitment at all stages of a demanding agenda for improving agricultural production (community seed production and distribution, introduction of improved breeds of small ruminants, establishment of animal health services in proximity to farmers, common use of new postharvest processing technologies, and the maintenance of shared facilities such as irrigation infrastructure). For this reason, the project will strengthen capacity within farmer organizations and cooperatives and encourage the development of new ones for activities developed by the project. An experienced consultant will review farmer organizations at the start of project implementation. Based on the specific weaknesses and constraints identified, capacity building programs will be developed and executed by specialized NGOs and private providers. To sustain the benefits of training, it will be linked closely to the implementation of other project activities. Most of this technical and organizational support will be directed to FOs that demonstrate a minimum level of institutional viability and are eligible for other project benefits, such as processing equipment. Training will also be offered to the co-managers of extension services.
Sub-component 1.2: Improving rice production through better water management in Pool Malebo (estimated costs: US$5.42 million)
22. Pool Malebo is a swampy plain surrounding Kinshasa’s N’Jili Airport and extending about 35 kilometers along the Congo River. Only about 800 of its potentially cultivable 6,000 hectares are currently cultivated. Under irrigation, this land could produce two rice crops per year. As an alternative to a second season of paddy, portions of this zone are also appropriate for growing vegetables in the drier season. The projected project will support the development of 2,000 hectares near the townships ofN’sClC, Masina, and Limete and directly involve 2,000 farm households. (Note that another donor, South Korea, plans to develop about 1,500 hectares in Pool Malebo.) In this area, women provide at least 40 percent of the labor devoted to farming, processing, and marketing.
23. Project investments will be informed by the results of a detailed study of the entire Pool Malebo plain. The study--funded by PMURR and in process-will formulate a master plan for irrigating 6,000 hectares in the Pool zone. It’will include technical studies and surveys to determine the most favorable areas for irrigation infrastructure, defined by topography, soils, and available water sources. Any complementary studies required will be financed during the first year of the proposed project. Irrigation infrastructure planning will also take into account the need for adequate access roads to the different perimeters. Support will also be provided to WUAs organized around hydraulic units, including support for water management, input delivery, and storage and processing of agricultural produce. Infrastructure works will be carried out in years 2 and 3 of the project, following detailed studies and training of WUAs in Year 1. These works will primarily involve reconstructing and cleaning irrigation and drainage channels and water control weirs.
Sub-component 1.3: Improving animal production capacity for small ruminant and poultry (estimated costs: US$5.00 million)
24. In the project zone in Equateur Province, small ruminants and poultry are the main sources of household revenue to cover expenses for basic needs such as education, healthcare,
52 and marriage. Support for ruminant and poultry production systems will have a strong impact on women, because in most households they are responsible for raising and selling animals and their products. Major constraints to small ruminant and poultry productivity at the household level include animal diseases (especially parasites and viral diseases); low productivity of local small ruminant breeds, exacerbated by inbreeding; and poor adoption of good husbandry practices, such as improved animal habitats and feeding strategies. Given that livestock production is very traditional and rudimentary in the province, care must be taken in the genetic improvement of local breeds through crosses with exotic breeds. The scarcity of veterinary technicians and specialized advisory services for these producers hinders the adoption of better animal husbandry techniques and contributes to poor reproductive performance in local breeds, high mortality rates, and poor overall productivity.
25. In line with the project development objectives and to be effective, livestock activities will primarily focus on establishing animal health services, delivering veterinary products in rural areas, and reinforcing public veterinary services. The project will also help to improve animal management and feeding practices and reconstitute the genetic resource base of the local breeds.
26. More specifically, animal health should benefit from better access to animal health facilities and veterinary pharmacies and from revitalized public veterinary services. A network of community animal health agents (ACSA) will be developed at the secteur level. To supervise the ACSA network and enable agents to perform their core public tasks (such as quality control and disease surveillance), training, office equipment, and transport facilities will be provided to MinAgri’s decentralized technical services. The project will rehabilitate and equip a small veterinary laboratory to strengthen the Veterinary Services’ capacity to diagnose basic animal health problems. It will also strengthen the core functions of the Veterinary Services at the central level (see component 3).
27. Three ACSA networks (about 90 agents) will be created and supplied with bicycles and veterinary kits. Pharmaceutical supplies for the networks will come from three district depots, which will be supplied in turn by a central pharmacy installed in Gemena under an agreed contract. The entire network (ACSA, depots, and pharmacy) will be managed by the private sector and coordinated by a sub-contracted NGO. The project will cover the management and supervision costs of the NGO, conduct animal health sensitization campaigns, and train animal health trainers.
28. To help producers improve the management and nutrition of small ruminants and poultry, the local NGO and MinAgri’s technical services will receive support to (i)conduct training and sensitization campaigns on the use of agricultural byproducts and residues to feed animals; (ii) promote the better use of fodder and feed supplements for small ruminants; and (iii)formulate poultry feed rations, using expertise developed by poultry development efforts undertaken by CDI-Bwamanda, an NGO operating in Gemena. Training in constructing shelters for small ruminants and poultry will help to improve animal housing. Training and demonstration sessions will be organized by village facilitators at selected sites to foster new ideas and practices.
53 29. The genetic resource base for small ruminants been narrowed by inbreeding. Starting in year 2, 900 small ruminants (males from a local breed) will be introduced at a rate of 300 males per year across some 80 producer groups. Within two years ofreceiving an animal, the recipient is required to provide a young male offspring to another member of the producer group. The identification and selection of beneficiaries, as well as the specific contributions they are required to make, will be detailed in the implementation manual and overseen by a hired local NGO. The introduced animals will stay in a transit center for 10-15 days before being transferred to farmers.
30. Project funding will cover: (i)the sensitization activities for farmer associations and selection of beneficiaries; (ii)the costs of acquiring the animals (animal branding, sanitary control, their stay at the transit center, and transfer to beneficiaries); and (iii)rehabilitation ofthe transit center.
Matching grant mechanism
3 1, Under component 1, the project will provide matching grants to finance activities under sub-components (1) to (3). Eligible activities will cover the acquisition of (i)seed and planting materials, (ii)improved breeding stocks for animal production, (iii)improved equipment for new processing technologies, and (iv) storage facilities at the village level. For the introduction of seed and planting material, the formula will be a 50 percent IDA subsidy for seed producers (ugri-multiplicuteur), To ease adoption of improved small ruminant stocks, the old stock that is replaced will be considered the beneficiary’s contribution. For new processing technologies and storage facilities, the formula for the matching grant will be a maximum of 80 percent contribution from IDA at the association level, depending on the costs and economic and financial viability ofthe particular technology.
32. The matching grants are one-time capital grants awarded to participating farmers in producer associations or cooperatives to enable them to make the investments required to adopt known and superior technologies. The grants are also used to build the capacity for small- and medium-scale farmers to promote viable agri-businesses and take advantage of market opportunities for their produce. The matching grant is open to all eligible members of village associations and cooperatives organized around given productive and/or commercial activity. Three criteria guide the selection ofproposals: (i)the technology must be technically viable, (ii) it must have a public good element, and (iii)it must be economically and financially viable. The activities eligible for grants, the criteria for selecting beneficiaries, and the matching grant formula are described extensively in the project’s operational implementation manual.
Component 2: Marketing infrastructure improvement (estimated costs: US$ 50.58 million, all IDA)
33. This component seeks to connect production areas to markets within the project area, further down towards Kinshasa, or north towards Bangui in the Central Afi-ican Republic. To realize this objective, major production zones in northern Equateur Province must be linked either to a functioning river port on the Congo River or its three major tributaries (the Ubangui, Mongala, and Lua Rivers) or to National Highway 6 (RN6), which runs across the province from
54 south to north, towards Bangui. The networks of feeder roads and waterways were identified in consultation with DVDA and through a participatory approach with the local administration in the project area. The proposed investment in access roads will complement other Bank and EU investments in rehabilitating RN6,” and it will focus on restoring market access (feeder roads) and rehabilitating or building a small number ofwholesale and retail markets.
Sub-component 2.1: Improving feeder roads (estimated costs: US$45.76 million)
34. The expected outcome of activities under this sub-component is an improvement in transport efficiency, leading to more competitive markets and substantially lower marketing costs. Priorities for investment in transport infrastructure have been determined through analyses ofthe agricultural potential of isolated zones, commodity-specific marketing constraints, the cost of works required, and multi-modal linkage to wider transport and marketing networks. By complementing road investments by other partners, these efforts will further improve transport connectivity within the province and with the Kinshasa and Kisangani markets.
35. The total length ofroads to be openedrehabilitated is about 2,500 kilometers, selected on the basis ofthe following criteria: (i)they belong to the 6,912 kilometers ofpriority feeder roads identified in the project area in June 2007 by DVDA; (ii)they lead to areas with high agricultural potential and relatively dense population; (iii)they are connected to operational main roads andor river ports; and (iv) they complement road programs financed by other donors. The final selection of feeder and district roads will be carried out following more elaborate technical studies, including environmental and social studies. Equateur Province appears to have an adequate number of functioning river ports (22, of which 18 are managed by private operators). The transit capacity of several of ports will be reinforced by an upcoming € 60 million project funded by the EU over 2010-12. This project includes dredging and navigation signals on the Congo River between Kisangani and Kinshasa, and technical and institutional capacity building for the national waterway company (Rbgie des Voies Fluviules, RVF) to ensure maintenance for this major transport network.
36. Physical works will be carried out during years 2, 3, and 4, under the technical and financial responsibility of a DMC that will manage the infrastructure activities (feeder roads, irrigation, and market constructionhehabilitation). Pending the effectiveness of the official road maintenance system,Z1 the road rehabilitation component is designed to include sufficient resources and practical arrangements for rehabilitation and maintenance, at least for a few years, by combining both functions in one contract. The contract requires the contractor that rehabilitates the roads to maintain them to a specific quality standard. Building on PMURR’s
2o DRC, with support from various financial institutions and partners, is undertaking an important program of reopening and rehabilitating the main road network serving the project area, of which RN6 is the backbone. The principal works in progress are: the Zongo-Bari-Gemena-Akula axis of RN6 (about 375 kilometers), financed by the World Bank through the emergency Program for Improvement of Living Conditions (PUACV); the Gemena- Businga-Lisala-Bumba axis (about 405 kilometers), financed by the EU; and the Budunki-Aketi-Dulia axis of RN6, financed by the World Bank (125 kilometers), which joins National Highway 4 (RN4) to Kisangani, DRC’s second major city. *’ The national road maintenance fund (FONER) was set up on December 24,2008. The law requires 40 percent of FONER resources to be allocated to the maintenance of high-priority local road networks across the country. 55 experience of rehabilitating about 2,300 kilometers in two years, the project will combine both mechanical and high-intensity labor (HIMO).
37. Project preparation included close contact with FEC representatives, who expressed much enthusiasm with the proposed infrastructure rehabilitation. They regard it as an opportunity to resume transport services and possibly to upgrade and expand their shipping fleet.
Sub-component 2.2: Rehabilitatiodconstruction of market infrastructure (estimated costs: US$4.82 million)
38. This sub-component comprises the rehabilitation of physical markets. It will support the rehabilitation ofthree to four agricultural markets that are expected to have an important demand effect on production. The first site will be the key market of Mogalo. By year 3, three additional markets will be developed in major production sites. The project’s strategy is to improve existing markets. Market infrastructure will be managed by a local committee under the aegis of the municipality. In addition, the project will actively promote viable management of the infrastructures by involving local communities (for example, in management boards).
Component 3: Capacity-building support to the Ministry of Agriculture and Ministry of Rural Development, and project management (estimated base costs: US$ 20 million, including US$2 million of PPF, all IDA)
39. This component supports the restructuring of MinAgri, which has been elaborated with support from BTC and FAO. Aside from supporting the restructuring in general, the project will give particular attention to aspects of restructuring that will encourage the attainment of other ARRSP objectives and ensure the effective management and coordination of project activities. Specific activities will include: (i)providing selective support for restructuring MinAgri’s key services at the central and provincial levels, as well as institutional support to MDR, and (ii) financing operation of the PIU, including M&E and the preparation of similar operations in other geographical areas. This component includes three sub-components: (i) capacity-building support to MinAgri and MDR; (ii)project management support; and (iii)M&E support.
Sub-component 3.1: Capacity-building support to the Ministry of Agriculture and the Ministry of Rural Development (estimated costs: USU.44 million)
40. Activities under this sub-component will support: (i) strategic thinking on the revitalization of core functions such as the advisory services and agriculture research provision; (ii)preparing for the recovery of agro-industry; and (iii)implementing part of the institutional restructuring and strengthening ofthe MinAgri initiated with assistance from BTC and FAO. The project’s funding will complement BTC’s current financing. Given the scope of the restructuring program, other financing is needed as well. The capacity building activities will allow the ministries to fulfill their obligations under the project and build, a foundation for good management ofthe sector in the future and in other provinces.
41. The project will support the revitalization of the national advisory services and research fimctions through studies and partnership with regional organizations. The project will draw
56 lessons from this pilot in Equateur Province and build on other partners’ experiences elsewhere in DRC to assist the government in the conception and implementation of an innovative extension system for the entire country. This extension approach will be based on reinforced government public institutions (MinAgri’s inspectorates, research system, seed policy, and so on) and active private sector and civil society organizations involved in rural development initiatives. To assess the replicability of the system developed under the project for other parts of the country, the project will finance studies to define a national vision of the advisory services as well as agricultural research, and it will help create a partnership with regional institutions such as WECARD, ADRAO, and CARDESA. This effort will help the government to elaborate a long-term vision for an agricultural extension system in DRC.
42. The project will support the recovery of agro-industry through studies. A number of large processing facilities are located in the province but have ceased to function and have deteriorated severely. The government has asked for assistance in assessing these facilities and formulating options for them. Studies are currently supported by the Bank-financed Private Sector Development project and conducted under the responsibility of the Ministry of Industry. Apart from the introduction of simple postharvest technologies (described earlier), the project will assist medium and/or large enterprises by financing studies of their potential rehabilitation and supporting the formulation of a government strategy to transfer these enterprises to the private sector. More specifically, project will support: (i) detailed complementary studies and consultations to alternative options for reform, including divestiture of Barastatah involved in agri-business, such as rubber and cocoa enterprises; (ii)national workshops to validate the studies and options; and (iii)exchange visits and training for the staff of MinAgri and the Ministry of Industry. It is expected that such reforms would help to reactivate medium- and large-scale agro-industries in the project area and provide opportunities for forward and backward linkages with smallholder-based agri-business. The project support will be provided in very close collaboration with the Bank Private Sector Development Unit, IFC, and FEC.
43. At the central level, selective support to MinAgri’s restructuring program will focus on (i)improving data collection capacity and analysis for the Directorate ofAnalysis, Planning, and Forecasting; (ii)improving technical and managerial capacities for the National Service of Planting and Seeds; (iii)enhancing administrative capacity for the Secretariat General of MinAgri; (iv) strengthening the core mandates of the Veterinary Services, such as the National Animal Disease Information System; (v) improving the business environment in agriculture, including assistance to carry out additional work to complement the Agriculture Code; and (vi) supporting planning for the staffing and decentralization of MinAgri, in line with the new structure defined under the restructuring program for agricultural service delivery. The preparatiodfinalization of a retirement plan for Ministry staff past retirement age and its implementation will be handled separately.
44. At the decentralized level, in Equateur Province, targeted technical support and equipment will be provided for: (i)formulating a provincial agricultural development plan; (ii) strengthening the capacities of the provincial directorate of agriculture, especially in M&E, statistics and planning, extension service delivery, and adaptive research; (iii)establishing a provincial “communications and information platform,” similar to the one BTC established in MinAgri in Kinshasa; and (iv) supporting the establishment and operation of CARGs throughout
57 Equateur Province. These councils are designed to be operational working groups involving government authorities, farmer organizations, NGOs, the private sector, researchers, and civil society. For the MDR, activities will involve technical and institutional support to enhance its capacity to fulfill its mandate for planning and management of economic infrastructure.
Sub-component 3.2: Project management (estimated costs: US$10.56 million)
45. The main expected outcome of this sub-component is the proper administration and use of project resources. IDA funding will ensure proper capacity for the Project Management Unit (PMU) to formulate and ensure implementation of annual activity programs in accordance with project objectives and mechanisms set forth in the Grant Agreement. Adequate funding will be provided for the PIU, including vehicles and equipment, office supplies, operating costs (salaries, utilities, mobility), audits, operating costs for the coordination committees at the central and provincial levels, consultant services, training, and workshops. It is expected that project supervision costs will be high, given the remoteness of the main project zone. Arrangements will be made for a joint Bank-PIU cost-sharing arrangement to visit the project site at least once a year. Other innovative mechanisms for supervision, such as the photo imagery system used in Afghanistan, will be sought.
Sub-component 3.3: Monitoring and evaluation (estimated costs: US$2.00 million)
46. This sub-component supports activities managed by the project Monitoring and Evaluation (M&E) Unit. These involve periodic assessments of the implementation of planned activities (namely, the delivery of project outputs as per the annual activity programs), as well as periodic assessments (evaluations) of progress towards expected project outcomes. Collaboration mechanisms will be established between the project’s M&E Unit and services responsible for M&E in MinAgri and MDR, to ensure on-the-job training for the latter during project implementation. Funding will be allocated for operating costs of the M&E Unit (salaries, utilities, and mobility), office supplies, consultants, training, vehicle and equipment. Costs supported by component 3 will include: (i)works such as rehabilitation ofoffices; (ii)goods and equipment; (iii)consulting services, including studies on the geographic roll-out of successor operations; (iv) training and study tours; and (v) operations.
58 Annex 5: Project Costs CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
~ Local Foreign Total Project Cost by Component and/or Activity (US% M) (US%M) (US%M)
1. Improving agricultural and animal 28.27 28.15 56.42 production 1.1. Improving production by providing seed, planting 23.50 23.50 47.00 materials, and advisory services 1.2. Improving rice production through better water 1.77 2.65 4.42 management in Pool Malebo 1.3. Improving animal production 3.00 2.00 5.00
2. Improvement of marketing infrastructure 17.20 25.80 43.00 2.1. Improvement of feeder roads 16.28 24.42 40.70 2.2. Rehab./construction of market infrastructure 0.92 1.38 2.30
3. Capacity building, project mgt., and M&E 13.31 4.69 18.00 3.1. Support to MinAgri and MDR 3.75 1.69 5.44 3.2. Project management 8.06 2.50 10.56 3.3. Monitoring & Evaluation 1.50 0.50 2.00
4. Project Preparation Facility 1.50 0.50 2.00
Total Baseline Cost 60.28 59.14 119.42 Physical Contingencies 3.02 4.04 7.06 Price Contingencies 1.51 2.01 3.52 Total Project Costs 64.81 65.19 130.00
Identifiable taxes and duties are $USlO.O million, and the total project cost net of taxes is $US120.0 million. Therefore the share of project cost nest of taxes is 92.38%.
59 Annex 6: Implementation Arrangements CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
A. Coordination with Other Planned or Ongoing Operations
1. The project implementation arrangements will foster synergies with other Bank initiatives and other partners. Together with the government, the Bank Group, including FIAS, has actively initiated two main initiatives involving the development of special economic zones (SEZ) and the formulation of a strategic framework for sequencing and prioritizing infrastructure investments, leading to the identification of three development corridors. The proposed project fits well with these initiatives in terms of its geographical coverage and planned activities. Equateur Province falls within the Matadi-Kisangani corridor, which is regarded as the most attractive for infrastructure investments (rail, river, and feeder roads) and bodes well for the mobilization of complementary financing in infrastructure. Likewise, Pool Malebo is within the likely site of the first pilot SEZ. It is anticipated that the SEZ could provide important market outlets for agricultural produce such as cassava from Equateur Province, and thus it would provide bases for restoring an agricultural supply chain along the Congo River.
2. The geographical coverage of the project in Equateur Province fully complements the area covered under an ongoing IFAD-finded project, which mainly involves two other districts, Equateur District and Mongala District. CDI-Bwamanda, a large NGO sponsored by the Catholic Church, has been operating in the northern Equateur for several years, with funding of € 3.5 million from the EU. This NGO has been involved in seed production and distribution in the project area, but its operations are nearing completion. It has also been a key player in implementing road maintenance and has run a very substantial marketing program, including shipping agricultural produce from the project area down the river to Kinshasa via its own fleet of river barges. The preparation of the proposed project largely benefitted from exchanges with representatives of CDI, and this entity is expected to be an important partner during implementation. Project activities in the Kinshasa Pool Malebo area are undertaken within the framework of the master plan for irrigation development in Pool Malebo, which is being carried out with support from the Bank-funded PMURR project. The proposed project’s activities also complement support by several partners, including FAO, EU, Italy, South Korea, and China.
B. Project implementation
3. It is expected that project implementation arrangements will help build management capacity within MinAgri and empower the concerned line ministries. Consistent with the recommendations of the Kinshasa Aid Forum, held in June 2009, the arrangements will ensure the effective oversight of the line ministries as well as operative collaboration with similar projects. It is also anticipated that the implementation arrangements will help lay out the roadmap for streamlining implementation units within MinAgri and avoid unnecessary multiplication of implementation units, especially outside the ministry. The assessment of existing implementation units in the agriculture and rural development sectors revealed that most of them are outside these ministries and are placed in the provinces hosting the projects. None of
60 them could be used at present to host the current project, but an implementation unit under the direct oversight of the Secretary General of MinAgri could serve as a departure for future projects and foster better donor harmonization.
4. The implementation arrangements have been designed with express intent to shift decision-making authority down to local levels and provide needed oversight from the center. This design feature is intended to address the distance between Kinshasa and Equateur Province and to avoid delays. To build in oversight at the local level, the Agricultural Management Councils, comprised of representative stakeholders, will be involved in monitoring and assessing the implementation of project activities. Implementation arrangements are integrated into the concerned line ministries and make maximum use of existing structures, including those outside the public sector. Because ofthe need to shift implementation authority down to lower levels, the arrangements may appear layered and cumbersome, but the layers are defined to accomplish subsidiarity and accountability. With respect to formulation of activity programs, monitoring and supervision of implementation performance, the institutional set-up includes a National Project Steering Committee chaired by the Secretary General of MinAgri, who will have overall responsibility for project supervision and implementation performance. He/she will collaborate very closely with the Secretary General of MDR, who will be the vice-chairperson of this committee. Additionally, a Provincial Coordination Committee, chaired by the Provincial Minister of Agriculture, will be mandated to draft proposals for annual activity programs and monitoring. Responsibilities for day-to-day implementation of project activities, along with fiduciary responsibilities, will be entrusted to a Project Coordination Unit (PCU) located under the Secretary General of MinAgri. The PCU will have one deconcentrated unit in each of the three Districts (future provinces) ofthe project area in Equateur Province. The organizational set- up for project management involves the entities described in the following paragraphs.
5. The Steering Committee (SC) will be entrusted with a general mandate for development assistance and will be the same for both MinAgri and MDR and all projects. It will be co-chaired by the Minister ofAgriculture and Minister ofRural Development (or their respective delegates). Its permanent members include representatives of selected ministries22(Ministry of Finance, Ministry ofPlanning, Ministry of Industry, Ministry ofInfrastructure, Ministry ofTransport, and Ministry of Research). Additional variable members would include representatives from the project zone, the private sector, the NGO community, and producer organizations. The project coordinator will be entrusted with secretarial duties for the SC. The SC will clear proposals for annual activity programs and budgets submitted by the PCU and help resolve coordination issues in project implementation that may hinder the smooth implementation ofthe project. It will carry out field supervision at least twice a year, jointly with the Bank task team, and it will ensure prompt implementation ofrecommendations to improve performance.
6. At the specific request of MinAgri, a PCU will be created and headed by a Project Coordinator, a locally recruited staff charged with day-to-day management of the project. The PCU will be staffed with specialists recruited locally on a competitive basis, including a senior technical adviser, an agronomist, an irrigation specialist, a financial management specialist, an
’’ The composition ofthe steering committee is standard for all agriculture and rural development sector projects. However, other members are usually added to these permanent members to take into account the geographical coverage ofthe concerned project. 61 internal auditor, an accountant, a treasurer, a monitoring and evaluation specialist, a statistician, and a procurement specialist. In addition, the PCU will closely collaborate with key staff from MinAgri and MDR. In particular, the Directorate for Studies, Planning, and Statistics ofMinAgri and MDR will closely collaborate with the M&E Unit of the PCU. Likewise, the PCU will be complemented by the participation of technical staff from MinAgri in the core functions (procurement, financial management, agricultural production, rural infrastructure). It is expected that this will help build capacity and ensure that the project implementation experience fully remains in the institutional memory of these ministries, so as to facilitate replication of successful experience elsewhere in the country. MinAgri has agreed that this PCU will host future projects and that additional staff can be hired as required to accommodate the needs of incoming projects. The PCU will be responsible for overall management ofthe project activities, including:
0 Coordinating the preparation of annual activity programs and budgets in consultation with provincial units and submitting them to the PSC for approval, and ensuring implementation ofrelated activities. 0 Monitoring and evaluating project performance (inputs, pace of execution, outputs, and outcomes). 0 Managing project financial and human resources and other assets, and procuring goods, services, and works in a manner consistent with Bank procedures and guidelines, as included in Annex 8 and the implementation manual
7. The Provincial Coordination and Monitoring Committee (PCMC) will be the key framework for the formulation ofproject activities and the monitoring oftheir implementation at the provincial level. The major responsibility of this entity will be to monitor project progress within the province, aggregating reports from several districts. In collaboration with the district- level coordination units, it will consolidate annual work programs and budgets for submission to the PCU for finalization, and participate in the Steering Committee meetings. It will make decisions on activities directly implemented by the province, such as capacity building, but will not have approval authority over decisions at the district level. Members of the PCMC will include relevant staff from the Provincial Ministry of Agriculture and Rural Development, the Ministry ofIndustry, the Ministry ofInfrastructure, and representatives ofthe territorial CARGs.
8. The three Decentralized Project Coordination Units (DPCUs) will be the key operational units at the district level. Each will be headed by a district project manager and will be established within the agriculture and rural development district office (inspection agricole) and charged with day-to-day management of the project. A firm (Designated Management Contractor, DMC) will be contracted to implement the infrastructure activities (roads, market, and irrigation). Each DPCU will be staffed with locally recruited technical and financial management experts, recruited on a competitive basis: a district project manager; an agricultural production specialist; a livestock specialist; a rural infrastructure specialist; a producer organization specialist; a safeguard specialist; a procurement assistant; and an accountant assistant. The DPCU will be responsible for:
0 Preparing annual district-level work programs and budgets. 0 Supervising the implementation ofproject activities at the district level.
62 0 Monitoring and evaluating project activities and reporting to the PCU for consolidation. 0 Managing project financial and human resources and other assets in accordance with Bank procedures and procuring goods, services, and works in a manner that complies with Bank procedures and guidelines, as included in Annex 8 and the implementation manual.
9. At the territorial level, the local representative of MinAgri will be responsible for monitoring implementation of project activities, in coordination and consultation with the territorial administration. This work will include mobilizing and training field staff at that level. Actual implementation at the territorial level will be undertaken by the contracted NGOs (for the work with farmers groups) and by the firm or firms contracted by the DMC (for the infrastructure work). The institutional arrangement is depicted in Annexes 6-A and 6-Bybelow.
C. Arrangements for the implementation of rural infrastructure activities
10. The management of these activities will be delegated to a private contractor to be recruited under Bank international bidding rules, due to the size and complexity of the infrastructure component of the project. In the project zone, this contractor would establish a DMC at one or more locations to facilitate efficient completion of the works. In close collaboration with DVDA and DPCUs, the DMC will:
0 Prepare the annual rehabilitatiodconstruction program based on project documents. 0 Prepare the bidding documents for the recruitment of the consultants and construction enterprises and participate in the selection process according to Bank procedures and the implementation manual. 0 Review the design and technical drawings, cost estimates, technical specifications, and construction and/or rehabilitation plans prepared by contractors. 0 Supervise the work and prepare monitoring reports for the DPCU, PCU, and PCMC. 0 Provide guidance for quality assurance of civil works and ensure that implementation of the infrastructure activities complies with approved technical standards, including the mitigation ofany adverse environmental and social impacts generated by the works.
11. The detailed terms of reference for the DMC are presented in the project implementation manual.
12. The DMC is an effectiveness condition and is expected to be timely on board. The first year of the project will be dedicated to participative validation of the selection of the roads and markets for which works are to be realized during years 2 through 4. The first year will also be dedicated to carrying out the feasibility studies, including the environmental impact assessments, The physical works will be carried out during years 2, 3, and 4 under the technical and financial responsibility of the DMC. The contractor that performs the rehabilitation works is also accountable for ensuring maintenance service at quality levels specified in the contract. A contractor will be paid in monthly or quarterly installments based on the maintenance performance. In this framework, the contractor has a strong financial incentive to be efficient in optimizing the physical interventions, while the road agency and the road users obtain the best value for money for maintenance services provided. The DMC is expected to put emphasis on
63 efficient and effective service delivery and national capacity building. This involves the development of local technical competence through training of team leaders for HIM0 construction brigades and capacity building for the maintenance of other rehabilitated infrastructure.
13. Creative methods should be used for dealing with risks associated with working in areas where there is a high probability of leakage of funds and where authentication of work is a serious challenge. The DMC will require that each request for invoice payment by contractors be supported by geo-referenced photographs (with a permanent monument visible in the background) taken before the start of the scheme works, during construction at various stages, and at c~mpletion.~~Requests for payment must also include evidence of quality control, which includes an “OK Card” countersigned by concerned DPCU, the contractor, as well as local communities and beneficiaries.
14. The infrastructure activities will be closely monitored and supervised by the Country Office-based Transport Specialist with the fill support and coordination of the Transport Sector Management Unit.
D. Arrangement for implementation of other project components (components 1 and 3)
15. The activities of component 1 related to improved production will be implemented by the DPCUs. Most of these activities, including the production and distribution of planting materials, the piloting of simple processing technologies, and training will be subcontracted to local service providers, including NGO and private agents. The central PCU will be responsible for implementing support services in Pool Malebo as well as activities envisioned under component 3, related to capacity building in MinAgri and agribusiness promotion. Finally, activities related to project management and M&E will be implemented both by the central PCU and decentralized operational units.
E. Implementation Support Plan
16. Because DRC is just emerging from a post-conflict situation to enter a development path, and because the project’s main site (Equateur Province) is far from Kinshasa, the project will require intensive supervision coupled with on-the-spot training from Bank staff and consultants. The project will benefit from multi-disciplinary team and topic-based supervision approaches as needed.
17. Like all Bank-financed projects, this project will benefit from two formal fill supervision missions, including all the required skills and additional expertise as needed. Instead of the traditional two weeks, however, the project’s fill supervisions will last at least three weeks each (two in the field and one in Kinshasa) to allow Bank and government teams to work deeply on each topic and find the appropriate solutions. Areas such as agronomy, agricultural research, seed production and certification, infrastructure, financial management, procurement, M&E, and social and environmental issues will be covered systematically. Frequent interim field visits and
23 This approach has been successfully used in Afghanistan, where it is difficult to access projects because of insecurity. 64 implementation support from the country-based senior agricultural specialist and other Country Office staff will also be organized whenever possible. The two formal supervision missions will be jointly organized with the government team, including the Steering Committee members, who will participate in the field visits. Synergy and joint supervision with other others partners intervening in the same project area, such as IFAD, will be sought as much as possible.
18. The fiduciary management and safeguards will be given special attention. A thorough review of accounting and financial management practices, including extensive expenditure reviews, audit reports, IFRs, disbursement issues, and compliance with Bank guidelines and procedures under the project will be regularly carried out by the field-based financial specialist to ensure proper financial management and mitigate the risk of financial mismanagement. Guidance and support will be sought from World Bank HQs and the DRC Financial Management Hub Coordinator when necessary. Procurement aspects will also be handled by the two field-based procurement specialists. The supervision of procurement activities will review practices, the application of the procurement plan, respect for thresholds, and proper filing of documents. In addition to the prior review supervision missions, the supervision of procurement activities will also include quarterly supervision missions during the first 18 months. This will allow the Bank procurement team to visit the field to carry out direct post reviews.
19. With respect to safeguards, the consultations process initiated during project preparation will be sustained during implementation to minimize conflicts and enhance cooperation and improve social benefits. At the local level, the implementation support mission will include the main stakeholders, including local government, civil society (such as NGOs and community- based organizations), vulnerable groups (such as women and young people), and persons affected by the project. The project’s safeguard specialist will produce quarterly progress report on social and environmental progress, which will be part of the overall project monitoring system.
20. In 2010, during the first three months following the Board presentation (expected to be held in March 2010), the task team will carry out one full supervision mission. The mission will include the launching workshop and move immediately towards implementation, initiating the activities specified in the Year 1 Work Plan and Budget. In December 2010, a second mission- in essence the first formal and comprehensive supervision mission-will include all of the expertise required to implement the project successfully. The assembled experts will assess the status of implementation during the first six months of project life. They will examine all of the planned activities for each of the project components.
2 1. In subsequent years, the project will run on the basis of the calendar budget year of the Recipient (January-December). The supervision schedule for 2010 (Year 1 of the project and future years will be finalized by the Task Team Leader (TTL), in consultation with the Recipient, supervising partners, and the Country Team, by the end of each preceding year. The Bank will conduct two formal supervision missions each year. They will be complemented by interim support missions carried out by the field-based TTL, as well as specific supervision missions conducted by the fiduciary team or any other sector. During the first two years, supervision of the project will be intense and require full support of the Program Coordinator along with sector staff, It is expected that the supervision costs during these first two years will be high, about
65 twice the normal supervision budget, taking into account the need to visit the project site. These costs will go down starting from Year 3.
22. As with the Year 1 supervision missions, the general objectives will be to support and monitor the execution of the overall project work plan for the given year, namely to (i)continue to support the consolidation of project activities; (ii)assess, discuss, and advise the PCU at MinAgri and the three district units on project implementation issues; (iii) assess the performance of the DMC in charge of the infrastructure activities; (iv) monitor implementation against agreed targets in the Annual Work Program and Budget; and (v) monitor and assess project results against the PAD, with a particular view to any changes in the identified risks matrix. .
Annual Task Team Budget Need for SPN
66 I 2 f i E i E
E L I 6
I f f
E
L T
! i :I i L: i I u 3 ? Annex 6-A: Institutional Arrangement Chart
~s.~*--mw~.. Steering *** *e* Committee Central **: U *. *. Level 0. ** *.** ...... I-] MinAgri
MinAgriProvince Equateur
...... O.0 ** ; Provincial **: . Level 0 ***...... ***'
f v 3r v \ DPCU DPCU DPCU DMC N-Ubangui S-Ubangui Mongala (Infrastructures)
PCMC Project Coordination and Monitoring Committee PCU Project Coordination Unit DPCU Decentralized Project Coordination Unit DMC Delegated Management Contractor
69 Annex 6-B Project Implementation Chart
Pool Malebo Unit (2)
I Admin. And Fin. Procurement internal Auditor M&E Specialist Management Specialist Specialist 1
Accountant Statistician/M&E tc-3 Assistant nTreasurer
I I I Y v \ Specialist Specialist organization Safeguard Procurement Accountant i A ,
70 Annex 7: Financial Management and Disbursement Arrangements CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
Executive summary
1. The financial management (FM) arrangements for the project have been designed with consideration for the country’s post-conflict situation and the remoteness of the main project sites. The assessment ofthe FM capacity ofthe Finances Division ofthe Ministry ofAgriculture revealed several weaknesses, mainly in staffing arrangements and accounting systems, and significant fiduciary risks. Given the weaknesses and the fiduciary risks associated with the project, the financial management team will be headed by a qualified, experienced FM expert (individual consultant), supported by five experienced accountants (one accountant and one treasurer at the central level and three accountants at the provincial level), all selected on a competitive basis among individual consultants and where feasible among civil servant already working for the Ministry of Agriculture or other specialized entities of the government. A financial management manual under preparation will be adopted before effectiveness. A computerized accounting system will be set up no later than three months after effectiveness.
2. The internal auditor will carry out regular internal audit controls, aiming to ensure that the internal control system is performing well. The internal audit function will be outsourced to an experienced internal auditor recruited on a competitive basis. In addition to ensuring that the project finds are used for the intended purposes, the internal auditor will have to provide technical assistance to MinAgri to create a robust Internal Audit Department (IAD) within the Ministry. The IAD will be composed ofa mix oftechnical and fiduciary staff. The finding ofthe internal auditor will be used by project management to make decisions regarding project implementation as well as payments and contracts for service providers and implementing agents.
3. One Designated Account will be opened in US dollars in a commercial bank acceptable to IDA. Disbursements from the IDA grant will be transaction-based (replenishment, reimbursement). This method will be used during at least the first 18 months and thereafter, the option to disburse against submission of IFRs (also known as the Report-based Disbursement method) could be considered, subject to the quality and timeliness of the financial management system deliverables. The option of disbursing the finds through direct payments on contracts above a pre-determined threshold will also be available.
4. The Cour des Comptes (DRC’s supreme audit institution) having been assessed as weak, a qualified, experienced, and independent external auditor will be recruited on approved terms of reference. The Cour des Comptes may participate in the selection of the external auditor. The external audit will be carried out according to either International Standards on Auditing (ISAs) or Auditing Standards (ASS). It will cover all aspects of project activities implemented at the central and decentralized levels and will include verification of expenditures eligibility and physical inspection. The audit period will be on annual basis and the reports submitted to IDA and the Cour des Comptes six months after the end ofeach fiscal year.
71 Summary Project description
5. The project development objective (PDO) is to increase agricultural productivity and improve marketing of crops and animal products by smallholder farmers in targeted areas. The project will have three key components: (i)improving agricultural and animal production; (ii) marketing infrastructure improvement; and (iii)capacity-building support to MinAgri and MDR and project management. The components are described in detail in Annex 4.
Country Issues
6. The World Bank and other donors’ assessments notably, the CFAA (Country Financial Accountability Assessment), PER (Public Expenditures Review), and PEFA (Public Expenditure and Financial Accountability), completed between 2002 and 2007, portray an unsatisfactory economic and financial control environment, including weak budgeting preparation and control, financial reporting, external audit, and human resources. In-depth structural reforms have been launched in the areas of economic governance, public expenditure management, financial sector, and public enterprises to strengthen capacity in public administration. With the support of the international community, the government of DRC is undertaking a series of Public Finance Management (PFM) reforms in budget preparation and execution, adhesion to Treasury forecasts, preparation of regular budget execution reports, and simplification of the national budget classification system. A new Organic Law is currently being finalized while a new Procurement Code was adopted in December 2008. Although there is reason for cautious optimism, it will take time for these reforms to yield substantial improvements in the management of public funds. As a result, the overall country fiduciary risk is still considered high. The Bank thus cannot at this time rely on the public expenditure framework for the purpose ofthis project.
Institutional arrangements for financial management
Financial management capacity assessment of the Ministry of Agriculture.
7. The Project’s implementation arrangements will be based on a delegation of implementation responsibilities to government administrative and technical entities and private enterprises and consulting firms wherever possible.
8. The findings of CFAA and PEFA exercises as well as the FM capacity assessment conducted during project preparation revealed some capacity shortages in the fields of financial management and procurement within MinAgri. The scope and responsibilities of the FM Division of MinAgri are limited to the preparation and execution of the ministry’s budget. The weaknesses of the FM Division of MinAgri include (i)insufficiently qualified staff in financial management at all levels ofthe MinAgri system; (ii)the staff is insufficiently familiar with IDA and other donor-financed-project procedures for reporting, disbursement arrangements, and auditing; (iii)lack of a proper accounting system to record and prepare financial reports; (iv) lack of computerized and modern accounting tools at the central and provincial levels; and (iv) weak internal control systems at the Finances Division.
72 9. The Poverty and Human Resources Development (PHRD) Grant implemented by MinAgri has faced some difficulties in terms of financial reporting and disbursement, although some improvements have been noticed recently. In a nutshell, the findings ofthe review suggest a need for strong support ofthe FM Division ofMinAgri to be able to manage IDA funds as well as the funds of the other partners. Therefore, the FM system acceptable to IDA is the one described below. The current FM arrangements in place within MinAgri require significant improvements and support before they could fully meet the Bank and other donors’ financial management requirements.
Financial Management Unit at the Finance Division of the Ministry of Agriculture:
10. It was agreed following discussions during project preparation to set up the FM team within the Finances Division of MinAgri to manage the fiduciary aspects of the project. It is anticipated that eventually MinAgri will create a single Financial Directorate. For this option to be realized, the capacity of the FM team of the current Finances Division must be strengthened in term of staffing, accounting software, FM procedures manual, and logistical and financial resources to enable the team to operate efficiently.
11. The Project Implementation Unit to be set up at the Secretariat General of MinAgri will be the Bank’s and other donors’ main counterpart and focal point. It will oversee the entire project management, including management ofthe funds. It will primarily be responsible for: (i) overseeing implementation; (ii) handling financial and administrative management; (iii) collaborating and coordinating with other relevant entities at the central, provincial, and district coordination units involved in the project for the successful implementation ofthe program; and (iv) liaison with the Bank and other donors. At the central level, the project’s FM team, headed by the FM expert, will be composed of one accountant and one treasurer (working on disbursement issues). An accountant will be assigned in each decentralized entity (provincial level) managing project funds. The FM staff will be selected among individual consultants and where possible among civil servants already working for the MinAgri or will be transferred from other entities or ministries. The FM expert will be recruited to provide technical support for a limited period oftime (no more than three years) to the FM team ofthe project to build capacity of the other implementing entities and MinAgri as a whole. The TORS of the mission will provide more details on the scope and responsibilities ofthe FM expert.
Risk assessment and mitigation
12. The Bank’s principal concern is to ensure that project funds are used economically and efficiently for the intended purpose. An important part ofthe FM assessment is to determine the risks that the project funds will not be so used. Two elements of risk are considered: (i)the risk associated with the project as a whole (inherent risk) and (ii)the risk linked to a weak control environment for project implementation (control risk). The features of these risks are described below.
73 Risk Risk Mitigating Measures Conditions for %esldualRisk Rating Effectiveness 0 Inherent risk H ; Country level H The government is committed to a N H The CFAA, PER, and PEFA reform program that includes the reports outlined PFM weaknesses strengthening of the budget at central and decentralized classification and implementation government levels as well as the of an interim IFMIS . A new legal in sector ministries in terms of framework is being prepared. governance and management of However there are still weaknesses public funds. in capacity and in audits of a first set of accounts. Efforts are being continued to strengthen the accounting and audit capacity. Use of IDA FMprocedures is required for this project. Entity level Relying on a dedicated FM team The assessment of the key at the PCU and use of IDA FM ministries during the CFAA, system requirements is critical for PEFA, and particularly the FM the mitigation of fiduciary risk of assessment of MinAgri and the this project. Recruitment of a Finance Division during finance manager and accountants preparation ofthis project at central and decentralized level revealed internal control and internal auditor will mitigate weaknesses and a weak fiduciary internal control weaknesses. environment. Project level: The PCU will strengthen ex ante The resources of the project may and ex post control of funds not reach all decentralized allocated to implementing entities entities (province and districts) at decentralized offices (DPCUs and may not be used for the and DMC). The scope of audit will intended purposes. Delays in the include review of expenditures reporting system and auditing due incurred at decentralized level. FM to the weak capacity of the staff will be recruited on TORS fiduciary team and geographical acceptable to IDA and training and location of some entities are hands-on advice given to staff ~ expected. during project implementation. Control Risk Budgeting: Annual work plan and budget (i)Weak capacity of central and required each year and proclaimed. decentralized entities to prepare The project Financial procedures and submit accurate work manual will define the program and budget; (ii)weak arrangements for budgeting, consolidation of decentralized budgetary control, and the budgets; and (iii)weak budgetary requirements for budgeting execution and control. revisions. Annual work plan and budget required. IFR will provide information on budgetary control and analysis of variances between actual and budget. Accounting: H (i)The project will adopt the Poor policies and procedures, Congolese accounting system.
74 Risk Rating lack of aualified accountant staff Accounting procedures will be at all le;els (MinAgri and PCU documented in the procedures and Internal Audit at manual. (ii)The FM functions will decentralized levels). be carried out by qualified individual FM staff recruited on competitive basis. (iii)FM team will be supported by the FM expert at the central level. Internal Control: (i)Adoption of a FM procedures Internal control system at manual and training on the use of decentralized level may be weak the manual by the consultant due to weak FM capacity of IA. recruited for this purpose. (ii)Recruitment of an internal auditor who will scrutinize the proclaimed accounting, financial,
and operational procedures. The I internal auditor will report to the Steering Committee.
Funds Flow: (i)Payment requests will be (i) Risk of misused approved by the FM expert prior offunds. (ii)Delays in to disbursement of funds to disbursements of funds to IA and contractors or consultants and beneficiaries at regional level. decentralized entities and IA. (iii) Unsecured safekeeping and (ii)The TORS ofthe internal transportation of funds. auditor as well as the External Auditors include regular field visits (physical inspection of goods, services, and works acquired). (iii)A ceiling for expenditures that can be handled at decentralized level will be set up in the FM procedures manual. (iv) Replenishment of bank accounts at decentralized level will be made via a simplified IFR (summary report) and supporting documents will be kept in provinces. (v) Bank accounts will be opened at decentralized level. (vi) FM staff capacity will be strengthened prior and during project implementation period. Financial Reporting (i)A computerized accounting [naccurate and delay in system will be used. (ii)IFR and submission of IFR at central level financial statement formats will be iue to delays from regional IAs. agreed at project negotiations. (iii) An FM expert will support the FM. team of the PCU to centralize data from the regions. 4uditing: (i) The project's institutional Delay in submission of audit arrangements allow for the 75 Risk Conditions for Residual Risk Effectiveness report and the scope of the appointment of adequate external mission may not cover auditors and the TORs will include expenditures incurred at field visits and specific reports on decentralized level. findings of physical inspections of goods, services, and works acquired at central and decentralized levels. (ii)Annual auditing arrangements will be carried out during the project implementation period.
Fraud and Corruption H (i)The TOR of the internal auditor N S Possibility of circumventing the will comprise a specific chapter on internal control system with corruption auditing. (ii)The colluding practices such as internal auditor will report directly bribes, abuse of administrative to the Steering Committee and not positions, mis-procurement, etc., to the Coordinator. (iii)One is a critical issue. sample of his reports will be submitted to the Bank on a quarterly basis. (iv) FM procedures manual approved before project effectiveness. (v) Strong FMarrangements (qualified FMstaff recruited under TORs acceptable to IDA, quarterly IFR including budget execution and monitoring. (vi) Technical auditing. (vii) Measures to improve transparency, such as providing information on the project status to the public, and to encourage participation of civil society and other stakeholders, are built into the project design (see Annex 16).
OVERALL FM RISK
Strengths and Weaknesses
13. No specific strength has been identified. In contrast, the main weaknesses for the FM arrangements of this program include a shortage of qualified accountants (mainly at decentralized levels) and delays in reporting and disbursement. The long process involved in producing reports from provinces and districts for the FM team at the central level may delay the timely submission of financial reports to the development partners and disbursement as well.
Financial Management Action Plan
14. The Financial Management Action Plan described below has been developed to mitigate the overall financial management risks.
76 Issue Remedial action recommended Responsible Completion FM bodylperson date Effectiveness Conditions Staffing at Appointment ofthe FM expert Effectiveness Yes central level:
Staffing at Appointment of the accountant and the PCU Three months central level: treasurer after effectiveness Staffing at Appointment of the accountants at PCU Effectiveness decentralized decentralized units (districts) and DMC level: Information (i)Acquisition and installation of PCU and the Three months system accounting software for the project and software after accounting training of the users providers. effectiveness software
Administrative, Finalization and adoption of the FM PCU Effectiveness Yes Accounting, and procedures manual Financial manual Internal auditing Appointment ofthe internal auditor MinAgri Three months after effectiveness External Appointment of the external auditor MinAgri Three months auditing completed and contract signed after effectiveness
(1) The actions required three months after Grant effectiveness are part ofthe Financing Agreement (Ref. Schedule 2 - Section 11, Paragraph B-land B-4) and have been reflected in the Minutes of the Negotiations.
Description of the ImplementingEntity
15. The Project Coordination Unit (PCU) to be set up at the Secretariat General of MinAgri will be the Bank and other donors’ main counterpart and focal point. It will oversee the entire project management, including management of funds, and it will primarily be responsible for: (i) overseeing implementation; (ii) handling financial and administrative management; (iii) collaborating and coordinating with DPCUs and DMC involved in the project for the successful implementation ofthe program; and (iv) liaison with the Bank and other donors. The FM team of the project will be composed of (i)one FM expert; (ii)one accountant and one treasurer at the central level (the accountant will focus on the DPCU and DMC); and (iii)one accountant in each of the three districts. The FM staff will be selected on a competitive basis under TORS acceptable to the Bank. The FM team would be composed of a mix of individual consultants and, where feasible, of civil servants. The FM expert will have the overall oversight of the project financial management system.
77 Budgeting Arrangements
16. For the purposes of this project, it is expected that the budget of the PCU will include the estimated IDA and other donor resources. The FM team ofthe PCU will prepare an annual work plan and budget for implementing project activities, taking into account the project’s components. The work plan and budgets will identify the activities to be undertaken and the role ofthe respective parties in implementation. Annual work plans and budgets will be consolidated into a single document by the FM Unit of the project. The document will be submitted to the Steering Committee for approval, and thereafter to IDA for approval, no later than December 3 1 ofthe year preceding the year the work plan should be implemented.
Key Accounting Policies and Procedures
17. An integrated financial and accounting system will be put in place and used by the PCU. The Project code and chart of accounts will be developed to meet the specific needs of the project and documented in the financial procedures manual. The prevailing accounting policies and procedures in line with national accounting standards (the Plan Comptable Congolais) will apply. The accounting systems and policies and financial procedures used by the project will be documented in the project’s administrative, accounting, and financial manual, which will be used by project staff as a reference manual; by IDA to assess the acceptability of the project accounting, reporting, and control systems; and by the auditors to assess the project’s accounting systems and controls and to design specific project audit procedures. Specific procedures will be documented for each significant accounting function. They will be written to depict document and transaction flows and will cover the flow of funds, record keeping and maintenance, the chart of accounts, formats of records and books of account, authorization procedures for transactions, planning and budgeting, financial reports (including formats, linkages with chart of accounts, and procedures for reviewing them).
18. For the project to deliver on its objectives, a computerized financial management system will be developed based on software to be acquired by the PCU. The system should integrate budgeting, operating, and cost accounting systems to facilitate monitoring, evaluation, and reporting. The computerized accounting system “kit” will be established at each DPCU and at DMC. Consolidation ofaccounting data will be made at the central level on a monthly basis.
Internal Control and Internal Auditing
19. The internal control system aims to ensure (i) the effectiveness and efficiency of operations, (ii)the reliability of financial reporting, and (iii)compliance with applicable laws and regulations. For this purpose, an accounting, financial, and administrative procedures manual an integral part of the PIM, will be created to document, explain, and describe work processes, information flow, authorization and delegation of authority, timing, job segregations, auto and sequential controls, compliance with project objectives, and micro and macro rules and regulations. Application of the procedures set up in the manual will be mandatory for all staff at all levels. In addition to the procedures manual, all rules of MinAgri that will not conflict with the manual will also apply to the project.
78 20. In the specific component related to ensuring the reliability of financial reporting, the following staffing arrangement should be sufficient to maintain accounting records relating to the project’s financial transactions and to prepare the project’s consolidated financial reports and submit them to IDA. The financial management function will be carried out by a team composed of a competent and experienced FM expert, who will be in charge of the overall financial management function ofthe project, two accountants and a treasurer at the central level, and four accountants at the decentralized levels (DPCUs), one ofwhich resides with DMC.
21. MinAgri will establish an IAD with appropriate organizational and staffing arrangements. The IAD will be composed ofa mix of technical and fiduciary staff. The FM procedures manual will describe the roles and responsibilities of the IAD and the arrangements that guarantee the necessary level of independence. In brief, the IAD’s role is to ensure that the project’s fiduciary and operational procedures and regulations are adhered to by MinAgri and any entity managing project funds. In the early stages of the project implementation, it is likely that the IAD will not have built sufficient capacity to fulfill its mission adequately. The project will thus provide support for the strengthening this function through the recruitment of an experienced and qualified internal auditor under terms and conditions acceptable to the Bank. The internal auditor will report directly to the Steering Committee. He/she will undertake periodic assessments of the strengths and weaknesses of the internal control system at the central and decentralized levels. All deficiencies or circumvented practices identified will be communicated in a timely manner to the overall senior management of the project, mainly the Steering Committee, for immediate corrective action as appropriate. One of each such report will also be communicated to the Bank. The internal auditor will provide training and hands-on support to the staff in the IAD to be created through the join conduct of internal audit reviews mission. He will also prepare relevant manuals and guidelines.
Funds Flow and Disbursement Arrangements
Disbursement methods
22. Upon Grant effectiveness, the transaction-based disbursement method (replenishment and reimbursement) will be used during at least the first 18 months of project implementation. Thereafter, the option to disburse against submission of IFRs (also known as the Report-based disbursement method) could be considered, subject to the quality of financial management arrangement as assessed in due course.
23. The option ofdisbursing funds through direct payments to third-party contracts suppliers will also be available. Another acceptable method of withdrawing proceeds from the IDA grant is the special Commitment method, whereby IDA may pay amounts to a third party for eligible expenditures to be paid by the Recipient under an irrevocable Letter of Credit (LC). The minimum value of applications for direct payment, reimbursement, and special commitment is 20 percent ofthe Designated Account (DA) ceiling.
79 Designated Account
24. A Designated Account denominated in US dollars will be opened in a commercial bank on terms and conditions acceptable to IDA. This designated account will finance all eligible project expenditures under the components and would be maintained by the PCU under the responsibility of the coordination team. An initial deposit up to the DA ceiling of US$4,500,000 equivalent to four (4) months’ expenditures forecast will be released by IDA at the request of the project upon.effectiveness.
25. The Designated Account will be used for all payments less than 20 percent of the deposited amount and replenishment applications will be submitted, on a monthly basis. Additional advances to the Designated Account will be made against withdrawal applications supported by appropriate documents as specified in the Disbursement Letter.
Disbursement of funds to Decentralized Project Coordination Units (DPCUs) and the Delegated Management Contractor (DMC)
26. Funds will be disbursed to decentralized entities on the basis of three months’ budget depicted under a Work Plan. Except for the Central Bank, no commercial bank operating in the three provinces is selected to implement the project. Therefore, as in some projects currently implemented in DRC (for example, P078658; P082516; P086874.etcS), the funds will be transferred into accounts opened in the financial institutions’ “money transfer agencies” acceptable to IDA using their own mechanisms of funds transfer. Replenishment of each provincial account will be made on the basis of two documents: (i)a statement of expenditures depicting the expenditures made and classified by category or component of the grant (SOEs) and (ii)a summary report showing the total amount received, the expenditures made (classified by category and project components), and the forecast for the next three (3) months. The balance between the next three months’ forecast and the closing cash balance of the bank account will constitute the amount to be transferred to the DPCU or DMC.
27. To ensure accountability before the annual audit, the internal auditor’s work program will include regular field visits to DPCUs and DMC to review the eligibility of expenditures incurred at these 1evels:Overall funds flow is described in the chart below:
IDA
DA (PCU) bank A i
80 Taxes
28. The table below sets out the expenditure categories to be financed out of the Grant proceeds. This table recognizes the prevailing Country Financing Parameter for the Democratic Republic of Congo in setting out the financing levels, which show that IDA will finance 100 percent of eligible expenditures, taxes included.
Amount of Financing Percentage of Expenditures to Category Allocated (US%) be Financed (Inclusive of Taxes) (1) Goods, works, and consultants’ services, 88,000,000 100% trainings, audits, and operating costs under the project (other than goods and services for matching grants (sub-grants) under component 1)
(2) Matching grants (sub-grants) under component 1 30,000,000 100% of amounts disbursed
(3) Rehnd of Preparation Advance 2,000,000 Amount payable pursuant to Section 2.07 of the General Conditions
TOTAL AMOUNT 120,000,000
Financial Reporting
29. Financial reports will be designed to provide quality and timely information on project performance to project management, IDA, and other relevant stakeholders. Formats of the financial reports will be developed and agreed during project negotiation. The quarterly IFR includes the following financial statements: (i)statement of sources of funds and project revenues and uses of funds; (ii)statement of expenditures classified by project components and or disbursement category (with additional information on expenditure types and implementing agencies as appropriate), showing comparisons with budgets for the reporting quarter and cumulatively for the project life; (iii)cash forecast; (iv) explanatory notes; and (v) Designated Account activity statements. The consolidated quarterly IFR will be prepared and submitted to IDA within 45 days after the end of each calendar quarter.
30. On the basis of financial reports received from the relevant implementing agencies at the central and decentralized levels, the FM team will submit a consolidated IFR to IDA within the time frame prescribed above (45 days after the end of each quarter). Each implementing agency will be responsible to submit regular financial reports to the FM team set up at the central level of MinAgri.
3 1, In compliance with International Accounting Standards and IDA requirements, the project will produce annual financial statements. These include: (i)a Balance Sheet that shows Assets and Liabilities; (ii)a Statement of Sources and Uses of Funds showing all the sources of Project funds, expenditures analyzed by project component and/or category; (iii)a Designated Account Activity Statement; (iv) a Summary of Withdrawals using SOE, listing individual 81 withdrawal applications by reference number, date, and amount; and (v) Notes related to significant accounting policies and accounting standards adopted by management and underlying the preparation of financial statements. The financial statements will constitute the entry point of the external auditor’s annual diligences.
Auditing
32. Due to the weak capacity of the Cour des Comptes, an external qualified audit firm will be recruited under TORs and procedures acceptable to IDA. This firm will audit the financial statements of the project annually. The PCU, with participation of the Cour des Comptes, will prepare the TORs for the audit, and they will be agreed upon during negotiations. The scope of the audit will cover the activities performed by the PCU at the central level and the DPCUs and DMC at decentralized levels.
Audit Report Due Date (i)Not later than June 30 (2000 + N) if effectiveness has The Project audit reports (Audit report and occurred before June 30 (2000 + N-1). Management letter) (ii)Not later than June 30 (2000 + N+1) if effectiveness has occurred after June 30, (2000 + N-1)
List of conditionalities
34. Following are the FM effectiveness conditions: . Appointment of an FMexpert, and the accountants at decentralized offices. . Preparation and adoption of the FM procedures manual. Supervision plan
35. FM supervisions will be conducted over the project’s lifetime. The project will be supervised on a risk-based approach. Supervision will focus on the status of the financial management system to verify whether the system continues to operate well throughout the project’s lifetime and to ensure that expenditures incurred by the project remain eligible for IDA funding. It will comprise, inter alia, the review of audit reports and IFRs and will advise the task team on all FM issues. Based on the current risk assessment, which is Substantial, and on the decentralized implementation of the project, more supervision mission budget will be allocated to conduct appropriate on-site visit supervisions (for example, at least twice during the first FY, adjusted as the need arises). The ISR will include the project’s FM rating. An implementation
82 support mission will be carried out before effectiveness to ensure project readiness. To the extent possible, mixed on-site supervision missions will be undertaken with procurement monitoring and evaluation and disbursement colleagues.
83 Annex 8: Procurement Arrangements CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
A. General
1. Procurement for the proposed project will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits," dated May 2004, revised October 2006; "Guidelines: Selection and Employment of Consultants by World Bank Borrowers," dated May 2004, revised October 2006; and the provisions stipulated in the Financial Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, estimated costs, prior review requirements, and time frame are agreed between the Recipient and the Bank in the Procurement Plan.
2. The World Bank's standard bidding documents (SBDs) will be used for all contracts involving international competition, including International Competitive Bidding (ICB) and Limited Competitive Bidding (LCB) for works, goods, and non-consultant services, and the World Bank Standard Request For Proposals (SRFP) for all consulting firms estimated to cost the equivalent value of US$ 100,000 or more. Until such time that a national procurement system has been developed and its use for Bank-financed projects approved by the Bank, the World Bank's SBDs will also be used for contracts involving national competition, including national competitive bidding (NCB) and National SBD agreed with or satisfactory to the Bank, as specified in the project implementation manual (PIM). The preparation of a PIM, satisfactory to the Bank, is a condition of effectiveness.
B. National procurement system
3. The main recommendations of the 2004 CPAR were to (i)prepare and approve a public Procurement Code, (ii)do a survey of the existing capacity on procurement, (iii)make a needs assessment of the institutional and human capacity requirements for public procurement in the country, and (iv) prepare a plan of action for procurement reform. All of these recommendations have been implemented, except for the enactment ofthe National Procurement Code.
4. Procurement reform in DRC began soon after the 2004 CPAR with assistance from the Bank, including the drafting of an Act on the Public Procurement Code. Progress with the formulation and approval of the Act has been slow, mainly due to instability and the elections of 2007. Recent events however can be taken as an indication that the Government and Parliament are committed to moving the reform forward. The Act was approved by the Council of Ministers on December 19,2008, and the Prime Minster has subsequently submitted it to Parliament with a request for urgent treatment. Once the National Procurement Code has been adopted, the national procurement procedures to be followed will be reviewed and suitable modifications to the Project will be discussed and agreed before implementation
84 C. Procurement methods
5. Procurement of Works: Works to be procured under this project would include: the rehabilitation and extension of buildings and rural infrastructure, construction of new infrastructure, and small irrigation schemes. 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.
6. Procurement of Goods: Goods to be procured under this project would include: office fbmiture, office equipment, information technology equipment, extension equipment, vehicles, motorcycles, didactic materials (including books), postharvest processing equipment for some commodities, livestock, veterinary equipment, and supplies, among others. Vehicles and motorcycles may be procured through the United Nations Office for Project Services (UNOPS) or IAPSO (Inter-Agency Procurement Services Organization). 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’s prior review and approval.
7. Procurement of Services (other than consultants’ services): Services (other than consultants’ services) to be procured under the project will include services for management of project components, research and extension services, installation and technical support of computerized systems, awareness/sensitization campaigns, distribution of didactic materials, and 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. Some of these services may be contracted with public sector services.
8. CDD approach for implementation of activities financed under matching grants: Goods and services to be procured under the matching grant mechanism will be carried out in accordance to the procedures laid out in the project implementation manual that is found acceptable by the Bank before effectiveness.
9. Selection of Consultants: Consultants’ services required would cover consultancies for: studies, works supervision of rural infrastructure, production and postharvest extension services, agribusiness and market development, M&E systems and communications, and training providers and advisory services.
10. Service providers, including NGOs, CBOs, and public sector services, may be employed, in partnership with smaller local organizations at the field level, to provide facilitation and community capacity development services across the project area.
11. Consultant’s services that may be identified under the matching grant mechanism will also be carried out in accordance to the procedures laid out in the project implementation manual.
85 12. All consulting service contracts costing more than US$ 200,000 equivalent for firms will be awarded through Quality and Cost Based Selection (QCBS) method. Contracts for highly specialized assignments estimated to cost less than US$ 200,000 equivalent may be contracted through Consultants’ Qualification (CQ).
13. 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, and which are estimated to cost less than US$ 100,000.
14. Single Source Selection (SSS) may be employed with prior approval of the Bank and will be in accordance with paragraphs 3.9 to 3.12 of the Consultant Guidelines. This category will cover: (i)Support to INERA Boteka; (ii) Support to SENASEM; and (iii)the Delegated Management Contract to be signed with UNOPS. The Single Source ’Selection with UNOPS is justified by the following reasons: (i)there will be many civil works contracts which the implementing agency does not have the capacity to manage; (ii)the difficulties in accessing part of DRC; (iii)experience with other Bank-financed infrastructure projects (Emergency Living Improvement Project) has proven that no reliable firms are willing to go to work in this area; and (iv) UNOPS is already deployed in this site and has performed well in similar assignments financed by other donors.
15. All services of individual consultants (IC) will be procured under individual contracts in accordance with the provisions of paragraphs 5.1 to 5.4 of the Guidelines.
16. Shortlists of consultants for services estimated to cost less than US$ 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.
17. Training: This category would cover all costs related to the carrying out of public sector services staff, NGOs, CBOs, farmer, and farmer organization training programs, study tours, training courses, and workshops-that is, 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 of the 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 an annual basis.
18. Operating Costs: Operating costs shall consist of operation and maintenance costs for vehicles and equipment; travel costs, and travel allowances to staff and Steering Committee members involved in project implementation and supervision, electricity, and telephone, among others.
19. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, will be included in the implementation manual to be prepared by the Recipient.
86 D. Institutional arrangement for procurement and capacity of the Project Coordination Unit to handle procurement
Institutional arrangement for procurement
20. The institutional arrangements for the implementation of the Grant have taken into account the need to strengthen MinAgri’s capacity in procurement and other fiduciary areas. At the central (national) level, a “Procurement Unit” will be created in the Project Coordination Unit located within the Secretariat General of MinAgri, in accordance with the provisions of the upcoming National Procurement Code, and a qualified and experienced procurement specialist will be positioned there to carry out major procurement activities, follow up all procurement activities, and build the capacity of the three procurement assistants (PAS) located in the Decentralized Project Coordination Units (DPCUs). The Procurement Unit will report to the . Project Coordinator to ensure hisher independence. He/she will have the full responsibility of the fiduciary compliance on procurement point of view. All procurement on the project at the central level will be managed by the PCU ofthe SG/MinAgri in accordance with the World Bank Procurement Guidelines, including the use of standard bidding documents for national procedures. In addition to hisher daily job requirements, the recruited procurement specialist will provide the following services: (i)develop and strengthen the procurement capacity of MinAgri staff, (ii)coach the national procurement specialist of the SG/MinAgri, (iii)reinforce the integrity and internal review of the procurement process, (iv) oversee and advise on procurement-related issues, and (v) draft for the Project Coordinator the no objection requests for all procurement decisions subject to prior review.
21. At each district level, there will be an Executive Unit with a procurement officer who has adequate qualifications and experience to handle all procurement activities in the district in the related locality. He/she will liaise with the PS at the central level whenever necessary for quality control reasons, even though he/she reports directly to the project manager at the district level.
22. As a support to project execution, a convention will be signed with the National Institute of Agricultural Research (INERA) and the National Seed Service (SENASEM) for the implementation of some activities in their respective areas of expertise. These two public services are the only entities which respectively have mandates for producing pre-foundation and foundation seed and certifying improved seed for planting. The project will sign conventions with these two institutions, not for consulting services but only for providing inputs to facilitate the delivery of their respective services. Contracts/conventions may also be signed with international research centers; the award of the contract for these conventions will be analyzed on a case-by-case basis.
23. Given that there will be many civil works contracts which the implementing agency does not have the capacity to manage, an international firm will be recruited to manage the whole component of infrastructure activities (roads, market, and irrigation). With proven performance in this area in the country, UNOPS (a UN agency) may be recruited on a Sole Sourcing basis, subject to the Bank’s normal clearances by the Regional Procurement Manager or Operational Procurement Review Committee, depending on the amount of the contract. The Delegated Management Contract to be signed between the project coordination and the said firm will be
87 included in the whole procurement process (excluding program identification and estimation) and supervision ofthe works.
Assessment of the agency’s capacity to implement procurement
24. The capacity of the implementing agency of MinAgri was assessed by Philippe Mahele, Senior Procurement Specialist in Kinshasa Country Office, on 04/27/2009. The assessment found that MinAgri currently has no capacity to handle the project procurement activities. Therefore, the Bank team will fully support MinAgri in recruiting the four procurement officers (at the central and local levels) to ensure that the recruited candidates have adequate qualifications and experience.
E. Assessment of the risks and measures to mitigate
25. The risk factors for procurement performance include those posed by the country context and those due to the low procurement capacity of MinAgri. This ministry will be in charge of project implementation. In terms of the country context, the Country Procurement Assessment Review (CPAR) and experience of other projects funded by IDA and International Financing Institutions indicate that procurement on the project is likely to involve the following risks:
0 A weak governance environment, weaknesses in accountability arrangements, and an overall lack of transparency in conducting procurement processes create significant risks of corruption, collusion, and fraud. 0 The administrative system as it operates in practice creates opportunities for informal interference in the procurement process by senior officials4reating opportunities for waste, mismanagement, nepotism, corruption, collusion, and fraud. 0 Government officials likely to be involved in project procurement through tender committees may not be familiar with procurement procedures. 0 There is neither a national control system ensuring that the rules are respected nor a regulatory body to handle complaints from bidders. 0 Few companies are interested in supplying goods and constructing works for development projects under the current country conditions. Goods may not be available or exorbitantly expensive, especially up-country. As a result, there may be insufficient competition, resulting in higher prices ofgoods and services.
Overall project risk for procurement is rated High.
Measures to mitigate the risks
26. The following strategy has been devised in the project to mitigate procurement risks: 0 To mitigate the risks of collusion, fraud, corruption, waste, and mismanagement, implementation arrangements will be geared to achieve a high level of transparency in project implementation. 0 To mitigate risks related to the low level ofcapacity, both at the Project Coordination Unit and MinAgri, all proposed procurement decisions at a given threshold (to be determined) will be subject to mandatory review by a contract committee composed
88 of representatives from the Ministry of Finance, Ministry of Budget, Ministry of Rural Development, and Ministry of Agriculture, excluding staff involved in evaluation and contract award processes. The publicly accessible project website will include all relevant information to facilitate transparency and integrity of implementation, including the following: Project Appraisal Document and Grant Agreement; advertisements; funding proposals; terms of reference for all activities; contract awards; progress reports from implementing entities; a procedure for handling complaints satisfactory to the World Bank; and complaints received and action taken. All ICB contracts for goods and works and all consulting contracts costing US$ 200,000 and above will be published in the UNDB and DgMarket, in accordance with World Bank Guidelines. The government project team will apply a “one-strike” policy to all contractors and consultants: Any case of complicity in corruption, collusion, nepotism, and/or fraud will lead to dismissal, disqualification from all hrther project activities, and prosecution. A project launch workshop will be carried out for all project stakeholders, including SGMinAgri staff, relevant staff of all other entities involved in project implementation, NGOs, producer’s organizations, and civil society. For all procurement, the project implementation manual, to be adopted by effectiveness, will include procurement methods to be used in the project along with their step-by-step explanation as well as the standard and sample documents to be used for each method. The SGMinAgri, in close conjunction with the PCU, will create a database of suppliers of the required goods, construction contractors, and consultants (firms and individuals). The database will also include information on current prices of goods.
F. Frequency of Procurement Supervision
27. In addition to the prior review supervision to be carried out by Bank staff, the capacity assessment of the Implementing Agency has recommended quarterly supervision missions during the first 18 months to visit the field to carry out post review of procurement actions. Missions in the first 18 months shall include a Bank procurement specialist or consultant.
G. Procurement Plan
28. The Recipient developed a procurement plan for project implementation, which provides the basis for the procurement methods. This plan was has been prepared and discussed during the technical discussion and will be available at the website of the SGMinAgri. It will also be available in the project’s database and on the Bank’s external website. The Procurement Plan will be updated in agreement with the Bank annually or as required to reflect the project implementation needs and improvements in institutional capacity.
29. Thresholds for the use of the various procurement and selection methods, regardless of the procuring entity (except the procurement process and the contract management under the CDD approach), are summarized below:
89 Thresholds for Procurement Methods and Prior Review
Expenditure Contract Value Threshold Contracts Subject to Prior Review Procurement Method Category (US$) (US$) 1. Works >3,000,000 ICB All >500,000 - 3,000,000 NCB All 100,000 - 500,000 NCB Post Review <100,000 3 quotations Post Review (small works) DC All 2. Goods and >500,000 ICB All Services (other than 50,000-500,000 NCB First two contracts Consultants’ <50,000 Shopping None Services) DC All
3. Consultants’ >100,000 All Services <100,000 CQ First two contracts Firms sss All Individuals sss All
>50,000 IC Prior review of the evaluation process of <50,000 IC the selection of individual consultants (Le., comparison of three CVs) should only be carried out in exceptional circumstances, for example when hiring an Advisor for the entire project duration, which could result in a substantial contract amount. In most cases, the evaluation process should not be prior reviewed by procurement staff. Clearance ofthe TORS for the assignment-which is not a procurement actionshould, however, be done by the TTL, except when hiring a Procurement Consultantkegal consultant, in which case the TORS are to be cleared by a PSlcounhy lawyer respectively.
(a) Consultancy services estimated to cost above US$ 100,000 equivalent per contract for firms and US$ 50,000 for individuals and all contracts awarded on a single source basis (SSS) will be subject to prior review by the Bank.
(b) Shortlists composed entirely of national consultants: Shortlists of consultants for services estimated to cost less than US$ 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.
90 E. Details of the Procurement Arrangements Involving International Competition
1. Goods, Works, and Services (other than Consultants’ Services) (a) List of contract packages to be procured following ICB, NCB, and direct contracting: - 1 5 6 7 a 9
Contract Estimated Procurement P-Q Domestic Review Expected Comments pescription) Cost (US%) Method Preference by Bank Bid- (yes/no) (Prior / Post) Opening Date
Goods - NCB No No Post Sept. 10 for selected services - [T equipment for I 63,600 NCB No No Post Sept. 10
selected services - ~ NCB No No Post July 10 Shopping No No Post July 10 selected - Direct No No Prior Nov. 10 Boteka contracting - Direct No No Prior Nov. 10 contracting - NCB No No Prior Nov. 10 - ICB No No Prior Nov. 10 equipment - Rural transport I 150,000 NCB No No Post Jan. 11 - NCB No No Prior Dec. 10 Several batches Non- Consultants - services Veterinary 1,000,000 ICB No No Prior Dec. 10 Non-consultant pharmacy services with a sub-contracted - NGO Goods and 45,000 Shopping No No Post July 10 equipment for rural agri. - Training and 6 10,000 NCB February Several batches Workshop for 11 Non- rural agri. council consultants - services Training and 260,000 NCB No No Post February Several batches workshop 11 Non-consultant (Provincial level) services
Works - SG Building 300,000 NCB No No Post July 10 Rehabilitation I - Road I 17,000,000 NCB No No Post Jan. 11 Several rehabilitation batches (HIMO)
91 level) 11 Office 300,000 NCB No No Post August 10 rehabilitation for project management
(b) Contracts estimated to cost above US$ 3,000,000 for works and US$ 500,000 for goods and services per contract and all direct contracting will be subject to prior review by the Bank.
2. Consultants’ Services
(a) List ofconsulting assignments with shortlist of international firms
1 12 13 4 5 6 7 I Review Expected Estimated Selection by Bank Proposals Comments cost (US$) Method (Prior or Submission Post) Date Road feasibility studies 1,500,OO QCB S Prior Dec. 10 Several including environmental studies I impact assessment 2 I Studies on agro-industry I 2,500,000 QCBS Prior Dec. 10 Several I stratew formulation I studies 3 Baseline survey update 2,000,000 Dec. 10 4 Institutional needs 1,000,000 Dec. 10 Several assessment for producer studies organizations 5 Complementary 1,200,000 Prior Dec. 10 irrigation studies 6 Elaboration of provincial 250,000 Prior Dec. 10 agricultural development plan -7-1 7 DMC 12,840,000 sss I Prior July 10 SSS with
92 assessment NGOs and
(*) National level (**) Provincial level
(b) Consultancy services estimated to cost above $100,000 per contract for firms and Single Source Selection of consultants will be subject to prior review by the Bank.
(c) Shortlists composed entirely ofnational consultants: Shortlists of consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions ofparagraph 2.7 of the Consultant Guidelines.
93 Annex 9: Economic and Financial Analysis CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support Overview
1. This annex presents the economic and financial analysis for the Agriculture Rehabilitation and Recovery Support Project (ARRSP). The analysis uses cost-benefit analysis and farm models to calculate internal rates of return (IRRs) and their corresponding net present values (NPVs). It focuses on the returns from investments under component 1 (“Improving agricultural and animal production”) and component 2 (“Improving marketing infrastructure”). More specifically, the analysis documents the returns from: (i)improved crop production, (ii) enhanced agro-processing, (iii)improved production of small ruminants and poultry, (iv) rehabilitated road infrastructure, and (v) new and improved small-scale irrigation infrastructure. The project also creates a number of important externalities under component 3 (“capacity building”), which have not been quantified.
2. The results indicate that the project is economically desirable. Under the presented assumptions, the average economic rate of return (ERR) is 29 percent. The financial rate of return (FRRFmeasuring benefits at the project level-is 25 percent. The corresponding net present values (NPV) are positive and in the order of US$ 56-69 million for a 15-year project lifecycle. The project’s returns are nevertheless sensitive to several scenarios. Considering the uncertainty of key parameters, a risk analysis demonstrates that in the most likely scenario the ERR will lie between 12 and 20 percent (with an overall probability of 41 percent). However, there is a significant probability (37 percent) that the ERR could be below the 12 percent threshold. While the most likely outcome is an acceptable economic rate of return, the project appears sensitive to changes in price levels, actual yield improvements, and in particular the phasing ofnet project benefits.
Identification of Benefits
3. The key quantifiable benefits are expected to come from:
0 Increased yields (cassava, maize, and rice) due to better planting materials, demonstration of improved agronomic techniques, better extension services, rehabilitated irrigation infrastructure, distribution of improved seed, and a number of area-specific legumes, and mosaic-resistant cuttings for cassava production. 0 Increased seasonal production of livestock due to the dissemination of improved breeding stock, the provision of veterinary services and products through the setting- up of a number of “close proximity” veterinary pharmacies, and the promotion ofthe use of improved animal feeding. 0 Reduction of vehicle operating costs (VOC) and increase in traffic due to road reopening.
4. More indirect and non-quantified benefits in the analysis are expected to come from:
94 Improved welfare at the household level, with decreasing poverty, malnutrition, and food insecurity. Economic externalities, such as institutional benefits, improved efficiency and effectiveness of public services through capacity-building support to MinAgri and MDR. Improved domestic distribution of surpluses to agricultural markets and ports due to better road access on the Congo and Oubangui Rivers, allowing fluvial transport towards Kinshasa and Kisangani (see Annex 1, Figure 1). Better regional market access for the project’s two neighboring countries and their capital cities, where urban demand is substantial (Bangui, Central African Republic; Brazzaville, Congo Republic).2g Enhanced commercial activity of close-proximity veterinary pharmacies, enhancing local employment and self-entrepreneurship.
Methodology and Assumptions
5. As noted, the analysis focused on components 1 and 2 of the project. Overall project costs for components 1 and 2 were extracted from the detailed costing of the various activities (COSTAB), and overall net benefits were computed.
6. Agricultural production and small-scale agro-processing units. The farm models in the analysis represent four typical enterprises in the project areas: (i)the average farm found in northern Equateur Province, producing key project crops (cassava, maize, and rice), in scenarios with and without project interventions; (ii)the average agro-processing unit, producing maize flour, cassava flour, processed rice, and peanuts; (iii)the average farm raising poultry and small ruminants (sheep and goats); and (iv) the average farm in Pool Malebo, equipped with basic irrigation infrastructure. Two different methods were used to compute overall net benefits for enterprises in North Equateur and Pool Malebo.
7. The methodologies and key assumptions are explained below.
Farms in North Equateur Province. For the representative farm models and agro- processing units (variables to develop the models were obtained through interviews with experienced agriculturalists in the area during project preparation), the benefits arising from a farm household were valued at the total number of farm households (beneficiaries) targeted by the project (an estimated 103,000 households after five years). Over a 15-year time horizon, the total number of beneficiary households would rise to 145,000, with 5,000 new beneficiaries per year. The financial and economic analysis subsequently computed net cash-flows and average incremental incomes at the farm level.
Farms in the Pool Malebo area. For the representative farm models, net benefits were computed according to the average operational costs per farm growing rice on an average of 1 hectare. Benefits, net of costs incurred by the farm, were computed from farm
29 The province connects historically with South Sudan, which represents potential markets. 95 budgets collected by the project team. The net benefits for one hectare were extrapolated to the total irrigated area to be covered by the project (2,000 hectares). The analysis subsequently computed net cash flows and averages incremental incomes at the farm level.
0 Yield increases. The approximate doubling of yields will occur incrementally over five . years and will arise primarily from the adoption of improved planting material and improved agronomic techniques demonstrated by leader farmers in village-level farmer organizations. The results obtained by PMURR showed that maize, cassava and rice yields can be doubled in DRC3'
Yields (Wa) Crops I Baseline I End of project Cassava 7,000 15,000 Maize 800 2,000 Upland rice 1000 2,500
0 Fertilizer and land use. Based on interviews with key agriculturalists, it was assumed that the average farmer would use only organic fertilizers for crop production. In the base- case scenario, it was also assumed that the average farm, supporting five to six persons (three working in crop production), would marginally expand its food crop area from 1 to 1.2 hectares per household. It was also assumed that average cash crop area would increase from 0.3 to 0.4 hectares.
0 Livestock. The valuation of benefits arising from livestock production also profited from data collected during project preparation. Net returns emanating from small ruminant and traditional poultry production are expected to come from the establishment of animal health services, the delivery of veterinary products in rural areas, and reinforcement of public veterinary services. For instance, currently the productivity ofthe poultry sector is extremely low (the average household sells 74 chickens per year), mainly because animals die from sickness or predation. The expected increased in yields (164 percent) under the project seems high but can be achieved with the adoption of basic husbandry practices and more access to veterinary products and services. Indeed, the increase in annual profits for poultry production at the household level is expected to average I13 percent.
0 Phasing of project benefits. The calculation of the average crop benefit stream assumes the incremental realization of average project benefits shown below. Although the incremental net benefit from cropping improvements is about US$ 360 per household per year (by the end of the project), it is assumed that only 75 percent of this increase (or US$ 270) is actually achieved (or can be attributed to the project) by the fifth year. In
30 World Bank (various years), Emergency Multi-sector Rehabilitation and Recovery Project, Democratic Republic of Congo, agricultural reports, Washington DC. 96 addition, although the project area has a potential maximum cropping intensity ofperhaps 1.5 to 1.7, the average cropping intensity is assumed to be 1.O.
Estimated Cumulative Crop Benefit Year Stream under ARRSP Year 1 15% Year 2 30% Year 3 45% Year 4 60%
8. Food-processing sub-component. The project will subsidize the acquisition ofappropriate postharvest processing equipment (such as small hammer-mills, paddy threshers, shellers, screw extruders) by clusters of farmer organizations at the village level. The appraisal mission estimated that 772 agro-processing units at a global cost of US$ 7.7 million would be distributed to 193 farmer organizations in North Equateur Province. For the benefit analysis, it was also assumed that 50 percent of the agro-processing units would be “small installations” (peanut shellers), 25 percent would be “medium installations” (manioc and maize mills), and 25 percent would be “large installations” (rice threshing and hulling equipment). The benefits (marketing of processed foods) and costs (opportunity cost of raw materials and operation and maintenance costs for food-processing equipment) arising from each processing unit were then aggregated to obtain an overall benefit stream for agro-processing. The percentage ofproduction processed and the percentage of targeted households using processing equipment were assumed to be as follows:
Baseline Year1 Year2 Year3 Year4 Year5 Percentage of processed production 2 Yo 3% 4% 6% 10% 10% Percentage of targeted households using 5% 10% 20% 25% 25% processing equipment I
9. Road infrastructure. The net benefits from road rehabilitation arise from an increase in traffic and a reduction in vehicle operating costs (VOC) fostered by the transfer of freight from bicycles to trucks. The economic analysis greatly benefited from the background data collected for the Pro-Routes project implemented in DRC, which rehabilitated some segments of road in North Equateur Province.31
0 The baseline transport vehicle was assumed to be the bicycle, because the poor roads are impassable for 4x2 vehicles and trucks. Bicycle transportation costs around US$ 2 per ton-kilometer. Once the roads are reopened, bicycles loads will be transferred to light trucks that can carry up to 7 tons per trip, at a cost ofaround US$ 0.15 per ton-kilometer.
3‘ World Bank (2008), Project Appraisal Document on a proposed grant in the amount of SDR 32 million to the Democratic Republic of Congo for a high-priority roads reopening and maintenance project Pro Route. Washington, DC. 97 It was assumed that rehabilitating 2,500 kilometers of feeder roads in North Equateur would increase the traffic on segments of RN6 (ZongeGemena-Akula-Lisala). Different scenarios were assumed and are discussed in the sensitivity analysis. The scenarios for increased traffic included: a low baseline traffic scenario on RN6 of 5 trucks per day, carrying 35 tons of agricultural products; a medium baseline traffic of 10 trucks per day, carrying 70 tons; and a high baseline traffic of 15 trucks per day, carrying 105 tons. The returns for those different scenarios are discussed in the sensitivity analysis.
0 It was assumed that traffic would grow at the same rate as the average GDP forecast (6 percent). These assumptions are conservative, since agricultural production is at its lowest level since the end of the 1980s. There are many losses due to general road conditions. Road rehabilitation was conservatively assumed to grow by 0 kilometers in the first year, 300 kilometers in the second year, 700 kilometers in the third year, 900 kilometers in the fourth year, and 600 kilometers in the fifth year. This conservative growth scheme was used to calculate the net benefit stream over the life ofthe project.
10. Price conver~ion.~’A standard conversion factor of 0.9 was used to calculate the economic prices ofthe main tradable outputs (maize, rice, cassava) and inputs (improved seed). This conversion factor is typically used when data are scarce. Similarly, the prevailing wage rate was adjusted by a factor of 0.9 to arrive at the opportunity cost of labor at the farm level. For planting materials, locally made materials, and local seed, a conversion factor ofone was chosen, because the market price typically reflects opportunity costs for those inputs.
Baseline Results
1 1. The net benefits arising from improved crop production, agro-processing, small ruminant and poultry production, rehabilitated roads, and new irrigation infrastructures were aggregated to obtain a global benefit from ARRSP, computed on a yearly basis. Yearly aggregated net benefits are related to the total annual project costs obtained in the project’s COSTAB database. While no formal baseline survey data are available,33 substantial field data have been gathered in the project zones (North Equateur Province and the Pool Malebo area near Kinshasa) through interviews with farmers, leaders of national and local institutions, experienced agriculturalists, NGOs, and irrigation and infrastructure experts.
12. IRRs were computed for an assumed project life cycle of 15 years. A standard 12 percent opportunity cost of capital was used to compute NPVs. The resulting economic (ERR) and financial rates (FRR) of return for ARRSP, together with their corresponding NPVs, are presented below.
32 In spite of efforts to compute conversion factors to derive economic prices from financial prices, the lack of price data available at preparation-such as the Cost/Insurance/Freight (CIF) price of the main imports, the handling/distribution/transportcosts from the point of import to the domestic market, and so on-prevented accurate import parity prices from being computed. 33 The current project baseline is drawn from data in the Monographie de I’Equater and annual reports from MinAgri. 98 ARRSP Baseline Results Economic Financial NPV 6312% (in ‘000 US$) 73,287 60,391 Rate of return (ERR and FRR 15 years) 29% 25%
13. The ERR and FRR for each project zone are shown in the table below. Returns per component could not be calculated because of the lack of data on recurrent costs over 15 years. The irrigation component shows a very good rate of return (32 ercent), essentially due to the limited amount of inputs34used and a more efficient use of labor.R
ARRSP Project ZoneIScheme Economic Financial Pool Malebo Area (Irrigation) 32% 32% North Equateur Province (Agriculture and Road Infrastructures) 29% 25%
Sensitivity Analysis
14. A basic sensitivity analysis was performed using two key variables affecting the project: (i)output prices and (ii)yields for the three commodities analyzed. The impact of food price inflation during 2008 has been high for DRC. The weighted average costs of the food basket rose by 19 percent between April 2007 and April 2008.36The sensitivity analysis found that returns to the project were particularly sensitive to output price changes.
FRR (15 years) ERR (15 years) PAD baseline IRR 25% 29% With a 10% decrease in crop prices (all crops) 19% 24% With a 5% decrease in yields (all crops) 23% 27%
34 Little fertilizer is used because of the risk of flooding. 35 100 man-days per hectare in the baseline versus 70 man-days per hectare after irrigation infrastructure was improved. 36 World Bank, AFTPM (May 2008), “DRC, implications of recent food prices increases and policy options, ” internal memo, Washington, DC. 99 16. The returns are sensitive to the project life cycle. If the project's life cycle exceeds 15 years, the rate of return increases slightly; if it is less than 7 years, the ERR falls below the 12 percent threshold, suggesting that sustainability is an important ingredient for the project's success. The figure below illustrates the relationship between the project life and the ERR/FRR. ERR and FRR by Project Life (in years)
0.35 I
Risk Analysis
17. Several variables in the base sensitivity analysis are important but subject to uncertainty. The main risks stemming from this uncertainty are: (i)hefty price fluctuations for key crops (maize, rice, and cassava), (ii)different yield levels for maize, rice, and cassava, (iii)changes in road traffic volumes, and (iv) project implementation delays, resulting in a lower than expected net project benefit stream. The table below presents the original point values used in the ERR base case.
100 18. Triangular distributions were used to represent this uncertainty. For example, in the triangular distributions below, it is assumed that the output price will decline by 15 percent, but in an extreme case it could decline by up to 30 percent or increase by 20 percent. Food price fluctuations were approximated by ,analyzing historic price trends.37As noted, other scenarios included changes for yields, traffic, and the cumulative net benefit stream. Indirectly, the changes may to some extent also take into account a deterioration (or improvement) of the political or security context in DRC, which could affect ARRSP by affecting how advisory institutions and farm-level activities function on the ground.
19. Having specified the distributions, a simulation was run using the @RISK software package. Possible values for the variables are randomly sampled 1,000 times using a Monte Carlo simulation technique. In the simulation, input and output prices are assumed to be jointly correlated with a correlation factor of 0.5. The main output is a cumulative distribution function that plots the probability ofthe ERR. The figure below summarizes the results.
20. Substituting the distributions for the original point values has the effect of replacing the original (most likely) values with the values for the new distribution. It thus recalculates the base case ERR. Based on the data and triangular distributional assumptions explained above, the expected average ERR is now about 14.4 percent. The average ERR remains above the 12 percent threshold, supporting the overall the economic desirability of ARRSP.
2 1. The most likely scenario-considering uncertainty-is that the ERR will lie somewhere between 12 and 20 percent (with an expected overall probability of 41 percent). But the exercise shows a significant probability (37 percent) that the ERR could fall below the 12 percent threshold (low economic efficiency). The probability that the ERR will be above 20 percent (high economic efficiency) is about 22 percent. The analysis thus suggests that the project entails
37 World Bank, AFTPM, “DRC: Implications of Recent Food Price Increases and Policy Options,” internal working paper, May 2008. 101 risks. While the most likely outcome is an acceptable economic rate ofreturn, the project appears sensitive to changes in price levels, yields, traffic volumes, and in particular the phasing of net project benefits.
Probability of ERR: Considering Uncertainty for Yields, Prices, Traffic, and Net Benefit Stream Phasing
Probability of ERR
.I2 2
102 Annex 10: Safeguard Policy Issues CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
1. The proposed project involves a number of safeguard policy issues. Because the project will undertake significant civil works under Component 2, including the rehabilitation of rural roads, market and storage infrastructure, and irrigation infrastructure, it triggers OP/BP 4.0 1 (Environmental Assessment), OP 4.1 1 (Physical Cultural Resources), and OP/BP 4.12 (Involuntary Resettlement), owing to the possible acquisition of land associated with the project’s civil works. Pest Management (OP 4.09) is triggered because the project will use agricultural pesticides on a limited scale. The project area is inhabited by the Bambenga people, an indigenous pygmy group, so OP/BP 4.10 (Indigenous Peoples) comes into play. The project has been assigned Environmental Category B. The safeguards instruments prepared include an Environment and Social Management Framework (ESMF), a Pesticide Management Plan (PMP), a Resettlement Policy Framework (RPF), and an Indigenous Peoples Planning Framework (IPPF). Mitigation measures have been identified and costed and will be financed by the project.
Environmental Issues:
2. Sustainable agricultural production is the project’s long-term objective. Environmental management will form part of the training provided to farmers to strengthen positive environmental practices and discourage negative ones, such as the excessive use agrochemicals, unsafe use of pesticides, the use of explosives in fishing, or the use of DDT in drying fish. The environmental impacts ofthe project include but are not limited to:
Potential increases in bush-meat hunting and land conversion as a result of improved access and expansion of agriculture. Residues of pesticides and inorganic fertilizer, resulting from agricultural intensification and diversification. Elimination of the natural enemies of crop pests and the consequent alteration of biological pest control methods. 0 Development of resistance to pesticides, encouraging increased reliance on chemical pesticides.
3. To mitigate the presumed impacts, an ESMF was prepared and disclosed on May 15, 2009. Mitigation measures are costed and will be financed by the project.
Social Issues
4. The project seeks to improve the livelihoods of smallholder farmers through improved crop productivity, processing, and marketing. Social Impact Assessments (SIAs) and analyses were carried out in conjunction with the preparation of the ESMF, the RPF, and the IPPF. The SIAs concluded that project operations will have adverse but not salient social impacts, induced by: (i)land acquisition for markets and roads, resulting in involuntary resettlement, the loss of physical cultural resources such as sacred groves, issues related to indigenous peoples, the loss of
103 houses, and the loss of fishing assets and (ii)dislocation of social values, induced by wage employment for road work, coupled with the spread of HIV/AIDS, poaching, land tenure disputes, cutting of timber, charcoal burning, and loss of cultural assets. To mitigate the possible impacts, the RPF and IPPF were prepared and disclosed on May 13,2009.
OP 4.12, Involuntary Resettlement/ Resettlement Policy Framework
5. Given that OPBP 4.12 (Involuntary Resettlement) is triggered because the civil works of the project may induce land acquisition, a ResettlementRehabilitation Policy Framework (RPF) was prepared and disclosed in country on May 13, 2009 and at the Bank’s Info-shop the same day. Based on the potential number of rural roads to be rehabilitated (54), the RPF estimated and costed the need for preparing 40 site-specific resettlement action plans (RAPS). The RAPs will be prepared and implemented before civil works begin. The cost of implementing the mitigation measures will be covered by the Government of DRC and by the Grant.
OP/BP 4.10, Indigenous Peoples/ Indigenous Peoples Planning Framework (IPPF)
6. The presence of the Bambenga people, an indigenous pygmy group, in the project area triggers OPBP 4.10 (Indigenous Peoples). On May 13, 2009, prior to appraisal, an IPPF was prepared and disclosed in country and at the Bank’s Info-shop. During the preparation of the IPPF, consultations were organized with the indigenous people, and preparation included both social scientists and environmentalists. The indigenous people were broadly supportive of the project objectives and outcomes. However, before the negotiations, the project team received a letter from a representative of a local NGO complaining about the consultation process with Indigenous Peoples during the preparation of the Indigenous Peoples Planning Framework. In response to this, the project team will undertake additional consultations on an ongoing basis to ensure that all stakeholders are well informed about the project and their concerns are taken into account during implementation.
OP 4.11 Physical Cultural Resources
7. ARRSP triggered OP 4.1 1, which applies whenever there is likely to be significant civil works. The ESMF identified the cemetery of the pioneers in Lisala as the only classified cultural and historical site in the project area. In compliance with OP 4.1 1 and Congolese legislation, the ESMF recommends that contractors be required to immediately contact the Institut des Musees Nationaux du Congo (IMNC) in the event that physical cultural resources are encountered during excavation for civil works. To ensure that chance finds of physical cultural resources are handled properly, the environmental contract clauses will include specific requirements on how such resources should be handled.
OP/BP 4.04 Natural Habitats
8. OP 4.04 on natural habitats is not triggered because the wetlands at Pool Malebo do not have characteristics consistent with critical natural habitats (that is, it is not a protected area nor an area known with high suitability for biodiversity conservation, or a site with rare, vulnerable, migratory or endangered species) and the wetlands are already under cultivation. The project
104 activities in Pool Malebo will only intensify agriculture on already cultivated lands so as to discourage encroachment on undisturbed lands.
OP/BP/GP 7.50 Projects on International Waterways
9. Although OP 7.50 (Projects on International Waterways) is triggered, an exception to the notification requirement is applied as provided for under paragraph 7(a) of the Policy for projects involving additions or alterations of ongoing schemes that, in the judgment of the Bank, will not adversely change the quality or quantity of water flows to other riparians, and will not be adversely affected by other riparians’ possible water use. This exception applies as the project will neither have a negative impact on the quality or quantity of water flows on the Congo River to the Republic of Congo, Angola, Central African Republic, Zambia, Tanzania, Burundi, and Rwanda, nor adversely affect their capacity to use water.
10. The project will support investments in irrigation and drainage infrastructure to allow more land to be irrigated by seven minor tributaries of the Congo River: the Muku, Regi, Tswengue, Mikonga, Tshangu, Ndjili, and Kwamataba. The rehabilitated scheme will cover some 2,000 hectares and will use about 5 cubic meters per second from these tributaries during four months of the year. There is no concern that the project could cause appreciable harm to other states, given that the quantity of water in question is less than 0.02 percent of the flow in the Congo River and will be used during only four months of the year.
Alternatives Considered to Minimize Adverse Safeguard-related Impacts
11. From design to appraisal, the ARRSP considered alternatives and mechanisms to minimize adverse safeguards impacts related to component 2 of the project. The potential rural roads to be rehabilitated will be required to select road alignments that will reduce adverse environmental and social impacts. Social protection clauses will be incorporated in the works contracts, including HIV/AIDS prevention. Compliance in the implementation of the clauses will be monitored by the ARRSP safeguards specialists. During the project’s operation, prior to the commencement of civil works (that is, during contract mobilization), the supervision consultant will undertake a review of the road alignments and suggest design changes that could improve not only engineering efficiency but also road safety, thereby reducing adverse social impacts.
Consultationswith Various Stakeholders and Project-affected Groups and Beneficiaries
12. The ARRSP project was designed with participation at the national level, donor community level, regional level, local government level, and the local community level. The public consultations focused on validating proposed project operations and methods through preparatory studies. The stakeholders included local governments, CBOs, community-based facilitators (CBFs), NGOs, regional governments, and sectoral administrations. The consultations focused on assessing the viability of the project, identifying potential areas of conflict between stakeholders, and defining areas of collaboration. Five key public consultations were carried out in preparing the project. They included:
105 A review ofthe analyses and findings ofthe baseline survey. A review ofthe analyses and findings ofthe basic infrastructure survey. A review ofthe analyses and findings ofthe environmental management framework. A review ofthe analyses and findings of the IPPF. A review ofthe analyses and findings of the implementation manual.
13. The public consultations confirmed that there was solid support for implementing road projects. Regional and local governments, as well as civil society (NGOs, CBOs, CBFs) and ' vulnerable groups (women, youth, the physically challenged, and the elderly) were in favor of the project. The ARRSP will sustain consultations with regional and local governments, local communities, CBOs, CBFs, NGOs, and project-affected persons (PAPS) at various phases of the project cycle. At project implementation, public consultations will start with local communities to prepare the yearly work program. The focus of the consultations during implementation will be to minimize conflicts, enhance cooperation, and improve social benefits. At appraisal stage, the project took stock of various responses from civil society to carry out additional consultations, if needed, prior to commencement of project operations.
Mechanisms to Monitor the Implementation of Agreed Mitigation Plans
14. The project management unit will recruit a safeguard specialist as a local long-term consultant (with a six-month renewable contract each year, over a period of two years) to provide periodic monitoring services and technical support.
15. The preparation and implementation of the RAPs will be launched prior to the commencement of civil works. In addition, the Project's safeguard specialists will produce quarterly progress reports on social and environmental performance, which will be part of the overall project monitoring system. MinAgri, in collaboration with the Ministry of Environment, will annually prepare and make public a brief summary report that describes how it is "performing" with respect to addressing the environmental and social issues raised by the project. These reports will include the following indicators:
Number of sub-projects screened on environmental and social safeguards grounds. Number of sub-projects needing specific Economic and Social Impact Analyses (ESIAs). Number ofESIAs conducted. Number of sub-projects with a costed EMP and/or RAP. Number ofEMPs and/or RAPs implemented according to schedule. Number of training programs carried out for safeguard capacity strengthening. Number oflfiequency of safeguard supervision and annual project reviews undertaken. Number of institutions/organizations trained.
106 Safeguard policies
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.0 1) [XI [I Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [XI [I Physical Cultural Resources (OPBP 4.1 1) [XI [I Involuntary Resettlement (OPBP 4.12) [XI [I Indigenous Peoples (OPBP 4.10) [XI [I Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OPBP 7.60)' [I [XI Projects on International Waterways (OP/BP 7.50) [XI [I
* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas. 107 Annex 11: Project Preparation and Supervision CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
Planned Actual PCN review 0612912006 Initial PID to PIC 08/02/2006 Initial ISDS to PIC 0810 112006 Appraisal 0 1/08/20 10 Negotiations 02/25/20 10 BoardlRVP approval 03l30l2010 Planned date of effectiveness 7/ 15/20 10 Planned date of Mid-Term Review 711512012 Planned closing date 12115/20 15
Key institutions responsible for preparation of the project: Ministry of Agriculture and Ministry of Rural Development.
A split Japan PHRD grant for US$900,000 (TF057809 and TF57966) was received and used for project preparation by the recipient and the Bank to contract consulting services for the following activities: (a) for the recipient-executed activities: (i)feasibility studies such as, environmental, socio-economic, and other assessments; (ii)development of project implementation and administrative and accounting manuals; (iii)carrying out of stakeholder consultations; (iv) provision of technical advisory services (including audits); (v) training; and (vi) goods required for carrying out such activities and (b) for the Bank-executed activities: (i)agricultural institutional assessment; (ii)training need assessment; and (iii)rural infrastructure assessment in the project zone. The grant was successfully executed by the Secretariat General of MinAgri. All planned outputs were completed and consultant performance was satisfactory. Both the client and stakeholders benefited from training and consultative workshops carried out by consultants to validate the results of the studies.
Bank staff and consultants who worked on the project included:
Name Title Unit Nicolas Ahouissoussi Sr. Agricultural Economist AFTAR Amadou Oumar Ba Sr. Rural Development AFTAR Alassane Sow Lead Operations Officer AFTAR Soulemane Fofana Operations Officer AFTAR Alexandre Dossou Sr. Transport Specialist AFTTR Thomas J. Ramin Sr. Operations Officer AFTRL Antoine V. Lema Sr. Development Specialist Sr. AFTCS Paul J. Martin Environmental Specialist AFTEN Bourama Diaite Sr. Procurement Specialist AFTPC Philippe M. Liwoke Sr. Procurement Specialist AFTPC
108 Etienne Nkoa Sr. FM Specialist AFTFM Jean Charles Kra Sr. FM Specialist AFTFM Ibrahim Djido Sr. Infrastructure Specialist FA0 Roble Sabrie Economist FA0 David Wilcock Sr. Economist (Consultant) FA0 Nsimba Nsoki Livestock Specialist (Consultant) FA0 Alain Mahunina Kitswaka Fisheries Specialist (Consultant) FA0 Jeanine Nkakala Team Assistant AFCC2 Marie-Claudine Fundi Language Program Assistant AFTAR Gilbert K Hatungumukama Livestock Specialist (Consultant) FA0 Julien Vallet Economist (Consultant) AFTAR
Bank funds expended to date on project preparation: 1. Bank resources: $897,778.00 2. Trust funds: 3. Total: $897,778.00
Estimated Approval and Supervision costs: 1. Remaining costs to approval: 2. Estimated annual supervision cost: $3 15,000.00
109 Annex 12: Anti-corruption Plan CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
Overall background
1; Poor management and corruption exist in all economies, but they flourish in countries recovering from insecurity arising from social and/or political conflict. The institutions responsible for investment programs in these countries are weak. They operate in an environment in which governance, the media, and civil society are reorganizing rapidly. This situation offers ample temptation for private operators to resort to corruption to derive quick profits.
2. Good governance has a perceptible impact on economic and social development. It has a pronounced influence on per capita income growth, national well-being, and social achievements. Many studies conducted by major donors (such as the Bank, EU, and DfID) have found a strong correlation between bad governance and weak private investments on the one hand, and weak economic performance on the other. Improving managerial capacity and transparency are priorities if the development programs and effective aid required to reduce poverty are to be implemented smoothly.
Country Profile
3, Severe governance problems and corruption continue to hamper DRC’s development prospects. Corruption remains widespread and takes a heavy toll on the public sector’s capacity to deliver key services. Despite its wealth in mineral resources, DRC’s social and economic indicators remain among the lowest in the world, with a per capita GDP of below US$ 200. The importance ofgovernance issues is illustrated by DRC’s very low scores on various international governance and corruption indices. For example, in the World Bank’s Country Policy and Institutional Assessment (CPIA), DRC ranks among the core fragile states, with a score of2.2 in 2008. The country received one of the lowest score in the world (2.0) for transparency, accountability, and corruption in public sector. This perception is fueled by a pervasive culture of impunity and persistent instability as well as the chronic non-payment of salaries.
4. Considerable risks are attached to the deployment of external aid to support urgent rehabilitation and reconstruction and build basic capacity for managing public finances and implementing programs. Good governance and anti-corruption measures are a central tenet of country assistance strategies for DRC. These strategies combine investments to revive the economy and improve living conditions (the “peace dividend”) with programs to reform public institutions, build managerial capacity, and develop the framework for public accountability and transparency.
5,, Things have started to improve. The elections in 2006 and the subsequent establishment of a coalition government in DRC offer an opportunity to develop a stable governance system. The key governance issues in DRC are summarized in the Contrat sur la Gouvernance (Governance Compact), which is part of the government program and provides the overall strategic framework for sector-specific undertakings at the level of specific actors. The Compact
110 contains three areas of sector reform: (i)state-owned enterprises, (ii)mining, and (iii)security. It also advances four cross-cutting priorities: (i)enhancing transparency, (ii)decentralization, (iii) public financial management, and (iv) public service reform. These priorities form the basis of the Common Assistance Framework, which has been agreed upon by the government and donors. The priorities are also reflected in the World Bank CAS (December 2007), which presents a coherent approach to supporting specific aspects of public sector management and capacity building in areas such as procurement and public enterprise reform and addresses cross- cutting priorities, particularly administrative decentralization under the Governance Capacity Enhancement Project (approved in May 2008). The CAS also advocates a gradual change from multi-sector rehabilitation programs executed by stand-alone implementation units to policy- based sectoral projects combining reform, investment, and capacity building. The ARRS Project exemplifies this transition for the agricultural sector, as detailed below.
6. Significant governance challenges remain, however, at all levels of government, especially in key cross-cutting management functions such as organizational management, human resource management, information management, budgeting and financial management, procurement, leadership, and public service management. Such management issues have been clearly highlighted in the agricultural sector, where, according to diagnostic analysis conducted by BTC and the World Bank between 2005 and 2008, 65 percent ofall civil servants have passed retirement age. Likewise, the decoupuge study completed in 2009 demonstrated that agricultural personnel are concentrated at the central level; delivery functions are understaffed at the local level, especially the district level.
7. These above-mentioned management issues seriously affect the public administration’s ability to deliver on development policies for the well-being of rural populations. Consequently public service delivery is very inefficient and of low quality at all levels ofgovernment and in all sectors, including agriculture. These challenges result fiom decades ofneglect of state structures and need to be addressed urgently to establish functioning service delivery systems. The present organizational and institutional configurations are not conducive to good performance by the public administration.
8. The decentralization process initiated under the 2006 Constitution has exacerbated the above challenges. Particular problems include the lack of clarity on key aspects of supervision and coordination between levels of government, the absence of skilled and motivated staff at the local level, and the insufficiency of resources transferred from the central government to the provinces to deliver public services in key sectors such as health, education, and agriculture. The risks include the continuing degradation of the quality of public services at the provincial and district levels.
9. Procurement and financial management are two specific areas that provide opportunities for corruption and are the target of reforms and anti-corruption measures. Annex 8 describes the state of DRC’s procurement system and its use in practice. Following finalization of the CPAR in 2004, the reform of the procurement system in the country started with the drafting of the Procurement Code, which has recently been approved by the Cabinet and is now in Parliament. Once it has been passed and has become effective, other reform measures will have to follow. A reliance on an acceptable national system in Bank-assisted projects will have to wait until
111 reforms have progressed. In the meantime, the use of the Bank’s Procurement Guidelines and procedures is required for all procurement in Bank-financed projects.
10. In DRC the auditing of public accounts is nominally entrusted to the Cour des Comptes, which is equivalent to the Office of the Auditor General. However, this critical state organ cannot yet fulfill its function as the supreme audit authority for public sector accounts. Annual audits on Bank-assisted projects are instead carried out by independent external auditors (see Annex 7). It is also expected that the new fiduciary unit being established within the Ministry of Finance with support from PRCG (Projet de Renforcement des CapacitCs de Gouvernance, ) will eventually assume responsibility for financial management and monitoring of donor projects and play a pivotal role in guiding the development of new and transparent rules, procedures, and practices for managing public resources.
ARRSP Background and Agricultural Sector Governance Issues
11. Issues of governance and corruption in the agricultural sector have their origin in the punishing legacy of colonial rule. After independence in 1960, greater emphasis was placed on assisting small-scale farmers with both food and cash crop production and marketing through a hierarchical system of agricultural extension, based on many thousands of extension agents (monugri-moniteurs ugricoles) distributing improved technologies and extension messages to farmers in their area, The period following independence was also characterized by massive public mismanagement of the large-scale (plantation) sub-sector. Mismanagement accelerated in the 1970s and afterwards under the Mobutu regime’s Zuirisution policies, which involved arbitrary land seizures and extensive extra-legal cronyism in the distribution and “management” (sometimes just looting) of these seized assets. Agricultural exports, mostly from large-scale plantations, were one of the two economic engines of the country until nationalization and mounting political chaos caused exports to collapse.
12. Decades of war, before and after the fall ofthe Mobutu regime, battered the already weak agricultural extension institutions and key multi-modal marketing systems. Infrastructure in all provinces was destroyed, abandoned, or fell into disrepair. Equipment was looted and lines of communication broken, both physically and functionally. Staff remained unpaid for years, but many remained at their posts looking for any means of economic survival. Most of the remaining staff members remain untrained in newer approaches to transmitting improved technologies to farmers and have passed retirement age. A large proportion of staff member in the provinces remains uninformed of recent and pending policy changes, such as the CARGs, the proposed Agriculture Code, and other measures related to decentralization and privatization. Those who are still able to work require new local leadership, catch-up training, and a minimum of resources to begin to work again.
13. The end of armed conflict should offer opportunities for change. Genuine political will and international support are helping DRC to lay the groundwork for sustainable, equitable, and participatory agricultural development, both for smallholders and for those who will be involved in relaunching large-scale plantation agriculture in some areas.
112 Diagnostic
14. As indicated above, recent diagnostic studies have highlighted that the agricultural sector administration is bloated with employees who are mostly underperforming, underpaid, and unmotivated, including an estimated 65 percent of ministry employees who are past retirement age. The wage system is opaque and inadequate, based on a plethora of bonuses and allowances and very low base wages. Aside from these problems, the severe lack of organizational, institutional, and technical capacity, especially at the provincial and district levels, not only hampers service delivery but could significantly hamper the implementation of the proposed project at all levels.
15. Decentralization poses a significant risk related to the management and redeployment of staff between deconcentrated and decentralized units, especially with respect to decisions on how to handle the transfer of personnel that will most likely need to accompany the transfer of competencies, and how to handle the cases of staff that may not meet the requirements posed by the new responsibilities assigned to the provinces. As emphasized in the decoupuge study, a sheer lack of basic office equipment, decision tools, legal framework, appropriate organizational structure, leadership, and ethics to ensure adequate public service delivery poses serious additional risks offraud and abuse of funds.
16. These risks could be exacerbated by the fact that in January 2010 the provinces will assume responsibility for managing and paying staff in the provincial and district agricultural, health, and education offices. The funds transferred for this purpose will be insufficient, based on actual numbers and not on census numbers as previously planned. Most provinces are not ready to assume this responsibility.
17. In short, the risks that the project will have to deal with include: The management and redeployment ofstaff. The opacity and inadequacy ofthe wage system. The weakness oforganizational, institutional, and technical capacity. The absence ofbasic infrastructure. The insufficiency oftransferred hnds for staff payment.
18. There are also risk factors for procurement performance, which include those posed by the country context and those due to the low procurement capacity ofthe MinAgri. This ministry will be in charge of project implementation. In terms of the country context, the CPAR and the experience of other projects funded through IDA and international financing institutions indicate that procurement on the project is likely to involve the following risks:
A weak governance environment, weaknesses in accountability arrangements, and an overall lack of transparency in conducting procurement processes creates significant risks ofcorruption, collusion, and fraud. The administrative system as it operates in practice creates opportunities for informal interference in the procurement process by senior officials-creating opportunities for waste, mismanagement, nepotism, corruption, collusion, and fraud.
113 e Government officials likely to be involved in project procurement through tender committees may not be familiar with procurement procedures. e There is neither a national control system ensuring that the rules are respected nor a regulatory body to handle complaints from bidders. e Few companies are interested in supplying goods and constructing works for development projects in the current country conditions. Goods may not be available or may be exorbitantly expensive, especially up-country. As a result, insufficient competition may result in higher prices of goods and services.
19. Overall project risk for procurement is High.
20. The current environment is characterized by the following problems: An environment in which the identification of infractions and sanctions is not routine, giving free rein to a state oflatent and chronic corruption. Contract violations through collusion. Excessive use ofrequests for quotes, often directed at the same firms. Lack of clarity in bid opening procedures, bid evaluation criteria, and contract awards. Negotiations, extensions, and modifications after bid submission. Failure to monitor adherence to contractual commitments. Excessive use of contract amendments, entailing very substantial increases in contract amounts. Flagrant inefficiency in the use of resources, as evidenced by slow program implementation and abnormally high unit prices in contracts compared with those on the international market. A high level of perceived risk in the financial and technical management of force account works.
21. To recapitulate: Despite the tangible progress made in DRC, the country’s procurement system and practices do not yet ensure cost-effectiveness, efficiency, and transparency in public procurement. Solid measures to strengthen existing procedures and institutions overall are needed and planned under ARRSP to minimize fiduciary risks.
22. With respect to fiduciary risk, the World Bank and other donor assessments, notably the CFAA (Country Financial Accountability Assessment), PER (Public Expenditures Review), and PEFA (Public Expenditure and Financial Accountability), completed between 2002 and 2007, portray an unsatisfactory economic and financial control environment featuring weak budgeting preparation and control, financial reporting, external audit, and human resources. In-depth structural reforms have been launched in the areas of economic governance, public expenditure management, and financial sector and public enterprises to strengthen capacity in the public administration. With the support of the international community, the Government of DRC is undertaking a series of PFM reforms in budget preparation and execution, adhesion to Treasury forecasts, preparation of regular budget execution reports, and simplification of the national budget classification system. Aside from the new Procurement Code (adopted in December 2008), a new Organic Law is currently being finalized. As stated previously, there is reason for cautious optimism, but it will take time for these reforms to yield substantial improvements in
114 the management of public hnds. For this reason, the overall country fiduciary risk is still considered high. The Bank cannot, at this time, rely on the public expenditure framework for the purpose ofthis project.
Definition of a strategy
23. How can the World Bank help DRC to strengthen the managerial capacities, accountability, and transparency ofthe institutions that are to manage the ARRSP? The project’s Governance and Anti-Corruption Action Plan is designed specifically to respond to this concern, since it emphasizes improved public management and transparency.
24. One of the main challenges to be addressed in the agricultural sector is the lack of skilled and motivated staff in MinAgri (including training on sector policy formulation and impact assessment), in addition to organizational capacity improvement. Vigorous reforms will be needed in human resources management, including the retirement program. The reform program calls for downsizing MinAgri staff by 46 percent, from 18,500 to 10,000 people, along with an 89 percent reduction of staff mapped at the central level, from over 2,700 to 300 people. The modalities of this resizing, which will lead to both exit and new recruitment, will be based on (i) an assessment of the existing human resources at both central and provincial levels and (ii)the staffing needs as spelled out in the new organizational chart. This program will be carried out in close coordination with the DRC public administration reform program.
25. Other reforms will be needed for rightsizing MinAgri at both central and local levels. The restructuring program has three main principles: (i)MinAgri’s key function involves the definition of the sector strategies, program planning, monitoring/evaluation, and definition and enforcement of regulatory framework; (ii)production and commercial activities must be transferred to private operators; and (iii)activities such as research and extension may be implemented in partnership between the private and public sector. In this new context, the role of MinAgri will consist of: (i)the conception and elaboration of national agricultural policy and planning of national programs and (ii)the definition and enforcement of a regulatory framework. Another important element of the restructuring program is the emphasis on decentralization. Technical services are to be deconcentrated at the provincial level. Program and project management responsibilities are to be decentralized and transferred to local entities and grassroots professional organizations. Particular emphasis will be put on establishing consultation platforms at the provincial levels through the CARGs, which will involve all key stakeholders in formulating and executing provincial agricultural programs.
26. Profound reform in governance is needed and entails radical change at all institutional levels, including the judicial system, custom controls, financial oversight, and state-level auditing, as well as in the Cour de Comptes and the Corruption Observatory, and with general contractors. Corruption cannot be reduced significantly by focusing controls on a few mid-level civil servants or bureaucrats who are profiting from it. It is more important to examine the more fundamental weaknesses of key institutions. National enterprises, the local and international private sector, and commercial banks also have an important role to play in combating corruption.
115 27. A growing number of international and multinational firms refuse to engage in corruption, and they operate efficiently and profitably. Yet it is obvious that another substantial segment of national and international companies still indulges in corruption, particularly in fragile and receptive environments such as that of the DRC. It is generally estimated that in developing countries, about one-third of firms-national and international-make under-the- table payments and that a small group of powerful local companies often successfully obtains public contracts through influence trafficking, vested interests, and interference in institutions and rule-setting. Such practices, when used by a few companies, can completely skew the investment climate, thereby compromising private sector growth and competition to the detriment of a country’s development.
28. The traditional recommendation for a national anti-corruption program would have been to engage the business community and the government in a broad program of governance, including ethical standards and guidelines to enhance the accountability of the various actors. Under the ARRSP, it would be unrealistic to embark upon this kind of broad and deep institutional reform and to address all levels of the administration and civil society. As noted, a profound reform of the country’s procurement system is underway with World Bank support, including the drafting of an Act on the Public Procurement Code. However, ARRSP cannot expect to benefit immediately from these reforms. Once the National Procurement Code has been adopted, the national procurement procedures to be followed will be reviewed, and suitable modifications to the proposed project will be discussed and agreed before implementation.
29. The strategy chosen for the ARRSP therefore aims exclusively to influence structures and procedures within the framework of MinAgri and MDR as well as the project, where smaller- ’ scale intervention is possible immediately. Interventions for the ARRSP focus essentially upon: (i)the basic principles and rules to be followed by the implementation agency (PIU); (ii) enhancement of visibility and transparency in the various stages of contract award and management; (iii)integration of beneficiaries and private sector operators into the project’s supervision system; (iv) strengthening of internal and external oversight mechanisms; and (v) disincentives for fraud and corruption.
30. Under the ARRSP, the chosen strategy is to emphasize the strengthening of managerial capacities and the means of exercising oversight. The goal is to create an environment with zero tolerance ofcorruption. This strategy is based upon the following observations: 0 Greater visibility of actions and procedures usually enhances the accountability of managers, whose efficacy can thus be better measured. 0 The enforcement of well-defined principles and the use of standard models usually ensure the predictability and coherence of files produced by program management entities. 0 The private sector’s access to a credible and independent system of recourse greatly helps to boost supervision of investment program management, since it has an obvious incentive to point out procedural anomalies and/or non-compliance. 0 The implementing agency’s use of international recognized indicators of conformity makes it possible to gauge the capacities of institutions responsible for managing investment programs-including public procurement and contract management-and
116 to agree with various partners on areas in which corrective action and capacity building are needed. 0 The introduction of internal audits and the performance of technical and financial audits make it possible to identify weaknesses in a management system and to recommend corrective measures and ways of boosting management efficiency and transparency. 0 The exhaustive definition of faulty management practices and corruption, as well as the dissemination of strict rules for the enforcement of sanctions, help enhance transparency in public procurement and contract management and increase individual accountability. Indeed, individuals thus become more aware of the risks they incur in deviating from, or failing to comply with procedures.
Action Plan to improve agricultural sector governance and combat corruption
3 1. The overall project strategy is based on three basic approaches in addressing governance and corruption issues in the DRC’s agricultural sector:
0 The first approach is, as Bank guidelines suggest, “to name the problem” 38 through organizing specific workshops at MinAgri and MDR, where specific governance and corruption issues will be openly and frankly discussed with ministry officials and other key sector stakeholders. 0 The second is to make extensive and explicit use of the Transparency, Accountability, and Participation (TAP) framework in project implementation at both national and provinciaVloca1 levels, as will be illustrated in the following paragraphs. 0 The third consists of supporting institutional capacity building at the central and provincial levels, including the establishment and operation of the CARGs in the territories covered by the project.
32. Although ARRSP is not primarily a national policy project, its institutional capacity- building component (component 3) will make a contribution to better governance and generate an improved anti-corruption environment by: (i)assisting in the selective creation of new and appropriate legislative and regulatory instruments; (ii)assisting MinAgri to disseminate these instruments widely to help all stakeholders become aware of their rights and obligations, (iii) restructuring and strengthening agricultural institutions and establishing collaboration with other key rural sector institutions (Environment and Natural Resources, Justice, Finance, and Interior Ministries, as well as private sector and civil society groups) to ensure understanding of the new agricultural policies and regulations as they emerge, and (iv) providing support to reform of the staffing of MinAgri, in particular through the elaboration of redeployment plan and training following the restructuring ofthe ministry.
33. Even more importantly, the proposed project intends to contribute directly to improving the management capabilities of MinAgri and MDR by locating the Kinshasa PIU in MinAgri, locating the three district project management offices in MinAgri facilities in each district, and
38 World Bank, “Dealing with Governance and Corruption Risks in Project Lending: Emerging Good Practices,” Operations Policy and Country Services, February, 2009. 117 demonstrating how scarce funds can be used in a responsible and cost-effective manor to achieve poverty reduction objectives that have been validated at all levels. Finally, ARRSP will use third- party organizations to set up independently verifiable control systems aimed at increasing transparency and combating corruption.
34. Measures will be taken to promote public information and increase sector transparency and accountability. Public information will be used as means to discourage collusion and corruption by various stakeholders and to defend the rights of the citizens. The following actions are envisaged:
0 Funding the establishment and functioning of the CARGs in Equateur Province: As detailed elsewhere, the ARRSP will fund the creation and operating expenses (during the life of the project) of the new participatory Conseils Agricoles Ruraux de Gestion (CARGs) at provincial and district levels throughout Equateur Province, and at the territory level in each pf the nine territories of the project zone. The CARGs, with the majority of membership coming from civil society should provide a new forum for the articulation of citizen views and feedback on project and other agricultural sector performance.
0 Dissemination of new laws and regulations. The PIU will work closely with MinAgri’s information and communications platform to publish and disseminate copies of new policy notes, the forthcoming Agriculture Code, new regulations on privatization and private sector agribusiness development, and other materials to interested parties both in urban and rural areas, particularly the ARRS project zone in North Equateur Province.
0 Local public consultation on all aspects of proiect implementation. The project will explicitly support meetings and events with the newly created provincial consultative groups, which include representatives of various government departments, local authorities, NGOs, and local communities, including indigenous people. The project will also make provision and allocations to ensure that activities requiring inputs from or having an impact on local communities are designed and implemented in a participatory manner.
0 Support to communities during negotiations with economic partners. Under this project formal agreement on social and environmental issues must be reached with local communities before contracts can be submitted for signature by the Minister of Agriculture and/or Rural Development. Given that some of the communities may not be familiar with their rights and obligations, specific assistance will be provided to them. Local NGOs, familiar with the way of life of local communities and able to speak local languages and dialects, will be selected to assist in this function.
0 Communication capacity established under the proiect. A local firm will be recruited by the PIU, on a part-time basis, to keep interested parties informed; disseminate information about good practices in agricultural development; report on progress in implementing ARRSP, related policy development, and capacity-building activities;
118 and receive and respond to suggestions and complaints from the public. This work will be done in cooperation with MinAgri’s “information and communications platform” unit.
35. Measures will also be taken to combat fraud in project administration and management. The PIU will have general fiduciary responsibility for the project. The FM staff will be composed at the central level of a finance manager and accountant. An accountant will be assigned in each DPCU and at DMC. The key local FM staff will be selected under TORS acceptable to the Bank. The finance manager will have the overall oversight of the project financial management system.
36. Institutional arrangements for implementation of the Grant have taken into account the need to strengthen MinAgri’s capacity in procurement and other fiduciary areas. At the central (national) level, a “Procurement Unit” will be created in the PCU within the Secretariat General ofMinAgri, in accordance with the provisions ofthe upcoming national Procurement Code and a qualified and experienced procurement specialist (PS) will be positioned there to carry out major procurement activities, follow up all procurement activities, and build the capacity of the three procurement assistants (PAS)located in the Decentralized Project Coordination Units (DPCU).
37. Much ofARRSP’s spending will be in two areas: (i)agricultural production and capacity building under components 1 and 3 and (ii)transportation and marketing infrastructure construction under component 2. Each ofthese areas has its own governance and corruption risks and mitigation measures. In component 1 (agricultural) spending, the main risks will come in the selection and use of state institutions and local NGOs to undertake most ofthe input procurement and village group organizational work, with village groups providing a conduit for the provision of planting materials, animal production technology, and partially subsidized postharvest equipment. The project implementation manual will develop specific standards to be used for the competitive selection of NGOs for the provision of contractual services and for minimum acceptable accounting for the use of project resources in these activities. It will be important for these standards to be consistent with the Bank’s Procurement Guidelines, be performance based, and subject to tight supervision by Project Management Unit staff in the field. Specific sanctions for non-performance or poor performance will be developed.
3 8. The implementation of construction contracts under component 2 (rural infrastructure) will be under the supervision of an internationally recruited DMC, which will be responsible for all aspects of the design, contractual execution, and final certification ofwork completed for this component. The DMC will procure the delegated activities in compliance with the Bank’s Procurement Guidelines and procedures.
39. To better manage the contracts, the project provides for independent technical monitoring of the performance under the contract on a semi-annual basis and on request as the need arises. This arrangement will contribute to fairness and integrity in the relationship between implementing partners and the PIU and district offices and with other stakeholders. Regular monitoring will also provide the basis for the periodic communication with key stakeholders, including the Project’s advisory committees at the central, provincial, and district levels.
119 40. The table below lists issues of governance that could result in sources of fraud and corrupt practices along with actions that are proposed to be integrated into the project management systems and through the Delegated Management Contract. These and other measures will be incorporated into the project implementation manual.
120 Specific Actions Specific Governance & Management Issues (in addition to systemic ones mentioned in the text)
Systemic issues Mitigation measures Staffing concentration at central level Reform of staffing of MinAgri Lack of professional staff at provincial Assessment of the existing human resources at and district levels both central and provincial levels Over-aged personnel at all levels Development of a comprehensive plan for staff Insufficiency of transferred funds for redeployment and reconversion staff payment at provincial and district Training programs implementation levels Support to retirement strategy
Procurement Systematic inventories Undue use of Single Source Selection of Purchase planning linked with preventive consultants and direct contracting for maintenance program goods and works Inspectionof stores and records Undue down payments to suppliers Systematic registry ofbills and payment and Weak and lax stocWstore management integration ofbilling and payment records practices (inaccurate records of transfers) Written procedures for supplies Improved procurement and contract management and payment procedures
Financial management, accounting and Budget control procedures and systems budgeting Strong FM arrangements including (a) FM staff Possibility of circumventing the internal recruited under terms and conditions acceptable to control system with such colluding IDA; (b) computerized accounting system; (c) FM practices as bribes, abuse of procedures manual approved by effectiveness and administrative positions, and mis- training of users at central and decentralized procurement is critical and may include entities; (d) internal auditor reporting to the the following issues: (a) late submission Steering Committee; (e) TORSof external auditors ofsupporting document; (b) poor filing include separate report of findings of physical and records; (c) lack of system inspectiodfield visits; quarterly IFR integration; (d) lack of budget discipline; (0 submission including budget execution and (e) unauthorized commitment to monitoring; (8) payment requests approved by the suppliers, bypassing budget and expenses FM expert prior to disbursement of funds to vetting procedures; (0 unsecured contractors, consultants, decentralized entities, safekeeping and transportation of funds and IA
Unsuitable working environment for Improvement in the workplace to enhance security cashier and comfort
Funds do not reach decentralized entities A ceiling for expenditures that can be handled at or are misused decentralized level will be set up in the FM procedures manual Technical auditing IT-based cash management procedures and records
121 Surprise inspection ofcash Late payments of social security charges Treasury management and planning
Equipment management Delegated Management Contract to manage and Making improper use of equipment build capacity Transparency in sourcing of equipment Management of furnished equipment
Human Resource (HR) Management Lack of HR rules for promotion and Comprehensive updating of personnel registry assignment IT-based HR records management system Non-compliance with career management Redeployment and retraining program procedures HR need assessment and development plan with 4- Influence peddling in hiring and to 5-year horizon promotions Linkages between HR registry and payroll Lack of training for new staff and non- management respect of qualifications requirements Introduction of performance-based evaluation and Lax supervision by HR managers career development system Undue use of overtime by supervisory staff Non-compliance with severance and employment contract termination Accumulation of salary arrears
Basic principles governing national competitive bidding
41. In the absence of satisfactory procurement regulations in DRC, NCB procedures must conform to the general principles and Bank procurement guidelines.
42. The World Bank’s standard bidding documents (SBDs) will be used for all contracts involving international competition, including International Competitive Bidding (ICB) for works, goods, and non-consultant services, and the World Bank Standard Request For Proposals (SRFP) will be used for all consulting firms estimated to cost the equivalent value of US$ 200,000 or more. Until such time that a national procurement system has been developed and its use for Bank-financed projects approved by the Bank, the SBDs will also be used for contracts involving national competition, including NCB, with suitable modifications, as specified in the PIM. The preparation of a PIM, satisfactory to the Bank, is a condition of effectiveness.
Recourse (processing of complaints)
43. An efficient and independent mechanism will be established to handle complaints lodged by private sector operators who feel they have been wronged in the application of procedures or in a contract award.
122 44. Access to independent avenues of recourse is important for the private sector if one of its operators feels that decisions causing the harm are in violation of prevailing regulations and therefore may compromise the desired competition, equity, and transparency.
45. It is crucial that the agency responsible for the review is made up of professionals thoroughly familiar with procurement procedures and that the agency is independent of the structures responsible for the direct implementation and management ofproject components.
46. The practical and legal logistics, the composition of the agency responsible for review, and the scope of its authority are detailed in an appendix to the implementation manual.
Performance indicators for the implementing agency
47. Sector performance will be measured though organizational performance and conformity to procedures and processes set forth for procurement and in credit agreement. At the operational level, performance indicators for PIU under the ARRSP will actually be indicators ofconformity used to gauge how the system is actually working. These indicators will essentially address the practical application of World Bank Guidelines, the provisions of the Grant Agreement and the project implementation manual, as well as national regulations and PIU’s internal regulations. The internal and external auditors, as well as the External Technical Auditor, will use these indicators to assess PIU’s performance. Periodic directorate efficiency will be evaluated and the result integrated in performance improvement plans and agreement to be signed and evaluated as well. Logistical details are in an annex to the implementation manual.
Auditing
48. Due to the weak capacity of the Cour des Comptes, an external qualified audit firm will be recruited under terms ofreferences and procedures acceptable to IDA. This firm will audit the financial statements ofthe project annually. The PCU will prepare the terms ofreference for the audit, and they will be agreed on during negotiations. The scope of the audit will cover the activities performed by the PCU at central level and the DPCUs and DMC at decentralized levels.
49. The annual audited financial statements together with the auditor’s report and management letter covering identified internal control weaknesses will be submitted to IDA no later than six months after the end ofeach fiscal year. A single audit opinion will be issued with respect to project income and expenditures, designated accounts, and the IFR. The report will also include specific controls such as compliance with procurement procedures and IFR requirements and consistency between financial statements and management reports and field visits. The audit report will thus refer to any incidence of non-compliance and ineligible expenditures identified during the audit mission. The first audit report ofthe project will include the review ofthe use the PPF (46320).
123 Definition of infractions and sanctions
50. The definition of infractions and sanctions is in two parts, one for the public sector and the other for the private sector. Corrective measures and sanctions are defined for matters pertaining to fraud, corruption, collusion, and coercion. These will result in the termination ofthe contract in question, probably accompanied by the referral of the case to a court, and other immediately coercive measures such as a ban on participation in bidding for a specific period of time.
51. The provisions of paragraph 1.14 of the World Bank Guidelines will apply if the Bank determines and/or recognizes with the Borrower that corruption is manifest.
52. The definition and coercive measures are detailed in an annex to the implementation manual.
124 Annex 13: Documents in the Project File CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
Badjeck, Benjamin, (( Renforcement Des CapacitCs dans le Cadre du Projet de Rehabilitation et de Relance Agricole dans la Province de l’Equateur D, 78 pp., Septembre 2008.
RDC, MAPE, (( La Decentralisation dans le Secteur de 1’Agriculture : Etude de Cas D, (par Evariste Niyonkuru et Patrick Makala), Juin, 2008.
RDC, MAPE, (( PARRSA : EnquCte de Base Concernant les Districts des Nord et Sud Ubangi et de la Mongala D, Mai, 2008.
RDC, Min du Plan, ((Document de Strategie de Croissance et de Reduction de la PauvretC -- DSCRP D, Kinshasa, Juillet, 2006.
RDC, Min du Plan, DSRP (( Monographie de la Province de I’Equateur D, Avril, 2005.
World Bank, (( Aide-memoire : Mission de PrbEvaluation du PRRSA, 20 Avril-8 Mai, 2009 D, May, 2009.
World Bank, (( Aide-memoire : Mission de Preparation du PRRSA, 24 Novembre-3 Decembre, 2008 o, December, 2008.
World Bank, (( Aide-memoire : Mission de Preparation du PRRSA, 3-15 Juillet 2008 D, July, 2008.
World Bank, AFTR, “DRC : Implications of recent food price increases and policy options”, internal working paper, May, 2008.
World Bank, “Country Assistance Strategy”, November, 2007 (in two volumes).
World Bank, (( Aide-memoire : Mission de formulation du projet de rehabilitation & de relance agricole D, mai, 2007, Kinshasa.
World Bank, “Project Concept Note: DRC, Agricultural Rehabilitation and Recovery Support Project”, June, 2006.
World Bank, “DRC Agricultural Sector Review”, April, 2006, Washington, DC, Report no. 3 02 15-ZR.
125 Annex 14: Statement of Loans and Credits CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Fm. Rev’d PI04041 2008 DRC-EnhancingGovernance Capacity 0.00 50.00 0.00 0.00 0.00 50.81 0.17 0.00 (FY08) P101745 2008 DRC- Pro-Routes (FYO8) 0.00 50.00 0.00 0.00 0.00 51.94 0.17 0.00 PI04497 2007 DRC-Em. Urban & Social Rehab ERL 0.00 180.00 0.00 0.00 0.00 132.04 113.97 0.00 (FY07) PO86294 2007 DRC-Education Sector Project (FY07) 0.00 150.00 0.00 0.00 0.00 156.93 -0.60 0.00 PO88751 2006 DRC-Health Sec Rehab Supt (FY06) 0.00 150.00 0.00 0.00 0.00 136.75 85.69 0.00 PO88619 2005 DRC-Emergen Living Condition Impr 0.00 82.00 0.00 0.00 0.00 49.36 26.05 0.00 (FY05) PO86874 2005 DRC-Emerg SOCAction (FY05) 0.00 60.00 0.00 0.00 0.00 37.24 21.09 0.00 PO82516 2004 DRC-Multisectoral HIV/AIDS (FY04) 0.00 102.00 0.00 0.00 0.00 61.94 1.80 0.00 PO81850 2004 DRC-Emerg Econ & SOC Reunif ERL 0.00 214.00 0.00 0.00 0.00 48.97 31.58 0.00 (FY04) PO78658 2004 DRC-Emerg Demob Reintegr ERL (FY04) 0.00 100.00 0.00 0.00 3.26 50.69 3.80 0.00 PO71144 2004 DRC Priv Sec Dev Competitiveness 0.00 120.00 0.00 0.00 0.00 104.43 21.44 0.00 (FY04) PO57296 2003 DRC-Emerg MS Rehab & Recovery ERL 0.00 454.00 0.00 0.00 0.00 139.29 -96.70 -97.69 (FY03) Total: 0.00 1,712.00 0.00 0.00 3.26 1,020.39 208.46 - 97.69
CONGO, DEMOCRATIC REPUBLIC OF STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions ofUS Dollars
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Adastra Miner ... 0.00 0.09 0.00 0.00 0.00 0.01 0.00 0.00 2003 Celtel DROC 8.57 0.00 0.00 0.00 8.57 0.00 0.00 0.00 2005 Kolwezi 0.00 4.80 0.47 0.00 0.00 4.46 0.47 0.00 2005 PCB Congo 0.00 0.45 0.00 0.00 0.00 0.45 0.00 0.00 Total portfolio: 8.57 5.34 0.47 0.00 8.57 4.92 0.47 0.00
126 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic.
Total pending commitment: 0.00 0.00 0.00 0.00
127 Annex 15: Country at a Glance CONGO, DEMOCRATIC REPUBLIC OF: DRC - Agriculture Rehabilitation and Recovery Support
Congo, Dem. Rep. at a glance 3/3i0
Sub- Key Development Indicators Congo, Saharan LO w Agedistribution, 2007 Dem Rep. Africa income (2008) Msle FWll&
75.79 Population. mid-year (millions) 64.3 800 1296 Surfacearea (thousand sq. km) 2,345 24,242 2 1846 5054 Population growth (%) 2.8 2.4 22 4Sd9 Urban population (%of total population) 34 36 32 30-34
GNi(Atla5 method, US$ billions) 9.8 761 744 15-19 GNIpercapita(Atlasmethod,US$) no 951 574 0-4 GNI per capita (PPP, international S) 290 1869 a489 15 $0 5 0 5 10 15 Of Mal GDP growth (Oh) 6.2 6.2 64 pxcent pcp.ilatian GDP per capita growth (%) 3.3 3.8 4.2
(most recent estimate, 2003-2008) Under4 mortality rate (per 1,000) Poverty headcount ratio at $ 125 a day(PPP. %) 59 51 Povertyheadcount ratio at 82.00a day(PPP, %) 80 73 Life expectancyat birth (years) 46 51 57 2W Infant mortality(per 1000 live births) D8 89 80 m Child malnutrition (%of children under 5) 27 28 150
100 Adult literacy, male (%of ages 15 and older) 71 72 Adult literacy,female (%of ages n and older) 54 55 50 Gross pnmaryenroIlment,male(%of agegroup) 94 99 DO Gross primalyenroIlment,female (%of age group) 76 66 89 0
Access to animprovedwatersource(%of population) 46 58 68 Access to improved sanitation facilities (%of population) 31 31 39
Net Aid Flows 1980 1990 2000 2008 a Growth of GDP and GDP per capita (%) (US%millions) Net ODA and official aid 426 696 ll7 12v '0 .1 Top 3 donors (in 2007): 5 Belgium 70 95 27 20 0 European Commission 23 52 33 158 4 United States li 32 D 132 -1 0 Aid(%of GNI) 3.1 0.4 4.5 72.6 .I 5 Aid per capita (US$) b 24 3 B -20 1 9s 05 Long-Term Economic Trends
Consumer pnces (annual Ohchange) 36.7 499.2 5110 8.0 GDP implicit deflator(annua1%change) 514 09.0 5S.8 8.4
Exchange rate (annual average, local per US$) 69.0 563.2 Tens of trade index (2000 = 00) 1980-90 1990-2000 2000-08 (avenge annualgmwth %) Population, mid-year (millions) 27,2 37.0 50.8 64.3 3.1 3.2 2.9 GDP (US$ millions) w,395 9,350 4,306 11588 16 -4.9 5.2 (%of GDP) Agriculture 26 6 310 50.0 40.2 2.5 14 15 Industry 35.0 29.0 20.3 28.0 0.9 -8.0 9.5 M anufactunng 15.2 n3 4.8 5.5 16 -8.7 6.3 Services 38 2 40.0 29.7 328 2.0 -1L.3 7.0
Household final consumption evenditure 815 79.1 88.0 80.8 3.4 -4.5 39 General gov't final consumption expenditure 8.4 115 7.5 72.3 0.0 -7.4 3.7 Gross capital formation 0.0 9.1 3.5 22.0 -5.1 -0.7 2.2
Exports ofgoods and services s.5 295 22.4 613 9.6 -0.5 -6.1 Imports of goods and services b.4 292 214 76.4 07 -2.4 -35 Gross savings 7.9 0.8 -13 9.7
128 Congo, Dem. Rep.
Balance of Payments and Trade 2000 2008 Sovernance indicators, 2000 and 2007 (US$ millions) Total merchandise exports (fob) 892 6.585 Total merchandise imports (cif) 669 6,711 Volceand acc~&!Aity Net trade in goods and services 48 -1749 Pdihcel stahlity Current account balance -89 -1425 asa%ofGDP -4.6 -Q.3 Regulzicw qudity
Rule of lsin Wrkers' remittances and compensation of employees (receipts) Control of cwrupbon
51 78 Reserves, including gold 0 25 50 75 '100
Central Government Finance
(%of GDP) Current revenue (including grants) 5.1 222 Tax revenue 4.0 8.8 Current expenditure M.6 7.8 Technology and Infrastructure 2000 2007 Overall surplusldeficit 6.0 -15 Pavedroads (%of total) 18 Highest marginal taxrate(%) Fixedlineandmobile phone Individual 60 50 subscribers (per 00people) 0 11 Corporate 40 40 High techno logy exports (%of manufactured exports) External Debt and Resource Flows Environment (US$ millions) Total debt outstanding anddisbursed 11692 Q,89 Agricultural land (%of land area) 10 a Total debt service 25 641 Forest area (%of land area) 59 6 58 9 Debt relief (HIPC. M DRI) 7,636 Nationally protected areas (%of land area) 86
Totaldebt (%of GDP) 2716 M5.3 Freshwater resources percapita (cu meters) rS,811 l4.423 Total debt service (%of exports) 2.5 9.0 Freshwaterwthdrawal (billion cubic meters) 04
Foreigndirect investment (net inflows) 166 17t3 C02 emissions percapita (mt) 0 03 0 04 Portfolio equity(net inflows) GDP per unit of energy use (2005 P PP $ per kg of oil equivalent) 09 09 :omposition of total external debt, 2007 Sholf4em. 6zJ Energy use per capita (kg of 011 equivalent) 291 289
(US$ rnl//!ons)
IBRD Total debt outstanding and disbursed 81 - Disbursements 0 - Principal repayments 82 - Interest payments 51 -
JS$ milliws IDA Total debt outstanding and disbursed 188 2,437 Disbursements 0 92 Private Sector Development 2000 2008 Total debt service 0 60
Time required to start a business (days) 255 IFC (fiscal year) Cost to start a business (%of GNIpercapita) 435.4 Total disbursed andoutstanding portfolio 0 Time required to register property(days) 57 of which iFC own account 0 Disbursements for IFC own account 0 Rankedas amajorconstraint to business 2000 2007 Portfolio sales, prepayments and (%of managers surveyed who agreed) repayments for IFC own account 0 Electricity 45.5 Access to/cost offinancing M.5 M IGA Gross exposure 0 Stock market capitalization (%of GDP) Bank capital to asset ratio (%) 129 Mi II en ni u m Development Goa Is Congo, Dem. Rep. with selected targets to achieve between 1990 and 2015 (estimate closest to date shown, % 2years)
Goal 1: halve the rates for extreme poverty and malnutritlon 1990 1995 2000 2007 Poverty headcount ratio at $125 a day (P P P, %of population) 59.2 Povertyheadcount ratio et national povertyline(%of population) Shareof incomeorconsumption to thepoorest qunitile (%) 55 Prevalence of malnutrition (%of children under 5) 33 6
Goal 2: ensure that children are able to complete primary schooling Primary schoo I enrollment (net, W) 54 33 Primarycompletion rate (%of relevant age group) 46 39 51 Seconderyschool enrollment (gross, %) 21 25 18 33 Youth literacyrate (%of people ages 5-24)
Goal 3: eliminate gender disparity In education and empower women Ratio of girls to boys in primaryand secondaryeducation(%) 80 73 Women employed in the nonagricultural sector (%of nonagricultural employment) 26 Proportion of seats held bywomen in national parliament (%) 5 5 8
Goal 4: reduce under4 mortality by two-thirds Under-5 mortalityrate (per 1,000) 200 82 l79 161 Infant mortalityrate (per lo00 live births) P7 122 116 03 Measles immunization(proportion of one-yearolds immunized,%) 3a 27 46 79
Goal 5: reduce maternal mortality by three-fourths M aternal mortalityratio (modeled estimate per 130,000 live births) 1m Births attended byskilled healthstaff (%of total) 61 74 Contraceptive prevalence (%of women ages 5-49) 8 31 21
Goal 6: halt and begin to reverse the spread of HlVlAlDS and other major diseases Prevalenceof HN(%of population ages 5-49) Incidence of tuberculosis (per 130,000 people) 85 238 343 392 Tuberculosis cases detected under DOTS (%) 40 47 61
Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improvedwatersource(%of population) 43 44 45 46 Access to improved sanitation facilities (%of population) 5 I7 25 31 Forest area(%oftotallanderea) 62 0 60 a 59 6 58 9 Nationally protected areas (%of total land area) 86 C02 emissions (metric tons per capita) 01 0.1 00 00 GDP perunit of energyuse (constant 2005 PPP $ per kgof oilequivalent) 19 1.2 09 09
Goal 8: develop a global partnership for development Telephone mainlines (per 130 people) 01 01 00 00 Mobile phonesubscribers (per '00 people) 00 00 00 136 Internet users (per '0Opeople) 00 00 00 04 Personelcomputers (per 130 people) 00 00
~~ Education indicators (Oh) Measles Immunization (K of 1-year ICT indicators (per 100 people) olds) 100 loo1 - 2o 1 25 ...... 2000 2002 2004 20062007
1990 1995 2000 2007 2000, 2002 2004 20062007 -Pnmaly ne1 snralirnent ratio (.) =,xed +mobile 8ubcdbels --&%-Ratio of girls to boys in pnmaiy a secandaly U2ongo. Dem Rep USubSahalilnAfnca education linternet use15
130 MAP SECTION
IBRD 33391R1 ° S S N 0 ° °
° 5
5 10
I
W A L A M Lake Malawi Lake Victoria UGANDA To Pakwach TANZANIA RWANDA Lake Albert To Juba a i BURUNDI n SUDAN u
Bunia Bunia B
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M M
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o K t UBANGI U UBANGI Q b i W N n O Inongo I Inongo O ÉQUATEUR É ÉQUATEUR u w Mbandaka M Mbandaka o KWILU K KWILU
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s u t - Bikoro Bikoro B u O h Bangui N e I u s Bulungu Bulungu B A e Kutu Kutu K m Imese Imese I A A Feshi Feshi F e W BANDUNDU B BANDUNDU g MAI-NDOMBE M MAI-NDOMBE KWANGO K KWANGO ANGOLA CENTRAL AFRICAN REPUBLIC
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u o i e ng d a b Kenge K Kenge w
n K m A u u d S Yumbi Yumbi Y This map was produced by the Map Design Unit of The World Bank. This map was produced by the Map Design Unit of The World The boundaries, colors, denominations and any other information Bank on the part of The World shown on this map do not imply, or any Group, any judgment on the legal status of territory, endorsement or acceptance of such boundaries. 0 1000 200 300 100 200 Miles n A a H Bandundu B Bandundu u g S n L u N I g A Y KINSHASA K N R A - T O I a T To S z E Damba C G n ° A N
CONGO a E b N 15 H A Mbanza-Ngungu Mbanza-Ngungu M C S O S
C N A I - O H S KINSHASA K KINSHASA G S A N BAS-CONGO B BAS-CONGO N I O Matadi KINSHASA CITY K KINSHASA CITY KONGO CENTRAL K a m DEM. REP. o Boma B OF CONGO To Noire Pointe- SELECTED CITIES AND TOWNS PROVINCE CAPITALS* CAPITAL NATIONAL RIVERS MAIN ROADS RAILROADS PROVINCE BOUNDARIES** BOUNDARIES INTERNATIONAL GABON OF CONGO CABINDA (ANGOLA) E ° 10 OCEAN ATLANTIC The existing 11 Province boundaries and names are shown in dark green; future light green. DEMOCRATIC REPUBLIC DEMOCRATIC N S The creation of 26 new Provinces was approved by the ratification 2005 Constitution, to take effect February, ° ° ° * 2009. The existing 11 Province Capitals, shown with green circles, will retain their status, the exception of Bandundu. Future Province Capitals are shown with white circles. ** 5 0 5
NOVEMBER 2007