Federal Republic of Nigeria Enable Youth Nigeria Appraisal Report

AFRICAN DEVELOPMENT BANK

Public Disclosure Authorized

FEDERAL REPUBLIC OF NIGERIA

ENABLE YOUTH NIGERIA

APPRAISAL REPORT

Public Disclosure Authorized

OSAN DEPARTMENT

November 2016

TABLE OF CONTENTS

Currency Equivalents………………………. ……………………………………… …i Fiscal Year……………………………………………… ………………………………i Weights and Measures ...... i Acronyms and Abbreviations…………………………………… …………………….ii Program Information Sheet ...... iv Project Summary ...... vi

1. STRATEGIC THRUST & RATIONALE………………………………………..1 1.1. Programme Linkages with Country Strategies and Objectives ...... 1 1.2 Rationale for Bank’s Involvement ...... 1

2. PROGRAMME DESCRIPTION……… ………………………… ……………3 2.1. Programme Components ...... 3 2.2 Technical Solutions Retained and Other Alternatives Explored ...... 6 2.3 Programme Type ...... 6 2.4 Programme Cost and Financing Arrangements ...... 7 2.5 Programme Area and Beneficiaries ...... 8 2.6 Participatory Approach to Programme Formulation, Design and Implementation9 2.7 Bank Group Experience, Lessons Reflected in Project Design ...... 9 2.8 Programme’s Performance Indicator ...... 10

3. PROGRAMME FEASIBILITY…… ………………………………………….11 3.1. Economic and Financial Performance ...... 11 3.2 Environmental and Social Impacts ...... 12

4. IMPLEMENTATION…………………………………………………………..14 4.1. Implementation Arrangements ...... 14 4.2 Monitoring ...... 17 4.3 Governance ...... 18 4.4 Sustainability ...... 18 4.5 Risk Management ...... 19 4.6 Knowledge Building ...... 19

5. LEGAL INSTRUMENTS AND AUTHORITY………………………… …….20 5.1. Legal Instrument ...... 20 5.2. Conditions Associated with Bank Group Intervention ...... 20 5.3. Compliance with Bank Policies ...... 20

6 RECOMMENDATION……………………………………… ………………..20

Appendix

Appendix I(a): Country Comparative Socio-Economic Indicators Appendix I (b) : Unemployment Rates by states in Nigeria Appendix II: AfDB’s portfolio in Nigeria Appendix III: Map of the Project Area Appendix IV: Similar Projects Financed by Other Development Partners in the Country Appendix V: Organizational Structure for Program Implementation Appendix VI: Project Description Appendix VII: Nigerian Incentive based Risk Sharing System for Agricultural Lending (NIRSAL PLC)

List of Tables

Table 1: Financing Plan Table 2: AfDB’s Key Financing Information (overall components) Table 3: Timeframe - Main Milestones (expected) Table 4: Result-Based Logical Framework (RBLF) Table 5: Project Timeframe Table 2.2: Technical Alternatives Considered and Reasons for Rejection Table 2.3: Project Cost Estimates by Components Table 2.3: Source of financing Table 2.5: Project Cost by Category of Expenditure Table 2.6: Category of Expenditure by Sources of Financing Table 2.7: Expenditure Schedule by Component (UA million) Table 2.8: Consideration of Lessons Learnt in Project Design Table 3.1: Summary of Sensitivity Analysis Table 4.1: Potential Risk and Mitigation Measures

List of Figures

Figure 1: The project Governance Framework

Currency Equivalents September, 2016

1 UA 1.40 US$ 1US$ 312.28 Naira 1 UA 435.43 Naira

Fiscal Year 01 January – 31 December

Weights and Measures 1 metric ton 2,204 pounds (lbs) 1 kilogramme (kg) 2.200 lbs 1 meter (m) 3.28 feet (ft) 1 millimetre (mm) 0.03937 inch (“) 1 kilometre (km) 0.62 mile 1 hectare (ha) 2.471 acres

Acronyms and Abbreviations ADF African Development Fund AfDB African Development Bank AGTF Africa Growing Together Fund AGRA Alliance for a Green Revolution in Africa APPB Annual Performance Plan and Budget APP Agricultural Promotion Policy ADWG Agriculture Donor Working Group ATA Agricultural Transformation Agenda AVC Agricultural Value Chain BDS Business Development Service CBN Central Bank of Nigeria CIDA Canadian International Development Agency CSP Country’s Strategy Paper CPM Country Portfolio Manager CPMT Country Programme Management Team CPPR Country Portfolio Performance Review DANIDA Danish International Development Agency DfID Department for International Development DPs Development Partners EIRR Economic Internal Rate of Return EU European Union RBLF Results-Based Logical Framework FAO Food and Agriculture Organisation of the United Nations FCT Federal Capital Territory FIRR Financial Internal Rate of Return FGN Federal Government of Nigeria FMARD Federal Ministry of Agriculture and Rural Development GAP Gender Action Plan GDP Gross domestic product GIZ German Technical Cooperation GoN Government of Nigeria GPRS-I Nigeria Poverty Reduction Strategy-Phase I GPRS II Growth and Poverty Reduction Strategy-Phase II IE Interim Evaluation IFAD International Fund for Agricultural Development IMF International Monetary Fund IITA International Institute of Tropical Agriculture JICA Japan International Cooperation Agency MDA Ministries, Departments and Agencies M&E Monitoring and Evaluation MGF Matching Grant Fund MOFEP Ministry of Finance and Economic Planning MSME Micro Small and Medium Scale Enterprise MTNDP Medium Term National Development Plan MTR Mid-Term Review NGO Non-Governmental Organization

NBS National Bureau for Statistics NGN Nigerian Naira NCO National Coordination Office NIRSAL Nigeria Incentive Based Risk Sharing Facility for Agricultural Lending NSC National Steering Committee PDR Programme Design Report PFI Participating Financial Institution PCR Project Completion Report QA Quality Assurance PMRRO Program Monitoring, Reporting and Remedial Office SSC State Steering Committee SIUs State Implementation Units SI Sensitivity Indicator SDF Skills Development Fund SSE Small Scale Enterprises SV Switching Value TA Technical Assistance TBD To Be Determined UA Unit of Account UNDP United Nations Development Programme UNICEF United Nations International Children’s Education Fund UNODC United Nations Office on Drugs and Crime USD United State Dollar USAID United States Agency for International Development WHO World Health Organisation

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Loan Information

Client’s information ______

BORROWER: Government of the Federal Republic of Nigeria EXECUTING AGENCY: Federal Ministry of Agriculture and Rural Development (FMARD)

Table 1. Financing plan S/N Source Amount (Million) Instrument UA US$ 1 ADB 179.32 250.00 Loan 2 AGTF 21.52 30.00 Loan 3 Federal Government of Nigeria 4.75 6.63 Own Fund 4 State Governments 48.68 67.88 Own Fund 5 NIRSAL 117.01 162.64 Own Fund 6 Beneficiaries 3.80 5.30 Own Fund TOTAL PROGRAMME COST 375.08 523.00 -

Table 2: ADB/AGTF key financing information Loan Currency USD Loan Type Fully Flexible Loan Tenor TBD (Up to 25 years inclusive of grace period) Grace period TBD (Up to 8 years) Average Loan Maturity TBD (function of the amortization profile) Repayments TBD (Consecutive semi-annual payments after grace period) Interest Rate Base Rate +Funding Cost Margin+ Lending Margin + Maturity Premium if applicable Base Rate Floating Base Rate (6-month USD LIBOR reset each 1st February and 1st August). A free option to fix the Base Rate is available. Funding Cost Margin The Bank funding cost margin as determined each 1st January and 1st July and applied to the Base Rate each 1st February and 1st August Lending Margin 80 basis points (0.8%) Maturity Premium TBD: - 0% if Average Loan Maturity <= 12.75 years - 0,10% if 12.75< Average Loan Maturity <=15 - 0,20% if Average Loan Maturity >15 years Front-end fees 0.25% of the loan amount payable at latest at signature of the loan agreement Commitment fees 0.25% of the undisbursed amount. Commitment fees start accruing 60 days after signature of the loan agreement and are payable on Payment dates Option to convert the Base Rate* In addition to the free option to fix the floating Base Rate, the borrower may reconvert the fix rate to floating or refax it on part or full disbursed amount. Transaction fees are payable. Option to cap or collar the Base The borrower may cap or set both cap and floor on the Base Rate to be applied Rate* on part or full disbursed amount. Transaction fees are payable. Option to convert loan currency** The borrower may convert the loan currency for both undisbursed and disbursed amounts in full or part to another approved lending currency of the Bank. Transaction fees are payable. * Conversion options and transaction fees are subject to the Bank Conversion Guidelines available: http://www.afdb.org/fr/documents/document/guidelines-for-conversion-of-loan-terms-july-2014-87643/ ** Loan currency conversion is not applicable under AGTF Loan.

Table 3: Project Financial and Economic Performance FIRR Programme 48% EIRR Overall Programme 32% Sensitivity Analysis Item Change NPV IRR % SI (NPV) SV(NPV) Base Case 1,314 Investment +20% 1,004.5 24.3 18.5 16.4% Benefits -20% 864.8 21.5 22.1 14.7% Implementation delays one year 927.6 26.9 16.3 13.0% SI = sensitivity indicator, SV = switching value

Table 4: Timeframe - Main Milestones (expected) Concept Note approval October, 2016 Program approval December, 2016 Effectiveness January, 2017 First Disbursement March, 2017 Completion December, 2021 Last repayment December, 2036

Project Summary 1. Project Overview

1.1 The Federal Government of Nigeria (FGN) through the present Agricultural Promotion Policy (APP: 2016-2020) has placed high priority on expanding wealth creation opportunities for youth and women as a key instrument for building agribusinesses capable of delivering sustained prosperity in domestic food security goals, exports, and supporting sustainable income and job creation. The APP (2016-2020) is anchored on three main pillars (Pillar 1: Promotion of agricultural investment; Pillar 2: Financing agricultural development programmes and Pillar 3: Research for agricultural innovation and productivity. This programme will contribute to the APP (2016-2020) strategic pillars of “Promotion of Agricultural Investment & Financing Agricultural Development Programmes”.

1.2 Nigeria’s unemployment rate is increasing, with young people experiencing higher levels of unemployment and underemployment and a much greater concentration in rural areas. In the last ten years, approximately 20 million youth entered the country’s labor market and only 20 % secured employment. As a result, the unemployment rate doubled in five years from 12.7 % in 2005 to 25% in 2013 (equivalent of more than 40 million people), with an estimated 56% of youth unemployed (National Bureau of Statistics, 2014). Besides, there is also a substantial problem of underemployment that does not support an adequate living wage: working poverty in Nigeria has reached a level of almost 60% on average and 65.3% for the youth, meaning that two thirds of young people who do have a job are living on less than USD 1.25 per day. Thus, there is a strong case for the provision of resources from the Bank to support the Country’s priority of job creation.

1.3 The proposed ENABLE Youth Nigeria Programme aims to contribute to job creation, food security and nutrition, rural income generation and improved livelihoods for youths in both urban and rural areas. The specific objective of the Program is to create business opportunities and decent employment for young women and men along priority agricultural value chains. Key impacts of the project are the real agricultural GDP growth from the present 3.09% to at least 7% per year and reduce youth unemployed by 10% by 2021 from the present 21.50%. Expected outcomes of the ENABLE Youth Program are: i) increase youth income by 40%, ii) generate 185,000 additional jobs, iii) and increase access to finance by 8%.

1.4 Overall, the programme will equip youth with various skills, values, attitudes, and orientation that will impact on their lives, the lives of others and the society in general. The project will make agriculture business attractive and provide decent employment to the youth. The programme will also influence institutional changes in terms of access to finance particularly for youth.

2. Needs Assessment

2.1 Nigeria faces ominously increasing unemployment, particularly amongst its youth prompting the Nigerian Government to prioritize this challenge. Although agriculture employs about 70% of the labour force, it accounted for only about 20% of GDP in 2016 (Central Bank of Nigeria 2016), suggesting that productivity and incomes in the sector are very low. The dwindling trend of economic prosperity among youth called for the need to diversify the economy through Agriculture. Employment trends in Nigeria also reveal that youth make up almost 40% of underemployed workers in the country. Additionally, 37.5% of youth between the ages of 15 and 34 are classified as inactive, meaning they are neither working, looking for

vi work, or in school. Development of the agriculture and rural development sector is critical to economic development of Nigeria (See Annex1: Country and Rural Context) and in achieving food security, import substitution, job creation and economic diversification in the country. Stakeholders during the ENABLE Youth workshop held in Abuja 21-22 April 2016, acknowledged the importance of this proposed intervention.

2.2 In that context, the Government of Nigeria through the Federal Ministry of Agriculture and Rural Development is exploring this opportunity for youth in agribusiness development under the ENABLE Youth Nigeria Programme. The programme has four components; 1) Enabling Environment for Youth Empowerment; 2) Entrepreneurship and Agribusiness Incubation; 3) Business Development and Financing; 4) Programme Management and Coordination. The programme will be implemented over 5 years in the 36 States and Federal Capital Territory (FCT) of the country. The programme will promote necessary reforms that will improve the ease of setting up businesses by young people, and enhance the enabling environment for youth to have equal access to resources and assets for agribusiness establishment and resultant employment generation. In addition, the programme will train youth and financially empower them through the Nigeria Incentive Based Risk Sharing Facility for Agricultural Lending (NIRSAL) by de-risking Commercial Banks to lend to them at mutually agreed and affordable interest rates after the 3-9 month agribusiness incubation and placement period, to actually setting up businesses.

3. Bank’s Added Value

The proposed intervention is in line with the Bank Group’s “HIGH 5”priorities that are crucial for accelerating Africa’s economic transformation.. It is aligned with the Bank’s Strategy for Agricultural Transformation in Africa (2016 – 2025) specifically (1) Contribute to ending Extreme Poverty by 2025; (2) End Hunger and Malnutrition by 2025; (3) Turn Africa into a Net Food Exporter by 2025; and (4) Move Africa to the top of key global agricultural value chains by 2025. The program is aligned with Pillar I - Supporting the Development of a Sound Policy Environment of the Country’s Strategy Paper (CSP) (2013-2017). The programme will promote Policy Reforms that will make youth self - dependent and be an active participant in development effort of the nation.

The programme is also consistent with the Bank’s Group Strategy for Jobs for Youth in Africa (2016-2025) and the Bank’s Ten Year Strategy (2013-2022) which pay particular attention to fragile states, agriculture and food security, and gender. Financing the proposed Programme will complement the Bank’s continued involvement and support for the agricultural sector in Nigeria. The Programme will also complement the efforts of other donors in the agricultural sector. The Bank’s experience in Nigeria and throughout Africa and lessons learned were built into the Programme design including: (i) reduction and streamlining of loan conditions for easier fulfilment; (ii) Ensure quality-at-entry to have clearer definition of components, advance preparation of a procurement plan and proper consultation during appraisal regarding implementation arrangements; (iii) ensuring proposer coordination between Federal and State Governments in the implementation of the program. The programme will support the 36 states and FCT to contribute to job creation, food security and nutrition, rural income generation and improved livelihoods for youth in rural areas.

The intervention is also aligned with the Strategy for Addressing Fragility and Building Resilience in Africa (2014-2019) which aims to place the Bank at the center of Africa’s efforts to address fragility and pave the way for a more resilient and inclusive development trajectory,

vii as well as the Gender Strategy (2014-2018) to operationalize the Bank’s commitment to gender equality as espoused in the Bank’s Ten-Year Strategy (2013–2022).

4. Knowledge Management

The experience gained from the implementation of this programme will be well documented in the various Programme reports including Programme completion reports, quarterly progress reports, audit reports, supervision reports and midterm review reports. The knowledge will be disseminated within the Bank to be applied in the design and implementation of new youth empowerment programmes. The ‘Greenfields’ and ‘Brownfields’ models proposed under the intervention hoped to enrich both business analysis and public policy discussion on investments by showing a more differentiated spectrum of entry modes for businesses. Greenfields model will create an enabling environment for decent employment of young unemployed graduates in Nigeria and a proportion of those already engaged in agribusiness under the Brownfields model. The ‘Greenfield’ and ‘Brownfield’ model could be replicated in other countries if proven successful in Nigeria.

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Table 4: Result-Based Logical Framework (RBLF) NAME OF PROGRAMME AND COUNTRY: ENABLE Youth Nigeria – Government of Federal Republic of Nigeria PROGRAMME PURPOSE: To create business opportunities and decent employment for young women and men along priority agricultural value chains Results chain Performance indicators Means of verification Risk/Mitigation Measures Indicators (including CSI) Baseline (2016) Target (2021)

Improved livelihoods Contribution to GDP Average 4.07% Growth of at least 5% per National Statistics and and reduced Annual Growth Rate year programme reports

unemployment Unemployed youths as % of 21.50% Unemployment reduced National Statistics and population by 10% programme reports Nigeria living standards

MPACT

I surveys, National household expenditures surveys Outcome 1: Generate Increased youth income Average Naira Increased in income of State statistics Risks: Policy reversal due to change in Government jobs and increased disaggregated by gender 90,000.00 beneficiaries by 40% Local Government (LGA) leadership and policy. income for youths (disaggregated by gender statistics, and age50% men & 50% Programme reports. Mitigation: Government remains committed to the women Reference surveys, studies implementation of the Agricultural Promotion Policy. Jobs generated and upgraded for the N.A 185,000 additional jobs to youth disaggregated by gender be created (disaggregated Risk: Untimely and inadequate financial contribution by by gender 50% men & the Federal and State Governments. 50% women)

Number of new agriculture-related NA At least 7,000 new Mitigation: States have already expressed eagerness to businesses established agriculture-related participate in the program. State contributions are businesses to be created mostly in kind in the form of land, which is one of the (by the 37,000 youths, readiness criteria for State participation UTCOMES some in groups)

O Outcome 2: Improved Increased access to finance by 4% Percentage of youths Programme reports. Risk: Lack of interest by commercial banks to lend to access to finance program beneficiaries (data access to Agric finance Reference surveys, studies agripreneurs NIRSAL reports disaggregated by gender) increase by 7% (disaggregated by gender CBN Bank reports Mitigation: NIRSAL has experience and good working 50% men and 50% relationship with commercial banks including Sterling, women) FCMB, UBA and Union Banks. The Banks have indicated willingness to participate in the program and NIRSAL will leverage on its existing relationships to drive the component.

NAME OF PROGRAMME AND COUNTRY: ENABLE Youth Nigeria – Government of Federal Republic of Nigeria PROGRAMME PURPOSE: To create business opportunities and decent employment for young women and men along priority agricultural value chains Results chain Performance indicators Means of verification Risk/Mitigation Measures Indicators (including CSI) Baseline (2016) Target (2021) COMPONENT A: Enabling Environment for Youth Empowerment Results chain Performance indicators Means of verification Risk/Mitigation Measures Indicators (including CSI) Baseline Target (2021) Output 1.1: Promotion Number of Greenfields and 0 20 workshops Program supervision reports; Risk: Weak policy initiatives and strategies at federal and state levels for expansion of Greenfields and Brownfield of Policy Reforms Brownfield youth employment 15 trainings Program Monitoring and Activities that will policy advocacy workshops, approaches. 5 studies Evaluation reports reduce discriminatory trainings and studies Programme reports practices in the Mitigation: Government at both level remains Mid-term review; committed to promoting enabling environment for youth

employment of women and youth in the sector Supervision reports decent employment opportunities in the agro sector. and expand wealth

creation opportunities for youths and women.

OUTPUTS Output 1.2: Enabling Number and type of graduate youth 0 At least 50 new Program supervision reports; environment for rural employment promotion initiatives in employment promotion Program Monitoring and youth to have equal participating States created and initiatives in all the States. Evaluation reports access to resources and strengthened Programme reports assets for agribusiness establishment and Mid-term review; resultant employment Supervision reports generation created COMPONENT B: Entrepreneurship and Agribusiness Incubation Results chain Performance indicators Means of verification Risk/Mitigation Measures Indicators (including CSI) Baseline Target (2021) Output 2.1: Skills Number of youths trained (data At t least 90% of youths Program supervision reports; acquired by youths disaggregated by type of training, 0 trained in agribusiness Program Monitoring and under the Greenfield gender, and age) management Evaluation reports and Brownfield skills/capacity, mindset Programme reports through internship at change, various business the incubation cnters. model and ethics Mid-term review; (disaggregated by gender Supervision reports 50% women & 50% OUTPUTS men). Output 2.2: Youths Number of youths established own 0 At least 90% trained successfully business as individuals or groups youths established own established their own business (disaggregated agribusiness by gender 50% women & 50% men).

COMPONENT C: Business Development and Financing Results chain Performance indicators Means of verification Risk/Mitigation Measures Indicators (including CSI) Baseline Target (2021) Means of verification Output 3.1: Number of youths transited to 0 At least 90% of youths Program supervision reports; Risk: Mind-set that considers youths in agriculture as failures. Participating youths successfully owners of business transited to successfully Program Monitoring and transited from (data disaggregated by gender) owners of business – Evaluation reports Mitigation: Advocate to change mind-set agribusiness interns to many constituted into Programme reports successful owners of groups disaggregated by agribusinesses gender 50% women & Mid-term review; Risk: Women may be reluctant to step forward in some 50% men. Supervision reports cultures. OUTPUTS Mitigation: Offer special incentives to women. Output 3.2: Number of agripreneurs accessing 0 At least 90% of

Agribusiness loans loans agripreneurs accessed

available and loans disaggregated by operational. gender 50% women & 50% men COMPONENT D: Programme Management and Coordination and Management Unit Results chain Performance indicators Means of verification Risk/Mitigation Measures Indicators (including CSI) Baseline Target (2021) Output 4.1: Program National Co-ordination Office and 0 1 National Coordinator, Program supervision reports; Risk: High turnover at recruitment management team personnel of the 37 States 37 State Coordinators, 1 Program Monitoring and Mitigation: established and Implementation Units Agribusiness Competitive recruitment Evaluation reports operational at federal Development Officer, 1 and state level M&E Officers, 1 Programme reports Risk: Cumbersome procurement procedures will slow Procurement officer, Mid-term review; disbursement. Supervision reports

OUTPUTS Accountants and Mitigation: Procedures simplified to ensure timely Investment/Loan Officers disbursements 2. NIRSAL’s PMO (Program 0 1 Program management Management Office) operations in office place 4.2; Procurement of Procurement completed 0 Transport and office Risk: Fulfilment of loan conditions significantly transport and office equipment; technical delayed equipment; technical assistance, studies, assistance, studies, surveys; and the Mitigation: Work out easily fulfilled loan and grant surveys; and the establishment and conditions establishment and operation of the M&E operation of the M&E system. system.

Component A: Enabling Environment for Youth Empowerment Inputs/Activities Inputs 1.1 A broad-based policy dialogue on rural youth employment in agriculture; 1.2 Coordination and partnerships with all public and private stakeholders involved Sources of Financing (UA million) in youth employment promotion; Sources Total Percent 1.3 Design of Risk-Sharing Facility to improve access to financial services; 1.4 Knowledge management and dissemination, using youth-friendly information ADB loan 179.32 47.8 and communication technologies. AGTF Loan 21.52 5.7 1.5 The States Implementation Unit (SIU) will also support public sector capacity Federal Government building to drive enabling environment reforms that will facilitate youth of Nigeria 4.75 1.3 agribusiness investments at State levels. State Governments 48.68 13 Component B: Entrepreneurship and Agribusiness Incubation Inputs/Activities Beneficiaries 3.80 1 2.1 Establish agribusiness incubation centers NIRSAL 117.01 31.2 2.2 Develop business incubation strategies; Total 375.08 100.0

2.3 Identify/explore promising ventures; 2.4 Track agribusiness start-ups to assess best practices/economic viability/expansion;

2.5 Training of youths in Agripreneurs Centers located in IITA 2.6 Agribusiness orientation designed by FMARD in partnership with IITA and the three Universities of Agriculture in Makurdi, Abeokuta and Umudike, and other identified partners.

ACTIVITIES

2.7 strong business management skill/capacity through business development Service institutions.

KEY Component C: Business Development and Financing Inputs/Activities 3.1 Develop bankable proposals of planned businesses or enterprises 3.2 Access to commercial fund as loan to grow businesses 3.3 Setting up businesses 3.4 Participating commercial Banks establishing adequate outreach in urban and rural areas 3.5 Additional funds leveraged from participating commercial banks Component D: Programme Coordination and Management Unit Inputs/Activities 4.1 Competitively recruited key personnel of the National Co-ordination Office and personnel of the 37 States Implementation Units 4.2 Plan and coordinate programme implementation activities; 4.3 Monitoring and Evaluation; 4.4 Management of relevant studies 4.5 Management of procurements

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Table 5: Programme Timeframe

2017 2018 2019 2020 2021 ACTIVITY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Signing of Loan agreements & MOUs Conducting baseline studies Prepare, approve and float Bid Documents and contract awards for Policy Reforms Enabling Environment for Youth Empowerment Entrepreneurship and Agribusiness Incubation Training of youths in Agripreneurs Centers Business Development and Financing Quarterly reports submission Annual reports submission Programme Work plans and Budgets Steering committee meetings Bank’s supervision missions Audit Mid-Term Review Program Completion Reporting Last Disbursement

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REPORT AND RECOMMENDATION OF THE MANAGEMENT OF THE ADB GROUP TO THE BOARD OF DIRECTORS ON A PROPOSED LOAN TO THE FEDERAL REPUBLIC OF NIGERIA FOR THE ENABLE YOUTH NIGERIA PROGRAMME

Management submits the following Report and Recommendation on proposed ADB loan of UA 179.32 million and AGTF Loan of UA 21.52 million to finance the ENABLE Youth Programme in Nigeria.

I. STRATEGIC THRUST & RATIONALE

1.1. Programme Linkages with Country Strategies and Objectives

1.1.1 This Program will contribute to the Nigerian Government’s Agriculture Promotion Policy (APP: 2016 – 2020) “Building on the Successes of the Agricultural Transformation Agenda (ATA)”. The goal of APP is to drive forward Federal Government’s priorities in partnership with State Governments in the following four areas: food security; import substitution; job creation; and economic diversification. The policy is anchored on three main pillars (Pillar 1: Promotion of agricultural investment; Pillar 2: Financing agricultural development programmes and Pillar 3: Research for agricultural innovation and productivity. This programme will contribute to the APP (2016-2020) strategic pillars of “Promotion of agricultural investment & Financing agricultural development programmes”.

1.1.2 The programme will also contribute to the policy shifts on youth and women by expanding wealth and job creation opportunities. The principal focus of the ENABLE Youth Nigeria Programme is to tackle graduate youth unemployment. Within the context of the programme, it is expected that the programme would generate additional 222,000 jobs targeted towards youth and women to help reduce youth unemployment and to ensure gender balance in agricultural development. These jobs would be created along agricultural value chains through training, financing, and enabling young people to go into commercial farming and to set up agribusinesses along these value chains. The programme will contribute to the Nigeria’s long term aspiration of Vision 2020 which seeks to drive Nigeria into the league of the first 20 developed economies by the year 2020.

1.1.3 The programme is aligned with Pillar I - Supporting the Development of a Sound Policy Environment of the Country’s Strategy Paper (CSP) (2012-2016). The programme will promote Policy Reforms that will make youth self - dependent and be an active participant in development effort of the nation.

1.2 Rationale for Bank’s Involvement

The rationale for the Bank to support ENABLE Youth Nigeria Programme includes the following:

i) Nigeria’s unemployment rate is increasing, youth experience higher levels of unemployment and underemployment and a much greater concentration in the rural areas. In the last ten years, approximately 20 million youth entered the country’s labour market and only 20% secured employment. As a result, the unemployment rate doubled in eight years from 12.7% in 2005 to 25% in 2013 (equivalent of more than 40 million people), (equivalent of more than 30 million people), with an estimated 56% of youth unemployed (National Bureau of Statistics, 2014). Besides, there is also a substantial problem of 1

underemployment that does not support an adequate living wage: working poverty in Nigeria has reached a level of almost 60% on average and 65.3% for the youth, meaning that two thirds of young people who do have a job are living on less than USD 1.25 per day (National Bureau of Statistics).Thus, there is a strong case for the provision of resources from the Bank to support the Country’s priority of job creation. ii) The government’s new economic strategy document has identified youth in Nigeria as entrepreneurial, yet face lower access to capital to start up and to scale up their businesses, and difficulty in accessing relevant training due to cultural or family constraints or lack of funds. iii) Among priorities emerging from the aspirations of the Country’s Agricultural Promotion Policy (APP) is the need to maximize the contributions of women and youth to agricultural production and create business opportunities. The Bank will promote youth participation in agriculture in Nigeria through the proposed programme. iv) The proposed intervention is in line with the Bank’s Group “HIGH 5”priorities that are crucial for accelerating Africa’s economic transformation.. It is aligned with the Bank’s Strategy for Agricultural Transformation in Africa (2016 – 2025). The program will contribute to the four strategic goals of the African Agricultural Transformation Agenda which includes 1. Contribute to ending Extreme Poverty by 2025; 2. End Hunger and Malnutrition by 2025, 3. Turn Africa into Net Food Exporter by 2025; and 4. Move Africa to the top of key global agricultural value chains by 2025. v) The proposed programme is fully consistent and it is one of the Flagship Action Plans of the Bank Group’s Jobs for Youth Strategy (2016-2025), which aims to provide technical and financial support to RMCs, to enable them pursue policies and plans that will contribute to better youth employment outcomes. vi) The intervention is also consistent with the Bank’s Ten Year Strategy (2013-2022) which pay particular attention to fragile states, agriculture and food security, and gender. The desired long-term outcome for the strategy is expanded economic opportunity for both male and female African youth, leading to improvements in other aspects of their lives. The programme is in line with the twin objectives of the TYS of inclusive growth and transition to green growth. vii) The intervention is aligned with the Strategy for Addressing Fragility and Building Resilience (2014-2019) in Africa which aims to place the Bank at the center of Africa’s efforts to address fragility and pave the way for a more resilient and inclusive development trajectory, as well as the Gender Strategy (2014-2018) to operationalize the Bank’s commitment to gender equality as espoused in the Bank’s Ten-Year Strategy (2013–2022).

1.3 Donors Coordination

Table: 1.3 Donor Support to Agriculture in Nigeria Players - Public Annual Expenditure (average) Government Donors AfDB: 21.5% FAO 9.7%* UA 164.3 m 821.4 m IFAD: 12.1%* WB 35.8% % Total 16.7% 83.3% Level of Donor Coordination Existence of Thematic Working Groups (this [Y] sector/sub-sector) Existence of SWAPS or Integrated Sector [Y] Approaches ADB's Involvement in Donors Coordination [M]

Key: L: Leader. M: Member but not leader. N: No involvement. Y: Yes. N: No.; *indicative announced

1.3.1 Donors co-ordination in Nigeria is managed by the National Planning Commission and the Federal Ministry of Finance in close collaboration with the Central Bank of Nigeria. In the agriculture sector, the Bank actively participates in donor coordination/harmonization activities in the country via the Agriculture Donor Working Group (ADWG). The ADWG, which is currently co-chaired by World Bank & GIZ consist of 15 members: Philanthropic Organizations (1); Bilateral Institutions (7); Financial Institutions (4); and Multi-Lateral Institutions (3). Amongst the mandate of ADWG is to promote coherence and consistency in development assistance to agriculture, through coordination of Development Partners’ support to the sector. It is aimed at achieving harmonization, promoting coordinated policy dialogue and reducing transaction costs. Intervention Pillars of the ADWG are: i) Production and Productivity Enhancement ii) Nutrition and Food Security iii) Value Chain Development/Market Access iv) Natural Resources Management/Climate Change Adaptation v) Financial Inclusion vi) Enterprise Development and vii) Rural and Agro-Infrastructure (irrigation, roads, etc.) viii) Sector Policy Reforms and Institutional Development.

II. PROGRAMME DESCRIPTION

2.1. Programme Components

Programme Components

2.1.1 The overall goal of the ENABLE Youth Nigeria Programme is to contribute to job creation, food security and nutrition, rural income generation and improved livelihoods for youths in both urban and rural areas. The specific objective of the Program is to create business opportunities and decent employment for young women and men along priority agricultural value chains of the various enterprises (aquaculture, crops framing, marketing, processing, etc).

2.1.2 Key Indicators of outcomes of the ENABLE Youth Programme include: (i) the number of new agriculture-related businesses established; (ii) and the number of jobs created by the participating agripreneurs including both Green and Brown field agripreneurs, and their disaggregation by gender, age, state, and size of business; (iii) the average annual revenues generated by the emergent businesses, and (iv) the number of businesses obtaining loans and volumes of loans from financial institutions.

2.1.3 The Programme has four components:

(i) Enabling Environment for Youth Empowerment, which aims to create an enabling environment nation-wide for decent employment of young unemployed graduates (Greenfields) and a proportion of those already engaged in agribusiness (Brownfield). The key objective here is a change in mind-set that will see agriculture as a viable business and career opportunity in which the youth can be profitably engaged. The Component has two sub-components;

Sub Component 1.1: This sub-component will promote necessary reforms that will make setting up businesses by young people relatively easy at Federal level. Activities will focus on: (a) a broad-based policy dialogue on rural youth employment in agriculture; (b) coordination and partnerships with all public and private stakeholders involved in youth employment promotion; and (c) knowledge management and dissemination, using youth-friendly information and communication technologies.

Sub Component 1.2: This sub-component is to enhance at State level the enabling environment for rural youth to have equal access to resources and assets for agribusiness establishment and resultant employment generation. The Program will build on ongoing graduate youth employment promotion initiatives in participating States in order to enhance their effectiveness, focus and outreach. The States Implementation Unit (SIU) will also support public sector capacity building to drive enabling environment reforms that will facilitate youth agribusiness investments at State levels (see Appendix VI)

(ii) Entrepreneurship and Agribusiness Incubation, will operate in a two-step manner in agribusiness incubation with (1) youth first participating in a two-week agribusiness orientation training (for both Greenfield and Brownfield agripreneurs) organized by IITA in partnership with FMARD, the three Universities of Agriculture in Makurdi, Abeokuta and Umudike, and other identified partners. (2) Youth then serve either as interns within existing or newly-formed agripreneurs groups (the Greenfield option) or are attached to an existing agribusinesses (the Brownfield option) in order to obtain additional experience in modern farming and agribusiness operations and management skills to supplement their orientation training at the incubation centers (see Appendix VI);

(iii) Business Development and Financing, which entails participating youth transiting from agribusiness interns to successful owners of agribusinesses or employees in going concerns. Financial empowerment is critical for effective transition after the 9-month (maximum) agribusiness incubation and placement period, to actually set up a business. Prior to completion of their training, agripreneurs, as individuals or in partnership, will develop bankable proposals of their planned businesses or enterprises. Under this component, Nigeria Incentive Based Risk Sharing Facility for Agricultural Lending (NIRSAL) hosted risk-sharing mechanism will leverage additional funds through participating commercial banks to lend to agripreneurs at mutually agreed and affordable interest rates (see Appendix VII and Annex C.3 and C.4); and

(iv) Programme management and coordination, which entails the day-to-day management based on adequate results measurement framework.

Table 2.1: Programme Components

Total Costs Component Component Description (UA million) 1. Enabling 14.79 This component will support creation of business enabling environment Environment for (4%) nation-wide for decent employment of young unemployed graduates Youth (Greenfields) and youth already engaged in agribusiness (Brownfield); Empowerment  Support policy advocacy and coordination activities at Federal and States level  Conduct sensitisation workshops for youth  The Program will support policy reform studies  Promotion of existing reforms for setting up businesses by young people at the Federal and State levels  Support activities that will help rural youth to have equal access to resources and assets for agribusiness establishment 2. Entrepreneurship 33.83 Agribusiness Incubation and Entrepreneurship and Agribusiness (9%)  Under this component (1) youth will participate in a two-week Incubation agribusiness orientation training (for both Greenfield and emerging Brownfield agripreneurs) and (2) Youth then serve either as interns within existing or newly-formed agripreneurs groups (the Greenfield option) or are attached to an existing agribusinesses (the Brownfield option) in order to obtain additional experience in modern farming and agribusiness operations and management skills to supplement their orientation training at the incubation centres. Key activities include:  Developing business incubation strategies;  Identify/explore promising ventures;  Track agribusiness start-ups to assess best practices/economic viability/expansion;  Training of youths in Agripreneurs Centers 3. Business 303.75 (81%) Agribusiness Financing and Risk Sharing Mechanism Development and Under this component youth will be financially empowered after the 3-9 Financing month agribusiness incubation and placement period, to actually setting up a business. Prior to completion of their training, agripreneurs, as individuals or in partnership, will develop bankable proposals of their planned businesses or enterprises. Activities envisage under this component include:  De-risking agribusiness lending through credit guarantees via the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) (Appendix VI and Annex C4 & C5).  Provision of up to $50,000 in repayable loans to agripreneurs from commercial banks and guaranteed by NIRSAL at mutually agreed and affordable interest rates.  Over 75% of the total ADB loan funds would serve as seed money / credit risk guarantee and interest drawback/rebate support via NIRSAL.  Interest rebate fund to reward good repayment behaviour by reducing the effective interest cost to a single digit interest. 4. Program 22.71 Program Coordination and supervision at Federal and States level Management & 6% This Component will provide financing for management, coordination, Coordination monitoring and evaluation at the Federal and State levels. Such activities will also leverage on the NIRSAL’s Project Monitoring Reporting and Remedial Office (PMRRO) operations under a structured technical support arrangement to monitor established field enterprise projects. Key activities include:  Competitively recruited key personnel of the National Co- ordination Office and personnel of the 37 States Implementation Units

Total Costs Component Component Description (UA million)  Plan and coordinate programme implementation activities;  Monitoring and Evaluation;  Management of relevant studies  Management of procurements Total costs 375.08

2.2 Technical Solutions Retained and Other Alternatives Explored

2.2.1 The technical solutions retained are based on criteria that will help ensure Program success and sustainability. Three technical alternatives were considered and rejected for their weaknesses in generating the expected impact on a sustainable basis. The technical solutions retained are also in line with Government preferences.

2.2.2 The technical alternative retained by the Programme is the Greenfields and Brownfields models. The reason for choosing these models is to create an enabling environment nation-wide for decent employment of young unemployed graduates (Greenfields) Nigerians and a proportion of those already engaged in agribusiness (Brownfield). While Greenfields offer maximum design flexibility to meet programme requirements Brownfields intervention will yield be quicker results with youths already engaged in agribusiness. The ‘Greenfields’ are young unemployed graduates while the ‘Brownfields’ are established and emerging existing agribusiness owners.

2.2.3 The alternative technical solutions explored and the reasons for their rejection are summarized in Table 2.2 below.

Table 2.2: Technical Alternatives Considered and Reasons for Rejection

Alternative Brief Description Reasons for Rejection Support to agripreneurs Support based on call for proposals, .Offers limited viability without link to NIRSAL support to the development of a business .Weakened by lack of guarantee and Commercial Banks plan, business plan competition and loan .Potential for creation of sustainable jobs in securing financing for businesses. rather low

Support to income- Support to financing income-generating .Such support does not ensure sustainable generating activities activities for youth improvement in the living conditions of the engaged by youth youth due to the lack of access to markets through the States .Does not address Government’s major Ministries of Agriculture. concern of resolving current unemployment crisis by tackling the issue of the large numbers of job seekers. FARA-UniBRAIN’s Equipping young graduates with The model is not desirable for this intervention approach additional soft skills through internships because it fails to encapsulate the already and industrial apprenticeships to make engaged youth in business (brownfield). them more readily employable and to also encourage them to become entrepreneurs.

2.3 Programme Type

The ENABLE Youth Nigeria programme is a programmatic investment program that will be funded through ADB and AGTF loan to the FGN. The amount of resources will be augmented as more resources become available.

2.4 Programme Cost and Financing Arrangements

2.4.1 The total Programme cost, net of taxes and customs duties, is estimated at 375.08 million Units of Account (UA), or approximately NGN 163,321 million. This cost comprises UA 202.56 million in local currency and UA 172.52 million in foreign exchange. The price contingency is UA 12.67 million. The summary of estimated costs by component, expenditure category, sources of financing as well as an expenditure schedule are presented in the tables below. Detailed Programme cost tables are presented in the Technical Annexes to this report.

Table 2.3: Programme Cost Estimates by Component

% (USD Million) (UA Million) % Total Foreign Base Components Local Foreign Total Local Foreign Total Exchange Costs 1. ENABLING ENVIRONMENT FOR YOUTH EMPOWERMENT 9.42 8.20 17.62 6.76 5.88 12.64 47 4 2. ENTREPRENEURSHIP AND AGRIBUSINESS INCUBATION 31.49 6.22 37.72 22.58 4.46 27.05 17 7 3. BUSINESS DEVELOPMENT AND FINANCING 218.06 205.46 423.52 156.39 147.35 303.74 49 84 4. PROGRAMME MANAGEMENT AND COORDINATION 9.04 17.44 26.48 6.48 12.50 18.99 66 5 Total BASELINE COSTS 268.01 237.32 505.33 192.21 170.20 362.41 47 100 Price Contingencies 14.43 3.23 17.66 10.35 2.32 12.67 18 3 TOTAL PROGRAMME COSTS 282.44 240.56 523.00 202.56 172.52 375.08 46 103

2.4.2 The programme will be financed by an ADB loan of UA 179.32 million (about USD 250.0 million), AGTF Loan of USD 30.0 million (UA 21.52 million). The Federal and State Government of Nigeria will contribute (UA 53 million) mostly in kind (in the form of making available land, training facilities, office facilities and other operating costs). NIRSAL contribution of UA 117 million will be in the form of its co-guarantee fund and Beneficiaries will contribute UA 3.8 million mainly in the form of labour. The respective contributions are as shown in Table 2.4 below.

Table 2.4: Sources of Financing (UA million) Sources Foreign Local Total Percent ADB loan 151.00 28.32 179.32 47.8 AGTF Loan 21.52 - 21.52 5.7 Federal Government of Nigeria - 4.75 4.75 1.3 State Government - 48.68 48.68 13 Beneficiaries - 3.80 3.80 1 NIRSAL - 117.01 117.01 31.2 Total 172.52 202.56 375.08 100.0

2.4.3 The cost of the Programme by category of expenditure and financing is presented in Tables 2.5 to 2.7 below:

Table 2.5: Programme Cost by Category of Expenditure

(USD Million) (UA Million) % Total % Base Local Foreign Total Local Foreign Total Foreign Costs A. GOODS 9.17 4.05 13.22 6.58 2.91 9.48 31 3 B. SERVICES 16.90 22.19 39.09 12.12 15.92 28.04 57 8

C. MISCELLANOUS 163.15 205.00 368.15 117.01 147.02 264.03 56 73 D. OPERATING COST 78.79 6.08 84.87 56.51 4.36 60.86 7 17 Total BASELINE COSTS 268.01 237.32 505.33 192.21 170.20 362.41 47 100 Price Contingencies 14.43 3.23 17.66 10.35 2.32 12.67 18 3 Total PROJECT COSTS 282.44 240.56 523.00 202.56 172.52 375.08 46 103

Table 2.6: Expenditure schedule by component (UA million) Base Cost Components 2017 2018 2019 2020 2021 Total 1. ENABLING ENVIRONMENT FOR YOUTH EMPOWERMENT 4.12 4.32 2.92 0.78 0.50 12.64 2. ENTREPRENEURSHIP AND AGRIBUSINESS INCUBATION 4.46 4.61 5.53 5.99 6.45 27.05 3. BUSINESS DEVELOPMENT AND FINANCING 38.38 63.36 88.64 66.89 46.47 303.74 4. PROGRAMME MANAGEMENT AND COORDINATION 4.45 4.22 3.46 3.39 3.47 18.99 TOTALBASELINE COSTS 51.42 76.50 100.56 77.04 56.89 362.41 Price Contingencies 0.49 1.54 2.66 3.29 4.70 12.67 TOTAL PROGRAMME COSTS 51.90 78.04 103.22 80.34 61.58 375.08

Table 2.7: Source of Finance by Category of Expenditure (UA million) Federal State AGTF ADB Beneficiaries NIRSAL Total % Category of Expenditure Gov’t Gov’t A. GOODS - 3.67 - 6.01 - - 9.68 2.6 B. SERVICES - 33.68 - - - - 33.68 9.0 C. MISCELLANOUS 21.52 125.51 - - - 117.01 264.03 70.4 D. OPERATING COST - 16.47 4.75 42.67 3.8 - 67.69 18 Total PROJECT COSTS 21.52 179.32 4.75 48.68 3.8 117.01 375.08 100

2.5 Programme’s target Area and Beneficiaries

2.5.1 Programme Area

The Programme will be implemented in all the 36 States of the Federation and FCT. All States plus FCT are eligible to be selected within two years based on readiness. Only those who meet pre-determined eligibility criteria, including evidence of support to agripreneurs, land, tax rebates, and other facilitations, including availability of training facilities in the State, will be among the first to start benefiting from the program (first served). States can start benefiting from the programme as they meet the start-up requirements. The criteria for programme start-up by the State will also include willingness and ability to provide counterpart funds and willingness and readiness to release or lease-out ‘wasting’ production/processing assets for youth entrepreneurs to take-up etc.

2.5.2 Programme Beneficiaries

The proposed programme will be implemented in all the 36 States of the Federation and FCT. The targeted beneficiaries will be in two categories. The first are unemployed young Nigerian graduates from any field of study who have finished their National Youth Service Corp (NYSC) program (Greenfield). The second are graduate youths who are already successfully engaged in agribusiness, but have no access to commercial loan to grow their businesses (Brownfields). The program will target a 50:50 male and female participation across the Federation aged 18-35 years. The number of beneficiaries of the program will depend in large part upon the outcome of the agribusiness incubation placement and successful bankable proposals. In general, it is expected that all the youth that have successfully undergone the incubation program and satisfies the

8 relevant criteria will move to the next stage of accessing the loans to set up their agribusinesses or may find employment with the private sector and the rural development community. It is expected that the bulk of the participating agripreneurs will launch agribusinesses as individuals or in partnership. Many will start moderately and grow over time. Most of the loans will be about US$50,000 maximum per business. Agripreneurs can have individual or joint businesses and these must be duly registered by Corporate Affairs Commission. The target is to reach 1,000 agripreneurs per State who will establish enterprises, as individuals (about 2,000 for both green and brown fields) and as groups of 10 – 50 (creating about 5,500 businesses). The businesses will generate about 185,000 additional jobs. Total direct jobs created by the program would reach as much as 222,000. 2.6 Participatory Approach to Programme Formulation, Design and Implementation 2.6.1 The programme identification, preparation and design was highly participatory. Broader consultation during the formulation missions was made with the Government authorities at both the Federal, States and Local Government levels, Development Partners, youths, private sector and civil society. A stakeholders’ workshop was held in Abuja on 21-22 April 2016 to build a well-grounded evidence-based understanding of the ENABLE Youth Programme Concept among key stakeholders from governments across Africa, the States of Nigeria, international development partners, agribusiness companies, finance institutions, women and youth groups.

2.6.2 The programme concept and components were discussed with the youths including women and men in poor rural communities, State governments, service providers and NGOs who all expressed keen interest to participate. State Governments, in particular, did not object to the principle of counterpart contribution to the program. Discussions were also held with representatives of the major donor community, such as, World Bank; IFAD; FAO; DFID; USAID and the Canadian International Development Agency, who indicated that the programme concept and activities were within the context of the intervention pillars of the Agriculture Donor Working Group (ADWG).

2.6.3 The participatory approach adopted during the programme formulation will be continued during its implementation. The implementation arrangement will therefore include representatives of key stakeholders to guarantee that their interests are taken into consideration at all times through collaboration.

2.7 Bank Group Experience, Lessons Reflected in Project Design

2.7.1 Lessons learned by Bank Group during implementation of its projects and those of other Development Partners in Nigeria and elsewhere have been incorporated in the design. Similarly, experiences shared with stakeholders during the project design missions, have been incorporated within the Programme. Also lessons from projects using the same concepts informed the design of this Program. The table below summarizes key lessons learnt from closed and on-going agriculture sector interventions in the country, and indicates how they have informed the design of Program.

Table 2.8: Consideration of Lessons Learnt in Project Design Lessons learnt Actions incorporated into the design of Enable Youth The need to ensure a wider coverage of programme The Enable Youth program Enable Youth is designed to intervention cover the 36 states of Nigeria including FCT.

The need for participatory and socially inclusive The organization of the stakeholders workshop that attracted formulation and implementation of development all stakeholders and their potential involvement in interventions implementing the Program would ensure ownership and sustainability after project investment period The need for decentralisation of implementation to The implementation arrangement of the Programme is a States where the projects are located using existing highly decentralized one located where the actual day-to-day organs actions are taking place and using or building capacity of existing Government systems to ensure efficiency and ownership The need for baseline survey at project start-up and The various site technical assessments carried out during the robust result oriented monitoring and evaluation preparatory stages would allow for tracking of changes, system monitoring progress, evaluating outcomes and assessing impact The need to mainstream gender and environmental The inclusivity and mainstreaming of gender and concerns (including climate change) into project environmental issues across the various components would design and activities ensure inclusiveness, as well as positive social and environmental impacts. Women and men proposed ratio for participation is 50:50

2.7.2 Taking into account experiences with similar operations funded by the Bank (e.g. Madagascar Young Rural Entrepreneurs’ Project – PROJER), Government preferences, the recommendations of the past project PCRs and Project Evaluations including internal Bank reviews, the Programme has been simplified both in conceptual terms and in the structure of activities.

2.8 Key Performance Indicators

2.8.1 Programme’s Performance Indicator Indicators of outcomes of the programme are: (i) the number of new businesses established and rural jobs generated by the graduating agripreneurs and their disaggregation by gender, age state, and size of business; and (ii) the average annual revenues of these unfolding businesses and the additional employment they provide, again interpreted in a disaggregated manner. The key performance indicators for monitoring progress in achieving Program objectives are in the Results Based Logical Framework (RBLF). 2.8.2 Output indicators for the program include number and type of policy initiatives and strategies at federal level for expansion of Greenfields and Brownfield approaches developed, number and type of graduate youth employment promotion initiatives in participating States created and strengthened, number of youth business incubation operational, number of youths trained (data disaggregated by type of training, gender, and age), number of youths established own business, number of agripreneurs accessing additional funds from commercial banks, number of agripreneurs assessing start-ups loans, and amount of NIRSAL disbursed by commercial banks (by gender and age). Baseline study is a high priority activity in this programme.

2.8.3 The annual and quarterly reports will provide information on the progress made in outputs. The mid-term review and end-of-project reports will indicate progress made towards achieving the expected project outcomes. An impact assessment study at the end of the project will focus on project achievements and issues of sustainability. 10

2.8.4 The mid-term review and the project completion reports will indicate progress made towards achieving the expected outcomes. An impact assessment study at the end of programme will focus on achievements and issues of sustainability. Supervision and mid-term reports will assist in the formulation of the second phase of the Program and contribute to knowledge building.

III. PROGRAMME FEASIBILITY 3.1. Economic and Financial Performance

Financial Analysis

3.1.1 Programme financial analysis was carried out based on Enterprise Modules envisaged for financing by the programme. The objective of the financial analysis of the programme activities is to: (i) assess the commercial viability of the proposed agricultural, livestock and value addition models representing the spectrum of youth enterprises to be funded under the Enable Youth Programme (ii) assess the relevance of tools used by the Programme; and (iii) provide a basis for the economic analysis of the Programme. The financial analysis focuses on crops, livestock and aquaculture production modules and various agro-processing enterprises. The analysis is based on prototype enterprise modules obtained from best practices documented by the Federal Ministry of Agriculture (FMARD), from field visits during design and available data from surveys conducted by on-going projects.

3.1.2 The programme is assumed to support 1,000 agripreneurs per State who will establish enterprises with an employment factor of 1:5. The target is to reach 1,000 agripreneurs per State who will establish enterprises, as individuals (about 2,000 for both green and brown fields) and as groups of 10 – 50 (creating about 5,500 businesses). The businesses will generate about 185,000 additional jobs. Total direct jobs created by the program would reach as much as 222,000.

3.1.3 The assumptions for the various enterprise models are detailed in Annex B.7. The aggregate financial benefits from crop production and other enterprises activities when computed against the investment costs for the project activities generate a FIRR of 48%. Similarly, at 25% required rate of return, the base case financial results indicate that the project is attractive to the beneficiaries as the NPV of the real net cash-flows is positive, amounting to a value of NGN24.8 billion (UA 124.95 million) for the entire programme area. A summary of the aggregate cash flow of the programme is included in Annex B7 of this report.

Economic Analysis

3.1.4 The Economic Analysis is carried out to determine the impact of the proposed programme to the economy as a whole, to justify Government intervention with public funds. The economic analysis includes most quantifiable incremental costs and benefits that are associated with the Programme's investments. The economic analysis is based on the following assumptions: (i) activities that are supported by the Programme will continue for a period of 15 years; (ii) total Programme cost without taxes and duties (economic value) is directly obtained from the budget; (iii) economic prices for imported inputs, labour (opportunity cost of labour were adjusted to reflect economic values) and outputs are used; (iv) the economic benefits and costs are in 2016

11 constant terms; and (v) the analysis assumes the opportunity cost of capital (OCC) at 12% for the incremental benefits.

3.1.5 Economic analysis is undertaken over a 15-year period. It is derived from the financial analysis by adjusting the financial prices for any market distortion that drives a wedge between the economic value and the financial values of the items. The financial value does not reflect the true economic value of a resource employed for the different modules envisaged for financing by the programme, thus the need to adjust it for distortions using conversion factors. The results of the analysis show that the programme is economically rewarding, with an economic internal rate of return (EIRR) of 32%. The analysis justifies the programme’s investments in supporting youths to undertake investment in different agricultural enterprises. The summary of the economic analysis is presented in Annex 3.

Sensitivity Analysis

3.1.6 A sensitivity analysis has been carried out to assess the impact on estimated project returns arising from changes in base case assumptions (Annex B.7). The sensitivity of the base case ENPV has been analysed for (adverse) changes in several key variables, as follows: (i) an increase in investment cost by 20% (ii) a decrease in economic benefits by 20% (iii) a delay in the period of project implementation by one year

The effects of the above changes are summarized in table 3.1

Item Change NPV IRR % SI (NPV) SV(NPV) Base Case 1, 314 Investment +20% 1,004.5 24.3 18.5 16.4% Benefits -20% 864.8 21.5 22.1 14.7% Implementation delays one year 927.6 26.9 16.3 13.0% SI = sensitivity indicator, SV = switching value

3.2 Environmental and Social Impacts

3.2.1 Environment

The proposed programme is environmentally and socially sustainable and it is categorised under category 3 of the Bank’s Environmental and Social Assessment Procedures for Public Sector Operations. The program environmental and social impacts are expected to be less adverse, and can be remedied easily, as they will mostly be site-specific. The minimal adverse environmental and social impacts may occur on new agro-processing and market infrastructure development, small-scale irrigation, ground water extraction and horticultural and livestock production and processing. Also, intensification of agricultural activities could lead to increased use of pesticides and herbicides. To mitigate any adverse effects on the environment, safeguards instruments will be prepared in compliance with Federal Government’s safeguards rules including environmental and social management plans.

3.2.2 Climate change

Technologies that will be promoted in this program will be climate smart. For the agripreneurs will learn how to utilize climate information such as rainfall, soil and air temperature, and soil

12 parameters to determine what variety of crop to cultivate. For instance use of early maturing cassava varieties for regions in Semi-Arid/Sudan savanna and Sahelian zones; and the use of improved water management schemes in rice production, etc.

3.2.3 Gender

The programme will address gender issues through mainstreaming across the project activities. The project will seek to ensure socio economic empowerment, increase the involvement of both genders in the advancement of agribusiness in Nigeria; create conditions for equitable access by men and women to project resources and increase decision-making for women along the agricultural value chain. Women entrepreneurship represents a vast untapped source of innovation, job creation and economic growth. This project will support innovative initiatives to promote women’s entrepreneurship development. The project will also promote a gender transformative approach by combining: a) Capacity building and knowledge sharing especially by facilitating women led business cooperatives/ associations and the development of their technical, leadership entrepreneurial skills; b) Strengthen gender mainstreaming of the NCO & SIU, c) Promote gender sensitive approach in Public-Private Sector agreements. The Project will also support monitoring and evaluation information activities that will be disaggregated along gender lines in the reports that would be generated.

3.2.4 Social Impact

3.2.4.1 On social impacts, the program outcomes include: (i) knowledge acquisition by the youth; (ii) connection of the youth to well organized agriculture value chains within which youth responsibilities are promoted, and that makes the local agriculture business attractive for them; and (iii) provision of decent employment to the youth.

3.2.4.2 The youth empowerment programme does not only mean to providing jobs alone to the youth but, also, extended to cover political, economic, intellectual and social power. This makes the youth to have sense of belonging. Empowerment will make the youth to be better placed to function multi-facetedly to achieve the holistic goals of the society. Youth empowerment is often addressed as a gateway to intergenerational equity, civic engagement and democracy building. Nigerian youth are change agents. Empowering them will make them to be equipped with various skills, values, attitudes, and orientation that will impact on their lives, the lives of others and the society in general.

3.2.4.3 The programme is designed to make youths to be more economically and socially responsible and self-reliant, via strong business management skill/capacity. Youth will serve as interns through attachment to existing agribusinesses to obtain additional experience in modern farming and agribusiness operations and management skills to supplement their training at incubation centers. The target is to reach 1,000 agripreneurs per State who will establish enterprises, as individuals (about 2,000 for both green and brown fields) and as groups of 10 – 50 (creating about 5,500 businesses). The businesses will generate about 185,000 additional jobs. Total direct jobs created by the program would reach as much as 222,000.

3.2.4.4 Involuntary Resettlement: The programme does not envisage any resettlement of persons since there is no provisions for major infrastructure.

IV. IMPLEMENTATION

4.1. Implementation Arrangements

4.1.1 The Executing Agency of the program is the Federal Ministry of Agriculture and Rural Development (FMARD) through its Federal Department of Agricultural Extension. FMARD will work closely with the Ministry of Youth, especially with regards to enabling youth employment policies.

4.1.2 National Steering Committee: At Federal level, a National Steering Committee (NSC) will be responsible for programme oversight, overall policy guidance and strategic direction. The NSC will be chaired by the Minister of FMARD or his/her representative, and will comprise State Steering Committee (SSC) Chairmen, Permanent Secretary level representation from the participating/relevant Federal Ministries such as Finance, Youth, Labour, Women Affairs, Environment, Commerce and Industry, IITA, NIRSAL, Job Creation Unit of the Vice President’s Office, representative of Bankers Committee, representatives of the organized private sector and value chain actors and two youth agripreneurs (one male and one female). The NSC will convene at least once a year or as determined by the chair. The NCO will be the secretariat of the NSC.

4.1.3 The National Coordinating Office (NCO): FMARD will constitute a National Coordination Office (NCO), which would be responsible for the day to day management of the program including monitoring and evaluation. The staff will be competitively recruited under performance contract. The NCO shall have very slim size, mainly a National Programme Coordinator, an Accountant, Investment Officer, Procurement officer, Agribusiness & youth development Officer and M&E specialists, who shall be recruited competitively and whose experiences and qualifications shall be acceptable to the Bank. An Interim Coordinator acceptable to the Bank will manage the programme until the recruitment of substantive coordinator, to reduce delays in programme start-up. The main functions of NCO would include:

- co-ordination of program planning, implementation and monitoring; - monitor the implementation of the annual work plan and budget, the performance of SIU and organize periodic participative reviews; - ensure quarterly and annual programme implementation reporting. - facilitate the implementation of national policy measures on behalf of FMARD; - propose the resources allocation for the implementation of the program in the States to the FSC, and ensure periodic disbursement of resources to SIUs at States level;

4.1.4 State Steering Committee: The State Steering Committee (SSC) will assure general oversight functions, including policy and strategic orientation of the program at the State level. The State Steering Committee will review and approve annual work plans and budgets. The SSC will be chaired by Honourable Commissioner of Agriculture and Natural Resources, or his/her representative, and will comprise Permanent Secretary level representation from relevant State Ministries including Finance, Youth, Women Affairs, Environment, Commerce and Industry, NIRSAL, representatives of the private sector and priority value chain actors and youth organizations. Representation quotas will include 30% for the Youth. The SSC will convene at least once a year or as determined by the chair. The SIU will be the secretariat of the NSC.

4.1.5 State Implementation Unit

At the States level, there will be State Implementation Units (SIU) in each State of the Federation including the FCT, and the SIUs will be responsible for the day to day implementation of the program. The SIU officers will be competitively recruited. NIRSAL through its Project Monitoring Reporting and Remediation Office (PMRRO) will support the SIU in monitoring and supervising the established enterprises. The staffing of the SIU comprise of State Coordinator, Youth Development and Training Officer, Agribusiness officer, M&E Officer, Accountant, Investment/Loan Officer and Procurement Officer. The main functions of SIU include:

- program planning, implementation and monitoring; - promote the development of youth agripreneurs in the priority value chains; - facilitate the organization of skill development for the youth in consultation with other actors; - liaise with State Governments and other related Ministries for the development and implementation of accompanying support e.g. training facilities, market and other rural infrastructures, incentive measures, etc.; - signing contracts with service providers and beneficiaries; - monitor the development of agripreneurs, their enterprises and commodity chains; and - report to the State Steering Committee and NCO.

Actual program implementation will be undertaken at States level. The role of the Sates is key in the implementation of the program. States Governments would ensure, amongst others youth access to operational training facilities, land and infrastructure development and other investments. The program will work with each State Government and value chain stakeholders to identify and formulate these accompanying activities. These activities will constitute the counterpart funding of the State Governments, will ensure State buy-in. It will also constitute criteria for start-up of the program in a State. These would also increase the program impact for the benefit of the youth.

4.1.6 NIRSAL’s Project Monitoring Reporting and Remediation Office (PMRRO)

NIRSAL will be in-charge of the implementation of the access to finance component 3. NIRSAL’s PMRRO will work closely with the NCO and SIUs. The SIUs will leverage on the PMRRO operations under a structured technical support arrangement to monitor established field enterprise projects. The PMRRO will provide a 360 degree enterprise support service with pre- investment decision tools, project lifecycle management and post production/market access system design and logistics (see Appendix VII). They will also play the role of interfacing between the Financial Institutions, Agricultural Value Chain Actors and the agripreneurs. The PMRROs will act as business development units by originating and monitoring the quality of loan applications.

4.1.7 Youth and Incubation Center Selection

The criteria for selection of beneficiaries have been set, and will be refined prior-to start-up of the Programme. Beneficiaries would be both young unemployed graduates and youths who are already successfully engaged in business, who have completed national youth service, but within the eligible age bracket (18-35 years). A draft Program Implementation Manual has been developed, and contains amongst others a Terms of Reference (TOR) for the selection of the young graduates, existing successful agribusiness firms who will mentor youths in their chosen value chain and the selection of incubation centers. Appendix C1 shows the selection criteria. 15

4.1.8 Role of IITA in the ENABLE Youth Program

IITA will serve as a partner in the development of the training content in collaboration with mandate national institutions especially with the Universities of Agriculture in Makurdi, Abeokuta and Umudike. They will also serve as Incubation centers for training the agripreneurs. Other Business Development Service (BDS) providers would also be considered in developing the business management content of this training particularly the private sector. The programme will promote development partnerships with the private sector to support actors within the agricultural value chains. Annex C.C2.

Procurement Arrangements

4.1.9 Procurement of goods (including non-consultancy services) and the acquisition of consulting services, financed by the Bank for the project, will be carried out in accordance with the “Procurement Policy and Methodology for Bank Group Funded Operations” (BPM), dated October 2015 and following the provisions stated in the Financing Agreement. Specifically, Procurement would be carried out following the Bank Procurement Policy and Methodology (BPM): Bank standard Procurement Methods Procedures (PMP), using the relevant Bank Standard Solicitation Documents (SDDs), will be used for Open Competitive Bidding (OCB) at national and International level, Limited Competitive Bidding (LCB), Direct Contracting (DP) comprising contracts for goods, Non-consulting services and Acquisition of Consulting Services as indicated in the Technical Annex B5, Para. B.5.3

4.1.10 Procurement Risks and Capacity Assessment (PRCA): the assessment of procurement risks at the Country, Sector, and Project levels and of procurement capacity at the Executing Agency (EA), were undertaken1 for the project and the output have informed the decisions on the procurement regimes (Banks PMP) being used for specific transactions or groups of similar transactions under the project. The appropriate risks mitigation measures have been included in the procurement PRCA action plan proposed in Annex B5, Para. 5.9.

Financial Management Reporting, Auditing and Disbursement

Financial Management

4.1.11 The Bank’s Fiduciary Risk Assessment (FRA) conducted for the Federal Republic of Nigeria (at the Federal level) in March 2016 concluded that the overall fiduciary risk for the country was high. The project will however be implemented primarily by each of the 36 States and Federal Capital Territory whose Public Financial Management (PFM) systems are independent of the Federal level and whose individual Fiduciary Risk Assessments (FRAs) are yet to be conducted by the Bank. In light of this, it was decided to ring fence financial management of the program, with project resources set to be managed primarily by the NCO (to be established) and the SIUs (also to be established), as well as a separate component to be managed by NIRSAL’s PMRRO. Each of the entities tasked with managing the project will require qualified project financial management staff. The project accountant should be capable of maintaining accurate accounting records in compliance with International Public Sector Accounting Standards (IPSAS - accrual basis), which is the prescribed framework for financial

1 See Technical Annexes for details 16 reporting in the Public Sector in Nigeria. Each entity’s accounting system will be computerised using conventional accounting software that the Project Accountant is familiar with in each case, and will be backed by a Programme Accounting Procedures Manual. On a quarterly basis, interim unaudited financial reports (IFRs) will be produced by each entity, and submitted to the Bank within 30 days of the end of the quarter reported on. In addition to its own quarterly IFR, the NCO will be required to construct an overall project position by consolidating the IFRs of all the entities into one.

Disbursement Arrangement

4.1.12 The program will have access to three disbursement methods: Special Account, Direct Payment and Reimbursement as prescribed in the Bank’s Disbursement Handbook. NIRSAL and the NCO will each open a segregated USD Special Account as well as Naira denominated operational accounts paired to the Special Accounts. The accounts will be opened at the Central Bank of Nigeria. The individual State SIUs and the FCT would also open project accounts for the purpose of receiving funds from NCO in commercial banks acceptable to the Bank. Larger disbursements to contractors, suppliers and consultants will be by direct payment where possible. Replenishments will be in accordance with the Bank’s Disbursement Handbook, details of which will be specified in the project Disbursement Letter.

Audit

4.1.13 In terms of the Nigerian Constitution, the Office of The Auditor General of the Federation and State Auditor Generals are responsible for the audits of the Federal and State Governments expenditures respectively, inclusive of funds sourced from donors. In practice however, the Auditor Generals normally outsources the audit of donor financed projects to acceptable independent private audit firms, on terms of reference acceptable to the Bank. The audited financial statements and associated management letters relating to the transactions of the NCO and each SIU shall be submitted separately (with a consolidated project position to be produced by NCO) to the Bank within six months of the end of each financial year audited. See Technical Annex B. B4 for Financial Management and Disbursement Details 4.2 Monitoring 4.2.1 The Monitoring and Evaluation Unit of FMARD will be responsible for the overall monitoring and evaluation of Program activities. In the program, M&E experts will be recruited at both the Federal and State level to plan, monitor and evaluate key project outcomes and output results. The M&E Officer at the NCO will consolidate data and provide guidance to the M&E Officers in the SIU at the States level. The key functions of the M&E Officers will be to regularly track, document and report the program progress and results; facilitate knowledge building; and share knowledge on monitoring and evaluation. All SIUs will develop monitoring plans based on the Program’s Results-Based Logical Framework (RBLF). In using the performance indicators and targets specified in the RBLF, program implementers tracking progress towards achievement of results, are expected to record changes that reflect advancement towards the translation of outputs into development outcomes. In developing monitoring and planning indicators, they would be disaggregated by age, gender and State. The RBLF will form the basis for measuring outputs, outcomes and impact. Supported by the M&E teams, the NCO will prepare: (i) Annual Work Program and Budgets; (ii) Quarterly Progress Reports; (iii) Mid-year Progress Reports; (iv) Annual Progress Reports; (v) Status Reports for Supervision Missions; (vi) Mid-term Review Report; and (vii) Project Completion Report. A Monitoring Information System will be established to track data throughout the program life cycle.

4.3 Governance

4.3.1 Project Governance provides the structure through which the objectives of the project are set, and the means of attaining those objectives and monitoring performance are determined. Based on Bank’s experience in implementing projects in Nigeria, the existing governance practices and controls have been deemed satisfactory. The implementation of the programme requires good governance at all levels from Federal to State to Local Governments including FMARD, NCO, SIU and States’ Ministries of Agriculture and NIRSAL Project Management Office. This is in relation to better responsiveness, transparency, accountability and efficiency in the use of resources. Hence, the institutional arrangement has been designed to ensure good governance, and will serve as an instrument for achieving Program objectives.

4.3.2 The Public Procurement Act 2007 established the Bureau of Public Procurement in Nigeria as the regulatory authority responsible for the monitoring and oversight of public procurement, harmonizing the existing government policies and practices by regulating, setting standards and developing the legal framework and professional capacity for public procurement in Nigeria. The Bureau of Public Procurement has established general policies and guidelines relating to public sector procurement, and for supervising procurement implementation as well as reviewing the procurement and award of contract procedures of every public entity to which the Public Procurement Act applies, including certifying all Federal wide procurement (subject to the Bureau’s prior review) prior to the award of contracts.

4.4 Sustainability

4.4.1 There is ample scope to increase agricultural productivity and value-addition, the profitability of medium-scale rural enterprises and thus economic advancement among Nigerian youth.The programme will support agripreneurs with sustainable climate smart technologies, that can broaden their options to better capture market opportunities while reducing risks and/or strengthening their capacity to manage them. The programme will be driven at the State level to ensure full ownership and sustainability. At close of the program, NIRSAL in collaboration with each State will be expected to draw up a suitable private sector driven framework to continue with the program on a revolving basis. (See Annex C.3).

4.4.2 The programme design includes an exit strategy and institutional mechanisms to ensure sustainability of the interventions at Federal and State levels. The design includes coordination, policy dialogue and knowledge management, as well as access to finance in the agricultural sector through the Risk-Sharing Facility under NIRSAL, which will encourage Commercial Banks’ lending. The involvement of private sector actors (agro-industrials and input/output wholesalers) farmer associations/organizations and agripreneurs towards the advancement of local and strategic commodity value chains, ensures a fair distribution of benefits amongst all stakeholders. The requisite gender balance among agripreneurs will ensure economic advancement of women, and will make the programme socially and economically attractive. The programme designs ensures that agripreneurs are adequately linked to ready markets.

4.4.3 In addition, NIRSAL credit guarantees will encourage lending from Commercial Banks, by de-risking lending to the agripreneurs. The guarantee fund will leverage commercial finance, while preserving the seed capital. At the end of the programme, the relationship between the youth, market and financial institutions would have been strengthened to a self-sustaining level. At this point, the youth, exiting from the programme, would have built sufficient relationships

18 and equity/collateral assets to make them attractive enough to financial institutions and as well as the wider value chain actors in the market.

4.5 Risk Management

The Program Result Based Logframe has identified certain risks and proposed some mitigation measures summarized in Table 4.1.

Table 4.1: Potential Risks and Mitigation Measures

Risks Rating1 Mitigation Measures Macroeconomic instability caused by Improved diversification of GDP, production and external (international financial/ food H exports resulting from improved agricultural enterprises crisis) and internal shocks (poor rains and supported by the program contributing to a better prices) negatively affecting productivity. performance of the MSME industrial, agro-processing and other non-oil sectors. Policy reversal due to change in Government remains committed to the implementation Government leadership and policy. M of the Agricultural Promotion Policy. Exposure to tax by micro and small Government deliberate policy improvement in favour businesses due to registration of M of micro and small businesses. businesses. Weak policy initiatives and strategies at H Government at both level remains committed to federal and state levels for expansion of promoting enabling environment for youth decent Greenfields and Brownfield approaches. employment opportunities in the agro sector. Non-payment of counterpart funds by the M Government and States contribution is mainly in kind Federal and states (land, training facilities etc). Commercial bank’s lack of interest in L NIRSAL has experience and good working relationship lending to youth agripreneurs with commercial banks including Sterling, FCMB, UBA and Union Banks. The Banks have indicated willingness to participate in the program and NIRSAL will leverage on its existing relationships to drive the finance component. Beneficiaries defaulting from the loan M NIRASL and Commercial Banks designed mechanisms repayment to minimise credit risk 1M = Medium; L = Low; H= High

4.6 Knowledge Building

4.6.1 The programme has great potential in creating new cognitive artefacts as a result of new agribusiness opportunities, mind-set change and various business models. The programme will contribute to the five competencies of a healthy youth: (i) positive sense of self, (ii) self- control, (iii) decision-making skills, (iv) a moral system of belief, and (v) pro-social connectedness. The Greenfield and Brownfield approach of the programme will provide an in-depth understanding of agribusiness learning cycle that will prepares youth for the establishment of their own agribusiness. The programme will help youth build skills to enable them overcome economic and social barriers. The programme will support training, financing, and enabling youth, whether educated or uneducated to go into commercial farming and to set up agri-businesses along the agricultural value chains. Empowering youth would maximize their chance to contribute to a nation's economic, social and cultural advancement.

V. LEGAL INSTRUMENTS AND AUTHORITY

5.1. Legal Instrument

The legal instruments to finance this programme are an ADB loan agreement for UA 179.32 million and an AGTF loan of UA 21.52 million between the Federal Republic of Nigeria and the Bank.

5.2. Conditions Associated with Bank Group Intervention

The following loan conditions are envisaged:

5.2.1 Conditions Precedent to entry into force of the Loan Agreement. It shall be a condition precedent to entry into force of the Agreement that the Borrower shall have fulfilled the conditions of sections 12.01 of the General Conditions of the Bank Applicable to Loan Agreements and Guarantee Agreements.

5.2.2 Other Conditions

(a) The Borrower, shall provide evidence of opening a Special Account in the Central Bank of Nigeria, where disbursements from the Bank will be deposited

(b) Provide evidence to the Bank, within 3 months of signature of this Agreement, of having recruited the Programme Coordinator, Procurement expert and Accountant, whose qualifications are satisfactory to the Bank.

(c) Not later than three months from the date of loan effectiveness, the Borrower shall submit a Memorandum of Understanding signed between the Borrower and NIRSAL, with respect to the management of the credit risk guarantee fund for youth agribusinesses described under component 3 of the Program.

(d) Not later than three months from the date of loan effectiveness, the Borrower shall submit a Memorandum of Understanding signed between the Borrower and the International Institute of Tropical Agriculture (IITA), for the coordination of the youth training and incubation activities specified in Component 2 of the Program.

5.3. Compliance with Bank Policies

 This program complies with all applicable Bank policies.  Non-standard conditions (if applicable): N/A

VI. RECOMMENDATION

Management recommends that the Board of Directors approve an ADB loan of UA179.32 million and an AGTF loan of USD 30.0 million (equivalent to UA21.52 million) to the Federal Republic of Nigeria, for the purposes and subject to the conditions stipulated in the present report.

Appendices Appendix I (a) NIGERIA COMPARATIVE SOCIO-ECONOMIC INDICATORS

Develo- Develo- Year Nigeria Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2014 924 30,067 80,386 53,939 Total Population (millions) 2014 178.5 1,136.9 6.0 1.3 3000 Urban Population (% of Total) 2014 51.5 39.9 47.6 78.7 2500 Population Density (per Km²) 2014 193.2 37.8 73.3 24.3 2000 GNI per Capita (US $) 2013 2 710 2 310 4 168 39 812 1500 Labor Force Participation - Total (%) 2014 56.2 66.1 67.7 72.3 1000 Labor Force Participation - Female (%) 2014 42.4 42.8 52.9 65.1 500

Gender -Related Dev elopment Index Value 0

2008 2012 2005 2007 2009 2010 2011 2013 2007-2013 0.839 0.801 0.506 0.792 2000 Human Dev elop. Index (Rank among 187 countries) 2013 152 ...... Popul. Liv ing Below $ 1.25 a Day (% of Population)2008-2013 62.0 39.6 17.0 ... Nigeria Africa Demographic Indicators Population Grow th Rate - Total (%) 2014 2.8 2.5 1.3 0.4 Population Grow th Rate - Urban (%) 2014 4.0 3.4 2.5 0.7 Population < 15 y ears (%) 2014 44.4 40.8 28.2 17.0 Population Growth Rate (%) Population >= 65 y ears (%) 2014 2.7 3.5 6.3 16.3 3.0 Dependency Ratio (%) 2014 85.8 62.4 54.3 50.4 Sex Ratio (per 100 female) 2014 103.7 100.4 107.7 105.4 2.5 Female Population 15-49 y ears (% of total population) 2014 22.5 24.0 26.0 23.0 2.0 Life Ex pectancy at Birth - Total (y ears) 2014 52.9 59.6 69.2 79.3 1.5 Life Ex pectancy at Birth - Female (y ears) 2014 53.2 60.7 71.2 82.3 1.0 Crude Birth Rate (per 1,000) 2014 40.9 34.4 20.9 11.4 0.5 Crude Death Rate (per 1,000) 2014 12.9 10.2 7.7 9.2

0.0

2000 2009 2011 2014 2008 2010 2012 2013 Infant Mortality Rate (per 1,000) 2013 74.3 56.7 36.8 5.1 2005 Child Mortality Rate (per 1,000) 2013 117.4 84.0 50.2 6.1 Total Fertility Rate (per w oman) 2014 5.9 4.6 2.6 1.7 Nigeria Africa Maternal Mortality Rate (per 100,000) 2013 560.0 411.5 230.0 17.0 Women Using Contraception (%) 2014 15.2 34.9 62.0 ...

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2004-2012 40.8 46.9 118.1 308.0 Life Expectancy at Birth Nurses (per 100,000 people)* 2004-2012 160.5 133.4 202.9 857.4 (years) Births attended by Trained Health Personnel (%) 2009-2012 48.7 50.6 67.7 ... 80 Access to Safe Water (% of Population) 2012 64.0 67.2 87.2 99.2 70 60 Healthy life ex pectancy at birth (y ears) 2012 46.0 51.3 57 69 50 Access to Sanitation (% of Population) 40 2012 27.8 38.8 56.9 96.2 30 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 2013 3.2 3.7 1.2 ... 20 Incidence of Tuberculosis (per 100,000) 10

2013 338.0 246.0 149.0 22.0 0

2009 2013 2005 2008 2010 2011 2012 2014 Child Immunization Against Tuberculosis (%) 2013 80.0 84.3 90.0 ... 2000 Child Immunization Against Measles (%) 2013 59.0 76.0 82.7 93.9

Underw eight Children (% of children under 5 y ears) 2005-2013 31.0 20.9 17.0 0.9 Nigeria Africa Daily Calorie Supply per Capita 2011 2 724 2 618 2 335 3 503 Public Ex penditure on Health (as % of GDP) 2013 1.1 2.7 3.1 7.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2011-2014 84.8 106.3 109.4 101.3 Primary School - Female 2011-2014 81.0 102.6 107.6 101.1 Infant Mortality Rate Secondary School - Total 2011-2014 43.8 54.3 69.0 100.2 ( Per 1000 ) Secondary School - Female 2011-2014 41.2 51.4 67.7 99.9 120 Primary School Female Teaching Staff (% of Total) 2012-2014 48.2 45.1 58.1 81.6 100 Adult literacy Rate - Total (%) 2006-2012 51.1 61.9 80.4 99.2 80 Adult literacy Rate - Male (%) 2006-2012 61.3 70.2 85.9 99.3 60 Adult literacy Rate - Female (%) 2006-2012 41.4 53.5 75.2 99.0 40 Percentage of GDP Spent on Education 2009-2012 ... 5.3 4.3 5.5 20

2000 2009 2013 2008 2010 2011 2012 Environmental Indicators 2005 Land Use (Arable Land as % of Total Land Area) 2012 38.4 8.8 11.8 9.2 Agricultural Land (as % of land area) 2012 0.8 43.4 43.4 28.9 Forest (As % of Land Area) 2012 9.0 22.1 28.3 34.9 Nigeria Africa Per Capita CO2 Emissions (metric tons) 2012 0.5 1.1 3.0 11.6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : May 2016 UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports. Note : n.a. : Not Applicable ; … : Data Not Available.

Appendix I (b) Unemployment Rates by states in Nigeria 2002-2011

State 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Abia 14.8 11.4 9.7 7.9 13.5 10.9 14.5 14.5 15.5 11.2 Adamawa 12.9 11.9 16.7 21.4 17.9 11.9 29.4 29.4 31.4 18.4 A/Ibom 12.3 14.4 14.4 14.4 15.3 13.5 34.1 34.1 36.1 18.4 Anambra 6.6 9.1 9.5 9.8 10.8 11.1 16.8 16.8 17.8 12.2 Bauchi 10.4 20.5 25.1 29.7 23.9 7.3 37.2 37.2 39.2 41.4 Bayelsa 3.5 7.1 14.0 20.9 16.0 6.9 38.4 38.4 40.4 23.9 Benue 8.2 4.8 11.7 18.6 10.8 67.4 8.5 8.5 9.5 14.2 Borno 6.4 0.8 3.6 6.3 5.8 7.8 27.7 27.7 29.7 29.1 C/River 7.9 12.0 11.5 11.1 16.9 11.8 14.3 14.3 15.3 18.2 Delta 14.9 17.1 10.8 4.5 13.8 18.9 18.4 18.4 20.8 27.2 Ebonyi 2.8 16.7 11.8 7.0 10.9 11.5 12.0 12.0 13.0 23.1 Edo 4.8 3.1 6.5 9.9 8.6 5.1 12.2 12.2 13.2 35.2 Ekiti 17.5 8.2 7.9 7.5 8.7 15.6 20.6 20.6 22.6 12.1 Enugu 15.2 16.5 21.6 27.4 20.0 11.5 14.9 14.9 15.9 25.2 Gombe 13.4 7.6 15.2 22.8 15.6 10.5 32.1 32.1 34.1 38.7 Imo 19.9 22.1 19.3 16.5 21.5 7.6 20.8 20.8 22.8 35.9 Jigawa 6.1 20.5 19.8 19.1 21.6 17.4 26.5 26.5 28.5 35.9 Kaduna 8.4 19.6 15.9 12.1 14.1 5.9 11.6 11.6 12.6 30.3 Kano 12.8 25.9 22.5 19.1 19.4 12.7 27.6 27.6 29.6 21.3 Katsina 10.4 20.3 22.1 23.8 19.3 5.8 37.3 37.3 39.3 28.1 Kebbi 12.3 19.8 19.9 19.9 15.2 11.8 12.0 12.0 13.0 25.3 Kogi 19.9 14.9 11.8 8.7 12.5 16.5 19.0 19.0 21.0 14.4 Kwara 8.8 5.4 4.2 2.9 7.5 16.4 11.0 11.0 12.0 7.1 Lagos 8.0 25.6 16.1 6.5 15.5 10.2 19.5 19.5 20.5 8.3 Nasarawa 1.6 5.1 6.9 8.7 8.1 7.6 10.1 10.1 11.1 36.5 Niger 6.3 6.7 3.5 0.2 3.6 17.0 11.9 11.9 12.9 39.4 Ogun 9.2 1.3 1.9 2.5 2.3 3.9 8.5 8.5 9.5 22.9 Ondo 16.8 7.3 6.8 6.2 6.7 5.8 14.9 14.9 16.9 12.5 Osun 1.0 0.4 1.2 1.9 2.7 6.3 12.6 12.6 13.6 3.0 Oyo 7.0 0.8 3.1 5.3 4.3 6.5 14.9 14.9 15.9 8.9 Plateau 11.8 0.4 1.6 2.8 2.9 8.7 7.1 7.1 8.1 25.3 Rivers 6.6 15.3 11.2 7.0 25.0 4.7 27.9 27.9 29.9 25.5 Sokoto 4.1 4.9 4.5 4.1 6.4 12.1 22.4 22.4 24.4 17.9 Taraba 16.8 23.8 13.6 3.4 14.0 5.9 26.8 26.8 28.8 12.7 Yobe 15.0 12.1 10.7 8.0 13.6 19.9 27.3 27.3 29.3 35.6 Zamfara 46.4 71.5 61.3 51.1 50.8 12.8 13.3 13.3 14.3 42.6 FCT 14.4 5.3 5.9 6.5 16.4 16.4 21.5 21.5 23.5 21.1 Nigeria 12.6 14.8 13.4 11.9 13.7 14.6 19.7 19.7 21.5 23.9 Source: NBS (2010); CBN Annual Report and Statement of Account (various issues)

Appendix II Table of ADB’s portfolio in Nigeria

AFRICAN DEVELOPMENT BANK - NIGERIA COUNTRY OFFICE (ORNG)

ON-GOING PORTFOLIO: NIGERIA

PUBLIC SECTOR 30th MARCH 2016

Sub-Sector Loan Numbers Number Net amount Share of Amount Disbur 't Rate Closing Date Finance Status Grant Numbers of Approved Portfolio Disbursed Last Date of Source Projects (UA) (UA) Disbur't

AGRICULTURE 2 138,930,000 13% 34,800,591 25.05%

CGIAR: SUPPORT TO AGRICUTURAL RESEARCH FOR 2100155022217 1 34,800,591 87.22% 18/03/2009 31/12/2016 ADF Ongoing DEVELOPMENT OF STRTEGIC CROPS IN AFRICA (SARD-SC) 39,900,000 - AGRICULTURAL TRANSFORMATION AGENDA (ATASP 1) 2100150029994 1 5.38% 29/12/2018 ADF Ongoing 99,030,000 - 5,324,836.1 30/10/2013 INFRASTRUCUTURE 10 866,292,800 80% 561,269,645 64.79% RURAL WATER SUPPLY AND SANITATION SUB- 2100150015645 1 51,000,000 54.01% 10/10/2007 31/12/2014 ADF Ongoing PROGRAMMES (OSUN & YOBE - RWSS) - 27,544,626 URBAN WATER SUPPLY AND SANITATION PROJECT FOR 2100150025696 1 50,000,000 27.44% 02/09/2009 30/04/2016 ADF Ongoing OYO AND TARABA STATES (UWSSP) - 13,717,599 ZARIA WATER SUPPLY AND SANITATION PROJECT 2100150026597 1 63,920,000 28.66% 08/02/2012 31/12/2015 ADF Ongoing - 18,321,187 URBAN WATER SECTOR REFORM AND PORT-HARCOURT 2100150025696 1 134,800,000 0.00% 26/3/2014 31/8/2019 ADB/ADF Ongoing WATER SUPPLY AND SANITATION PROJECT - - ECONOMIC AND POWER SECTOR REFORM PROGRAM 2100150027946 1 100,000,000 100.00% 28/10/2009 31/12/2013 ADF Ongoing (EPSERP) - 100,000,000 TRANSPORT SECTOR AND ECONOMIC GOVERNANCE 2000130009730 1 195,050,000 195,050,000 100.00% 27/05/2013 31/12/2015 ADB Ongoing (TSERP) - RURAL ACCESS MOBILITY PROJECT CROSS RIVER STATE- 2100150014595 1 35,270,000 88.23% 18/07/2007 30/12/2013 ADF Ongoing (CR-RAMP) - 31,120,036 TRANSPORT FACILITATION PROGRAMME FOR THE 2100150019643 1 98,092,800 52,273,107 53.29% 25/11/2008 31/12/2014 ADF Ongoing BAMENDA-- MAMFEABAKALILKI ENUGU CORRIDOR- - Nigeria(NCH&TFP)

III

TRANSPORT FACILITATION PROGRAMME FOR BAMENDA- 2100155015166 1 16,160,000 1,243,089 7.69% 25/11/2008 31/12/2014 ADF Ongoing MAMFE- ABAKALIKI ENUGU CORRIDOR-ECOWAS (NCH&TFP) - PRG-PARTIAL RISK GUARANTEE FOR NIGERIA POWER NA 1 122,000,000 100.00% 18/12/2013 04/01/2017 ADF Ongoing SECTOR PRIVATIZATION PROGRAM [Capacity Building - 122,000,000 Component] SOCIAL SECTOR 4 43,320,000 4% 35,232,167 81.33% SKILLS TRAINING AND VOCATIONAL EDUCATION (STVEP) 2100150010394 1 30,000,000 76.55% 27/07/2005 30/11/2015 ADF Ongoing - 22,963,741 SUPPORT TO NETWORK OF REGIONAL AFRICAN 2100155014816 1 12,000,000 10,948,426 91.24% 18/03/2009 31/12/2014 ADF Ongoing INSITUTIONS OF SCIENCE AND TECHNOLOGY (AUST &2iE) - PROJECT NIGERIA - EMERGENCY ASSISTANCE TO BORNO STATE TO 5000199003568 1 660,000 100.00% 21/07/2014 30/9/2015 SRF Ongoing REHABILITATE & PROMOTE SAFE SCHOOLS FOR GIRLS - 660,000.0 EDUCATION (SSI) (Equivalent of USD 1,000,000) - CHIBOK EBOLA - EMERGENCY ASSISTANCE TO FIGHT EBOLA VIRUS 5000199003619 1 660,000 100.00% 18/08/204 30/12/2015 SRF Closed DISEASE EPIDEMIC (SRF) - 660,000.0 ENVIRONMENT 2 30,000,000 3% 16,555,913 55.19% LAKE CHAD BASIN SUSTAINABLE DEVELOPMENT 2100155013766 1 30,000,000 16,555,913 55.19% 12/12/2008 31/12/2015 ADF Ongoing PROGRAMME/PROGRAMMEDE DEVELOPPEMENT DURABLE - DU BASSIN DU LAC TCHAD(PRODEBALT) LAKE CHAD BASIN SUSTAINABLE & RESILIENCE Project Not yet 1 0.00% 17/12/2014 TBD ADF Not yet DEVELOPMENT PROGRAMME/PROGRAMMEDE Started in - - - Efective DEVELOPPEMENT DURABLE DU BASSIN DU LAC Nigeria TCHAD(PRESIBALT) New Program POLICY BASED NON-LENDING 5 1,355,466 0% 646,031 47.66% CAPACITY DEVELOPMENT PROGRAM FOR MEMBERS OF 5500155007252 1 144,755 144,755 100.00% 28/03/2014 30/04/2016 MIC Closed THE NATIONAL ASSEMBLY COMMITEES ON FINANCE, - APPROPRIATION &AID, DEBTS& LOANS(MIC-TAF GRANT) ASSET MAPPING OF ECONOMIC OPPORTUNITIES (MIC- TAF) 5500155007901 1 513,000 74.28% 14/01/2014 30/06/2016 MIC Ongoing - 381,067 TRADE MISPRICING, HIDDEN DRAINAGE OF RESOURCES 5500155008452 1 65.33% 16/02/2015 30/06/2015 MIC Ongoing OUT OF NIGERIA (MIC-TAF) 184,000 - 120,208.95

ADVISORY SUPPORT TO FMARD STAPLE CROP PROCESSING 5500155009551 1 0% 05/08/2015 30/04/2016 MIC Ongoing ZONE INITIATIVE (SCPZ) 367,700 - -

NIGERIA EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (NEITI) 1 146,011 0.00% 01/08/2016 30/6/2017 MIC Ongoing - -

TOTAL PUBLIC SECTOR 23 1,079,898,266 100% 653,448,116 60.51%

Appendix III

Map of the Project Area

Appendix IV

Similar Projects Financed by Other Development Partners in the Country

Intervention Project Name Donor Geographic Scope Financing Pillar Production and Program for Biosafety (PBS) - USAID National $1 million Productivity policy development and Enhancement implementation of agricultural biotechnology West Africa Agricultural WB National $45 million Productivity Project (WAAPP) Nutrition and Food Support to Scale up Maternal and EU Kebbi and Adamawa $32 million Security New born Child Health in Northern States Nigeria Strengthening Nigeria National FAO National $0.5 million Food Control System and Safety Feed the Future Livelihoods Project USAID Sokoto, Kebbi, and FCT $20 million Famine Early Warning Systems USAID $1.25 million Network (FEWSNET) Value Chain Rubber Out-growers project in AFD Ondo, Ogun, Delta, Edo $100 million Development/ Southern states (ROPSS) Market Access Market Development for the DFID Niger Delta $22 million Niger Delta (MADE) Agricultural Transformation AfDB Enugu, Anambra, Niger, $20 million Agenda Support Program Kebbi, Sokoto, Kano, Phase-I (ATASP-I) Jigawa Strengthening Agricultural FAO Rivers, Lagos, Niger, Imo, $0.6 million Market Information Systems Katsina and Bauchi States (AMIS) Competitive African Rice BMZ, Nigeria: $20.6 million Initiative (CARI) BMGF, Kogi, Niger, Kebbi, Kano, Regional Walmart (Jigawa, Kaduna, Traba, Foundation Adamawa) Ghana, Tnazania Brukina Faso Value Chain Commercial Agriculture WB Lagos, Cross River, Enugu, $150 million Development/Market Development Programme Kano, Kaduna Access Fadama III Additional Financing WB Anambra, Enugu, Kano, $200 million (FADAMAIII/AF) Kogi, Lagos, Niger Pro-poor Growth and BMZ Plateau, Niger, Ogun $7 million Employment Promotion in Nigeria (SEDIN) Value Chain Support IFAD Anambra, Benue, Ebonyi, $74.5 million Programme (VCDP) Niger, Ogun, Taraba Value Chain Business Innovation Fund 2 (BIF 2) DFID National $8 million Development/Market Growth and Employment DFID National $25 Access Programme 4 Rice Post-Harvest Processing and JICA Nasarawa, Niger $6 million Marketing Pilot Project in Commodity - rice Nasarawa and Niger States (RIPMAPP)

Coalition for African Rice JICA National To be Development (CARD)/Nigeria confirmed Rice Seed Development Strategy (RSDS) Maximizing Agricultural Revenue USAID Kano, Kaduna, Sokoto, $60.7 and Key Enterprises in Targeted Niger, Benue, Kwara, Oyo, million Sectors (MARKETS) II Ondo, Delta, Cross Rivers, Enugu, Rivers, Kogi, Taraba, Kebbi, Ebonyi, Anambra, Jigawa, FCT Agro-Input to Production USAID Bauchi, Kano, FCT, Niger, $3 million Expansion (APEx) Jigawa, Oyo, Kaduna, Sokoto Nigeria Expanded Trade and USAID LaKaJi corridor $15 million Transport (NEXTT) NRM/Climate Change Farmer Managed Renewable EU Katsina $10.3 million Adaptation Energy Production Climate Change Adaptation and IFAD Borno, Jigawa, Katsina, $85 million Agribusiness Support Programme Kebbi, Sokoto, Yobe, Zamfara Feed the Future Climate Resilient USAID West Africa (Nigeria $15 million Cowpea Innovation Lab <$2m) One World – No Hunger . Green BMZ Benue, Nassarawa, Kano, $7.5 million Innovation Centres Kaduna, Oyo, Ogun, Rural Financial Rural Finance Institutions Building IFAD Zamfara, Katsina, $27 million Inclusion Programme (RUFIN) Adamawa, Fund for Agricultural Finance KfW National $11 million in Nigeria (FAFIN) Agricultural Insurance BMZ Design phase (Kebbi, tbd Niger) Agro-Enterprise Promoting Youth Employment and DFATD, Cross River $12 million development Entrepreneurship (YouLead) PROPCOM Maikarfi DFID Northern Nigeria $42 million Micro Project Programme in the 9 EU Akwa Ibom, Bayelsa, $110 million Niger Delta States (MPP9) Delta, Edo, Rivers, Imo, Abia, Cross Rivers, Ondo Sustainable Smallholder BMZ, EU, Nigeria: Abia, Cross River, $9 million Agribusiness (SSAB) regional NIRSAL Edo, Ekiti, Katsina, Kano, programme Niger, Ondo, Osun Cameroon, Ghana, ôte d’Ivoire, Togo Rural and Agro- Rural and Mobility Project II AFD Enugu, Niger, Adamawa, $60 million Infrastructure (RAMP II) Osun Agricultural Transformation AfDB Enugu, Anambra, Niger, $150 million Agenda Support Program Phase-I Kebbi, Sokoto, Kano, (ATASP-I) Jigawa Water Supply and Sanitation Sector EU FCT, Abuja Anambra, $97.2 + Reform Programme Cross River, Jigawa, Kano, $68 + Osun Yobe $48.6 million Design of (7) Master Plans and UNIDO Kano, Niger, Kogi, $1.45 Technical Capacity to Manage Anambra, Enugu, Million Staple Crop Processing Zones (SCPZs) in Nigeria Staple Crop Processing Zones WB Kogi $100 million (SCPZs) Project (to be confirmed)

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Staple Crop Processing Zones WB Kogi $100 million (SCPZs) Project (to be confirmed) Sector Policy Reform and Institutional Technical Assistance to the UNDP National UNDP Development FMARD on Agribusiness, - Policy, Knowledge Management BMGF and Organizational Management Africa Lead II - capacity USAID National $1.5 development to implement million CAADP Feed the Future Agricultural USAID National $12.5 Policy Project – analysis and million capacity building Agriculture Development Policy WB National $100 Operation million

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Appendix V

Organizational Structure of the Program

FMARD

National Steering Committee

Coordinating Secretariat

State Steering Committee

SIU SIU SIU SIU SIU

IITA NIRSAL- PMRO (Project Monitoring & Remedial Offices)

IITA Partners (Universities of Agriculture in Makurdi, Abeokuta and Umudike, and other identified partners)

Appendix VI Project Description Project design (components). The Programme has four components, namely:

Component 1: Enabling Environment for Youth Empowerment:

The aim of Component 1 is to create an enabling environment nation-wide for decent employment of young unemployed graduates (Greenfields) Nigerians and a proportion of those already engaged in agribusiness (Brownfields). The key objective here is to promote policy dialogue and advocacy which promote an agribusiness-enabling environment and support commercial bank lending to agriculture. The Component shall have two sub-components.

Subcomponent 1.1: This sub-component will promote necessary reforms that will make setting up businesses by young people relatively easy. It will include activities such as policy advocacy & synthesis, knowledge management & dissemination, technical assistance in the design of information and communication tools and mobilization of SIU Youth Coordinators. It shall be led at the Federal level by the FMARD, in association with the Federal Ministry of Youth and Employment. It shall provide leadership with respect to creating an enabling environment for youth agribusinesses to thrive. It shall coordinate policies that facilitate the youth establishment of businesses and employment in agriculture. Similar State institutions shall lead in the implementation of these enabling policies at the State level. This subcomponent will be implemented by the National Coordination Office (NCO). Staffing at this level will be light, and will include a Coordinator, Agribusiness Officer, Youth Training Officer, Procurement officer, Accountant and M&E Officer. Activities will focus on: (a) a broad-based policy dialogue on rural youth employment in agriculture; (b) coordination and partnerships with all public and private stakeholders involved in youth employment promotion; and (c) knowledge management and dissemination, using youth-friendly information and communication technologies.

Subcomponent 1.2: This sub-component is to enhance, at State level, the enabling environment for rural youth to have equal access to resources and assets for agribusiness establishment and resultant employment generation. The Program will build on ongoing graduate youth employment promotion initiatives in participating States in order to enhance their effectiveness, focus and outreach. The State Implementation Unit (SIU) will also support public sector capacity building to drive enabling environment reforms that will facilitate youth agribusiness investments at State levels. Each participating States will provide parallel public investments and coordination, especially in kind. The implementation of Subcomponent 1.2 will be managed by a State Implementation Unit.

At both Federal and State levels, IITA will provide technical support in the selection process of participating young graduates in the programme and serve as one of the partners providing capacity building to the youth. NIRSAL and participating commercial banks will collaborate with the SIUs in trainings on business management and development of business plan.

Component 2: Entrepreneurship and Agribusiness Incubation

Component 2 will operate in a two-step manner in agribusiness incubation with 1) youth first participating in a three-month training for the Greenfield and one-month for the Brownfield agripreneurs (although this will vary depending on a needs assessment) involving agribusiness orientation designed by FMARD in partnership with IITA and Universities of agriculture including Makurdi, Abeokuta and Umudike, and other identified agricultural training institutes. (2) Youth would serve as interns through attachment to existing agribusinesses in order to obtain additional experience in modern farming and agribusiness operations and management skills to supplement their training at incubation centers. There is need for a strong business management skill/capacity to be introduced at this stage. The NIRSAL TA window will facilitate the introduction of selected Business Development Service support to offer support to the

Agripreneurs. These institutions will be selected competitively through a Call for Proposals. These sequential activities will amount to a 3-9 month agribusiness learning cycle (or agribusiness incubation period) that prepares youth for the establishment of their own agribusiness (depending on the value chain and the background of participant, the total incubation period could last for up to 9 months).

Youth will be trained in groups of 30 - 40 in identified Incubation Centers located in IITA and other pre- selected mandate universities and training institutions in all the 36 States and FCT. The youth will be exposed to a series of participatory training activities including agribusiness opportunities, mindset change, various business models, ethics and other necessary background issues to start and operate their own businesses. The youth will also be provided with agribusiness orientation and internships with established businesses to expose them to modern farming, marketing and value-addition operations so that they can gain insight into the kind of agribusiness interests them most.

At the conclusion of the initial 1 or 3 month on-boarding training, the Greenfields are placed as interns within an existing, successful agribusiness. Groups of between 2 – 10 youth will serve as agribusiness interns for a maximum of 6 months (including the 2 weeks quarterly trainings)2, and the operators and managers of these existing businesses, who shall receive 1-2 weeks training on mentoring and the mechanics of the ENABLE youth program, will serve as mentors to these youth. The training will also include modules on market information systems and business regulatory environment.

Component 3: Business Development and Financing.

The participating youth should transit from agribusiness interns to successful owners of agribusinesses or expand their current operations in the case of brownfield participants. Access to credit and some seed capital is critical for effective transition after the agribusiness incubation and placement period, to actually setting up a business. Prior to completion of their training, agripreneurs, as individuals or in partnership (or groups), will develop bankable proposals of their planned businesses or enterprises.

In some cases this transition will be bridged by reliance upon the existing agribusiness where internship took place for market access and other business services through collaborative agreement, e.g. as an out- grower or off taker. The proposal is to have some Brownfield or well established agribusiness companies offer to buy from youth entrepreneurs on contract basis, which will further improve the young borrower’s credibility. The Brownfield agripreneurs will also have access to the programme commercial fund as loan to grow their businesses. They will play the role of first line of support to the other youth, based on their experience in agribusiness management. They will be selected according to the criteria described in Annex 1. Like the Greenfields, they will also draft bankable proposals for strengthening their businesses from participating financial institutions.

This component addresses financial services enabling these business start-ups, providing up to USD 50,000 in repayable loans from participating financial institutions. Out of the USD 280 million (ADB and AGTF) loans, about 75% (i.e. about USD 210 million) will be reserved for catalyzing additional resources for risk sharing with commercial banks to incentivize them to lend to agripreneurs. The funds would serve as seed money / credit risk guarantee and interest drawback support. An interest rebate fund would be set up by the program, to be managed by NIRSAL, to reward good repayment behaviour by reducing the effective interest rate. The interest drawback (IDB) rates will be based on the nature of business but it will not exceed 50% and will offered based on performance. This will be financed by the project in the first 3 years of implementation, then NIRSAL will cover 50% cost of the interest drawback rates when the beneficiaries are mainstreamed into commercial relationships with the Banks and markets. The Bank agreed with NIRSAL that the earlier proposed 130% risk guarantee would create a moral hazard within the credit scheme since the banks will have no risk burden. Hence, it was agreed that NIRSAL should

2 For Greenfields: 3 months initial incubation training and 6 months attachment punctuated by quarterly 2-3weeks training. For Brown field: 1 month initial training and quarterly 2 weeks training

XI utilize its existing model where risk is shared with Commercial Banks and the level of coverage depends on the type of business.

Participating commercial Banks will be expected to have adequate outreach in urban and rural areas and be fully digitalised to enable ICT-based business transactions for last mile operations, especially relevant to young people. Selection of participating commercial banks would not be a one-off agenda at the onset of the program, but an ongoing review and re-appraisal process on an annual or six-monthly basis. NIRSAL will work through the Bankers Association headed by CBN to broadcast the project to all Banks to express interest and participate. This will be done continually until full engagement and participation is achieved. However at the initial project entry and right from inception phase, NIRSAL and the Bank will discuss and define roles and responsibilities of commercial banks, the indicative fees and interest rates for the sub-borrowers under this program. NIRSAL will also carry out the following sub activities; (i) Identification and selection of first movers and partner banks in the project; (ii) Development of MoU between NIRSAL and the Banks; (iii) Performance monitoring and expansion to include other interested commercial banks; iv) Provision of continued support and coaching for borrowers to minimise default and v) Close monitoring of the performance of banks and borrowers and regularly report to the Bank.

Component 4: Program coordination, monitoring and evaluation

The Program will provide financing for management, coordination, monitoring and evaluation at the Federal and State levels. Such activities will also leverage on the NIRSAL’s PMRRO (Program Monitoring, Reporting and Remediation Office) operations under a structured technical support arrangement to monitor established field enterprise projects. The NIRSAL PMRRO will provide a 360- degree enterprise support service with pre-investment decision tools, project lifecycle management and post production/market access system design and logistics. This component will include competitively recruited key personnel of the National Co-ordination Office and personnel of the 37 State Implementation Units. The key staff of these offices will include National Coordinator, State Coordinators, Youth Development & Training Officers, Agribusiness Development Officer, M&E Officers, Accountants and Investment/Loan Officers. This component will also include procurement of transport and office equipment; technical assistance, studies, surveys; and the establishment and operation of the M&E system.

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Appendix VII

Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL PLC)

Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL PLC) is a non-bank financial institution incorporated in 2013 under the Companies and Allied Matters Act 2004 (See Annex for details about NIRSAL). The Central Bank of Nigeria committed ₦75 billion (equiv. $500 million) to NIRSAL. NIRSAL was to leverage $3 billion from Commercial Banks and other microfinance institutions in Nigeria into agricultural value chains. It provides risk sharing package to mitigate the risks of financial institutions to incentivise them to lend more to agricultural enterprises. NIRSAL also supports financial institutions with tools and good practices in agricultural financing lending. It also provides technical support and hand hold agribusiness enterprises in, loans utilization, repayment and link to markets. To date its achievements can be summarised as follows:

 ₦50 billion (equiv. $300 million) risk-sharing facility to share losses from agricultural lending with banks;  ₦4.5 billion ($30 million) insurance facility to expand insurance products for agricultural lending from the current coverage of 0.5 million to 3.8 million agricultural producers to help reduce credit risks and increase lending across the entire value chain;  ₦9 billion ($60 million) technical assistance facility to improve the agricultural lending capability of banks, and the financial literacy of borrowers;  ₦1.5 billion ($10 million) holistic bank rating mechanism to measure which banks do most to lend to agriculture; and  ₦15 billion ($100 million) bank incentives scheme to offer additional incentives to banks’ lending to agriculture.

NIRSAL’s performance has been commended, from inception to October 2015, 454 projects valued ₦61billion were guaranteed. Similarly, the sum of ₦750 million was paid out as interest rebate to borrowers who were in good standing to encourage good repayment thereby minimizing default. Through its insurance facility, four insurance companies have started underwriting agricultural risks. Through the Technical Assistance Facility, NIRSAL was able to train close of 30.000 farmers in 8 States and across several value chains including cotton, cocoa, tomato and rice. Also 104 Agricultural Desk officers in Commercial Banks have been trained nationwide on Agriculture Value Chain Financing. NIRSAL will, within this programme, deploy the same approach with a little more detail and in a fit for purpose fashion support the youth entrepreneurs to make sure they are accepted as credible borrowers by financial institutions, despite their relative lack of sufficient track record.

NIRSAL will use a dynamic and holistic approach to tackling the challenges in the agricultural and financial value chains, which include: . To fix agricultural value chains in order to provide a reliable platform for de-risking agricultural lending . To mobilize financing for agribusiness by using credit guarantees to address the risk of default . To provide technical assistance through capacity building across the value chains . To reduce the cost of borrowing by agricultural producers from commercial banks . To provide technical advice to agribusinesses.

To ensure that these services are consistently provided throughout the country, NIRSAL strategy is to develop a network of Project Monitoring, Reporting and Remediation Offices (PMRRO) that will cover all States of the Federation (8 PMRRO are envisaged under this programme, one per 3 Geo-economic region of the country) This will facilitate the gathering, analysis, interpretation and dissemination of near time information of each sub-project benefiting from the company’s credit risk guarantee. This will ensure pro-active participation of stakeholders, that will ultimately reduce the associated risks in Agricultural Value Chain (AVC) transactions since total elimination is not possible.

In this programme, NIRSAL sees a sequential, overlapping cross-functional five-phase process. Embedded in the five phases are 30 specific activities the sequencing of which is presented graphically below.

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Project Activity Flowchart and Sequencing

Phase

t c

e Study of AfDB Conceptual review j Project o Concept Note key of design to ensure r approval by

p implementing a credit driven - AfDB

e partners project

i t

p Establishment of Project sensitization Target group e project c Project launch and stakeholders identification,

n management i.e. I

consultation participant t NCO, SIU

c selection

g n

i AVC/ecological d

l Final Embedding and Identification and based agribusiness Generic training for i

u selection of mentoring of sign MoU with Additional opportunity Additional greenfield and b

Agripreneurs ENABLE Youths with partner AVC off screening of mapping, training screening of Brown field

y t

i with bankable AVC off taker takers and partner participants &BDS support for participants entrepreneurs c

a projects partners banks business planning &

p project feasibility

i t

a Loan appraisal by

c Successful ENABLE Loan approval by Joint Project

i banks with ongoing l graduates submit commercial banks Loan implementation and p BDS support still Full loan repayment

p loan application to and request for disbursement performance

available to A

partner banks NIRSAL guarantee monitoring

Agripreneurs

L Joint Project t

A Activate

n Guarantee appraisal Guarantee implementation and S

a Loan default NIRSAL Guarantee r

R and processing approval performance I

a activation process N

u monitoring G

Red boxes: Implementation activities that require fundamental review Blue diamonds: Decision points for progressive participants screening

The phases and the number of activities per phase are as follows:

The five key stages are described below, although some may occur simultaneously:

Project Inception: The 1 phase sets up the project coordinating teams at both national (NCO) and state levels (SIUs). It includes sensitization, call for Expression of Interest as well as target group identification and selection. Capacity Building: The 2nd phase starts with the selection of agripreneurs with bankable business projects and embedding them within Agricultural Value Chain off-takers. This is concluded with technical agricultural training by IITA. Loan Processing: At the 4th stage, successful agripreneurs submit applications, loan approval and disbursement as well as monitoring and repayment. NIRSAL Guarantee: the last activity will run concurrently with the previous one as NIRSAL’s guarantee is activated as soon as loan is disbursed by the Commercial Banks (CBs).

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