LIVESTOCK and FISHERIES SECTOR DEVELOPMENT PROJECT November 17, 2017

Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD2396

Public Disclosure Authorized INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT

IN THE AMOUNT OF SDR 121.1 MILLION (US$ 170 MILLION EQUIVALENT)

TO THE

Public Disclosure Authorized FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

FOR A LIVESTOCK AND FISHERIES SECTOR DEVELOPMENT PROJECT November 17, 2017

Agriculture Global Practice Public Disclosure Authorized Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

Public Disclosure Authorized

CURRENCY EQUIVALENTS

(Exchange Rate Effective October 31, 2017)

Currency Unit = Ethiopian Birr (ETB) ETB 27.27 = US$1 SDR 1 = US$0.71190085

FISCAL YEAR July 8 – July 7

Regional Vice President: Makhtar Diop Country Director: Carolyn Turk Senior Global Practice Director: Juergen Voegele Practice Manager: Mark E. Cackler Task Team Leader(s): Francois G. Le Gall, Assaye Legesse, Benjamin Billard

ABBREVIATIONS AND ACRONYMS

A&FMP Aquaculture and Fisheries Master Plan ACC Agricultural Commodity Cluster AECID Agencia Española de Cooperación Internacional para el Desarrollo (Spanish Agency for International Development) AGP I and II Agriculture Growth Program I and II AI Artificial Insemination AMR Anti‐Microbial Resistance AnGR Animal Genetic Resources ASF Animal‐Sourced Food ATA Agricultural Transformation Agency AU‐IBAR African Union / Inter‐African Bureau for Animal Resources AWP&B Annual Work Plan and Budget BCR Benefit Cost Ratio BMGF Bill & Melinda Gates Foundation BOO Build‐Operate‐Own BOT Build‐Operate‐Transfer BP Business Plan C&A Cooperatives and Associations CAHW Community Animal Health Workers CBBP Community‐Based Goat and Sheep Breeding Programs CBE Commercial Bank of Ethiopia CBPP Contagious Bovine Pleuropneumonia CCRF Code of Conduct for Responsible Fisheries CD Capacity Development CDP Capacity Development Program CDRF Capacity Development Results Framework CGGD Climate and Green Growth Directorate CGIAR Consultative Group on International Agricultural Research CIRAD Centre de Coopération Internationale en Recherche Agronomique pour le Développement (French Agricultural Research Center for International Development) CPF Country Partnership Framework CS Communication Strategy CSA Central Statistics Agency DAMS Data Analysis and Monitoring System for Livestock and Fisheries Sectors DBO Design‐Build‐Operate DP Development Partner DSA Daily Subsistence Allowance DVM Doctor in Veterinary Medicine EADD East Africa Dairy Development EAFA Ecosystem Approach to Fisheries and Aquaculture EAS Extension & Advisory Services EFA Economic and Financial Analysis EIAR Ethiopian Institute for Agriculture Research

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EPPPA Ethiopian Poultry Producers and Processors Association ETB Ethiopian Birr EU European Union EX‐ACT Ex‐ante Carbon Balance Tool FAO Food and Agriculture Organization of the United Nations FCA Federal Cooperative Agency FDU Forage Development Unit FFS Farmers’ Field School FM Financial Management FMD Foot and Mouth Disease FPCM Fat and Protein Corrected Milk FPCU Federal Project Coordination Unit FTC Farmer Training Centre GAFP Good Aquaculture and Fisheries Practices GAFSP Global Agriculture and Food Security Program GAHP Good Animal Husbandry Practices GDP Gross Domestic Product GHG Greenhouse Gas GLEAM‐i Global Livestock Environmental Assessment Modeling interactive GoE Government of Ethiopia GRS Grievance Redress Service GTP I and II Growth and Transformation Plan HF&J Holstein Friesian and Jersey HIV‐AIDS Human Immunodeficiency Virus Infection‐Acquired Immune Deficiency Syndrome HPAI Highly Pathogenic Avian Influenza ICARDA International Center for Agricultural Research in the Dry Areas ICPALD Centre for Pastoral Areas and Livestock Development IDA International Development Association IFAD International Fund for Agricultural Development IFC International Finance Corporation IGAD Inter‐Governmental Authority on Development ILRI International Livestock Research Institute IPM Integrated Pest Management IRR Internal Rate of Return IS Implementation Support L‐MIRA Livestock Micro‐Reform for Agribusiness L&F Livestock & Fishery L&F FFS Livestock and Fisheries Farmers’ Field School LFSDP Livestock and Fisheries Sector Development Project LGA Livestock Global Alliance LITS Livestock Identification and Traceability System LMD Livestock Market Development Project (USAID funded) LMP Livestock Master Plan LSA Livestock Sector Assessment LSIPT Livestock Sector and Investment Policy Toolkit LVC‐PPD Livestock Value Chain through Public Private Dialogue Project (from EU)

M&E Monitoring and Evaluation MCC Milk Collection Centre MDG Millennium Development Goals MFIs Micro Finance Institutions MoANR Ministry of Agriculture and Natural Resources MoFEC Ministry of Finance and Economic Cooperation MoLF Ministry of Livestock and Fisheries MoNRM Ministry of Natural Resource Management MPC Milk Processing Center MRD Mixed Rainfall Deficient MRS Mixed Rainfall Sufficient NAGII National Animal Genetic Improvement Institute NAHDIC National Animal Health Diagnostic and Investigation Centre NAIC National Artificial Insemination Center NBP National Breeding Policy NCA National Cooperative Agency ND Newcastle Disease NFFDP National Feed and Forage Development Program NGO Non‐Governmental Organization NPC National Project Coordinator NPV Net Present Value NRM Natural Resource Management NTT National Task Team O&M Operation & Maintenance ODI Overseas Development Institute OIE World Organisation for Animal Health OP/BP Operational Policy/Bank Policy PCDP III Pastoral Community Development Project III PCU Project Coordination Agency PDO Project Development Objective PDS Participatory Disease Surveillance PIM Project Implementation Manual PM Procurement Management PP Procurement Plan PPP Public Private Partnership PPR Peste des Petits Ruminants (Small Ruminant Plague) PRIMS Progress and Results Information Monitoring System PRS Performance Recording System PSC Project Steering Committee PTC Project Technical Committee RCPB Regional Cooperative Promotion Bureau RED&FS Rural Economic Development and Food Security RF Results Framework RPCU Regional Project Coordination Unit RPLRP Regional Pastoral Livelihoods and Resilience Project RSC Regional Steering Committee

SC Sub‐Component SCD Systematic Country Diagnostic SME Small and Medium Enterprise SNNPR Southern Nations Nationalities and Peoples Region SNP Strategic National Program SNV Stichting Nederlandse Vrijwilligers (Netherlands Development Organization) SORT Systematic Operations Risk‐rating Tool SP Specialized Producer SWIFT Survey of Wellbeing via Instant Frequent Tracking TA Technical Assistance TOR Terms of Reference ToT Training of Trainers TTL Task Team Leader T‐VET Technical and Vocational Education and Training USAID United States Agency for International Development VAT Value Added Tax VC Value Chain VDFACA Veterinary Drug, Feed Administration and Control Authority VGGT Voluntary Guidelines on the Responsible Governance of Tenure VS Veterinary Services VSB Veterinary Statutory Body VV Village Vaccinators WB World Bank WBI World Bank Institute WPCU Woreda Project Coordination Unit

The World Bank Livestock and Fisheries Sector Development Project (P159382)

BASIC INFORMATION

Is this a regionally tagged project? Country(ies) Financing Instrument

No Investment Project Financing

[ ] Situations of Urgent Need of Assistance or Capacity Constraints [ ] Financial Intermediaries [ ] Series of Projects

Approval Date Closing Date Environmental Assessment Category

12‐Dec‐2017 07‐Jul‐2024 B ‐ Partial Assessment

Bank/IFC Collaboration Joint Level Yes Complementary or Interdependent project requiring active coordination

Proposed Development Objective(s)

Increase productivity and commercialization of producers and processors in selected value chains, strengthen service delivery systems in the livestock and fisheries sectors, and respond promptly and effectively to an eligible crisis or emergency.

Components

Component Name Cost (US$, millions)

Linking More Productive Farmers to Markets 103.20

Strengthening National Institutions and Programs 55.80

Project Coordination, Monitoring and Evaluation, and Knowledge Management 17.20

Organizations

Borrower : Federal Ministry of Finance and Economic Development, Federal Democratic Republic of Ethiopia

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The World Bank Livestock and Fisheries Sector Development Project (P159382)

Implementing Agency : Ministry of Livestock and Fisheries

PROJECT FINANCING DATA (US$, Millions)

[ ✔ ] [ ] IBRD [ ✔ ] IDA Credit [ ] IDA Grant [ ] Trust [ ] Counterpart Funds Parallel Funding Financing FIN COST OLD Total Project Cost: Total Financing: Financing Gap: 176.20 176.20 0.00 Of Which Bank Financing (IBRD/IDA):

170.00

Financing (in US$, millions) FIN SUMM OLD Financing Source Amount Borrower 3.80 IDA‐61650 170.00 Local Farmer Organizations 2.40 Total 176.20

Expected Disbursements (in US$, millions)

Fiscal Year 2018 2019 2020 2021 2022 2023 2024

Annual 0.50 15.00 51.00 52.00 36.00 11.00 4.50

Cumulative 0.50 15.50 66.50 118.50 154.50 165.50 170.00

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The World Bank Livestock and Fisheries Sector Development Project (P159382)

INSTITUTIONAL DATA

Practice Area (Lead) Agriculture

Contributing Practice Areas

Climate Change and Disaster Screening This operation has been screened for short and long‐term climate change and disaster risks

Gender Tag

Does the project plan to undertake any of the following?

a. Analysis to identify Project‐relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF

Yes

b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment

Yes

c. Include Indicators in results framework to monitor outcomes from actions identified in (b)

Yes

SYSTEMATIC OPERATIONS RISK‐RATING TOOL (SORT)

Risk Category Rating

 High 1. Political and Governance  Moderate 2. Macroeconomic  Moderate 3. Sector Strategies and Policies  Moderate 4. Technical Design of Project or Program  High 5. Institutional Capacity for Implementation and Sustainability  High 6. Fiduciary  Substantial 7. Environment and Social  Moderate 8. Stakeholders 9. Other

The World Bank Livestock and Fisheries Sector Development Project (P159382)

10. Overall  High

COMPLIANCE

Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✔] No

Does the project require any waivers of Bank policies? [ ] Yes [✔] No

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment OP/BP 4.01 ✔ Natural Habitats OP/BP 4.04 ✔ Forests OP/BP 4.36 ✔ Pest Management OP 4.09 ✔ Physical Cultural Resources OP/BP 4.11 ✔ Indigenous Peoples OP/BP 4.10 ✔ Involuntary Resettlement OP/BP 4.12 ✔ Safety of Dams OP/BP 4.37 ✔ Projects on International Waterways OP/BP 7.50 ✔ Projects in Disputed Areas OP/BP 7.60 ✔

Legal Covenants

Sections and Description Schedule 2 ‐ Section I. A.1. Within one (1) month from the Effective Date, the Recipient shall have in place a full time National Project Coordinator in the Federal PCU, with experience, qualifications and terms of reference acceptable to the Association

Sections and Description Schedule 2 ‐ Section I. A.2. The Recipient shall establish and cause to be established: (a) At the federal level, within two (2) months from the Effective Date, and thereafter maintain at all times during the Project implementation, the following with composition and/or qualified staff and resources acceptable to the Association:

The World Bank Livestock and Fisheries Sector Development Project (P159382)

(i) A Steering Committee to be responsible for the overall strategic oversight for Project implementation at the federal level; (ii) A Technical Committee to be responsible for providing technical support for Project implementation at the federal level; and (iii) A PCU, with a core team comprising the National Project Coordinator, a monitoring and evaluation specialist, a procurement specialist, a financial management specialist and a livestock data management specialist, to be responsible for the coordination of the Project activities at the federal level.

Sections and Description Schedule 2 ‐ Section I. A.2. The Recipient shall establish and cause to be established: (b) At the regional and Woreda levels, within seven (7) months from the Effective Date, and thereafter maintain at all times during the Project implementation, the following with composition and/or qualified staff and resources acceptable to the Association: (i) A Steering Committee at the regional (excluding the Gambella and Benishangul Gumuz Regions) and Woreda levels to be responsible for the overall strategic oversight for Project implementation at the respective levels; (ii) A Technical Committee at the regional (excluding the Gambella and Benishangul Gumuz Regions) and Woreda levels to be responsible for providing technical support for Project implementation at the respective levels; (iii) A PCU at the regional (excluding the Gambella and Benishangul Gumuz Regions) and Woreda levels, to be responsible for the coordination of the Project activities at the respective levels

Sections and Description Schedule 2 ‐ Section 1. B. 2. Within one (1) month from the Effective Date, the Recipient, through MoLF, shall adopt such PIM as shall have been approved by the Association and thereafter, implement the Project, and cause the Implementing Agencies to implement the Project, in accordance with the PIM; and (b) not amend or waive any provision in the PIM without the Association’s prior written approval.

Sections and Description Schedule 2 ‐ Section 1. F. 1. The Recipient shall within one (1) year from the Effective Date: (a) prepare and furnish to the Association for its review and approval, an operations manual which shall set forth detailed implementation arrangements for the CERC Part, including: (i) designation of, terms of reference for and resources to be allocated to, the entity to be responsible for coordinating and implementing the CERC Part (“Coordinating Authority”); (ii) specific activities which may be included in the CERC Part, Eligible Expenditures required therefor (“Emergency Expenditures”), and any procedures for such inclusion; (iii) financial management arrangements for the CERC Part; (iv) procurement methods and procedures for Emergency Expenditures to be financed under the CERC Part; (v) documentation required for withdrawals of Emergency Expenditures; (vi) environmental and social Safeguards management frameworks for the CERC Part, consistent with the

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Association’s policies on the matter; and (vi) any other arrangements necessary to ensure proper coordination and implementation of the CERC Part; (b) afford the Association a reasonable opportunity to review said proposed operations manual; (c) promptly adopt such operations manual for the CERC Part as shall have been approved by the Association (“CERC Operations Manual”); (d) ensure that the CERC Part is carried out in accordance with the CERC Operations Manual; provided, however, that in the event of any inconsistency between the provisions of the CERC Operations Manual and this Agreement, the provisions of this Agreement shall prevail; and (e) not amend, suspend, abrogate, repeal or waive any provision of the CERC Operations Manual without prior approval by the Association

Conditions

PROJECT TEAM

Bank Staff Name Role Specialization Unit Team Leader(ADM Francois G. Le Gall Livestock GFA01 Responsible) Assaye Legesse Team Leader Agriculture GFA13 Benjamin Billard Team Leader Operations GFA01 Procurement Specialist(ADM Ayalew Kebede Belew Procurement Specialist GGO01 Responsible) Financial Management Meron Tadesse Techane Financial Management GGO25 Specialist Andrew D. Goodland Team Member Agriculture SACSL Asa Margareta G. Hoglund Team Member Nutrition GFA13 Giertz Bethelhem Teka Befekadu Team Member Team Assistant AFCE3 Caroline Aurelie Plante Peer Reviewer Livestock GFA04 Chukwudi H. Okafor Team Member Social Safeguards GSU07 Eddie Spencer Keturakis Team Member Private Sector GTCCS Hans Shrader Team Member Private Sector GTCAF

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The World Bank Livestock and Fisheries Sector Development Project (P159382)

Hikuepi Sieglinde Brenda Team Member Agriculture GFA13 Katjiuongua Maiada Mahmoud Abdel Team Member FO WFALA Fattah Kassem Margaret Png Counsel Legal LEGAM Marianne Grosclaude Peer Reviewer Agriculture GFA03 Messeret Marcos Team Member Procurement Assistant AFCE3 Pierre Jean Gerber Team Member Livestock GFA12 Samuel Lule Demsash Social Safeguards Specialist Social Safeguards GSU07 Sanna Liisa Taivalmaa Team Member Gender GFAGE Srilatha Shankar Team Member Program Assistant GFA13 Stephane Forman Peer Reviewer Livestock GFA02 Tom Bundervoet Team Member Poverty GPV01 Yacob Wondimkun Environmental Safeguards Environmental Safeguards GEN01 Endaylalu Specialist Yemsrach Kinfe Edey Team Member Team Assistant AFCE3

Extended Team Name Title Organization Location Principal Scientist / Peer‐ Azage Tegegne ILRI reviewer Senior Animal Production Badi Besbes FAO Officer Barbara Jordan‐Vicente Economist FAO Chiara Romano Gender and Youth Consultant Clarisse Ingabire Animal Health Officer FAO Julien Vallet Economist FAO Rome, Senior Livestock Investment Marc Moens FAO Rome, Italy, Officer and FAO Team Leader Maria Iskandarani FAO TCI M&E Consultant Martin van der Knaap Regional Fisheries Officer FAO Rauno Zander Access to Finance Consultant Richard Abila Fisheries & Aquaculture Expert IFAD

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The World Bank Livestock and Fisheries Sector Development Project (P159382)

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The World Bank Livestock and Fisheries Sector Development Project (P159382)

ETHIOPIA LIVESTOCK AND FISHERIES SECTOR DEVELOPMENT PROJECT

TABLE OF CONTENTS

I. STRATEGIC CONTEXT ...... 1 A. Country Context ...... 1 B. Sector and Institutional Context ...... 1 C. Higher Level Objectives to which the Project Contributes ...... 3 II. PROJECT DEVELOPMENT OBJECTIVES ...... 4 A. PDO ...... 4 B. Project Beneficiaries ...... 4 C. PDO‐Level Results Indicators ...... 5 III. PROJECT DESCRIPTION ...... 5 A. Project Components ...... 7 B. Project Cost and Financing ...... 11 C. Lessons Learned and Reflected in the Project Design ...... 12 IV. IMPLEMENTATION ...... 13 A. Institutional and Implementation Arrangements ...... 13 B. Results Monitoring and Evaluation ...... 14 C. Sustainability ...... 14 D. Role of Partners ...... 15 V. KEY RISKS ...... 16 A. Overall Risk Rating and Explanation of Key Risks ...... 16 VI. APPRAISAL SUMMARY ...... 17 A. Economic and Financial Analysis ...... 17 B. Technical ...... 18 C. Financial Management ...... 18 D. Procurement ...... 19 E. Social (including Safeguards) ...... 20 F. Environment (including Safeguards) ...... 22 G. World Bank Grievance Redress ...... 23 VII. RESULTS FRAMEWORK AND MONITORING ...... 24

The World Bank Livestock and Fisheries Sector Development Project (P159382)

ANNEX 1: DETAILED PROJECT DESCRIPTION ...... 39 ANNEX 2: IMPLEMENTATION ARRANGEMENTS ...... 66 ANNEX 3: IMPLEMENTATION SUPPORT PLAN ...... 91 ANNEX 4: GENDER MAINTSTREAMING AND INCLUSION OF YOUTH ...... 95 ANNEX 5: GREENHOUSE GAS EMISSION AND EXPECTED MITIGATION EFFECT ...... 100 ANNEX 6: ECONOMIC AND FINANCIAL ANALYSIS (EFA) ...... 104 ANNEX 7: SOCIAL DEVELOPMENT PLAN ...... 114 ANNEX 8: MAP (IBRD 43329) ...... 122

BOXES 1. The Livestock Master Plan and its Use in LFSDP’s Design…………………………………………………………………….…….….42 2. The Role of the Livestock and Fishery Sectors in Improving Nutrition Intake in Ethiopia.………………………………46 3. Brief Overview of the Livestock & Fisheries Farmers Field Schools……….……………………………………………….………55 4. Lessons Learned in Fisheries and Aquaculture……………………………………..……………………………………………….………61 5. Gender and LFSDP…………………………………………………………………………………………………………………………………………99

FIGURES 1. Transformation Pathway for Improved Livestock and Fisheries Productivity and Commercialization: Direct Beneficiary Targeting & sub‐Projects………………………………………………………….………………………………………………..….7 2. Progress and Results Monitoring in LFSDP. Responsibilities and Monitoring Data Flows………………….…….….….64 3. M&E of LFSDP Capacity Development. Results Chain……………………………………………………………………….……………65 4. Project Institutional and Implementation Arrangements……………………………………………………………….………………70 5. Variability in Milk Emission Intensity, by Production System………………………………………………………….……………100 6. Variation in Greenhouse Gas (GHG) Emission Intensity of Milk in Relation to Milk Productivity Per Cow…….101 7. Milk Production and GHG Emission Trends Under Selected Scenarios……..………………………………..………………..102

TABLES 1. Project Cost and Financing………………………………………………………………………………………………………….………………..11 2. Role of Development Partners in LFSDP………………………………………………………………………………………………………..16 3. Transformation Matrix………………………………………………………………………………………………………………………………….44 4. Financial Management Implementation Support Plan…………………………………………………………………………………..93 5. Main Implementation Support Activities…………………………………………………………………………………………………….…94 6. Skill Mix Required for the Proposed Project………………………………………………………………………………………………….94 7. Main GHG Assumptions Used in EX‐ACT………………………………………………………………………………………………………110 8. Carbon Balance Results……………………………………………………………………………………………………………………………....110 9. Financial Analysis of sub‐Projects…………………………………………………………………………………………………………….….112 10. Results of Economic Analysis……………………………………………………………………………………………………………………….113 11. Results of the Sensitivity Analysis………………………………………………………………………………………………………….…….113 12. Results of EX‐ACT Analysis…………………………………………………………………………………………………F .……………………….113

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The World Bank Livestock and Fisheries Sector Development Project (P159382)

I. STRATEGIC CONTEXT A. Country Context

1. Ethiopia is a large, land‐locked, and diverse country. Located in the Horn of Africa, Ethiopia extends over an area of 1.1 million square kilometers, about the size of France and Spain combined. Its bio‐physical environment includes a variety of contrasting ecosystems, with significant differences in climate, soil properties, vegetation types, agricultural potential, biodiversity and water resources and with a challenging topography vulnerable to the impacts of climate change. Ethiopia is a country of many nationalities and peoples1, with current total population estimated at 104 million (2017).

2. Ethiopia has experienced strong economic growth over the past decade and is amongst the fastest growing countries in the world. Although still one of the poorest countries in the world, Ethiopia’s per capita income has increased from US$350 per capita in 2010 to US$993 in 2017.2 Economic growth averaged 10.7 percent per year between 2003/04 and 2011/12 compared to the regional average of 5.4 percent and had a continued high level throughout FY 2013/14 and 2014/15 with some decline to an estimated 7.6 percent in FY 2015/16. 3due to the severe drought and global economic factors. The IMF expects Ethiopia to recover some ground in 2017 and the current projected real GDP growth for 2017 is 8.5 percent.4The IMF projects an 8.5‐7.8 percent real GDP growth in the medium term (2018‐2020). If the trend continues, it is possible for Ethiopia to reach middle‐income status by 2025. The rapid growth is based on a mix of factors, including agricultural modernization, the development of new export sectors, strong global commodity demand, and government‐led development investments. Private consumption and public investment have driven demand side growth, with the latter assuming an increasingly important role in recent years.

3. There have been positive impacts from structural change for the period 2005 to 2013 especially on poverty reduction. Extreme poverty has fallen from 55 percent in 2000 to 34 percent in 2011 and 24 percent in 2016, which is one of the most impressive poverty reduction results recorded internationally. Yet, vulnerability to return to poverty remains high and inequality rose slightly during the most recent five years, with the Gini coefficient5 moving from 0.284 to 0.328. Economic growth and substantial improvements in the provision of safety nets and basic services have been important drivers of poverty reduction in the last decade, with each percent of growth reducing poverty by 0.55 percent. While there is a modest shift in labor from agriculture to services and construction, the structural change was not sufficiently inclusive.

4. Political unrest in 2016 has largely settled but pockets of uncertainty remain.6 The state of emergency was lifted in August 2017. However, strikes and signs of unrest erupted in some parts of the country linked to an increase in the tax liabilities of medium and small size businesses and ethnic tensions on the borders between Somali and Oromia regions; but the federal government has moved to reduce the tensions.

B. Sector and Institutional Context

5. Agriculture is a dominant sector contributing significantly to economic growth and poverty reduction.

1 Country Partnership Framework FY18‐22. 2 World Bank Indicators, 2017 and Gross National Income, World Bank Atlas Method. 3 IMF, September 2016, Article IV report. 4 IMF, Country Data (2017). www. imf.org. 5 Gini coefficient is a measure of statistical dispersion intended to represent the income or wealth distribution of a nation’s residents. 6 See Key Risks section V page 16 paragraph 69. 1

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Central Statistics Agency (CSA) data show that the sector makes up 40 percent of total output, employs 78 percent of the country’s labor force and contributes over 80 percent of goods exports (including coffee). Over the past 15 years, the sector has grown by an average of 7 percent per year resulting in positive impacts on farming and non‐farm rural economies. This growth was mainly due to increased productivity associated with the increased use of inputs, agriculture extension services, increased focus on the use of irrigation infrastructure, and soil and water conservation works, as well as increased area under cultivation. Ethiopia has the largest livestock population in Africa and the fifth largest in the world. The livestock subsector contributes nearly 20 percent of total GDP and foreign exchange earnings of the country, and some 35 to 40 percent of agricultural GDP.

6. The livestock and fisheries sectors are expected to help the country reach middle‐income status. Spurred by population growth, increasing urbanization and incomes, domestic demand for meat, dairy, eggs and fish is expected to increase significantly. The livestock and fisheries sectors present opportunities for business, and increasing the availability of livestock sourced products and fish can address food and nutrition security challenges in Ethiopia. Approximately 38 percent of children under 5 years are stunted. In the coming years, the livestock sector can become a major contributor to poverty reduction. In consequence, the livestock and fisheries sectors have been made priorities in the government’s Second Growth and Transformation Plan (GTPII) from 2016‐2020. Livestock and fisheries are now seen as critical in achieving priority goals of the government including: (i) contributing to overall economic growth, including an increase in the volume and value of exports; (ii) contributing to poverty reduction in both highland and lowland areas; (iii) contributing to improved food security and nutritional outcomes for rural and urban households; and (iv) supporting the country’s green growth priorities.

7. These objectives are reflected in the recently‐approved Livestock Master Plan (LMP). The LMP is a series of five‐year development plans for the key livestock value chains, and production systems within each value chain. These include red meat and milk from cattle, sheep, goats and camels, poultry and dairy cows. The investments proposed in the development plans include appropriate combinations of genetic, feed and health interventions and related policy changes to improve livestock productivity and the performance of the value chains. The interventions are meant to transform traditional family farms into improved market‐oriented systems, to improve household incomes, food security, livestock product consumption and nutrition, and to contribute to national economic growth (Box 1, Annex 1).

8. As the result of the renewed attention to the livestock and fisheries sector, the Government created a Ministry of Livestock and Fisheries (MoLF). Previously under the Ministry of Agriculture and Natural Resources (MoANR), it lacked the autonomy and focus for a scale up of government support for the sectors. The MoLF is refining its structure from the federal to the Woreda and Kebele levels. Currently, the Ministry comprises three State Ministers: (i) the State Minister for Animal Health and Feed; (ii) the State Minister for Animal Production; and (iii) the State Minister for Inputs and Marketing. The Ministry also has a specific unit for Pastoral Area Development and Cooperation which is placed under the responsibility of the State Ministry for Animal Production. Being recently established, the institutional and organizational capacities of the MoLF need to be built while strategic priority programs need to be initiated and/or reinforced.

9. Ethiopia has not experienced significant productivity gains in the sector. Even though Ethiopia’s total meat production increased by 4.6 percent, with mutton and goat meat registering growth rates of 12 and 13 percent respectively, the growth is because of the increase in the number of slaughtered animals, but not from an increase in productivity. Milk yield averages 1.5 liters per day, which is about one‐eighth of the milk yield for

The World Bank Livestock and Fisheries Sector Development Project (P159382)

improved dairy breeds which can manage 9 liters per day per cow. Average yields are much lower compared with other countries in the region such as Kenya and Rwanda (3.6 kg per day)7. Similarly, there is a substantial productivity difference between local and improved poultry breeds. The local poultry breeds lay only 50 eggs per year, which is one‐third the number laid by modern breeds. As a result of these low productivity levels, the livestock sector is characterized by relatively high greenhouse gas (GHG) emissions per unit of product. Average GHG emissions are 19 kg CO2 eq/kg milk among mixed crop‐livestock systems in Ethiopia, against an average of ca. 9 kg CO2 eq./kg milk in Sub‐Saharan Africa.

10. Key challenges continue to undermine the performance and potential of the livestock and fisheries sectors. These include: reduced availability and access to communal grazing and natural pasture; insufficient access to forage, forage seeds and feed supply; poor animal health due to disease prevalence; and low livestock genetic make‐up. Limited adoption of improved livestock practices and poor provision of livestock support services are major sources of low productivity levels. The public sector dominates livestock support service delivery, which is weak for animal health, breeding, feed, and extension services. In addition, the sector has a low commercial market off‐take due to inadequate processing and marketing infrastructure. Most farmers do not participate in the livestock market and household livestock production is ultimately consumed within the household or sold on the local market.

11. The fisheries and aquaculture sector are constrained by similar challenges. There is an acute shortage of trained personnel and specialized service delivery systems. The institutional capacity is weak and extension services, health and food safety services are poor. The lack of reliable data has hampered preparation of a master plan for the development of both inland fisheries and aquaculture. Fishery associations are not well developed and the sector is constrained by the remoteness of fishing areas; and the lack of basic equipment such as fishing gear, improved technologies and techniques, brood stock and good quality fish seed, and good quality fish feed. Environmentally unsustainable fishing practices limit inland fisheries development.

12. The government seeks to scale up its investment and institutional support for the livestock and fisheries sector. It is taking measures to address the challenges and overall weak performance of these sub‐sectors, limited access to quality livestock and fisheries services and markets, limited participation of the private sector and institutional and policy gaps and challenges existing in the sector. It wishes to focus particularly on the subsistence level and small holder farmers, where the maximum benefits can be obtained for both the sector and its participants. Improvements in productivity can have a substantial impact on farmer incomes and thus on poverty reduction. Improvements in quality can increase the potential to build value chains in the agro‐ processing sector, contributing to the country’s broader aims of industrialization as well as export earnings.

13. The proposed project supports the government’s strategy for livestock growth and transformation as articulated in its GTPII and LMP by adding value to the existing investments that support the sector. The fisheries sector was not addressed in the LMP, but was recently added by the government as a priority.

C. Higher Level Objectives to which the Project Contributes

14. The project is closely aligned to the new CPF goals. The Ethiopia FY18‐22 Country Partnership Framework (CPF ‐ June 27, 2017) is based on the recommendations of the WBG’s 2016 Systematic Country Diagnostic (SCD) which emphasizes the leading role that agricultural growth (including livestock) has in poverty reduction. The

7 Various: FAOSTAT, EADD (2009). 3

The World Bank Livestock and Fisheries Sector Development Project (P159382)

predominance of agriculture as a source of income for the poorer households in Ethiopia suggests that growth in the sector will remain important for poverty reduction in the coming years. The SCD identifies eight binding constraints to the achievement of the WBG twin goals, including poor market access for farmers and an uncompetitive private sector. The project is addressing these issues as it aims to increase smallholder productivity, access to markets and service delivery, thus improving the overall functioning of the agricultural sector.

15. The project will contribute to the Ethiopia Nationally Determined Contribution (NDC) for emissions reduction. The Government of Ethiopia (GoE) intends to limit its net GHG emissions in 2030 to 145 Mt CO2e or 8 lower . This ambitious objective constitutes a 255 Mt CO2e reduction from the projected ʻbusiness‐as‐usual' emissions in 2030, or a 64 percent reduction from the business as usual scenario in 2030. Improving crop and livestock production practices for greater food security and higher farmer incomes while reducing emissions is the first of the four pillars that Ethiopia has identified to achieve its target, given that livestock is estimated to contribute over 40 percent of national emissions. The efficiency gains achieved by the project, and related GHG emission reduction (Annex 5) will be monitored and reported as contribution towards the NDC.

II. PROJECT DEVELOPMENT OBJECTIVES

A. PDO

16. Increase productivity and commercialization of producers and processors in selected value chains, strengthen service delivery systems in the livestock and fisheries sectors, and respond promptly and effectively to an eligible crisis or emergency.

B. Project Beneficiaries

17. Direct beneficiaries. The direct beneficiaries of the project will include smallholder livestock and fisheries producers and processors. The project will support an estimated 1.2 million households (HH), of which 466,000 HH from sub‐Projects in the selected9 58 Woredas (component A) and 735,000 HH from improved services (component B). Targeted staff of the MoLF and associated livestock support institutions will benefit from capacity development support provided by the project. A full description of the project beneficiaries is provided in Annex 1.

18. Gender and Youth. In Ethiopia, gender disparities are found in the production, marketing and sales of livestock and fisheries and their products. The project will pay special attention to women headed households and unemployed youth in all intervention areas, including capacity building and skill development trainings which would help them to participate and benefit from the project. The detailed description on how the project will address Gender and Youth can be found in Annex 4.

19. Target Value Chains. The project will target four priority value chains i.e.: (i) dairy with small‐scale mixed crop‐livestock systems; (ii) poultry with improved semi‐scavenging systems, small‐scale broilers and layers

8 Ethiopia Intended Nationally Determined Contribution (INDC), 2015. 9 These Woredas were selected by the autonomous six Regions, based on MoLF‐World Bank agreed technical criteria, doubled by geographical balancing consideration. 4

The World Bank Livestock and Fisheries Sector Development Project (P159382)

systems; (iii) red meat with fattening in dairy and small ruminant systems; and (iv) fish with sustainable inland fisheries and aquaculture in selected suitable areas. In addition, the project will indirectly support the red meat cattle value chain nation‐wide through its support to the strategic national programs on animal health, access to feed and traceability system. There is a strong rationale for the selection of the value chains for the project as highlighted in the LMP.

20. Geographical targeting: The primary geographic focus area of the project targeted value chains would be the rural and peri‐urban areas of the high potential highland regions where the dairy, poultry, fisheries and aquaculture production systems dominate. Furthermore, the project would follow the Government cluster approach and intervene in the existing or planned clusters of dairy, poultry and fisheries and aquaculture. This would enable the project to benefit from synergistic gains which might arise from other investment (infrastructure, private sector, etc.) coming in these clusters. While the crosscutting activities of the project will have a national coverage, the value chains activities will be implemented in the 58 Woredas of the following six regions10: Amhara, Benishangul‐Gumuz, Gambella, Oromiya, Southern Nations Nationalities and Peoples Region ‐ SNNPR, and Tigray. See map in Annex 8.

C. PDO‐Level Results Indicators

21. The following PDO level results indicators have been identified:

(i) Change in productivity of small‐scale producers (by selected commodity); (ii) Increase in sales of primary and processed livestock and fish products by producers and processors (by selected commodity); (iii) Number of system improvements11 in support of better livestock and fisheries service delivery achieved; (iv) Proportion of trainees applying the newly acquired competencies in their daily work; and (v) Time lapse between early warning information and disbursement toward response, in case of crisis or emergency (in weeks). 22. The first two indicators pertain to component A while the next two pertain to component B. Those indicators taken together are a good proxy to reflect the beneficiaries’ progression within the transformation pathway (Figure 1).

III. PROJECT DESCRIPTION

Strategic approach

23. The proposed project will follow a dual approach of: (i) targeting strategic commodity value chains

10 The project is targeting four value chains in five high potential highland regions, plus Gambella for fisheries. The arid and semi‐arid lowland regions, where pastoralism dominates, are already supported by ongoing IDA‐funded projects (Regional Pastoral Livelihoods Resilience Project; Pastoral Community Development Project III) and therefore are not being considered here under component A. However, all regions of Ethiopia would benefit from component B which has a national coverage. 11 (i) Rationalization of Vet services, (ii) Rationalization of the Livestock and Fisheries Extension and Advisory Services (EAS), (iii) DAMS, (iv) Animal Identification, Traceability and Performance Recording Upgrade, (v) Surveillance and Diagnostic Capacity Improvement, (vi) Improvement of the Breeding Program, (vii) Improvement of the Feed and Forage System, (viii) Enhanced Animal Disease Prevention and Control, (ix) Development of a National Aquaculture and Fisheries Master Plan. 5

The World Bank Livestock and Fisheries Sector Development Project (P159382)

through comprehensive support to smallholder producers and other value chain actors; and (ii) supporting the newly established MoLF and its strategic national programs for immediate and long‐term impact of national coverage.

24. Poverty focus. The project is designed to focus primarily on smallholder producers in the mixed crop‐ livestock production systems of the central highlands, and in areas with potential for fish production. Smallholder farm households are defined as those with small parcels of farm land, few farm animals, large family size and unemployed youth and women headed households. The project will contribute to the LMP goal to raise out of poverty 25 percent of livestock keeping households, which is about 2.36 million households.

25. Maximizing Finance for Development. Although there is a strong rationale for public sector support of the livestock sector, there are also elements that should be left to the private sector and a few barriers prevent them from fully engaging. The project will therefore complement existing efforts to build private sector engagement, including upgrading policy and regulations to make them more conducive to the private sector. It will also support the progressive transformation of the service delivery system, from pure public delivery to a more public‐private, comprehensive and specialized services delivery system. As well as private goods and services, private providers would also be allowed to deliver specific public goods and services under the oversight of the public authorities. Private producers, processors, buyers, young entrepreneurs, and others will be encouraged to participate in the transformation of the sector in a more structured way, through the productive partnership arrangements supported by the project. Private engagement will strengthen the growth and transformation agenda of the livestock and fisheries sectors.

26. WB‐IFC Linkages. The World Bank Group is also working to improve the quality and access of inputs related to animal drugs, vaccines and feed used in the livestock sector and the competitiveness of the Small and Medium Enterprises (SMEs) working in this sector. Support in the form of regulatory reform and capacity building is provided through ongoing IFC non‐lending advisory services (Livestock Micro‐Reform for Agribusiness project ‐ L‐MIRA) from the Trade and Competitiveness Practice Group to Ethiopia’s Veterinary Drugs, Feeds and Vaccine Control Authority (VDFACA). In addition, the L‐MIRA project will support initial World Bank Group engagement on the recently adopted breeding policy and the intent to introduce veterinarian certification.

27. Transformation Pathway. The Transformation Pathway for improved livestock and fisheries productivity and commercialization is set out in Figure 1. While recognizing the fluidity of the levels, each level requires a specific set of interventions tailored to the current beneficiary status in the transformation pathway (Table 3 in Annex 1). The project will simultaneously intervene in all three levels of the transformation pathway.

28. Climate smart agriculture and greenhouse gas emissions. The project will systematically ensure that all activities and investments financed include climate‐smart and good environmental management practices, and that the technical support and financial incentives provided by the project facilitate the wide adoption of such practices. Most technical and institutional interventions envisaged under the project will have effects on more than one of the climate smart agriculture outcomes, that will be thoroughly integrated in the transformation pathway. At the lower levels of the pathway, focus will be on adaptation and increased productivity (resulting in lower emission intensities), whereas interventions in support of beneficiaries at higher levels of the pathway may also include specific mitigation options such as covered manure storage, biogas and energy saving devices.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Figure 1: Transformation pathway for improved livestock and fisheries productivity and commercialization: direct beneficiary targeting12 and sub‐Projects

A. Project Components

29. The project is structured around three inter‐dependent components: (i) Component A: Linking More Productive Farmers to Markets; (ii) Component B: Strengthening National Institutions and Programs; and (iii) Component C: Project Coordination, Monitoring and Evaluation, and Knowledge Management. Detailed description of the project components is provided in Annex 1.

Component A: Linking More Productive Farmers to Markets (US$103.2 million equivalent, of which SDR 71.8 million IDA or US$100.8 million equivalent and US$2.4 million from beneficiaries).

30. This component will finance a program of activities aimed at increasing productivity and commercialization of producers and processors in selected value chains and targeted areas in 58 Woredas by improving their access to critical knowledge, services, inputs, equipment and productive infrastructure, and increasing their linkages with markets and value chains. To achieve these objectives, the component will address all levels of the transformation pathway through the implementation of three types of sub‐Projects (sub‐ components A2 A3 and A4), each supporting a specific cluster of activities and training approach tailored to the beneficiary’s needs in the pathway (Figure 1 above & Table 3 Annex 1). A first sub‐component (A1) will establish the enabling environment for the successful implementation of these sub‐Projects.

31. Sub‐component A.1. Enabling Sub‐Projects Implementation (US$0.8 million IDA). The sub‐component

12 The project does not address level 4 producers and processors because they are already at a level where their needs can be met by private financing. 7

The World Bank Livestock and Fisheries Sector Development Project (P159382)

will finance preparatory analyses and activities to enable the implementation of sub‐components A.2, A.3 and A.4. These upfront investments will include: (i) studies for the grouping of Woredas, based on a production and commercial infrastructure mapping, as well as the clustering criteria used by the Agricultural Transformation Agency ‐ATA (i.e. livestock and fisheries production potential, storage and processing capacity, access to markets, institutional environment13); (ii) assessments to identify beneficiaries within the group of Woredas (subsistence14, improved and specialized producers and processors and cooperatives), based on their position in the Ethiopia Good Practices (Good Animal Husbandry Practices ‐GAHP and Good Aquaculture and Fisheries Practices ‐GAFP) checklist (tools developed under component B); (iii) training to Development Agents (DAs) on the sub‐Project's approach and process; (iv) beneficiaries’ monitoring to assess transformation throughout the pathway; and (v) a feasibility study for establishing a Line of Credit (LoC) during project implementation.

32. Sub‐component A.2. Support to Subsistence Farmers and Unemployed Youth (US$53.4 million IDA). The sub‐component will support the transformation of level 1 beneficiaries (i.e. livestock and fisheries smallholder subsistence men and women farmers, subsistence fishermen/women, unemployed youth from farming families) into level 2 beneficiaries (i.e. improved cooperatives of small and medium‐size producers and primary processors, and future young entrepreneurs). To enable this transformation, the sub‐component will finance basic sub‐Projects focusing on establishing primary cooperatives and mastering minimum good practices (Eth‐ GAP1), supported by basic training, public extension and advisory services, inputs, basic equipment and small‐ scale infrastructure. Basic sub‐Projects will be prepared jointly by the beneficiaries and the DA. Level 1 direct beneficiaries will represent 70 percent of total direct beneficiaries of component A, i.e. 325,000 households.

33. Sub‐component A.3. Support to Improved Cooperatives (US$26 million, of which US$25.3 million IDA and US$0.7 million from beneficiaries). The sub‐component will support the level 2 beneficiaries (improved cooperatives) through the implementation of intermediate sub‐Projects based on the productive partnerships approach, defined as an association, facilitated by the project through a sub‐Project, between cooperative(s) of supplier(s) of a given product(s) and buyer(s) (individual15 or cooperative). The partnership is formed through the joint preparation and implementation of the sub‐Project, and is formalized through a commercial contract defining the agreement reached by the partners such as the agreed quantity and quality of products to be supplied / bought, the periodicity, the pricing policy, etc. Sub‐Projects will be prepared jointly by project beneficiaries and suppliers and/or buyers of products. The sub‐Project, supported by ATA as the specialized services provider, will act as the main facilitator for establishing and implementing these partnerships. These intermediate sub‐Projects will focus on improving both the level of cooperatives organization and intensification of production, and the efficiency of the cooperative buyers, through the implementation of improved good practices (Eth‐GAP2) supported by Farm Field School training, public and private services, inputs, equipment and small/medium‐scale infrastructures. Level 2 direct beneficiaries will represent 23 percent of total direct beneficiaries of component A, i.e. 108,000 households.

34. Sub‐component A.4. Support to Specialized Cooperatives and Municipalities (US$23 million, of which US$21.3 million IDA and US$1.7 million from beneficiaries). The sub‐component will support level 3 beneficiaries (specialized cooperatives of sellers and buyers, and municipalities) through the implementation of advanced sub‐

13 Criteria used by ATA to identify clusters under the Agricultural Commodity Cluster/ ACC Program. 14 Special attention will be given to include underserved peoples and vulnerable groups as potential beneficiaries as identified in the Social Assessment (Social Development Plan, see PAD Annex 7). The project will support inclusive targeting of those groups for them to access productive assets. 15 In the case of individual buyer (supermarket, institutional buyer, etc.), the support of the project through the sub‐Project will be directed to the cooperative entity only. The benefit for the individual partner would consist of some level of guarantee to receive more regular quantity of better quality products. 8

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Projects based on the Productive Partnership approach. The advanced sub‐Projects will focus on linking value chain actors through formal contracts and the implementation of specialized good practices (Eth‐GAP3) supported by specialized training, private and public advisory services, specialized inputs and equipment and medium‐scale productive and commercial infrastructures. Level 3 direct beneficiaries will represent 7 percent of total direct beneficiaries of component A, i.e. 33,000 households.

Component B: Strengthening National Institutions and Programs (US$55.8 million equivalent, of which SDR 37.4 million IDA or US$52.5 million equivalent and US$3.3 million from Government).

35. The component16 will carry out a program of activities to improve the immediate and long‐term human, organizational and institutional capacity of MoLF and key public and private actors and cooperatives of the livestock and fisheries sectors through the following sub‐components:

36. Sub‐component B.1. Human Resources and Organizational Capacity Development (US$7.1 million IDA). The sub‐component will provide support to: carry out a capacity development assessment of MoLF’s immediate and long‐term needs for human resource development, organizational development, and institutional and legal framework development; prepare a Capacity Development Program (“CDP”) based on the results of the assessment; and validate the CDP through a national consultation workshop. Once approved, the recommended interventions of the CDP will be embedded in the capacity development activities of the project at federal and regional levels, and in the 58 targeted Woredas and implemented through other sub‐components described below.

37. Sub‐component B.2. Policy, Planning and Coordination (US$0.3 million IDA). The sub‐component will: (a) improve monitoring and assessment of the livestock and fisheries sectors, including: development and rolling out of a data analysis and monitoring system for the livestock and fisheries sector; acquisition of critical equipment for necessary surveys and training programs for its extension; and update of CSA questionnaires; (b) provide support for: conducting an evidence‐based technical review of current policies, laws and regulations and the drafting and/or updating of new ones: stakeholder consultation processes and policy dialogue between public, private and associative actors; and consensus building to ensure that new policies reflect the views and needs of women, youth, smallholder farmers and larger participants in the livestock and fisheries sector; and (c) provide training and awareness campaigns related to various policy aspects, and support pilot operations to test the decentralized implementation of new/upgraded policies.

38. Sub‐component B.3. Sustainable Animal Health, Extension, and Advisory Services (US$25.6 million IDA). Under this sub‐component, the project will: (a) contribute to the overall development of capacity of the MoLF through the rehabilitation and construction of training facilities (Farmer Training Center ‐ FTC, Technical and Vocational Education and Training ‐ T‐VET, National Training Centre on Poultry), the provision of means of transport (motorcycles and mountain bikes) and critical field equipment for livestock and fisheries field staff at Woredas and Kebeles level; (b) reinforce the capacity of the public Veterinary Services (VS) through the establishment of private animal health services networks and the development of partnerships between the public authorities, the private veterinarians, and the groups of VC actors; and the strengthening of the surveillance and diagnostic capacities of the National Animal Health Diagnostic and Investigation Centre and regional laboratories; and (c) strengthen the Extension & Advisory Services (EAS), including by developing a roadmap for improved livestock and fisheries EAS; promoting, introducing and implementing innovative EAS such

16 Component B has a national coverage, although directing its main applications in priority towards the 58 Woredas targeted by Component A. 9

The World Bank Livestock and Fisheries Sector Development Project (P159382)

as the GAHP and GAFP approach and the Livestock and Fisheries Farmers’ Field School (L&F‐FFS).

39. Sub‐component B.4. Development of Strategic National Programs ‐ SNPs (US$22.8 million, of which US$19.5 million IDA and US$3.3 million from Government). The sub‐component will provide support for the preparation and/or finalization and the implementation (in project areas and for the targeted value chains) of the following five priority strategic national programs, which will help shape a more productive, efficient and resilient livestock sector:

(i) Livestock Identification and Traceability System (SNP1) to support: (a) the harmonization and integration of the various systems existing in Ethiopia through the preparation and implementation of a road map for harmonization and integration of the systems; and (b) contribute to the coordinated implementation of internationally and regionally recognized animal identification, traceability and performance recording systems in the country. (ii) Priority Animal Disease Prevention and Control Program (SNP2) to support the prevention and control of major devastating diseases in the targeted value chains such as the Newcastle Disease (ND) and the Peste des Petits Ruminants (PPR), by supporting the preparation of a ND control strategy and the implementation of said strategy in targeted areas; the extension in the highlands of the PPR Control Program currently implemented in the lowlands; and supporting the MoLF’s One Health program. (iii) National Feed and Forage Program (SNP3) to support the finalization and implementation of the program contributing primarily to the development of the forage component of the program in the project Woredas. The project will support the MoLF in finalizing the overall strategy and implementation plan for a National Feed and Forage Development Program and contribute to the implementation of the said program, particularly the development and expansion of the forage component of the program in the project areas. (iv) National Breeding Program (SNP4) to support the MoLF in finalizing the adoption of the National Breeding Policy and co‐develop with smallholders and larger farmers’ breeding strategies to implement the policy in the Project areas. It will also support the progressive development in the project areas of a performance recording system for small‐scale dairy cows and ensure the promotion of the use of Animal Genetic Resources adapted to the agro‐ecological and socio‐economic situation prevailing within the targeted farming systems. (v) Aquaculture and Fisheries Master Plan (SNP5) to support the preparation of an Aquaculture and Fisheries Master Plan17 and its implementation in selected project areas, including the development of sustainable fisheries co‐management plans and the strengthening of fish handling and processing facilities to reduce post‐harvest losses. The project will contribute to the implementation of the legal framework, rules and regulations on fisheries and aquaculture, and support capacity building in the inland fisheries and aquaculture sub‐sectors.

40. Sub‐component B.5. Contingent Emergency Response (US$0 IDA) aims to support immediate and rapid response to an Eligible Crisis or Emergency, as needed.

Component C: Project Coordination, Monitoring and Evaluation, and Knowledge Management (US$17.2 million equivalent, of which SDR 11.9 million IDA or US$16.7 million equivalent and US$0.5 million from Government)

41. The objective of this component is to support project coordination, management, monitoring and

17 Note that some identified activities and investments in fisheries and aquaculture will be implemented at the beginning of the project and will not depend on the completion of the Aquaculture and Fisheries Master Plan. 10

The World Bank Livestock and Fisheries Sector Development Project (P159382)

evaluation, and learning needs.

42. Sub‐component C.1. Project Coordination (US$16.1 million, of which US$15.6 million IDA and US$0.5 million from Government). The sub‐component will finance the costs of the federal, regional, and Woreda Project Coordination Units (FPCU, RPCU and WPCU), including consultant fees, daily subsistence allowances (DSA) and O&M costs, such as transport, office equipment, furniture, tools, and internal and external audits, among others. It will also finance the costs of project launching, project sensitization and communication, supervision, staff training (on the Environmental and Social Management Framework – ESMF, Resettlement Policy Framework, Social Assessment, on MIS, financial management and procurement etc.) and other administration expenses.

43. Sub‐component C.2. Monitoring, Evaluation and Knowledge Management (US$1.1 million IDA) to support the development of a Project progress and results monitoring and reporting system; the development of a Project monitoring and evaluation manual; and capacity development interventions and services, including organizing surveys (households, focus groups, participants of training events), conducting capacity needs assessments, facilitating action learning events, performing studies and analyses in relevant areas, in particular on poverty analyses (see paragraph 58); and carrying out regular, mid‐term and end of project progress evaluations, and a community and household survey.

B. Project Cost and Financing

44. The total project cost is estimated at US$176.2 million equivalent, of which US$170 million will be financed through an IDA credit. The largest part of the IDA credit goes towards component A “Linking More Productive Farmers to Markets” (US$100.8 million IDA18, 59.3 percent of total costs), followed by component B “Strengthening National Institutions and Programs” (US$52.5 million IDA, 30.9 percent of total costs) and component C “Project Coordination, Monitoring and Evaluation and Knowledge Management” (US$16.7 million IDA, 9.8 percent of total costs).

Table 1: Project Cost and Financing

Component IDA Government Beneficiaries Total Project Cost (US$ million) Linking More Productive Farmers to Markets Enabling Sub‐Projects Implementation 0.8 0.8 Support to Subsistence Farmers and Unemployed Youth 53.4 53.4 Support to Improved Cooperatives 25.3 0.7 26.0 Support to Specialized Cooperatives and Municipalities 21.3 1.7 23.0 Subtotal 100.8 2.4 103.2 Strengthening National Institutions & Programs Human Resources and Organization Capacity Development 7.1 7.1 Policy, Planning and Coordination 0.3 0.3 Sustainability Animal Health, Extension and Advisory Services 25.6 25.6 Development of Strategic National Programs 19.5 3.3 22.8 Contingency Emergency Response 0 0 Subtotal 52.5 3.3 55.8 Project Coordination, Monitoring and Evaluation, Knowledge Management Project Management and Coordination 15.6 0.5 16.1 Monitoring, Evaluation and Knowledge 1.1 1.1 Subtotal 16.7 0.5 17.2 Total project costs, including contingencies 170.0 3.8 2.4 176.2

18 Including price and physical contingencies. 11

The World Bank Livestock and Fisheries Sector Development Project (P159382)

C. Lessons Learned and Reflected in the Project Design

45. The project reflects lessons learned from the design and implementation of various recent projects in Ethiopia with livestock and fisheries activities, including World Bank‐funded Agriculture Growth Program I and II (AGP, AGP2; P113032 and P148591), Pastoral Community Development Project – PCDP (P130276) and Regional Pastoral Livelihoods and Resilience Project ‐ RPLRP (P129408), and IFC‐funded L‐MIRA19, and on the global knowledge brought by the World Bank Group and its partners in linking farmers to markets20, policy and institutional support, and good practices in livestock21, fisheries and aquaculture (Box 4, Annex 1). Based on the various consultations held during project preparation, and for the livestock sector, intervention areas identified in the LMP, key investments to best contribute to achieving the ambitious goals established in the GTPII have been identified and organized around the proposed three inter‐dependent components.

46. Successfully linking farmers to markets, requires simultaneously investing in value chain actors’ capacity development as well as in productive and processing infrastructures. Smallholder groups are most successful when they are supported by a comprehensive cluster of activities tailored to their specific needs. The project includes a dedicated component designed to finance sub‐Projects co‐prepared by the beneficiaries and a public or private service provider, facilitated by the project.

47. Solid institutions, equipped with sound systems, can develop and implement critical strategic programs for long lasting impact on the sector. This requires the MoLF and the VC actors to adopt international standards and adapt good practices in livestock and fisheries tailored to the Ethiopian conditions and sector context.

48. Cross‐cutting issues require specific interventions and clear targets to gauge progress and outcomes. This project aims to have specific interventions targeting women and youth and nutrition, and will include climate‐ smart livestock interventions (e.g. animal health, animal nutrition and genetic resources management) to increase productivity while reducing GHG emission intensities.

49. To reduce the gender gap in the livestock and fisheries sectors, the project will focus on supporting women to: (i) access services, information and networking, and be more involved in training, for example through women‐friendly services such as provision of child care service during meeting and trainings; (ii) improve their technical skills by providing technical and business‐management training offering more profitable economic opportunities; and (iii) develop cooperatives and participate in those organizations. Furthermore, a gender oriented livestock and fishery value chain analysis is essential to understand the existing market opportunities, structure and power relations, participation of men and women actors, and the constraints that limit growth of the livestock sector.

50. The positive correlation between increased environmental benefits and increased productivity is well demonstrated in several livestock value chains. The project will systematically ensure that all activities and investments financed include climate‐smart and good environmental management practices, and that the technical support and financial incentives provided by the project facilitate the wide adoption of such practices.

51. For timely and efficient project execution and to respond to local needs, PCUs right down to the Woreda

19 AGP: Agriculture Growth Project I and II, PCDP: Pastoral Community Development Project, Regional Pastoral Livelihoods Resilience Project, L‐MIRA Livestock Micro‐Reform for Agribusiness. 20 World Bank, 2016, Linking farmers to markets through Productive Alliances: an assessment of the World Bank experience in Latin America, Washington DC, USA. 21 Notably the ongoing LIPSAP in Vietnam for its successful GAHP approach. 12

The World Bank Livestock and Fisheries Sector Development Project (P159382)

level are needed. In addition, the project is using tried and tested Government systems.

IV. IMPLEMENTATION

A. Institutional and Implementation Arrangements

52. The project will be implemented under the overall responsibility and coordination of the MoLF. To ensure timely and effective execution of the activities, and to monitor progress towards the PDO, the MoLF will establish a dedicated PCU at the federal level, supported by PCUs at the regional and Woreda levels. These units will also serve as common coordination bodies of the livestock activities being implemented, or to be implemented by the other World Bank‐financed projects operating in the same regions. The FPCU will ensure the overall coordination of the project and will be directly accountable to the Minister of Livestock and Fisheries or his/her designate. These PCUs will be guided by Project Steering Committees and Project Technical Committees that will also be established at the federal, regional and Woreda levels22. The FPCU will be headed by a full time National Project Coordinator.

53. Implementation of the project will rely on existing Government structures. To assist these structures in implementing the project, collaboration and partnerships will be established with: (i) private and public service providers, including ATA and FCA, (ii) private actors, and (iii) development partners (DPs) including International Center for Agricultural Research in the Dry Areas (ICARDA) and the Food and Agriculture Organization of the United Nations (FAO).

54. Roles and responsibilities of federal, regional, and Woreda institutions are provided in Annex 2 and will be detailed in the Project Implementation Manual (PIM), which will be finalized no later than one month after project effectiveness. The PIM will detail the organizational and technical procedures that will govern the project, including operations, annual work plans and budgets (AWP&B) preparation, approach for targeting beneficiaries (including youth and women), M&E, and financial and procurement procedures. During implementation, the PIM will be revised and updated as the need arises.

55. An environmental guideline for small scale construction contractors is annexed with the ESMF. This guideline will be used to supplement existing clauses within the standard contract documents (particularly the Technical and Special Specifications) for the sub‐Project requiring small scale civil works. The guideline will help to address social, environmental and health and safety requirements in the civil works.

56. Spending components and sequencing – The project disbursement profile reflects a six‐year project implementation period. Starting year one, spending will prepare the implementing agencies to get the proper equipment, vehicles, training and studies under sub‐components A1, and components B and C, while the sub‐ Projects under sub‐components A2, A3, and A4, will start their implementation in year two. Overall, the soft investments (Training; Studies and Surveys; Workshop and Meetings; and TA) amounts to 39.3 percent and the hard (Civil Works; Vehicles; Goods & Equipment) to 60.7 percent. A retroactive financing and advanced procurement plan of US$500,000 will support the MoLF to initiate key preparatory studies and advance the procurement process prior to effectiveness.

22 Only one (1) Federal Project Steering Committee and one (1) Federal Project Technical Committee will be established at federal level. See Annex 2 for more details. 13

The World Bank Livestock and Fisheries Sector Development Project (P159382)

B. Results Monitoring and Evaluation

57. LFSDP will be instrumental in developing basic M&E capacity at the MoLF, and in providing thrust to the development and implementation of an effective sectoral M&E system. As such, LFSDP will establish a Progress and Results Information Monitoring System (PRIMS) that will be managed by the Federal PCU with the understanding that it will be compatible with a future MoLF M&E system. A small core group of staff at MoLF and at the regional level will receive trainings in basic and advanced result‐based M&E, followed by on‐the‐job coaching to develop and deepen their M&E skills, thus strengthening the government’s capacity to monitor the project effectively.

58. Beneficiaries will be surveyed in year 1 (baseline), year 3 (mid‐term) and year 6 (end of project) of project implementation to track changes in the effectiveness of livestock and fishery service provision, productivity and commercialization. M&E activities will be largely financed through component C. Each productive partnership will have its own results chain that will be under the LFSDP results chain, and as such it will be designed to contribute to the overall achievement of LFSDP’s intermediate and PDO level results. Therefore, each productive partnership results framework (RF) will include mandatory common results indicators and use harmonized definitions and data collection methodologies. The common results indicators will be disaggregated results measures (e.g., change in poultry production, productivity, sale, and related capacity developed) required for calculating the (consolidated) indicators laid out in the LFSDP RF. All service providers facilitating the preparation and implementation of business plans will be responsible for implementing the guidelines. Service providers will be accountable to the FPCU, and as such submit semi‐annual performance reports of their sub‐Project portfolio. The reports with the performance data will be documented in PRIMS.

59. Performance of the project intervention in terms of its contribution to poverty reduction would be measured by three complementary methods. First, to track changes of poverty trends, the project’s beneficiaries will be surveyed, using the Survey of Wellbeing via Instant Frequent Tracking ‐ SWIFT approach, in year 1 (baseline), year 3 (mid‐term) and year 6 (end) of project implementation. Second, the project’s performance will be measured along the following three set of impacts: (i) number of subsistence farmers adopting improved livestock and fisheries Eth‐GAP1 (generically called ‘agricultural technologies’) with a target of 325,0000 households (HH), leading to (ii) productivity increases measured for each targeted commodity); and (iii) increase of sales. Third, the project’s contribution to improving the dietary diversity (widely accepted as an indicator of improved nutrition), which has high poverty relevance, will be measured by the change in proportion of women of reproductive age (15‐49 years) who consume animal sourced food in the past seven days.

C. Sustainability

60. The decentralization process in Ethiopia has revealed institutional, human and physical capacity deficits at federal, regional and Woreda levels. The weak capacity issue at the decentralized level cannot be addressed through this project alone and must be addressed through regular public investments as well.

61. The LFSDP will build the capacity of implementing agencies at various levels on leadership, organizational, managerial, fiduciary, and technical by following a holistic and systematic capacity building approach.

62. The institutional sustainability of the project will depend primarily on ownership, buy‐in and capacity‐ building of the executing agency, participating public institutions as well as beneficiary communities in project intervention areas. The GoE is committed to stimulate the growth of the livestock and fisheries sector as an

The World Bank Livestock and Fisheries Sector Development Project (P159382)

important engine for economic growth and enhance food security and improve the livelihoods of the target communities which in turn will have a great impact on the sustainability of the project.

63. The implementing agency (MoLF) is committed to mobilizing and deploying its regular staff and facilities for timely implementation of the project. The project, through the planned capacity building investment, will provide support to strengthen the human and institutional capacity of the executing agency at all levels. The implementing agency is committed to progressively increase public resources to the sub‐sector. Moreover, since the project is implemented through the existing MoLF structures at all levels, it will be an integral part of the ministry’s activities, further ensuring its sustainability. The partnering arrangement with ATA and other specialized institutions (e.g. FAO, ICARDA) would further strengthen the technical viability and sustainability of the project.

64. The policy, regulatory and institutional changes (public‐private partnerships and private services delivery) and the innovative approaches that will be introduced with the project (Ethiopian GAPs; Productive Partnerships) will strengthen the technical viability and sustainability of future investments in the sector.

65. While the infrastructure investments will be implemented with external contractors and technical assistance, the ownership and management of the facilities will ultimately rest with the beneficiary cooperatives and municipalities. Towards this, the project will ensure that these groups acquire the knowledge and necessary skills to operate and maintain the facilities.

D. Role of Partners

66. The Project was prepared by the National Technical Team supported by the WBG in close collaboration with FAO (an FAO team led by TCI and comprising staff from both TCI and AGA) and in consultation with other Development Partners (DPs), including the Consultative Group on International Agricultural Research ‐ CGIAR Center International Livestock Research Institute ‐ ILRI, and bilateral donors (e.g. International Fund and Agriculture Development ‐ A, European Union ‐ EU, Spanish Agency for International Development ‐ AECID, Netherlands Development Organization ‐ SNV, United States Agency for International Development ‐ USAID). The Livestock Global Alliance (LGA) –led by the WBG and comprising the World Organisation for Animal Health ‐ OIE, FAO, CGIAR Center ILRI and IFAD– supported the preparation of the livestock aspects of the project in ensuring that the latest global knowledge, relevant good practices, and international standards and guidelines were considered in the project design. Broad consultations with members of the Technical Committees for Livestock and Fisheries of the Rural Economic Development and Food Security (RED&FS), and representatives from the private sector and from producer and processor organizations during project preparation have been critical to build a coherent project design and ensure good complementarity of activities with ongoing and forthcoming livestock and fisheries programs.

67. These DPs will not finance any of the proposed activities because they have their own complementary operations, but the Federal PCU within MoLF will ensure that collaboration and information sharing will occur systematically during implementation of the proposed LFSDP. Partners will also be invited to join implementation missions when and if they so desire. The Federal PCU will support the role of the RED&FS in providing DPs coordination. Table 2 provides some additional detail on the DPs cooperating with the LFSDP and the role they are expected to play.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Table 2: Role of Development Partners in LFSDP

Name Institution/Country Role Development partners involved in EU, USAID, AECID, SNV Provide advice on project preparation livestock and/or fisheries and Ensure synergies and complementarities (RED&FS) aquaculture projects Contribute to project supervision Representatives of ILRI and ICARDA CGIAR Centers Contribute to the Livestock Master Plan. Provide good practices and support for technology transfer Provide technical support to the Community‐Based Breeding Program (ICARDA) Investment Center (TCI) FAO Contribute to project preparation and supervision within the framework of the WB‐FAO collaborative program

Technical Services FAO Ensure provision of skills mix to support quality of project implementation Coordinators of World Bank (AGP2, World Bank Group Contribute to project preparation. Ensure synergies and RPLRP, PCDP3, SMEFP, etc.) and IFC complementarities (L‐MIRA) projects Contribute to project supervision

V. KEY RISKS

A. Overall Risk Rating and Explanation of Key Risks

68. The overall project risk is rated high. The risks include political and governance as well as institutional capacity for implementation and sustainability, fiduciary, and environment and social risks.

69. In recent months, the Government has been confronted with growing social and political unrest, as evidenced by the protests in Oromia and Amhara regions. These events have substantially increased the political and governance risks in the country. The situation is likely to remain highly unpredictable for the foreseeable future. To mitigate the latent risks arising from a potential reemergence of the civil disturbances, this project includes strong participatory development models and transparency measures, as well as the enhanced safeguards operational steps.

70. The main implementation agency is a new ministry with limited capacity in terms of procurement, financial management, safeguards, and implementation. To address these risks, the capacity building strategy for the MoLF was developed during the preparation phase. The Bank has completed the Financial Management (FM) and Procurement Management (PM) assessments as part of project preparation, which outlined the detailed risks and mitigating measures. The project would further explore providing systematic and regular training to targeted Woredas as well as undertaking regular supervision to ensure that challenges with regards to FM and procurement are identified and addressed in a timely manner. Steps to further strengthen M&E capacity have been taken. In addition, technical assistance through ATA and UN Agencies will be used to accelerate the transfer of specific skills to the MoLF.

71. There could be a possible overlap with communities supported under the government’s Commune Program with the project in Gambella. This raises substantial risk with regards to safeguards, if the project is

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perceived to be supporting the Commune Program in communities in which the Program has not been well implemented. In agreement with Government and based on the Alignment Study, a cautious screening approach would be applied to circumvent potential risks.

72. Because of the weak capacity of the livestock institutions in general with a newly established MoLF in charge of the proposed project implementation, the Institutional Capacity for Implementation and Sustainability and Political and Governance and Fiduciary risks are rated high, while the Environment and Social risks are rated substantial.

VI. APPRAISAL SUMMARY

A. Economic and Financial Analysis

73. The detailed Economic and Financial analysis (EFA) of LFSDP is presented in Annex 6. Activities under the two components are expected to generate three main benefit streams: (i) private‐level benefits, such as accrued production of livestock products (milk, dairy and small‐ruminants’ red meat, eggs and poultry meat) and fish due to improved access to inputs, services, improved feeding, better husbandry and improved genetics. Other benefits include increased revenues from processing and commercialization through the productive partnerships with buyers, which in turn generates additional social benefits in the form of increased food security and nutrition; (ii) public benefits, such as institutional strengthening of the MoLF due to capacity development at federal, regional and Woreda levels (these intangible benefits were not fully quantified due to the difficulty of attributing a monetary value to their contribution to the PDO); and (iii) global benefits, such as reduced GHG emission intensity associated with animal production and processing due to GAHP/GAFP and climate smart processing and commercialization practices. Other benefits include spill‐over effects on consumers through relatively high milk supply and quality, less health‐related illnesses through investments in food safety, and veterinary drug and feed suppliers who would receive higher demand for their services.

74. Annex 6 details the methodology and tools used to calculate the project’s Internal Rate of Return ‐ IRR and Net Present Value ‐ NPV. The analysis finds the project to be economically justified. Under the current modelling assumptions, the IRR is in the order of 21.2 percent, while the NPV averages US$153 million. Due to the relative scarcity of baseline data, the ex‐ante results should be considered as indicative, rather than final. Finally, results indicate that the project is robust but sensitive to changes in some of the project’s variables (output prices, mortality rates, milk productivity and GAHP/GAFP adoption rates).

75. The EFA shows there is a strong economic rationale for public interventions in the livestock and fisheries sectors. First, the project will support the newly‐established MoLF in performing its core public functions of providing public goods for the livestock and fisheries sub‐sectors. Second, the project will address market imperfections (insufficient formal farmers‐buyers’ linkages, missing infrastructures, bargaining power imbalances and knowledge asymmetries) preventing smallholders and the private sector to perform efficiently and sustainably in livestock and fisheries VCs. Third, project investments will contribute to climate change adaptation and mitigation that are key pathways to poverty reduction. These interventions are well aligned with the Bank’s twin goals of fighting poverty and fostering shared prosperity.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

B. Technical

The rationale for the selected technical design or approach is based on the following elements:

76. The project will support the Borrower’s newly‐established MoLF in performing its core public functions of delivering public goods for the livestock and fisheries sub‐sectors. The provision of public goods includes policy‐making, regulation and legislation, investment planning and coordination, delivery of advisory services on GAHP/GAFP in animal health, animal feed provision, and genetic resources management, as well as training, services and investments for public health (food safety, zoonotic diseases, AMR), climate change mitigation, biosecurity measures, pollution control and environmental management, and animal welfare. The project will also contribute to the implementation of MoLF’s LMP that aims to raise out of poverty 25 percent of livestock keeping households, i.e. approximately 2.36 million livestock‐keeping households (Box 1, Annex 1).

77. The project will address market failures that prevent the development of sustainable and inclusive livestock and fisheries VCs. These market imperfections include insufficient formal farmers‐buyers’ linkages, missing infrastructures, bargaining power imbalances and knowledge asymmetries that inhibit smallholder producers/processors socio‐economic progress (i.e. insufficient access to market demand and signals). The “productive partnerships” approach envisioned in the project, involving one or several cooperatives, some buyers and the public sector to prepare sub‐Projects aiming to upgrade cooperatives’ production and marketing capacities is considered global good practice. In the Sub‐Saharan Africa context, this approach has been mainstreamed in the recent design of a few Bank‐financed projects in Cameroon, Kenya and Burkina Faso.

78. Bank‐sponsored investments will contribute to climate change adaptation and mitigation, both being key pathways to poverty reduction and shared prosperity. Most technical and institutional interventions envisaged under the project will have effects on more than one of the climate smart agriculture outcomes, that will be thoroughly integrated in the transformation pathway. At the lower levels of the pathway, the focus will be on adaptation and increased productivity (resulting in lower emission intensities), whereas interventions in support of beneficiaries at higher levels of the pathway may also include specific mitigation options such as covered manure storage, biogas and energy saving devices (Annex 5).

C. Financial Management

79. A Financial Management (FM) assessment was conducted in accordance with the Financial Management Practices Manual for World Bank‐financed investment operations issued on February 4, 2015, and the supporting guidelines. In conducting the assessment, the Bank team has reviewed the experiences of other projects implemented by the MoLF such as RPLRP and AGP. Capacity assessments have been carried out for MoLF, ATA, regions and selected Woredas. The program will build on the strengths of the country’s public finance management (PFM) system such as the budget process, classification system, and compliance with financial regulations. Significant ongoing work is directed at improving the country’s PFM systems through the government’s Expenditure Management and Control subprogram. The program also benefits from the country’s internal control system, which provides sufficiently for the separation of responsibilities, powers, and duties, and it benefits from the effort being made to improve the internal audit function.

80. The FM arrangements for the program (see Annex 2 for details) follow the government’s channel 2 fund flow mechanism, where funds from the Bank flow directly to MoLF. MoLF will transfer fund to the federal level implementers, regional Bureaus and Woredas. Staffing arrangements have been outlined at all levels to

The World Bank Livestock and Fisheries Sector Development Project (P159382)

supplement the existing system. The program will use report‐based disbursement, with submission of interim financial reports (IFRs) with two quarters’ expenditure forecast submitted to the Bank and replenishment of project accounts accordingly. The program will have an independent auditor’s report every year, to be submitted to the Bank within six months of the year end.

81. The conclusion of the FM assessment is that the FM arrangements meet the IDA requirements per the Bank Policy for Investment Lending. An action plan has been developed to mitigate the risks identified in the project.

D. Procurement

82. Procurement under the project will be carried out in accordance with the World Bank’s Procurement Regulations for IPF Borrowers ‐ ‘Procurement in Investment Project Financing, Goods, Works, Non‐Consulting, and Consulting Services’, dated July 2016 and ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants’, revised as of July 1, 2016; and the provisions stipulated in the Legal Agreement.

83. As per the requirement of the Regulations, a Project Procurement Strategy Document (PPSD) has been prepared by the MoLF, which shall form the basis for a Procurement Plan at least for the first 18 months of the project life.

84. The project will be implemented by several federal, regional and Woreda level agencies. A procurement capacity assessment of the implementing agencies was carried out using Procurement Risk Assessment Management System questionnaires. The assessment carried out revealed that the MoLF and other implementing agencies lack adequate experience in implementing procurement activities under World Bank‐ financed projects. The MoLF’s is only two years old, the Procurement and Property Administration Directorate has limited experience in public procurement under Word Bank‐financed projects, with the exception of AGP‐II and RPLRP. Similarly, the regional and Woreda Livestock and Fisheries agencies/bureaus/offices and other sectoral implementing agencies at federal and regional level lack adequate experience in carrying out similar World Bank financed projects.

85. Other shortcomings/risks of the procurement system include, lack of staff with adequate experience on WB procurement procedures, poor quality of bidding documents; mechanical approach on technical evaluation; unsuitable working environment for procurement; lack of adequate capacity for procurement record keeping; lack of skill development schemes for procurement personnel, low level of pay scale for procurement personnel, which is too low to attract qualified procurement staff, lack of systematic procurement planning and follow‐up in procurement; and lack of experience in contract administration and management. Based on the current risk assessment, the procurement risk rating is “High”.

86. In order to address the identified shortcomings/risks of the procurement system of the project, the MoLF shall engage competent procurement and contract management specialists to provide hands on assistance on procurement and contract management and build the capacity of procurement and contract management staff and, no later than one month after effectiveness, prepare a procurement manual as part of the project implementation manual, which provides step‐by‐step procedures for the execution of procurement and contract management activities under the project. Details on the shortcomings/risks identified and recommended mitigation measures are provided in Annex 2.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

87. Each implementing agency at federal, regional and Woreda levels shall be responsible for conducting its own procurements based on approved consolidated procurement plans and budget cash‐flow. The procurement activities of the Project at federal, regional and Woreda levels will be implemented within the existing structure of the procurement function of each implementing agency. Considering the capacity limitations of the implementing agencies, the PCUs to be established at federal, regional and Woreda offices and housed by the core implementing agencies, MoLF and regional Livestock and Fisheries Agencies/Bureaus will include procurement and contract management professionals who will assist the respective procurement units. MoLF, in addition to its own procurement, shall aggregate and procure strategic and specialized procurements, such as vaccines, vehicles and other specialized laboratory and field equipment on behalf of other implementing agencies.

E. Social (including Safeguards)

88. The project’s anticipated social impacts triggered the following World Bank Operational Polices: Environmental Assessment (OP 4.01), Involuntary Resettlement (OP 4.12) and Indigenous Peoples/Underserved Peoples (OP 4.10). The relevant safeguards instruments have been prepared by the Borrower, consulted on, reviewed by the Bank, and have been disclosed in‐country and in the Bank’s external website on October 27, 2017 for the Social Assessment (SA) and Resettlement Policy Framework (RPF) and October 30, 2017 for the Environment and Social Management Framework (ESMF).

89. The LFSDP triggered OP 4.10 Indigenous People as it was determined that the physical and sociocultural characteristics of the LFSDP proposed intervention areas where sub‐Project activities could be implemented, and the people living in these sites, meet the policy requirements. The decision to trigger the policy is also based on the Ethiopian Constitution, which recognizes the presence of different socio‐cultural groups, including historically disadvantaged or underserved peoples, as well as their rights to their identity, culture, language, customary livelihoods, socio‐economic equity, etc. The social safeguard issues relating to the policy are assessed in detail through an enhanced Social Assessment and extensive consultation with potential project beneficiaries, including those identified as vulnerable groups and underserved peoples. The consultation enabled communities to voice their views, concerns and a wide range of recommendations have been made and incorporated into the project design. A detailed matrix outlining grievance redress mechanism, benefit sharing approach, monitoring and evaluation, potential social risks and mitigation actions are included in the project Social Assessment and outlined in Annex 7 as the Social Development Plan (SDP)23.

90. The budget for the implementation of the SDP activities is embedded in (i) Sub‐component A.1. Enabling Sub‐Projects Implementation, (ii) Sub‐component A.2. Support to Subsistence Farmers and Unemployed Youth and other sub components for inclusively targeting underserved peoples and vulnerable groups as indicated in the plan and the operational modalities will be included in the Project Implementation Manual (PIM). The SDP tasks will also be addressed by Component C, providing, amongst others, resources to better understand the local needs of vulnerable and underserved people in the design of sub‐Projects as well as monitoring the inclusive approach of the project for adaptive management and accountability purposes. The Project’s respective social

23 In Ethiopia, SDP is the operational equivalent of the World Bank OP 4.10 ‐ Indigenous Peoples Plan. The SDP for the LFSDP was prepared based on the Social Assessment and the related in depth consultation with the affected underserved peoples and vulnerable groups to seek their support for the project. The SDP sets out the measures to ensure that: (a) underserved and vulnerable groups affected by the project receive culturally appropriate social and economic benefits, and (b) any potential adverse effects are avoided, minimized, mitigated, and/or compensated.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

safeguards officers/units will materially participate in budget preparation and decision processes and meetings to support the other team members on local, regional, and federal level in aligning the SDP measures and targets with the overall project progress on a regular base.

91. OP 4.12 Involuntary Resettlement is triggered. The proposed LFSDP Components and sub projects including forage seed and forage production, dairy farming, water resources harvesting, medium‐scale aquaculture ponds and other fishery infrastructures, livestock/poultry shades and market centers/shades, and FTC rehabilitations and the construction of new midlevel TVET centers, may require land and induce access and use restriction to natural resources. Sub‐Projects requiring a sizable area of land may be implemented by small holder farmers, or government offices of small and middle scale enterprises. Therefore, to meet the policy requirements, the project prepared, consulted upon and disclosed a RPF to address any issues which might arise from physical and economic displacement and or restriction of access to and/or use communal natural resources. The RPF will ensure that prior to implementation of any sub‐Project activities, project‐affected people (PAP) are consulted, and appropriate mitigation measures are exhaustively considered; and if needed, site specific Resettlement Action Plan (RAP) commensurate the scope of impact will be prepared.

92. Safeguards Management Capacity: The implementation agency of the borrower has limited experience in implementing World Bank supported projects, and must assign a qualified and experienced social development officer and environmental officer who will be responsible for social and environmental safeguard matters at national and regional levels. The Social Safeguard Officer will closely work with the Gender and Youth Officers. These specialists need to coordinate and strictly follow‐up with the preparation of the required site specific safeguards instruments, monitor safeguards due diligence and report quarterly during implementation. The Bank will provide the required support and capacity strengthening for the designated counterpart staff during project implementation.

93. Citizen Engagement, Consultation and Participation: LFSDP while using a participatory approach in the identification of sub projects will build on citizen engagement through continued community consultation, participation and feedback through its grievance handling mechanism. Community Consultation/participation and feedback is at the center of the LFSDP investment in the six participating regional states. As part of the safeguards instruments preparation, LFSDP conducted enhanced community and stakeholder consultations, where sites for the consultation were selected to fairly represent views and concerns taking into account the regional diversity and particular needs of stakeholders. Community consultation participants comprised smallholder farmers, cooperative members, women, youth, and elders, as well as experts at regional and Woreda livestock and fisheries bureaus/offices including fair representation of ethnic minorities, vulnerable groups and underserved peoples. The engagement of communities in the identification, planning and implementation of the LFSDP include a feedback mechanism that will continue throughout the project implementation. The LFSDP will finance a dedicated consultation and participation endeavor as included in the Social Assessment (SDP) which will frame communication, consultation and feedback messages of the project.

94. Gender and Inclusion of Youth: the project will support the Government’s policy to mainstream the participation of women (both female headed households, women in male headed households and women in polygamous marriages) and youth into the livestock and fisheries sectors. The FPCU will have a Gender and Youth Officer who will coordinate with the Social Development Specialist on the implementation of the Gender and Youth Strategy as well as supporting institutional strengthening. Gender and Youth relevant measures are included in Annex 4 of the PAD.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

95. Labor and working conditions: To minimize the impact of the influx of external labor on the community, such as (a) unfair wage paid by the contractor; (b) increased cost of living and food prices in local market; (c) risk of cultural misunderstandings/exploitation; (d) risk of sexual violence due to workers relations with local women/girls; and (e) risk of increase in local alcohol consumption, the project will put in place adequate risk mitigation measures based on the scope of the civil works for the selected value chains such as (a) zero tolerance to sexual violence, and so on; (b) promotion of fair treatment, non‐discrimination and equal pay for equal work for all project workers; and (c) having a code of conduct on the relationship with the local community included in bidding documents including labor management procedures to prevent and address harassment, intimidation and/or exploitation of members of the local community and unwanted pregnancies.

F. Environment (including Safeguards)

96. LFSDP is assigned an EA Category “B” and has triggered six out of the ten safeguard polices: Environmental Assessment (EA), Pest Management, Natural Habitat, Physical cultural resources, Involuntary Resettlement, and Indigenous Peoples The environmental issues of the project are primarily associated with the activities of Component A and B. The overall environmental impact of the project is positive as it will improve the capacity of the MoLF and its human resources to enable it develop and review policies and strategies for sustainable animal health and extension service delivery, improve livestock and fishery data management as well as communication. Provision of extension services to farmers in most of the program implementation areas will be improved as a result of various capacity building activities and thereby increase the production and productivity of smallholder farmers; minimize livestock diseases and deaths through supporting a strategic program; expand market opportunities of livestock and fishery commodities through construction of critical market and commercialization infrastructures; and generate job opportunities and income primarily for women and youth through creating small investor producers and cooperatives.

97. However, some limited negative impacts may arise as there will be increased use of livestock drugs, vaccines and other chemicals which may be toxic to non‐target organisms and hazardous to humans and the environment. Antibiotic resistance from poor management of livestock drugs and inappropriate disposal of animal waste; and multi‐drug resistant microbes of zoonotic diseases can be transmitted through food and the environment. Use of hazardous laboratory chemicals in animal health services laboratories may cause environmental pollution and a risk to human health.

98. The negative impacts of sub‐Projects would be avoided or mitigated through the implementation of the mitigation measures developed. The ESMF prepared as part of this project includes measures for addressing broader environmental and social impacts and impacts on natural habitats. The ESMF will be used to develop detailed site‐specific Environmental Management Plans (EMPs) that will be consulted upon and disclosed prior to the commencement of sub‐Projects under Component A and B. The effective use of the ESMF would be regularly reviewed as part of the project’s M&E system.

99. Since the project triggered the Pest Management Policy, an Integrated Pest Management Plan (IPMP) has been included as part of the ESMF.

100. Greenhouse Gas Accounting. The results of the of EX‐ACT (Annex 6) indicate that the activities foreseen by the project lead to a carbon balance of 1.8 million tons of CO2e that are mitigated over the period of 20 years, assuming (i) a warm temperate climate and moist regime, (ii) a linear dynamic of change over the duration of the project, (iii) a six‐year implementation phase, and (iv) a 14‐year capitalization phase. This is equivalent to the

The World Bank Livestock and Fisheries Sector Development Project (P159382)

annual mitigation of roughly 91,849t of CO2e annually. With such a result, the project can thus be characterized as an investment that benefits GHG mitigation.

G. World Bank Grievance Redress

101. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project‐level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project‐related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non‐compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects‐operations/products‐and‐services/grievance‐redress‐service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. .

The World Bank Livestock and Fisheries Sector Development Project (P159382)

VII. RESULTS FRAMEWORK AND MONITORING

Results Framework COUNTRY : Ethiopia Livestock and Fisheries Sector Development Project

Project Development Objectives

Project Development Objective Indicators

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

Name: 1.1. Change in Liter 178.00 265.00 Baseline, mid‐term, end Survey of producers PCU Productivity of small‐scale of project producers ‐ Milk (level 1)

Description: This indicator is computed as: duration of the milking period (day)*average milk yield per animal per day during lactation (l/day)* fraction of adult cows in the household that are either in production or pregnant (fraction). At baseline, a milking period of 180 days, an average productivity of 1.5 l/day, and 2/3 share of cows either in production or pregnant were assumed (i.e. 180*1.5*0.66). The target is based on a lactating period of 197 days, an average yield of 1.7 liter/day, and 4/5 share of cows either in production or pregnant (i.e. 195*1.7*0.8). This PDO indicator refers to Component A.

Name: 1.2. Change in Percentage 20.00 13.00 Baseline, mid‐term, end Survey of producers PCU Productivity of small‐scale of project producers ‐ Broiler (Level 1) ‐

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Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

Mortality

Description: At this level of the pathway, mortality is the most critical driver of productivity. This PDO indicator refers to Component A.

Name: 1.3. Change in Days 60.00 42.00 Baseline, mid‐term, end Sample of cooperatives, PCU Productivity of small‐scale of project Survey of producers producers ‐ Broiler (Level 2/3) ‐ Age at marketing

Description: This PDO indicator refers to Component A.

Name: 1.4. Change in Number 0.00 40.00 Baseline, mid‐term, end Survey of producers PCU Productivity of small‐scale of project producers ‐ Aquaculture

(Cage) Kg/Cubic Meters

Description: Cage production culture. This PDO indicator refers to Component A.

Name: 1.5. Change in Number 0.60 3.00 Baseline, mid‐term, end Survey of producers PCU Productivity of small‐scale of project

producers ‐ Aquaculture (Pond) Kg/Cubic Meters

Description: Pond production culture. This PDO indicator refers to Component A.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

Name: 2.1. Increase in sales Liter 500.00 1500.00 Baseline, mid‐term, end Survey of producers and PCU of primary and processed of project processors livestock and fish products by producers and processors ‐ Milk (Liter/Collection Centers)

Description: Estimated average of milk collection centers promoted by the project, assuming a 1.5 m3 milk collection center. This PDO indicator refers to Component A.

Name: 2.2. Increase in sales Number 45.00 90.00 Baseline, mid‐term, end Survey of producers and PCU of primary and processed of project processors livestock and fish products by producers and processors ‐ Eggs (Level 2/3) ‐ Peak Laying Rate (egg/100 hens/day)

Description: Livestock Sector Assessment – 2016. It assumed that all eggs produced are purchased by the buyer. This PDO indicator refers to Component A.

Name: 2.3. Increase in sales Number 0.00 180000.00 Baseline, mid‐term, end Survey of producers and PCU of primary and processed of project processors livestock and fish products by producers and processors ‐ Broiler (number of birds/slaughterhouse/year)

Description: This PDO indicator refers to Component A.

Name: 2.4. Increase in sales Percentage 0.00 50.00 Baseline, mid‐term, end Survey of producers and PCU

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

of primary and processed of project processors livestock and fish products by

producers and processors ‐ Dried or Smoked Fish (Kg/Year)

Description: This PDO indicator refers to Component A.

Name: 3. Number of System Number 0.00 9.00 Mid‐term and end of Monitoring of achievements PCU Improvements in support of project by using checklist for each

better livestock and fisheries System Improvement service delivery achieved

Description: Improvements refer to administrative, institutional and organizational changes that positively affect livestock and fisheries sector development. This PDO indicator refers to component B. (i) Rationalization of Vet services, (ii) Rationalization of the Livestock and Fisheries Extension and Advisory Services (EAS), (iii) DAMS, (iv) Animal Identification, Traceability and Performance Recording Upgrade, (v) Surveillance and Diagnostic Capacity Improvement, (vi) Improvement of the Breeding Program, (vii) Improvement of the Feed and Forage System, (viii) Enhanced Animal Disease Prevention and Control, (ix) Development of a National Aquaculture and Fisheries Master Plan.

Name: 4. Proportion of Percentage 0.00 90.00 mid‐term, end of Triangulation of information PCU (with support trainees applying the newly project from surveys, knowledge of evaluation service acquired competencies in test, and evaluation provider) their daily work interviews

Description: Assessment based on (i) exit surveys at training events, (ii) self‐assessment online surveys of training participants after approx. 6 months to collect evidence on the use of the new competencies; (iii) random validation interviews by external evaluator; “Trainees” refers to staff from MoLF, NVI, NAIC, NAHDIC, VDFACA, EAS, AH system and VS supported under component B. This PDO indicator refers to Component B.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

Name: 5. Time lapse Weeks 6.00 2.00 Annual M&E function of Ministry Review of reports by between early warning responsible for response to national institution information and emergency situation responsible for disbursement toward response to crisis response

Description: Only relevant in case of emergency response. This PDO indicator relates to the Contingency Emergency Recovery Component, under Component B.

Intermediate Results Indicators

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

Name: 1.1 Number of Basic Number 0.00 10530.00 Semi‐annual sub‐Projects Implemented Service Provider

Description: A 10 percent rejection rate is expected during preparation and a 10 percent failure rate during implementation

Name: 1.2. Number of Number 0.00 360.00 Semi‐annual contractual monitoring with PCU Intermediate sub‐Projects field visits

Implemented

Description: A 40 percent rejection rate is expected during preparation and a 20 percent failure rate during implementation

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

Name: 1.3. Number of Number 0.00 57.00 Semi‐annual contractual monitoring with PCU Advanced sub‐Projects field visits Implemented

Description: A 40 percent rejection rate is expected during preparation and a 20 percent failure rate during implementation

Name: 2.1. Number of Number 0.00 4320.00 Semi‐annual PCU Farmer Field Schools (FFS) established

Description:

Name: Teachers recruited or ✔ Number 0.00 6830.00 Semi‐annual Training delivery reports PCU trained

Teachers recruited or ✔ Number 0.00 1366.00 Semi‐annual Training delivery reports PCU trained ‐ Female (RMS requirement)

2.2. Number of Teachers Number 0.00 2880.00 Semi‐annual Training delivery reports PCU recruited or trained (GAHP/GAFP)

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

2.3. Number of Teachers Number 0.00 2900.00 Semi‐annual Training delivery reports PCU recruited or trained (Field worker in Animal Health)

2.4. Number of Teachers Number 0.00 620.00 Semi‐annual Training delivery reports PCU recruited or trained

(Farmer Field School)

Description:

Name: Farmers reached with ✔ Number 0.00 300000.00 mid‐term, end of Household survey PCU agricultural assets or project services

Farmers reached with ✔ Number 0.00 90000.00 mid‐term, end of Household survey PCU agricultural assets or project

services ‐ Female

Description:

Name: Farmers adopting ✔ Number 0.00 210000.00 Mid‐term and end of Household survey PCU improved agricultural project

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

technology

Farmers adopting ✔ Number 0.00 63000.00 Mid‐term and end of Household survey PCU improved agricultural project

technology ‐ Female

Description:

Name: 2.5. Percentage of Percentage 0.00 80.00 Baseline, mid‐term, and Household survey PCU Targeted Producers satisfied end of project with the livestock and fisheries services received (TOTAL)

2.5.1. Percentage of Percentage 0.00 80.00 Baseline, mid‐term, Household survey PCU Targeted Producers and end of project satisfied with the livestock and fisheries services received (men)

2.5.2. Percentage of Percentage 0.00 80.00 Baseline, mid‐term, Household survey PCU Targeted Producers and end of project satisfied with the livestock

and fisheries services received (women)

Description: This indicator is used as a citizen engagement indicator

Name: 2.6. Proportion of Percentage 0.00 50.00 Baseline, mid‐term, and Household survey PCU

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

women of reproductive age end of project (15‐49 years) that consumed

animal sourced food in past 7 days

Description: The project will apply the Minimum Dietary Diversity of Women (MDDW) methodology for data collection. MDD‐W is a dichotomous indicator defined as: The proportion of women 15–49 years of age who consumed food items from at least five out of ten defined food groups the previous day or night. Three out of the ten food groups are animal source product groups included in the MDDW

Name: 2.7. Reduction in Percentage 0.00 30.00 Baseline, Mid‐term and (i) DAMS and (ii) emission PCU GHG Emission Intensity end of project factors generated based on observed livestock practices

in the project area

Description: GHG emission per unit of protein from milk, red /white meat and eggs

Name: 2.8. Primary National Number 0.00 3.00 Annual PCU PCU Livestock and Fisheries Monitoring and Information Systems established and operational

Description: (1) Data analysis and monitoring System for Livestock & Fisheries (DAMS); (2) Livestock Identification and Traceability System (LITS); (3) Dairy Performance Recording System

Name: 2.9. Number of Number 0.00 5.00 Annual PCU PCU Strategic National Programs

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Unit of Responsibility for Indicator Name Core Baseline End Target Frequency Data Source/Methodology Measure Data Collection

(SNPs) and National Roadmaps prepared, budgeted and launched

Description: (1) PPR and New Castle Disease Prevention and Control Program; (2) National Feed and Forage Systems Development Program (3) National Breeding Program (4) Aquaculture and Fisheries Master Plan (5) Roadmap for improved Livestock and Fisheries Extension and advisory services

Name: 3.1. Semi‐annual Yes/No N Y Semi‐annual M&E system PCU progress reports rated

satisfactory

Description: Considering on time, within budget and quality; meeting PIM, M&E Manual requirements.

Name: 3.2. Performance of Yes/No N Y Annual PCU staff appraisal system PCU all PCU staff is formally measured against agreed deliverables directly contributing to LFSDP

Description: The MoLF together with the PCU will make sure that performance of government staff assigned to the project will be assessed based on their work program in the project.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Target Values

Project Development Objective Indicators FY

Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 YR6 End Target

1.1. Change in Productivity of small‐ 178.00 221.00 265.00 265.00 scale producers ‐ Milk (level 1)

1.2. Change in Productivity of small‐ scale producers ‐ Broiler (Level 1) ‐ 20.00 20.00 18.00 16.00 15.00 14.00 13.00 13.00 Mortality

1.3. Change in Productivity of small‐ scale producers ‐ Broiler (Level 2/3) ‐ 60.00 60.00 50.00 42.00 42.00 Age at marketing

1.4. Change in Productivity of small‐ scale producers ‐ Aquaculture (Cage) 0.00 28.00 40.00 40.00 Kg/Cubic Meters

1.5. Change in Productivity of small‐ scale producers ‐ Aquaculture (Pond) 0.60 1.60 3.00 3.00 Kg/Cubic Meters

2.1. Increase in sales of primary and processed livestock and fish products 500.00 500.00 800.00 1000.00 1200.00 1350.00 1500.00 1500.00 by producers and processors ‐ Milk (Liter/Collection Centers)

2.2. Increase in sales of primary and processed livestock and fish products 45.00 45.00 60.00 70.00 80.00 85.00 90.00 90.00 by producers and processors ‐ Eggs (Level 2/3) ‐ Peak Laying Rate

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 YR6 End Target (egg/100 hens/day)

2.3. Increase in sales of primary and processed livestock and fish products by producers and processors ‐ Broiler 0.00 0.00 0.00 0.00 50000.00 100000.00 180000.00 180000.00 (number of birds/slaughterhouse/year)

2.4. Increase in sales of primary and processed livestock and fish products 0.00 10.00 20.00 30.00 40.00 50.00 50.00 50.00 by producers and processors ‐ Dried or Smoked Fish (Kg/Year)

3. Number of System Improvements in support of better livestock and 0.00 5.00 9.00 9.00 fisheries service delivery achieved

4. Proportion of trainees applying the newly acquired competencies in their 0.00 70.00 90.00 90.00 daily work

5. Time lapse between early warning information and disbursement 6.00 6.00 5.00 4.00 3.00 2.00 2.00 2.00 toward response

Intermediate Results Indicators FY

Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 YR6 End Target

1.1 Number of Basic sub‐Projects 0.00 0.00 0.00 4680.00 4680.00 1170.00 0.00 10530.00 Implemented

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 YR6 End Target

1.2. Number of Intermediate sub‐ 0.00 0.00 0.00 120.00 120.00 120.00 0.00 360.00 Projects Implemented

1.3. Number of Advanced sub‐ 0.00 0.00 0.00 19.00 19.00 19.00 57.00 Projects Implemented

2.1. Number of Farmer Field Schools 0.00 0.00 1440.00 1440.00 0.00 1440.00 0.00 4320.00 (FFS) established

Teachers recruited or trained 0.00 0.00 1685.00 3720.00 5805.00 6680.00 6830.00 6830.00

Teachers recruited or trained ‐ 0.00 1366.00 Female (RMS requirement)

2.2. Number of Teachers recruited or 0.00 0.00 960.00 1920.00 2880.00 2880.00 2880.00 2880.00 trained (GAHP/GAFP)

2.3. Number of Teachers recruited or trained (Field worker in Animal 0.00 0.00 725.00 1450.00 2175.00 2900.00 2900.00 2900.00 Health)

2.4. Number of Teachers recruited or 0.00 0.00 0.00 55.00 200.00 350.00 620.00 620.00 trained (Farmer Field School)

Farmers reached with agricultural 0.00 0.00 25000.00 50000.00 150000.00 250000.00 300000.00 300000.00 assets or services

Farmers reached with agricultural 0.00 0.00 12500.00 25000.00 75000.00 125000.00 150000.00 90000.00 assets or services ‐ Female

Farmers adopting improved 0.00 0.00 0.00 35000.00 210000.00 210000.00 agricultural technology

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 YR6 End Target

Farmers adopting improved 0.00 0.00 0.00 17500.00 105000.00 63000.00 agricultural technology ‐ Female

2.5. Percentage of Targeted Producers satisfied with the livestock 0.00 60.00 80.00 80.00 and fisheries services received (TOTAL)

2.5.1. Percentage of Targeted Producers satisfied with the livestock 0.00 60.00 80.00 80.00 and fisheries services received (men)

2.5.2. Percentage of Targeted Producers satisfied with the livestock 0.00 60.00 80.00 80.00 and fisheries services received (women)

2.6. Proportion of women of reproductive age (15‐49 years) that 0.00 25.00 50.00 50.00 consumed animal sourced food in past 7 days

2.7. Reduction in GHG Emission 0.00 10.00 30.00 30.00 Intensity

2.8. Primary National Livestock and Fisheries Monitoring and Information 0.00 0.00 0.00 0.00 1.00 2.00 3.00 3.00 Systems established and operational

2.9. Number of Strategic National Programs (SNPs) and National 0.00 0.00 0.00 3.00 4.00 5.00 5.00 5.00 Roadmaps prepared, budgeted and

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Indicator Name Baseline YR1 YR2 YR3 YR4 YR5 YR6 End Target launched

3.1. Semi‐annual progress reports N N Y Y Y Y Y Y rated satisfactory

3.2. Performance of all PCU staff is formally measured against agreed N Y Y Y Y Y Y Y deliverables directly contributing to LFSDP

The World Bank Livestock and Fisheries Sector Development Project (P159382)

ANNEX 1: DETAILED PROJECT DESCRIPTION

Ethiopia Livestock and Fisheries Sector Development Project

1. The project development objective (PDO) is to “Increase productivity and commercialization of producers and processors in selected value chains, strengthen service delivery systems in the livestock and fisheries sectors, and respond promptly and effectively to an eligible crisis or emergency”. The design of LFSDP builds on the lessons learned from previous livestock related projects in Ethiopia (particularly AGP I and II, RPLRP, PCDP) and on the global knowledge brought by the World Bank Group and FAO in linking farmers to markets24 and building institutional capacity.

2. Based on the various consultations held during project preparation and intervention areas identified in the Livestock Master Plan (LMP) (Box 1), key investments to best contribute to achieving the ambitious goals established in the GTPII have been identified and organized around three inter‐ dependent components: (i) Component A: Linking More Productive Farmers to Markets; (ii) Component B: Strengthening National Institutions and Programs; and (iii) Component C: Project Coordination, Monitoring and Evaluation, and Knowledge Management. The first component will be implemented in 58 Woredas. It is designed to support productivity increase and commercialization in the selected four commodity value chains, GHG mitigation per unit of product and adaptation to climate change. The second component has a national coverage although directing its main applications in priority towards the fifty ‐eight Woredas supported by the first component. It will support immediate and long term human and institutional capacity development of the key actors in the livestock and fisheries sectors, and support the finalization and implementation (in project areas and for the targeted value chains) of five priority strategic national programs. The third component will support project coordination and implementation and effective monitoring and evaluation of project’s performance.

3. The direct beneficiaries of the project will include smallholder farmers25 inclusive of family, traditional and small‐scale subsistence producers; farmers and smallholders with improved husbandry practices; and producer organizations. Smallholder producers are being considered around four different levels of poverty and knowledge and practice advancement (Figure 1 page 7 of main text). Building on the farmers’ description of the LMP and starting from the most vulnerable household, the direct beneficiaries of the project include:

a. At level 1: (i) Livestock and fisheries smallholder subsistence farmers. In this category, the farmers are working in mixed‐crop‐livestock production systems producing primarily one of the following commodities: milk, poultry, fish, dairy meat or small ruminants’ meat. These beneficiaries are characterized by an average HH size of about six members; an average herd size comprising two cattle, four hens, one goat, and one sheep; an average access to land of about one hectare per HH; a market access which is limited to occasional sales of eggs and chicken; a limited or non‐existing access to inputs and services (non‐adequate feed and inputs, no access to improved breeds); relatively high GHG emissions per unit of meat and milk produced; high vulnerability to climate change; and the absence of any form of formal or informal organization or collective action; and (ii) Non‐farm actors groups, i.e. informal groups of non‐farm actors including unemployed youth men and women willing to initiate

24 World Bank, 2016, Linking farmers to markets through Productive Alliances: an assessment of the World Bank experience in Latin America, Washington DC, USA. 25 Smallholder farmers as defined by the Central Statistics Agency as farmers living in a village, registered as a resident in kebele administration, conducting agricultural production activities (crop production, livestock husbandry and agroforestry) and owning land of variable size; the average holding sizes of land per household in Ethiopia is around one hectare. 39

The World Bank Livestock and Fisheries Sector Development Project (P159382)

livestock or fisheries production / processing activity. At that level, the project will support an estimated 840,000 households (325,000 HH benefiting from sub‐Projects and 515,000 HH benefitting from improved services). b. At level 2: (i) Improved smallholder farmers / fisherman(women) and small‐scale processors. In this category, the beneficiaries are mastering a pre‐defined checklist of good practices (Eth‐GAP1) and organized in basic organizations such as primary cooperatives for the production and/or the processing of at least one of the commodities targeted by the project. The improved livestock producers are characterized by an average HH size of about seven members; an average herd size comprising five cattle, five hens, one goat, two sheep; an average access to land of about two hectares per HH; the commercialization to the primary market of milk, chickens, eggs and some cattle/sheep; an access to inputs and services comprising livestock restocking, labor hiring and access to basic animal drugs; relatively high GHG emissions per unit of meat and milk produced; high vulnerability to climate change; and an organization into primary cooperatives; and (ii) Improved non‐farm actors groups, i.e. groups of non‐farm actors such as unemployed men and women youth graduated and organized in primary cooperatives or other forms of interest groups that have acquired minimum skills to master the good practices for the targeted activity and willing to further develop their livestock or fisheries production / processing activity. At that level, the project will support an estimated 277,000 households (108,000 HH benefiting from sub‐ Projects and 169,000 HH benefitting from improved services). c. At level 3: Specialized smallholder farmers / fisherman(women) and specialized small‐scale processors. In this category, the beneficiaries have some assets and are organized into formally established and legally registered operational and viable producers and/or processors cooperatives or union of cooperatives with productive and entrepreneurial potential. They are engaged in collective action, but are still lacking formal and well‐ established linkages with buyers and the market. The average HH size comprises about eight members. Other socio‐economic characteristics include an average herd size of 11 cattle, five hens, three goats, two sheep; an average access to land of about five hectares per HH; the sale of a large proportion of their products on the local, regional or national markets; lower vulnerability to climate change and GHG emissions per unit of meat and milk produced than levels 1 and 2, but still offering an important improvement potential; and good access to inputs (including medicines) and services including investment in improved animal genetic resource. At that level, the project will support an estimated 84,000 households (33,000 HH benefiting from sub‐Projects and 51,000 HH benefitting from improved services). In addition, an additional number of HH at all level will benefit from the improved livestock and fisheries markets managed by 15 Municipalities. d. Targeted staff of the MoLF and associated livestock support institutions at federal, regional and Woreda levels (e.g., National Veterinary Institute [NVI], National Artificial Insemination Center [NAIC], Training institutions, Extension Services), who are benefitting from capacity development support provided by the project. 4. Other direct beneficiaries include: (i) small and medium scale livestock and fisheries processors; (ii) vulnerable groups, particularly women and youth; and (iii) livestock support service institutions, including public livestock research and extension services, NGOs, and service providers involved in the targeted livestock value chains in the project areas.

5. Indirect beneficiaries. Secondary beneficiaries would include other livestock producers not directly involved with the project activities who would indirectly benefit from the national programs (e.g. improved animal diseases service delivery). Value chain actors (buyers, processors, and exporters) would benefit from increased and more regular supply of better quality livestock products. On the 40

The World Bank Livestock and Fisheries Sector Development Project (P159382)

consumption side, consumers in Ethiopia would benefit from the increased quality of national animal sourced products supply. Other indirect beneficiaries would be livestock service providers, including private veterinarians, and inputs providers (e.g. feed, veterinary medicines, and genetic material suppliers).

6. The project will pay attention to equitable participation of gender and youth and mainstream nutrition and climate smart techniques and technologies in all its activities.

Component A: Linking More Productive Farmers to Markets (US$103.2 million, of which SDR 71.8 million IDA or US$100.8 million equivalent and US$2.4 million from beneficiaries).

Component Overview

7. The objective of the component is to increase productivity and commercialization of producers and processors in selected value chains and targeted areas by: (i) improving their access to critical knowledge, services, inputs, equipment and productive infrastructure, and (ii) increasing their linkages with markets and value chains. To achieve these objectives, that also contribute to climate change adaptation, the component will address all steps of the transformation pathway through the implementation of three types of sub‐Projects (sub‐components A2 A3 and A4), each supporting a specific set of interventions tailored to the beneficiary’s needs in the pathway. A first sub‐component (A.1) will allow establishing the enabling environment for the successful implementation of these sub‐ Projects.

8. Within the transformation pathway (Figure 1, Table 3), the project will finance sub‐Projects to support a progressive development of capacity towards an increased organization, efficiency and specialization of smallholder producers and small/medium‐scale processors in the livestock and fisheries sectors. At each step of the pathway, the project will facilitate producers’ access to critical knowledge, services, inputs, equipment and infrastructure as needed to ensure the sustainable adoption and implementation of recommended good practices26 (Eth‐GAP1, 2 and 3), including those related to improved household’s nutrition, reduced greenhouse gas emissions and improved food safety. The component will support the preparation, implementation and monitoring of sub‐Projects (basic; improved; and advanced for level 1,2,3 respectively). It will support sub‐Projects that contribute to climate change adaptation and/or mitigation. The component will also facilitate the gradual integration of level 2 and 3 beneficiaries into the targeted VC through a productive partnerships approach that aims at forging inclusive and sustainable linkages between suppliers and buyers. At level 1, basic sub‐Projects will be prepared jointly by beneficiaries and Development Agents, while at level 2 and 3, intermediate and advanced sub‐Projects will be prepared jointly by suppliers and buyers, with the public sector (i.e. the project coordination unit supported by specialized service providers) acting as the main facilitator for establishing and implementing these partnerships. In the context of the LFSDP, a productive partnership is defined as an association, facilitated by the project through specialized services provider(s) (private and/or public), between cooperatives of supplier(s) and buyer(s) (individual or cooperative), in a value chain targeted by the project. The partnership will materialize through the joint preparation and implementation of a sub‐Project, and will be ‘formalized’ through a commercial contract defining the agreement reached by the partners such as the agreed quantity and quality of products to be supplied / bought, the periodicity, the pricing policy, etc. When

26 A good practice is a practice that has been proven to work well and produce good results, and is therefore recommended as a model. It is a successful experience, which has been tested and validated, in the broad sense, which has been repeated and deserves to be shared so that a greater number of people can adopt it (FAO). Good practices are defined in terms of both proven technologies to increase productivity and value added, and proven gender ‐ nutrition ‐ and climate change‐ sensitive/friendly technologies. A set of such good practices will be developed for Ethiopia for the four targeted value chains supported by the project. 41

The World Bank Livestock and Fisheries Sector Development Project (P159382)

appropriate, the contract will also describe the services that each partner agreed to provide such as advisory services of the buyers on best ways to provide required quality of the product, or, in some cases the provision of private animal health and/or AI services. The LFSDP will allow for a contract between a cooperative and an individual partner (e.g. a supermarket). However, in this case, the support of the LFSDP through the sub‐Project will be directed to the cooperative entity only. The benefit for the individual partner would then consist in some level of guaranty to receive more regular quantity of better quality products.

Box 1: The Livestock Master Plan and its Use in LFSDP’s Design

Over the last 20 years, the Government of Ethiopia has prioritized the transformation of the agricultural sector, including livestock. This approach has been adopted in the 2010‐2015 Growth and Transformation Plan (GTPI) and its successor, the 2016‐2020 GTPII. Until the recent preparation of the Livestock Sector Assessment that formed the basis for the Ethiopia Livestock Master Plan (LMP, 2015‐2020), the absence of clear roadmaps to develop the livestock sector has hindered successful implementation of GTP I and II. The LMP is a series of five‐year development implementation plans or “roadmaps”, to be used to implement the GTPII and better inform the newly established Ministry of Livestock and Fisheries (MoLF) on sectoral public and private investment planning. The LMP objectives are intimately linked to those of the GTP i.e. (i) poverty reduction; (ii) achieving food and nutritional security; (iii) contributing to economic growth (GDP); (iv) contributing to exports and foreign exchange earnings; and (v) contributing to climate mitigation and adaptation. The LMP sets out investment interventions – better genetics, feed and health services, which, together with complementary policy support, could help meet the GTPII targets by improving productivity and total production in the key LMP value chains, i.e. poultry, red meat, and dairy. If the proposed investments – of 7,762 million Ethiopian birr (US$ 388.1 million), 57 percent and 43 percent from the public and private sectors respectively—were successfully implemented, they could eliminate poverty in approximately 2.36 million livestock‐keeping households, helping family farms move from traditional to improved market‐oriented systems and adding to agricultural gross domestic product (GDP). A wide array of priority investment and policy interventions are highlighted in the LMP and informed the design of LFSDP. The main blocks of investments that are further depicted in the roadmaps include: . Improvement of dairy cattle through breeding interventions, combining artificial insemination using exotic semen with oestrus synchronization in mixed rainfall sufficient dairy systems and in peri‐urban milk sheds; . Improvement of productivity of local breed animals (cattle, sheep, goats, and camels) for meat and milk through investments in genetic selection (recording schemes, etc.) and in animal health to reduce young and adult stock mortality, and by implementing critical vaccination programs; . Increase of public investment in rehabilitating pasture lands to improve feeding and animal management to complement genetic and health improvements; . Increase of specialized commercial production units and – where conducive agro‐ecological and market conditions prevail – consequent increases in animal numbers for all three commodities, and the adoption of appropriate genetic, health and feed technologies. . The introduction of policy measures to rationalize public and private sector roles in veterinary service provision, leading to the transition to the private provision of clinical services, wherever feasible, and to public oversight and quality regulations; . The enabling agribusiness environment; . The promotion of feed efficiency through the removal of the double‐imposition of value‐added tax and excessive customs duties (currently 53 percent) on feed mill ingredients, as well as the introduction of quality control measures

During LFSDP’s design and consultation workshops held in October 2016 in Addis Ababa under MoLF’s leadership, LMP’s detailed roadmaps were used as the base for group level work to identify project value chains, main investments and policy development options.

9. The sub‐Project will spell out the specific support of the LFSDP for each cooperative of the productive partnership in terms of critical knowledge, services, inputs, equipment and infrastructure27. In identifying potential sub‐Projects, the collection/processing/marketing

27 Detailed process and format for the preparation of each type of sub‐Project (basic, intermediate, and advanced) will be detailed in the PIM. 42

The World Bank Livestock and Fisheries Sector Development Project (P159382)

infrastructure (including collection, processing, marketing infrastructure, and infrastructure for the production of inputs such as hatcheries for the production of fingerlings or day‐old‐chicks, forage production, etc.) will be used as the main entry point to reach the other(s) downstream and/or upstream partners of the productive partnership. As an example, a Milk Processing Center (MPC) could be identified as the entry point and as the buyer entity of the partnership. The seller’s partner would be represented by the milk producers’ cooperatives. The sub‐Project would include, for the buyer (the MPC), some extension for the facility, the furniture of additional cooling equipment, and specific training in safe milk handling (food safety). The milk producer cooperative(s) could be supported through the establishment of a village/kebele milk collection point (comprising of e.g. shelter, solar fridge, buckets, primary quality control equipment) as well as FFS training. When identifying this productive partnership, and preparing the sub‐Project, additional producers (subsistence farmers, level 1) who could, if additional training were provided, also sell milk to the MPC, could be identified. The LFSDP, through the livestock extension services (DAs), will assist these producers in preparing basic sub‐ Projects to help them adopt and sustainably implement the recommended good practices (Eth‐GAP1 in this case).

10. Given the novelty of the above productive partnership approach for livestock and fisheries in Ethiopia, the deployment of the model will be step‐wise, phased and focused, and carried out with the assistance of a service provider (ATA). Priority will be given to the rehabilitation of existing infrastructures, with the objective to optimize their efficiency in terms of quality, quality and periodicity of the supply of products (support to producer cooperatives/sellers), equipment (upgrading but also downsizing when the main issue is an over‐capacity).

11. Improved access to knowledge, services and inputs will be largely supported by the implementation of component B activities such as: (i) access to public and/or private terrestrial and aquatic animal health inputs and services through the “Enhancement of Animal Health System and Strengthening of Veterinary Services” and the “Priority Animal Disease Prevention and Control Program (Strategic National Program ‐ SNP2); (ii) access to knowledge and critical services through the trainings and demonstrations of the “Capacity Development of Extension and Advisory Services” , (iii) access to forage seeds and planting materials through the “National Feed and Forage Program” (SNP3); (iv) access to improved animal genetic resources through the “National Breeding Program” (SNP4); and (v) access to critical services and inputs for aquaculture and Fisheries through the implementation of “Aquaculture and Fisheries Master Plan” (SNP5).

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Table 3: Transformation Matrix

Level 1 Level 2 Level 3 Level 4

70% of total beneficiaries Transformation 23% of total beneficiaries Transformation 7% of total Transformation (A1) (A2) beneficiaries (A3) Livestock and fisheries Tool of Improved smallholder Tool of Specialized farmers / Tool of Cooperatives / smallholder subsistence transformation farmers / fishermen transformation fishermen(women), transformation SMEs formally producers producing (women), and improved and small‐scale engaged in market primarily one of the Basic capacity small‐scale processors being Intermediate processors having Advanced relationships following commodities: development bankable, mastering a pre‐ capacity some assets, being capacity through productive cattle milk, poultry, fish, through defined checklist of good development organized into formally development partnerships with dairy meat or small implementation practices and organized in through established, legally through buyers (SMEs, ruminants’ meat. of minimum basic organizations such as implementation registered, operational implementation private large‐scale Good Practices common interest groups or of improved and viable primary or of specialized processors, supported by primary cooperatives for the Good Practices secondary Good Practices wholesalers, Unemployed youth from Training, Public production and/or the supported by cooperatives with supported by agribusiness‐ farming families willing to Extension and processing of at least one of Farm Field School productive and Specialized enterprises, initiate Livestock or Advisory the commodities targeted by Training, Public entrepreneurial Training, P& P supermarkets, Fisheries Production / Services, Inputs, the project. and Private potential, being Services, Inputs, hotels, restaurants, Processing activity. Equipment and Services, Inputs, engaged in collective Equipment and etc.) and small‐scale Future young entrepreneurs, Equipment and action but lacking medium‐scale contractual Infrastructures. i.e. groups of unemployed small/medium‐ formal and well‐ Infrastructures. agreements. Sub‐Project youth graduated organized in scale established linkages to . Sub‐Project focusing on groups and mastering the Infrastructures. buyers/ markets. focusing on establishing basic good practices for the linking VC actors farmers’ targeted activity and willing to Sub‐Project through formal cooperatives and (further) develop (their) a focusing on contracts mastering livestock or fisheries improved Minimum production / processing organization and Ethiopian activity. intensification GAHP/GAFP.

The World Bank Livestock and Fisheries Sector Development Project (P159382)

Sub‐component A.1. Enabling Sub‐Projects Implementation (US$0.8 million IDA)

12. The sub‐component (SC) will finance preparatory analyses and activities to enable the implementation of sub‐Projects and the formation of productive partnerships (sub‐components A.2, A.3 and A.4). These upfront investments will include: (i) studies for the identification of Woreda livestock and fisheries clusters, based on a production and commercial infrastructure mapping, as well as other criteria similar to those used by ATA’s clustering work (i.e. livestock and fisheries production potential, climate change adaptation needs, storage and processing capacity, access to markets, institutional environment28); (ii) assessments to identify potential beneficiaries within the clusters (subsistence29, improved and specialized producers and processors and cooperatives), based on their position in the Ethiopia Good Practices (Good Animal Husbandry Practices ‐ GAHP and Good Aquaculture and Fisheries Practices ‐GAFP) checklist (tools developed under component B); (iii) the training of Development Agents (DAs) on the sub‐Project's approach and process; (iv) beneficiaries’ regular monitoring to assess transformation throughout the pathway; and (v) a feasibility study to assess and subsequently detail the establishing of a Line of Credit (LoC) during project implementation.

Sub‐component A.2. Support to Subsistence Farmers and Unemployed Youth (US$53.4 million IDA)

13. The SC will support the transformation of level 1 beneficiaries (i.e. livestock and fisheries smallholder subsistence men and women farmers, subsistence fishermen/women, unemployed youth from farming families) into level 2 beneficiaries (i.e. improved cooperatives of small and medium‐size producers and primary processors, and future young entrepreneurs). To enable this transformation, the SC will finance basic sub‐Projects focusing on establishing primary cooperatives comprising of members mastering minimum good practices (Eth‐GAP1), supported by basic training, public extension and advisory services, inputs, basic equipment and small‐scale infrastructures. Within the primary cooperatives, producers will find information and services that strengthen their ability to adapt to climate change. Basic sub‐Projects will be prepared jointly by the beneficiaries and the DA.

14. More specifically, activities financed by the project will include: (i) the organization of beneficiaries into primary cooperatives; (ii) Eth‐GAP1 capacity development tailored to the identified gaps (on farm and Farming Training Center (FTC) demonstrations, farmer’s exchange, farmers training in specialized training centers such as the National Training Center on Poultry of Debre Zeit, the National Fisheries and Aquatic Life Research Centre of Sebata and regional training centers); (iii) the acquisition of critical inputs (e.g. initial furniture of forage and complementary animal feed for dairy cattle and dairy meat and small ruminants fattening, initial stock of starter and growth feed for poultry/layers, day‐old30‐chicks for broiler and layer, fish feed and fingerlings, etc.); (iv) the acquisition of small, collective productive infrastructure (e.g. construction/ rehabilitation of basic animal housing, renewable energy generation, shelter, storage facilities for forage, and fish‐ponds, fencing, manure storage and composting platforms, etc.) and energy saving primary production equipment (e.g. livestock waterer, feeder, milk collection and milk quality control equipment fishing nets, fishpond digging tools, small‐scale fish and livestock feed manufacturing units, etc.) through training and demonstrations to ensure the sustainable adoption of the recommended Eth‐GAP1. Activities financed under the SC will be screened for their climate change adaptation and mitigation performances to ensure that they all contribute to at least one of the two objectives.

15. Training will address the main principles and approaches underpinning the GAHP//GAFP, such as: (i) climate‐smart livestock interventions (e.g. animal husbandry, animal health, animal nutrition and breeding

28 Criteria used by ATA to identify clusters under the Agricultural Commodity Cluster/ ACC Program. 29 Special attention will be given to include underserved peoples and vulnerable groups as potential beneficiaries as identified in the Social Assessment (Social Development Plan, see PAD Annex 7). The project will support inclusive targeting of those groups for them to access productive assets. 30 Or preferably 3‐weeks old when high mortality risk areas.

45 The World Bank Livestock and Fisheries Sector Development Project (P159382)

management) to increase productivity while reducing GHG emission intensities, (ii) responsible fishing and fish farming, (iii) small ruminants and beef‐dairy fattening, (iv) milk handling and hygiene, (v) safe household‐ based chicken production, (vi) improved food safety, (vii) on‐farm manure and nutrient management, and (viii) marketing. The organization of primary cooperative and the development of their management and leadership capacities will be performed through the Federal Cooperative Agency (FCA). The project will encourage the inclusion of women in the training (50 percent of training recipients will be women) by considering appropriate time, locations and child‐care facilities. In addition, the SC will finance household level trainings at farm level and in FTCs (cooking demonstrations targeting mainly women farmers) to promote the diversification of diets and consumption of Animal‐Sourced Food (ASF) for improved household nutrition (see Box 2).

Box 2: The Role of the Livestock and Fishery Sectors in Improving Nutrition Intake in Ethiopia

Ethiopia has relatively high undernourishment levels. Among Ethiopian children under 5 years old, 40 percent are stunted (chronically malnourished), 9 percent are wasted (acutely malnourished), and 27 percent are underweight. Micro‐nutrient deficiency is also high and according to the National Nutrition Sensitive Agriculture Strategy (Nov 2016), 44 percent of children under five years, 30 percent of adolescents, 22 percent of pregnant women, and 17 percent of women of reproductive age are anemic (iron deficient). With impacts starting already at conception as the nutrition status of the mother affects the fetus, the consequences of malnourishment for the child can be devastating and permanently impede their cognitive and physical development, preventing them from reaching their full intellectual potential. The African Union (2013) estimates that the negative impact of malnourishment on productivity costs Ethiopia US$ 13.4 million, or 4 percent of GDP in lost growth annually (2009 fig.). As for any country, malnourishment in Ethiopia is a result of a combination of factors, such as poverty and low education, inadequate access to uncontaminated water, food culture, and the food environment. And as for other countries, there will not be a silver bullet solution, but malnutrition has to be tackled through a combination of interventions.

The livestock and fishery sectors will play an important role in combatting malnutrition in Ethiopia. In particular, intake of animal sourced products has proven efficient in combatting child malnutrition, not the least iron deficiency. Nevertheless, limited nutrition knowledge among Ethiopian livestock producers and fishers, in combination with inadequate knowledge in appropriate food handling, prevent producer households from optimally consuming their own production. Understanding the role that livestock and fish products can have in childhood early development and how to appropriately handle and preserve such foods for nutrition purposes will be important – especially given the common fasting practice of refraining from livestock sourced foods over extended periods of the year, but also to ensure that these potentially vital foods are being consumed as needed by all members of the households rather than being taken directly for sales at markets.

The project will support beneficiaries in addressing gaps in nutrition knowledge and food handling and preservation skills for improved dietary intake within households. In coordination with health extension providers, the project will under Component A.3 support strengthening such skills among livestock extension workers as well as among the Livestock and Fisheries Farmers’ Field School (L&F‐ FFS). In these schools, a curriculum will be developed for basic training in nutrition/dietary knowledge, and livestock sourced food and fish handling and preservation techniques. Women are the main target group for these activities, but for optimal uptake, increased awareness of nutrition issues among men will be necessary. These new skills can also add value and marketability of products, and through the improved preservation of perishable products improve the availability of livestock products to consumers. Nevertheless, the main purpose of these activities is to improve the dietary intake among women of reproductive age (15‐49), and young (0‐2) and older children (3‐14).

Source: Project preparation team, based on ‘National Nutrition Sensitive Agriculture Strategy’ 2017‐21 (November 2016). African Union (2013); and ‘The Cost of Hunger in Africa’, accessed at: http://documents.wfp.org/stellent/groups/public/documents/communications/wfp258076.pdf?_ga=1.179919911.227394440.1492 116895 Note: Project activities will be implemented in close coordination with nutrition‐sensitive agriculture activities under AGP2, and in line with the National Nutrition Strategy and the National Nutrition Sensitive Agriculture Strategy (November 2016).

16. The project will support the preparation, implementation and monitoring of an estimated 13,000 basic sub‐Projects of US$3,700 each on average, for the benefit of 325,000 level 1 households, representing 70 percent of total project beneficiaries of component A. With the adoption of Eth‐GAP1 and the sustainable access to basic services, beneficiaries will enhance the productivity of their animal assets and hence improve the production and marketing of milk, eggs/ broilers, fish and/or small‐ruminants/dairy meat. Improved women leadership over household resources, nutrition‐sensitive production, increased revenues, and

46 The World Bank Livestock and Fisheries Sector Development Project (P159382)

collective action will improve producers’ lives and have positive impacts on the household.

Sub‐component A.3. Support to Improved Cooperatives (US$26 million, of which US$25.3 million IDA and US$0.7 million from beneficiaries)

17. The SC will support the level 2 beneficiaries (improved cooperatives) through the implementation of intermediate sub‐Projects based on the productive partnerships approach. Sub‐Projects will be prepared jointly by project beneficiaries and suppliers and/or buyers of products, with the support of the project supported by specialized services providers. The project will be the main facilitator for establishing and implementing these partnerships. These intermediate sub‐Projects will focus on improved level of cooperatives organization and intensification of production through the implementation of improved good practices (Eth‐GAP2) supported by Farm Field School training, public and private services, inputs, equipment and small/medium‐scale infrastructures.

18. Level 2 beneficiaries will represent 23 percent of total direct beneficiaries of component A (i.e. 108,000 households).

19. The identification of partners and the joint preparation of sub‐Projects will follow a standard procedure inspired by the global experience of the World Bank in implementing productive partnerships in Latin America and the Caribbean’s and in Asia, but adapted to the Ethiopian context and institutions. Partners identification and sub‐Project preparation and selection processes will be detailed in the PIM. Main steps include:

Step 1: Public information campaigns, call for proposals and partner identification. This step will focus on (a) undertaking project awareness and sensitization, particularly on Projects’ investment approach and potential opportunities offered by productive partnerships, (b) establishing and facilitating Platforms in the grouping of Woredas identified under SC A.1. Activities financed by the Project will include: (a) establishing and facilitating Woreda grouping platforms with ATA, in line with the Agricultural Commodity Cluster (ACC) Initiative31 to connect the demand and supply of the products of the targeted VC and to assist in identifying potential partners for the productive partnership starting with existing value‐chain cooperatives’ infrastructure as the entry point; (b) organizing public information activities such as awareness and information campaigns in local languages with DAs, community leaders and local radios).

Step 2: Profile preparation and appraisal. Initial sub‐Project proposals (thereafter called “profiles”) will be prepared by partners (i.e. sellers and buyers) with the support of a service provider recruited by the project (ATA). Profiles will be screened and shortlisted by Woredas’ grouping sub‐Project Approval Committees established and financed by the project. Committees will meet three to four times per year as needed, depending on the number of proposals received. Detailed composition and mandates of the committees and description of the process and criteria for the selection and approval of profiles will be detailed in the PIM. Once the profile has been approved by the Committee, a commercial agreement or contract will be signed between the sellers and the buyers. This contract will detail key elements agreed between partners such as the quality requirements, price arrangements, quantities, periodicity and other delivery specifications and duration of partnership, recourse in case of disputes, arrangements for review or termination of the agreement.

Step 3: Detailed sub‐Project preparation and appraisal. The Project will assist partners to transform the approved profiles into detailed sub‐Projects. This process will be facilitated by a private or public service provider to be financed by the project. Detailed sub‐Projects will be screened by the Woredas’ Cluster sub‐Project Approval Committees established under step 2. At this stage, the role of the committees will not be to reject the proposal but to approve implementation or recommend

31 The PIM will further describe how the ATA platform will operate in terms governance, membership and functioning.

47 The World Bank Livestock and Fisheries Sector Development Project (P159382)

modifications and improvements before authorizing implementation of the sub‐Projects. Screening of sub‐Projects will assess the quality of the market/ demand analysis, technical description, details of organizational and capacity building, the necessary contribution to either climate change mitigation and/or adaptation, the quality and realism of the financial analysis including multi‐annual cash‐flow (before and after financing), and of the profitability and calculation of the financial internal rate of return (FIRR) and net present value (NPV), the quality of the consideration given to the environmental and social impacts and the mitigation measures.

Step 4: Detailed sub‐Project implementation. Sub‐Projects will be financed through a combination of direct project support, and a contribution from beneficiaries (10 percent of sub‐Project costs). Sub‐ Project implementation will fall under the direct responsibility of the MoLF/PCU, with the support of the same service provider that supported the preparation of detailed sub‐Projects. The PCU and the service provider will support cooperatives in the procurement of equipment and inputs and assist beneficiaries to link with relevant implementing public and private partners supported under Component B (e.g. private animal health and AI service providers, private advisory services, FCA, FFS facilitators).

20. Tailoring sub‐Projects to beneficiary needs. While it is difficult to predict at ex‐ante level the exact nature of sub‐Projects arising from a demand‐driven process, it is expected that their scale and sophistication will differ per the level of beneficiaries in the transformation pathway. At level 2, sub‐Projects could include: (i) infrastructure and equipment investments on upgrading of new or existing small‐scale commercial and production facilities, (ii) specialized services, on livestock identification and traceability (SNP1); animal health, food and feed safety (SNP2); animal nutrition (SNP3); artificial insemination (SNP4), farmer‐to‐farmer knowledge sharing through FFS (component A.3); (iii) intensive training through Livestock/Fisheries‐Farmers Field School (LF‐FFS) to assist farmers mastering the good practices “Eth‐GAP2” (such as good and climate‐ smart practices in animal husbandry, animal health [including zoonotic diseases and AMR] animal nutrition, forage and by‐products conservation, feed utilization and feeding strategy, forage production and forage seeds/vegetative material multiplication, animal genetic resource management, safe products handling and food safety and biosecurity measures, climate change mitigation, waste management, pollution control & environmental management, animal welfare); and (iv) trainings on organizational development (such as support towards formalized producers’ cooperatives, registration, governance, formal banking, collective action, financial literacy, procurement and leadership training for women and youth).

21. Nature of sub‐Projects. A list of possible eligible sub‐Projects (as well as a negative list of sub‐Projects or rejection criteria) will be proposed in the PIM. According to preparation team estimates, it is expected that suitable sub‐Projects for improved cooperatives will average US$ 35,000, with a financial ceiling up to US$ 50,000. Examples of infrastructures and equipment financed under sub‐Projects could include (see Indicative ist of sub‐Projects in Table 3): (i) primary Milk Collection Points (MCP) at village level supplying Milk Collection Center (MCC) with a 1.5‐2.5m3 capacity or MCC supplying a small dairy cooperative (Milk Processing Center); (ii) small‐scale dairy/small ruminants fattening cooperatives supplying collection and marketing cooperatives and/or small urban/peri‐urban butchers cooperatives; (iii) semi‐scavenging or semi‐ intensive broiler / layers production cooperatives supplying small‐scale chicken abattoirs; (iv) small‐scale chicken abattoirs supplying local butchers and retailers or retails shops and restaurants; (v) tilapia or catfish production in 300m2 fish ponds supplying fish‐drying facilities; and (vi) Fish or Poultry hatchery supplying fingerlings or day‐old‐chicks to tilapia or catfish or broiler / layers producers’ cooperatives. By the end of the project, it is expected that up to 450 intermediate sub‐Projects of US$31,000 each on average, directly supporting about 108,000 level 2 households would be implemented.

48 The World Bank Livestock and Fisheries Sector Development Project (P159382)

Sub‐component A.4. Support to Specialized Cooperatives and Municipalities (US$23 million, of which US$21.3 million IDA and US$1.7 million from beneficiaries)

22. The SC will support level 3 beneficiaries (specialized cooperatives of producers and processors, and municipalities) through the implementation of advanced sub‐Projects based on the Productive Partnership approach. As with level 2 (Improved cooperatives), sub‐Projects will be prepared jointly by project beneficiaries and suppliers and/or buyers of products, with the project acting as the facilitator of the partnership The advanced sub‐Projects will focus on linking value chain actors through formal contracts and the implementation of specialized good practices (Eth‐GAP3) supported by specialized training, private and public advisory services, specialized inputs and equipment and medium‐scale productive and commercial infrastructures.

23. Support to specialized cooperatives and municipalities to prepare advanced sub‐Projects will be carried out at the regional level. Municipalities, which are responsible for administering commercial infrastructure such as livestock secondary (Woreda) and terminal (regional) markets, will also be recipients of advanced sub‐Projects. The sequence of activities to prepare advanced sub‐Projects will be similar to the one described for level 2, i.e. (i) public information campaigns, call for proposals and partner's identification through regional platforms, (ii) profile identification, preparation and appraisal, (iii) detailed sub‐Project preparation and appraisal and, (iv) sub‐Project implementation. Sub‐Projects will be reviewed by a regional sub‐Project approval committee that will meet three times per year. Approved proposals will be financed through a combination of direct project support and a contribution from beneficiaries (20 percent of sub‐Project costs). Implementation will be under the responsibility of the PCU, with the support of a service provider. The provision of services will be provided by both public and private sectors and the commercial partner (i.e. the buyer) entering the productive partnerships.

24. At level 3, advanced sub‐Projects to specialized cooperatives and municipalities could include: (i) infrastructure and equipment investments on upgrading of new or existing medium and larger scale commercial facilities, (ii) specialized services (same as level 2) and advanced services such as performance recording and data collection (SNP4) and biosecurity (SNP2); (iii) specialized trainings to assist buyers and sellers mastering the good practices “Eth‐GAP3”; and (iv) training in business development (coaching on business administration and marketing, leadership, risk management, credit management, contract management, procurement).

25. Nature of sub‐Projects. A list of possible eligible sub‐Projects will be proposed in the PIM, together with a negative list of sub‐Projects (or rejection criteria). Suitable sub‐Projects for specialized cooperatives and municipalities will average US$ 192,000 and not exceed US$ 250,000. Examples of sub‐Projects include (list non exhaustive): (i) MCCs upgraded with a pasteurization unit, supplying a cooperative or a network of milk distribution or supplying larger private or cooperative processors; (ii) milk processing centers (MPC) for pasteurized whole and skimmed milk, butter and ghee production, supplying hotels, restaurants and/or Government institutions; (iii) renewable energy production (solar and biogas); (iv) upgrading of equipment with energy saving devices; (v) rehabilitation of livestock markets managed by municipalities (with infrastructures, equipment and services such as markets yards, fencing, cold storage facilities, livestock sheds, weighbridges, warehousing, veterinary and quality control services, logistics, security and tax collection services) supplying a network of wholesalers and retailers; (vi) medium‐scale dairy/small‐ruminants fattening cooperatives supplying a network of urban/peri‐urban butchers, (vii) semi‐intensive boilers and layers producers supplying medium‐scale chicken abattoirs and medium scale abattoir supplying hotels, airlines and supermarkets; (viii) hatcheries for the production of fingerlings or DCO, supplying a network of fish or poultry producer cooperatives, (ix) fish‐feed mills equipped with extruders to produce sinking and floating feed, supplying a network of fish producer cooperatives and, (x) fish‐drying facilities for tilapia or catfish production in larger fish ponds (>300m2) By the end of the project, it is expected that about 55 advanced sub‐Projects of US$143,000 each on average, directly supporting 33,000 households towards level 4, and 15 sub‐Projects for

49 The World Bank Livestock and Fisheries Sector Development Project (P159382)

Municipalities (livestock market rehabilitation) would be implemented.

Component B: Strengthening National Institutions and Programs (US$55.8 million, of which SDR 37.4 million IDA or US$52.5 million equivalent and US$3.3 million from Government).

26. Despite their contribution to economic growth and poverty reduction, the livestock and fisheries sectors have for many years been overshadowed by the crop sector and have traditionally not received the attention they deserved relative to their potential. Binding constraints have led to very low productivity in livestock and fisheries while aquaculture has remained nearly nonexistent. As a result, the country is trailing far behind in meeting the growing local demand for basic and processed animal products. Among the main constraints to all livestock and fisheries value chains development, access to animal health, animal genetic resources, and quality forage and feed, are critical to achieve the government’s objectives for agricultural transformation. Unlocking the potential of the livestock sector requires developing substantially improved access to functioning key services for better organized producers. The institutional and organizational capacities of the newly established MoLF need to be built while strategic priority programs need to be initiated and/or reinforced.

27. The component’s main objective is to improve the enabling environment and strengthen the institutional and organizational capacity of key actors of the livestock and fisheries sectors in order to provide effective livestock and fisheries services. The component will assist the MoLF in (i) building immediate and long‐term human, organizational and institutional capacity of the MoLF to allow the Ministry to carry out its core public responsibilities of sector analysis, policy preparation and implementation, sector monitoring and evaluation (M&E) effectively; (ii) developing sector coordination with climate policies and to ensure that the livestock sector, fully contributes to the NDC; and (iii) improving the organizational and technical capacity of the key actors of the livestock and fisheries sectors, including the MoLF, key public and private services providers, producer organizations and commodity associations.

28. To achieve its objectives, the component will be implemented through the following four SC: (i) Human Resources and Organizational Capacity Development; (ii) Policy, Planning and Coordination; (iii) Sustainable Animal Health, Advisory and Extension Services; and (iv) Support to Strategic National Programs (SNP). An additional ‘zero‐dollar’ fifth SC will be triggered to increase preparedness and support emergency responses in the event of a crisis affecting the livestock sector.

Sub‐component B.1. Human Resources and Organizational Capacity Development (US$7.1 million IDA)

29. As a first step, the SC will assist the MoLF in conducting a capacity development needs assessment to identify its immediate and long‐term needs in terms of Human Resource Development, Organizational Development, and Institutional and Legal Framework Development. The needs assessment will focus on enhancing the process of equipping individuals and institutions with the understanding, skills and access to information, knowledge and training that will enable them to perform effectively their core public functions. It will also focus on strengthening the management structures, processes and procedures, both within the MoLF and with the different organizations of the sector (public, private, producers’ organizations and commodity associations), and improve its capacity for making the necessary legal and regulatory changes to enable the institutional transformation of the sector. The capacity assessment will be outsourced to one or more service providers and will lead to the preparation of a Capacity Development Program (CDP) that will be validated through a national consultation workshop. It will in particular look at the Ministry’s capacity to address climate change issues. Once approved, the training and capacity building activities of the project, in particular the SC A.3.1 will contribute to the implementation of the CDP at federal and regional levels, and in the 58 Woredas.

30. The SC will finance the cost of consultancy services for the preparation of the needs assessment and the

50 The World Bank Livestock and Fisheries Sector Development Project (P159382)

CDP and the cost of a national workshop to discuss study outcomes. The SC will also organize the implementation of specific training and capacity development among the newly established Climate and Green Growth Directorate. At mid‐term, the project will finance the cost of an independent impact evaluation of the CDP.

Sub‐component B.2. Policy, Planning and Coordination (US$0.3 million IDA)

31. The SC aims at improving the Ministry’s capacity to efficiently plan, coordinate, monitor and assess public investments in the sector, including the interventions financed and/or implemented by other donors. The SC will equip the MoLF with modern computerized Data Analysis and Monitoring System (DAMS) for the livestock and fisheries sectors, in order to assist the Ministry in taking the most appropriate evidence‐based decisions in terms of investment planning and sector coordination. It will also support activities aiming at strengthening sector analysis and coordination. Using evidence‐based data, the SC will also support the development and/or updating and modernization of key policies, laws and regulations such as policies to improve partnership between the public, private and associative sectors (animal health, animal identification, animal genetic and breed society, etc.) and the development of norms, quality and safety standards of inputs and animal‐sourced products.

B.2.1. Investment Planning and Sector Coordination

32. The SC will support the development (conceptualization, design of specification and requirements, programming, testing and bug fixing) of a DAMS. The DAMS will be developed under the responsibility of the PCU in close collaboration and with the participation of the ATA, the CS, key relevant stakeholders, and the technical assistance of FAO. The DAMS will build on the Livestock Sector and Investment Policy Toolkit (LSIPT) developed by the World Bank, FAO and the CIRAD and used by the MoLF to prepare its Master Plan. The system will be designed to be easily decentralized, flexible, versatile, accessible and user friendly. As with the LSIPT, the system will be based on production systems. The system will be modular, connecting several specific modules such as the Livestock Identification and Traceability System (SNP1), the Performance Recording System for dairy (cf. SNP4), and the DAMS that will include the development of Tier2 emission factors for the detailed quantification of emission reductions in the livestock sector. It will be connected to the national GHG accounting system, towards the reporting of GHG emissions in the context of the NDC.

33. In addition to financing the development of the DAMS, the project will support the progressive rolling out of the system in the targeted Regions and Woredas. To this end, the project will finance the costs of the preparation and organization of Training of Trainers (ToT) programs as well as awareness campaign, initial training and refresher courses for users. It will finance surveys and data collection, the acquisition of critical equipment such as computer and tablets for data entry, and the provision of regular expert support to users. Finally, to improve MoLF’s capacity in sector analysis and coordination, the SC will finance the establishment and/or updating of a livestock and fisheries projects and programs database, a performance assessment of the sector and the subsequent stakeholders’ consultation and finalization process, specific training on investment project preparation, annual planning coordination retreats and advisory services on investment planning and sector coordination.

B.2.2. Policy Development

34. The SC will work across the phases of the national policy cycle (i.e. policy review, formulation, implementation and evaluation). As a first step, the SC will identify highly qualified national and/or international policy expert(s) and/or institution(s) in order to conduct a review and gap assessment of current policies, law and regulations in the fisheries and livestock sectors, and recommend the priority actions for short and long term policy development to enhance the contribution of the sectors to poverty reduction, food security, economic growth, and to the national climate agenda. Thereafter, a specific evidence‐based

51 The World Bank Livestock and Fisheries Sector Development Project (P159382)

technical review will be conducted for a number of selected priority policies directly related to the selected VC in order to support the drafting of new ones or the updating of existing ones. In this process, the project will support, if necessary, pilot operations to test new/updated policies. In addition to policy implementation, the pilot operations "packages" will include the preparation and the test of awareness campaigns and training programs and tools aiming at supporting the enforcement of the tested policies. Key policies pre‐identified during project preparation include policies: (i) establishing the Veterinary Statutory Body (VSB) to regulate the veterinary profession; (ii) regulating the Livestock Identification and Traceability (LITS) and the Performance Recording System(s) (PRS); (iii) mainstreaming GHG mitigation and climate change adaptation in the sector’s strategies; (iv) promoting the safe importation of veterinary drugs, animal feed, feed constituents and pre‐mix, and animal genetic material; (v) establishing and regulating the privatization of animal health services and the sanitary mandate; and (vi) supporting animal welfare practices. In addition, the initial gap assessment of current policies will assess the need for the following additional policies: (i) an updated policy on food safety for products of animal origins (in partnership with, or under the leadership of the Ministry of Health); (ii) new policy regulating the grading and labeling of live animals and of products of animal origin (and the differentiation between imported/exotic and local/national products) (in partnership with, or under the leadership of the Ethiopian Standard Agency); (iii) a new policy for the establishment of commodity boards for the targeted livestock and fisheries VC; (iv) a revised policy on contract and contract farming (in partnership with, or under the leadership of the Ministry of Trade); and (v) policy and standards on feed/forage seed quality and certification system.

35. To achieve the above objectives, the SC will finance the costs of the international and/or national service provider for the initial gap assessment, technical policy reviews and pilot operation. The project will also finance the necessary stakeholder consultation processes and policy dialogue (workshops, meetings, field visits, surveys, etc.) between public, private and associative actors, and support consensus building to ensure that new/updated policies reflect the views and needs of women, youth, smallholder farmers as well as the larger players in the livestock and fisheries sectors. The project will also finance the preparation and implementation of trainings and study tours for the staff in the Ministry responsible for policy formulation and for national and/or regional producers/value chain actor organizations to improve their capacity to undertake critical policy analysis, to communicate with and receive feedback from members, and contribute efficiently to the drafting of relevant laws, regulations and policies. It will support specific training on how to integrate gender and nutrition into policy formulation, implementation and evaluation.

Sub‐component B.3. Sustainable Animal Health, Advisory and Extension Services (US$25.6 million IDA)

36. The SC’s main objective is to improve smallholder’s access to the most critical livestock support services i.e. Animal Health Services (AHS ‐ B.3.2.), and Advisory and Extension services (AES – B.3.3.). To achieve this objective, the component will intervene simultaneously in building capacity, partnerships, and complementarities within public and private animal health and advisory and extension services, and in building capacity within producer organizations and commodity associations, whilst enhancing partnerships and collaboration between these organizations and public services.

B.3.1. Capacity Development of Livestock and Fisheries Field Services

37. The SC will aim at contributing to further develop the capacity of the Ministry through the rehabilitation and construction of training facilities (FTC T‐VET, and National Training Centre on Poultry in Debre Zeit), the provision of motorcycles for the livestock and fisheries staff in Woredas, and mountain bikes for Livestock and Fisheries staff at Kebeles level, and the provision of critical field equipment to Woreda and Kebeles public field livestock and fisheries workers.

52 The World Bank Livestock and Fisheries Sector Development Project (P159382)

B.3.2. Enhancement of Animal Health System and Strengthening of Veterinary Services

38. The SC will aim at enhancing the short and long‐term capacity of the country to detect and respond quickly to major disease outbreaks. Activities will focus on enhancing (i) the effectiveness of the animal health system; and (ii) the quality and effectiveness of the surveillance and diagnostic system for terrestrial and aquatic animal diseases. This capacity will generate significant climate change co‐benefits, through the improvement of primary production efficiency (reduction of GHG emission intensity) and the monitoring of emerging diseases and preparation of response plans (adaptation).

(i) Enhancement of the animal health system. Key activities to be financed are based on the results of the OIE Performance of Veterinary Services (PVS) Pathway32 and will include the development of a partnership between the public authorities, the private veterinarians, and the associative actors through (i) the organization of a national workshop to facilitate the endorsement of the roadmap for the rationalization of the VS and assist in refocusing the official VS towards its core public functions, (ii) scaling up of the sanitary mandate approach (delegating, under the oversight of the official VS, public tasks to private veterinarians), (iii) ensuring the transfer of private tasks to the private service providers and VC actors whenever feasible, and (iv) supporting the Veterinary Statutory Body (VSB).

To support the development of capacity of public extension workers in animal health, the project will finance the development of specific training curriculum and the production, multiplication, and translation of training manuals for field workers, ToTs and training of field workers at Woreda and Kebele levels, the acquisition of critical field equipment for Woreda and Kebele staff, and the acquisition of bicycle for Kebeles field workers.

Within the project areas, the project will also support the establishment of Private Animal Health Services Networks (PAHS Networks) comprising Community Animal Health Workers (CAHW) and private Para‐Veterinarians (Para‐Vets) who will operate under the full responsibility of a private Doctor in Veterinary Medicine (DVM). It is estimated that each private DVM will supervise about 10 Para‐Vets and 50 CAHW. The establishment of PAHS Networks will come as an activity in support of the implementation of the roadmap for the rationalization of the VS and the privatization of animal health. It will be implemented under the responsibility of the Veterinary Statutory Body (VSB) and in close partnership with public VS and representatives of the private sector. The project will support the development of the model (including the definition of the roles, responsibilities and duties of each actor of the Network, the preparation of standard contracts between the DVM, Para‐Vets and CAHW, etc.) It will finance the process of the identification and the selection of the DVM and network actors, the preparation of detailed guidelines, field manuals, awareness campaign (including awareness of local authorities) and training material for the actors of the networks (DVM, Para‐Vets, CAHW), and the acquisition of starting kits for the DVM, para‐vets and CAHW, the monitoring and evaluation of the implementation, results and impact to draw lessons and share knowledge. Project support also includes an allocation to support the development of the sanitary mandate within the networks.

(ii) Strengthening of Surveillance and Diagnostic capacities. At project inception, the project will finance a detailed needs assessment/gaps analysis in terms of equipment, training and vehicles for the National Animal Health Diagnostic and Investigation Center (NAHDIC) and regional laboratories for terrestrial and aquatic animal diseases. Within the limits of available budget and on the basis of the results of the gaps / needs analysis, the project will then finance for the NAHDIC (i) critical equipment and consumables for the surveillance and diagnostic of the PPR and NDV diseases; the

32 The OIE PVS Pathway is a global program for the sustainable improvement of a country’s Veterinary Services compliance with OIE International Standards.

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establishment of an aquatic animal diagnostic laboratory (fish diseases); the acquisition of a maximum of two vehicles for the collection of samples and other outbreak investigation activities; the operational costs for the pre and post vaccination sero‐monitoring, surveillance and outbreak investigation for PPR and NCD; the cost of the maintenance and calibration of laboratory equipment, and the cost of the training of NAHDIC staff in calibration and maintenance of equipment. For regional laboratories and based on the results of the gaps / needs analysis, the project will finance the acquisition of a maximum of one vehicle and one stand‐by generator for each regional laboratory, and the acquisition of crucial equipment (freezers, distiller, autoclave) within the limits of the allocated budget.

B.3.3. Capacity Development of Extension and Advisory Services (EAS)

39. As a new Ministry recently separated from the Ministry of Agriculture, which has kept most of the extension and advisory capacities, the MoLF wishes to develop its own strategy and approach for EAS. The SC will assist the Ministry to develop its vision and strategy for EAS focusing primarily on the highlands and mixed crop‐livestock production systems, inland fisheries and aquaculture. The strategy will build on the recommendations prepared with the assistance of FAO in the context of the Global Agriculture and Food Security Program (GAFSP)33 such as promoting on‐farm demonstration, extension/training activities to be conducted on the fields of participating producers; focusing on forage development as the simplest and most cost‐effective intervention; promoting and introducing new innovative extension and advisory methodologies and practices including: (i) the Good Animal Husbandry Practices (GAHP) and Good Aquaculture and Fisheries Practices (GAFP) approach and; (ii) specialized adult training through the Livestock and Fisheries Farmers’ Field School (L&F‐FFS) approach (see Box 3). It is expected that a separate but complementary strategy for the pastoral systems will be prepared with the support of the World Bank financed projects located in the lowlands.

40. Once the strategy is endorsed by the Ministry, the SC will equip individuals and institutions of the public and private sector directly involved in livestock and fisheries EAS with the understanding, skills, methodologies and access to information, knowledge and training to enable them to perform their mandate effectively. The SC will promote and support the introduction and adaptation to Ethiopian realities of: (i) the GAHP and GAFP approach and; (ii) the specialized adult training through the Livestock and Fisheries Farmers’ Field School (L&F‐FFS) approach. The first approach would be more appropriate to the first level subsistence beneficiaries whilst the L&F FFS would better fit the needs of advanced farmers (level 2). Both the preparation of the vision and strategy for EAS, and the introduction of the GAHP/GAFP and L&F FFS will be implemented under the supervision of ad‐hoc technical committees comprising AES specialists from the MoLF and specialists from international and bilateral cooperation (e.g. FAO, CGIAR Center ILRI, USAID, EU) and from other Departments and producer organizations.

33 A.D. Robertson, FAO Consultant. Livestock extension in Ethiopia. November 2014.

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Box 3: Brief overview of the Livestock and Fisheries Farmers Field Schools

The FFS approach brings together a group of farmers to engage in a process of hands‐on field‐based learning over a season/production cycle as a time‐bound activity, with a beginning and an end. For example, the dairy‐livestock‐based FFS will cover “calf to calf”. This initial basic learning cycle will aim at strengthening farmers’ skills, knowledge and critical analysis to test and validate new practices and make informed decisions about the production systems. The learning process in the FFS will reinforce smallholders’ understanding of ecological conditions in the field. The basic learning cycle also aims at enhancing group cohesion of participants to better work as a group and to prepare for follow‐up action once the FFS finishes (e.g. create producer’s cooperative for collective actions such as processing of milk or common acquisition of inputs, etc.). Through group dynamics, exercises and discussions, the L&F‐FFS helps create a basic understanding of how groups function. The FFS also includes activities that encourage participants in critical analysis and evaluation, and planning for further action once the FFS basic learning cycle is completed.

A FFS is usually initiated by an extension staff or a skilled farmer who is trained by Master Trainers (MT) in season‐long courses to become facilitators of their groups of farmers. The MT FFS teach basic agricultural and management skills to facilitators. In addition to technical skills, facilitation skills, group dynamic and group building methods are also included in the training. The curriculum of the L&F‐FFS will follow the natural cycle of the animals. It will expose farmers to a large range of subjects including but not limited to: (i) animal husbandry; (ii) animal health; (iii) animal genetic resources management; (iv) animal nutrition and feed/hay/forage conservation; (v) product handling and hygiene; and (vi) climate smart technologies, etc. The L&F‐FFS will also address human nutrition, gender and any other aspect that would be demanded by the group.

Source: Project preparation team

41. L&F FFS will be implemented under the supervision of ad‐hoc technical committees comprising AES. The project will finance the costs of the technical committees including the costs of the required national and international consultancies, and the cost of the technical assistance of FAO, the costs of the organization of meetings and retreats, and the costs of stakeholders’ consultations (workshops). It will also finance: (i) the preparation of the roadmap for livestock and fisheries EAS (vision and strategy); (ii) the introduction, development and rolling out in the targeted Woredas of the GAHP/GAFP model (including: the preparation, development and test of operational guidelines and directives; the design of training and learning material such as ToTs’ training and training of EAS staff and private advisory agents; data collection on production systems; the preparation for each level of beneficiaries of a check list of Good Practices; and the initial assessment and the progress of the beneficiaries within the checklist in order to identify the remaining gaps and tailor next training subjects to the training needs; (iii) the introduction and development/rolling out in the targeted Woredas of the L&F‐FFS model for level 2 beneficiaries including the preparation, development and test of operational guidelines and directives, the design of training and learning material for each type of trainee (ToT of 40 FFS Master Trainers and training by the Master Trainers of 620 facilitators) tailored to species and livestock/fisheries production systems, the facilitation costs for Master Trainers and FFS facilitators.

42. The development of the Ethiopian GAHP/GAFP and L&F‐FFS approach will be implemented under the responsibility of the Capacity Development specialist to be recruited within the PCU (see component C). The L&F‐FFS expert will work in close collaboration and coordination with the relevant Technical Committees. He/she will be responsible for the secretariat of these committees (organize meetings, retreats, minutes of the meetings, drafting ToRs, etc.). The mandate and the composition of the TC will be detailed in the implementation manual. Key activities will involve: (i) the development with the support of international and national expert of the GAHP/GAFP and L&F‐FFS curriculum and training materials, including the ex‐ante assessment of the effect these practices have on climate change mitigation and adaptation to ensure that all contribute to at least one of the two objectives; (ii) the selection and training by an internationally recognized and accredited FFS Master of the L&F‐FFS National Master Trainers (NMT); (iii) the selection and training by the L&F‐FFS National Master Trainers of the L&F‐FFS facilitators; (iv) the selection and training of the beneficiaries (L&F‐FFS’s groups); and (v) the regular supervision by NMT of the facilitators. Both of the approaches (GAHP/GAFP and L&F‐FFS) will be better described in the PIM and detailed in guidelines for

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implementation that will be prepared at the project’s inception and annexed to the PIM.

Sub‐component B.4. Support to Strategic National Programs (US$22.8 million, of which US$19.5 million IDA and US$3.3 million from Government)

43. Spurred by population growth, increasing urbanization and incomes, domestic demand for meat, dairy products, eggs and fishes is expected to increase significantly in the foreseeable future. The livestock and fisheries sectors present huge opportunities for poverty reduction, food and nutrition security, and economic growth. However, several challenges continue to undermine the performance of the livestock and fisheries sectors. Some of these challenges have been considered by the Government of Ethiopia as priority challenges which need to be addressed within specific Strategic National Programs (SNP). The project will therefore provide specific support to five of the SNP selected by the MoLF i.e. (i) SNP1: the “Livestock Identification and Traceability” System (LITS) with an objective to develop a unique Animal Identification and Recording system and contribute to improve the livestock traceability, in particular for export, (ii) SNP2: the “Priority Animal Disease Prevention and Control Program” challenge that will concentrate its activities to the eradication of the “Peste des Petits Ruminants” (PPR), the fight against Newcastle Disease (ND) and the development of the “One Health” Program; (iii) SNP3: the “National Feed and Forage Program” challenge that will focus primarily on developing the access to, and the efficient use of quality forage; (iv) SNP4: the “National Breeding Program” challenge to contribute on improving smallholders access to well adapted improved animal genetic resources for milk production, poultry and small ruminants; and (v) SNP5: the development of the “Aquaculture and Fisheries” Master Plan.

B.4.1 SNP1. Livestock Identification and Traceability System (LITS)

44. The objective of the program is to ensure the harmonization, integration within the country and at regional level, and coordinated implementation of the animal identification, traceability and performance recording systems. The SC will assist the MoLF in taking the lead in the development and implementation of the national regionally harmonized Livestock Identification and Traceability System (LITS). It will build on existing initiatives such as the ET‐LITS pilot program implemented jointly by the USAID‐funded Livestock Market Development Project (LMD), the Livestock Value Chain Public Private Dialogue Project (LVC‐PPD) of the European Union (EU), the IGAD’s Centre for Pastoral Areas and Livestock Development (ICPALD), and any other initiatives dealing with Animal Identification, Animal Performance Recording and Livestock traceability. The establishment and operation of the LITS Committee will fall under the responsibility of a Livestock Data Management expert to be recruited within the PCU (component C). The PCU’s expert will work in close collaboration and coordination with the Technical Committee. He/she will be responsible for the secretariat of the committee (organize meetings, retreats, minutes of the meetings, drafting ToRs, etc.). The mandate and the composition of the committee will be detailed in the PIM.

45. As a first step, the SNP1 will finance a study to identify and assess the performance of all initiatives in the country dealing with animal identification, performance recording, and traceability. The study will consider both the technical and managerial aspects of the performance, including the roles and responsibilities of the public and private sectors, civil society (such as research institutions and breeding associations). Based on its findings, the study will prepare a road map towards harmonization and standardization of the Animal Identification Systems evolving in the country. The project will contribute to implementation of this road map.

46. The project will finance the costs of the committee including the costs of the required national and/or international assistance, the costs of the organization of meetings and retreats, and the costs of stakeholders’ consultations (workshops). It will support the development of the LITS system ensuring complete LITS functionalities within the existing scheme (e.g. unique animal identification system, laboratory module, feedlots module, primary market module) and integration with: (i) the DAMS; (ii) the Performance Recording

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Systems to be developed to improve animal genetic resources and ensure good management of these resources (e.g. milk PRS and Artificial Insemination Management System, small‐ruminants PRS); (iii) the Animal Diseases Notification System; (iv) the monitoring and reporting of GHG emissions; and (iv) the Market Information System. The SC will also contribute to the expansion of the LITS to the producer level and to other species.

47. In addition to the above, the project will finance the reinforcement of capacity of the MoLF’s LITS Unit including (i) trainings, study tours and exchange with countries using a similar technology platform, training of IT staff in software development and database administration, (ii) the provision of equipment including a central computer database, and (iii) the technical assistance of FAO and of ad‐hoc technical assistance (upon demand). Other activities will include support to the AIR's (LITS) Committee for the development of a repository of common terms and codes to be adopted to facilitate the harmonization process, the adoption of a common coding system to facilitate harmonization and harness cost‐savings from synergies. In addition to supporting the finalization of the legal framework (A.2.), the SC will support the preparation of a rolling‐ out strategy to achieve national coverage of the LITS. Once adopted, the SC will contribute to the implementation of the LITS expansion in the project area and for the targeted VCs (training and equipment to decentralized LITS office).

B.4.2 SNP2: Priority Animal Disease Prevention and Control Program

48. This program will focus on the prevention and control of two of the most devastating diseases in the targeted VC i.e. the Newcastle Disease (ND) in the poultry‐meat/eggs VC, and the PPR in the small ruminants’ red‐meat VC. For the ND, the SC will support the preparation of a control strategy and will contribute to its implement in the project’s targeted areas. The project will work towards the control and eradication of PPR, following the guidelines of the FAO‐OIE Global Strategy for the Control and Eradication of PPR, by ensuring the extension in the highlands of the PPR Control Program currently implemented in the lowlands with the financial support of the European Union (EU). Finally, the SC will support the One Health program of the MoLF.

49. To support the control and eradication of PPR, the SC will finance (i) the training of trainers and practitioners on participatory disease surveillance (PDS) and passive (syndromic) surveillance; (ii) Training of the Woreda vets on sample collection and forwarding; (iii) the undertaking of a prevalence study for disease mapping in the regions not covered by the EU‐financed project; (iv) the acquisition of equipment and vehicles for the Branch Coordination Office located in regions not covered by the EU‐financed Project; and (v) the organization of vaccination campaigns (small equipment, cold chain, vaccines and operational costs).

50. To support the prevention and control of the ND, the project will finance: (i) a study to review and update the ND control strategy, (ii) ToT courses, training of public or private animal health workers in the 58 Woredas targeted by the project, and training of village vaccinators (mainly women); and (iii) the cost of vaccination and vaccination campaigns including awareness campaigns, small equipment, (freezers, refrigerators, cool boxes, vaccine carriers), vaccines and operational costs.

51. Under the leadership of the Veterinary Public Health Directorate and in collaboration with the VDAFACA, the NAHDIC, the Meat Inspection and Certification Directorate, and the Ministry of Health, the SC will support the newly developed Ethiopian One Health program focusing on: (i) Anti‐Microbiological Resistance (AMR); (ii) feed and food safety; (iii) meat inspection; and (iv) the Surveillance of Brucellosis and Tuberculosis. The main activities to be financed by the project will include: (i) for AMR: the development of the livestock AMR plan as a contribution to the national strategy, strengthening the regulatory system on the import, distribution and administration of veterinary drugs, ToTs on rational veterinary drug use, training on drug quality and safety assessment for VDFACA staff, and the development of specific AMR related good animal health practices/good fishery health practices (linked to GAHP/GAFP); (ii) for feed and food safety: the

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assessment of country needs on feed safety (mainly Aflatoxine in dairy feed), and the development of food safety guidelines and good practices at farm / processing level (linked to GAHP/GAFP); (iii) for meat inspection: ToT for experts at ministry level, the training of 70 meat inspectors and the acquisition of small equipment for meat inspection; and (iv) for surveillance of Brucellosis and Tuberculosis: the cost of awareness campaigns for farmers, a limited number of sample collection and laboratory analysis and the implementation of some control measures within the limits of the allocated budget.

B.4.3 SNP3: National Feed and Forage Development Program

52. The project will assist the MoLF in preparing an overall strategy (road map) for a National Feed and Forage Development Program (NFFDP) which will build on the lessons learned and recommendations, guidelines, tools and training manuals prepared in the context of the Global Agriculture and Food Security Program (GAFSP), more particularly the Forage/IPM component of AGP34, and expand the program to the feed sector. The SC will support the implementation of the program focusing on the development of the forage component of the program in the project areas, with particular attention to the likely impacts of climate change on feed resources, and related adaptation measures.

53. The SC’s activities will be implemented under the direct supervision and control of a specific "Forage Development Task Force" that will be established at the Ministry under the overall responsibility of the animal nutrition specialist to be recruited within the Federal PCU (see component C) who will work in close collaboration and coordination with the Task Force for which he/she will be responsible for the secretariat (prepare work program, organize meetings, retreats, minutes of the meetings, drafting ToRs, etc.).

54. In addition to financing the cost of the preparation and validation process of the NFFDP, the SC will finance: (i) the establishment and/or strengthening of regional and Woredas Feed and Forage Development Units (FFDUs) (office equipment, training, and operational cost); (ii) the production of guidelines and good practices for the production, conservation and use at farm and FTC levels of forage, forage seeds and forage vegetative materials (linked to GAHP/GAFP); (iii) the preparation of training materials, the organization of ToT and training of field workers, and the organization (on‐farm and FTCs) of demonstrations for the production, conservation and use of forage, forage seeds and vegetative materials. The SC will also support (i) the bulking up and distribution of already identified appropriate and climate resilient seeds and vegetative planting forage material from the International Livestock Research Institute (ILRI) and the Ethiopian Institute for Agricultural Research (EIAR) sites; (ii) the development of a multiplication and distribution system based on contracted smallholder farmers, who will be organized into clusters and/or into seed producing cooperatives; (iii) the training and capacity development of the contracted multipliers farmers; (iv) the training of livestock farmers through demonstration and exchange visits involving key Woreda staff. The program will prioritize the establishment of superior forages within all targeted project Woredas on FTC compounds and adjacent farmer plots, to enable local refinement of recommendations, and spontaneous distribution to farmers. FTCs in project areas will also establish bare‐root bare‐stem nursery areas (e.g. of 100‐200sq.m. per FTC) for local distribution of seedlings. Additional new seed and vegetal planting material could also be accessed from the CGIAR Center ILRI gene bank for initiating bulking up in contract programs or through imports of key recommended material not currently held. The media will be used as an additional sensitization tool to promote forage strategies, promote superior genetic material, and to help create a demand for that material after the capacity to deliver is well established.

B.4.4 SNP4: National Breeding Program and Performance Recording Systems

55. The program will support the MoLF to finalize the National Breeding Policy (NBP) and to develop with

34 In particular: "Forage development and multiplication systems for Ethiopia". FAO, 2015, Livestock extension in Ethiopia. November 2014.

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farmers’ participation the most appropriate breeding strategies to implement the policy in the project areas and for the various targeted species. The SC will be implemented under the supervision of a "Breeding and Animal Genetic Resource Management Technical Committee" that will be established at the Ministry under the overall responsibility of the animal genetic resources specialist to be recruited within the PCU (see component C) who will work in close collaboration and coordination with the Task Force for which he/she will be responsible for the secretariat (prepare work program , organize meetings, retreats, minutes of the meetings, drafting ToRs, etc.) The SC will be implemented in close relation with the SNP1 on “Livestock Identification and Traceability System (LITS)”. It will promote the use of Animal Genetic Resources (AnGR) well adapted to the agro‐ecological and socio‐economic situation prevailing in each of the livestock production systems targeted by the project, and aiming at improving adaptation to current and anticipated climate change.

56. For the dairy sector, activities will aim at: (i) enhancing production of exotic genetic material; (ii) enhancing capacity and efficiency of artificial insemination (AI) services; (iii) up‐scaling the dairy herd performance recording system; and (iv) supporting the conservation of indigenous breeds.

57. To enhance the production of exotic genetic material, the project will (i) perform a rapid needs assessment of the Jersey Farm and contribute to the rehabilitation/ improvement of the farm as recommended by the assessment and; (ii) finance the safe import of 150 heifers and 75 jersey cows, and of semen’s straw of Holstein/Friesian and Jersey. The SC will also contribute to financing of the equipment of a multi‐ovulation and embryo‐transfer laboratory within the NAIC.

58. To enhance AI, the SC will finance: (i) the acquisition of AI equipment and transport means for the production and distribution of liquid nitrogen,;(ii) the reinforcement of the capacity of the regional AI training centers, and the training of both public and private AI technicians; and (iii) consultancy services and stakeholder consultations for the development of the legal framework of the status “Authorized Agent for AI” and the development of the mandatory minimum curriculum for AI technicians (both public and private) to acquire the status of “Authorized Agent”. To enhance the dairy herd performance recording system, the project will finance: (i) the cost of the development of the software (same quality and compatibility for data to be integrated (exported or other) in the DAMS; (ii) the increase of the servers’ capacity of the NAIC; (iii) the acquisition of equipment for the collection of data at farm level (Hand‐held devices such as tablets); (iv) awareness campaign; and (v) practical training of public and private technicians, and lead farmers in performance recording.

59. To contribute to the conservation of indigenous breeds, the SC will support (i) the preparation of the MoLF’s strategy for the conservation and improvement of indigenous breeds; (ii) the recording of performance of the indigenous breeds; and (iii) the rehabilitation/upgrading of the infrastructures for indigenous breeds ranches located in the project regions (Borana, Horo, Begait, Fogera, Sheko).

60. For the poultry sector, the focus will be on improving family poultry production by up‐scaling and providing support to the African Chicken Genetic Gain Project currently implemented by the CGIAR Center ILRI with the support of the Bill and Melinda Gates Foundation.

61. For the small ruminants, the project will build on the Community Based Breeding Program (CBBP) developed with the support of ICARDA. The SC will assist in scaling‐up the approach through the establishment of a mechanism for the valuation of superior animals and the development of capacity (through ToT for Woreda and Kebele experts) at different levels for data collection, data management and genetics. The SC will also finance trainings of participating farmers on community based breeding, as well as the cost of the technical assistance of ICARDA. The acquisition of equipment and consumable goods, and the establishment or rehabilitation of infrastructures to run the CBBP will be provided through sub‐Projects under component A. CBBP will be scaled up around places (Amed‐Guya, Debre‐Birhan, Bonga, Bako, Abi Adi, Sekota)

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where on‐going breeding research sites operate for the major Ethiopian sheeps/goats breeds (i.e. Menz, Bonga, Horro, Adillo, Doyogena sheep breeds and Abergelle goat).

B.4.5 SNP5: Aquaculture and Fisheries Master Plan

62. The objective of this program is: (i) to support the preparation of the Aquaculture and Fisheries Master Plan (A&FMP) and, (ii) to contribute to the implementation of the A&FMP in the project areas (aquaculture and inland fisheries components of the MP).

63. Support to the preparation of the A&FMP. The activities to be financed by the SC will include: (i) the establishment and the operational costs of the Task Force for the preparation and monitoring of the A& FMP; (ii) the preparation with the support of international and national experts of the A&FMP; (iii) the cost of international and national regular peer reviewing of the A&F MP to ensure quality assurance and the cost of the technical assistance of FAO to support the preparation of the MP and provide coaching and advice during implementation; (iv) the stakeholders process for the review and adoption of the A&FMP. The Task force for the A&F MP will have the overall responsibility for the preparation and implementation of the A&FMP during project implementation. The fisheries expert to be recruited within the Federal PCU (see component C) will be responsible for, in close collaboration and coordination with the Task Force, the secretariat (prepare program of work, organize meetings, retreats, minutes of the meetings, drafting ToRs, etc.). The task force will take into account the Code of Conduct for Responsible Fisheries (CCRF), the Ecosystem Approach to Fisheries and Aquaculture (EAFA) and Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries, and Forests in the Context of National Food Security (VGGT), the IGAD Regional Aquaculture and Fisheries Strategy. The SC will assess the anticipated impacts of climate change on fishery resources to propose a Master Plan that fosters adaptation to current and future climatic conditions. The task force will include key stakeholders of the sector, i.e. Ethiopian Research Institute (Sabata Life Research Centre), AECID, the Ministry of Industry (Fisheries Department) etc.; (ii) preparing the A&FMP by a team of national and international consultants. The A&FMP is expected to cover the Aquaculture Development and Management Plan, and the Fisheries Development and Management Plan. The AFMP will cover all the different habitats in the country, i.e. natural lakes, artificial lakes, rivers and streams in the different eco‐climatic zones.

64. Contribution to the implementation of the A&FMP. The SC will support the implementation of the A&FMP within the limits of the project area. For aquaculture, the project will: (i) finance a stocktaking exercise of aquaculture establishments in the project areas; (ii) on the basis of a needs assessment, the rehabilitation and/or establishment of small‐scale demonstration infrastructure of fingerlings production and fish feed production within the National Fisheries and Aquatic Life Research Centre and in one selected regional center in the project area with high potential for the production of fingerlings and fish feed; and (iii) the production of brood stock to produce genetically improved fish strains. The training of beneficiaries and any other additional small scale equipment and infrastructure will be provided through the sub‐Projects approach under component A.

65. For the inland fisheries component, the project will contribute to the development of the fisheries resources management system by financing: (i) the preparation of a nation‐wide survey (inventory of fishers, equipment, infrastructures, landing sites, catch and fishing effort data recording system) and the production of a statistical yearbook, and (ii) the support of international and national expertise for the participatory preparation of the Fisheries Management Plan (FMP) for the different types of water bodies in the project area.

66. The SC will also finance ToT and farmers’ training on a number of subjects such as post‐harvest loss reduction, fish handling and processing, pond fish farming, cage/pen production, river/dam fishing, processing, marketing and household fish consumption. The SC will contribute to the implementation of the legal framework, i.e. rules and regulations on fisheries with focus on reducing illegal, unregulated and

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unreported fisheries.

67. In addition to the above, the project will contribute to the preparation and implementation of a stocking program for overexploited water bodies and newly developed reservoirs.

Box 4: Lessons Learned in Fisheries and Aquaculture

A foreign company invested considerable amounts of funds to produce tilapia fingerlings in a commercial hatchery. The fingerlings are raised in floating cages in artificial lakes to not disturb the ecological balance in natural lakes in case of escape by fish and eutrophication by unconsumed fish feed. The company supplies inputs and equipment to small‐scale fish farmers to rear fish in ponds for buy‐back purposes. The approach generated much goodwill in the neighboring communities.

Development of aquaculture practices failed in countries where no access existed to quality fingerlings and quality (floating) fish feed. Demonstration farms appeared of paramount importance for showing the potential of fish culture to new fish farmers . As income can only be generated upon harvesting the fish from ponds or cages after five to six months, it appeared difficult for the farmers to survive during that production cycle. Fish farming development should as a result be accompanied by additional income generating activities.

Fish species occurring in Ethiopian waters are found in other African lakes, too, with the exception of the Cyprinid species flock of Lake Tana, which is unique in the world. The Lake Fisheries Development Project (implemented in the 1990s and financed by the European Development Fund) determined a safe annual fish production level of 10,000 tons for Lake Tana. Current catch statistics indicate a much higher fish production from that lake (more than 22,000 tons in 2014/15), jeopardizing the species flock. In various African Great Lakes the fish biodiversity of endemic species was negatively affected by excessive fishing efforts at the mouths of rivers during spawning migrations, which prevented the fish from reproducing, which led to partial or complete disappearance of certain fish varieties. Introduction of exotic (invasive) species in lakes led to the eradication of unique fish species in some water bodies (e.g. Lake Victoria).

Estimates of potential fisheries yields of water bodies through the application of certain formulas based on parameters under steady‐state conditions, may lead to inaccurate conclusions for fisheries development and management purposes. Such methods may be indicative for unexploited water bodies, but should be applied cautiously for water bodies with existing or developing fisheries. Catch and fishing effort recording systems should then be developed to obtain reliable resource information. The above methods were used for (among others) reservoirs in Cameroon and Nigeria and were proven inaccurate when fisheries developed.

Source: Project preparation team

Sub‐component B.5. Contingency Emergency Response Component (US$0 million)

68. Following an adverse natural event that results in a major natural disaster, the government of Ethiopia may request the World Bank to reallocate project funds to support response and reconstruction. This SC would draw resources from the unallocated expenditure category and /or allow the government to request the Bank to re‐categorize and reallocate financing from other Project components to partially cover emergency response and costs. This SC could also channel additional funds should they become available as a result of an eligible emergency. Detailed operational guidelines acceptable to the World Bank for the implementation of the Contingency Emergency Response Plan, would be prepared during the first year of project implementation. Should this component be triggered, all expenditures would be made in accordance with paragraph 11 of the Bank Policy on Investment Lending (OP 10) and would be reviewed and accepted by the Bank before any disbursement is made. In accordance with paragraphs 11 and 12 of the Bank Policy on Investment Lending, this component would provide immediate, rapidly disbursing support to finance goods (positive list agreed with government), works, and services needed for response, mitigation, and recovery and reconstruction.

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Component C: Project Coordination, Monitoring and Evaluation, Knowledge Management (US$17.2 million equivalent, of which SDR 11.9 million IDA or US$16.7 million equivalent and US$0.5 million from Government).

Component overview

69. This component will cover project coordination, management, monitoring and learning needs (i.e. support to project governance bodies, contractor salaries, monitoring and evaluation expenses, vehicles and other operating costs) and support studies and analyses in relevant areas.

Sub‐component C.1. Project Coordination (US$16.1 million, of which US$15.6 million IDA and US$0.5 million from Government)

70. The project will be implemented under the overall responsibility of the MoLF. To ensure timely and effective execution of the activities, and to monitor progress towards the PDO, the MoLF will establish Projects Coordination Units (PCUs) at federal (FPCU), regional (RPCU) and Woreda Levels (WPCU). These coordination units will also serve as common coordination units of the livestock activities being implemented, or to be implemented by the other World Bank‐financed projects operating in the same regions. The Federal PCUs will ensure the overall coordination of the project and will be directly accountable to the Minister of Livestock and Fisheries or his/her representative. The PCU will be headed by a National Project Coordinator (NPC) to be assigned on a full‐time basis by the MoLF. Detailed composition and roles of the PCU is provided in Annex 2.

71. The SC will finance the costs of the FPCU, RPCU and WPCU, including consultant fees, daily subsistence allowances (DSA) and O&M costs, such as transport, office equipment, furniture, tools, and internal and external audits, among others. It will also finance the costs of project launching, project sensitization and communication, supervision, staff training (on the Environmental and Social Management Framework – ESMF, Resettlement Policy Framework, Social Assessment, on program MIS, on financial management and procurement etc.) and other administration expenses.

72. The Government will establish Project Steering Committees (PSC) and Project Technical Committees (PTC) at federal, regional and Woreda levels. The project will finance the PSC and PTC throughout project implementation. The composition and functions of the PSC and PTC are described in Annex 2 and will also be further defined in the Project Implementation Manual (PIM) that will be adopted no later than one month after project effectiveness. The PIM will detail the organizational and technical procedures that will govern the project, including operations, M&E, financial and procurement procedures. At the National level, the PTC will be established on the basis of the Livestock and Fisheries Technical Committees from the Rural Economic Development and Food Security (RED&FS) Sector Working Group.

Sub‐component C.2. Monitoring, Evaluation and Knowledge Management (US$1.1 million IDA)

73. The Federal PCU will be responsible for overseeing and managing the implementation of LFSDP’s monitoring, evaluation and knowledge management instruments. The objectives of this SC are: (i) to monitor progress and facilitate evidence‐based reporting of development results, both for performance management and accountability purposes; (ii) to facilitate knowledge management through action learning by VC stakeholders; (iii) to facilitate M&E of capacity development intervention; and (iv) support studies and analyses in relevant areas.

74. A LFSDP Progress and Results Information Monitoring System (PRIMS) will be financed (designed during the first year of the project and thereafter managed by the PCU). PRIMS will facilitate evidence‐based results reporting for performance management and accountability. As such, it will be programmed as a web‐based

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data management tool that will help: (i) to collect, document, analyze and generate reports on project progress and results indicators; (ii) to cross reference annual work plan and budget (AWP&B) tables with progress and results information; (iii) to integrate progress and results data of all productive partnerships (i.e. monitoring of Business plans); (iv) to store and document geo‐referenced data from regular Client Satisfaction Surveys (or Livestock Service Delivery Survey), that are used to assess the performance of public services; (v) to integrate selected information from the new DAMS (see component A); and (vi) to serve as a project related grievances monitoring database. The PRIMS will be procured and managed through the PCU. It will have the capacity to be further expanded, so that the MoLF can use the system for other projects.

75. Nine system improvements will strengthen service delivery systems in the livestock and fisheries sectors, namely (i) Rationalization of Veterinary Services, (ii) Rationalization of the Livestock and Fisheries Extension and Advisory Services (EAS), (iii) DAMS, (iv) Animal Identification, Traceability and Performance Recording Upgrade, (v) Surveillance and Diagnostic Capacity Improvement, (vi) Improvement of the Breeding Program, (vii) Improvement of the Feed and Forage System, (viii) Enhanced Animal Disease Prevention and Control, and (ix) Development of a National Aquaculture and Fisheries Master Plan. Improvements refer to administrative, institutional and organizational changes that positively affect livestock and fisheries sector development. Each planned System Improvement will comprise a series of intervention/activities with intended milestones and outputs to be monitored by the project during implementation. Achievements will be consolidated and assessed against a ‘checklist of critical outputs’ being required as deliverables towards overall achievement of the System Improvement. These checklists (one for each System Improvement) will be prepared as part of the M&E manual, monitored by the PCU in collaboration with the respective national institutions involved, and will guide the final validation of the achievements of System Improvements (see PDO indicator).

76. Each productive partnership sub‐Project will have its own results framework (RF) that will be under the LFSDP RF, and as such it will be designed to contribute to the overall achievement of the intermediate outcomes and PDO. Therefore, each productive partnership RF will include mandatory core indicators (e.g. change in productivity, change in sales volume), and use harmonized definitions and data collection methodologies). These will be prepared by the PCU and laid out in the M&E manual, which will be financed by the project and prepared during the first year of implementation. All service providers facilitating the preparation and implementation of business plans will be responsible for implementing the processes set in the manual. It will also include assisting sub‐Project teams with: (i) individual results‐frame preparation and reporting, (ii) developing their M&E report writing skills and, (iii) facilitating action learning of business plan actors for continuous advancement of partnership arrangements, including plan design and implementation. Finally, the service provider will be responsible for semi‐annual performance reporting of their sub‐Project portfolio to the PCU to be stored and documented in PRIMS (see Figure 2).

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Figure 2: Progress and Results Monitoring in LFSDP – Responsibilities and monitoring data flows

77. Regular business plan preparation and business plan implementation meetings, financed by the project and organized by M&E staff together with business plan proponents, ATA, service providers, the business plan review task force and finance institutions (MFI and Commercial Banks) will serve as a forum for joint reflection and facilitated action learning. These meetings will aim to (i) stimulate feedback iterations between banks, reviewers, service providers, and BP proponents, (ii) assess the causes of business plans approval and rejection by either the review task force or the MFI/ banks. With regards to implementation, these meetings will help to uncover partnership issues and operational bottlenecks, track intended and unintended positive and negative results, foster a systematic sharing of experience between key actors of productive partnerships, and ultimately facilitate improvements to planning and implementation that will lead to better results. The PCU, together with service providers, will be responsible for documenting findings and the possible solutions identified, consolidate and share lessons learned, and to monitor follow‐up of agreed actions.

78. The LFSDP will support many capacity development interventions, and a sound M&E of the intended capacity development results chain will be critical for the success of the project – i.e., a strategic and logical alignment of the capacity development (CD) plans with the identified capacity needs, the effective delivery of CD interventions that lead to changes in competencies of CD recipients, and finally the evaluation of actual learning outcomes being achieved. The project will use as a basis for M&E of project capacity development interventions, the Capacity Development Results Framework (CDRF) developed by the World Bank Institute. It provides a strategic and results‐oriented approach to learning for capacity development. It lays our three capacity factors that affect the achievement of LFSDP development goals: (i) conduciveness of the socio‐ political environment, made up of the political and social forces that determine the priority given to the development goal by the government, the private sector, and civil society; (ii) efficiency of policy instruments, or the formal mechanisms to be used to guide stakeholder actions toward achievement of the development goal. Those formal mechanisms include administrative rules, laws, regulations, and standards; and (iii) effectiveness of organizational arrangements, or the systems, rules of action, processes, personnel, and other resources that government and non‐government stakeholders bring together to achieve development goals.

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Figure 3: M&E of LFSDP Capacity development ‐ results chain

79. Finally, the M&E function of the project will have a coordinating role for a timely and efficient design and implementation of the various M&E tools throughout project implementation. This involves among other things the preparation of TORs and procurement of services for: (i) organizing surveys (households, focus groups, participants of training events); (ii) conducting capacity needs assessments; (iii) facilitating action learning events; (iv) performing studies and analyses in relevant areas; and (v) progress evaluations.

80. The project will conduct a community and household survey (at the beginning, mid‐term and end of project) that integrates household level modules on livestock production, husbandry practices, post‐harvest handling and processing, gender and intra‐household decision‐making, animal sourced food consumption and dietary diversity, with community level modules capturing community characteristics, including the general demographic profile, collective action behavior and social networks, infrastructure, distance to markets, business interests and preferences, and environmental conditions. The data will be instrumental in: (i) tracking changes in household livestock production and husbandry practices and at the same time it would contribute to assessing producer capacity needs, hence informing the design of the interventions in more detail; (ii) informing the local specification of GAHP/GAFP (based on baseline survey); (iii) understanding gender and household dietary diversity issues, hence inform the design of complementary gender and nutrition‐sensitive interventions; (iv) better understanding strength, weaknesses, opportunities and threats to local livestock service delivery; (v) identifying business opportunities and business plan actors in livestock production and processing; and (vi) understanding local realities with respect to social networks and environmental conditions.

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ANNEX 2: IMPLEMENTATION ARRANGEMENTS

Ethiopia Livestock and Fisheries Sector Development Project

A. Project Institutional and Implementation Arrangements

1. The Government of the Federal Democratic Republic of Ethiopia (the “Borrower”) will be represented by the Ministry of Finance and Economic Cooperation (MoFEC). Project implementation will be under the overall responsibility of the Ministry of Livestock and Fisheries (MoLF). The Government will establish Project Steering Committees (PSCs), Project Technical Committees (PTCs) and Project Coordination Units (PCUs) at federal, regional and Woreda levels (see Figure 4). Detailed roles and responsibilities of federal, regional, and Woreda institutions will be provided in the Project Implementation Manual (PIM) that will be adopted no later than one month after project effectiveness. The PIM will detail the organizational and technical procedures that will govern the project, including operations, annual work plans and budgets (AWP&B) preparation, approach for targeting beneficiaries, M&E, financial and procurement procedures. During implementation, the PIM will be updated on a regular basis.

2. Project steering and technical committees at federal level. The Federal PSC, chaired by the MoLF, will include (among others) one representative of the MoFEC, the three State Ministers from MoLF, the Ministry of Trade (MoT), the Ministry of Industry (MoI), the Ministry of Agriculture and Natural Resources (MoANR), the Ministry of Water and Energy (MoWE), livestock and fisheries Research Institutions (including the Ethiopian Institute for Agriculture Research ‐ EIAR, National Fisheries and Aquatic Life Research Centre), representatives of the six regional States and representatives of the World Bank. The National Project Coordinator (see below “project coordination”) will be responsible for the secretariat of the PSC. The FSC will provide strategic direction and policy guidance, ensure inter‐ministerial coordination, harmonization and alignment among donors providing related programs. It will also review progress of the project on a semi‐ annual basis and will evaluate AWP&Bs. It will meet on an annual basis.

3. In Oromiya, Tigray, Amhara, Southern Nations Nationalities and Peoples Region (SNNPR), Benishangul Gumuz and Gambella, the Regional Steering Committees (RSC) will involve Bureaus/ Agencies/ Departments of Livestock and Fisheries, Bureau Head and Deputy, Bureau of Finance and Economy, Bureau of Natural Resources and the Bureau of Land Administration. The RSC will be chaired by the Regional Governor. The Secretary of the RSC will be the regional PCU Coordinator. The RSC will meet quarterly. The RSCs will be responsible for: (i) providing overall supervision for project implementation; (ii) approving the overall regional AWP&B; and (iii) reviewing the annual implementation performance report prepared by the Regional PCU in relation to key performance indicators.

4. At Woreda level, the oversight for the project will be carried out by a Woreda PSC. The Woreda Administrator will chair the PSC while the head of the Livestock and Fisheries Office will be the Secretary. The Woreda PSCs shall be responsible for: (i) providing overall supervision for project implementation; (ii) approving the Woreda AWP&B; and (iii) reviewing the annual implementation performance report prepared by the Woreda PCU in relation to key performance indicators.

5. At federal level, the PTC will be established and its key responsibilities will be to: (i) advise the PSC, (ii) provide recommendations on all relevant documentation, such as the AWPBs, before submission to the PSC; and (iii) provide technical support to the PCU.

6. Membership of the PTC will comprise members of the Livestock and Fisheries task force from the Rural Economic Development and Food Security (RED&FS) Sector Working Group; it will also embed all concerned

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technical Directorates including procurement and financing, the Agriculture Transformation Agency (ATA), the Federal Cooperative Agency (FCA) and research institutions of both L&F. The Chair of the PTC will be appointed by the Minister of Livestock and Fisheries. At each level, technical committees (TCs) will include representatives of the relevant Project Coordination Unit (see below “project coordination”) who will be responsible for the secretariat of the TCs. The FTC will meet every quarter, while the RTC and WTC will meet every two months and every month, respectively.

7. Project coordination. To ensure timely and effective execution of day‐to‐day activities of LFSDP, the MoLF will establish Project Coordination Units (PCUs) at federal (FPCU), regional (RPCU) and Woreda Levels (WPCU). These coordination units will also serve as common coordination units to implement future (and on‐ going) World Bank‐financed livestock projects /activities operating in in the same regions.

8. The FPCU will ensure the overall day‐to‐day coordination of the project and will be directly accountable to the Minister of Livestock and Fisheries or his/her representative. The FPCU will be headed by a National Project Coordinator (NPC) to be assigned on a full‐time basis by the MoLF and assisted by a Deputy Coordinator. The FPCU will comprise (i) civil servants from the public sector to be assigned to the project on a full‐time basis, and (ii) contracted staff from the private sector in specific areas that may not exist and/or not be available full time in the ministry. The FPCU will include expertise related to (i) monitoring and evaluation, (ii) procurement, (iii) financial management, (iv) communication, (v) accounting, (vi) internal auditing, (vii) safeguards, (viii) gender and nutrition, (ix) capacity development and where applicable (x) staff for service delivery in fisheries and aquaculture, animal health, animal breeding, animal feed and forage, data management and recording systems, and value chain/ agribusiness. Drivers and administration secretaries will also support the FPCU.

9. The Federal PCU will be responsible for (i) developing and coordinating the targeting approach of project beneficiaries; (ii) developing national AWP&B and Procurement Plan (PP) by consolidating the regional and Woreda level AWP&Bs and PP (prepared by the RPCU); (iii) receiving technical feedback and recommendations from the PTCs and seeking approval of AWP&B and PP from the PSC; (iv) managing project funds, including disbursing, accounting, and preparing interim financial reports (IFRs) and financial statements for auditing; (v) managing the M&E system; (vi) managing human resources, particularly contracted staff; (vii) assist in the preparation of ToRs/specifications of activities outsourced to public or private service providers, assist the procurement department and contract implementation units of MoLF to (a) ensure procurement of goods and services, (b) ensure supervision and handling over of these works, (c) launch tenders and manage contracts (such as civil works, goods and service providers for business plan preparation) and project assets (vehicles, computers and accessories, office equipment and furniture, among others); (viii) supporting regional PCUs as needed, (ix) handling project communication; and (x) handling and supporting all missions conducted by the World Bank and/or FAO.

10. The regional PCUs (RPCU), to be headed by the regional Coordinators, will be responsible for the day‐to‐ day operations of the project in each region. Each RPCU will comprise (i) a M&E officer, (ii) a procurement officer, (iii) a financial management officer and an accountant, (iv) a safeguards specialist, and (v) staff for L&F service delivery in fisheries and aquaculture, animal health, animal breeding, animal feed and forage, LITS, value chain/ agribusiness. Support staff (drivers and administration secretaries) will also comprise the RPCU.

11. For the Gambella and Benishangul Gumuz Regions, that cover one and two Woredas respectively and where a full coordination team is not warranted, a distinct coordination framework will be established. Technical support (i.e. M&E, procurement, safeguards and all the above livestock and fisheries subject matters) will be provided directly by the Federal PCU, while the day‐to‐day coordination and administration (including financial management) will be carried out at Woreda level.

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12. The RPCU will be responsible for: (i) preparing regional‐level AWP&Bs, consolidating those prepared by the Woreda PCUs and ensuring their timely submission to the Regional Technical and Steering Committees, before being sent to the FPCU; (ii) monitoring, evaluating and reporting on project implementation; (iii) preparing quarterly, semi‐annual progress reports, including activity implementation progress against work plans (with results indicators), financial execution and procurement progress; (iv) assist regional implementing agencies in the preparation of ToRs/specifications for activities outsourced to public or private service providers, assist the procurement and contract management units of the regional implementing agencies to (a) ensure procurement of goods and services, (b) ensure supervision and handling of these works; (v) managing project funds flows and liaising with FPCU and relevant Departments at the national level; and (vi) when appropriate (i.e. depending on the costs of the goods/ services to be procured), and in line with the rules of the procurement manual, handling procurement and financial management at regional and Woreda levels.

13. In each Woreda, the Project will have a: (i) project focal point, (ii) an accountant/ financial officer, and (iii) a driver recruited by the government to facilitate the day‐to‐day coordination of activities.

14. The Woreda PCU will be responsible for: (i) elaborating Woreda‐level AWP&B and ensuring their timely submission to the Woreda SC, the Woreda Technical Committee, and their timely submission to the RPCU; (ii) in line with the M&E manual, monitoring and reporting on project implementation: prepare monthly, quarterly, semi‐annual progress reports, including activity implementation progress against work plans (with output indicators).

15. Implementing institutions. Implementation of the project will rely on existing Government structures. Various partnerships will be formed during implementation, including arrangements with: (a) federal as well as regional/local government institutions, (b) outsourced service providers and UN Agencies, (c) private actors, and (d) development partners (DPs).

16. Implementation will be decentralized to the Livestock and Fisheries Agency/Bureau in the project regions. Federal implementing agencies will provide guidance and support to regions and include various Directorates and institutions of the Ministry such as (the following list is not exhaustive and will be detailed in the PIM): (i) the Human Resource Development Directorate (for the Capacity Assessment and Capacity Development Program, component B); (ii) the Policy, Planning and Programming Directorate (for a‐ Investment Planning and Sector Coordination, b‐ Policy Support, component B); (iii) the Directorate of Disease Prevention and Control, the Directorate of Epidemiology Veterinary Public Health, the Directorate of meat inspection and certification for the oversight of animal health related issues; (iv) the Directorate of Livestock Identification, Traceability and Welfare for all activities related to Livestock Identification and Traceability System (SNP1); (v) the Feed Resources Development Directorate and EIAR (SNP3); (vi) the Directorate of Breed Improvement and NAIC/ National Animal Genetic Improvement Institute) for all activities related to Breeding (SNP4), (vii) the Directorate of Fisheries Resources Development for activities related to Aquaculture and Fisheries (SNP5). The Federal Cooperative Agency (FCA), will be involved under component A for the formation and support to cooperatives.

17. The Agriculture Transformation Agency (ATA)35 will have a key role during LFSDP’s implementation. A Memorandum of Understanding (MoU) will be signed between the Federal PCU and ATA to delineate ATA’s

35 To support GTP’s transformation agenda for the agriculture and livestock sectors, the GoE established the Agricultural Transformation Agency (ATA) in 2011. In GTPII, the Agricultural Commercialization Clusters (ACC) initiative, a flagship Program in ATA, has been introduced within specific high‐potential geographies and strategic commodities, including livestock. The ACC initiative developed an operational platform for the coordinated implementation of priority and geographically‐focused interventions for agricultural transformation‐led growth and value‐chain development.

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role in the project (roles and responsibilities will be detailed in the PIM) and, as with all implementing partners, a AWP&B will be prepared for consolidation by the PCU and approval by the Federal Steering Committee. Among other roles, ATA will support the PCU in: (i) conducting initial regional studies to identify and assess VC infrastructure and regroup Woredas within Woredas‐cluster; (ii) the facilitation of the multi‐ stakeholders commodity platforms to support the identification of potential sellers and buyers and productive partnerships; (iii) assist the partners in the preparation of initial sub‐Project proposals between producers and buyers (“profiles”); (iv) assist the partners in the preparation, after approval by the Woreda/Regional Committees, of the selected detailed sub‐Projects; (v) support the MoLF and partners in the implementation of the productive partnerships. This collaboration with ATA will ensure alignment with the GoE GTP framework and ACC approach, but also operational synergies with on‐going World Bank‐funded projects, more particularly the Agricultural Growth Project (AGP‐II) that implements some of its activities (including livestock related activities such as bee‐keeping and honey production) through ATA.

18. Private actors like processors, wholesalers, small and medium enterprises (SMEs), agro‐enterprises and/or agro‐industries involved in large‐scale processing (and possibly located in agro‐industrial parks36), supermarkets, hotels, restaurants will be involved in the productive partnerships established under component A. However, as individual partners (as opposed to cooperative/collective partners), the support of the LFSDP through the sub‐Projects will be directed to the cooperative entity only. The benefit for individual partners would consist of some level of guarantee to receive more regular quantities of better quality products.

19. MoLF will also collaborate with DPs (mainly under the RED&FS structure) to implement specific LFSDP activities. A Unilateral Trust Fund (UTF) will be signed between the GoE and the FAO in early 2019 to support MoLF on specific themes (see paragraph 104). Partnerships with CGIAR Center ICARDA (for the community‐ based breeding program, SNP4) and AECID (for the preparation of the Fisheries and Aquaculture Master Plan, SNP5) will also be explored.

20. Preparation of AWP&B and PP. The project will be implemented based on the AWP&B approved by the MoLF and the World Bank. The annual planning exercise will be synchronized with the Ethiopian fiscal year. The preparation of the AWP&B and regular updating of PP will be a participatory and demand‐driven exercise following a series of steps that will be detailed in the PIM. The process will be initiated when the FPCU sends a letter in early January each year requesting each RPCU and concerned federal implementing agencies to prepare their AWP&B for the project. The RPCUs will in turn formally request the Woreda PCU, and concerned regional implementing agencies to prepare an AWP&B.

21. Implementation approach for targeting37. The approach for targeting beneficiaries within the 58 Woredas will be based on geographic and social principles. The project will use existing VC’s infrastructure such as collection, processing, marketing and input production facilities located in project areas as the main entry points to reach and identify Level 2 and Level 1 beneficiaries i.e. (i) beneficiaries already connected to markets and supplying these facilities (level 2) and, (ii) beneficiaries (level 1) not yet connected to VC’s infrastructures but located within an “economic distance”38 of these facilities (i.e. benefiting from rural road access). Criteria for selection and prioritization that will be detailed in the PIM, which will, among others, ensure gender and youth participation in project’s activities.

36 The Integrated Agro‐Industrial Parks (IAIP) is a territorial initiative led by the GoE and supported by UNIDO. Four IAIP were targeted in the country i.e. Baeker (Western Tigray), Bulbula (Central Eastern Oromia), Yirgalem Eastern SNNP and Bure (South West Amhara). 37 Mainly component B beneficiaries i.e. those entering the transformation pathway. 38 Could be defined as the distance beyond which it is no longer interesting for the buyer and/or the seller of a product to complete the transaction.

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22. Approach to implement the Gender and Youth Strategy. Specific attention will be given to women and youth throughout the project, starting by strengthening the FPCU with a Gender and Youth Officer who will be responsible for further development, implementation, monitoring and reporting of the project Gender and Youth Strategy as well as supporting institutional strengthening. A gender specialist will be recruited as part of the PCU. In addition, gender focal points from public services will be appointed at other levels (regional, Woreda) and coordination mechanisms between gender focal points and the gender directorate of MoLF will be established. Service providers supporting the implementation of activities (particularly those directly dealing with business plan preparation) will have a demonstrable commitment to gender and youth inclusive approaches to ensure adequate knowledge of relevant gender issues and how to tackle them during implementation. Gender measures during implementation will include: (i) establishing minimum participant quotas for women in capacity building activities; (ii) developing the capacities of extension/development agents (DAs) to reach women and increase representation of women DAs, veterinary and/or para‐veterinary; (iii) where appropriate, organizing special sessions for women and; (iv) ensuring that both male and female family members have access to L&F‐FFS and other technical training. More information will be provided in the PIM.

Figure 4: Project Institutional and implementation arrangements

B. Financial Management

23. An FM assessment was conducted in accordance with the Financial Management Practices Manual for World Bank‐financed investment operations issued on February 4, 2015, and the supporting guidelines. In conducting the assessment, the Bank team has reviewed the experiences of other projects implemented by the MoLF such as Regional Pastoral Livelihood Resilience Project (RPLRP) and Agricultural Growth Project (AGP). Capacity assessments have been carried out for MoLF, ATA, DBE, regions and selected Woredas.

24. The FM assessment considers the degree to which: (a) the budgeted expenditures are realistic, prepared with due regard to relevant policies, and executed in an orderly and predictable manner, (b) reasonable records are maintained and financial reports produced and disseminated for decision‐making, management, and reporting, (c) adequate funds are available to finance the Project, (d) there are reasonable controls over Project funds, and (e) independent and competent audit arrangements are in place. The assessment also included the identification of key perceived financial management risks that may affect program

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implementation and proceeded to develop mitigation measures against such risks.

Country Context

25. The GoE has been implementing a comprehensive public financial management (PFM) reform with support from DPs, including the World Bank, for the last 12 years through the Expenditure Management and Control sub‐program (EMCP) of the Government’s civil service reform program. This was supported by the closed IDA‐financed Public Sector Capacity‐Building Support Program (P074020), the ongoing Promoting Basic Services (PBS) program (P128891), Enhanced Shared Prosperity through Equitable Services Program (P151432) and ET PFM project (P150922) and other donor‐financing as well as Government‐financing programs. These programs have focused on strengthening the basics of PFM systems: budget preparation, revenue administration, budget execution, internal controls, cash management, accounting, reporting, and auditing.

26. The 2014 Public Expenditure and Financial Accountability assessment has been completed for the federal government as well as for Tigray, Amhara, Southern Nations, Nationalities, and Peoples’ Region, Oromia, and Somali Regions and Addis Ababa city administration. Improvements were noted in most of the federal government ratings although the ratings differ among regions. Generally, the budget credibility of the country remained well supported with the continuing robust budget execution and internal control systems. Since the 2010 assessment, budget transparency and comprehensiveness and arrears management has also strengthened. The tax audit function is gradually increasing focus on risk assessment but capacity constraints still remain. Budget execution systems appear to continue to work well. Robust internal control systems remain. Procurement systems have been strengthened since the 2010 assessment although the publication of procurement information has not progressed as much. Furthermore, the effectiveness of the review process has strengthened to an extent given that the Macro Economic and Fiscal Framework is being reviewed by the relevant legislation unit and a strengthened procedure for review of the draft budget is in place. The legislative review process of audit reports improved the performance in the depth of hearing recommendations and monitoring their implementation.

27. Although improvements are noted, the strengthening of the internal audit function has proceeded at a slower pace than expected. The assessment revealed that high staff turnover and capacity constraints remain in procurement and internal audit capacity. In addition, timeliness of the preparation of statements and coverage has improved although regional reports submitted to the federal level have been experiencing delays. The assessment also indicated that external auditing has progressed overall but capacity constraints still remain.

Project financial management arrangement

Budgeting

28. Budget Preparation: The project will apply the government’s budget system, recorded in the government’s budget manual39. In addition, the project will develop an FM Manual that documents key budget preparation and controlling procedures. The budget process will start at the Woreda level. The Woredas budget will be consolidated by the regions along with the regional activities and submitted to the Federal PCU. The Federal PCU has the final responsibility to obtain the annual work plan and budget from the regions and federal level implementers to come up with the project’s consolidated budget. The budget will

39 The Ethiopian budget system is complex, reflecting the fiscal decentralization structure. Budget is processed at federal, regional, zonal (in some regions), Woreda and municipality levels. The budget preparation procedure and steps are recorded in the government’s budget manual. The budgets are reviewed at first by MoFEC then by the Council of Ministers. The final recommended draft budget is sent to parliament around early June and expected to be cleared at the latest by the end of the fiscal year.

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be submitted to the World Bank for no objection.

29. Budget approval: The budget prepared by the MoLF will then be submitted to the MoFEC for final approval. The budget will be published by the MoLF.

30. Budget Control & Monitoring: Budget control is needed to ensure that resources are being spent as planned and expenditures are not exceeding budget. The visited implementing entities all have systems in place to monitor the budget against actual performance. The modalities differ from using the IBEX itself for such functions to excel spreadsheets or manual control ledger cards. Registers are being kept in most cases to record all disbursements and commitments to track the available budget and report the utilization. For the project, each implementing entity will establish a budget monitoring mechanism. The quarterly IFRs should report on comparison of budget against actual and the reasons for under /over utilization. Such analysis should be used by the management as a decision‐making tool.

Accounting

31. Accounting Centers & Accounting Documents: The program financial arrangements will be led by MoLF through the Project Coordination Unit (PCU) established at the Ministry. Therefore, the accounting centers for program funds are: (i) MoLF; (ii) ATA; (iii) FCA; (iv) regional livestock and fishery bureaus; (v) Regional Cooperative Agencies (RCA); and (vi) Woredas. All these institutions will maintain acceptable accounting books and records and prepare financial reports in line with the system outlined in the FM Manual. Each implementing agency is responsible for maintaining the project’s records and documents of the project transactions, which will be made available to the World Bank’s regular supervision missions and to the external auditors. Detailed procedures for maintaining and retaining documents and records will be discussed in the FM Manual.

32. FM Manual (Policies and Procedures): The GoE follows a double entry bookkeeping system and modified cash basis of accounting, as documented in the government’s Accounting Manual which the MoLF is also required to apply. To ensure smooth implementation of the project, as part of the project’s Operational Manual, the project will have its own Financial Management manual, which will largely follow the government Accounting Manual, depicting all accounting policies, procedures, internal control issues, financial reporting, fund flow arrangements, budgeting and external auditing. The manual will be adopted no later than one month after effectiveness.

33. Accounting System: IBEX accounting software is in use for capturing and reporting on government treasury transactions at the MoLF. The Federal PCU on the other hand is expected to apply Peachtree accounting software for the project as IBEX cannot capture transactions of donor‐financed projects. In addition, all regional and Woreda level implementers will use Peachtree accounting software for the project. A Chart of Accounts will be established for the project which will be consistent across all implementers.

34. Retaining documents: Each implementing agency will continue to be responsible for maintaining the project’s records and documents for all financial transactions that occur in their offices. These documents and records will also be made available to the Bank’s regular supervision missions and to the external auditors. Thus, MoLF/Federal PCU will continue to maintain separate records and documents for the implementation of this project.

35. Staffing: At MoLF, at the time of the assessment, out of the 32 positions approved for the finance and procurement directorate, only 12 positions were filled. The remaining positions, including that of the Director is still vacant. For this project, the MOLF needs to recruit two finance officers at the federal level, one finance officer for each of the regional PCUs and one accountant for the 58 Woredas implementing the project.

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Furthermore, the MoLF should fill the vacant posts in its finance directorate. The placement of the finance officers and accountants for the project at all levels will be within one month of project effectiveness. Until such a time, officers will be assigned from the implementing agencies to oversee the project. Regions are also required not to disburse fund to Woredas if the proper finance officers have not been assigned or recruited. All other federal and regional level implementers will use the existing finance staff they have within their agencies. This arrangement will be assessed and additional accountant can be recruited if the load requires so.

36. FM Support and Capacity Building: Focused and continued FM training is essential for the success of the project given that it operates in a decentralized environment. Therefore, once the project becomes effective, the MoLF will deliver comprehensive training including provision of the project documents (like PAD, FM Manual, PIM, FA, etc.) to the participants. The training will cover the FM manual, accounting software, WB requirements, and preparation of IFRs to the project accountants. The project has allocated budget under component 3 of the project. Thus, MoLF will include FM annual training as part of the annual work plan and budget to train new and existing staff to build capacity and to address any turnover challenges.

Internal control and internal audit

37. Internal Controls: Internal control comprises the entire system of control, financial or otherwise, established by management to: (i) carry out the project activities in an orderly and efficient manner; (ii) assure adherence to policies and procedures; and (iii) safeguard the assets of the project and secure as far as possible the completeness and accuracy of the financial and other records. Internal control procedures of MoLF and other institutions have been assessed to be satisfactory to ensure authorization, recording and custody controls. Internal controls at the ministry follow the procedures outlined in the government’s FM Manual. Functional responsibilities are segregated within the finance procedures and bank accounts are operated jointly. Weakness has been noted on the fixed asset management of the ministry. The fixed asset register is yet to be developed for MoLF since it split from the Ministry of Agriculture. Although cash accounting is said to have been conducted during petty cash replenishments, there was no evidence available during the assessment. It is thus recommended that a fixed asset register which contains relevant information about the assets should be maintained in accordance with the FM manual.

38. Control of Soft Expenses: The control of soft expenditures for the project will continue to be monitored closely as is the case for the other project implemented within MoLF. The project financial officers and coordinators will continue to be responsible for ensuring that the management controls specified in the FM manual are enforced. These controls include:

39. Internal Audit: The MoLF has established an internal audit and inspection directorate to conduct a financial and property audit as well as a performance audit. At the time the assessment was conducted, the directorate was staffed with only six staff out of the approved seventeen but the team was informed that the MoLF was in the process of creating staffing directorates. The internal audit unit of each implementing entity would audit the financial transactions of the project. The internal audit unit of the MoLF should thus be strengthened and include the project in the annual plan and conduct a risk based financial audit of the project implementation transactions.

Financial reporting

40. As per the government requirement, MoLF’s finance department is required to prepare and submit monthly reports to MoFEC (within 15 days after end of the relevant month). The content of the report includes the trial balance, revenue details, receivable/payable details, transfer details, expenditure details, bank reconciliation with the Bank statement, and monthly transaction details. There has been a backlog of

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reporting in the past due to absence of finance staff. However, as of the assessment date, the MoLF was almost up to date with its reporting requirements. Other federal and regional implementers prepare and submit their monthly reports to MoFEC in a timely manner. All the reporting requirements of the government are similar across the federal and regional governments.

41. Interim Financial Reports (IFRs) will be required from the project which will be prepared by MoLF consolidating its own as well as those of federal and regional level implementers. The report will be due within 45 days of the quarter end. The format and content of the IFR has been agreed between the Bank and MoLF during project negotiations. Reports should be produced from the system and at a minimum should include: (i) A statement of sources and uses of funds by categories, components, and sub‐components and opening and closing balances for the quarter and cumulative; (ii) A statement of uses of fund that shows actual expenditures, appropriately classified by main project activities (categories, components, and sub‐ components). Actual versus budget comparisons for the quarter and cumulative as well as the related explanations will also be included; (iii) A statement on movements (inflows and outflows) of the project Designated Account, including opening and closing balances; (iv) Expenditure forecast for the next two quarters together with the cash requirement; (v) Trial Balance, balance sheet, and income statement from the system; (vi) Bank reconciliation statement and the related bank statement;(vii) Aging analysis of advances and payables; (viii) Cash count certificates and other notes as necessary; and (ix) Notes and explanations.

42. Delay in submission of IFRs is noted at MoLF in the other bank financed operation, RPLRP. To avoid such delays, a clear time table for preparation of the reports at all levels should be established in the FM Manual. Furthermore, training should be provided annually which includes the preparation of IFRs. The Federal PCU should also prepare a checklist to be used at all levels, which will indicate the minimum standard of an IFR.

43. For monitoring purposes, the Federal and regional PCUs will send their financial reports to MoFEC and BoFEC respectively. In addition, the Federal PCU will submit semi‐annual progress reports to the Federal Steering Committee showing budgeted and actual expenditures, source of funds used, statements of progress achieved based on the agreed upon indicators and the objectives and financial reports for the forthcoming six months.

44. In compliance with the government’s financial rules and regulations as well as IDA requirements, the Federal PCU will produce annual financial statements. These financial statements will be submitted for audit at the end of each year.

External audit

45. The MoLF is audited annually by the Office of Auditor General (OFAG). At the time of assessment, the auditor issued the draft report which is yet to be finalized.

46. For the project, annual audited financial statements and audit reports (including Management Letter) will be submitted to IDA within six months from the end of the fiscal year. The annual financial statements will be prepared in accordance with the standards indicated in the audit TOR agreed during project negotiations. The audit will be carried out by the Office of the Federal Auditor General (OFAG), or a qualified auditor nominated by OFAG and acceptable to IDA.

47. The audit will be carried out in accordance with the International Standards of Auditing (ISA) issued by the International Federation of Accountants (IFAC). The auditor will prepare a work plan to ensure adequate coverage of the various institutions that receive project funds and cover all the major risk areas.

48. Based on lessons learned from the similar projects, the following mechanisms are proposed to

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systematically monitor the timing of audit reports and the timely action on audit findings: (i) MoLF has the responsibility to prepare audit action plans within one month of the receipt of the annual audit report. The prepared action plan will be disseminated to concerned regions, Woredas and implementers; and (ii) within two months after the receipt of the audit report, MoLF should report back to IDA the actions taken on the audit report findings.

49. In accordance with the Bank’s policies, the Bank requires that the Borrower disclose the audited financial statements in a manner acceptable to the Bank; following the Bank’s formal receipt of these statements from the borrower, the Bank makes them available to the public in accordance with the World Bank Policy on Access to Information.

FM‐related Costs

50. The program work plans and budget at MoLF will include the costs of (a) audit costs; (b) related logistics and supervision costs (for example, transportation, per diem, and accommodation while travelling); (c) FM‐ related trainings; (d) bank charges; etc.

FM Risk Assessment, Strengths, Weaknesses, Lessons Learned, Action Plan

51. Risk assessment. The FM risk of the project is substantial. The preliminary mitigating measures proposed in the action plan will help reduce the risk of the project once implemented and applied during project implementation.

52. Strength and weaknesses. The program will inherit the various strengths of the country’s PFM system. As discussed earlier, several aspects of the PFM system function well, such as the budget process, classification system, and compliance with financial regulations. Significant ongoing work is directed at improving the country’s PFM systems through the government’s EMCP. The government’s existing arrangements are already being used in several WB financed projects, which are under implementation. The program also benefits from the country’s internal control system, which provides sufficiently for the separation of responsibilities, powers, and duties. It benefits from the effort being made to improve the internal audit function.

53. The main drawbacks in FM arrangements are: (i) the complexity of the project with the involvement of multiple implementers which raises the risk of timely preparation of IFRs and audit reports; (ii) the limited experience of the MoLF in managing Bank financed operation; (iii) the vacant positions still at the finance and internal audit directorates of the MoLF; (iv) the staff turnover40 will be high at Woreda level hence affecting the project; (v) the capacity gaps within the Ministry’s finance and internal audit units; and (vi) the weak internal audit function across the country.

Financial Management Action Plan

54. The action plan that encompasses the mitigation measures for the risks and weaknesses is below.

Action Date Due by Responsible 1 Prepare a financial management manual, as part of the Within One Month of PIM Effectiveness MoLF‐PCU 2 Staff recruitment: One month after MoLF‐PCU effectiveness. Until such a

40 There is in Ethiopia a general high rate of turnover of project staff within all implementing agencies, due to low salary levels (CPF FY18‐22).

75 The World Bank Livestock and Fisheries Sector Development Project (P159382)

Action Date Due by Responsible  Recruit two finance officers at the MoLF to time, the existing staff at oversee the FM of this project MoLF and PMT of DBE will  Recruit one finance officer each for the regions implement the project.  Recruit one accountant each for the Woredas  MoLF should fill the vacant posts within the ministry’s finance and procurement directorate. 3 Accounting:  As part of the FM MoLF  MoLF to develop a chart of account suitable for manual the project and adopt Peachtree accounting software for  Others are MoLF, regions and Woredas. ongoing actions 4 Internal auditor of the MoLF will include the project in At least annually based on MoLF their annual plans and will perform an audit on an the annual work plan of ongoing basis the units. 5 IFR/Report issues 1. Trainings will be provided by the Bank 1. Within three 1. WB 2. Quarterly submission of IFRs from MoLF months of effectiveness 2. MoLF 2. Within 45 days of the end of quarter 6 Audit issues 1. Recruitment of external Auditors at early stages 1. Within three 1.‐4 (a). MoLF of the project. months of effectiveness 2. Project annual financial statements will be 2. Within three 4 (b). MoLF & WB prepared on time and timely closure of accounts will be months of year end made. 3. Within six months 3. Submission of annual audited financial of the end of each fiscal statements and audit report including the management year letter. 4. Annually 4. Disclosure‐In accordance with Bank Policy, (a) the Bank requires that the borrower disclose the audited financial statements in a manner acceptable to the Bank; (b) Following the Bank’s formal receipt of these statements from the borrower, the Bank makes them available to the public in accordance with The World Bank Policy on Access to Information.

Governance and anticorruption

55. Measures to tackle fraud and accountability aspects within the project should they arise will follow the Government systems set up. The Government of Ethiopia established the Federal Ethics and Anti‐Corruption Commission of Ethiopia (FEACC) in May 2001, with regional states setting up their own ethics and anti‐ corruption commissions in accordance with their respective constitutional jurisdictions to tackle corruption and impropriety before it becomes rampant and widespread. The objectives of the Commission are: (a) to strive to create an aware society where corruption will not be condoned; (b) in cooperation with the relevant bodies, to prevent corruption offences and improprieties; and (c) expose, investigate and prosecute corruption offences and improprieties. In collaboration with other institutions.

56. MoLF has established an ethics follow‐up office staffed with one expert. The unit is currently under the minster in the structure but it is also accountable to the FEACC in relation to its duties. Among others, the unit is responsible to create awareness among employees about ethics and corruption and to conduct follow up of ethics and corruption issues in the organization and report to the minister as well as to the FEACC. Currently the office is largely engaged in awareness creation activities for employees of the Ministry (or

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spreading ethics and anti‐corruption education) through training and distribution of tailor‐made publications in cooperation with the FEACC. It has been indicated during the discussion in the unit that to effectively discharge its role the unit need to be staffed with additional employees with diversified skills. In addition, the need for training in WB operations has been indicated for effective discharge of responsibility in connection to WB financed project operations.

FM covenants

57. The FM related covenants will include the following: a) Maintaining satisfactory FM system for the program; b) Submission of IFRs for the program for each fiscal quarter within 45 days of the end of the quarter covering the quarter, year to date and project life information, in form and substance satisfactory to the World Bank; and c) Submission of annual audited financial statements and audit report within six months of the end of each fiscal year.

Supervision plan

58. Financial Management supervision missions will continue to be an integral part of the project’s implementation reviews to ensure the continuing adequacy of the financial management arrangements and to ensure that expenditures incurred under project parts remain eligible for the Bank’s funding. As the FM risk for the project is rated as substantial, the project will be supervised twice per year. After each supervision, risks will be recalibrated accordingly. Supervision activities will include: a) Onsite visit to the various project institutions at all levels, including Federal PCU, Regional PCU, and a sample of WOFEDs. These visits would include a review of the controls and the overall operation of the FM system; review of internal audit, selected transaction reviews, and sample verification of existence and ownership of assets; b) Reviews of IFRs and follow‐up on actions needed; c) Review of Audit Reports and Management Letters, and follow up on action needed.

Fund flow and disbursement

59. Fund flow arrangement‐ The project follows channel two fund flow mechanism of the government whereby funds will flow directly to the implementing sector ministry (MoLF) and then to federal level implementers and regions and to Woredas. IDA funds will be deposited into a separate designated account to be opened by the MoLF at the National Bank of Ethiopia (NBE). The authorized ceiling of the Designated Account will be two quarters of forecasted expenditure based on the approved annual work plan and budget. Funds from the designated US$ account will be further transferred in to pooled Birr account to be held by MoLF. From the pooled local‐currency account, MoLF will transfer funds to separate local‐currency bank accounts to be opened by ATA, FCA, the regions and Woredas. A single cash forecast for the program will be prepared at MoLF based on approved annual work plans and budgets for the program.

60. At the federal level, except for ATA and FCA, other implementing entities namely NAIC, NAHDIC and NVI will not open separate bank accounts for the project. The procurement needs for these entities will be managed by the Federal PCU within MoLF. For the other activities, these entities will receive funds from the MoLF/PCU in the form of an advance and will settle or account for the advance once the activities are completed. All documentation for these entities will be retained at the MoLF/PCU.

61. Before any fund goes to the implementers, it is important to ensure that separate bank accounts are used

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only for the project fund and project monies should not be used for other purposes even on a loan basis. The fund flow to each implementing entity will be made per its respective annual work plan and budget. Before transferring any money to the lower level, the Federal PCU at MoLF must ensure that separate bank accounts have been opened for the project (FCA, ATA, regions and Woredas) and there are adequate FM systems including FM staff capable of producing the required financial deliverables. Any implementing entity that does not report in a timely manner on how the advance is expended will not receive additional funds until the initial advance is reasonably settled. The FM Manual will indicate in detail the fund flow arrangement to each implementing entity including the accounting and internal control required around the project earmarked fund.

62. The fund flow arrangement for the project is summarized in the following chart:

IDA

US$ Designated Account at NBE managed by MoLF

Birr account at MoLF

Local currency account at Local currency account at regional

ATA/FCA Livestock and Fishery Bureaus

Local currency Fund Flow account at Reporting Woreda level

C. Disbursements

63. Disbursement Method: The project will use report based disbursement method. Disbursement will be made quarterly and cover cash requirements for the next six months based on the forecasts contained in the IFRs. The project may follow one or a combination of the following disbursement methods: Designated Account, Direct Payment, Reimbursement and Special Commitment. Regularity and timeliness of IFRs are needed to ensure smooth disbursements.

64. Designated Account: MoLF will open the Designated Account denominated in US dollars in the National Bank of Ethiopia on terms and conditions acceptable to IDA. The limit of the Designated account would be six months forecasted expenditures.

65. Conclusion. Based on the assessment conducted, the current project financial management

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arrangements satisfy the World Bank’s minimum requirements and that the current arrangements could provide with reasonable assurance, accurate and timely information on status of the proposed project. The recommended improvements are detailed in the Financial Management Action Plan to make the system stronger.

D. Procurement

Applicable Procurement Regulations

66. Procurement under the project will be carried out in accordance with the World Bank’s Procurement Regulations for IPF Borrowers ‐ Procurement in Investment Project Financing, Goods, Works, Non‐Consulting, and Consulting Services’, dated July 1, 2016; ‘Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants’, revised as of July 1, 2016; and the provisions stipulated in the Legal Agreement.

67. Use of Alternative Procurement Arrangements (APA) was not considered as the Project is not co‐financed by other multilateral and bilateral organization and the procurement rules and procedures of the implementing agencies are not adequate for international procurement procedures.

68. When approaching the national market, as agreed in the Procurement Plan, the country’s own procurement procedures may be used. Requirements for national open competitive procurement include the following: a. open advertising of the procurement opportunity at the national level; b. the procurement is open to eligible firms from any country; c. the request for bids/request for proposals document shall require that Bidders/Proposers submitting Bids/Proposals present a signed acceptance at the time of bidding, to be incorporated in any resulting contracts, confirming application of, and compliance with, the Bank’s Anti‐ Corruption Guidelines, including without limitation the Bank’s right to sanction and the Bank’s inspection and audit rights; d. contracts with an appropriate allocation of responsibilities, risks, and liabilities; e. publication of contract award information; f. rights for the Bank to review procurement documentation and activities; g. an effective complaints mechanism; and h. maintenance of records of the Procurement Process.

69. Other national procurement arrangements (other than national open competitive procurement) that may be applied by the borrower (such as limited/restricted competitive bidding, request for quotation/shopping, direct contracting), shall be consistent with the World Bank’s core procurement principles and ensure that the World Bank’s Anticorruption Guidelines and Sanctions Framework and contractual remedies set out in its Legal Agreement apply.

70. The Bank’s procurement regulations applicable to the Project are guided by the core procurement principles of value for money, economy, integrity, fit for purpose, efficiency, transparency, and fairness. The regulations support these core procurement principles by providing many choices for the borrower to design the right approach to market.

71. As per the requirements of the Regulations, a Project Procurement Strategy Document (PPSD) has been prepared by the MoLF, which formed the basis for a PP at least for the first 18 months of the project life. The PP was prepared based on the PPSD and sets out the selection methods to be followed by the Borrower during project implementation in the procurement of goods, works, non‐consulting and consulting services

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financed by the Bank. The Bank reviewed the PPSD and agreed to the Procurement Plan before the completion of project negotiations. The PP will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

72. Standard Procurement Documents issued by the World Bank to be used by borrowers for IPF‐financed projects which include the General Procurement Notice, Specific Procurement Notice, Request for Expression of Interest, Request for Proposals, and Request for Bids documents, will be used for works, goods, consulting, and non‐consulting services to be procured through international competitive procurement, For Procurement involving national competitive Procurement, the Borrower may use its own Procurement Documents, acceptable to the Bank, with the addition of the Bank requirements for national bidding.

73. Systematic Tracking of Exchanges in Procurement (STEP). The project will implement STEP, a World Bank planning and tracking system, which would provide data on procurement activities, and establish benchmarks. The details of the procurement activities in the procurement plan will be transferred to the STEP system.

Project Procurement Strategy for Development (PPSD)

74. As per the PPSD, the procurement objectives of the Livestock and Fisheries Sector Development Project include the following:

 To procure consultancy services for a needs assessment of capacity development programs to build immediate and long‐term human, organizational and institutional capacity of the Ministry of Livestock and Fisheries (MoLF) in order to allow the Ministry to carry out effectively its core public responsibilities.

 To procure office and field equipment, and other critical inputs of LFSDP implementing agencies to create a conducive working environment for service providers and users of the MoLF institutions.

 To support implementing institutions (NAHDIC and regional labs) to acquire better service delivery capacity in the sector.

 To support the rehabilitation or construction of productive infrastructures in the project regions for the development of the targeted value chains (dairy, poultry, red‐meat, and fish).

 To acquire the necessary PIU staff, including proficient and qualified procurement and contract administration staff no later than one month after the effectiveness of the project to expedite the procurement process and ensure that at least 75 per cent of the contracts are executed per the original plan.

 To procure contractors whose performance can be measured through key performance indicators;

75. The procurement items include, but not necessarily limited to:

76. Procurement of Goods: Procurement of goods would include but not be limited to office and field equipment, and other critical inputs (e.g. vaccines, feed including forage and concentrated feeds for dairy cattle, starter and growth feed for poultry/layers, day‐old‐chicks and pullets, feed for small‐ruminants fattening, fish feed and fingerlings etc.) and small equipment/ infrastructure (e.g. animal housing, fencing,

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livestock production tools like waterer, feeder, milk collection tools, fishing nets, fishpond digging tools, small fish feed manufacturing units, etc. Procurement of Vehicles, Motorcycles, Bicycles, and Animal Health, Vaccination equipment and materials, sample collection, DAMS/IT Equipment, and Lab equipment. The National Veterinary Institute produces 17 vaccines for transboundary and for some endemic animal diseases; whereas, the other vaccines are imported, and over 90 percent of animal drugs are imported. There is, however, dissatisfaction with the quality of imported drugs and vaccines available, and the risk in this regard would be identification of counterfeit and substandard drugs from suppliers. Hence, pre‐and post‐inspection should be included as requirements in the bidding documents.

77. Procurement of works: Works procured under this project would include but not be limited to: fish hatchery, small and medium scale animal/fish feed production units, upgrading field training centers, construction/rehabilitation of T‐VET, Rehabilitation of the Jersey Farm, milk cooling facilities, construction of abattoirs, market centers, animal, holding crash, market infrastructure; stores, sheds, and community nurseries. These works contracts are of low risk and their values are small and geographically scattered to attract international contractors’ participation. Hence, open national bidding procedures may be more suitable.

78. Procurement of Consulting Services: The project will make use of consultant services for training, technical assistance, and other capacity‐building activities, farmer survey, M&E studies, studies to integrate land use system, financial management agency services, independent procurement audits and annual financial audits of program activities. A number of suitable national individual consultants and experts, and consulting firms as well as international consultants will also be procured and there are no expected major risks in these areas.

79. The majority of the consultancy services to be procured by the Project are to be conducted during the first two years. There will be a number of individual consultants employed as part of the PCUs staff and also for other technical assistance services who are going to be sourced from both the national and international markets.

80. Particularly for the procurement of the main consulting services, it is envisaged that the services are not expected to be acquired within the country as the services require high caliber expertise which may not be available in qualified local consulting firms (i.e., Contract to service provider for sub‐Project plan preparation and implementation; establishment and facilitation of regional and/or Woreda commodity multi‐stakeholder platforms and calls for proposals, Identification of partners (level 2 and 3 producers and buyers) entering the partnership through Woreda commodity platforms, Contract to service provider for (i) pre‐sub‐Project preparation and (ii) field assessment of the feasibility of those sub‐Projects, Concept development, design specification and requirements for Livestock and Fisheries Data Analysis and Monitoring System (L&F DAMS); System Development for Livestock and Fisheries Data Analysis and Monitoring System (L&F DAMS).

81. Procurement of Non‐Consulting Services: This includes procurement of preparation and production of training and learning materials for radio campaigns (including program development), television programs (production of documentary film), production of Statistical Yearbook for contribution to the development of fisheries resources management system, and provision for translation of documents in local languages.

Implementation Arrangements

82. Federal Implementing Agencies include: Ministry of Livestock and Fisheries, MoLF, (Lead implementing Agency), Agricultural Transformation Agency (ATA), and Federal Cooperatives Association (FCA).

83. Regional Implementing Agencies include: Amhara Livestock Resource Development Promotion Agency,

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Oromia Livestock and Fisheries Resource Development Bureau, SNNPR Bureau of Livestock and Fishery Resource, Tigray Bureau of Agriculture and Rural Development, Benishangul Gumuz Bureau of Agriculture, Animal and Fishery Resource Development, and Gambela Livestock and Fishery Resource Agency and Regional Cooperative Associations (RCAs).

84. Woreda Implementing Agencies include: Selected Fifty‐Eight (58) Woredas in the six implementing regions of the Project.

85. While as lead agency, the primary responsibility for the successful implementation of the project will rest on MoLF, the support and close involvement of other federal, regional and Woreda level implementing agencies is critical. Other implementing agencies are also responsible for implementing the procurement activities allocated to them in the consolidated PP.

86. Each implementing agency shall prepare its own PP. The MoLF shall aggregate and consolidate the PPof all implementing agencies and identify which agency is best placed to conduct which procurement. MoLF in addition to its own procurement shall aggregate and procure strategic and specialized procurements, such as vehicles and other specialized laboratory and field equipment on behalf of other implementing agencies. After aggregation and consolidation, international bidding shall be conducted by MoLF. National bidding may be carried out by federal implementing agencies including MoLF. Regional and Woreda level implementing agencies may conduct procurement based on Request for Quotations and Direct Procurements (in special circumstances as per approved procurement plans (eg. One‐off and unforeseen type both very low value and low risk procurement items).

87. At the regional level, finance, procurement and property administration process units of regional agricultural and fishery bureaus aggregate annual PPs after collecting annual procurement requirements from all implementing agencies of the region.

88. At Woreda level, finance, procurement and property administration process units of the Woreda finance and economic development offices aggregate annual PPs after collecting annual procurement requirements.

89. Considering the capacity limitations of the implementing agencies, establishment of PCUs at federal and regional levels is mandatory for the proper execution of the Project. However, the procurement activities of the Project at federal, regional and Woreda levels will be implemented within the existing structure of the procurement function of each implementing agency. The role of conducting procurement is vested in the respective procurement units of each implementing agency. The role of the project coordination units is to assist, support, participate, coordinate and build the capacity of the procurement units of the implementing agencies. The procurement specialists assigned in each project coordination unit shall work under the supervision of the heads of the respective procurement units and the project implementation unit coordinators on their day to day procurement functions. The regional project coordination units will also support and coordinate all the procurement activities at Woreda levels to smoothly implement the project procurement rules and regulations in harmony. For this purpose, mobile procurement teams having at least one procurement specialist will be established within each regional project coordination unit.

90. The PCUs to be established at federal and regional levels and housed by the core implementing agencies, MoLF and the respective regional Livestock and Fisheries Agencies/Bureaus will include procurement and contract management professionals who will assist the respective procurement units in their procurement and contract management functions. Other sectoral implementing agencies at federal, regional and Woreda levels shall also engage procurement and contract management professionals to assist their respective procurement departments depending on the procurement and contract management workload. The procurement and contract management professionals will be responsible to train and build capacity of the

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procurement and contract management officers within the procurement functions of their respective Implementing agencies.

Procurement Capacity Assessment

91. A procurement capacity assessment of the implementing agencies was carried out in March‐May, 2017, using Procurement Risk Assessment Management System questionnaires. The assessment was carried out on: Federal Agencies; MoLF, Agricultural Transformation Agency (ATA), and Ethiopia Institute for Agricultural Research (EIAR), regional Livestock and Fisheries Resource Development Agencies/Bureaus of Amhara, SNNPR, Tigray and Benishangul Gumuz; Woreda Livestock and Fisheries Resource Offices of Deksis, Hawasa zuria, Dilla zuria, Adama zuria, Dangila, Bahirdar Zuria, Assosa and Thanqabergele Woredas. The assessment reviewed the procurement rules and procedures, organizational structure for implementing the proposed project and the qualification and experience of staff responsible for procurement in the implementing agencies. The assessment also looked into procurement practices, procurement cycle management, record keeping, the procedures of complaint handling, and procurement control and oversight.

92. The MoLF and other sectoral implementing agencies have no adequate prior experience of implementing World Bank‐financed projects. MoLF has acquired limited experience in implementing other World Bank financed projects such as AGP‐II and RPLRP. The MoLFs Procurement and Property Administration Directorate has nine procurement officers and other federal and regional implementing agencies have up to three procurement officers and Woreda level offices have two procurement officers who have reasonable experience in public procurement but have no adequate experience in implementing WB and other development partner financed projects. ATA has better procurement organization, staffing (six procurement officers) and experience in implementing development partner financed projects.

93. The lack of qualified and procurement proficient procurement staff will be a major challenge in the implementation of the project. The staff use Standard Bidding Documents for procurement under National Competitive Bidding procedures. However, the current practice of the procurement units does not appear to be adequate in the preparation of quality bidding documents. Moreover, shortcomings in bid evaluations, which are being carried out mechanically without applying professional judgment, might be another area of challenge. Other key issues and risks for implementation of procurement under the proposed project include unsuitable procurement working environment, lack of adequate space for procurement record keeping; lack of skill development schemes for procurement personnel; low level of pay scale for procurement personnel, which is too low to attract qualified procurement staff; lack of systematic procurement planning and follow‐ up in procurement; lack of adequate experience in contract administration and management. Another weakness identified was lack of system to keep data on volume of complaints and nature of complaints.

94. According to the assessment, all assessed project implementing agencies’, performance in complying with the system has been found inadequate in achieving these objectives and hence the conclusion of this assessment in this regards is that achieving the intended results through the program procurement process and procedures is rated as “High Risk”.

95. In order to address the identified shortcomings/risks of the procurement system of the project, MoLF should engage competent procurement and contract management specialists to provide hands on assistance on procurement and contract management and build the capacity of procurement and contract management staff. The procurement staff including the technical staff who will participate in the procurement planning, technical specifications/ToRs preparation, bid evaluations and contract management, and procurement decision makers need to be provided with procurement training and clinics on the World Bank’s procurement procedures. The areas of training should include procurement planning, bidding document preparation, bid evaluation, procurement record keeping and contract management.

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96. The MoLF shall, no later than one month after effectiveness, adopt a procurement manual as part of the project implementation manual, which provides step‐by‐step procedures for the execution of procurement and contract management activities under the project. The manual needs to clearly define: (a) procurement responsibilities (procurement decision matrix); (b) eligible procurement items; (c) the necessary steps and procurement procedures for different procurement methods; (d) evaluation of bids; (e) the templates and standard documents to guide the staff on different procurement action/processes; (f) contract management; (g) complaint review and handling procedures; (h) capacity building and training; (i) procurement reviews and audits; and (j) procurement staff code of ethics.

97. Details of shortcomings/risks identified and recommended mitigation measures are presented in the following table.

Severity and Responsible and I/No Mitigation Measures Issue/Risk Impact on Time Frame

Project 1 Staff have inadequate High . The staff related to the World Bank experience on procurement procurement function including staff from team/MoLF, within of World Bank‐financed user sections need to be provided with six months of the projects procurement training and clinics on the project effectiveness. World Bank’s procurement and contract management procedures. Engage TA consultant to support MOLF 2 Low quality of procurement High . Provision of training on PP World Bank team/ plans, bidding documents, preparation and its implementation MoLF, within six evaluation reports and monitoring; including use of STEP System months of project inadequate implementation . Provide support and capacity effectiveness and monitoring and tracking building through use of TA Consultant continuous . Technical evaluators, in addition to thereafter. technical evaluation, shall also participate in financial evaluation 3 Inadequate record Substantial . Keep records in safe and secured All implementing management system place without exposure to unauthorized agencies, within four personnel; months of project . Establish record retrieving system effectiveness. 4 Lack of adequate number of High At least one Procurement Specialist shall be MoLF and other procurement staff to handle assigned in each of the PCU offices at implementing procurement management federal and regional levels. In addition to agencies at federal, activities this, one mobile Procurement Specialist will regional and Woreda be deployed to each regional PCU office, levels, within four who will provide procurement support and months of the Project capacity building activities. Furthermore, effectiveness. the procurement officer vacant positions in all procurement units at federal, regional and Woreda implementing agencies should be filled. 5 Lack of written procedural High . Prepare a step‐by‐step MoLF, within one manuals/systems in place Procurement Manual as part of the PIM for month of Project including code of ethics the Project. effectiveness. . Widely disseminate the Procurement Manual (PIM) to all implementing agencies.

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Severity and Responsible and I/No Mitigation Measures Issue/Risk Impact on Time Frame

Project 6 Inadequate contract Moderate . Training to be provided on World Bank team; management practice contracts management to MoLF, within two the user departments or institutions to be months of the Project involved in contracts management. The TA effectiveness and consultant to provide continuous capacity continuous building activities. thereafter. 7 Lack of adequate internal Substantial . Engage an independent MoLF, Starting from procurement oversight and Procurement Auditor‐The audit reports to be the first year of the control shared with internal audit departments of Project period the implementing agencies, respective procurement regulatory bodies, auditor general offices and ethics and anti‐ corruption offices. The internal audit will follow up on the implementation of the audit findings. 8 Poor working environment High . Provide separate office for MoLF, within four for the procurement procurement section and secured place for months of section. The procurement procurement records. effectiveness of the section of MOLF is placed Project. together with finance, transport and general services in a big hall without secured storage for procurement documents. This risks the confidentiality of the procurement process. 9 Lack of system for recording Substantial . Establish a system to register All implementing complaints and responses complaints Agencies, within four months of Project effectiveness. 10 Lack of adequate Substantial . Ensure that the procurement and All implementing procurement and contract contract management monitoring Agencies, within 12 management monitoring mechanism issued by the FPPA is months of the Project system implemented effectively. effectiveness.

Procurement Oversight and Monitoring Arrangements

98. The World Bank exercises its procurement oversight through a risk‐based approach comprising prior and post reviews, and independent review as appropriate. The World Bank sets mandatory thresholds for prior review for the proposed project based on procurement risk levels of the project. Based on the risk rating at appraisal of the project, the World Bank agreed with the Borrower that procurement above the applicable thresholds as provided in the table below shall be subject to prior review. Such procurements shall use the World Bank’s Standard Procurement Documents. The World Bank shall carry out post reviews of procurement processes undertaken by the Borrower to determine whether they comply with the requirements of the Legal Agreement. The Bank may use a third party such as a supreme audit institution, acceptable to the Bank, to carry out post reviews. Any such third party shall carryout the reviews in accordance with the terms of reference (TOR) provided to it by the Bank.

99. Based on the initial risk rating, which is “HIGH”, the prior review thresholds are provided in the table

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below. The prior review thresholds will be updated based on risk levels to be updated from time to time.

Category Prior Review Thresholds (US$, millions) Works ≥ 5.0

Goods, IT, and non‐consulting services ≥ 1.5

Consultants (Firms) ≥ 0.5

Individual Consultants ≥ 0.2

100. As an exception, an activity/contract below the applicable mandatory thresholds shall be subject to prior review if the Bank determines that the activity/contract has risks such as procurement arrangements that are inherently risky, such as procurement that includes the use of negotiations in a competitive procurement process for Goods, Works and Non‐Consulting Services, BAFO, Competitive Dialogue, and the application of sustainable procurement. Furthermore, the TORs for post review consultancy services shall be cleared by the Bank. If the assessed activity/contract level risk is low or moderate, the Bank may determine that procurement above the applicable thresholds shall be subject to post review, and be included in the Procurement Plan.

101. All contracts at or above the mandatory procurement prior review thresholds are subject to international advertising and the use of the Bank’s SBDs (or other documents agreed with the Bank).

102. Dated Covenant: A procurement manual as part of PIM shall be prepared and submitted to Bank no later than one month after effectiveness.

Procurement Arrangement

103. The procurement arrangements for the high or substantial risk and relatively high value contracts of the project are provided in the table below.

No. Contract Title, Description Estimated Bank Procurement Selection Evaluation and Category Cost (US$) Oversight Approach / Methods Method and Risk Competition Rating 1 Procurement of Vehicles 5,330,000 Prior Review Direct Negotiation Negotiation (Goods) 2 Procurement of Motorcycle 1,216,560 Post Review Direct Negotiation Negotiation (Goods) 3 Procurement of Bicycle 1,043,280 Post Review Direct Negotiation Negotiation (Goods) 4 Procurement of Field equipment (Animal Health, Post Open / Lowest Vaccination equipment and 1,743,600 Prior Review Qualification International Evaluated Bid materials, sample collection / RFB (Goods) 5 Post Procurement of DAMS/IT Open / Lowest 3,344,130 Prior Review Qualification Equipment (Goods) International Evaluated Bid / RFB 6 Procurement of vaccines PPR 1,900,000 Prior Review Open / National Post Lowest

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No. Contract Title, Description Estimated Bank Procurement Selection Evaluation and Category Cost (US$) Oversight Approach / Methods Method and Risk Competition Rating Qualification Evaluated Bid / RFB 7 Post Procurement of Lab and Open / Lowest 1,865,000 Prior Review Qualification vaccine equipment (Goods) International Evaluated Bid / RFB 8 Consultancy Services for intermediate sub‐Project Open / Rated 5,179,983 Prior Review QCBS preparation and International Criteria(Vfm) implementation 9 Consultancy Services for advanced sub‐Project Open / Rated 3,199,984 Prior Review QCBS preparation and International Criteria(Vfm) implementation 10 Access to critical inputs and small equipment (G&E component of sub‐Projects)‐ Post Lowest Several small value contracts 19,200,000 Post Review Open / National Qualification Evaluated Bid to be procured across / RFB federal, regional and Woreda implementing agencies 11 Sub‐Projects Fund for Post Open / Lowest Intermediate Cooperatives 5,666,394 Prior Review Qualification International Evaluated Bid Sub‐Projects (Equipment) / RFB 12 Sub‐Projects Fund for Post Advanced Sub‐Projects Open / Lowest 6,399,936 Prior Review Qualification (Equipment component of International Evaluated Bid / RFB sub‐Projects) 13 Consultancy Services Livestock and Fisheries DAMS Open / Rated concept development, design 1,000,500 Prior Review QCBS International Criteria(Vfm) specification, system development, and TOT 14 Assignment of Staffs for the Federal PCU (21 Staffs including FPCU Coordinator, FMS, PS, LITS Specialist, etc.)‐ 1,245,000 Post Review SIC/Open Qualification Negotiations Several small value Individual Consultant Contracts 15 Assignment of Staffs for the Regional PCU (70 Staffs including RPCU Coordinator, FMS, PS, LITS Specialist, etc.)‐ 2,525,400 Post Review SIC/Open Qualification Negotiations Several small value Individual Consultant Contracts distributed across regions 16 Assignment of Focal persons and Financial Officers for 58 3,261,630 Post Review SIC/Open Qualification Negotiations Woredas (174 Staffs)‐Several small value Individual

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No. Contract Title, Description Estimated Bank Procurement Selection Evaluation and Category Cost (US$) Oversight Approach / Methods Method and Risk Competition Rating Consultant Contracts distributed across 58 Woredas 17 Critical field equipment to Woreda and Kebele public Post Lowest field workers‐ Several small 1,714,400 Post Review Open/National Qualification Evaluated Bid value Contracts distributed / RFB across Woredas 18 Upgrading of FTC (Civil Post Works)‐Several small value Lowest 2,830,000 Post Review Open/National Qualification Contracts distributed across Evaluated Bid / RFB regions and Woredas 19 Construction / Rehabilitation Post LF T‐VET‐ Several small value Lowest 2,215,000 Post Review Open/National Qualification Contracts distributed across Evaluated Bid / RFB regions and Woredas 20 Basic Civil Works for subsistence farmers and Post Lowest cooperatives‐ Several small 19,200,000 Post Review Open/National Qualification Evaluated Bid value Contracts distributed / RFB across regions and Woredas 21 Civil Works for improved Post cooperatives‐ Several small Lowest 5,665,943 Post Review Open/National Qualification value Contracts distributed Evaluated Bid / RFB across regions and Woredas 22 Civil Works for specialized cooperatives and Post Lowest municipalities‐ Several small 7,199,928 Post Review Open/National Qualification Evaluated Bid value Contracts distributed / RFB across regions and Woredas

104. Single Source contracts with Specialized Organizations: As agreed with the Government of Ethiopia, the following organizations may provide consulting services taking into account their exceptional worth for the proposed assignments in line with respectively the Provision of Guidelines 7.27 and 7.28 for UN Agency: (i) the Food and Agriculture Organization (FAO), and (ii) the International Center for Agricultural Research in the Dry Areas (CGIAR Center ICARDA).

Entity Amount (US$) Themes FAO 2,936,280  Implementation support to the Project Coordination Unit;  Preparation and implementation of the fish and aquaculture master plan  Data management systems (including Data Analysis and Monitoring System for livestock and fisheries, animal identification and traceability, and performance recording among dairy animals  Genetic improvement in poultry  Road map for extension and advisory services and introduction of innovative extension and adult

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Entity Amount (US$) Themes training approaches (Good Animal Husbandry / Aquaculture and Fisheries Practices, Farming Field Schools) CGIAR Center ICARDA 481,000  Community‐based livestock breeding approach in small ruminants

105. Advance Contracting and Retroactive Financing. Considering the limited capacity of the project implementers, Advance Contracting and Retroactive Financing will be part of the project for the Borrower to proceed with the procurement process before signing the Legal Agreement. The procurement procedures, including advertising, shall be consistent with Sections I, II and III of these Procurement Regulations. The Borrower undertakes such advance procurement at its own risk, and any concurrence by the Bank on the procedures, documentation, or proposal for award of contract, does not commit the Bank to finance the project in question. If the contract is signed, reimbursement by the Bank of any payments made by the Borrower under the contract prior to signing the Legal Agreement is referred to as retroactive financing, and is only permitted within the limits specified in the Legal Agreement.

E. Social and Environmental (including safeguards)

106. MoLF and livestock and fisheries agencies/bureaus/offices at regional and Woreda level will be responsible for implementing Environmental and Social Safeguard (ESS) requirements for the project including the ESMF, RPF and SA including SDP. Depending on the nature and scope of sub‐Projects, safeguard assessments, documentations and approvals of the screening process and result can be undertaken at federal, regional or Woreda levels as articulated in the complementary ESMF. Federal and regional Project Coordination Units (PCUs) will recruit Environmental (one) and Social (one) Safeguard experts to oversee ESS planning, implementation, monitoring and evaluation and reporting activities of the project. Woreda level implementation structures will include Woreda Project Appraisal Teams (WATs) to be established for each LFSDP Woreda with membership from the Woreda Offices of Livestock and Fisheries, Agriculture, Health, Cooperatives, Women Affairs and Youth Affairs. WAT should be separate from the technical committee discussed earlier so that its members have no facilitation responsibilities under the project. In this way, it can maintain a degree of independence to appraise and review sub‐Projects, particularly from the perspective of ESS, technical soundness, gender equity, consistency with the Woreda Development Plan, compliance with rules, and any issues raised by the community audit and supervision committees as well as to track the achievement of milestones at different stages of sub‐Project implementation. Approval of ESS procedures and documents as well as conducting annual environmental and social audits will be the responsibility of environment, forest and climate change offices or equivalents at all levels.

107. A review of the documents compiled for the preparation of the LFSDP and the findings of the Social Assessment reveal that there is a capacity gap in fully implementing safeguard issues. Most notably, the absence of separate environmental and social safeguards units in the MoLF is observed as a major capacity gap. To minimize the risk of safeguard issues being neglected or undermined and also ensure proper compliance, recruited safeguard experts, and other project staff as well as relevant Woreda and regional level government expertise will need to be trained in the environmental and social management procedures, World Bank’s environmental and social policies and government safeguard regulations including LFSDP SA, ESMF and RPF.

F. Monitoring and Evaluation

108. The capacity available at MoLF to ensure adequate M&E of LFSDP is insufficient. It will be developed as early as possible, and will be largely in place by the time the project becomes effective. Key actions will

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comprise (i) hiring one M&E Specialist and 5 regional M&E focal points to work full time on LFSDP, and (ii) investing into basic M&E capacity development (i.e. short‐term training) of sub‐Project managers, regional M&E focal points, managers of capacity development and action learning events, and survey enumerators. Therefore, the LFSDP will be instrumental in developing basic M&E capacity at the Ministry, and in providing support to the development and implementation of an effective MoLF M&E System. LFSDP will establish a Progress and Results Information Monitoring System (PRIMS) that will be managed by the PCU with the understanding that it will be compatible with a future MoLF M&E System.

109. Beneficiaries will be surveyed in year 1 (baseline), year 3 (mid‐term) and year 6 (end of project) of project implementation to track changes in the effectiveness of livestock service provision, productivity and commercialization (please see details in component description). M&E activities will be largely financed through component C. Each productive partnership will have its own results framework (RF) that will be under the LFSDP RF, and as such it will be designed to contribute to the overall achievement of intermediate outcomes and PDO (Figure 4). Therefore, each productive partnership RF will include mandatory core indicators and use harmonized definitions and data collection methodologies. These will be prepared by the PCU and laid out in “M&E guidelines for Productive Partnership”. All service providers facilitating the preparation and implementation of sub‐Projects, will be responsible for implementing the guidelines. The service provider will be responsible for semi‐annual performance reporting of their sub‐Project portfolio to the PCU to be stored and documented in PRIMS.

G. Role of Partners

110. The Project was prepared by the National Technical Team supported by the WBG in close collaboration with FAO (TCI) and in consultation with other development partners (DPs), including CGIAR Center ILRI, and bilateral donors (e.g. IFAD, EU, AECID, SNV, USAID). The Livestock Global Alliance (LGA) –led by the WBG and comprising of OIE, FAO, CGIAR Center ILRI and IFAD– supported the preparation of the livestock aspects of the project in ensuring that the latest global knowledge and international good practices were considered in the project design. Broad consultations with members of the Technical Committees for Livestock and Fisheries of the Rural Economic Development and Food Security (RED&FS) and representatives from the private sector and from producer and processor organizations during project preparation have been critical to build a coherent project design and ensure good complementarity of activities with ongoing and forthcoming livestock and fisheries programs.

111. These DPs will not finance any of the proposed activities, because they have their own complementary operations, but the Federal PCU within MoLF will ensure that collaboration and information sharing will occur systematically during implementation of the proposed LFSDP. Partners will also be invited to join implementation missions when and if so they desire. The Federal PCU will support the role of the RED&FS in providing DPs coordination.

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ANNEX 3: IMPLEMENTATION SUPPORT PLAN

Ethiopia Livestock and Fisheries Sector Development Project

Strategy and Approach for Implementation Support

1. The strategy for supporting project implementation will focus on successfully mitigating the risks identified at various levels and supporting the risk management proposed in the SORT. The approach entails close monitoring of the project’s technical design and implementation, as well as governance, fiduciary, and safeguard issues. It will consist of: (i) support on a day to day basis from staff on the ground in the Addis office; (ii) implementation support missions carried out jointly with FAO when technical needs arise and (iii) technical assistance in areas of weaknesses and where new approaches/procedures have been introduced.

2. Effective collaboration with the GoE, in particular with MoLF, at the federal level as well as at the regional, Woredas and Kebeles is critical for efficient and effective implementation of the project. Furthermore, consultation and collaboration with other key stakeholders is also important including development partners (DPs) supporting livestock and fisheries sectors, other World Bank funded projects (such as AGP2, RPLRP, PCDP3), community organizations, private sector and academic/research institutions.

3. Implementation support missions. One of the biggest implementation challenge identified is MoLF overall low capacity. To respond to this challenge, and to ensure that project resources are being used effectively to achieve the PDO, the implementation support strategy will use a number of instruments to review progress and respond to implementation issues, including: a) Implementation Support (IS) Missions: The World Bank Task Team will conduct semi‐annual review and implementation support mission (in the spring and the fall seasons of each year) to review LFSDP implementation performance and progress toward the achievement of the PDO. Given the overall design and scope of the project, a multi‐disciplinary team comprised of technical specialists, along with fiduciary, environmental, social, and operations specialists will be needed to support the Government of Ethiopia in implementing the project. Support from technical partners, such as FAO, will be sought when needed. The first implementation support mission will take place as soon as possible after effectiveness to provide start‐up support through direct and timely feedback on the quality of implementation plans and their likely soundness and acceptability; b) Mid‐term review (MTR): A MTR will be carried out mid‐way in the implementation phase. It will include a comprehensive assessment of the overall progress with implementation and achievement of LFSDP objectives as laid out in the Results Framework. The MTR will also serve as a platform for revisiting design issues that may require adjustments to ensure satisfactory achievement of the Project’s objective; c) Other reviews: Each year, the Bank and the Ministry of Finance and Economic Cooperation ‐ MOFEC will consider the need for additional analytical, advisory, and knowledge sharing activities. Such reviews will be planned for over and above the semi‐annual IS missions; and d) Implementation completion: At the close of the project, the Bank will carry out an implementation completion review to assess the success of the project and draw lessons from its implementation. 4. Objective of implementation support mission. The implementation support and oversight missions would have the combined aim of reviewing the quality of implementation, providing solutions to implementation problems, and assessing the likelihood of achieving the PDO. More specifically, they will: (i) review implementation progress by component, including institutional development aspects; (ii) provide

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solutions to implementation problems as they arise; (iii) review with the Federal PCU the action plan and disbursement programs for the next six months; (iv) review the Project’s fiduciary aspects, including disbursement and procurement; (v) verify compliance of project activities with the Bank’s environmental and social safeguard policies; (vi) review case studies and survey results to measure results indicators to determine progress toward the PDO against the targets set within the Results Framework and the quality of implementation; and (vii) review the quality of capacity‐building activities, which are crucial for an effective implementation of the program. The missions would combine some field visits, field‐based focus group discussions and interactive workshops with stakeholders for feedback, and regional workshops as well as national workshops to highlight implementation issues, pick up emerging implementation lessons, and share mission recommendations, including agreements on actions moving forward. It will also include reviews of quarterly/annual reports and various studies.

5. Technical Assistance. Implementation support will include technical support from the Bank, FAO, and possibly other bilateral/ multilateral agencies for critical aspects of the Project, for ensuring proper financial management/ procurement, as well as for monitoring social and environmental safeguards. The objective of the technical support would be to help the project teams to internalize good practices and to resolve implementation bottlenecks as they are identified during IS missions. Technical assistance will include training workshops to develop core resource teams within implementing units and project teams, helping to finalize manuals, and reviewing and advising on terms of reference for required studies and technical support missions.

Implementation Support Plan and Resource Requirements

6. Technical support. Some of the investments planned under the Project are relatively complex from a technical standpoint, especially in terms of ensuring that the activities to be funded, result in expected efficiency improvements. In addition to the Bank’s core supervision team, the FAO Investment Center, as well as several consultants may be mobilized periodically to provide technical assistance to implementing agencies in the form of hands‐on training and mentoring.

7. Focus of support. The first two years of implementation will see more technical support. Thereafter, the focus will change to more routine monitoring of progress, trouble‐shooting, and assessments based on the Results Framework. The support missions will be complemented by regular short visits by individual specialists to follow up on specific thematic issues as needed.

8. Financial support. The project financial management specialist based in the country office will review the FM systems, including their continued adequacy; evaluate the quality of the budgets and implementing agencies’ adherence to these budgets; review the cycle of transaction recording through to final report generation; evaluate the internal audit function; review IFRs and/or annual Financial Statements; follow up on the advances to the Designated Account; follow up on both internal and external audit reports; and periodically assess the Project’s compliance with the FM manual as well as the Financial Agreement. Table 4 summarizes the implementation support plan. 9. Procurement support. On the procurement front, the Bank will provide implementation support to the client through a combination of prior and ex‐post reviews, procurement training to project staff and relevant implementing agencies, and periodic assessment of the Project’s compliance with the procurement manual. Implementation support missions will be geared toward: (i) reviewing procurement documents; (ii) providing detailed guidance on the Bank’s Procurement Guidelines; and (iii) monitoring procurement progress against the detailed Procurement Plan. Based on the recommendations of the fiduciary assessments of the Implementing Agencies, and in addition to the prior review supervision to be carried out from the Bank office, the semi‐annual supervision missions will include field visits, of which at least one mission will involve ex‐post review of procurement activities.

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Table 4: FM Implementation Support Plan

FM Activity Frequency Desk reviews Interim financial reports review Quarterly Audit report review of the program Annually Review of other relevant information such as interim internal Continuous as they become available control systems reports. On site visits Review of overall operation of the FM system (Implementation One per year Support Mission) Monitoring of actions taken on issues highlighted in audit reports, As needed auditors’ management letters, internal audit and other reports Transaction reviews As needed Capacity building support FM training sessions During implementation and as and when needed

10. Safeguards. The Bank specialists in Social and Environmental Safeguards based in Addis will have responsibility for supervising safeguard activities. They will conduct supervision of the project’s safeguard activities at least once a year, participate in regional meetings to discuss findings, and draft action plans to improve implementation.

11. Main focus of implementation support. Table 5 summarizes the main focus of implementation support during the Project’s implementation period.

12. Role of Development Partners. The Project was prepared in close collaboration with other development partners, including FAO, and bilateral donors. These partners will not finance any of the proposed activities, because they have their own complementary operations, but the Federal PCU within MoLF will ensure that collaboration and information sharing will occur systematically during implementation of the proposed LFSDP. Partners will also be invited to join implementation missions when and if so they desire. The Federal PCU will encourage the establishment of a task force of development partners involved in the targeted areas and to meet on a regular basis to monitor the matrix of interventions and action plan.

13. The Project has been designed to support critical activities that were identified in the targeted value chains and areas but are not supported by other partners. This flexible and pragmatic design will enable the Project to build on initiatives supported by other partners (which focus on a complementary set of activities). In turn, this is expected to foster synergies and create a framework for more integrated livestock development, in line with the project’s objectives and thematic emphasis. Table 2 provides some additional detail on the development partners cooperating with the LFSDP and the role they are expected to play. 14. It is planned that a significant part of the expertise can be mobilized locally in the country office, including team leadership. A mission based approach will not suffice in being able to adequately and timely respond to coordination and implementation issues. Therefore, a significant part of the task team is decentralized and this will continue to enhance implementation support. Fiduciary and safeguards supports are also provided at the country office. In addition to the missions and on‐call support, the task team proposes proactive monthly or quarterly implementation support meetings. This approach has proven to be effective in other projects in Ethiopia and in other countries.

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Table 5: Main Implementation Support Activities Time Focus Skills needed First 12 months  Project start up  TTL+ operation officer + co‐TTL  Support to implementation activities (sensitization,  Livestock council/community consultations and planning, capacity  Fisheries & Aquaculture building, strengthening implementation capacity including  Value Chains (incl. Finance) M&E)  Financial management  Guidance on applying safeguard instruments  Procurement  Development of impact evaluation methodology and  Environment oversight of baseline survey  Social  Procurement, FM, M&E and safeguards training of staff  Communication at all levels  M&E  Establishing coordination mechanisms with other projects 12‐72 months  Monitoring implementation performance including  TTL+ operation officer + co‐TTL progress  Livestock  Review of annual work plans and disbursement schedule  Fisheries & Aquaculture  Review strength of councils and cooperatives, quality of  Value Chains (incl. Finance) participatory process and capacity building activities  Financial management  Review quality of quarterly/annual reports, data and  Procurement various produced studies  Environment  Assess quality of implementation process  Social  Assess quality of M&E system (including quality of data  Communication collected)  M&E  Review of audit reports and IFR  Review adequacy of the FM system and compliance with financial management covenants  Assess quality of safeguards instruments and their application

Table 6: Skill Mix Required for the Proposed Project (per year)

Number of Skills Needed Staff Weeks Comments Trips Team leader 15 2 DC based Co‐TTL 6 CO based Operations officer/ Co‐TTL 10 2 DC based Livestock specialists 6 2 DC based Fisheries and Aquaculture specialists 6 2 Consultant Value chain / Access to Finance 6 2 Consultant specialist Procurement specialist 6 CO based Financial management specialist 6 CO based Environmental safeguard specialist 6 CO based Social safeguard specialist 6 CO based Gender/Youth/Jobs specialists 2 1 DC based M&E specialist 6 2 Consultant Communication specialist 4 CO based

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ANNEX 4: GENDER MAINTSTREAMING AND INCLUSION OF YOUTH

Ethiopia Livestock and Fisheries Sector Development Project

1. Approach in closing the gender gap: In the livestock and fishery sector, constraints such as lack of capital and access to institutional credit, competing use of time, poor technical skills and lack of access to extension services affect women more than men. Low presence of women in formal institutions and organizations limit their ability to have voice and access to better market and business opportunities.

2. The project gender strategy aims at equal involvement and benefits of women and men in the development of the selected value chains. Women and men of different ages and socioeconomic categories, including youth, will be given equal chances to participate in LFSDP activities and obtain equal returns.

3. This will be achieved by investing in capacity building at all levels, especially by introducing innovative methodology at household level to support women to share control of income generated and decision making. Within each household, headed by men or women, all members will be engaged in negotiating their needs and interests (men, women, boys, girls, elders). The goal is to find innovative, collaborative, gender‐ equitable solutions in livelihoods planning and value chain development.

4. The project will expand women’s economic empowerment through access to and control over productive and household assets. Women headed households and women in male‐headed households will be empowered. Their financial and business skills will be strengthened to build small businesses and effectively engage in income generating activities (IGAs) in the selected value chains. At least 30 percent women and 20 percent youth will receive direct support and services to improve their production capacity, literacy skills as well as accessing key inputs and finance.

5. The project will strengthen women’s decision‐making role in the household and community and their representation in membership and leadership of local institutions. The use of capacity building, including i.e. households (HHs) methodologies already in use in Ethiopia (paragraph 16), will ensure that women are fully part of decision‐making in the household and regarding VCs economic related activities. In particular, the project will strive to support women’s capacity to remain engaged in the different value chains and keep on benefiting from it as it becomes more commercial, supporting women to share control of income generated and decision making.

6. Women’s participation in L&F‐FFS will be used to encourage their membership and leadership in related VCs farmers’ organisations and apex organisations. Women and youth in cooperatives and groups will receive business skills training and support to sub‐Project preparation. This will help them to expand their businesses and enter more profitable market/business opportunities.

7. The project aims to achieve a reduced workload and an equitable workload balance between women and men, girls and boys. Time and labour saving technologies as well as other type of technologies (i.e intensification of dairy production will allow introduction of biogas systems which can be used for household energy) will be promoted by the project. Another main contributor for an equitable workload balance will be the application of HHs methodology at household level.

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8. Specific measures will include: (i) establishing minimum participant quotas for women in capacity building activities; (ii) developing the capacities of extension/development agents (DAs) to reach women and increase the percentage of women DAs/veterinary/para‐veterinary;(iii) where appropriate organizing special sessions for women; (iv) ensuring that both male and female family members have access to L&F‐FFS and other technical training, with a target of 50 percent women. Provision for on‐site childcare facilities will be facilitated, to enable women to cope with childbearing responsibilities while spending time away from home.

9. Specific attention will be given to women and youth throughout the project starting by strengthening the FPCU with a Gender and Youth officer who will be responsible for further development, implementation and monitoring of the gender and youth strategy as well as supporting institutional strengthening.

Component A: Linking More Productive Farmers to Markets

10. Under this Component, the project will improve smallholder farmers’ capacity to sustainably increase the productivity and quality of their produce, to subsequently reduce losses and increase incomes. The component will pay particular attention to increase awareness of gender roles in the livestock and fishery farmers’ households by improving their capacity to negotiate their needs and interests and assist in developing gender‐equitable solutions in livelihoods planning and value chain development.

11. The gender strategy will consider lessons from existing and past experiences41 and will support women farmers to take advantage of economic opportunities provided by value chain development and engage in viable business initiatives. Moreover, women will be supported in becoming active and vocal members of relevant organizations such as cooperatives and producer’s organizations. It will also support (i) women smallholders’ farmers access to services, inputs and assets; (ii) women and youth inclusion in capacity building; and (iii) the dissemination of labor saving technologies that could reduce women’s time burden and (iv) nutrition education. In consideration of women’s (i) low levels of literacy and numeracy; (ii) lack of business development and management skills; and (iii) limited voice, leadership and decision making capacity in organizations and business management, the project will support financial literacy and leadership training.

12. The financial literacy and leadership training for women will work on their capacity to engage in business activities and become leaders. This activity will support women’s participation in groups, cooperatives and enterprises, enabling them to engage in profitable income generating activities and benefit from them. Training will target women who are already member of producers’ organizations, cooperatives or private enterprises or those who have the potential to be active members of one of those.

13. The project will apply affirmative actions (quotas) to ensure women’s and youth inclusion in key component activities such as support in the development of sub‐Projects (30 percent women and 20 percent youth).

14. The project will pay careful attention to ensure trainings respond to women’s needs. To ensure their inclusion (50 percent participants) the extension agents will consider appropriate time, location and child care facilities will be provided. The trainings on Ethiopian GAHP/GAFP will include topics of relevance for women: (i) animal health; (ii) human nutrition; (iii) milk handling and hygiene; (iv) small‐ruminants and beef‐dairy fattening activities, (v) animal husbandry, (vi) fishing and fish farming, (vii) climate smart livestock technologies, (viii) nutrition / cooking demonstrations; and (v) marketing.

41 Lessons from (i) Agriculture Growth Programme (AGP) Livestock Market Development (LMD) and (ii) the pro‐poor sheep and goat value chains for enhanced livelihoods, food and nutrition security in Ethiopia (ILRI‐ICARDA).

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15. The project will involve strategies to improve the nutritional quality and safety in the food supply chain of the selected foods. At the community level, a curriculum on nutrition will be developed and integrated in the training plans for FTC and L&F‐FFS. It is also proposed that the activities on specific food promotion, behavior change communication and nutrition education will be implemented at the household level using the household methodologies approach.

16. The Household methodology, whose success has been proven under an IFAD funded initiative in Ethiopia42, will be used through the L&F‐FFS to promote equal access of men and women to economic opportunities, decision‐making processes and share of workload. The ultimate goal is to give women and men more control over their lives as the basis for individual, household, community and organizational development. The results are tangible in terms of: a more equitable work balance in the home, a greater voice for women in household decision‐making, a fairer share of economic benefits accruing to women, improved food security and nutrition and a noticeable reduction in domestic violence. The project will benefit from lessons learned, best practices (and capacity) available in the country.

17. The project will support the development and testing of technical innovations that could favor women’s workload reduction such as labor‐saving technologies for women and small‐scale machineries (for instance, biogas materials that are readily available from their dairy farming and reduce unregulated forest harvesting and thus contribute to environmental conservation). These innovations, among others, will support women’s workload reduction by decreasing the time required in fetching fuel (other may include i.e. solar panel, efficient cooking stoves).

18. The project will promote the involvement of young men and women in the value chain, particularly: (i) in services such as, i.e., veterinary and para‐veterinary services, pasture production, transportation, distribution and labor employed in processing centers; (ii) as producers, introducing through them a business‐oriented approach to production and marketing; and (iii) as entrepreneurs, young graduates who wish to establish themselves as entrepreneurs, will have the opportunity to participate in training activities.

Component B: Strengthening National Institutions and Programs

19. Under this component, whose objective is to contribute to build immediate and long‐term human, organizational and institutional capacity of MoLF, the gender strategy will: support capacity building of the gender directorate staff of MoLF and gender focal points from public service at all levels (regional, Woreda and Kebele). Trainings to integrate gender and youth issues into the work of MoLF will be conducted using a ToT model. This will ensure that proper capacity is built among implementers to address gender and youth gaps in all value chains interventions.

20. Available materials for Gender awareness trainings will be used. Specific modules will be added, especially in emerging sectors, i.e. gender issues in the fishery sector. The topics of the trainings will be defined after the training need assessment which will be conducted at the beginning of the project. However, initial areas identified for immediate support are: (i) integration of gender and youth into policy formulation; and (ii) gender and M&E.

21. Capacity building trainings for implementers will not be limited to MoLF but will also include other partners (i.e Federal Cooperative Agency) involved in the implementation of some key activities, such as financial literacy trainings for women and youth at Kebele and sub‐Kebele levels.

42 Send a Cow Ethiopia (SACE) has implemented household transformative methodology in Wolayta zone, targeting 400 households and reaching out a total of 2,000 beneficiaries.

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Component C: Project Coordination and Monitoring

22. Within the FPCU, a gender and youth expert will be recruited full time to support overall implementation of gender related activities. TOR will be provided in the PIM.

23. Service providers supporting the implementation of activities (particularly those directly dealing with producers and groups) should have a demonstrable commitment to gender inclusive approaches, youth and nutrition to ensure adequate knowledge of relevant gender issues and how to tackle them during implementation of activities.

24. The M&E system will give strong emphasis to monitoring of targeting performance. All implementers, including service providers are required to provide disaggregated data on women and youth participation, in relation to overall project targets of 30 percent participation of women and 20 percent of youth.

25. The M&E system will collect and analyze information about project outreach, effectiveness of the targeting strategy and specific benefits for women and youth. This requires strong coordination and collaboration between the M&E unit and the subject matter specialist (gender and youth.

26. Impact will be assessed based on methodologically sound baseline, mid‐term and completion surveys which will use key indicators to measure women’s empowerment. The Women’s Empowerment in Agriculture Index (WEAI) will be used (or a light version selecting key indicators most relevant for this intervention).

27. Outcomes will be monitored regularly to ensure the project is on track vis‐à‐vis results and allow timely decision‐making if results are not being achieved as expected. Specific indicators will include number of women and youth cooperatives with sub‐Projects approved and women accessing time and labour saving technologies.

Implementation arrangements:

28. Financial literacy trainings for women and youth will be conducted by the Regional Cooperative Agency (RCA), while business management training for sub‐Project preparation will be embedded in the activities of the service providers responsible of sub‐Projects preparation.

29. It is expected that the percentage of outreach (30 percent women and 20 percent youth) will be respected by all implementers. Trainings on HHs methodology will be embedded into L&F‐FSS activities and trainings for the national master trainers.

30. Overall supervision and implementation support, monitoring and reporting on LFSDP gender related aspects and activities will be the responsibility of Gender and Youth expert of FPCU. The public gender focal points will be responsible at other levels (regional, Woreda, Kebele) and coordination mechanisms between gender focal points; gender directorate of MOLF and gender consultant will be established.

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Box 5: Gender and LFSDP

In the agriculture sector in Ethiopia an overall gender difference in productivity of 23.4 percent favoring men is found, of which 10.1 percentage points (43 percent) corresponds to the endowment effect. Women manage smaller plots, use less non‐labor inputs (e.g. livestock and tools), regularly spend less time in agricultural‐related activities, are less likely to use rented fields to produce, and inhabit smaller households with lower average income. Other limiting factors are related to access to extension services, fields' distance to the household, agricultural non‐labor input use (e.g. chemical fertilizer and livestock use), land characteristics (e.g. size and number of plots managed), product diversification, and years of schooling.

Gender disparities are found in the marketing and sales of livestock and livestock products where men are likely to control high value animals, such as cattle, equines and dairy cows, while women are more likely to be responsible for less valued (monetary terms) animals and animal products such as small ruminants, chickens, eggs, butter and cheese. Although women may be contributing substantial amounts of time and effort in livestock production, they are unlikely to have control over the income derived from their work. Female‐headed households have greater control over crop and livestock value chains than married women.

Constraints such as competing use of time, poor technical skills and lack of capital and access to extension services affect women more than men, and may further limit their participation and efficiency in the value chain. Low presence of women in formal institutions and organizations limit their ability to have voice and access to better market and business opportunities. To close the gender gap and strengthen women’s participation as economic actors in the livestock and fishery sectors, FSDP will: (i) promote women’s participation in value chain development on an equal footing as men; (ii) assist them to move out of low input‐ low output activities and to retain control on resources and incomes; (iii) gain equal access to knowledge, services, inputs, equipment and productive infrastructure; and (iv) play an active role in producers and processors cooperatives.

The project will support beneficiaries in addressing gender gap. Through Component A the project will support: (i) women smallholder farmers access to services, inputs and assets; (ii) women and youth inclusion in groups and organizations; (iii) the dissemination of labor saving technologies that could reduce women’s time burden; and (iv) will introduce innovative methodology at household level to support women to share control of income generated and decision making. Through Component B the project will build capacity of implementing agencies at all levels to better address gender and youth issues in the sectors and to ensure equal involvement and benefits of women and men in the development of the selected value chains. Through Component C, specific attention will be given to women and youth throughout the project starting by strengthening the FPCU with a Gender and youth officer who will be responsible for further development, implementation and monitoring of the gender and youth strategy as well as supporting institutional strengthening. A gender sensitive M&E system including proper indicators will be developed and baseline, mid‐term and completion surveys will capture the impact of the intervention in key dimensions of women’s empowerment.

Source: Decomposition of Gender Differentials in Agricultural Productivity in Ethiopia, World Bank, 2014

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ANNEX 5: GREENHOUSE GAS EMISSION AND EXPECTED MITIGATION EFFECT 43

Ethiopia Livestock and Fisheries Sector Development Project

1. In 2011, the Government of Ethiopia initiated a bold policy process to accelerate development to attain middle‐income status by 2025, while adopting green growth pathways that foster development and sustainability. In its Climate‐Resilient Green Economy (CRGE) strategy, the country recognizes that the pursuit of a conventional development path would, among other adverse effects, result in a sharp increase in GHG emissions and unsustainable use of natural resources. To avoid such negative effects, and address the dual challenge of promoting development and reducing greenhouse gas (GHG) emissions, the green growth pathway envisages limiting national greenhouse gas emission levels to 150 million tons CO2 eq. instead of 400 million tons CO2 eq. in 2030 under business as usual scenario. One of the key pillars of this strategy is to improve livestock productivity to ensure food security and improvement in farmers’ livelihoods while mitigating emissions.

A. GHG emissions and mitigation potential in the dairy sector

2. A life‐cycle assessment (LCA) of the global cattle dairy sector revealed that Milk production from the cattle dairy sector in Ethiopia is estimated to be responsible for about half of the national emissions in 2013. The GHG emission profile is dominated by methane (97.3 percent, 87 percent of which from enteric fermentation), while the contribution of nitrous oxide (N2O) and carbon dioxide (CO2) is negligible (2.1 percent and 0.5 percent of the total, respectively). The national average GHG emission per kg of milk amounts to about 25 kg CO2‐eq. per kg fat‐and‐protein corrected milk (FPCM) at the farm gate, with great variability between and within production systems (Figure 5).

Figure 5. Variability in milk emission intensity, by production system

43 Data from FAO report: “Supporting low emissions development in the Ethiopian dairy cattle sector”, 2016. (http://www.fao.org/in‐ action/enteric‐methane/en/).

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3. A few key management factors influence emission intensity (i.e emissions per unit of product) from dairy production:  Inadequate supply of quality feed results in high enteric methane emissions per unit of metabolizable energy, low milk yields, high mortality of young stock, longer parturition intervals, and low animal weights.  Animal health affects emission intensity as mortality and morbidity cause losses of animal and productivity, that result in “unproductive emissions”.  Reproductive efficiency and herd management affects emission intensity by influencing the portion of the herd that is in production (e.g. milked cows and young stock fattened for meat).

4. These three production parameters are encapsulated in milk yield and herd levels. As a result, we observe a strong inverse correlation between the emission intensity and the average annual milk yield in dairy production systems (Figure 6).

Figure 6. Variation in greenhouse gas (GHG) emission intensity of milk in relation to milk productivity per cow (kg FPCM, fat and protein corrected milk per cow). Each dot represents the average yield and emission in a zone in Ethiopia.

B. Effect of project interventions on milk yields and emission intensity: the case of Oromia

5. The Oromia Region has about 23 million cattle, of which 10.5 million are dairy animals (45 percent). The 23 Woredas tentatively selected for LFSDP implementation count 1.5 million cattle (7 percent of Oromia’s total), and 0.6 million dairy animals (6 percent of Oromia’s total). Total emissions from the cattle sector in Oromia Region are estimated at about 81.4 MtCO2 eq., of which more than half are from dairy production.

6. Increasing milk yield is part of the LFSD Project Development Objective and a range of activities will be carried out to progressively upgrade production units, along a “transformation pathway“. The incremental adoption of Good Animal Husbandry Practices (GAHP) is central to this process. As shown above, this will result in a reduction of GHG emissions per litter of milk produced.

7. Figure 7 displays the result of a scenario analysis carried out for the mixed crop‐livestock systems in the project area. Project interventions (adoption of GAHP) result in a nearly six times greater increase in milk

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output compared to historical trends (ca. 30 Mt against 5Mt) while maintaining GHG emission growth slightly below the projected historical trend. Achieving the same growth in output through a larger herd (instead of through productivity gains), would result in emitting about 700 thousand tons CO2 eq. per year by the end of the project, or ca. 1.7 Mt CO2 eq. during the six‐year project implementation period, for the mixed crop‐ livestock systems in the 23 Woredas selected for implementation.

Figure 7. Milk production and GHG emission trends under selected scenarios: Historical (projection of historical trend), WP practice change (with project, including adoption of GAHP), WP larger herd (milk production identical to with project scenario but achieved through larger herd instead of through adoption of GAHP)

2,000 70

60 1,500 50

1,000 30 Million tonnes milk PY1 PY2 PY3 PY4 PY5 PY6 Historical milk WP milk

500 Thousand tonnes CO2 eq. PY1PY2PY3PY4PY5PY6

WP GHG (larger herd) WP GHG (practice change) Historical GHG (national trend) WP GHG (BCF)

C. Inclusion of livestock in the Initiative for Sustainable Forest Landscapes (ISFL) program BioCarbon Fund engagement in Oromia

8. The Oromia Forested Landscape Program’s goal is to reduce deforestation and net greenhouse gas emissions from land use in all forested areas in the Oromia regional state. It is based on an integrated landscape perspective that aims at addressing trade‐offs and synergies among land uses that include forest, crop, livestock, water, and household energy objectives.

9. The ISFL program is a programmatic umbrella and coordination platform for multi‐sector, multi‐partner intervention on all forested landscapes in Oromia. It includes two components: (i) a US$18 million mobilization grant will finance enabling activities over a five‐year period, and (ii) the provision of US$50 million for Emission Reductions Payments against verified emissions reductions (Emission Reduction Purchase Agreement ‐ERPA) delivered over a 10‐year period.

10. Adopting a landscape approach, the ISFL program will monitor forest cover change and GHG emissions throughout Oromia, accounting for net positive and negative changes in greenhouse gas emissions within the regional state boundaries of Oromia (i.e., the ‘accounting area of the Program’). Emission reduction payments will be made against any net emission reductions taking place within the regional state boundaries.

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11. The engagement of the BioCarbon Fund in support of capacity development would be combined with the LFSDP resources, in support of activities such as technical assistance and capacity development, for the monitoring of GHG emissions and the development of baseline data in Oromia. Depending on the trend in GHG emissions within the livestock sector, and the method selected to account for GHG emission reduction the context of the ISFL (an in particular the selection of baseline), emission reductions generated in the livestock sector may be included in the ERPA.

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ANNEX 6: ECONOMIC AND FINANCIAL ANALYSIS (EFA)

Ethiopia Livestock and Fisheries Sector Development Project

I‐ Foreword

1. This annex presents the Economic and Financial Analysis (EFA) of the World Bank‐funded Livestock and Fisheries Sector Development Project (LFSDP). This EFA demonstrates –through a bibliography review‐ that the investments proposed by the project are justified for World Bank support (section III) and justified from the private and society viewpoints (section V). The EFA describes in some detail the methodology to calculate the project’s IRR and NPV. Preliminary results are presented in section VII for the baseline scenario and in section VIII for the sensitivity analysis.

II‐ Introduction

2. The Project Development Objective (PDO) is to “Increase productivity and commercialization of producers and processors in selected value chains, strengthen service delivery systems in the livestock and fisheries sectors, and respond promptly and effectively to an eligible crisis or emergency”. To achieve this PDO, the project will invest in a number of activities, implemented across three components, namely (i) Linking More Productive Farmers to Markets, (ii) Strengthening National Institutions and Programs and, (iii) Project Coordination, Monitoring and Evaluation, and Knowledge Management.

3. The results indicate that the project is economically justified. Under the current assumptions, the IRR of the overall project is about 21.2 percent and the NPV averages US$ 153 million. The project is sensitive to changes in some of the model’s variables (output and input prices, mortality rates, milk productivity and adoption rates), confirming that sustainable investments towards animal nutrition, genetics and health are key to project success.

III‐ Rationale for public sector provision and value‐added for World Bank support

4. There is a strong economic rationale for public interventions as proposed by the project. First, the project will support the newly‐established Ministry of Livestock and Fisheries (MoLF) in performing its core public functions of providing public goods for the livestock and fisheries sub‐sectors. The provision of public goods include policy‐making, regulation and legislation, investment planning and coordination, delivery of advisory services (on Good Animal Husbandry Practices [GAHP] and Good Aquaculture and Fisheries Practices [GAFP] in animal health, feed provision, and genetic resources management) and facilitation of productive partnerships all along the value‐chain (VC). The project will also contribute to the implementation of MoLF’s Livestock Master Plan (LMP) that aims to raise out of poverty 25 percent of livestock keeping households, i.e. approximately 2.36 million livestock‐keeping households.

5. The project will also address a number of market failures preventing the development of sustainable and inclusive livestock and fisheries VCs. These market imperfections include insufficient formal farmers‐ buyers (agribusinesses, wholesalers and exporters) linkages, low mutual trust between VC agents, lack of bargaining power balance and knowledge asymmetries that inhibit smallholder producers/processors socio‐ economic progress (i.e. insufficient access to market demand and signals). In that context, the World Bank Agriculture Global Practice identified “linking farmers to markets” as a major development objective in its Agriculture Action Plan 2013‐2015. The added value of the Bank’s support includes global knowledge and

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operational know‐how brought from international experience for similar VC projects. More particularly, the “productive partnerships” approach envisioned in the project, involving a cooperative, some buyers and the public sector to prepare sub‐Projects aiming to upgrade cooperatives’ production and marketing capacities has been inspired by World Bank‐sponsored projects in Latin America and the Caribbean’s (World Bank, 2016)44.

6. Bank‐sponsored investments will contribute to climate change adaptation and mitigation, both being key pathways to poverty reduction and shared prosperity. Greenhouse Gas (GHG) emissions from Agriculture (including livestock), Forestry and Land Use change (AFOLU) account for 24 percent of the global GHG emissions, while agriculture alone contributes 10‐12 percent (IPCC, 2014). According to FAO, emissions from crop and livestock production grew globally from 4.7 billion tons of carbon dioxide equivalent (CO2e) in 2001, to over 5.3 billion tons in 2011, a 14 percent increase, mainly originating from deforestation and agricultural emissions from livestock, soil and nutrient management. In Ethiopia, milk production in the dairy 45 sector alone is responsible for about 116.3 million tons of CO2e absolute emissions in 2013 (GLEAM, 2016) .

7. In addition, according to the Stern Review on the Economics of Climate Change (2006), the cost of climate change to the Global Economy is substantial, resulting in a 7 percent gross domestic product (GDP) loss in Africa by 2100. The Review highlights that a climate‐driven reduction in GDP would increase the number of people below the US$ 2 per day poverty line by 2100 compared with a world without climate change. A study from the Overseas Development Institute (ODI) confirms these prospects, and shows that climate change could draw up to 720 million people back into extreme poverty if the current emissions trend continues toward a 3.5‐degree Celsius mean temperature change by 2100 (ODI, 2015)46. Climate change is likely to increase the frequency and severity of extreme weather events and disasters, leading to large economic and social losses. The rationale for climate change mitigation is hence strong for the Bank, since it will benefit both the global economy and that of Sub‐Saharan Africa in general, and Ethiopia in particular. The convening power of the World Bank, as proven by its key role in bringing Climate and Clean Air Coalition (CCAC) and possible BioCarbon Fund (BCF) financing during project implementation, will be key in achieving adaptation and mitigation objectives.

IV‐ Economics of livestock and fisheries value‐chains

8. Livestock. The livestock sub‐sector is a major contributor to the overall economy of Ethiopia. The livestock sector taken as a whole (i.e. cow dairy, red meat/milk and poultry VCs in mixed‐crop livestock systems, small‐ scale and medium scale commercial systems and pastoral and agro‐pastoral systems) contributes 19 percent of the GDP, 16‐19 percent of the foreign exchange earnings of the country and contributes some 35 percent of agricultural GDP. With a rapidly growing population, increasing urbanization and rising incomes, domestic demand for meat, milk and eggs is expected to increase significantly in the foreseeable future. The livestock sector can be a major contributor to poverty reduction since 85 percent of Ethiopia’s population is rural, with livestock‐based livelihoods supporting about 80 percent of rural people (Livestock Sector Assessment [LSA], 2015).

9. For dairy, the total monetary value of the milk47 produced in 2013 (latest information available in the LSA) is estimated to be US$ 2.8 billion, which is 6.9 percent of the GDP of the country. The traditional smallholder production systems contribute 88 percent of the total cow milk production of the nation, while the contribution of the small and medium size specialized dairy systems is only 12 percent. According to the

44 World Bank, 2016, Linking farmers to markets through Productive Alliances: an assessment of the World Bank experience in Latin America, Washington DC, USA. 45 See paragraphs 25‐26 of the EFA for more information on GLEAM. 46 ODI, 2015, Zero Poverty, Zero Emissions, Eradicating Extreme Poverty in the climate crisis. 47 Based on the average farm gate price prevailing at the time of the Livestock Sector Assessment preparation.

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LSA, since farm‐gate prices are high relative to world market prices and since dairy productivity is low relative to nearby countries, significant opportunities exist for productivity increases at the primary production level and efficiency gains at all post‐production levels in the VCs, with the potential to lead to increased benefits for all the actors in the chains.

10. For poultry meat, the total GDP is about US$ 146 million while eggs production generates about US$ 14 million (Livestock Sector Assessment ‐LSA, 2014). The total production of poultry meat was 47.7 thousand tons in 2013, out of which 99 percent came from village backyard traditional system (traditional family poultry) and 1 percent from commercial poultry farms (broilers and layers). Total egg production is estimated to be 138.6 million from the traditional backyard (79 percent of total output) and 36.1 million from commercial farms (21 percent of total output). The supermarket sub‐chain absorbs about 50 percent of the eggs entering the value chain, from which 73 percent comes from backyard village producers and 27 percent from commercial poultry farms. The traders direct to consumers’ sub‐chain accounts for the remaining 50 percent of the eggs, of which 40 percent comes from village backyard producers and 60 percent comes from small‐scale poultry farms (LSA, 2014).

11. Fisheries. Ethiopia’s fishery sector contribution to the GDP is marginal and averaged 0.02 percent in 2010. In 2010, Ethiopia reached about US$ 14 million from fishing catches, impacting a total of 40,000 livelihoods. A very limited workforce is employed by the sub‐sector: about 4,000 persons were employed directly in 2010 and a total of 9,000 others benefited from indirect employment offered by the sector. Although national fish demand is seasonal (religious observances exert strong influence on fish consumption patterns), the country imports significant amounts of fish. The domestic fish demand is robust during two short periods of the year when the Orthodox Church encourages fish consumption instead of meat, milk and eggs (FAO, 2015)48.

V‐ Identification of benefits

12. Activities financed under the basic, intermediate and advanced sub‐Projects are expected to generate three main benefit streams: (i) private‐level benefits, such as accrued production of livestock products (milk, eggs, dairy, poultry/dairy/small‐ruminant meat) and fish due to improved feeding practices, better animal husbandry and improved genetics. Other private benefits include increased revenues from processing and commercialization of these products through the productive partnerships with buyers, which in turn generates additional social benefits in the form of increased food security and nutrition; (ii) public benefits at national and regional levels due to capacity development and institutional strengthening of the MoLF at federal, regional and Woreda levels (these intangible benefits were not fully quantified due to the difficulty of attributing a monetary value to their contribution to the PDO); (iii) global benefits, such as reduced GHG emission intensity of milk and other animal products due to GAHP practices (e.g. feed ration balancing, animal health, reproduction management) improving production efficiency and reducing enteric and manure emissions. Other benefits, arising from the Ethiopian GAHP and GAFP include spill‐over effects on consumers through high milk supply and quality, reduced health related illnesses through investments in food safety, and veterinary drug and feed suppliers who would receive higher demand for their services.

13. Ethiopian GAHP and GAFP interventions are profitable solutions for both the farmers’ and fishers (private) and society’s viewpoints. Research work performed in the context of the LSA showed that animal health and feeding improvement activities, artificial insemination, animal identification and traceability all yield positive financial NPV and generate IRRs above the prevailing opportunity cost of capital (LSA, 2013)49.

48 FAO Country Profile – Ethiopia. 49 See section 9 of the LSA “Ex‐ante assessment of strategic options (combining technology interventions with supporting policy”.

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In addition, according to FAO and others (2016)50, the Benefit Cost Ratio (BCR) of all GAHP options enhancing reduction in emission intensity as proposed by LFSDP in rural mixed crop‐livestock systems also yield attractive results from the smallholder producers viewpoint, with BCRs above 1: artificial insemination (BCR=5), leguminous shrubs (BCR=4.2), use of urea molasses multi‐nutrient blocks (BCR=4.3), straw treatment with urea (BCR=4.5), supplementation with urea treated straw and rice bran (BCR=4.5), supplementation with urea treated straw and concentrate (BCR=4.6). These interventions have the potential to reduce milk 51 emission intensities (reduction of CO2eq/kg of FPCM ) up to 65 percent (FAO and others, 2016).

VI‐ Methodology and assumptions

14. Methodology. The approach follows that of Gittinger (1982)52, Belli et al. (2001)53 and is in line with recent guidelines published on economic and financial analysis54. The financial analysis was performed from the perspective of beneficiaries. The private cost‐benefit analysis, based on GAHP/GAFP and improved/specialized sub‐Projects, computed the costs and benefits experienced by the beneficiaries and uses market prices. The economic analysis, in turn, was performed at LFSDP level and from the society viewpoint. The analysis aggregated incremental benefits to the total number of beneficiaries, included environmental co‐benefits arising from reduced GHG emissions, and deducted total project economic costs to determine whether investments were viable from the perspective of the society. The economic analysis also differed from the financial analysis due to a shadow price that was assumed for the main project outputs.

 Financial analysis

15. Interventions at level 1 beneficiaries (i.e. smallholder subsistence farmers). Herd growth projection models for cattle in mixed rainfall sufficient systems have been designed to estimate the “with project” and “without project” situations over a 15‐years period. The herd growth projection model uses the “EcoRum” module of the Livestock Sector Investment Policy Toolkit (LSIPT, a program developed by FAO and CIRAD under the ALIVE initiative) for simulating bio‐economic performances of herds of tropical domestic ruminants. Other modules of LSIPT, such as “the Performance of ruminant fattening systems” and “Performance of poultry backyard systems (meat and eggs production integrated)” were also used. LSIPT calculates, in “with” and “without” project scenario, different livestock production outputs (meat, milk, manure etc.) and financial outputs that can be used to derive economic and financial performance indicators such as IRR and NPV.

16. In most cases, the same demographic (e.g. parturition, prolificacy, mortality and off‐take rates) and productive (e.g. live weights, milk productivity) parameters as the one used for the preparation of the LSA/LMP were used in the “without‐project” scenario for the main production systems targeted by the project i.e. (i) cattle in small‐scale mixed rainfed system (coded as “B1MR” in the LMP) and (ii) village‐level small‐ scale layers system (coded as “V1OV” in the LMP).

17. With the project, as per the transformation pathway described earlier in the PAD, it was assumed that level 1 beneficiaries would have graduated to “level 2”. The adoption of GAHP (that implies an improved access to feed, breeds and animal health services) would translate into: (i) a reduction of young and adult stock mortality (YASM), (ii) increased animal parturition and calving rates, (iii) longer lactating periods, (iv) reduced laying periods and higher egg fertility, (v) increased live weights, and (vi) higher animal prices due

50 FAO, New Zealand Agricultural Greenhouse Gas Research Centre, Climate and Clean Air Coalition, Low carbon development pathway for the Ethiopian dairy sector, Reducing enteric methane while increasing food security and livelihoods, draft report October 31, 2016. Draft. 51 Fat and Protein corrected milk. 52 Gittinger, P., 1982, Economic analysis of agricultural projects. 53 Belli, P., J.R. Anderson, H.N. Barnum, J.A. Dixon, and J‐P. Tan (2001), Economic Analysis of Investment Operations: Analytical Tools and Practical Applications. WBI Development Studies, World Bank Institute, World Bank, Washington, D.C. 54 IFAD, 2015, Economic and Financial analysis of rural investment projects, basic concepts and rationale.

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to improved average live weight for each animal class of age and production of well‐finished animals. For projections in the “with project” scenario, the analysis conservatively used the demographic parameters of the LSA/LMP and complemented them with data from the EFA of the Agriculture Growth Program (AGP‐II) given the relative similarity of ecologies, production systems and interventions. Results are presented in section VIII.

18. Productive partnerships based on intermediate/advanced sub‐Projects (targeting level 2 and 3 beneficiaries). The quantity and exact nature of Productive Partnership (PP) sub‐Projects are not known ex‐ ante. PP will be based on market‐ and demand‐driven sub‐Projects prepared by cooperatives and reviewed by the Project Coordination Unit (PCU) (through the Woreda/regional Sub‐Project Approval Committees) before financing. For this reason, a full quantitative evaluation of financial benefits of these sub‐Projects at the ex‐ante stage is challenging because it is difficult to predict exactly which investment activities will be pursued and the cost of investment packages. However, during project design, a list of possible and representative sub‐Projects was established with the National Task Team (NTT). The mix of sub‐Projects include (i) a peri‐urban specialized cattle fattening system, (ii) a peri‐urban specialized dairy system, (iii) a primary Milk Collection Center (MCC) with 1.5m3 capacity per day, (iv) a MCC with 2m3 capacity per day equipped with a pasteurization unit, (v) a milk processing center (for pasteurized whole and skimmed milk, butter and ghee production), (vi) a poultry abattoir and, (vii) 300m2 fish ponds for tilapia or catfish production.

19. The analysis of these sub‐Projects consisted in comparing expected annual income streams (arising from sales to the buyer entering the productive partnership) and expenses streams (investment, variable and fixed costs) calculated from the beneficiaries’ viewpoints. Two kind of calculations were carried out: (i) a profitability analysis (in terms of IRR and NPV at 10 percent discount rate) to assess the sub‐Project’s profitability over a 15‐year period and, (ii) a cash‐flow analysis to assess financial sustainability. Results are presented in section VII.

20. Primary milk collection centers. In the without‐project situation, it is assumed that the MCC absorbs 0.8m3/day of raw milk. In the with‐project situation, as per the transformation pathway, MCCs will have their management and operational capacity strengthened in order to ensure a growing and reliable supply of quality milk to the buyer. With the project, the MCC will be enhanced (in terms of milk collection techniques and equipment), translating into an increased quantity of milk collected from 1m3/day in the first year, to 1.1m3/day in the second year, 1.2m3/day in the third year, 1.3m3/day in the fourth year and 1.4m3/day in the fifth year. Post‐harvest losses have been considered because omitting them would have induced an overestimate of income. Losses are progressively decreasing from 20 percent (without project) to 10 percent (with the project). Prices of milk used in the financial analysis correspond to those actually paid by MCCs to farmers and those paid by processors to MCCs (market prices). For the purpose of the analysis, average prices of 14 ETB/litre and 11 ETB/litre have been used respectively as the price paid by MCCs and by processors.

21. Milk collection center with a pasteurization unit. In this scenario, the MCC will be equipped with processing technologies (batch pasteurizer, milk buffer tanks etc.) to increase the supply of pasteurized milk to buyers, from 1.5m3/day in the first year to 2m3/day the second year and onwards. It was assumed that small bags of 200, 500 and 1,000mL with proper labelling would be sold to buyers. Losses during processing are progressively decreasing from 10 percent without project to 5 percent with the project. Prices of milk used in the financial analysis correspond to those actually paid by MCCs to farmers and those paid by processors for pasteurized milk. Prices for milk paid by MCCs and by processors are those described above.

22. Milk processing center. In the without project situation, the MCC is not processing milk. With the project, the MCC will be equipped with processing technology so as to increase the supply of pasteurized whole milk and processed products to buyers (i.e. skimmed milk, butter, ghee in packs of 200, 500 and 1,000mL). The quantity of raw milk collected from milk producers would increase from 2m3/day in the first year to 4m3/day

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the third year and onwards. The price of milk used in the financial analysis corresponds to those actually paid by MCCs to farmers and those paid by buyers for pasteurized milk (17 ETB/litre), skimmed milk (19 ETB/litre), butter, ghee and fresh cream (prices depending on the various packages of 200g, 500g or 1kg).

23. Poultry abattoir. The investment would be fully incremental (i.e. no existing abattoir without the project). It will consist of establishing an abattoir that will slaughter, process, grade, package, cold‐store and market processed chicken (assuming a capacity of 1,000 birds per day). The analysis assumed that the abattoir would operate under a dual‐purpose approach i.e. (i) purchasing broilers from poultry cooperatives (105 ETB per 1.5kg bird) and (ii) offering a slaughtering service to smallholder producers (3.5 ETB/head). The abattoir will produce whole carcasses and various chicken parts i.e. leg, breast or wing bone‐in and offals. Capital costs will consist of building and equipment while operating costs will mainly consist of procuring the slaugtherstock from broiler producers.

24. Tilapia/ catfish production. The sub‐Project would be fully incremental. The business plan will consist of establishing a 300 m2 fish pond in order to produce catfish or tilapia. From the first year of operation, about 1300kg of catfish and tilapia (net of losses) would be produced over two cycles of six months. Capital costs will consist of pond construction, fencing materials, water pipes and pumps and storage facility for feed. Operating costs will consist of fingerlings procurement, feed and labor costs. The price of catfish and tilapia paid by the buyer were estimated at 100 and 130 ETB/kg respectively.

 Economic analysis

25. The Ex‐ante Carbon Balance Tool (EX‐ACT) and the Global Livestock Environmental Assessment Model interactive (GLEAM‐i) were used to assess the abatement (mitigation) potential of LFSDP. The EX‐ACT tool, developed by FAO, provides estimations of the impact of AFOLU projects (including livestock and fisheries) and policies on the carbon‐balance (quantification of absolute emissions). The carbon‐balance is defined as the net balance from all GHGs expressed in CO2 equivalents (CO2e) that were emitted or sequestered due to project implementation as compared to a business‐as‐usual scenario. EX‐ACT has been developed using mostly data from the Intergovernmental Panel on Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventories (NGGI‐IPCC, 2006) that furnishes EX‐ACT with recognized default values for emission factors (the so‐called “Tier 1 level” of precision). EX‐ACT can accommodate more site‐specific emission factors, when available (Tier 2 level data).

26. Tier 2 parameters for dairy cattle used in EX‐ACT, also called “emission factors” (i.e. enteric methane and manure emissions, in kgCH4/ head of dairy cattle), were calculated in the “with” and “without” project scenario using the database prepared under the “Low carbon development pathway for the Ethiopian dairy sector, Reducing enteric methane while increasing food security and livelihoods” Study prepared by FAO, the New Zealand Agricultural Greenhouse Gas Research Centre and Climate and Clean Air Coalition (2016)55.

27. Tier 2 parameters found in the study are based on the GLEAM modeling framework (developed by FAO) that simulates the environmental impacts of the livestock sector56. GLEAM covers the main livestock commodities found globally i.e. meat and milk from cattle, sheep, goats and buffalo; meat from pigs; and meat and eggs from chickens. The model, which runs in a geographic information system environment, provides spatially disaggregated estimations on GHG emissions and commodity production for a given production system, thereby enabling the calculation of the emission intensity for any combination of

55 FAO, New Zealand Agricultural Greenhouse Gas Research Centre, Climate and Clean Air Coalition, Low carbon development pathway for the Ethiopian dairy sector, Reducing enteric methane while increasing food security and livelihoods, draft report October 31, 2016. Draft. 56 More on http://www.fao.org/gleam/en/. The tool and related support documentation and publications are available at http://www.fao.org/gleam/resources%20/en/.

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commodity, farming systems and location at different spatial scales. GLEAM is built on five modules reproducing the main stages of livestock production: the herd module, the manure module, the feed module, the system module and the allocation module.

Table 7: Main GHG assumptions used in EX‐ACT

Assumption Results Emission factor WOP Enteric CH4 (kg CH4/dairy cattle/year) 84.2 (Tier 2) Emission factor WOP manure (kg CH4/ dairy cattle/year) 9.1 (Tier 2) Emission factor WP EntericCH4 (kg CH4/ dairy cattle/year) 92.5 (Tier 2) Emission factor WP manure (kg CH4/ dairy cattle/year) 9.6 (Tier 2) Emission factor WOP Enteric CH4 and manure (kg CH4/other animal Default Tier 1 species/year) EX‐ACT factors Number of dairy cattle WOP/ WP (million) (based on LSA) 2.74/ 2.49 Number of small‐ruminants WOP/ WP (million) (based on LSA) 23.2/ 23.1 Production per year catfish/ tilapia WP (tons) 32.1/ 17.1 Number of animals (dairy cattle) (based on Central Statistical 2.4 million (start), 2.74 million Agency and LSA herd modeling data) (WOP), 2.75 (WP) Improved grazing land management (hectares, WP) 120,000

28. Carbon balance. The analysis used 3 modules of EX‐ACT i.e. (i) Grassland and Livestock, (ii) Fisheries and Aquaculture; and (iii) Inputs and Investments. Results indicate that the activities foreseen by the project lead to a carbon balance of 1.8 million tons of CO2e that are mitigated over the period of 20 years, assuming (i) a warm temperate climate and moist regime, (ii) a linear dynamic of change over the duration of the project, (iii) a six‐year implementation phase; and (iv) a 14‐year capitalization phase. This is equivalent to the annual mitigation of roughly 91,849t of CO2e annually. With such a result, LFSDP can thus be characterized as an investment that benefits GHG mitigation.

Table 8: Carbon balance results Item Results Total balance, 20 years, tCO2eq, million ‐1.8 Balance per year, tCO2eq ‐91,849

29. Social price of carbon. According to the World Bank Guidance Note on the Social Value of Carbon (2014), the value of carbon can be derived from three different measures: (i) the social cost of carbon, (ii) the marginal abatement costs, and (iii) the carbon market prices. The social cost of carbon attempts to capture the marginal global damage (cost) of an additional unit of CO2e emitted. Marginal abatement costs measure the carbon price necessary to achieve a particular climate change target. This price is conceived as the global carbon price that would cover the marginal cost of achieving a particular climate policy target, such as the internationally accepted goal of limiting mean global warming to 2°C above pre‐industrial temperatures. Carbon market prices are the market value of CO2e emission reductions or sequestration that are registered and sold through various market structures. Carbon market prices, however, bear little relation with the value of climate damages or the carbon price needed to achieve a 2°C target. For this reason, the Bank Note recommends to use a social price of carbon (in real terms) of US$ 30 per ton. This value was conservatively chosen in the economic analysis.

30. Economic prices. Import and export parity prices were calculated for some of the main tradable outputs, using Free on Board (FOB) and Cost Insurance Freight price (CIF) to adjust market values to economic values

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applying a Conversion Factor (CF). Using some of the assumptions found in the EFA of AGP II57, the CF of financial prices to economic prices obtained is 0.7 for milk, 1.2 for red meat and 0.8 for chicken meat58. A CF of 0.9 was applied to the cost of labor. Using these CF, livestock models in the financial analysis were transformed into economic budgets. Total project costs were provided by the COSTAB tool on the basis of detailed cost tables.

31. Social discount rate. To calculate the economic NPV, future net incremental benefits were discounted using a social discount rate. The choice of the social discount rate is based on the recent recommendations of the Bank found in the “Technical Note on Discounting Costs and Benefits in Economic Analysis of World Bank Projects”. This Note recommends to use a 5 percent discount rate in World Bank’s project evaluations. This discount rate was applied in the context of LFSDP.

VII‐ Results

32. Financial analysis. The financial analysis calculated the IRR and NPV of the various interventions and sub‐ Projects. Given the demand‐driven nature of the project, the presented results should be considered as indicative, rather than final. The financial analysis of sub‐Projects, once identified during implementation, will be performed systematically. Good practice would be to re‐run the EFA during implementation, more particularly at mid‐term review, with data collected through the M&E system.

57 Shadow price of the exchange rate and CF for tradable goods and services. 58 Due to data scarcity for fisheries, a CF of 0.9 was assumed for tilapia and catfish.

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Table 9: Financial Analysis of sub‐Projects

NPV (US$, 15 IRR Production model Investments Technical parameters years, 10% (15 years) discount rate) GAHP Mortality decrease in all age and sex categories by 3% Cattle in small‐scale Increase of parturition rate: Animal health, feeding, mixed rainfed 0.57 WOP vs. 0.62 WP 35.6% 6,936 husbandry system Milk productivity: 3.4litre/day for 240 days WP vs. 1.5 litre/day for 180 days WOP Initial stock of birds (improved Small‐scale familly Adult mortalities reduced from breeds: dual purpose), shelter 33.2% 7,604 poultry 20% to 7% and feeds Sub‐Projects 3.4litre/day for 240 days Specialized dairy Fodder, genetics, animal (WOP) vs. 8 litre/day for 280 32.8% 85,177 system husbandry days (WP) 25% increase in meat price vs. Specialized peri‐ WOP urban cattle Borehole, fencing 50% of feed for fattening stage 34.9% 22,235 fattening system that is purchased vs. 30% in WOP Building, cooling tanks, cans, milk 1m3 day capacity of fresh milk Primary MCC 29.8% 111,216 testing equipment and others collected and stored

Pasteurizer, cooling tanks, cans, MCC with 2m3 day capacity of fresh milk milk testing equipment and 17.2% 54,837 pasteurization collected and stored others Batch pasteurizer, milk buffer Milk processing tanks, milk‐processing and 4m3 day capacity of fresh milk 38.3% 619,875 centre packaging equipment, others

300 m2 fish pond, water pipes/ Density 3 fingerlings/ m2 Tilapia production pumps/ aeration system, feed 10% losses during transport 24.0% 2,854.0 storage facility 2 cycles per year/ pond

300 m2 fish pond, water pipes/ Density 5 fingerlings/ m2 Catfish production pumps/ aeration system, feed 10% losses during transport 15.4% 1,057.2 storage facility 2 cycles per year/ pond Processing capacity of 1000 Poultry abattoir Building, processing equipment birds/day 37.3% 662,215

33. Economic Analysis. Results (Table 10) suggest that the overall project is economically profitable. The IRR (21.2 percent) is above the prevailing discount rate in Ethiopia while the NPV averages US$153 million. Besides, given the demand and market driven nature of the project, the results should be considered as indicative, rather than final. Good practice would be to re‐run the EFA during project implementation, more particularly at mid‐term review, with data collected through the M&E system.

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Table 10: Results of the Economic Analysis

EIRR NPV (20 years @ 5%, US$ '000) Base scenario 21.2% 152,863

VIII‐ Sensitivity analysis

34. Variables affecting the project returns. Through a deterministic approach, the analysis tested the robustness of results (EIRR and NPV) against some disturbances in the main variables of the model. These key variables include (i) output prices, (ii) animal mortality rates, (iii) milk productivity and, (iv) GAHP adoption rates. The sensitivity analysis also tested the impact on the EIRR of a decrease in the expected total benefit stream. Results show that the project remains robust, with EIRRs above the 5 percent social discount rate. Results are presented in Table 11 below.

Table 11: Results of the Sensitivity Analysis

Modelling scenario EIRR Base scenario 21.2% With output price decrease… …by 5% 19.2% …by 10% 17.1% With mortality rates… …remaining at WOP level 20.8% With annual milk productivity decrease… …by 5% 20.0% …by 10% 18.7% …by 20% 16.0% With a reduction of GAHP adoption rates… …by 5% 19.3% …by 10% 17.5% …by 20% 13.8% With a total reduction of the benefit stream... …benefits reduced by 10% 18.6% …benefits reduced by 20% 15.9% …benefits reduced by 30% 13.1%

Table 12:Results of the EX‐ACT Analysis

Gross fluxes Share per GHG of the Balance Result per year Components of the project Without With Balance All GHG in tCO2eq Without With Balance

All GHG in tCO2eq CO2 N2OCH4 Positive = source / negative = sink Biomass Soil Other

Land use changes CO2-Biomas CO2-Soil CO2-OtherN2O CH4 Deforestation 0 0 0 0 0 0 0 0 0 0 Afforestation 0 0 0 0 0 0 0 0 0 0 Other LUC 0 0 0 0 0 0 0 0 0 0 Agriculture Annual00000 00000 Perennial 0 0 0 0 0 0 0 0 0 0 Rice00000 00000 Gra ssl a nd & Li ve stocks Grassland 8,228,000 -6,253,280 -14,481,280 0 -14,481,280 0 0 411,400 -312,664 -724,064 Livestocks 278,285,073 290,238,172 11,953,099 1,163,770 10,789,329 13,914,254 14,511,909 597,655 Degradation & Management 00000 00000 Coastal wetlands 00000 00000 Inputs & Investments 0 29,603 29,603 0 0 0 0 1,480 1,480 Fishery & Aquaculture 0 661,593 661,593 0 661,593 0 0 33,080 33,080

Total 286,513,073 284,676,088 -1,836,985 0 -14,481,280 0 1,825,363 10,789,329 14,325,654 14,233,804 -91,849

Per hectare 2388 2372 -15 0.0 -120.7 0.0 15.2 89.9 Per hectare per year 119.4 118.6 -0.8 0.0 -6.0 0.0 0.8 4.5 119.4 118.6 -0.8

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ANNEX 7: SOCIAL DEVELOPMENT PLAN

Ethiopia Livestock and Fisheries Sector Development Project

1. LFSDP is assigned as EA Category “B” and has triggered six out of the ten safeguard polices: Environmental Assessment (EA), Pest Management, Natural Habitat, Physical cultural resources, Involuntary Resettlement, and Indigenous Peoples The environmental issues of the project are primarily associated with the activities of Component A and B. The overall environmental impact of the project is positive as it will improve the capacity of Ministry of Livestock and Fisheries (MoLF) and its human resources so as to enable it develop and review policies and strategies for sustainable animal health and extension service delivery, and will improve livestock and fishery data management as well as communication. Provision of extension services to farmers in most of the program implementation areas will be improved as a result of various capacity building activities thereby increasing the production and productivity of smallholder farmers; minimizing livestock diseases and deaths through supporting the strategic program; expanding market opportunities of livestock and fishery commodities through construction of critical market and commercialization infrastructures; and generating job opportunities and income primarily for women and youth through creating small investor producers and cooperatives.

2. However, some limited negative impacts may arise as there will be increased use of livestock pesticides, drugs and vaccines and other chemicals which may be toxic to non‐target organisms and hazardous to humans and the environment; antibiotic resistance from poor management of livestock drugs and inappropriate disposal of animal waste; and multi‐drug resistant microbes of zoonotic diseases can be transmitted through food and Environment. Use of hazardous laboratory chemicals in animal health services laboratories may cause environmental pollution and human health risk.

3. The negative impacts of sub‐Projects would be avoided or mitigated through the implementation of the mitigation measures developed. The Environmental and Social Management Framework (ESMF) prepared as part of this project includes measures for addressing broader environmental and social impacts and impacts on natural habitats. The ESMF will be used to develop detailed site‐specific Environmental Management Plans (EMPs) that will be consulted upon and disclosed prior to the commencement of sub project under Component A and B. The effective use of the ESMF would be regularly reviewed as part of the project’s M&E system.

4. Since the project triggered the Pest Management Policy, an Integrated Pest Management Plan (IPMP) has been included as part of the ESMF. The ESMF has been disclosed in‐country and on the Bank external website on October 30, 2017 in accordance with Bank requirements.

5. Although LFSDP does not support construction of new Dams, there are instances in which it will finance activities that utilize existing dams such as GAFP. However, the scope of interventions on these existing dams is only limited to fishing practices which are not risky for the safety of these dams. Even in such sub‐Projects, the implementing agency needs to submit, through the regional and federal LFSDP coordination Units, to the World Bank evidence of effective operation of dam safety program and plans for the Bank’s review and full inspection and dam safety assessment of the existing dam.

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6. Safeguards Management Capacity: Effective implementation of the ESMF, RPF and SA (Social Development Plan) requires technical capacity in the human resource base of implementing institutions and logistics. The Borrower lacks experience in implementing World Bank supported projects, and must assign qualified and experienced environmental and social officers both at the national and regional level who will be responsible for environmental and social safeguards matters. The specialists need to coordinate and strictly follow‐up with the preparation of the required site specific safeguards instruments, monitor safeguards due diligence and report quarterly during implementation. The Bank will provide the required support and capacity strengthening for the designated counterpart staff during project implementation.

7. Citizen Engagement, Consultation and Participation: LFSDP while using a participatory approach in the identification of sub‐Projects will build on citizen engagement through continued community consultation, participation and feedback through its grievance handling mechanism. Community Consultation/participation and feedback is at the center of the LFSDP investment in the six participating regional states. As part of the safeguards instruments preparation, LFSDP conducted enhanced community and stakeholder’s consultation, where sites for the consultation were selected to fairly represent views and concerns with the regional diversity and particular needs of stakeholders such as, Oromia (seven Woredas), Amhara (three), SNNP (three), Tigray (two), Benishangul‐Gumz (one) and Gambella (one). Community consultation participants comprised smallholder farmers, cooperative members, women, youth, and elders, as well as experts at regional and Woreda livestock and fisheries bureaus/offices. The community consultation identification considered fair representation of ethnic minorities, vulnerable groups and underserved peoples. The engagement of communities in the identification, planning and implementation of the LFSDP including feedback mechanism will continue throughout the project implementation.

8. Labor and working conditions: To minimize the impact of the influx of external labor on the community, such as (a) unfair wage paid by the contractor; (b) increased cost of living and food prices in local market; (c) risk of cultural misunderstandings/exploitation; (d) risk of sexual violence due to workers relations with local women/girls; and (e) risk of increase in local alcohol consumption, the project will ensure adequate risk mitigation measures based on the scope of the civil works for the selected value chains such as (a) zero tolerance to sexual violence, and so on; (b) promotion of fair treatment, non‐discrimination and equal pay for equal work for all project workers; and (c) having a code of conduct on the relationship with the local community included in bidding documents including labor management procedures to prevent and address harassment, intimidation and/or exploitation of members of the local community and unwanted pregnancies.

9. Land Acquisition and Restriction of Access to Natural Resources: The proposed LFSDP Components and sub projects including small and medium size productive and marketing infrastructure as well as training centers, may require land based on the scope of investment. Sub‐Projects requiring a sizable area of land may be implemented by private investors, or government offices of small‐scale and medium‐sized enterprises development. Thus, there will be instances where households will be affected by the loss of land and/or assets for the implementation of sub‐Projects. All land acquisition and restriction of access matters of the project will be assessed and a site‐specific resettlement action plan will be prepared as per the principles and procedures outlined in the RPF, including consultation with the affected community, preparation of appropriate instruments, payment of proper compensation and provision of livelihoods restoration schemes.

10. Underserved Peoples and Ethnic Minorities. There are ethnic minorities, who settled in the LFSDP participating Woredas over the years, vulnerable because of being numerically small and practicing livelihood strategies different from those of the host communities. The LFSDP safeguard instruments preparation

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identified ethnic minorities, historically underserved communities in the participating regions of Amhara, Benishangul‐Gumz, Gambella, and SNNP. These include, the Negede (Woito) in Amhara, who practice fishing, the Berta in Benishagul‐Gumz dependent mainly on shifting cultivation, with fishing, hunting and gathering, livestock raising and gold panning. The Agnywa in Gambella are mainly crop dependent, with fishing, hunting and gathering and the Majenger in the same region lead a non‐sedentary way of life practicing apiculture, hunting and gathering and shifting cultivation. In SNNPR, the Gamo engage in mixed farming, fishing and weaving. The Zeyse in the same region engage in a livelihood that is predominantly based on mixed farming, animal husbandry and fishing. The results of the enhanced consultation and the specific sociocultural context of the underserved peoples and ethnic minorities as per the proposed project and its sub project components and mitigation measures are proposed in the SDP.

11. The Commune Development Program (CDP): The LFSDP will be implemented in Benishangul Gumuz and Gambella regional states with the existence of vulnerable groups and underserved peoples. The CDP has been under implementation solely in the emerging regions and closed in 2015. While the LFSDP will not contribute to, or participate in, the ‘Commune Development Program’, it does recognize the need to ensure a strategic approach to risk management. In 2014‐15, to address the above potential issue, a procedure for proactively managing the interface between the Government of Ethiopia’s Commune Development Program (CDP) and Bank‐financed projects was developed and agreed with Government of Ethiopia. The ‘Supporting Results and Alignment of Operations in Ethiopia’s Rural Areas Screening Checklist’ has been included in the project’s ESMF to manage the operational interface. Further, the World Bank will apply a balanced approach that includes community‐based prevention and targeting of underserved groups, capacity building and training, and effective monitoring, citizen engagement, use of gender filter, and use of checklist to screen for potential interface with CDP to ensure a high standard of environmental and social safeguard risk management.

12. Grievance Redress Mechanism: The causes of grievances may include asset losses in land acquisition process, inadequate or delayed compensation payments, claims of being pressured to donate land supposedly on voluntarily basis, preferential treatment of community members in the application of eligibility criteria for sub projects beneficiary targeting, and favoritism and lack of transparency in the provision of access to LFSDP support and services. The LFSDP will make use of the existing pertinent state structures such as Public Grievance Hearing Offices (PGHO) operating at all levels, the Ethiopian Institute of Ombudsman (EIO) and conventional courts as the last resort of appeal. In addition, a grievance settlement process will be designed to resolve complaints in a timely, transparent and cost effective manner, particularly from the beneficiary side. Furthermore, traditional dispute settlement institutions will be an integral part of the LFSDP grievance handling design. LFSDP will provide capacity building trainings on basic elements of the law and gender sensitive issues mainly to community elders and religious leaders. The involvement of customary dispute settlement arrangements is deemed essential with a view to make the process accommodative of local experience and social capital, as well as to gaining community trust and acceptance of the procedures and decisions.

13. Benefit sharing approach: In Ethiopia, there is no law on benefit sharing mechanisms for activities and this might pose a risk that communities might not benefit directly from the development objectives of the project. While there is no law on benefit sharing arrangements, the constitution of Ethiopia recognizes the participation of the communities in the development agenda. In this regard, during initial public consultations for the preparation of the safeguard instruments, the project has met and discussed with stakeholders and emphasized that the key instrument for communities to participate in the project is through the priority value chain development in fishery and aquaculture, poultry, dairy, and red meat/fattening. The LFSDP will ensure that these selected value chains are socially inclusive and incorporate the knowledge and views of the

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participating communities in the planning and management of development sub‐Project activities. Specific measures on inclusion of underserved peoples and ethnic minorities is included in the proposal in the SDP.

14. Safeguards Monitoring, Evaluation and Reporting: Throughout implementation, the project will support safeguard monitoring to ensure that the project is following the prepared and disclosed safeguard instruments. Safeguard monitoring will include environmental and social performance reviews to assess compliance with safeguard instruments, determine lessons learnt and provide guidance for improving future performance. LFSDP will provide quarterly environmental and social safeguards reports to the WB. Reporting formats will also include structured indicators on safeguards.

15. Social Development Plan: Potential risks, challenges and recommendations: This social development plan as outlined below will ensure that the project and its implementing agencies will respect the dignity, rights and culture of groups meeting the OP4.10 requirements and ensure that these people benefit from the project in a sustainable manner. The plan could be redefined during implementation and further consultation undertaken for the underserved groups to ensure their full participation. The matrix below outlines the component based potential implementation risks and challenges and the suggested mitigation measures based on data generated for the SA using different methods. The budget for the implementation of the SDP activities is embedded in (i) Sub‐component A.1. Enabling Sub‐Projects Implementation, (ii) Sub‐component A.2. Support to Subsistence Farmers and Unemployed Youth and other sub components for inclusively targeting underserved peoples and vulnerable groups as indicated in the plan and the operational modalities will be included in the Project Implementation Manual (PIM). The SDP tasks will also be addressed by Component C, providing, amongst others, resources to better understand the local needs of vulnerable and underserved people in the design of sub‐Projects as well as monitoring the inclusive approach of the project for adaptive management and accountability purposes. The Project’s respective Social Safeguards Officers/Units will materially participate in budget preparation and decision processes and meetings to support the other team members on local, regional, and federal level in aligning the SDP measures and targets with the overall project progress on a regular base.

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Components/Is Potential risks and Challenges Mitigation Measure Responsible Body Budget sues ‘000 Component A: Dairy  Facilitate the availability of improved variety NPCU $800 Linking More  Short supply of improved variety and exotic animal breed supplies and accessible Productive animal breeds; AI service in the required amounts to target Farmers to  Scarcity of exotic animal breeds beneficiaries including women households, Markets in milk shade project Woredas; vulnerable groups, underserved peoples and  Inadequate artificial disadvantaged groups of the community. insemination (AI) service  Facilitate and/or coordinate with relevant compared to the existing high agencies to provide Artificial Insemination (AI) NPCU and RPCU demand by farmers in milk shade service as per the local demand in the respective project Woredas; LFSDP Woredas;  Coordinate and or provide/facilitate  Weak market linkage and mechanisms to improve the quality of milk farmers’ loss of confidence in yields and market access for profitable sales dairy farming; throughout the year;  Coordinate with relevant agencies to  Decrease in the demand for milk establish/enhance livestock market information yields affecting dairy system including for cooperatives (such as cooperatives. fatteners with major market outlets).

 The scarcity of concentrate  Establish milk processing facilities to preserve animal feed supplies, and milk yields and sell the products at good prices unaffordability of prices when in high demand seasons. available  Facilitate and make accessible the supply of  Exorbitant feed prices compared concentrated feed and forage processing plant to to the selling prices of milk milk producers including women households products. and other underserved groups in milk shade project Woredas;  Scarcity of land for production of  Support resource poor households, youth, forage and forage seeds. women, women headed households engage in animal feed supply and veterinary drugs supply  Non-availability of especially and production as applicable; designated areas of land for  Work in collaboration with the concerned intensive dairy production in bodies to secure land for commercial forage urban and peri-urban area. As a production as per the relevant procedures result, farmers being forced to outlined in the complementary RPF. practice dairy production around their dwellings and in crowded  Designate a special area of land and put in place residential neighborhoods. the necessary infrastructure facilities for dairy  The consequent environmental farming, and health hazards.  Take into account the variation among dairy farmers in the levels of capital investment, and  The uniformity and homogenous technical capacity, and corresponding needs, nature of service delivery to and plan service delivery accordingly. dairy farmers operating with different levels of investment and  Coordinate with concerned stakeholders in capacities and needs. LFSDP target areas to prevent and control the spread of the tsetse fly and the trypanosomiasis High prevalence of the tsetse fly and disease. the trypanosomiasis especially in the lowland of DRS.  Facilitate local production and supply of animal feed through promotion of community based youth and women cooperatives;  Build the capacity of farmers involved in fattening on animal feed production and processing.  Support tailored/need based capacity building for Berta women on the essential knowledge, skills, and methods of managing dairy farm and animal fattening;

Fishery and Aquaculture  Carry out intensive awareness raising and NPCU and RPCU $400  Poor/undeveloped state of promotional work to improve fish consumption aquaculture practice; and low and commercial fishing. awareness of fish as source of Commercialize the practice of fishing through: diet and livelihood;  The supply of improved fishing gears;  The provision of transport, fish preservation and  Traditional and subsistence conservation facilities; nature of fishing practice in  Establish market outlets where it will be Gambella. accessible to the women, and other underserved

118 The World Bank Livestock and Fisheries Sector Development Project (P159382)

peoples and vulnerable group of the community;

 Dependence on the use of  The conduct of capacity building training for traditional fishing boats and nets cooperative leadership by the historically disadvantaged  Make available motorized fishing boats and underserved peoples, modern nets. occupational minorities such as,  Support the instituting of a government entity the Negede (Woito). mandated to manage the proper utilization of lakes and fish resource. Overfishing  Support the enactment and enforcement of legal  The use of fishing nets that do frameworks to regulate fishing practices in a not meet national legal which accommodate the interests, priorities and standards. problems/challenges of underserved people and  The pollution of lakes; the vulnerable groups already engaged their resultant threat posed to fish livelihood in this activity. resources and the fishing  Support the coordination of efforts by livelihood. stakeholders to ensure the effective  Siltation resulting from the implementation of the laws. expansion of crop cultivation of  Broaden the awareness of fishers and local the lake buffer zones. communities regarding standard fishing  The absence of laws or the practices. failure to enforce these to  Provide and/or facilitate access to better quality preserve lakes and fish motorized fishing boat to improve productivity, resource. seasonal fishing, timely transport fish yield to the market, while saving labor;  Provide and/or facilitate access to different kinds of modern/standard fishing nets and gears for individuals and cooperatives;  Coordinate with other World Bank59 and government financed projects to harness watershed management to halt expansion of recession agriculture in the lake buffer zone;  Provide support on development of rules/guidelines60 of fishing based on ‘Fisheries Development and Utilization’ Proclamation No. 315/2003 to regulate fishing in the respective LFSDP regions; Poultry  Facilitate the establishment of poultry feed NPCU and RPCU $300 Scarce and unaffordable concentrate processing plant/cooperatives. poultry feed particularly in urban and  Facilitate and make accessible the treatment of peri-urban areas. poultry disease with the supply of quality vaccines to all target beneficiaries including The high vulnerability of poultry to women households, vulnerable groups, disease; and the high risks of the underserved peoples and disadvantaged groups business as a result. of the community.  Make available supplies of the right poultry Short supply of improved breeds of breeds for egg and meat production. layers and broilers.  Sensitize and inform the concerned bodies regarding the potential and value of poultry Inadequate attention by the concerned resource development. bodies to poultry farming.  Provide beginner poultry farmers with tailor- made support on poultry production and Lack of poultry management knowhow management. and skills among youth groups and  Facilitate the establishment of poultry feed women who are beginners. processing plant to deal with the problem.  Transform the opportunities proposed by LFSDP through adequate supply of improved breeds, layers and broilers at reasonable prices for egg and poultry meat production with preferential targeting of women households, vulnerable groups, underserved peoples and disadvantaged groups of the community; Red Meat/Fattening  Provide and/or facilitate access to credit, and $400 increase their bargaining power in the share- The scarcity of concentrate animal feed fattening and share-cropping partnership, and industrial byproducts. especially for vulnerable women, women

59 WB Financed projects including SLMP‐2, PSNP‐IV, AGP‐2, etc. 60 This could be developed at the respective regional levels based on the proclamation, including regulating cooperatives.

119 The World Bank Livestock and Fisheries Sector Development Project (P159382)

The existing weak market chain headed households, and women in polygamous between fatteners and major outlets. unions;  Provide support for saving and credit cooperatives in LFSDP selected value chains for smallholder farmers facilitates conditions for the adoption of new production technologies and mitigate the risk of seasonal financial constraints through cooperatives, micro finance institutions operating in the respective project regions; Component B: The absence of a separate  Put in place an Environmental and Social National Project $500 Strengthening environmental and social safeguard Safeguard unit at different levels of MoLF and its Coordination Unit National (ESS) unit adequately resourced counterpart regional and Woreda offices with (NPCU) Institutions and (human and financial) at federal and adequate financial and human resources- to Programs regional level structures in MoLF to prepare, implement and monitor the process of monitor the process of environmental environmental and social safeguard issues. and social safeguard management.  Conduct capacity building, including trainings for the safeguard specialists in selected areas of NPCU and Regional safeguard management. Project Existing gaps in knowledge, skills and  Carry out tailored, need based and customized Coordination Unit attitudes at Woreda and grassroots capacity building trainings for Woreda and (RPCU) levels in relation to safeguard issues. kebele PCUs, SCs, and TSCs.  Deliver capacity building trainings adapted to the Inadequate safeguards institutional needs of target stakeholders by project including human capacity among component and selected value chains. stakeholder organizations collaborating in LFSDP  Raise the awareness of SCs with respect to their RPCUs implementation. responsibilities and the overall significance of their contribution. NPCU and RPCU The tendencies on part of SCs to view their responsibilities as secondary to  Boost the awareness of the relevant political regular government jobs. leadership on the development potential of NPCUs livestock resource and the contributions of LFSDP through continuous and concerted Underestimation of the development sensitization programs. NPCUs potential of the livestock sector in  Strengthen the institutional capacity of Woreda developing regional states (DRS). livestock fisheries offices through the provision

of transport logistics and office equipment. Inadequate transport logistics, office  Provide and/or coordinate cooperative space, and equipment. leadership and management training to enhance NPCUs the governance skills and competencies of cooperative members;  Provide and/or coordinate LFSDP focused capacity building for credit and saving cooperative agencies, micro financial institutions to enhance service delivery for targeted LFSDP value chains; Component C: Failure of political leadership at all  Encourage SCs to support project $200 Project levels to fully and equally own the implementation with full commitment through Coordination, project. consistent and concerted awareness raising and Monitoring and sensitization efforts. Evaluation, The possibility of Woreda livestock PCUs Knowledge experts spending much of their time on  Speed up the structural separation of MoLF Management supporting crop production and natural from MoANR particularly at Woreda offices resource management rather than and upper levels. livestock and fisheries development NPCUs and RPCUS  Enhance the awareness, knowledge and Monitoring and Evaluation commitment required to monitor and evaluate Inadequate attention given to the the management of safeguards through importance of the monitoring, consistent capacity building trainings at all evaluation and documentation of levels. safeguard management processes.  Make sure that M&E procedures and guidelines for compliance with safeguard policies are incorporated into the LFSDP ESMF, reporting and M&E. Gender  The burden and pressure on  Ensure 30% women and 20% youth access to n NPCU and RPCU $800 (Women and women as a result of domestic direct support and services to improve inclusion of responsibilities, involvement in productivity Youths). crop and livestock husbandry  Enhance women’s access to time and labor- PCUs especially among underserved saving technologies in the targeted value chains peoples in DRS. in developing regional states including

120 The World Bank Livestock and Fisheries Sector Development Project (P159382)

 Land less women lack of access intensification of dairy farming and introducing to credit facilities may exacerbate biogas systems. their vulnerability  Support tailored/need based capacity building  Exacerbate vulnerability of for Berta women on the essential knowledge, Female-headed households skills, and methods of managing dairy farm and becoming landless or labor animal fattening; deficient.  Provide need based support for young girls,  Lack of property rights by women female household heads, and elderly women on in polygamous unions especially poultry raising in resource poor community among underserved peoples in members including access to credit; DRS.  Coordinate with Micro-financial institutions  Unemployed and underemployed and cooperatives to arrange access to financial rural youths may not be fully and credit service for poor women and youth included in the targeted value groups. chains.  Coordinate with respective cooperative offices  Lack of voice and access to better to facilitate women’s access to land through market and business organized cooperative groups as per the opportunities procedures outlined in the RPF.  Ensure equitable access of women, youth ethnic  Inadequate capacity and lack of minorities, and underserved peoples to social access to business opportunities and economic benefits from different LFSDP and access to financial facilities sub components to enhance their economic and social bargaining power;  Establish minimum participant quota for  Child bearing women may be left women (50%) in capacity building activities out of trainings due to child  Facilitate financial literacy and leadership bearing in convenience during training for women trainings  Provide tailored support for ‘youth in livestock and fishery innovation program’ (20 youth students in one group per region, 120 in total)  Facilitate onsite child care center to enable women cope with child bearing responsibilities, Community consultations not being  Make sure that community consultations are NPCU and RPCU $300 carried out on a continuous basis. ongoing process at all level of project implementation unit starting from national to down regional, Woreda and kebele levels during preparation, implementation and monitoring of LFSDP. Consultations  Ensure strategic communication on LFSDP development objective and different components using appropriate manner, language and cultural context;  Develop communication action plan and capacity-building program for relevant LFSDP stakeholders including communities.  Ensure culturally and linguistically appropriate consultation and communication programs for vulnerable groups and underserved peoples; Total Cost of SDP $3,700

121 The World Bank Livestock and Fisheries Sector Development Project (P159382)

ANNEX 8: MAP (IBRD 43329)

122 This map was produced by the Cartography Unit of the World Bank Group. The boundaries, colors, denominations and any ETHIOPIA other information shown on this map do not imply, on the part of R the World Bank Group, any judgment on the legal status of any ERITREA e d LIVESTOCK AND territory, or any endorsement or acceptance of such boundaries. S North e FISHERIES SECTOR IBRD 43329 | NOVEMBER 2017 TIGRAY a REP. OF Western Eastern Central DEVELOPMENT PROJECT Western Tigray Tigray Tigray YEMEN Tsegede Tigray LFSDP Thanq Mekele Abergele Sp. Zone Zone 2 SUDAN Hintalo Wajirat PROJECT WOREDAS Southern Lay Armacho Tigray NATIONAL CAPITAL Waghemira North Gondar INTERNATIONAL BOUNDARIES Gonder Zuriya Ofla Dahna Zone 4 REGION BOUNDARIES Lake Libo Kemkem Tana AFAR ZONE BOUNDARIES Farta North Wello South Gondar DJIBOUTI Guba Lafto Zone 1 Bahir DarBahir Dar Sp. Wer.Zuria AMHARA Mecha Dangila Dese Zuriya ArgobaKalu G u l f o f A d e n Metekel West Awi Gojjam South Sp. Wer. Zone Wello Dewa Chefa 5 East BENSHANGUL- Gojjam Oromiya Shinile Gozamin Assosa GUMUZ North Shewa Zone 3 DIRE Asossa Horo Moretina Kemashi East Abay Choman Jiru (R3) DAWA Bambasi Gudru North Basona Najo Daber Libanos West Shewa (R4) Werena Kombolch Wellega Metarobe Kersa SOMALIA Jaldu Jijiga Wellega Sibu Sire Tulo HARARI Wellega West ADDIS ADDIS Haramaya Kelem Shewa Leka Dulacha ABABA ABABA East Hararge Wellega Dawo West Hawa Gelan Mako South West Shewa East Shewa Hararge Ilu Aba Bora Adama Bacho Nuwer Deksis Degehabur Abobo Limu Kosa Gurage Meskan GAMBELA Yem Sp. Silti Arsi Jimma Wer. Silti Robe Agnewak Hadiya Fik Sheka Halaba AlabAlaba Sp. Wer. Kembata Alaba Mezhenger Kededa Gamela OROMIA Keffa Timbaro Kore Warder Konta Dawuro West Arsi Dinsho SOMALI Wolyita Hawassa Town Bale Sp. Wer. Lemo Dale Humbo Sidama Bench S.N.N.P. Dilla Korahe Deniba Gofa Abaya Zuriya Maji Bore Basketo Gamo Gofa Gedeo Gode Sp. Wer. Arba Minich Amaro SOUTH Zuriya Derashe Sp. Wer. SUDAN South Sp. Wer. Burji Guji Konso Special Sp. Wer. Omo Konso Afder Sp. Wer.

Liben Borena SOMALIA KENYA INDIAN UGANDA OCEAN