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World Bank Document Document of The World Bank Public Disclosure Authorized Report No. 16850-YEM STAFF APPRAISAL REPORT Public Disclosure Authorized REPUBLIC OF YEMEN SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT Public Disclosure Authorized September 18, 1997 Rural Development, Water and Environment Departnent Public Disclosure Authorized Middle East and North Africa Region CURRENCY Yemeni Rials 125 = US$1 (at June 1, 1997) ABBREVIATIONS BDA Business Development Advisors CACB Cooperative and Agricultural Credit Bank CAS The Country Assistance Strategy CPPR Country Portfolio Performance Review EIRR Economic Internal Rate of Return FIAHS Fund for Innovative Approach in Human and Social Development GDP Gross Domestic Product GOY Government of Yemen GTZ German Technical Cooperation ICB International Competitive Bidding IDA International Development Association IFAD International Fund for Agricultural Development IU Irrigation Unit M&E Monitoring and Evaluation MAWR Ministry of Agriculture and Water Resources MENA Middle East and North Africa MIS Management Information System MOPD Ministry of Planning and Development MSE Micro and Small Enterprises NCB National Competitive Bidding NGO Non-Governmental Organization NWRA National Water Resources Authority OC Operations Committee O&M Operation and Maintenance PDC Participatory Development Coordinators PDRY People's Democratic Republic of Yemen PHRD Policy and Human Resource Development (Japanese grant) PMU Project Management Unit PNA Participatory Needs Assessment ROY Republic of Yemen SDR Special Drawing Right SFD Social Fund for Development US$ United States dollar VTC Vocational Training Center WHADP Wadi Hadramawt Agricultural Development Project WID Women in Development WUA Water Users Association YAR Yemen Arab Republic GOVERNMENT OF THE REPUBLIC OF YEMEN Fiscal Year January 1 - December 31 Vice President : Kemal Dervis CountryDirector: Inder Sud Sector Director : SalahDarghouth Task Team ChristopherWard, Task Manager UsaidEl-Hanbali Srish Kumar MichaelCernea REPUBLIC OF YEMEN SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Chapter Page No. Credit and Project Summary ........................................................................ i-iv . BACKGROUND . A. Socio-Economic and Sectoral Background .1 B. The Poverty Challenge .2 C. The Country Assistance Strategy and Lessons from IDA Lending Experience. 3 D. Project Area .5 I. THE PROJECT .................................................................................................................. 5 A. Preparation and Design .5 B. Project Objectives and Target Group .7 C. Project Description .8 D. Project Costs and Financing ...................... 10 III. PROJECT IMPLEMENTATION .. 11 A. Project Management Arangements .11 B. Procurement .15 C. Disbursements, Accounting and Audits .17 D. Monitoring, Supervision and Evaluation .18 E. Cost Recovery .19 F. Project Sustainability .19 IV. BENEFITS, RISKS AND IMPACTS .. 20 A. Benefits .20 B. Economic and Financial Evaluation.20 C. Risks and Issues .21 D. Social Impact .24 E. Environmental Impact .25 V. SUMMARY OF AGREEMENTS REACHED AND RECOMMENDATION .. 26 A. Conditions of Negotiations .26 B. Assurances Received at Negotiations .26 Page No. TABLES Table 2.1: Inflation Rates Used ............................................................ 0 Table 2.2: Project Cost Summary ........................................................... 10 Table 2.3: Financing Plan ........................................................... 11 Table 3.1: Amount and Methods of Procurement .16 Table 3.2: Disbursements by Category.17 ANNEXES Annex 1: Detailed Project Description and Project Design Summary Annex 2: Implementation Schedule Annex 3: Economic Analysis Annex 4: Procurement Plan Annex 5: Implementation at the Community Level Annex 6: Project Costs and Financing Annex 7: Summary of Staff and Equipment Annex 8: Proposed Sites for Development and Rehabilitation Annex 9: Number of Beneficiaries Annex 10: Supervision Plan Annex 11: Selected Documents and Data Available in the Project File MAPS: IBRD 28574 IBRD 28575 IBRD 28576 IBRD 28577 REPUBLIC OF YEMEN SOUTHERNGOVERNORATESi RURAL DEVELOPMENT PROJECT STAFFAPPRAISAL REPORT Creditand Project Summary Borrower Republicof Yemen ImplementingAgency The Ministryof Agricultureand WaterResources Beneficiaries Poor rural families and communitiesin four southern govemorates CreditAmount : SDR 17.7million (US$24.7 million equivalent) Terms Standard IDA terms with 40-year maturity, including 10 years of graceperiod CommitmentFee : Standard ProjectObjectives Withinthe overallCAS objectiveof social protection, the specificdevelopment objectives of the projectare: (i) to raise the incomesof very poor rural individuals and their families (50-60,000people) in the southern govemoratesof Yemen sustainablyabove the poverty level; (ii) to promote overall economic and social developmentin the approximately40 extended rural communities (up to about 150,000 people in total, includingthose already benefitingunder (i)) in which the target population reside and in which there is a very high concentrationof poor people; and (iii) to test innovations regarding the involvement of beneficiaries in planning and implementation and regardinga businessapproach to project management. ProjectDescription : Project components are: (i) land allocation and development or rehabilitation on about 3,900 ha; (ii) off-farm income development activities; (iii) economic and social development activities in approximately 40 extended communities; (iv) preparation of future projects in the sector; and (v) operationof a projectmanagement unit. Environment : The Project has been classifiedas a CategoryB for the purpose of O.D. 4.01. The principalenvironment risks are: groundwater overdraft or contamination,which wouldbe avoidedby monitoring,management and high technical specifications;and soil salination and wind erosion, which would be mitigated through irrigation management, leaching and wind-breaks. Povertv : The project is classified under the Program of Targeted Interventions. It is aimed at the alleviation of the poverty of poor people and communities in poor areas of the rural south, particularly those adversely affected by recent changes in land tenure and by the economic transition consequent to unification. Benefits The project would supplement the means of economic livelihood for about 50-60,000 people, together with improvements in welfare arising from community development activities for a total of up to 150,000. The farm units of 2 ha would generate incomes of between $2,600 and $4,000 per farm family, varying according to the crop mix. For the fisheries component, annual fish catch per boat is expected to be 28 tons, generating incomes in excess of $3,000 a year for 280 poor families. Other revenue-earning enterprise activities (training, credit, etc.) are expected to provide greater surety of income and new-found employment or business for up to 6,850 trainees, each of whom is expected to attain annual earnings of between $500 and $1,000 a year subsequent to training. Improvements in women's animal husbandry are expected to generate annual income of about $185,000 throughout the project area, supplementing the incomes of many women. Risks : Principal risks are: (a) the macroeconomic risk that Government's stabilization and adjustment program and decentralized poverty alleviation policy may falter - this risk is minimized by the current strong performance backed up by dialogue and adjustment lending, and by the careful monitoring that will be continuous throughout the project period; (b) the risk that the project may not be well managed, or that it may prove over-complex - this would be avoided by the setting up of an autonomous project management unit run on business lines and by the continuous involvement of the community in planning and execution; (c) the risk that water resources might be insufficient - this risk has been reduced by careful studies during preparation, by fitting the proposed water development within an overall water resources management framework, and by the provision for monitoring during the project; (d) the risk that some unanticipated claim could conceivably arise to lands iii assignedfor developmentunder the project - this risk has been substantially eliminated by the extensive process of screening undertaken during project preparation and appraisal, including the issue of a Council of Minister's Decree establishing Government title, an exhaustive title search, and consultation with the local community; and (e) the risk to farm productivityfrom farmnerrisk aversion,or from the possible lack of credit for inputs or of adequate profitablemarket outlets - this risk has been reduced by the investment under the project in high grade contract extension services that would help farmersto prepare professionalbusiness plans. Project Cost Summary % *%Total Foreign Base Local Foreign Total Local Foreign Total Exchange Costs --------(Rials '000)--------- ----------US$ 000)---------- A. Land Allocation and Development 1,355,947 1,998,864 3,354,812 10,043 14,804 24,847 60 61 B. Off-Farm Activities 362,664 314,563 677,227 2,686 2,330 5,016 46 12 C. Community Development 244,646 677,625 922,271 1,812 5,019 6,831 73 17 D. Sector Study and Project Preparation - 132,117 132,117 - 979 979 100 2 E. PMU 143,439 227,234 370,673 1,062 1,683 2,745 61 7 Total Baseline Costs 2,106,696 3,350,404 5,457,100 15,603 24,814 40,417 61 100 Physical Contingencies 174,087
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