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 incomes of 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 174,087 278,052 452,139 1,289 2,059 3,349 61 8 Price Contingencies 286,118 579,419 865,537 429 1,629 2,058 79 5 Total Project Costs 2,566,901 4,207,875 6,774,775 17,322 28,503 45,824 62 113
Financing Plan
Financier Local Foreign Total ------(US$ Million) ------IDA 6.8 17.9 24.7 IFAD 4.4 6.9 11.3 BeneficiaryFarmers 2.2 3.2 5.4 Government 3.9 0.5 4.4
Total 17.3 28.5 45.8 iv
Estimated Disbursements IDA Fiscal Year
FY98 FY99 EYQ0 FY01 FYOZ FY0 _FY04 ------(US$ Million) ------
Annual - 3.5 5.7 8.9 4.4 1.4 0.7 Cumulative - 3.5 9.2 18.1 22.6 24.0 24.7
Economic Rate of Return 9-28 percent for land development subcomponents; around 20 percent for the livestock subcomponent; and about 180 percent for the fisheries subcomponent.
Estimated Completion Date December 31, 2003
Project Identification No. RY-PE-5902
Mams : IBRD Nos. 28574, 28575, 28576, 28577 REPUBLIC OF YEMEN
SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
STAFF APPRAISAL REPORT
I. BACKGROUND
A. Socio-Economic and Sectoral Background
1.1 The Government of Yemen has requested IDA assistance in financing the Southern Governorates Rural Development Project. The project is designed to relieve rural poverty in the arid southern governorates of the country. This introduction describes the challenge for the proposed project - how to raise incomes sustainably in poor rural regions of Yemen in a context of general economic crisis, a marked deterioration in public services and limited natural and human resource potential.
1.2. Yemen Unification and Transition. The Republic of Yemen was created in May 1990 by agreement between the governments of the former Yemen Arab Republic (YAR) and People's Democratic Republic of Yemen (PDRY). The political complexity of re-unifying the country after two decades of separation was compounded by the needs of economic transition from the socialist economy of the south to a market based economy.
1.3 The Economic Situation. While starting to re-link after unification, the country's two economies were jolted again by the economic impacts of the Gulf War (1991). This triggered a massive return of migrant Yemeni workers and a sudden decrease in financial inflows from remittances. Compounding these impacts, the internal economic reforms started in the southern governorates with an ill-designed process of land de- nationalization. This abruptly dispossessed a large number of cultivators of their income generating assets and disrupted agricultural production over a wide area. As a result of these developments, the country has continued to confront throughout the '90s major economic problems: the unemployment rate is currently over 20 percent; real per capita income has halved, from about US$513 in 1990 to about US$216 in 1995; inflation rates reached 72 percent in 1994 (abating to single figures by mid-1997); and the currency devalued from an official rate of YR12/US$1 in 1991 to about YR125/US$1 free market rate in mid-1997.
1.4 The Civil War. Unsolved political tensions from the unification process and growing social and economic pressures reached crisis point in 1994, exploding in a civil war. Although the war was of short duration, the cost, and the consequent disruptions, further aggravated the problems of the economy and deepened poverty levels, particularly among the population of the southern governorates, making assistance for reform and post-war reconstruction an even stronger imperative.
1.5 The Crisis in Government Services.! In this difficult economic climate, government services have vastly weakened and in places collapsed. Fiscal constraints have reduced operating budgets to low levels, and inflation reduced the real value of public sector pay in 1996 to 15 percent of its level in 1990. As a result, an increasingly overstaffed and unmotivated civil service has little or no resources to actually do its job. The delivery of many basic public services has dwindled to low levels.
1.6 Human Impact. The population is perceptibly suffering from the worsened economic situation and impoverishment. In addition, there is a high population growth rate (estimated at 3.7 percent per annum), with 52 percent of the population under 15 years of age and labor force growth of 4.5 percent per annum.
' See PublicExpenditure Review, December 1996 2 SouthernGovernorates Rural DevelopmentProject
With declining quality and coverage of education and health services, the resulting low educational standards and very high rates of illiteracy (62 percent) give the population little advantage in the global economy.
1.7 Resource Advantages and Constraints. Despite these very serious limitations, the country has development potential in certain sectors, including limited oil resources and significant gas reserves. The agricultureand rural sector has shown resilienceover the last two decades,absorbing a huge increasein the rural population into an increasingly market - oriented agriculture. Now, however, there is acute pressure on the limitedwater resource and there has been little recent technologicalinnovation that could improve productivity and incomes.
1.8 Development Strategy. To achieve sustainable growth and to alleviate poverty, government has adopted a new development strategy based on a reduced role for the public sector, the development of the private sector, and direct interventions to reduce poverty. Thus, government's program currently focuses on: (i) stabilization to restore macroeconomic balance and reduce inflation; (ii) structural reform and adjustment to stimulate economic growth; and (iii) poverty alleviation and social protection measures. The structural reforms are being supported by the Economic Recovery Credit (ERC, Credit No. 2840-YEM) approved in April 1996. Poverty alleviation is to be achieved through different initiatives, including a rapid income transfer through the Public Works Project (CreditNo. 2878-YE), by the Social Fund Project (Credit No. 2953- YE), and by the proposed project.
Agriculture and Rural Development
1.9 Yemen's agricultural sector provides about 18 percent of gross domestic product, gives employment to about 70 percent of the economicallyactive population, and provides about one third of the nation's staple food supply. The principal crops are: cereals, especially sorghum and millet; legumes, notably lentils and chickpeas; a wide variety of vegetables and fruits; and cotton and coffee. In recent years, the main areas of growth have been qat (a plant with a mild drug content chewed locally), grapes, potatoes and onions, all of which are very profitable for farmers. Extensive - albeit poor - pasture and widespread fodder production support a large livestock herd, predominantlysheep and goats.
1.10 Over the last twenty years, Yemen had developed a range of services to the rural sector. However, as a result of the crisis in Government services (para. 1.5), overstaffing and underfunding are pervasive, and the level of basic service delivery has dropped considerably.
B. The Poverty Challenge
Background
1.11 Yemen's population growth rate of 3.7 percent per annum is one of the highest in the world. Among countries in the Middle East and North Africa, Yemen has the lowest life expectancy (51 years), the lowest adult literacy rate (38 percent), the highest fertility rate (7.5), and the highest infant mortality rate (11.7 percent of live births). Poverty is a major problem - in 1995, 19 percent of the population was poor (3.0 million people). Poverty is predominantly a rural phenomenon - 81 percent of the poor are living in rural areas, where they make up 15 percent of the rural population.
1.12 The recently initiated stabilization and structural adjustment program can begin to lay the economic foundation for a revival of economic growth and thereby the reduction of poverty. The first step in a poverty eradication program is to redirect expenditures away from the wasteful universal subsidy program which cost an estimated 16 percent of GDP in 1994. The second step is to take direct action to transfer resources to the poor. The recent Poverty Assessment' thus recommends an approach that targets the poor directly, with
l Report No. 15158-YEM,June 26, 1996 Southern GovernoratesRural DevelopmentProject 3 particular emphasis on the non-governmental sector and local community groups. IDA is to support a nationwide program on these lines through the Social Fund Project (Credit No. 2953-YE). At the same time, the Assessment recommends special attention to the rural sector where the core of the problem lies.
1.13 The proposed project is set in the context of this special emphasis on action in the rural sector through a community approach and through investment in sustainable increases in incomes. The objectives of the proposed project are further defined by the dispossession of tenant farmers throughout the southern govemorates that took place after unification. This process is explained in the next section.
Land Tenure and Rural Poverty
1.14 The general process of impoverishment in rural areas has been worsened in the southern governorates by recent changes in land tenure. In 1970, the government of the former People's Democratic Republic of Yemen (PDRY) passed a law that nationalized much privately owned land and assigned the land on a tenancy basis to small farmers associated in cooperatives. After unification in 1990, the new government decided to reverse the previous land nationalization policy and to encourage a return to private land ownership and individual systems of production. The government passed a decree (Decree 65) that returned expropriated land to former owners. As a result, up to 23,000 small tenant farmers in the southern governorates of Hadramawt, Shabwa, Abyan and Lahej (see map) became liable to dispossession, and over the last five years the great majority of them have surrendered the lands they were farming to the returning former owners.
1.15 The dispossessed tenants have been deprived of their farming income which was their principal - or in most cases, sole - source of livelihood The process of dispossession thus aggravated the problem of rural poverty in the area. According to the Participatory Needs Assessment conducted by IDA in 1994 as part of project identification, income losses for the dispossessed averaged 41 percent. Most dispossessed tenants are living below the poverty iine, and the majority of them (86 percent) are living in absolute poverty.
1.16 In 1994, Government requested help from IDA to finance a rural development project in the southern governorates based on land development and community participation, aimed at raising incomes of very poor people with particular focus on the dispossessed tenants, and ensuring environmentally sustainable economic and social development in poor rural communities.
C. The Country Assistance Strategy and Lessons from IDA Lending Experience
The Country Assistance Strategy (CAS) 2
1.17 The CAS provides the underlying rationale for the decision of IDA to agree to Government's request to consider financing the proposed project. The CAS has three main objectives:
(a) Stabilization, Structural Reforms and Social Protection: the principal thrusts are to support the stabilization and structural adjustment program by policy dialogue and adjustment lending, and to attack poverty in a practical way through targeted interventions and support to economic growth. The proposed project is designed to provide support to the poorest segment of the community in a well-defined geographical area where targeting is possible and where there are good prospects for a sustainable solution to poverty through economic development. It is thus a prime means of implementing this CAS objective (see CASpara 46);
(b) Portfolio Implementation and Sustainability of Investments: poor implementation performance and a mixed record on sustainability of investments underlie this important
2 Report15286-YEM, January 19, 1996 4 SouthernGovernorates Rural Development Project
objective. The principal tools proposed are selectivity of new investments (confined to situations where there are good prospects of efficient implementation) and an emphasis on cost-effective and innovative approaches to project management The project would contribute to the CAS objective of improving implementation and sustainability by incorporating a change in project management approach, with an autonomous executing agency, and by integrating beneficiaryand community involvement,and self-managementand self-financing as the main foundations of sustainability (see CASpara 47fl); and
(c) Sustainable Natural and Human Resource Development: human pressure on natural resources is growing and the IDA program has to take up the challenge of helping sustain incomes for a growing rural population whilst reducing the rate of mining of water and land resources. This is being addressed at the policy and at the program level, notably through work on the water strategy3 and the assistance program that flows from it The proposed project is founded on detailed work on the nature and extent of the natural resource base carried out by international consultants over the last ten years and thoroughly checked at appraisal. Sustainable management of water, soil and the overall environment are built into the proposed project, together with support to water resource monitoring systems (see CAS para 51).
1.18 Because of the way in which the proposed project can contribute to the achievement of IDA program objectives, particularly on a population segment most deprived by reform and economic transition, it was incorporated in the CAS which was adopted after discussion by the Board on February 20, 1996.
IDA Lending Experience
1.19 Since 1973, IDA has financed a total of 24 agriculture and rural development projects and five fisheries projects in Yemen and thus has considerable lending experience in the sector. At present, six projects are under implementation. IDA financed projects in the sector have been of two main types: area development projects, including five successive projects in the Tihama region, three in the Southern Highlands, three in Wadi Hadramawt and others in Beihan, Al Jawf, Central Highlands, Northern Region and Eastern Region; and national projects (research and extension, credit, land and water conservation etc.). On the whole, area development projects have been more successful than national ones. The principal lessons learned from lending experience can be summarized as: (i) good management is key - poor management skills, weak management structures and cumbersome procedures have been the principal cause of project failure; (ii) beneficiary participation helps improve performance - top down designs have usually had weak impact; (iii) Government commitment is vital - where sector ministry partners have not been committed to projects, implementation and impact have been poor; and (iv) projects should be simple - complex designs have proved very hard to implement in the Yemen environment.
1.20 In recent years, IDA has been very active in addressing project implementation constraints. These were addressed by decisions at the 1995 and 1996 Country Portfolio Performance Reviews (CPPR), in particular: simplification of procedures for procurement; denomination of local contracts in convertible currencies; streamlining of disbursements; and improvements in management through competitive recruitment of staff on contract at market salaries.
1.21 At the start of FY98, the portfolio in agriculture and natural resources contained six projects, of which one is currently (September 1997) rated unsatisfactory: The National Agriculture Sector Management Project is rated unsatisfactory on Development Objectives because, although implementation is satisfactory, the overall environment of poorly-performing public services has made it more difficult to translate increased capacity in sector institutions into improved service delivery at farmer level. Under the project, a process has
3Report 15718-YEM,August 31, 1996 SouthernGovernorates Rural DevelopmentProject 5 now been launched to prioritize public service interventions in agriculture and to reallocate resources to the delivery of essentially public services such as research and extension. Once the process of prioritization and reallocation is underway, it will be justifiable to uprate the project; this is expected before the end of 1997. Another project, Wadi HadramawtIII, was rated unsatisfactory until the most recent supervision (June 1997). The project suffered from difficult cofinancing arrangements;one cofinancing loan was canceled early in the project life, and another was not declared effective for six years, until the cofinancier unilaterally canceled the loan in June 1997. As cofinancing arrangements were essential to implementation of the largest project component (agricultural development), the project could not achieve its original objectives. However, the principal component that has been actually implemented - spate irrigation improvement - has been successful, mobilizing widespread community participation and exceeding quantitative targets. The project development objectiveswere revised and the project is now rated satisfactory. The Credit will close in September 1997.
1.22 In order to ensure improved implementation, Government and IDA have agreed that each project has to be designed as simply as possible in such a way that it can deliver benefits in a cost-effective and sustainable way within a weak-capacity and low-budgetpublic sector environment. The proposed project thus incorporates: autonomous project management;maximum private sector and beneficiary participation; simple cofinancing arrangements;and a clear vision of how post-project sustainability is to be achieved.
D. Project Area
1.23 The project area comprisesfive regions in four southern governoratesof Yemen - these are (see map): (i) Wadi Hadramawt in Hadramawt Governorate; (ii) Coastal Hadramawt in Hadramawt Govemorate; (iii) Meifa'a/Ataq in Shabwa Govemorate; (iv) Ja'ar/Zinjibar/Ahwarin Abyan Govemorate; and (v) Al Hawta in Lahej Govemorate. These regions containa high concentrationof dispossessedtenants and other rural poor (see para. 1.14 ff). The five project regions are generally arid, with low and erratic rainfall. Natural resources throughout the project area are limited, although oil has been discovered in the eastern part of the area. Agriculture is the mainstay of the rural economy, with artisanal fisheries an important activity on the coast. Despite the generally harsh environment,the area and its populationstill have untapped developmentpotential: (i) water resources in some areas, notably in Wadi Hadramawtand in major wadis in Shabwa and Abyan; (ii) coastalfisheries resources; (iii) a tradition of enterpriseand a generallyhigher level of education and skill than in the rest of the country; and (iv) real potentialfor the developmentof cultural tourism.
II. THE PROJECT
A. Preparation and Design
Project Preparation
2.1 Government requested IDA assistance with the project in 1994. The first step in project identification was a participatory needs assessment (PNA) that consisted of a series of systematic on-site consultations (governorate by governorate) with the key local actors - both the dispossessed tenants and the returning owners. The PNA was conducted to give these key stakeholders a voice in project design, to assess the economic and social problems that had resulted from the dispossession process, and to identify both individual and community level solutions.
2.2 Building on the results of the PNA, the project was identified during a joint Government/IDA mission in January 1995. The basic methodology of this mission - and of subsequent field missions - was participatory. Extensive consultations were held with communities, sub-groups and individuals in order to understand the problems and the development opportunities, and to incorporate the proposals of potential beneficiaries and of central and local government into project design. The result was a project proposal 6 SouthernGovernorates Rural DevelopmentProject
directed at rural poverty with an accent on cost effective implementation, participation and rapid benefits for the poor. The components identified were: development of irrigated land; promotion of off-farm enterprise; and communitydevelopment activities.
2.3 The second step in project preparation was reconnaissance level studies under Japan PHRD grant financing to screen areas proposed for irrigation development and to assess, through a variety of participatory methodologies, the technical, social and institutional conditions for a project. This level of studies was completed by the end of 1995, and confirmed the feasibility of the project proposal. Water resource availability was checked by both site investigation and analysis of the wealth of existing data on water resources, and sites where water resource sustainabilitywas not clear were eliminated. The key issue at this stage concerned doubts about the tenure of the land sites allocated by the government for development under the project. Many claims had been lodged, alleging that these were private, rather than government, lands, and it was necessary to assess these claims before a decision could be taken by government and IDA to proceed.
2.4 By early 1996, government had begun the process of resolving claims and had decided to guarantee the allocation of land developed under the project to poor small farmers on a freehold basis. As a result, government and IDA took the decision to proceed with full-scale preparation. This was conducted through a joint govemmentlconsultant team, with the consultant contract financed by a Japan PHRD grant. The preparationteam was in the field from April to August 1996, working continuously with communities and the target population, and with representatives of central and local governments. The preparation report was produced in October 1996; and a joint Government/IDA mission carried out a preappraisal mission in November 1996. The preappraisal (i) defined the nature and scope of benefits to be delivered to project beneficiaries; (ii) broadened the project's target population to include some of the poorest rural community members residing in the project areas, even though they were not dispossessed; (iii) specified the non-land- related project components; and (iv) launched the work of a "Committee for the Selection of Beneficiaries" that used an innovative methodology of prompting the communities themselves to create the lists of benefiting families, through a self selectionprocess donejointly with the Committee.
2.5 Following pre-appraisal,the Bank-wide Operations Committee (OC) discussed (December 1996) this project, in view of its unusual nature and important poverty reduction content, and fully endorsed its rural poverty focus and innovative participatory approaches. The OC also instructed the appraisal mission to seek from Government a legal decision to formally end the process of dispossession. As a condition of negotiations,Government issued a decree that permanently halts the process of dispossession. The appraisal took place in March 1997 and its results are presented in this report.
Project Design
2.6 The following paragraphs explain the reason for the choice of components and their integration in the overall social design and implementationstrategy.
2.7 Priority to Land-Based Poverty Alleviation. Sustainable poverty alleviation requires the development of income-producingassets and skills rather than temporary income transfer. Best practice has shown that the surest means of restoring incomes for impoverished rural people is land development. The impoverished population in the target group are all from a farming background and most of them are recently dispossessed farmers (para. 1.14). Not surprisingly, the PNA and all the subsequent project preparation work revealed that the dispossessed and other poor had an overwhelming preference for land-based support, if available. This component was therefore a priority in project design. However, the scope of the component was limited by the lack of sufficient water resources and by the high cost of water development in some areas, SouthernGovernorates Rural DevelopmentProject 7 and hence other non-land-based development componentshave also been developed in order to reach as many of the rural poor in the project area as possible at the least cost possible.
2.8 Non Land-Based Poverty Alleviation. Throughout the preparation process, Government and beneficiaries alike clearly expressed a preference - if there was not enough land in the project - for other rural based poverty alleviating investments(rather than migration to towns). In situ poverty alleviation is certainly lower cost. Most of Yemen's towns are suffering from rapid and uncontrolled expansion and from growing physical constraints, notably in water supply and sanitation. The preparation process, therefore, focused on working with the target group to identify profitable or potentially profitable enterprises in the rural sector for which there is both a market and an interest on the part of the target group. This led to the inclusion in the project of support to livestock (familiar to and practiced by most beneficiaries, scope for low cost animal husbandry and health improvements identified, and ready sale market particularly in the fast growing coastal towns); fisheries (a well-organized sector with good potential for sustainable extra production and a fast- growing market both locally and in the highlands, with competitive market organization, good availability of credit and equipment, and a working institutional support structure); new, farm-related activities (well-suited to ex-farmers and complementary to the land development component of the project) and rural-based handicrafts (a large unsatisfied potential market, well-suited to home production by women). In the case of livestock and fisheries, the preparation process continued into a "subsector analysis" which identified specific bottlenecks that the project could remove in order to help realize potential for the benefit of the target group. In the case of these two subsectors, specific subcomponentshave been designed. For other subsectors, and building on the methodology, the project will conduct a series of such "subsector analyses" during implementation - these analyses are pragmatic, hands-on exercises that will enable project staff (through a participatory methodology)to identify bottlenecksand show where the project can effectively intervene.
2.9 CommunityInvolvement. A clear finding of the PNA and of subsequent preparationwork is that the communityhas a responsibility and interest in poverty alleviation. Hence design brings in communities in the selection of beneficiaries, in getting the community to acknowledgeGovernment title to the land sites and to agree to the allocation of these lands to the poor amongst their own community, and in the identification of opportunities for non-land based poverty alleviation. The same logic led to the community development component which involves the broader community in the project and brings benefits to the community as a whole.
2.10 A "Business" Approach to Project Management. Throughout the preparation period there was skepticismevident about the capability of a project to affect the problem of rural poverty. Rural people - and Government officials - tended to see a project as a series of inputs that were placed in the hands of the Government rather than as a set of outputs and impacts on the real problem. This perception, which is largely based on past experience, led to proposals for project implementation which provide for a temporary, light and efficient structure run on "business" lines, with low overhead and focused on the impact on the target group. Beneficiary involvement in monitoring the efficiency of project management according to service delivery standards to be developed by the project management would provide one of the checks on the effectiveness of the proposed "business" approach.
B. Project Objectives
2.11 Within the overall CAS objectives (para. 1.17), the specific development objectives of the project are:
(a) to raise the incomes of about 8,750 very poor rural individuals and their families (50-60,000 people) in the southern govemorates of Yemen sustainably above the poverty level; 8 SouthernGovernorates Rural DevelopmentProject
(b) to promote overall economic and social development in the approximately 40 extended rural communities (up to about 150,000 people in total) in the which the target population under (a) reside and in which there is a very high concentrationof poor people; and (c) to test innovationsregarding the involvement of beneficiaries in planning and implementation and regarding a business approach to project management.
C. ProjectDescription
2.12 The detailed project description is in Annex 1. Project components are summarized in the following paragraphs.
Land Allocation and Development or Rehabilitation(base cost US$24.8 million)
2.13 This component would comprise a series of activities designed to establish about 1,950 very poor landless families within the target communities in sustainable new farming operations on about 3,900 ha. About 3,150 ha would be newly developed and about 750 ha would be rehabilitation work on former state farms. Subcomponentswould be: (i) land allocation - assignment of secure title for lands to be developed or rehabilitated under the project to poor rural families, largely dispossessed; (ii) land development and rehabilitation - about 3,900 hectares of irrigated land would be developed or rehabilitated, and water monitoring set up or reinforced; and (iii) farmer services - training and extension (delivered by professionals on a contract basis), help to access credit for equipment and inputs, and material support to farm establishment.
2.14 About three quarters of the land (2,900 ha) comprises specific sites which have been appraised from the technical, economic, social and legal standpoints. Government has formally certified that these sites are free from claim, are state property and would be assigned irrevocably in freehold to project beneficiaries (subject to certain covenants that would ensure that the beneficiaries used the land for the purpose intended - see Annex 1). Action on this was a condition of negotiations. About one quarter (1,000 ha) is land that was added to the project only at negotiations when cofinancing for its development under the IDA-supportedWadi Hadramawt III Project (para 1.21) was canceled. The technical and economic characteristics of this land are equivalent or superior to the land that has been fully appraised, and detailed studies will be completed in the first year of the project. The same selection criteria and Government certification procedures (detailed in the Manual of Procedures) will be applied as for existing sites. In the event of any sites proving unsatisfactory, there are ample alternatives. During negotiations, assurances were received from Government that it would: (i) demarcate all sites in accordance with the Manual of Procedures, and exclude lands with valid claims from development under the project; and (ii) grant to beneficiaries freehold title on individual plots before land is developed. In order to ensure that land is allocated to the poorest and that the community fully accepts and endorses the allocation, a participatory process to select beneficiaries has already been conducted and about two thirds of the beneficiary farmers have been selected. The sustainability of water resources on these sites has been thoroughly checked and doubtful sites have been excluded. Groundwatermonitoring in the project area would be strengthened, and all project wells would be metered.
2.15 The following investments would be financed under this component: drilling wells; equipment of the wells with pumps and engines; water conveyance and distribution systems; land leveling; farm establishment, including leaching, deep ploughing, canal construction, tree planting and soil amendment; contract services for extension and training during the initial years of farming; technical assistance and equipment for groundwatermonitoring; and engineering and supervision services, including vehicles and equipment. Southern GovernoratesRural DevelopmentProject 9
Off-farm Income Development (base cost US$5.0 million)
2.16 Thecomponent would comprise three setsof activitiesto provide assistance to poor people to set up or develop very small or small businesses or to acquire the technical skills training needed to find remunerative employment. The interest of the target group to take up these opportunitieshas been established through the participatorypreparation process. The component would comprise three sets of activities: (i) livestock development -training and equipment in animal health and care to about 500 poor villagers, at least half of them women, to enable them to set up as simple animal health providers ("paraveterinarians")- this activity has been successfully piloted by a GTZ-financed project in the southern govemorates; (ii) fishing development - training and equipment of about 280 new entrants to the profitable fisheries business on the south coast; and (iii) promotionof other revenue-earningservices and micro-enterprise. This activity would provide assistance to: (a) establish start-up micro and small enterprisesI (MSEs); (b) assist already existing MSEs; and (c) provide technical skills training in areas where employment opportunitiesexist. While being poor is the overriding characteristicof the target group, opportunitiesfor income generation would vary based on individual characteristics, geographical areas, and community infrastructure. Phased implementationof MSE development and technical skills training would occur based on findings of subsector analysis and market studies as well as communitydialogue. The project would pilot activities in both financial and non-financial service delivery (the former executed on contract by other agencies, including the Social Fund for Development). Because there is little experience within the project areas in MSE development, a number of approaches would be used. As experience is gained, methods and activities would be adjusted accordingly.
2.17 Investments would be: technical assistance contracts to provide training; apprenticeships; minor equipment for trainees (such as initial kits of drugs and instruments for the paraveterinarians, or nets and ropes as teaching aids for the fishermen); workshops and visits to other enterprises locally; the costs of operating a group of business development advisers; technical assistance;and vehicles and equipment.
Economic and Social Development of Rural Communities (base cost US$6.8 million)
2.18 This component is aimed at the social and economic development of the 40 target communities as a whole. The component would comprise two sets of activities. The first is development of community management skills and institutions - the project would provide training and minor logistical support to community organizations around specific projects of economic or social importance to the local community. This would be backed up by the second component - a community development fund to finance small grants for community projects on a cost sharing basis - spate irrigation, water supply and sanitation, a community center, or flood protection works are some typical projects. Only communities where there was no land development would have access to the community development fund. Investments would be in project staff, vehicles and equipment, in training materials, in visits to other community projects; in workshops for the communities, and in the grant fund.
Preparation of Future Projects (base cost US$1.0 million)
2.19 Investment would be in technical assistance and training to help prepare future projects in the sector, including possible projects for irrigation improvement,field services and animal health.
1 A commondefinition of MSEsincludes a widerange of enterprises(services, transport, agriculture, manufacturing) ranging frompart time, seasonal activities of a singleperson to small,formnal enterprises employing several non-family members. 10 SouthernGovernorates Rural DevelopmentProject
Operation of the Project ManagementUnit (base cost US$2.7 million)
2.20 Investments to be financed are: technical assistance, project staff, vehicles, office equipment, office rental, and operating costs.
D. Project Costs and Financing
2.21 Cost Estimates. The estimated total cost of the proposed project (including taxes and physicai and price contingencies)over a six-year implementationperiod is US$45.8 million. Inflation has been assumed as follows: Table 2.1: Inflation Rates Used
Foreign % Local % 1997 3.00 5.5 1998 2.80 4.1 1999 3.05 3.7 2000 3.05 3.1 2001 3.14 3.1 2002 3.14 3.1 2003 3.14 3.1
2.22 Physical contingencies have been applied for all categories of expenditure except for technical assistance, operating costs and training. In summary, costs are:
Table 2.2: Project Cost Summary (US$ 000's) o%e %Total Foreign Base Local Foreign Total Local Foreign Total Exchange Costs --- (Rials '000) ------US$ 000)
Land Allocation and Development Land Allocation 26,447 2,962 29,440 196 22 218 10 1 Land Development 939,346 1,642,735 2,582,081 6,957 12,167 19,124 64 47 Crop Development 390,125 353,167 743,291 2,889 2,616 5,505 48 14 Subtotal 1,355,947 1,998,864 3,354,812 10,043 14,804 24,847 60 61 Off-Farm Income Development Livestock 56,310 58,333 114,643 417 432 849 51 2 Fisheries 29,542 13,796 43,338 220 219 102 32 1 OtherRevenue EarningEnterprises 276,812 242,434 519,246 2,050 1,796 3,846 47 10 Subtotal 362,664 314,563 677,227 2,686 2,330 5,016 46 12 Community Development 244,646 677,625 922,271 1,812 5,019 6,831 73 17 Subtotal 244,646 677,625 922,271 1,812 5,019 6,831 73 17 Future Projects Preparation - 132,117 132,117 - 979 979 100 2 PMIU 143,439 227,234 370,673 1,063 1,683 2,745 61 7 Total BaselineCosts 2,106,696 3,350,404 5,457,100 15,603 24,814 40,417 61 100 Physical Contingencies 174,087 278,052 452,139 1,289 2,059 3,349 61 8 Price Contingencies 286,118 579,419 865,537 430 1,629 2,058 79 5 Total Project Costs 2,566,901 4,207,875 6,774,775 17,322 28,503 45,824 62 113
Financing Plan
2.23 Total project costs of US$45.8 million would be financed by: an IDA Credit of SDR 17.7 million (US$24.7 million equivalent, 54 percent of project costs) that would cover part of the costs of the land allocation and development component and the costs of the project preparation and project management Southern Governorates Rural Development Project 1l components;an IFAD Loan of SDR 8.15 million (US$11.3 million equivalent, 25 percent of project costs) that would finance the costs of the off-farm income development and communitydevelopment components; a Government contribution of US$4.4 million equivalent (10 percent of project costs) that would cover part of the cost of the land allocation and development component; and beneficiary cost sharing in the cost of the land allocation and development component equivalent to US$5.4 million (11 percent of project costs). The IDA Credit would be on standard IDA terms. The financing plan is shown in Table 2.3 below.
Table 2.3: Financing Plan (US$ million)
Government Beneficiaries Total % Total IDA IFAD Land Allocationand 20.6 - 3.4 4.0 28.0 61 Development
Off Farm Income - 5.4 0.2 - 5.6 12 Development
Community Development - 5.9 0.8 1.4 8.0 17
Project preparation 1.0 1.0 3
Project Management 3.1 - - - 3.2 7
TOTAL 24.7 11.3 4.4 5.4 45.8 100
Percentage 54 25 10 I I 100
EI[. PROJECT IMPLEMENTATION
A. Project ManagementArrangements Business Approach
3.1 The project design provides for an innovationin managementarrangements that can best be described as a "business approach". Under this approach,the Government has created by Decree of December 1996 the Project Management Unit (PMU, see para. 3.3 below) as a temporary autonomous legal entity with powers and a structure equivalent to those of a private business. This was a condition of negotiations. The reason for this business approach is to ensure that the project starts up rapidly and is implementedat lowest possible cost with the maximum direct benefits being delivered in a timely and efficient manner to the beneficiaries - the rural poor. The PMU will exist to achieve specific targets over the project period, and would be dissolved at the end of the project. Low management overhead would be a key performance indicator, not exceeding 10 percent of project cost (compared to rates of 20 percent and upward experienced in projects in the sector that have been implementedthrough ministries).
Steering Committee
3.2 By Decree of December 1996, Government created the project steering committee chaired by the Minister of Agriculture. This was a condition of negotiations This committee has powers and functions equivalent to the Board of Directors of a company. The steering committee comprises representatives (at Deputy Minister level or equivalent) of MAWR, MOPD and the Governor's office in each of the four governorates concerned. The committee would meet regularly twice a year, once in April to review and approve the project annual report and audited accounts for the preceding year and once in about September to review the draft budget and work program for the following year. The committee would ensure that 12 SouthernGovernorates Rural DevelopmentProject
implementationwas carried out according to the manual of procedures (para. 3.3 ) and would approve the appointment of the senior staff (para. 3.11 ff). Meetings of the steering committee would be in the project governoratesand in Sana'a in turn.
Project ManagementUnit
3.3 The PMU would have its headquarters at Seiyun, the principal town of Wadi Hadramawt, where the largest regional share of project activities is located. The PMU would have the structure, powers, functions and responsibilities of company management. The organization chart, terms of reference of staff and the procedures of the PMU are laid down in a manual of procedures, the final version of which was agreed at negotiations and which is in the project file. All PMU professional staff (22 in total) would be recruited on contract after competition and would be paid salaries at market rates. Staff recruited who already held posts in another institution, whether public or private, would have to resign or take long-term leave without pay. Employment with the project would be full-time but fixed term. All staff would be liable to termination if their services were considered inadequate.
3.4 The PMU would be headed by a project director with overall responsibility for planning, implementationand reporting. Under the director, the PMU would comprise four groups, plus advisory staff: (i) the participatory development group, headed by a senior community development specialist (internationally recruited); (ii) the business development group, headed by a senior business development adviser; (iii) the engineering group, headed by a senior engineer (internationally recruited); and (iv) the finance and administrationgroup, headed by afinance manager.
3.5 Participatory Development Group. The group leader, the senior community development specialist, would work from headquarters but would travel widely. The group's focus would be entirely field- oriented with five participatory development coordinators (PDCs) resident in the project regions (one each in Seiyun, Mukalla, Ataq, Zinjibar and Al Hawta). The PDCs would have front line responsibility, as representatives of the project to the communities,would manage the community development component and would coordinate overall implementation in their region of responsibility. With five PDCs and 40 communities, each PDC would work in about eight communities. The number of PDCs has been deternined based on an analysis of the tasks they would have to undertake.
3.6 Business Development Group. The group leader, the senior business development adviser, would work from headquarters but would travel widely. Four business development advisors (BDAs) would be resident in the field (in Mukalla, Ataq, Zinjibar and Al Hawta) and responsible for implementing the off-farm income development component (para. 2.16 and Annex 1). This would include: (i) conducting subsector analyses and implementing interventions; (ii) liaising with credit projects/institutions and advising client groups on accessing credit; (iii) providing business andlor marketing training and information; and (iv) facilitating all aspects of technical skills training. Because micro- and small-enterprise development activities are almost non-existent in Yemen, the project would contract with an international agency or firm with relevant experience in the region to train the BDAs.
3.7 Engineering Group. The group leader, the senior engineer, would work from headquarters but would travel widely. The senior engineer would have overall responsibility for supervising preparation of final design and for overseeing contract implementation for all land development activities. Two (civil) engineers would be posted in the field (Seiyun, and either Ataq, Meifa'a or Zinjibar) to supervise implementationof the land development component.
3.8 Finance and Administration Group. The Finance and Administration Group would be based in headquarters. Under the Finance Manager, the group would comprise an accountant, a liaison SouthernGovernorates Rural DevelopmentProject 13 officer/clearing agent and a procurement officer. The Finance Manager would have overall responsibility for the financial management and accounts of the project, including disbursements of the IDA Credit. The accountant would be responsible, under supervision of the Finance Manager, for keeping records of disbursements and the special account, and for preparing disbursement requests.
3.9 In addition to the four groups, there would be three other senior staff reporting to the Project Director: an agricultural adviser to back up the field program in farming and livestock: a women-in-development adviser to back up the PDCs and BDAs on gender and to ensure the integration of women's support in all aspects of the project; and a monitoring and evaluation specialist to provide feedback to enable headquarters and field staff to learn in a positive environment from both success and failure. A series of consultancies would be available to back up the project team in areas where a full time staff member is not justified.
3.10 All staff would either have experience or demonstrated interest in participatory social development approaches, and training in these approaches would be given to all staff early in their service. All professional staff would be highly mobile and provided with the best available communication facilities. Government would provide office space in the different regions for liaison purposes, but field staff would be expected to spend at least 90 percent of their time in the field. Headquarters staff would be expected to travel about half of their time.
3.11 The appointment of the senior professional staff (project director, group leaders, senior headquarters staff) would be subject to IDA approval. Terms of reference for all staff were agreed at negotiations. A project manager satisfactory to IDA has been appointed. The appointment of the four group leaders would be required by December 31, 1997, and of five participatory development coordinators, four business development advisers, a procurement officer, an economic adviser, a women-in-development adviser, and a management and evaluation specialist by March 31, 1998. Assurances to this effect were received at negotiations.
Work Programming
3.12 The PMU will prepare Annual Work Programs for presentation through the Steering Committee to IDA for approval before November 30 of each year. Assurances on this were obtained at negotiations. The draft program for the first year of the project was agreed at negotiations.
Implementation and Contract Services
3.13 The project's three components would make up a "menu" offered by the PDCs during the community dialogue process. Not all activities would be conducted in each community; it would depend on local opportunities and community and individual requests. After dialogue within the community, the activities to be implemented in each community would be agreed and the activities implemented as follows:
(a) Land Allocation and Development. Allocation would be conducted by Government with PMU support (both the participatory development group and the engineering group). Preparation of detailed designs would be conducted by consultants under supervision of the engineering group. Tendering and supervision for land development would be conducted by the engineering group, execution would be by contractors. Crop development activities (training, extension, physical works) would be carried out through contractors, with the PMIUJ (agricultural adviser) responsible for tendering and supervision.
(b) Off-Farm Income Development. The paraveterinarian activity would be executed by a contractor, with PMU responsible for tendering and supervision. The fisheries activity would 14 SouthernGovernorates Rural Development Project
be executed by the business development group, with the formal training done under contract by the Fisheries Institute in Aden. The subsector analysis and the management of the resulting interventions would be executed by the business development group. The business training activity would be executed by the business development group. The technical training activity would be executed by the business group, with the formal training done under contract with VTCs and other training institutions. The microfinance pilot activity would be implemented under contract by SFD, and the small enterprise credit pilot would be implementedunder contract by SEDU.
(c) Economic and Social Development of Rural Communities. The development of community management skills activity would be implemented by the participatory development group. The community development fund activity would be implemented by the participatory development group working directly with communities (see Annex I for a detailed description of implementation arrangements), with works executed under contracts tendered and supervisedby the participatory development group.
(d) Preparation of Future Projects in the Sector. This component would be executed by the MAWR Directorate General of Planning and Monitoring.
3.14 It is estimatedthat a total of about 100 contracts would be managed during the project period, ranging from major civil works and equipment supply contracts, through contracts with international specialist organizations(e.g., with an internationalNGO for the paraveterinarianactivity), down to local level contracts for extension and training (contracts would be signed with consultants or with other local professionals of demonstratedability -- those working in the public sector would be required to take leave of absence during their contract). It is expectedthat the use of contract services would prove much lower cost and more flexible and speedy than the recruitment and training of a large cadre of PMU staff. However, it is experimentalin Yemen and would be closely observed during early supervision in order to ensure that the system is manageable and giving the expected results. Design and managementof performance criteria would be critical and the skills needed for this would be key to the selectionof PMU staff.
Credit
3.15 Beneficiariesreceiving land would be responsible for their own working capital and equipment needs beyond the costs of farm establishment. As beneficiariesare poor, it is expected that credit would be required. Most formal rural credit is presently supplied by the parastatal Cooperative and Agricultural Credit Bank (CACB). No special credit fund is proposed under the project. Instead, project field staff would work closely with beneficiaries in order to help them to prepare well-structuredcredit applications either to CACB or to other credit institutions present in the project area. As the financial sector is presently undergoing reform as part of the overall adjustmentprogram, it is expected that the offer of credit for well-structured projects backed by freehold land collateral would increase. For the fisheries component, there is adequate finance available in the existing Fisheries IV revolving fund, and credit for the project fisheries component would therefore be handled through the existing fund without any special provisions under the project. Finance for very small and small enterprises would be provided through the pilot programs to be run by SFD and SEDU (para. 3.13).
Operation and Maintenance
3.16 The proposed typical Irrigation Unit (IU) for groundwater irrigation development would consist of 60 feddans divided among 12 farming families,with 5 feddans each. Operation and maintenance (O&M) of the irrigation systems will be managed by Water User Associations (WUAs), which would be organized and supervisedby the PMU. Operation of wells and day-to-day maintenance would be carried out by the SouthernGovernorates Rural DevelopmentProject 15 beneficiariesthrough arrangementsestablished by the WUAs. Initial training in the operation of wells would be given to the WUAs. More complicated technical maintenancework should be carried out by technicians under the supervision of the PMU and the concemed WUAs. The same above procedureswould be applied also for O&M of the spate irrigation scheme in the areas of Meifa'a State Farm which would included under the Project.
3.17 Assuranceswere obtained during negotiations that the PMU would: (i) submit a plan for operation and maintenance for each groundwaterirrigation scheme to IDA for review by December 31, 1998;(ii) submit a plan for operation and maintenanceof the spate irrigation scheme to IDA for review by December 31, 1999;(iii) assist the water user associationsto review and revise by December31 of each year the charges set by each WUA to ensure that they cover all operation and maintenance costs and submit that to IDA for review; (iv) cause the irrigation systems under the Project to be maintained and inspected periodically in accordance with sound engineering practices, under arrangements satisfactoryto IDA; and (v) prepare and submit to IDA by December 31, 1998 a water managementprogram for the spate irrigation scheme that will be included under this project to ensure that the irrigation system (headworks and distribution system) will serve efficiently and equitably present and new owners in this site.
B. Procurement
3.18 Procurement authority would be as agreed at the 1995 CPPR: the project director would approve contracts up to US$200,000 and the Minister of Agriculture would approve contracts US$200,000 to US$1.0 million. Any contract awards beyond that level would be approved by the High Tender Board (US$1.0 - 3.0 million) or the cabinet (procurementsover US$3.0 million).
3.19 Principal items to be procured under the project would be: civil works - land development contracts; equipment - pump equipment, vehicles; and services - technical assistance and a broad range of support activities, as described above (paras. 2.12 ff, and 3.13).
3.20 IDA will act as IFAD's cooperating agency, and will administer disbursements and procurement for IFAD financing. Procurement of goods and works would be according to IDA Procurement Guidelines (January 1995). ICB would apply: for goods of a contract value above US$200,000, and civil works of a contract value above US$1 million. Contracts for works below US$1 million and goods between US$50,000 and US$200,000 would be procured through national competitive bidding (NCB). Goods estimated to cost less than the equivalent of US$100,000 per contract up to an aggregate amount not exceeding US$750,000 may be procured through intemational shopping Goods estimated to cost less than the equivalent of US$50,000 per contract up to an aggregate amount not exceeding US$250,000 may be procured through national shopping. All bidding packages for works, equipment, materials and vehicles estimated to cost US$200,000equivalent or more would be subject to prior IDA review of procurement documentation. Other contracts would be subject to ex-post review after the contract award. These limits would result in prior review of about 75 percent of total IDA financing and about 90 percent of IDA financing of contract works by ICB and NCB covering some 25 contracts. An exception to the above would be procurement for the IFAD- financed community development component, amounting to less than US$2.0 million, which would include community participation and provision of grants for community projects in water supply and sanitation, community centers, flood protection works and other local community infrastructure. Goods and works required for these activities shall be procured in accordance with procedures acceptable to IDA. A second exception would be for procurement of small works under both the off-farm income and community development components. Works for these components estimated to cost less than US$ 100,000 equivalent per contract, up to an amount not to exceed US$4.0 million equivalent, may be procured under lump-sum, fixed-price contracts awarded on the basis of quotations obtained from three qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description of the works, including 16 Southern Governorates Rural Development Project
basic specifications,the required completion date, a basic form of agreement acceptable to IDA, and relevant drawings, where applicable. The award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to complete the contract successfully. Services for consultants, training, and studies would follow the Guidelines for Selection and Employment of Consultants (January 1997). Two training contracts for support to the livestock component and to the business development activity would be procured through international competition under the Quality and Cost Based Selection Process. All other contracts are expected to cost less than $100,000 and would follow the selection process based on consultants' qualifications and the process for selecting individual consultants. All contracts for the employment of consultants estimated to cost $100,000 equivalent or more for consulting firms and $50,000 equivalent or more for individual consultants would be subject to IDA's prior review. All other contracts would be subject to ex-post review by IDA. Procurement procedures were agreed at negotiations.
Table 3.1: Amountand Methodsof Procurement (US$millions)
Project Element Procurement Method (USS M)l ICB NCB NIF 1/ OTHER TOTAL LandAcquisition 3.35 3.35
Civil Works 14.11 0.44 14.55 IFAD/IDA) 2/ (14.11) (0.44) (14.55) (IFAD) (IDA) (14.11) (0.44) (14.55) Equipment 3/ 2.73 0.99 0.21 3.93 (IFAD/IDA) (2.73) (0.60) (0.21) (3.53) (IFAD) (0.21) (0.21) (IDA) (2.73) (0.60) (3.33) Vehicles 0.73 0.73 (IFAD/IDA) (0.72) (0.72) |(IFAD) (0.12) (0.12) (IDA) (0.60) (0.60) ConsultancyServices and Training4/ 8.42 8.42 (IFAD/IDA) (8.20) (8.20) (IFAD) (5.60) (5.60) (IDA) (2.60) (2.60) Operating & Recurrent Costs 4.31 4.31
(IFAD) (0.52) (0.52) (IDA) (1.21) (1.21 Farm Establishment & Development Fund 9.50 9.50
(IFAD) (4.82) (4.82) (IDA) (1.38) (1.38) Sector Study & Project Preparation 1.02 1.02
(IFAD) (IDA) (1.02) (1.02) Total 18.59 1.43 3.35 22.44 45.80
(IFAD) (0.12) - (11.15) (11.27) (IDA) (18.46) (1.04) (5.19) (24.70) Note: Total may not add up due to rounding. 1/ NIF: Not IDA or IFAD financed (land acquisition). 2/ Figures in parentheses are the respective amounts financed by IFAD and IDA. 3/ National and International Shopping would be used to procure some of these goods which are not procured by ICB. 4/ Consultants and TA services recruited in accordance to IFAD's and IDA's Consultants Guidelines SouthernGovernorates Rural DevelopmentProject 17
C. Disbursements,Accounts and Audits
Disbursements
3.21 The credit would be disbursed over an estimated six and a half years. The disbursement profile is based on the standard disbursement profile in the MENA region, adapted to the particular features of the proposed project. IDA would not finance the costs of land nor any tax or tax element. The closing date for the Credit would be June 30, 2004. The Project Preparation Advance would be refunded from the Credit upon effectiveness. Disbursementswould be by category as follows:
Table3.2: Disbursementsby Category (millions)
Category ID)AAmount Foreign% Local% SDR US$ equivalent CivilWorks 9.6 13.4 100% 95% Goods,Equipment and 3.0 4.2 100% 100%ex Vehicles factory 80%locally produced TechnicalAssistance, Training 3.2 4.5 100% 100% and Studies OperatingExpenses 0.7 1.0 100% 100% PPA 0.2 0.3 AmountDue Unallocated 1.0 1.3 TOTAL 17.7 24.7 1 1
3.22 Disbursement for contracts for civil works, goods and services to be made on the basis of statements of expenditure for expenditureswould be as follows: (i) civil works under contracts of less than US$1 million equivalent; (ii) goods under contracts of less than US$200,000 equivalent; (iii) contracts for consulting services not exceeding US$100,000 equivalent; (iv) contracts for individual consultants and training not exceeding US$50,000 equivalent; and (v) operating costs under such terms and conditions as the Association shall specify by notice to the Borrower. All other disbursementswould be fully documented.
Special Account
3.23 To facilitate d;sbursements, a Special Account of value US$500,000(equivalent to about four months of cash flow for the relevant expenditures) would be established in a commercial bank in Seiyun. Assurances to this effect were received at negotiations.
Accountsand Audits
3.24 The Project ManagementUnit (PMU) would be responsiblefor project budgeting and accounting.The PMU would install accountingand budgetary managementinformation systems, to be operationalat the start of the 1998 financial year. Systems would incorporateintemal controls and checks. Accountingand procurement monitoring will be computerized. The Finance Manager and his group (para. 3.8) would be responsible for developing these systems, with input from the monitoring and evaluation specialist on the management information systems. The Finance Manager and his group would prepare the chart of accounts and the accountingmanual, and will be responsiblefor producing monthly statementson expenditureagainst budget, on the special account and on disbursements on sub-projects. The group will produce the annual accounting statements ready for audit within two months of the year end. All these statementswill be made available to the 18 Southern GovernoratesRural DevelopmentProject
Steering Committeeand to IDA. The PMU would seek any necessaryconsultant support and finance is provided for this under the project.
3.25 PMU autonomy needs to be balanced by internal controls and external supervision. Project accounts would be audited by private auditors from a national or internationalaccounting firm, selected by the Steering Committee and subject to the approval of IDA. Assurances to this effect were received at negotiations. The auditorwill be selected beforethe start of the 1998 financialyear and terns of reference will be agreed withIDA. The project's audited accounts and the auditors' report would be submittedannually to the Steering Committee. The committeewould take note of the auditors' report before passing on the report and the audited accounts to IDA, within six months of the end of the accounting period. It is expected that the firm selected would also provide accountingsystem design supportto the PMU, includinghelp with the initial system design.
D. Monitoring,Supervision and Evaluation
Monitoring
3.26 Monitoringof project implementationand impact would be continuous throughout the project. The basis would be the key performanceindicators developed in the design summary (Annex 1), which were agreed at negotiations. The detailed monitoring frameworkwould be designed and supervised by the monitoring and evaluation specialist. The finance manager and the M&E specialist would be jointly responsible for the ManagementInformation System (MIS). Monitoringby the beneficiary target groups of project execution and impactwould be built in from the start, involvingat least one formal meeting a year in each community.
3.27 In order to track the impact of the project on incomes and welfare at the household level, a limited number of families would be monitored regularly throughout the project by the M&E system set up by the project's M&E Specialist.
Supervision
3.28 A project launch workshop would be held shortly before the expected date of effectiveness. This would provide "just in time" training in procurement, disbursement, accounting, auditing and management procedures. Thereafter, regular IDA supervision would take place every six months, according to a supervision plan that was worked out at appraisal (see Annex 10). Supervision would be led from the Yemen Resident Mission, with support from headquarters. This will allow close and frequent follow-up, particularly in the initial stages of the project. Supervision resources required are estimated at 25 weeks in FY98, and thereafter 18 weeks annually, with a special provision of additional resources in FY 2001 to conduct the proposed mid-term review (para. 3.29). At least once a year, supervision missions would contain a financial analyst to verify procedures and give some hands-on training.
Mid-Term Review
3.29 In view of its novel implementationmethodology and to allow for redesign and adjustment of project inputs and components,a mid-term review should take place late in the third year of the project (target date - November 2000). It would involve a social scientist specialised in participatory approaches, specialists in irrigation,finance, project management, off-farm/SME,and others accordingto need. The mid-term evaluation would examine the status of project execution and impact. It would also canvas the opinions of a representative sample of beneficiaries. As necessary, it would propose restructuring or reallocation of funds and propose methodologicalchanges for the continuationof the project. Southern Governorates Rural Development Project 19
Impact Evaluation
3.30 Impact evaluation by an independent monitoring team would be conducted towards the end of the project implementationperiod. It would be appropriateto repeat the exercise about eight or nine years after project start up, i.e., two or three years after completion. The basic reference would be the development objectives and the related performance indicators listed in the design summary. Ways in which the second impact evaluation would be conducted and financed (the evaluation would be well after the IDA Credit had closed) would be examined during implementationand decidedat the time of the first evaluation.
Completion Report
3.31 Not later than six months after the completion of the project, the Govemment would submit to IDA a Project Completion Report summarizing the achievements of the project and its impact vis-a-vis objectives. Assuranceson this were obtainedat negotiations.
E. Cost Recovery
3.32 Beneficiarieswould contributeabout US$4.1 million (11 percent of project costs) to cover half the cost of irrigatedfarm establishment,pumps and engines for irrigation. The quantum to be recovered has been set at 15 percent of net income (a level that is affordable by the averagely performingfarmer on the lowest yielding project land site (the worst case scenario). During the work of the Committee for the Selection of Beneficiaries, the cost recovery provision proved a practical means of identifyingable and suitable candidates, as only those with the necessary managementskills were prepared to accept land on these terms. Capital repaymentswould be made over fifteen years with three years grace commencing from the start of the farming operations. The Governmentshall appoint a financial institutionsatisfactory to the Associationto collect the mortgagepayments. The repaymentswould be made to an escrowaccount accordingto a legally enforceableschedule contained in a covenant to the land title. The funds in the escrow account would be used for local communityprojects. In the event of default and after exhausting all possible remedies, the defaulting beneficiary would be obliged to surrender the land, which would then be reallocatedto a fresh beneficiary according to the same criteria and process as used in the originalallocation. Assuranceson this were receivedat negotiations.
F. Project Sustainability
3.33 Sustainability of project interventions would be assured through the following main characteristics of the project: (i) land development would only take place on sites where water availability is sustainable (see para 4.12 and paras 4.19-4.20) and the basic knowledge for sustained, profitable farming is available; (ii) cost recovery would ensure the commitment of beneficiaries and would ensure the financial sustainability of the water user associations; (iii) the off-farm component would be market-driven - all activities would aim at ensuring sustainability of the micro- and small enterprises established through finance, business and technical support; (iv) institutionally the project would achieve sustainability through the provision of the necessary support to community organizationsto enable them to manage their affairs more efficiently by the end of the project; and (v) the training and experience gained by the participatory development coordinators in the project unit would create a small pool of experienced staff whose capacity could be used by other projects in the country in the future, thus promoting the practice of participatory rural development in Yemen. Similarly, the business development advisors would be in an excellent position to strengthen and support SEDU or SFD after the project, thanks to the experience and training gained through their work in the project. The project's organization/management arrangements, however, are not intended to endure beyond project end. Sustainabilityhere is intended primarily at the level of the target beneficiary group. 20 SouthernGovernorates Rural DevelopmentProject
IV. BENEFITS, RISKS AND IMPACTS
A. Benefits
QuantifiedBenefits
4.1 The project would supplement the means of economic livelihood for about 8,750 very poor individuals and their families (50-60,000 people), together with improvements in welfare arising from community development activities for a total of up to 150,000 people. 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 (2 ha has been set as the size that can be managed by a family and that provides a good income). These incomes are based on conservativelyestimated yields and prices for the area (e.g. onions 15-18 t/ha, tomatoes 10-15 tlha, sesame 0.6-1.2 t/ha), and on cropping intensities of 90-110 percent, which are below best practice in the region. For the fisheries component, annual fish catch per boat is expected to be 28 tons (based on experience with existing fishing operations under the ongoing Fisheries IV project), generating incomes in excess of $3,000 a year for 280 poor families. Other revenue-earningenterprise activities (business advice, skills training, credit, etc.) are expectedto provide greater surety of income and new-found employment or business for about 6,000 beneficiaries. Three quarters of them are expected to attain annual earnings of between $500 and $1,000 a year. Improvementsin women's animal husbandry are expected to generate annual income of about $185,000 throughout the project area, supplementing the incomes of many women. The figure for other-revenue earning activities are based on information on the local market collected during preparation.
Non-QuantifiedBenefits
4.2 Benefits from the Community Development Component. The benefits from the community development component would include better community relations; greater ability to deal successfully with the authorities to obtain services and support; improved health due to repair and rehabilitation of domestic water supplies and drainage systems; and benefits from environmental awareness and actions. Although these benefits are largely non-quantifiable, the success of this component would be evaluated in the scheduled communitymonitoring meetings (para. 3.26).
4.3 Other Benefits. The project is intendedto pioneer two new approachesto rural developmentin Yemen. First, although there have been some pilot projects to test participation approachesto rural development, the proposedproject would be the first full-scale project in Yemen to work in partnershipwith rural communities. Second,the proposed "business" approachto project implementation(para. 3.1) would test a new solution to the problemsof implementingrural developmentprojects in Yemen. If these approachesare successful,there would be an importantbenefit in the lesson for future projects.
B. Economicand FinancialEvaluation
4.4 The full economic analysis is set out in Annex 3. Using the above projected benefits and the project costs, and allowing for periodicasset replacements,individual components have the followingEIRRs:
Land Allocationand Development(various sites) - new land development 9.17-16.57percent - rehabilitation 21.89-28.19percent Livestock 19.64 percent Fisheries 179.79percent SouthernGovernorates Rural DevelopmentProject 21
4.5 For the land allocation and development component, the analysis was conducted separately for each region and type of development,with a cut-off ERR of 10 percent.
SensitivityAnalysis
4.6 A sensitivity analysis was conducted on key project risks. The sensitivities modeled correspond to the risks discussed in Section C. below. The analysis has been carried out only on the land development component as: (i) this is the largest component subject to cost benefit analysis; (ii) the risks impact predominantlyon this component; and (iii) some of the ERRs for this component are close to or at the cut off point. The risks modeled are:
Risk Description of Risk Modeled ERR range
- Base case 9-28%
#1 Divergence of 5% p.a. between official and market exchange rates negative - 17% (macroeconomicrisk)
#2 Civil works costs increase by 30% (project complexity) 4-24%
# 3 Crop benefits decrease by 25% (water resources risk) negative - 18%
# 4 Pumping costs increase by 50% (water resources risk) 2-21%
# 5 Farms in service decrease by 20% (land tenure risk) 5-23%
# 6 Cropping intensity reaches 1.0 only after five years (farm 9-28% productivityrisk)
The results of the sensitivity analysis show that for all but one of the risks modeled, some of the land development component ERRs would drop below 10 percent This underlines the importance of: (i) the mitigating and risk-avoidingmeasures that have been built into the project and which are discussed in Section C below; and (ii) the need for close monitoring of all parametersthroughout implementation(see para 3.26 ff) for details).
FinancialEvaluation
4.7 The financial rates of return to the project are in the range 15-187percent (see Project File). Incomes accruing to project beneficiarieswould be adequateto raise all beneficiariessignificantly above the poverty line (estimated at US$85/person/year). A cost-effectivenesscomparison between the proposed "business" approach to project implementationand the alternativeof implementingthe project through a regular Governmentagency shows that the proposed "business" approach would save about 60 percent on overhead in comparison to the alternative (this was estimated by analysing the cost of MAWR executing the project through its Provincial Departmentsof Agriculture;the calculationincludes assumptions about implementationdelays and cost overruns that are based on actual experiencein public sector-implementedprojects in Yemen).
C. Risks and Issues
4.8 MacroeconomicRisk. The following are the main specific macroeconomicassumptions that would condition success (see project design summary in Annex 1): (i) continued macroeconomicstabilisation; and (ii) continued Government support for a decentralised rural poverty alleviation program as a major development goal. Indications are that these assumptions are realistic and do not present a high risk. The macroeconomic 22 SouthernGovernorates Rural DevelopmentProject
stabilization program is on track and Government is negotiating a new facility with the IMF and a new adjustmentoperation with IDA. Nonetheless,the macroeconomiccontext is vital. The sensitivityanalysis below shows the impact of just one macroeconomicparameter going off track (Risk # 1 models the impact of a divergence between official and market exchange rates). Although this risk presently appears unlikely to materialise,the results of the sensitivityanalysis underscore the need for careful monitoring and for sustained dialogue at the macroeconomiclevel in order to providean enablingenvironment for the projectto succeed.
4.9 Regarding Government support for decentralized rural poverty operations, Government has worked actively with NGOs and donors on poverty alleviation and has made a commitment to major operations for poverty alleviation(paras 1.8 and 1.12).There is a strong historic tradition of decentralisedself-management and community involvementin the developmentprocess, and this is reinforced not only by Government's present policy and practice but also by a strong self-helpmovement from communitiesthemselves. Donors at the recent Consultative Group meeting showed strong support for this approach, and are backing it up with several externally-financedinitiatives in the way of decentralisedand community led development. The risk that this approachwill not be sustainedare therefore small.
4.10 InstitutionalRisk. Experiencewith IDA projects in the rural sector has been mixed, with problems of both implementationand sustainability. The implementationstrategy for the proposedproject goes a long way to reduce this risk - relying upon a demand-driven, field-oriented way of working; a "business approach" to management with properly paid and qualified staff; decentralization in implementation;transparency and accountability;and autonomyfrom over-bureaucraticprocedures. However,the implementationdesign involves innovative experiments and would require political commitment and good management to make it work. Governmenthas endorsed the proposedapproach, and has acted decisively to create the steering committee and the PMU, and to appoint the project director(para 3.1 ff). At the local level, the governors for the project areas are committedto quick results on the ground. The early appointmentof the project directorwill help to get early results, so that the project could generateits own momentumof support.
ProjectLevel Risks and Their Resolution
4.11 Project Complexity. One of the lessons from IDA lending experience has been that project design should be as simple as possible. The sensitivity analysis (para 4.6) shows the possible impact of project complexity leading to delays and cost increases (Risk # 2 modelled), and project design therefore focused on maintaining as simple a design as is consistent with achieving project objectives and on ensuring workable management arrangements. During preappraisal and appraisal, components of the proposed project were reduced (the fisheries component)or eliminated(a proposed traditional building component) and the resulting project has, in fact, a simple structure and a manageable implementationstrategy. The key features are: communitydialogue and involvementas the unifying mechanismfor project activities; the business approachto project management;and implementationthrough contractorsunder supervisionrather than by a heavy in-house capacity. Althoughthe project is spread geographicallyacross five separatedregions, this is nonethelessa viable project area as the project intervenesin a finite number of communities(40) and staff are mandated to be highly mobile and to use all means of communication(including the recently reintroducedcellular telephones, together with fax, radio etc.). The project is thus manageable, provided the PMU is endowed with the powers and attributes describedin Chapter III. This again underlinesthe essential nature of the conditionalityattached to the PMU (para. 3.1 ff).
4.12 Risks RegardingWater Resources. Water scarcityis a major constraint in Yemen, and the economic consequences on the project if water were to be insufficientor if pumping costs were to increase are very striking (see Risks # 3 and 4 in the sensitivityanalysis, para 4.6). Therefore,close attentionwas paid to the issue throughout the preparation and appraisal process. Availability of sustainable water has been a prime factor in SouthernGovernorates Rural DevelopmentProject 23 determiningthe sites which have been adopted for land development. During identificationand preparation,site investigationswere carried out and the large number of existing studies of water resources and data collected by public agencies were analyzed, including the nationwide Water Resources Assessment of Yemen (General Department of Hydrogeology,with Netherlands Government aid), the survey of Wadi Hadramawt resources (Murdoch McDonald, IDA-financed)and numerous local and regional surveys. As a result, Lahej governorate was excluded from land development activities and only limited areas were selected in Abyan and Shabwa. Further work was done at appraisal,when the missionincluded a hydrogeologist. Subsequentwork published on Hadramawtfrom a Canadianconsultant study (KOMEX)confirms the adequacyof sustainablewater in that area. Based on these existing studies, new field work and expert opinion, sites have only been included where extraction of water is sustainable. Proposed developmentof water resourcesunder the projecthas been discussed with the National Water ResourcesAuthority (NWRA),which is responsiblefor approvingwater resource uses. In addition, support is being provided under this and other projects for water monitoring and management. Assuranceswere obtained during negotiationsthat Government (through NWRA) would (i) submit to IDA by December 31, 1998 and prepare a plan to control groundwater development in the project areas and limit abstractionof each aquifer to those recommendedby the available hydrologicalstudies, and (ii) submit to IDA by January 31 of each year an annual report on groundwatermonitoring and assessment for each of the project areas. More specificmeasures are discussedbelow (para. 4.20).
4.13 Risks Regarding Land Tenure. In the fluid conditions that prevailed in the southern govemorates after unification and the civil war of 1994, there were many land claims. Notwithstanding the multiple precautions taken during project preparation to deal with claims, and to drop sites where title was seriously contested, under the Constitutionof Yemen, citizens are always entitled to lodge claims, however speculative. The sensitivity analysis carried out on the project rate of return (para. 4.6) shows that if problems over land tenure were to reduce the number of farms in service (Risk #5 in the sensitivity analysis), project viability would be at risk. However, this risk has been minimizedby the actions of Government in clearing claims and asserting and assigning freehold title, and also by the community validation procedure followed to select beneficiaries (para. 2.14). This process has gone as far as possible to reduce the risk that further claims are made on the lands once allocated, as there is both a formal declaration and assignment of a clean title underwritten by government and a community commitmentto the agreed distribution. Two further steps have been built in to ensure that no claims could be made on land once developed. First, the sites would be demarcated, further announcements made in the newspapers, and any resulting claims would be adjudicated before the tender for development is launched. Second, Government would grant freehold title on plots to beneficiaries before land is developed (para. 2.14). 4.14 Risks Regarding Farm Productivity. As beneficiaries receiving land are poor, they may be risk averse and also have problems of access to investment and working capital. In addition, there is a risk that markets may not be steady or able to absorb output, particularly high value produce. These risks could threaten the economicjustification of the project, as shown by Risk # 6 in the sensitivity analysis (para. 4.6). These risks would be avoided by the emphasis placed on support to farmers in the early years of farming to provide training, access to inputs and credit. The high grade contract extension services would help farmers to prepare professional business plans matching produce to markets, and would ease fanner access to bank financing. This risk also reinforced the case for farmers to share in the costs (para. 3.32), in order to ensure that they have the incentive to earn the maximum possible return from their farming. Finally, the allocation of land to beneficiaries on a freehold basis (para. 2.14) would both increase farmer incentives and ease access to credit. Remedies 4.15 Risks have been thoroughly analyzed and minimizing, avoiding and mitigating measures have been deployed. Monitoring of all critical assumptions and risks would be continuousthroughout the project period (through project monitoring and evaluation, supervision missions, mid-term review, independent evaluation). 24 Southern Governorates Rural Development Project
In the event that these or other risks nonetheless threaten implementation, and the government would not implement agreed upon solutions,then remedies would be employed, going from restructuringto cancellation.
AlternativesConsidered and StrategicChoices
4.16 During identificationand preparation the following alternative design elements were considered and rejected:
(a) no land development- because of the comparativelyhigh cost of land development,the possibility of a project without land was considered. This was rejected by Government and IDA because: (i) the target population were farmers and knew best how to farm; (ii) the process of consulting beneficiaries threw up an overwhelming preference for land; (iii) despite high cost, land development offered the most assured and stable return of any component (and it had an acceptable rate of return); and (iv) land development was seen by both Government and communitiesas an "anchor" that held togetherthe other project interventions.
(b) development of private lands and their transferto beneficiaries- because many of the returning owners were not interested in farming, the preparation and appraisal missions examined the possibility that the project might invest in rehabilitation of private lands and their transfer to beneficiaries. However,this proved impracticableas it would have involved either Government purchasingthe land from the owners - which was againstpublic policy - or a long term mortgage- style arrangementwhereby beneficiarieswould have committedthemselves to capital repayments to owners over an extended period before they received clear title. As the term of this arrangement would have gone well beyond the life of the IDA Credit, IDA and Government considered that the guarantees that the landowners would honor their side of the bargain were inadequate. However, at negotiations, it was agreed that consultant services would be retained under the project to investigate whether this approach could be tested on a pilot basis, with appropriatesafeguards to protect the beneficiaries.
(c) implementation of the off-farm and community development components through another agency - at the time of appraisal,the new Social Fund for Developmentwas being set up, and the missionreviewed the feasibilitythat implementationof these two componentscould be transferred to the Social Fund which had similar objectivesand activities. However,the managementof the Social Fund decidedagainst this option as it was itself an embryonicinstitution and was unwilling to take on extensive field commitments. Instead, it was agreed that the two projects would cooperatein fields of mutual interest,and that the Social Fund would implementone pilot activity for the SouthernGovernorates Project (microfmancepilot) as this was a field in which the Social Fund had competenceand experience.
D. SocialImpact
4.17 The project is expected to have a direct impact on the socio-economic status of poor people in particularly poor areas. This target group has been well defined (in the ParticipatoryNeeds Assessment (para. 2.1) and improvementswould be monitoredregularly during and afterthe project developmentperiod (para. 3.26 ff). In additionto specificmonitorable changes in incomesand welfare, the communitydevelopment component is expected to contribute to the reintegration and social and economic development of generally poor communities fragmented by the changes of recent years. The project does not involve any resettlement, as selection of beneficiariesfor the land development has included proximity to the site as one of the selection Southern GovernoratesRural DevelopmentProject 25 criteria. The project is not expected to affect tribal peoples nor any related traditional grazing rights on any significantscale; in fact, most of the beneficiarieslive within the tribal system,and would therefore profit. Any impact on traditional grazing rights would be assessed during the demarcation procedure (para. 2.14) and appropriatecompensation made, but this impact is expectedto be minimal or non-existent.
4.18 The project would have a particular impact on women through targeting of specific componentsunder the direction of the women-in-developmentadviser (para. 3.9). Targeting would include: women's role in livestock care, where at least half of the "paravets"trained (250) are expectedto be women; and women's role in other off-farm activities where a number of handicraft activities would be developed and promoted specifically for women. For all relevant activities,there would be specialtraining arrangementsfor women. Half of those to receive training in technical skills (1,500)are expectedto be women.
E. EnvironmentalImpact
4.19 The project carries a number of moderate environmental risks, especially with respect to water management, sustainable land use, and sustainable farming practices. The subprojectsunder the community development fund subcomponent would have summary environmental assessments and, where relevant, mitigation plans. Assurancesto this effect were obtained at negotiations.
Water Management
4.20 The availability of groundwater is a major constraint in Yemen and groundwater availability has been a major factor in designing the land development component. In addition to the safeguards discussed above (para. 4.12), project development would be phased at one site (Khabt al Asloom), in order to assess the water situation before completing the scheme. No groundwater development would take place in coastal Hadramawt or in Lahej where water resources are limited and mainly fulfilling urban demand. In addition, in order to assess water use and flow, and to encourage farmers in sustainable water use, the project would require and finance water meters on the wells drilled under the project.
4.21 The drilling of deeper wells brings a risk of contamination of lower aquifers through leakage from surface water or the higher aquifer. The risk would be mitigated through careful site selection and through requiring the sealing off the upper aquifers by concrete/grout casing through the upper aquifers and stainless steel casing. Well design would be approved by IDA, and execution of well drilling, casing and welding would be carried out by licensed drilling companies and carefully supervised by project staff, government (including local water monitoring units) and internationalconsultants.
SustainableLand Use
4.22 The major environmentalrisks of farming at the southern governorates are salination of farm land and wind erosion. In many areas, the salt levels in well water are moderate to critical and do not allow leaching. Sites where serious risks of salination cannot be mitigated, have therefore been excluded from the project. In general, the risk would be managed through training of farmers in irrigation management and in leaching practices. Wind erosion would be reduced through careful monitoring of new constructions in irrigated fields and through planting wind-breaks.
Sustainable Farming Practices
4.23 High productivity farming in the arid conditions of the southern governorates requires careful on-farm husbandry, particularly soil and water management. The risk cf sub-optimal farming practices would be mitigated by training, both through extension and on-site training for farmer groups. The project would not 26 Southern GovernoratesRural DevelopmentProject finance pesticides and would encouragethe use of integrated pest managementtechniques. Efforts to enhance animal health and care would increase efficiency of production and decrease non-productive use of grazing and water resources.
Biodiversity
4.24 The project would have a minimal effect on biodiversity. The emphasis on traditional practices in field school- and paravet training, as well as on bee-keeping as an off-farm activity, would increase appreciation for plant and animal biodiversity, and would enhance the respect for traditional knowledge systems.
4.25 The fisheries component would not affect the threatened coastal lobster population. Increased coastal fishing, by providing and equipping a limited number of boats, is not expected to have a measurable impact on the small (sardine, mackerel) and large pelagic (tuna, sharks, etc.) fish population.
Archeological Sites
4.26 The project is not expected to provide a risk to archeologicalsites. One proposed irrigation site was in fact eliminated as it threatened an archaeologicalsite, and others were dropped to avoid affecting the water table in the cities in the region. Water use near or upstream of these sites would be monitored through the water meters installed on newly drilled wells. It is expected that there may be some positive impact on the Naqb al Hajr historic site, by better land managementadjacent to the site.
V. SUMMARY OF AGREEMENTS REACHED AND RECOMMENDATION
A. Conditions of Negotiations
The following were conditions of negotiations for the proposed Credit which have been met by Government:
5.1 End to Dispossession. Government issued a decree permanently halting dispossessions (para 2.5).
5.2 Land Allocation. Government formally certified that the 2,900 ha originally to the project are free from claim, are state property and are assigned irrevocably in freehold to project beneficiaries (para 2.14).
5.3 Creation of the Project and the PMU. Government created by Decree of the Council of Ministers the project steering committee and managementunit (paras 3.1 and 3.2).
5.4 Project Manager. Government appointed a project manager satisfactory to IDA (para 3.11).
B. Assurances Received at Negotiations
The following assurances were received from Government at negotiations:
5.5 Land Allocation. Government will demarcate sites to be developed under the project in accordance with the Manual of Procedures. Before any particular land site is developed under the project, Government would grant freehold title - subject to certain covenants as listed in Annex 1 - on each assigned plot to the beneficiaries(para 2.14). Southern GovernoratesRural DevelopmentProject 27
5.6 Special Account. To facilitate disbursements, a Special Account of value US$500,000 will be established in a commercial bank at Seiyun (para 3.23).
5.7 Project accounts. Project Accountswill be audited by private independentauditors from a national or intemational accounting firm, selected by the Steering Committee and subject to the approval of IDA. The project's audited accountsand the auditors' report would be submittedto IDA within six months of the end of the accountingperiod (para 3.25).
5.8 Project manual of procedures. The procedures of the PMU are laid down in a manual of procedures,the text of which was agreed at negotiations(para 3.3).
5.9 Staff and Terms of Reference. Appointment of the four group leaders will be by December 31, 1997 and other key PMU personnel will be appointed by March 31, 1998. Such appointmentswill be subject to IDA approval. Terms of reference for all staff were agreed at negotiations (para 3.1 1).
5.10 Annual Work Programs. PMU will prepare Annual Work Programs for presentation through the Steering Committee to IDA for approval before November 30 of each year. The draft program for the first year of the project was agreed at negotiations (para 3.12).
5.11 Operation and Maintenance. Arrangements for operation and maintenance of irrigation schemes were agreed at negotiations (para. 3.17)
5.12 Procurement. Procedures were agreed at negotiatlons (para 3.20).
5.13 Performance Indicators. Based on the project design summary (Annex 1), performance indicators for the project were agreed at negotiations (para 3.26).
5.14 Completion Report. Not later than six months after the completion of the project, the Government will submit to IDA a Project Completion Report summarizing the achievements of the project and its impact vis-a-vis objectives (para 3.31).
5.15 Cost Recovery. Arrangementsfor cost recovery were finalized at negotiations (para 3.32).
5.16 Groundwater Monitoring. Government will regularly monitor groundwater levels in the project area (para. 4.12)
5.17 Environmental Assessment. Community development fund subprojects will have environmental assessments(para. 4.19). I Annex I Page 1 of 11
REPUBLIC OF YEMEN SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
PROJECT DESCRIPTION
Land Allocation and Development (Base cost US$ 24.9 million)
1. This component would comprise a series of activities designed to establish about 1,950 very poor landless families in sustainable new farming operations on about 3,900 ha.
2. Land Allocation. This would comprise the assignment of secure title for lands to be developed or rehabilitated under the project to poor rural families, largely those who were dispossessed under Yemen's reprivatization of farm land. The process of ensuring that the state has clear title to the lands to be developed under the project has been a major activity (and success) of the project preparation process. Government has issued a decree that formally certifies that the lands are free from claim, are state property and are assigned irrevocably in freehold to project beneficiaries. Action on this was a condition of negotiations. As a next step, Government will demarcate the sites, place further announcements in the newspapers, and adjudicate any claims arising, informing IDA of its actions. In addition, before any particular land site is developed under the project, Government will grant freehold title on each assigned plot to the beneficiaries. The freehold would be subject to covenants that would ensure that the beneficiaries would use the land for the purpose intended' . The criteria and process for selecting beneficiaries of the land have been worked out to ensure that land is allocated to the poorest amongst capable farmers and that the community fully accepts and endorses the allocation. The selection criteria are: (i) poverty recognized by the community; (ii) proximity of dwelling to the site proposed; (iii) ability to farm the land effectively; and (iv) willingness to enter into the obligations accompanying the title, including the cost recovery obligations. A participatory process of selecting beneficiaries and obtaining community validation has been conducted, and about two thirds of the beneficiary farmers have already been selected on 22 sites in three governorates . The balance of the beneficiary farmers will be selected closer to the time when land development begins.
3. Land Development and Rehabilitation. About 3,900 hectares of irrigated land would be developed or rehabilitated. About three quarters of the land (2,900 ha) comprises specific sites which have been appraised from the technical, economic, social and legal standpoints. About one quarter (1,000 ha) is land that was added to the project only at negotiations when cofinancing for its development under the IDA-supported Wadi Hadramawt III Project was canceled. The technical and
to cultivate the land themselves, or with the help of nuclear family members; - not to drill any shallow wells, individually or in smaller groups; - to participate in irrigation network operation and maintenance, and in the activities and decisions of their WUA according to the terms decided by the irrigation group; - not to sell the land for a period of a minimum of 10 years; - not to use the land for non-agricultural purposes. Annex I Page 2 of 11
economic characteristics of this land are equivalent or superior to the land that has been fully appraised, and detailed studies will be completed in the first year of the project. The same selection criteria (detailed in the Manual of Procedures) will be applied as for existing sites. In the event of any sites proving unsatisfactory, there are ample alternatives. In fact, total land allocated to the project, prima facie Governmentland free of claims and which is technicallyand economically viable, is considerably more. In the event that any problem arose with any proposed project site before developmentanother site could thus be substituted.
4. New LandDevelopment would includethe drillingof wells,the equippingof the wells with diesel pumpsand engines,the conveyanceof water fromwells to fieldsand the levellingof fields. Reclamationof some landswhich are sandyor saline wouldbe needed.
5. The averagebase cost per hectare of new land developmentis about $6,200. Well depths would vary between sites, averaging 160 m (with up to 40m screen length per well) in Wadi Hadramawt, 70 m in Shabwa and 87 m in Abyan. Well design will be based on diligent supervisionat every stage of well construction,development and test pumping. Sites in Wadi Hadramawtaverage 60 ha; those in Shabwa are over 200 ha each; and those in Abyan over 400 ha each. Each beneficiarywould receive a plot of 2 hectares size, which is adequate to maintain an averagefamily. Farms would be arranged around wells, with each well serving5 -12 farms. Farmers would be organizedin smallgroups and would cooperatein operatingand maintainingthe wells, pumps and equipment,which would be the property of the group as a whole. The group would also be responsiblefor all future capital replacements.
6. Land rehabilitationwould comprise about 750 hectares already developed for irrigation and which was previouslyfarmed by governmentas "state farms". The land to be rehabilitatedis located on three old "state farms" in HadramawtGovernorate, ranging in size from 130 ha to 385 ha.. The average rehabilitationcost per ha is $880/ha. Land would be allocated in 2 ha plots as for new land, but arrangementsfor farmer organisationand for operationand maintenancewould vary by site dependingon the nature and layoutof the irrigationsystem. One site, for example,has a numberof wells discharginginto a main canalwhich serves relativelylarge farm areas; in this situation,all the farmers in the commandarea wouldhave to organisethemselves to take responsibilityfor managementof the system.
7. There is an urgentneed to resumeregular and systematicgroundwater monitoring at all well sites in the Wadi Hadramawtregion and to supportongoing monitoring programs in other projectareas. This will be done throughthe existingmonitoring units and underthe coordinationof the NationalWater Resources Authority(NWRA). In Wadi Hadramawt,the existingmonitoring unit at Seiyunwould be strengthened.In the other two governorates,the monitoringunits set up under the Land and Water ConservationProject wouldconduct the monitoring..
8. Crop Development. Supportto crop developmentwill be organizedto help the new owners to establish themselves. This support would include training and extension, help to access credit for equipmentand inputs, and material support to farm establishment,including leaching,deep ploughing, canalconstruction, tree plantingand soil amendment. Annex I Page 3 of 11
Off-Farm Income Development (Base cost US$ 5.0 million)
9. This component would comprise three sets of activities designed to create sustainable sources of income for poor rural people within the target communities in activities for which they have a comparative advantage and for which there is a market. The interest of the target group to take up these opportunities has been established through the participatory preparation process.
10. Support for Livestock Development. Many poor landless people, particularly women, survive from the income from livestock rearing, and this component is designed to increase the productivity of livestock and the incomes from it. The component would provide simple training in animal health and care to about 500 poor villagers, at least half of them women, and provide each person trained with a minimal "care" package of some equipment and medicines. The trained villagers would act as "paraveterinarians" and would provide services both to their own animals and to other livestock owners in their village; they will charge for their services, and gain full- or part-time employment. Replenishment of medicines can be done through the market. International experience, and some limited experience in Yemen, have shown that this activity should bring high pay-offs.
11. Support for Fishing. Artisanal fishing is an important and profitable occupation of a large part of the rural population along the coast. Some of the project target group - poor young landless farmers - have indeed already taken up fishing, but there are constraints to entry and the project intends to stimulate further employment generation in the fisheries sector. The component would select and train about 280 participants in fishing skills and arrange for their practical "apprenticeship" with established fishing boats. Initially, participants will receive six weeks of basic skill training in classes held in five or six locations on the coast. Each class will contain 20-40 students and be led by an experienced instructor with one or two assistants. After completing this basic course, the students will be assigned to work with existing fishermen as apprentices, with the boat owner receiving a modest fee to take and train the newcomer. The apprenticeship program would last one to two years, depending on individual arrangements. Two week long training courses in advanced topics would be held for the students after about 12 and 18 months of apprenticeship. Upon successful completion of the apprenticeship program, the students would be eligible to participate in the revolving credit schemes established under the IDA and IFAD-financed Fisheries IV Project (Cr. 2265-YE) in order to purchase their own boats and gear. An international technical expert has been included to develop a training curriculum and monitor the quality of the program. The local fisheries cooperative will administer the apprenticeship program. The program would be limited to the south coast in areas west of Mukalla. This is because in Mukalla, and east of there, ample opportunities exist for alternative employment. In Shabwa, some rehabilitation of on-shore facilities will be necessary, and it is expected that this work will be carried out in the context of the Fisheries IV Project.
12. Promotion of Other Revenue-Earning Services and Enterprises. This component would provide assistance to beneficiaries to set up or develop very small or small businesses ("micro and small enterprises", MSEs, or to acquire technical skills training they need to find productive employment. While being poor is the overriding characteristic of the target group, opportunities for income generation would vary based on individual characteristics, geographical areas, and community infrastructure. Phased implementation of MSE development and technical skills training would occur based on findings of subsector analysis and market studies as well as community dialogue. The project would pilot activities in both financial and non-financial service delivery. Because there is little experience within AnnexI Page 4 of 11 the project areas in MSE development, a number of approaches would be used. As experience is gained, methods and activities would be adjusted accordingly.
13. The component would comprise four activities:
(a) Analysis and development of economic subsectors that have particular promise for absorbing new rural entrants. This is an upstream activity that will help define the other three activities, and would also lead to specific project interventions. Priority subsectors are those which include large numbers of the target population or subsectors which are growing and offer opportunities for the target population. Examples of possible priority subsectors include garnent manufacturing (large number of women), building construction (growth potential), wool products (large number of target population rearing sheep and producing wool products), handicrafts (large number of women), and specific agricultural commodities important in the project areas. Types of interventions might include developing market linkages (between MSEs and a larger enterprise), facilitating subcontracting relationships, forming trade or business associations to provide lower cost material sourcing, specific skill training, etc. The identification of priority subsectors and the management of project interventions would be done by project staff.
(b) The second project activity under this component would be to provide basic business training/information. Many of the project's target population are unemployed or without skills or have no experience in how to start a business or develop a business idea. In addition, some project clients would receive technical skills training and will want to use this training to start-up their own enterprise and be in need of basic business training. This business training would be offered in group formats for cost-effectiveness and will initially use course materials that have been used successfully in the region or other countries. Project staff would directly manage this activity.
(c) During project preparation, communities expressed demand for a number of businesses for which they believed there was a local market and which would require technical skills training if the target population were to gain employment or start MSEs. The third activity under this component would therefore be technical training. This provides opportunities for apprenticeships combined with intensive short-term training During project implementation, community and market assessments will further define the potential for specific technical training activities. The project would contract with existing vocational training centers (VTCs) and other training institutes in the project area to deliver training, as well as with private businesses willing to provide apprenticeship and/or employment opportunities.
(d) The fourth activity to be conducted under this component would be to pilot the development offinancial services for off-farm activities. The provision of MSE credit has been shown to be an effective way of increasing the incomes and assets of poor people worldwide. In Yemen, the unmet demand for MSE finance has been estimated by Annex 1 Page 5 of 11
the well-establishedSmall EnterpriseDevelopment Unit (SEDU)I and by others to be very strong. Microfinance(finance in the range of US$50-US$1,000)can assist in the start-up or growth of microenterprisesneeding little capital or training. In addition, many potential enterpriseswhich were identifiedduring the preparationprocess require a larger investment,generally in the $1,000-$3,000range (as well as technical/business training). Typically,this investmentmight finance the purchase of tools or a machine. Therefore, two types of pilot projects are planned: microfinance (which includes savings) and small enterprise credit. To leverage other resources, the project will contract with other institutions which have an advantage for piloting MSE finance activitiesin the project area: the Social Fund for Development(SFD) for a microfinance project (advantageis that SFD wishes to invest in buildingthe capacity of their staff in this field) and SEDU for small enterprise lending (advantage is that SEDU has experienceand is planning on buildinga nationwidecapability).
14. Up to 3000 project clients (half of them women)will receive technical skills training. At least seventy percent of these clientsare expectedto initiate (or expand)MSEs or obtain employmentthrough skills training. Over 1300 clients will receive businesstraining (both those that receive technical skills/ apprenticeshiptraining and those that do not). Over 3000 clients are expectedto receive microfinancial services and another 200 or more clients will receive small loans. Other subsector interventionsare expectedto benefit at least 500 project clients (through provision of lower cost inputs, for examnple). Importantproject benefits include the developmentof sustainableMSE finance activities,as well as the testingand developmentof MSE trainingmaterials in the project areas.
15. One problem with starting a new programin off-farm income generation is that there is so little experiencein Yemen that inevitablythe costs will be high. Therefore,the design of the componenttakes into account other existing capacity wherever possible, to keep costs down. Thus, in the financial servicesactivity, it is proposedto pass contractswith the two other institutionsthat have capacity:with SFD (whichis gaining expertisein buildingsustainable microfinance institutions) and SEDU (which has a good track record in smallenterprise finance lending). Similarly,the project will work with VTCs (in Mukalla, Seiyun, Ja'ar, Zinjibar, Aden) to provide technical skills training. These VTCs are already being supported under IDA and GTZ projects, and are developing good capacity. Project apprenticeshipsand short-term training workshops will be done in local communities and in group situationsthereby reducing costs. Off-the-shelf MSE development materials will be used whenever possible.
Economicand SocialDevelopment of Rural Communities(Base cost US$6.8million)
16. This component would comprise a series of activities aimed at the social and economic development of poor communities as a whole. During project implementation, about 40 broad communitieswould be selected for support. Selectioncriteria would include: (i) high concentrationof dispossessedtenants and other poor people;(ii) willingnessto participatein the project and work within the participatory methodology; and (iii) (where possible) the presence of an existing community
SEDUwas set up in 1990 under donor assistanceas the smallenterprise arm IndustrialBank of Yemen. It is now becomingautonomous and is expandinginto operationsoutside the country. Annex I Page 6 of 11 organization,e.g., a managementcommittee for a domestic water supply scheme. With respect to the project, communitiesare defined as individual large villages with populationsover 2000 people or a group of hamlets and smaller villages. Communities so defined would have the following characteristics:(i) a total populationof 200 to 800 households;(ii) longest walking distance between the hamlets included not to exceed one hour; (iii) social cohesion, i.e., there being no current or known history of significantconflicts or disagreementsbetween the hamlets; ard (iv) populated by people from the same social stratum or strata, with known good relationships.
17. Development of Community Management Skills and Institutions. The project would provide training and minor logistical support to community organizations around specific projects of economic or social importance to the local community. This could be backed up by the community fund described below. Typical projects might include: development of village water supply and sanitation; maintenance or rehabilitation of community infrastructure, whether productive (irrigation systems, terraces, etc.) or social (schools, health clinics, etc.); and community environmental protection and awareness programs.
18. A Community Development Fund. Of the 40 communities with which the project would work, it is estimated that approximately 25 would not benefit from land development. These 25 communities would have access to a grant fund (up to US $100,000 per community) to finance community projects on a cost sharing basis. Through the participatory process, the needs of the communities would be established and communities would make a request for financing from the project. Priority would be given to investments directly supporting economic development (spate irrigation construction and rehabilitation, community workshops, women's workshops/centers, marketing centers, etc.). Second priority for project funding would go to environmentally relevant investments (domestic water and drainage supply, flood protection structures, waste disposal, etc.) while third priority would be given to direct social infrastructures (health centers or education facilities).
19. Project field staff would negotiate directly with the community to reach agreement on a subproject. Technical aspects would be prepared with support from project staff or consultants and the proposal would finally be approved by project management according to rules set out in the Manual of Procedures (usually from the engineering group). These rules would establish the criteria for acceptance which would include the following:
- that subprojects are of high value and benefit to the entire community; - that no subgroup within the community would benefit disproportionately from the investment funded by the project; - that there is adequate commitment from the community demonstrated by comprehensive sharing in the process and costs of the design and implementation of the project; - that the project would be sustainable under community management and that adequate arrangements have been made to this effect; and - that the cost per beneficiary did not exceed the maximum agreed under the project.
Implementation would be by contracts made according to procurement rules that would give preference to community associations and local contractors, whether for construction or for the provision of services. Annex 1 Page 7 of 11
20. In view of the expected start-up of interventionsof the Social Fund for Development (SFD) (IDA Cr. 2953-YE) in the project area shortly after that of the proposed project, close coordination would be establishedand maintainedwith that project's field staff as soon as they are appointed. During appraisal,agreement was reachedwith SFD managementon the cooperationmechanism for subprojects which would be more suitable for SFD funding. The project would act as intermediary between communitiesand the SFD for investmentseither in communitiesthat are not eligible for the project's own Fund, or for additional investmentsin other communities. In this case, project staff would assist the communitiesin preparing a project to the standardsrequired by the SFD and support the communityup to the point when the SFD accepted the project and integrated it into its own program. In addition, agreementwas reached duringappraisal on cooperationon methodology,training and programmingwith a GTZ-financed community development project that is working in other parts of the southern governorates.
FutureProjects Preparation(Base CostUS $ 1.0 million)
21. The pipeline of projects in agriculture and rural development is very weak. Despite the processing needs of the sector, particularly in rehabilitating rural services, no projects are ready. Therefore, an allocation has been made under the present project, totaling $ 1.0 million, to finance consultants,working groups and a pilot project.
Project ManagementUnit (Base Cost US$2.7million)
22. A Project ManagementUnit would be set up to implementthe project (ChapterIII). Investments to be financedare: technical assistanceand project staff, vehicles,office equipment,office rental, and operatingcosts. REPUBLIC OF YEMEN SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
DESIGN SUMMARY
Narrative Summary Key Performance Monitoring & Supervision Critical Assumptions & Indicators Risks
Country Strategy Objectives Stabilization, structural Teformsand CAS does not include performance Govemment remains committed to social protection indicators stabilization and adjustment, and to poverty alleviation
Portfolio implementation and sustainability of investments
Sustainable natural and human resource development
Project Development Sustainably raise the income of - 1,950 families receiving land Project monitoring and evaluation Govemment remains committed to Objectives very poor rural people in four achieve annual income of above a decentralized rural poverty southem govemorates (largely $2,600 by end of project (up to Mid-term review alleviation program as a major those affected by changes in land $4,000 by PYIO) development goal tenure) to above the poverty level Independent evaluations (2) - 500 persons trained as "paravets" 400 of them attain annual income of above $1,000 (by end of project)
- 280 families taking up fishing acquire an annual income above $3,000 (by end of project)
Reinforce community cohesion and - 40 communities set up community Project monitoring and evaluation raise the welfare level in institutions (PME) communities in the southemr govemorates that have a very high - regular meetings of community Supervision missions (SPN) Oq concentration of poor people institutions Mid-term review (MTR) oo >
.______o__ P__CD Test innovations regarding the - 25 communities confirm selection PME, SPN, MTR Government-community-project involvement of beneficiaries in of beneficiaries agree to operate in three-way planning and implementation partnership - 40 communities agree community development plans Project staff are willing and able to use participatory techniques - 40 communities participate in annual monitoring and evaluation meetings
Test innovations regarding a - project implemented on schedule Decree creating the PMU with high Government continues to support business approach to project and within budget level of autonomy (condition of the operation of the PMU management negotiations) (covenant) - overhead: direct benefit ratio of $1:$9 or better TORs and CVs of PMU staff PMU staff are high calibre acceptable to IDA (covenant) (covenant)
PME, SPN
Project Outputs Creating sustainable new farming - 1,950 new family farms operating PME, SPN New farmers are trained and have enterprises profitably by PY6 incentives and means (including access to credit) to produce to
Increasing animal production - 400 "paravets" operating PME, SPN Paravets can find drugs in the through improved health profitably and suatainably market to restock
Creating off-farm jobs and -2,100 new jobs and/or new PME, SPN Market opportunities continue to businesses businesses exist
-1,000 existing businesses expanded
-microfinance system piloted co
-business loans system piloted
0 ( Increasing fisheries production - 280 new fishermen and 70 new PME, SPN Fisheries stocks and market remain fishing businesses working buoyant profitably
Well-structured community - at least one self-sustaining PME, SPN institutions community institution in each of 40 communities Project Components A. Land allocation and development
1. land allocation - 22 new land sites (2,150 ha) and 3 Decree (condition of negotiations) Govermnent title to land is sound state farmns(750 ha) legally allocated to the project before negotiations
- plot allocation agreed by Government and the community, and titles issued, before land Land Registry promptly records development registered title clean title
2. land development and - 3,900 ha of land developed PME, SPN Technical studies on soil, water and rehabilitation costs are sound
3. farmer services - 3,900 ha of land brought into PME, SPN Contract training and extension are production effecive in raisingfarmers technical level, in matching farm potential to profitable markets and in helping farmers to access credit.
Profitable technical packages adapted to the farming system are available
B. Off farm income development
1. livestock development - 500 paravets trained and equipped PME, SPN Tumkey training and development contract can be let
2. services and microenterprise - 3,000 apprenticeships and PME, SPN Contracts for apprentices and with vocational course (including 1,500 VTCs can be let and supervised women)
- 1,300 business training packages PMU, SFD and SEDU can develop -3,000 microfinance clients institutional mechanism -200 small loans given on
3. fishing - 280 would-be fishermen trained PME, SPN PMU can negotiate credit and apprenticed arrangements from Fisheries IV P - 70 fishing boats and gear supplied system o P from the market under existing _ X credit arrangements C. Community Development
1. community management and - community dialogue and training PME, SPN PMU staff can develop the needed institutions in 40 communities dialogue skills
2. community development fund - grants made for community PME, SPN PMU can develop institutional development projects in up to 25 mechanism conmnunities
3. environmental protection and - environmental awareness PME, SPN Community responsiveness awareness campaigns in schools in 25 communities
- 6 audiovisual and radio programs made and transmitted locally
D oro 0 m YEMEN - SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT Implementation Schedule
1997 1998 1999 2000 2001 2002 2003 2004 ID Task Name Duration Start Finish 00401 2|03|Q401|Q2|3041 Q203Q4Q1Q21Q30Q4Q1 QQ20Q30Q4Q01 0Q20Q30Q40Q1 |Q20Q31040Q1 0Q20Q30Q4 I PROJECTPROCESSING 52.86w 11/1/96 11/25/97
2 Preappraisal 2.86w 11/1/96 11/21/96
3 Appraisal& Negotiations 2w 3/14/97 3/28/97
4 PostAppraisal 2w 5/27/97 6/10/97
5 AdditionalStudies 13w 1/13/97 4/17/97
6 StateFarm Rehabilitatin 6.2w 1/13/97 2/27/97
7 Groundwaterin Hadramaut 4w 3/20/97 4/17/97
8 Effectiveness Ow 11/25/97 11/25/9
9 PROJECTSTUDIES 30w 9/12/97 4i21/981
10 Preparationof FinalDesign 30w 9/12/97 4/21/98
11 Preparationof BiddingDocuments 14w 1/8/98 4/21/98
12 PROJECTIMPLEMENTATION 337w 1/8/98 10/20/04 . . . E 13 LAND DEVELOPMENT 337w 1/8/98 10/20/04 . . , r .__.. 5
14 HadramoutGovernate 291w 1/8/98 11/17/03 . . I
15 Land DevelopmentComponent 163w 5/20/98 8/30/01 ._
16 Hinen 20w 5/20/98 10/14/98
17 well drilling 15w 5/20/98 9/8/98 .
18 irrigationsystem 12w 7/17/98 10/14/98
19 BarwaJ 38w 8/3/98 5/7/99
20 well drilling 35w 8/3/98 4/15/99
21 irrigationsyst 30w 9/30/98 5/7/99
Task Summary * RolledUp Progress _ (D Project: ______Date:9/12197 Progress RolledUp Task | N Milestone RolledUp Milestone
C:\DATA\SOG0V\YENS0G0V.MPP Page 1 YEMEN - SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT Implementation Schedule
1997 1998 1999 2000 2001 2002 2003 2004 ID Task Name Duration Start Finish Q4IQ11Q21Q31Q4|/ Q2Q3 Q4 21 Q21|Q3IQ4|IQ133 Q11Q2lQ31041Q1 102103104 1 22 Ghayl Omar 20w 12128198 6121/99
23 well drilling 15w 12/28/98 4/15/99
24 irrigationsyst 12w 2/24/99 5/21/99
25 Ukm Al Himar 25w 3/10199 919199
26 well drilling 22w 3/10/99 8/18/99
27 irgation syst 15w 5/24/99 9/9/99
28 Dhubala 14w 5124/99 9/2/99
29 well drilling 12w 5/24/99 8/18/99
30 Irrigationsyst 8w 7/6199 9/2/99
31 Bii-Hafldh 16w 7121199 11/1U199
32 well drilling lOw 7/21/99 10/11/99
33 irrigationsyst 8w 9/17/99 11/15/99
34 Al Rudud 12w 9/2199 11/30/99
35 well drilling 8w 9/2/99 11/1/99
36 irrigationsyst 8w 1101199 11130/99
37 Shaeuf 18w 10/1199 2110/00 .
38 well drilling lOw 10/11/99 12/14/99
39 irrigationsyst 8w 12115/99 2110/00 ..
40 Al-Sary 14w 11/16199 2126/O0 I
41 well drilling 12w 11/16/99 2/10/00
42 irrigationsyst lOw 12/15/99 2/25/00 I *.
Task Summary RolledUp Progress Project:______Date:9/12/97 Progress RolledUp Task Milestone RolledUp Milestone K
C:\DATA\SOGOV\YENSOGOV.MPP Page2 YEMEN - SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT Implementation Schedule
1991 1998 1999 2000 2001 2002 2003 2004 ID Task Name Duration Start Finish Q40Q1Q2|Q3|Q41 Q2 0Q34011 Q203104 0 020Q30Q401QQ2 Q3|Q4 QiQ2 Q3lQ40Q1lQ20Q3Q4 010Q20Q30Q4 43 Ba'alal 14w 1113100 4125100
44 well drilling 12w 1/13/00 4110/00
45 irrigationsyst 8w 2V25/00 4/25100
46 Al-Jarab 20w 3/13/00 8/4/00 47 well drilling 18w 3/13/00 7/21/00
48 irrigationsyst 14w 4/25/00 8/4/00
49 Gaher lOw 5/24/00 8/4/00
50 well drilling 6w 5/24/00 7/6/00
51 irrigationsyst 6w 6/22/00 8/4/00
52 Ba Ateer lOw 6/22/00 9/4/00 I
63 well drilling 6w 6/22/00 8/4100
54 irrigationsyst 6w 7/21/00 9/4/00
55 Inat low 817/00 10/18/00 .
56 well drilling 8w 8/7/00 10/3/00
57 irrigation syst 6w 9/5/00 10/18/00
58 Al Wasta low 9/19/00 11/30/00
59 well drilling 6w 9/19/00 11/1/00
60 irrigationsyst 6w 10/18/00 11/30/00
61 Boor (east) 14w 1V1100 3114101 ..
62 welldrilling lOw 12/1/00 2/13/01
63 irrigationsyst 8w 1/15/01 3/14/01
Task Summary _ RolledUp Progress Project: ______Date:9/12/97 Progress RolledUp Task Milestone Roled Up Milestone )
C:\DATA\SOGOV\YENSOGOV.MPP Page3 YEMEN - SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT Implerientation Schedule
| 1997 | 1998 | 1999 2000 2001 2002 2003 2004 ID Task Name Duration Start Finish Q4[IQ1|Q2IQ3|Q4IQ 0Q2Q3101 02 0Q3Q4 01 02 0Q3041 Q2030Q41 Q2 Q3 04 1 Q2 0304 1 0Q2Q304 64 Boor (west) 25w 2/28/01 8/30/01
65 well drilling 25w 2/28/01 8/30/01
66 irrigationsyst 15w 5/11/01 8/30/01 67 Community DevelopmentComp 290w 118/98 11110/03 . . . _ _I
68 CommunityDevelopment 290w 1/8/98 11/10/03
Environment 280w 3/9/98 10/24/03
70 Off-Farm Activities 287w 2/6/98 11/17103 71 AnimalHusbandry 285w 2/6/98 11/3/03 I* * . * _1_ 72 Fisheries 285w 2/20/98 11/17/03 . . _ l 73 TraditionalBuilding 130w 3/16/98 10/25/00 . * l * _ 74 ShabwahGovernate 285w 2/6/98 11/3/03 . . _ _ *_
75 Land DevelopmentComponent 90w 7/3/98 4/25/00
76 Naqb Al Hajr 23w 7/3198 12/18/98
77 wells drilling 20w 7/3/98 11/26/98
78 irrigationsyst 15w 9/1/98 12/18/98
79 Al Malbooja 23w 7/3/98 12/18/98
80 wells drilling 20w 7/3/98 11/26/98
81 irrigationsyst 15W 9/1/98 12/18/98 82 State FarmsRehabilitation 90w 7/3/98 4/25/00 . _ 83 Al Swairy 30w 7/3/98 2/9/99 . . 0 (D 84 Al Rudud 20w 11/30/99 4/25/00
Task Summary Rolled Up Progress Project: ______Date: 9/12/97 Progress Rolled Up Task Milestone * Rolled Up Milestone
C:\DATA\SOGOV\YENSOGOV.MPP Page 4 YEMEN - SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT Implementation Schedule
_ 1997 1998 1 1999 2000 2001 2002 2003 2004 ID Task Name Duration Start Finish 04 Q410Q20Q30Q41 Q02Q30401 020Q30Q4 032 lQ3 0Q4Q012 Q3 Q4Q 02030 1 Q2|030401 020304 85 Meifa'a Hajr 50w 9/15/98 9/16/99 86 CommunityDevelopment Comp 285w 216198 11/3/03 g**m 87 CommunityDevelopment 285w 2/6/98 11/3/03 I* _ * 88 Environment 275w 3/23/98 10/3/03 . . . : . ii 89 Off-FarmActivities 285w 2/6/98 11/3103
90 AnimalHusbandry 285w 2/6/98 11/3/03
91 Fisheries 275w 3/23/98 10/3/03
92 TraditionalBuilding 130w 7/3/98 2/13/01
93 Abyan Govemate 335w 1/22/98 10/20/04 . __
94 Land DevelopmentComponent 155w 4/23/99 6/5/02
95 Khabt Asloom 75w 4/23199 10/26/00
96 well drilling 70w 4/23/99 9/19/00
97 irrigationsyst 60w 8/11/99 10/25/00
98 Al Naqa' 80w 4/25/00 12;4/01
99 well drilling 80w 4/25/00 12/4/01
100 irrigationsyst 65w 8114/00 12/4/01
101 Khabt Al Asloom 45w 7/10/01 615/02
102 well drilling 40w 7/10/01 4/30/02
103 irrigationsystem 35w 9/21/01 6/5/02
104 Community DevelopmentComp 285w 1/22198 10/17/03
105 CommunityDevelopment 285w 1/22/98 10/17/03 OrX
Task Summary RolledUp Progress a Project: Date:9/12/97 Progress Rolled Up Task Milestone Rolled UpMilestone
C:\DATA\SOGOv\YENSOGOV.MPP Page5 YEMEN - SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT Implementation Schedule
1997 1998 1999 2000 2001 2002 | 2003 2004 ID TaskName Duration Start Finish 1 043 01 Q 3 21IQ2 0Q310401 Q20304 Qi 0203041Q IQ2lQ3lQ41QIQ2103IQ41 IQ203lQ4 106 Environment 275w 3116198 9/25/03
107 Off-Farm Activities 330w 2/27/98 10/20/04 . .____ _
108 AnimalHusbandry 285w 1/26/99 10/20/04
109 Fisheries 275w 2/27/98 9/11/03
110 TraditionalBuilding 130w 7/3/98 2/13/01 . . .
111 Lahaj Governate 287w 1/8/98 10/17/03
112 Land Development& Irrigation 24w 1/22/98 7/17/98
113 WaterResources Studies 24w 1/22198 7/17/98
114 Implementation? Ow 7/17/98 7/17/98 7/17
115 Community DevelopmentComp 285w 1/22/98 10/17/03 .
1i16 CommunityDevelopment 285w 1/22/98 10/17/03I
117 Environment 275w 3/16/98 9/25/03 .
118 Off-FarmActivities 285w 1/8/98 10/3/03 . . .
119 Animal Husbandry 285w 1/8/98 10/3/03 . .
120 Fisheries 275w 3/23/98 10/3/03 .
121 TraditionalBuilding 130w 7/3/98 2/13/01
(D
0 Ml ON t4,
f | ~~~~~~~~~Task Summary RolledUp Progress
Date:9/12/97 Progress RolledUp Task Milestone *Rolled UpMilestone
C:\DATA\SOGO\V\YENSOGOV.MPP Page6 Annex 3 Page 1 of 20 REPUBLIC OF YEMEN
SOUTUERN GOVERNORATESRURAL DEVELOPMENT PROJECT
ECONOMIC ANALYSIS
Abstract: The project objective is poverty alleviation for a specific target group in the poor southern governorates of Yemen. Components are land development, off farm income development and community development The land development component and two of the off-farm income generating activities have been subjected to cost benefit analysis. EIRRs are in the range 9-17 percent for new land development; and in the range 22-28 percent for rehabilitation. The livestock income generating activity EIRR is 20 percent, andfor fisheries the ERR is over 175 percent Cost effectiveness evaluation has been carried out for other components.
A. Policy Environment
1. The economic situation in Yemen has been difficult for almost a decade, following the successive shocks of the Gulf War, Unification and the 1994 Civil War. This has had its impact on incomes and social condition, and has led to a weakening of Government services. However, Government embarked on a program of stabilization and adjustment from 1995, and has adopted a growth and poverty alleviation strategy based on a reduced role for the public sector, the development of the private sector, and direct interventions to reduce poverty. Thus, government's program currently focuses on: (i) stabilization to restore macroeconomic balance and reduce inflation; (ii) structural reform and adjustment to stimulate economic growth; and (iii) poverty alleviation and social protection measures. The structural reforms are being supported by the Economic Recovery Credit (ERC, Credit No. 2840-YEM) approved in April 1996. Poverty alleviation is to be achieved through different initiatives, including a rapid income transfer through the Public Works Project (Credit No. 2878-YE), by the Social Fund Project (Credit No. 2953-YE), and by the proposed project.
2. Performance to date has been good. The stabilization program is on track, and the adjustment program is being supported by IDA adjustment lending (Economic Recovery Credit, Credit No. 2840-YEM). Public sector reform is to be supported by an Administrative Reform Credit (FY99). Yemen's proposed decentralization law, which has been approved by the Cabinet and is now in Parliament, will further facilitate implementation of the types of activities supported by the proposed project. A financial sector adjustment program has begun and this is to be supported under the recently appraised Financial Sector Adjustment Credit.
B. Links to ESW
3. The latest formal sector work in agriculture was the Agricultural Sector Study (September 1993, Report 11126-YEM). This report, although somewhat dated by the rapid decline of the effectiveness of public services, nonetheless sets the strategic context for the proposed project: it emphasizes the need for attention to poor rural areas, with bottom up Annexa Page 2 of 20 planning focused on farmers needs and measures to ensure communityparticipation in project preparation and execution. It underlines the need for prudent attention to water resources exploitation and management, and recommends interventions that give priority to poverty alleviationand to improvingthe lot of women. The proposed project has been designed within this framework.
4. More recent sector work has been done in water sector with the Water Strategy (August 1997, Report No. 15718-YEM). This report promotes a broad agenda of water conservation, with emphasis on the need for good informationand a regional planning context for all new water resources development, and on the need for water users to be mobilized in self- managementand self-regulation. The proposed project has been agreed with the new National Water Resources Authority as falling within the planning framework; the project provides support to water resourcesmonitoring; and the developmentof water user associationsis integral to project implementationand management.
5. Recent sector work on poverty is contained in the Poverty Assessment (June 1996, Report No. 15158-YEM). The Assessment recommends an approach that targets the poor directly, with particular emphasis on the non-governmentalsector and local communitygroups. IDA is supportinga nationwideprogram on these lines throughthe Public Works Project (Credit No. 2878-YE)and the Social Fund Project (Credit No. 2953-YE). The proposedproject is set in the context of this special emphasison action in the rural sector through a communityapproach and throughinvestment in sustainableincreases in incomes.
6. The recent Public Expenditure Review highlights the need to prioritize public investment spending on high return activities, and to minimize the recurrent cost burden on Governmentfrom projects. The proposed project's focus on a particular, highly impoverished target group has been based on this prioritizationimperative, and the project has been designed so that at completion there will be a zero recurrent cost burden on Government,as the project unit will be dissolved,and the beneficiariesand users will have taken full control of assets and their management.
C. Linksto CAS
7. The projectis fully consistentwith the latest country assistancestrategy (CAS, January 1996, ReportNo. 15286-YEM).The CAS has three main objectives:
(a) Stabilization, Structural Reforms and Social Protection. The principal thrusts are to support the stabilization and structural adjustment program by policy dialogue and adjustmentlending and to attack poverty in a practical way through targeted interventionsand support to economic growth. The proposed project is designed to provide support to the poorest segment of the community in a well-definedgeographical area where targeting is possible and where there are good prospects for a sustainable solution to poverty through economic development. It is thus a prime means of implementingthis CAS objective (see CASpara. 46).
(b) Portfolio Implementation and Sustainability of Investments. Poor implementation performance and a mixed record on sustainability of investmentsunderlie this importantobjective. The principal tools proposed are Annex 3 Page 3 of 20
selectivity of new investments (confined to situations where there are good prospects of efficient implementation) and an emphasis on cost-effective and innovative approaches to project management. The proposed project has been designed in the light of the mixed record of rural development projects in implementation and sustainability; the project should contribute to the CAS objective of improving implementation and sustainability by incorporating a radical change in project management approach and by integrating beneficiary and community involvement and capacity building as the main foundation of sustainability (see CAS para. 47).
(c) Sustainable Natural Resource Development. The proposed project is founded on detailed work on the nature and extent of the natural resource base. Sustainable water management (see CAS para. 51) is built into the project through: (i) the establishment of water user associations; (ii) the buildup of monitoring capability; (iii) site selection; and (iv) sufficient technical assistance.
This project was incorporated into the CAS after discussion by the Board in February 1996. The project is shown as a complement to the structural adjustment program and will provide an alternative mechanism to the Government for helping the poor to re-enter the economy.
D. Role of the Private Sector and Rationale for Public Sector Intervention
8. Role of the Private Sector. Government has primary responsibility for financing and implementing the project. However, the role of the private sector will be key, as implementation will be through a program of public-private partnerships using community groups and private contractors. The project will work through private contractors to deliver most activities, which will be defined, executed and monitored by beneficiaries and community groups. Beneficiary cost sharing is a significant feature of the project (US$5.4 million, 11 percent of project cost).
9. Rationale for Public Sector Involvement. In general, public intervention is justified because the project: (i) target benefits to poor communities unlikely to be reached by the private sector; and (ii) provides an impetus for new approaches to poverty reduction which could be generalized once sufficient experience and familiarity with them has been gained.
10. Each component was examined to determine the maximum possible scope for private participation or implementation. The results are presented in Table 1 below. The role of the private sector has been maximized, and for most components there is cost sharing and beneficiary participation in management and implementation. Some functions have been necessarily allocated to Government for the reasons indicated in the table. The principal criteria which have been applied to determine the roles of public and private sectors are:
(a) redistribution - the market will not redistribute assets to the poor, and Government has necessarily to assume the task in the interests of equity. As the project's principal objective is poverty alleviation, this is the dominant reason for public intervention and applies to all components.
(b) incomplete information - the market will not invest in assets or activities where there is inadequate information about likely outcomes. For example, the land Annex 3 Page 4 of 20 development component is based on detailed information available only to Governmenton the water resourcesand their future allocationand management.
(c) reserved function - some activities are essentially Government's task. In the project, the allocation of public land and registration of title can only be performed by a Governmentagency (although implementationcan - and will be - be delegatedto the private sector).
(d) exclusiondifficult - in the case of public infrastructuresuch as roads that may be constructed under the community development component, it would be difficult to prevent a third party, non-memberof the communityfrom using the asset .
Table1: Rationalefor Public Sector Involvement
Conponent Rationale Implementadion Beneficiary
Land Allocation Reserved function Government and private Poor private farmers surveyors
Land Development Incomplete information, Private contractors and Poor private farmers redistribution suppliers
Crop development Redistribution Beneficiaries Poor private farmers
Off-farm Income Incomplete information, Government, NGOs, Rural poor Development redistribution contractors, beneficiaries
Community Development Redistribution, exclusion Government, NGOs, Poor rural communities difficult contractors, beneficiaries
E. TheProject Management Approach
11. Throughoutthe preparation period, there was a pronounced and pervasive skepticism evident about the capability of a project to affect the problem of rural poverty. Rural people - and governmentofficials - tended to see a project as a series of inputs with Governmentagencies as the beneficiary rather than a coherent set of deliverables designed to impact on the real problem. This perception, which is largely based on past experience, led to the proposals for project implementation,which provide for a temporary, light and efficient structure focused entirelyon the impacton the target group. Project managementarrangements will follow private sector practice and accountability,adopting a "business approach". Under this approach, the Governmenthas created by Decree of December1996 the Project ManagementUnit (PMU) as a temporaryautonomous legal entity with powers and a structureequivalent to those of a private business. The reason for this business approach is to ensure that the project starts up rapidly and is implementedat lowest possible cost with the maximum direct benefits being delivered in a timely and efficientmanner to the beneficiaries- the rural poor.
12. The PMU will exist to achieve specific targets over the project period, and would be dissolved at the end of the project. Low managementoverhead would be a key performance indicator,not exceeding 10 percent of project cost (comparedto rates of 20 percent and upward experienced in projects in the sector that have been implementedthrough ministries). A key Annex 3 Page 5 of 20 parameter retained is that "overhead" (the cost of project management) should be at most $1 for every $9 value of output delivered to the beneficiary. Beneficiary involvement in monitoring this and other parameters will provide one of the checks on the effectiveness of the "business approach".
13. The cost-effectiveness of the proposed approach was tested against the alternative of delivering the services through govemment ministries. The Government units primarily responsible for development projects were examined and the average cost of overhead per dollar of investment in these ministries was estimated and compared to the forecast average for the project. This cost-effectiveness comparison shows that the proposed project is more efficient and would result in an overhead cost savings of about 60 percent compared to the estimated cost of conducting these activities in the Ministries. This comparison excludes the question of whether Government ministries are capable of implementing this type of community and beneficiary based project.
F. Cost Benefit Analysis
14. Cost-Benefit Analysis Methodology. For those components where a cost benefit technique is used to calculate the economic internal rate of return (i.e., Land Development, Livestock and Fisheries), the financial and economic rates of return for each project component have been calculated by the following methodology. First, a financial flows model is constructed for the with project scenario. Next the without project scenario is modeled. The difference between the with and without project is calculated, and the financial net present value and internal rate of return estimated on the net benefit flow. The model is then adjusted for specific conversion factors and the economic net present value and internal rate of return determined. This methodology is followed for each region in the Land Development Component, resulting in six separate estimates of the economic returns. The period of the analysis is 20 years for the Land Development component. For the Livestock and Fisheries components, the period of analysis is only ten years. This period was chosen because the components return very robust economic rates of return and a longer analysis period was not considered to be warranted.
15. Opportunity Cost of Capital. Based on IDA norms for projects in Yemen, the analysis has been carried out using a 10 percent discount rate. Use of the 10 percent discount rate will also be required for future revenue-earning services and micro-enterprises identified under the off-farm income development component.
16. Macroeconomic Risk. The following are the main specific macroeconomic assumptions that would condition success (see project design summary in Annex 1): continued macroeconomic stabilisation; and continued Government support for a decentralised rural poverty alleviation program as a major development goal. Indications are that these assumptions are realistic and do not present a high risk. The macroeconomic stabilization program is on track and Government is negotiating a new facility with the IME and a new adjustment operation with IDA. Nonetheless, the macroeconomic context is vital. The sensitivity analysis below shows the impact of just one macroeconomic parameter going off track (Scenario # I models the impact of a divergence between official and market exchange rates). Although this risk presently appears unlikely to materialise, the results of the sensitivity analysis underscore the need for careful monitoring and for sustained dialogue at the macroeconomic level in order to provide an enabling environment for the project to succeed. Annex 3 Page 6 of 20
17. Regarding Govemment support for decentralized rural poverty operations, Government has worked actively with NGOs and donors on poverty alleviation and has made a commitment to major operations for poverty alleviation. There is a strong historic tradition of decentralized self-management and community involvement in the development process, and this is reinforced not only by Government's present policy and practice but also by a strong self-help movement from communities themselves. Donors at the recent Consultative Group meeting showed strong support for this approach, and are backing it up with several externally-financed initiatives in the way of decentralized and community led development. The risk that this approach will not be sustained are therefore small.
18. Institutional Risk. Experience with IDA projects in the rural sector has been mixed, with problems of both implementation and sustainability. The implementation strategy for the proposed project goes a long way to reduce this risk - relying upon a demand-driven, field-oriented way of working; a "business approach" to management with properly paid and qualified staff; decentralization in implementation; transparency and accountability; and autonomy from over- bureaucratic procedures. However, the implementation design involves innovative experiments and would require political commitment and good management to make it work. Government has endorsed the proposed approach and has acted decisively to create the steering committee and the PMU, and to appoint the project director. At the local level, the governors for the project areas are committed to quick results on the ground. The early appointment of the project director will help to get early results, so that the project could generate its own momentum of support.
Land Development Component
19. Description. The land development component comprises a series of activities designed to establish about 1,950 very poor landless families within the target communities in sustainable new farming operations on about 3,900 ha. About 3,150 ha would be newly developed and about 750 ha would be rehabilitation work on former state farms. Sub-components would be: (i) land allocation - assignment of secure title for lands to be developed or rehabilitated under the project to poor rural families, largely dispossessed; (ii) land development and rehabilitation - about 3,900 hectares of irrigated land would be developed or rehabilitated, and water monitoring set up or reinforced; and (iii) farmer services - training and extension (delivered by professionals on a contract basis), help to access credit for equipment and inputs, and material support to farm establishment. The project sites are located in three separate governorates. 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 (2 ha has been set as the size that can be managed by a family and that provides a good income). Complete details are available in the Project File.
20. Up-Front Screening. The project land sites were selected during identification and preparation from a large number of sites proposed by Government. Selection criteria were technical (soils, water quality, quantity and sustainability, production capability), social (target population in the area, community willing), legal (no claims on the land, Government held secure title), and economic (lower per hectare development cost, likely ERR above 10 percent). After this screening, sites were studied in detail and the technical, social, legal and economic analyses were finalized at preparation and reviewed at appraisal.
21. Benefits. For the Base Case scenario, benefit streams are based on detailed farm budgets that conservatively estimate yields and prices for the area (e.g. onions 15-18 t/ha, tomatoes 10-15 t/ha, sesame 0.6-1.2 tlha). Cropping intensities are between 95-111 percent, Annex 3 Page 7 of 20 which are below best practice in the area. Full crop development is assumed five years after the start of farning on each site. The predominant crops in the analysis are wheat, durah, dates, onions tomatoes and other vegetables.
22. Costs. Project costs come from the detailed crop budgets and IDA's estimates of capital expenditures and technical assistance. The Land Development component costs include land allocation, development or rehabilitation (well drilling and equipment, water conveyance systems, land leveling, field layout), and the costs of crop development for the start-up period (training, extension, support to farm establishment, including leaching, deep ploughing, in field canal construction, tree planting, soil amendment). Recurrent include pump replacement after every seven years of service and ongoing O&M for the entire period. Water has been priced using the pumping cost as a proxy, as there is no resource charge and there is no alternative use of the water that would allow an opportunity cost to be calculated. Depletion costs and recharge benefits are not included in the analysis as it is envisaged that the project will not result in mining of the aquifer (and provisions for water monitoring and management are included in the project to ensure this outcome).
23. Without Project Scenario. The without project scenario assumes that the project's beneficiaries are living at, or near, the poverty line. Base Case assumptions are a per capita annual expenditure of YR 5723, a figure based on Annex II.A of the green cover Poverty Assessment (Report No. 15158-YEM) for the Hadramawt governorate, increased by 2.53 percent for the rate of inflation since the report's publication. The without project scenario assumes an average family size of 6.5 persons, and that the working members of the household are employed in various, but unknown, activities resulting in an average poverty line income on a per capita basis.
24. Conversion Factors. Conversion factors were calculated and used for the foreign exchange premium on all tradable inputs, diesel or gasoline (as appropriate) used in pumps or vehicles, farmgate wheat prices, urea, phosphate and land. Imported IDA project capital inputs are not subject to customs duties or local taxes, therefore no adjustment was made for these taxes. See the Project File for details.
25. Economic Return. The base case analysis, using the assumptions described above, shows economic rates of return to the land development component of between 9 percent and 17 percent for new land development; and between 22 percent and 28 percent for rehabilitation. The lowest rate of return (9 percent) applies to the two new development schemes in Abyan Governorate. This rate of return reflects the relatively difficult soil and water conditions in the Governorate. The two sites have been retained in the project because of the extreme problem of poverty in the area and the lack of alternative economic activities that could be developed. Nonetheless, the development at one site (Khabt Al-Asloom) will be phased in order to assess the water resources situation, and a decision will be taken on whether to develop the whole of the scheme at the time of the Mid-Term Review. Annex 3 Page 8 of 20
Table2: Land DevelopmentComponent - CostBenefit Analysis Summary
Economic Financial
Net Present Value @10% (US$ millions)
1. New Land Developnent Hadramawt 0.2 0.3 Shabwa 0.3 0.3 Abyan 0.0 0.2 2. Rehabilitation Al-RududState Farm 0.2 0.2 El-SuwariState Farm 0.2 0.3 Meifa-HajrState Farm 0.3 0.4
Rate of Return (percent)
1. New Land Development Hadramnawt 13.5 15.6 Shabwa 16.6 24.7 Abyan 10.0 15.0 2. Rehabilitation Al-RududState Farm 28.2 58.1 El-SuwariState Farm 23.5 45.8 Meifa-HajrState Farm 21.2 39.9
26. Risks-Project Complexity. One of the lessons from IDA lending experiencehas been that project design shouldbe as simple as possible. The sensitivityanalysis shows the possible impact of projectcomplexity leading to delays and cost increases(Scenario # 2 in the Sensitivity Analysis),and projectdesign therefore focused on maintainingas simplea designas is consistent with achievingproject objectivesand on ensuringworkable management arrangements. During preappraisal and appraisal, components of the proposed project were reduced (the fisheries component)or eliminated(the proposedtraditional building component) and the resulting project has, in fact, a simple structureand a manageableimplementation strategy. The key features are: communitydialogue and involvementas the unifyingmechanism for projectactivities; the business approachto projectmanagement; and implementationthrough contractors under supervisionrather than by a heavy in-house capacity. Although the project is spread geographicallyacross five separatedregions, this is nonethelessa viable project area as the project intervenes in a finite number of communities(40) and staff are mandatedto be highly mobile and to use all means of communication(including the recently reintroducedcellular telephones,together with fax, radio etc.). The project is thus manageable,provided the PMUis endowedwith the powersand attributes intended. This underlinesthe importanceattached in project design to the characteristicsof the PMU and the need for close followup duringstart up and supervision.
27. Risks-Water Resources. Water scarcity is a major constraint in Yemen, and the economicconsequences on the projectif water were to be insufficientor if pumpingcosts were to increaseare very striking(see Scenarios # 3 and 4 in the SensitivityAnalysis). Therefore,close attention was paid to the issue throughoutthe preparationand appraisalprocess. Availabilityof sustainablewater has been a prime factor in determiningthe sites whichhave been adoptedfor land Annex 3 Page 9 of 20 development. During identification and preparation, site investigations were carried out and the large number of existing studies of water resources and data collected by public agencies were analyzed, including the nationwide Water Resources Assessment of Yemen (General Departrnent of Hydrogeology, with Netherlands Government aid), the survey of Wadi Hadramawt resources (Murdoch McDonald, IDA-financed) and numerous local and regional surveys. As a result, Lahej governorate was excluded from land development activities and only limited areas were selected in Abyan and Shabwa. Further work was done at appraisal, when the mission included a hydrogeologist. Subsequent work published on Hadramawt from a Canadian consultant study (KOMEX) confirms the adequacy of sustainable water in that area. Based on these existing studies, new field work and expert opinion, sites have only been included where extraction of water is sustainable. Proposed development of water resources under the project has been discussed with the National Water Resources Authority (NWRA), which is responsible for approving water resource uses. In addition, support is being provided under this and other projects for water monitoring and management. Assurances were obtained during negotiations that Government (through NWRA) would: (i) prepare a plan to control groundwater development in the project areas and limit abstraction of each aquifer to those recommended by the available hydrological studies and submit it to IDA by December 31, 1998 and (ii) submit to IDA by January 31 of each year a annual report on groundwater monitoring and assessment for each of the project areas. Other measures are discussed below in the section on environment.
28. Risks-Land Tenure. In the fluid conditions that prevailed in the southem govemorates after unification and the civil war of 1994, there were many land claims. Notwithstanding the multiple precautions taken during project preparation to deal with claims, and to drop sites where title was seriously contested, under the Constitution of Yemen, citizens are always entitled to lodge claims, however speculative. The sensitivity analysis carried out on the project rate of return shows that if problems over land tenure were to reduce the number of farms in service (Scenarios #5 in the Sensitivity Analysis), project viability would be at risk. However, this risk has been minimized by the actions of Government in clearing claims and asserting and assigning freehold title, and also by the community validation procedure followed to select beneficiaries. This process has gone as far as possible to reduce the risk that further claims are made on the lands once allocated, as there is both a formal declaration and assignment of a clean title underwritten by govermment and a community commitment to the agreed distribution. Two further steps have been built in to ensure that no claims could be made on land once developed. First, the sites would be demarcated, further announcements made in the newspapers, and any resulting claims would be adjudicated before the tender for development is launched. Second, Govemment would grant freehold title on plots to beneficiaries before land is developed. 29. Risks-Farm Productivity. As beneficiaries receiving land are poor, they may be risk averse and also have problems of access to investment and working capital. In addition, there is a risk that markets may not be steady or able to absorb output, particularly high value produce. These risks could threaten the economic justification of the project (as shown by Scenario # 6 in the Sensitivity Analysis). These risks would be avoided by the emphasis placed on support to farmers in the early years of farming to provide training, access to inputs and credit. The high grade contract extension services would help farmers to prepare professional business plans matching produce to markets, and would ease farner access to bank financing. This risk also reinforced the case for farmers to share in the costs, in order to ensure that they have the incentive to earn the maximum possible return from their farming. Finally, the allocation of land to beneficiaries on a freehold basis would both increase farmer incentives and ease access to credit. Annex 3 Page IO of 20
30. Sensitivity Analysis. The sensitivities modeled correspond to the risks discussed above. The analysis has been carried out only on the land development component as: (i) this is the largest component subject to cost benefit analysis; (ii) the risks impact predominantly on this component; and (iii) some of the Base Case EIRRs for this component are close to or at the cut off point. The risks modeled are:
Table 3: SensitivityAnalysis - Land DevelopmentComponent
Scenario Descriptionof Risk Modeled EIRR range
- Base case 9-28%
#1 Divergenceof 5% p.a. between official and market exchange rates negative- 17% (macroeconomicrisk)
#2 Civilworks costs increaseby 30% (projectcomplexity) 4 - 24%
# 3 Crop benefitsdecrease by 25% (waterresources risk) negative- 18%
# 4 Pumpingcosts increaseby 50%(water resourcesrisk) 2 -21%
# 5 Feddansgrown decreasedby 20%(land tenurerisk) 5 - 23%
# 6 Cropping intensity reaches 1.0 only after five years (farm 9-28% productivityrisk)
The results of the sensitivity analysis show that for all but one of the risks modeled, some of the land development component EIRRs would drop below 10 percent. This underlines the importance of: (i) the mitigating and risk-avoiding measures that have been built into the project and which are discussed above; and (ii) the need for close monitoring of all parameters throughout implementation (see Section K below for details).
31. Switching values were also calculated for the two areas showing the lowest predicted economic returns (Hadramawt and Abyan). The results, illustrated in Table 4 below, amplify the discussion of the previous paragraph and those of the ICRs of previous IDA experience examined for this project-achieving the predicted crop intensities and benefit streams will be a key ingredient to achieving the project's development objectives. Thus, these two parameters will be closely monitored during supervision (see full discussion at Section K).
Table 4: SwitchingValues for Two Areas in the LandDevelopment Component
ParameterAdjusted Hadramawt Abyan Year I crop intensitywould have to decreaseby 54 <1 what percentage? Per capita income in the WithoutProject Scenario would have to increaseby what percentage? >4,000 <1 Crop benefits would have to decrease by what 6 <1 percentage? I _
32. Transfer Payments. For each of the Land Development sub-components, a distribution of the net present value of the economic benefits and costs was made between the beneficiaries Annex 3 Page 11 of 20
(farmers) and the government. The results are shown in Table 10 at the end of this annex. As illustrated, the overall economic benefit of this component is just over YR 1.0 billion. The amount accruing to the farmers exceeds this amount by some YR 737 million, reflecting the net balance of input subsidies and below-market wheat farm gate prices. From this analysis, we confirm that the intended beneficiaries well targeted.
Off-Farm Income Development Component
33. The component would comprise three sets of activities to provide assistance to poor people to set up or develop very small or small businesses or to acquire the technical skills training needed to find remunerative employment. The interest of the target group to take up these opportunities has been established through the participatory preparation process. The component would comprise three sets of activities: (i) livestock development - training and equipment in animal health and care to about 500 poor villagers, at least half of them women, to enable them to set up as simple animal health providers ("paraveterinarians") - this activity has been successfully piloted by a GTZ-financed project in the southern governorates; (ii) fishing development - training and equipment of about 280 new entrants to the profitable fisheries business on the south coast; and (iii) promotion of other revenue-earning services and micro- enterprise. This activity would provide assistance to: (i) establish start-up micro and small enterprises' (MSEs); (ii) assist already existing MSEs; and (iii) provide technical skills training in areas where employment opportunities exist.
34. Livestock. For the livestock activity the benefits are expected to be substantial in relation to the costs; appraisal estimates are that training of a paravet should create the ability to generate an additional income of US$500-1,000/annum. However, to present a conservative case, the benefit stream for this component is based on estimated income per paravet of only US$750, and it has been assumed that only 50 percent of those trained will carry on this profession. The without project model is the same as the Land Development component, i.e., that beneficiaries are assumed to be currently employed in activities that result in a household poverty line income on a per capita basis. The economic net present value for livestock is YR 36 million, and economic internal rate of return is expected to be 20 percent. A switching value analysis was performed on the estimated income and number of people that carry on in the profession. As shown in Table 5 below, the estimated annual income would have to fall below US$ 585, or the number of people remaining in the profession would have to decrease by another 50, before the NPV reached zero.
A commondefinition of MSEs includesa wide range of enterprises(services, transport, agriculture, manufacturing)ranging from part time, seasonalactivities of a singleperson to small,formal enterprisesemploying several non-family members. Annex 3 Page 12 of 20 Table 5: Switching Values for Livestock sub-Component
ParameterAdjusted
Thedecrease in estimatedannual income would have to 22 be whatpercent?
the decreasein thenumber of peopleremaining in the 50 professionwould have to be what?
35. No analysis of transfer payments was performed because the financial and economic net present values were equal, implying all benefits accrue to the beneficiaries.
36. Fisheries. For the fisheries activity costs include training, school days per diem. apprenticeship fees, boats, motors, gear and operations and maintenance costs. The Base Case scenario assumes that 280 fishermen trained will take up the profession and that all are full-time fishermen by year three of the analysis. It also assumes that each boat (comprised of four fishermen) will be able to catch 26 tons of fish/boat and that YR30,000 is the average per ton price for their catch. These numbers are based on experience under the current IDA-financed Fisheries IV Project and are considered by IDA fishery experts to be conservative assumptions. The without project model is the same as that described above for the Land Development Component and Livestock sub-component. For fisheries, the Base Case economic net present value is YR161 million and the economic internal rate of return is expected to be about 180 percent.
37. Table 6 illustrates that economic rates of return for this sub-component are quite robust. Of the four sensitivity analyses perforned, the EIRR was never found to be below 40 percent. Switching value analysis shows that an about 85 percent reduction in either the price per ton or tons caught per year would be needed to bring the economic net present value to zero.
Table 6: SensitivityAnalysis and SwitchingValues for FisheriesSub-Component
Scenario DescriptionofRisk Modeled EcononmcNPV ERR (YRMillions) (%9) - BaseCase 161.0 179.8 #1 Priceper ton of fishdecreases from YR 30,000 to YR10,000 35.0 43.5 #2 Tonscaught annually per boat decreases from 28 to 14tons 66.6 73.9 #3 It takes6 years(instead of 2) to get allstudents into full-time fishing 39.1 56.5 #4 Only140 (vs. 280) students remain in fishing 66.7 78.2 Switching Analysis Percen a Priceper ton of fish would have to decreaseby what? 85 b Tonslanded annually would have to decreaseby what? 85
38. No analysis of transfer payments was performed because the financial net present value was with two percent of the economic net present value, thereby demonstrating that almost all of the benefits wili go to the target population. Annex 3 Page 13 of 20
39. Promotion of other revenue earning services and microenterprise activity. This sub- component could not be yet analyzed using the cost-benefit methodology because the specific activities financed have yet to be identified. However, the project will require the following parameters be observed. First, a least-cost approach has been followed in setting up project implementation arrangements for this component. In order to avoid duplication of expensive staff capacity building, the project will leverage its resources with those of the Social Fund for Development (SFD, providing microfinance expertise in building sustainable microfinance institutions) and the Small Enterprise Development Unit (SEDU, providing expertise in small enterprise finance lending) in order to build local institutional capacity. Similarly, the project will work with Vocational Training Centers (VTCs) to provide technical skills training to project clients and to obtain additional leverage through the investments of IDA and GTZ in building the capacity of these institutions. Project apprenticeships and short-term training workshops will be done in local communities and in group situations thereby reducing costs.
40. Second, support to small enterprise development will be subject to financial analysis and to criteria for maximum loan size and entrepreneur contribution. Maximum loan size per permanent small enterprise job created, as well as expected entrepreneur contributions and maximum default by type of entrepreneurial activity are given in Table 7.
Table 7: Small Enterprise Subprojects
Maximum Loan Size per Job Contribution of Maximum Loan Created Entrepreneur DefaultRate US$ % % Commerceand Trade 2,000 25% 10% Agro-relatedProcessing 3,000 30% 10% Workshops(Electrical/Mechanical/Other) 4,000 25% 15% Services 2,000 20% 10% Textile/Apparel 2,000 20% 10%
41. Third, the microfinance pilot would use financial sustainability criteria, with a baseline expectation of financial viability for the apex organization within three years of inception. It will also require a simplified financial analysis (without the use of conversion factors or a without project element) be used to screen projects, with a threshold discount rate of 10 percent required.
Community Development
42. The project will support a variety of subprojects, ranging from community development to institutional development to small enterprise development. The approach to economic analysis differs from subproject to subproject. It is difficult to calculate an ERR for the overall project, given the difficulty of quantifying benefits of some of the activities supported. As far as possible, the project approach has been aligned with that of the Social Fund (SFD) in order to ensure compatible interventions. The approach for community development subprojects will use an ERR approach with cut-off of 10 percent for economically productive projects. For infrastructure projects, the project will employ a maximum unit cost per beneficiary criterion. Subprojects with costs exceeding this maximum unit cost will not be financed. Table 8 shows Annex 3 Page 14 of 20 the maximum unit cost per beneficiary for various types of community development activity. It also shows the expected labor content for civil works and the expected level of community contribution. These expectations will be reviewed annually to incorporate experience gained in field operations.
Table 8: Economicand Financial Criteria for Community DevelopmentSubprojects
Expected Maximum Cost Minimum Labor Community per Beneficiary Content Contribution USS % % Rural watersupply 25 N/A 10%-20% StreetPaving 10 50% 5%0-0% Markets 25 30% 100/o-20% Health (investmnentcost per beneficiary) 25 30% 50/o10% Education(investment cost per student) 300 30% 5%-10% Education(long-term recurrent cost per student/year) 40 N/A 250/o-75% Solidwaste management 25 40% 100/&20%
G. Fiscal Impact and Cost Recovery
43. Fiscal Impact. Over the six year implementation period, Government will have to provide about US$ 3.4 million in counterpart funds, an average of US$600,000 per year. This level is about 2 percent of the total capital budget for the agriculture sector, and a fraction of 1 percent of the total investment budget of the nation. It will not pose any overall fiscal problem. There will be no recurrent cost funding required from the government under the project, and at the end of the project the project unit will be dissolved.
44. Cost Recovery. Beneficiaries would contribute about US$4.1 million (about 11 percent of project costs) to cover half the cost of irrigated farn establishment, pumps and engines for irrigation. The quantum to be recovered has been set at the level that is affordable by the averagely performing farmer on the lowest yielding project land site (the worst case scenario). During the work of the Committee for the Selection of Beneficiaries, the cost recovery provision proved a practical means of identifying able and suitable candidates, as only those with the necessary management skills were prepared to accept land on these terms. Capital repayments will be made over fifteen years with three years grace from start of the farming operation. The funds will be paid to community associations for use in community development activities.
45. Repayment obligations were designed not to exceed 15 percent, on average, of farm household incomes. This amount was considered by the project team, local advisers and farmers to be affordable and sustainable over the fifteen-year repayment period. The project's Procedures Manual also provides guidelines if a farm family has trouble making its payments, including the provision for counseling and the setting up of extended payment plans and/or limited duration grace periods after year three. Annex 3 Page 15 of 20 H. DesignAlternatives Considered
46. The project design was the result of an extended period of consultation with all stakeholders, beginning with the initial Participatory Needs Assessment and continuing throughoutthe preparation and appraisal period. During this process a number of alternative designelements were considered,and not retained. The principalamongst them are:
(a) relocationof the dispossessed- because of the constrainedresource situation in the areas in which project beneficiarieslive, the possibility of relocation was considered early in the project design phase. However, this was not retained, first and foremost because there is a very high cost attached to resettlement, requiring complete infrastructure in addition to investment in economic activities before the population can be brought back to their original income level. Best practice shows that under almost all circumstancesin situ poverty alleviation is lower cost. If resettlement had been adopted, the project beneficiarieswould have been far fewer within the available financial resources. Second, throughout the preparation process, and especially during the Participatory Needs Assessment, Government and beneficiaries alike clearly expressed a preference for locally-basedpoverty alleviating investmentsrather than out-migration. Government pointed out that economic opportunities in towns were hardly better than in the villages of origin, and most of Yemen's towns are suffering from rapid and uncontrolledexpansion and from growing physical constraints, notably in water supply and sanitation. Finally, in the difficult social situationprevailing in the southern governoratesbefore and after the civil war, the movementof large numbersof people to new areas would have exacerbatedsocial tensions.
(b) no land development - because of the comparatively high cost of land development,the possibilityof a project without land was considered. This was rejected by Governmentand IDA because:(i) the target populationwere farmers and knew best how to farm; (ii) the processof consultingbeneficiaries threw up an overwhelmingpreference for land; (iii) despite high cost, land development offered the most assured and stable return of any component (and it had an acceptable rate of return); and (iv) iand development was seen by both Governmentand communitiesas an "anchor"that held togetherthe other project interventions.
(c) developmentof private lands and their transferto beneficiaries- because many of the returning owners were not interested in farming, the preparation and appraisal missions examined the possibility that the project might invest in rehabilitationof private lands and their transfer to beneficiaries. However,this proved impracticableas it would have involvedeither Governmentpurchasing the land fromthe owners- whichwas againstpublic policy - or a long term mortgage- style arrangementwhereby beneficiarieswould have committed themselves to capital repaymentsto owners over an extendedperiod before they receivedclear title. As the term of this arrangementwould have gonewell beyondthe life of the IDA Credit, IDA and Government considered that the guarantees that the landownerswould honourtheir side of the bargainwere inadequate. Annex 3 Page 16 of 20 (d) inplementation of the off-farm and community developnent components through another agency - at the time of appraisal, the new Social Fund for Development was being set up, and the mission reviewed the feasibility that implementation of these two components could be transferred to the Social Fund which had similar objectives and activities. However, the management of the Social Fund decided against this option as it was itself an embryonic institution and was unwilling to take on extensive field commitments. Instead, it was agreed that the two projects would cooperate in fields of mutual interest, and that the Social Fund would implement one pilot activity for the Southern Governorates Project (microfmance pilot) as this was a field in which the Social Fund had competence and experience.
(e) inclusion of a "traditional building skills component" - there is a long history of development of the "built environment" in the project area and parts of this environment represent a precious cultural heritage. It was proposed, therefore, to include a traditional building skills component in the project, as this was felt to be a possible area of economic development. However, there was a high risk that there would not be an adequate market response as the component was designed. In particular, it was not clear what the constraints to "market" development of the subsector were. This led to a low and insecure rate of return in the first round of economic analysis. It was therefore decided to drop the component as a free- standing activity. Instead, subsector analysis will be carried out under the off-farm income development component. The bottlenecks will thus be identified to what should, in principle, be a thriving economic sector in several parts of the project area.
1. BeneficiaryAssessment and Poverty Impact
47. The objective of the project is to relieve rural poverty, with a particular focus on the pockets of extreme poverty comprising those families dispossessed as a result of the 1990 changes in land tenure. The focus of project preparationright from the start was, therefore,on identifyingthe target population, on defining their characteristicsand needs, and on including them as full partners in project design and implementation. This process began with the Participatory Needs Assessment (PNA) conducted by IDA in 1994 as part of project identification. The PNA found that income losses for the dispossessedaveraged 41 percent. The dispossessed tenants were (and are) living below the poverty line; the PNA found that the majority of the dispossessed (86 percent) are living in absolute poverty (less than US$65, Rls 8,775 per person per year); and the balance are below the general poverty line (US$85, Rls 1 1,475per person per year).
48. The existenceof this well-definedpoverty target group makes it relativelyeasy to select project beneficiaries and to know that they are poor. Records exist for all project areas as to who are the dispossessed,and these are easy to validate through communitydialogue. It is expected that about 75 percent of project beneficiarieswill come from this group. The balance will be selectedon the basis of communitydialogue.
49. In order to ensure that the project meets its objectives of poverty alleviation,a financial analysis was carried out to evaluate the ability of the land allocationof 5 feddans to sustain the livelihood of farm families and to bring them sustainably above the poverty lines. Cash income Annex 3 Page 17 of 20
from a typical 5 feddan farm will ensure that the target group is lifted out of poverty - farm incomes per person are of the order of US$ 400, well above the poverty line of US$ 85. Similarly, the expected cash incomes from the livestock component (US$250 per person) and from the fisheries component (up to US$ 450 per person) are well above the poverty line
Table 9: - Sample Forecast Farm Incomes under the Project
l___ USD_ YR Hadramawt 2,689 362,990 Meifa 3,687 497,761 Abyan 2,501 337,657 Average 2,806 399,469 Per person 401 57,067
J. Environmental Aspects
50. The project carries a number of moderate environmental risks, especially with respect to water management, sustainable land use, and sustainable farming practices.
Water Management
51. The availability of groundwater is a major constraint in Yemen and groundwater availability has been a major factor in designing the land development component. In addition to the safeguards discussed above, project development would be phased at one site (Khabt al Asloom), in order to assess the water situation before completing the scheme. No groundwater development would take place in coastal Hadramawt or in Lahej where water resources are limited and mainly fulfilling urban demand. In addition, in order to assess water use and flow, and to encourage farmers in sustainable water use, the project would require and finance water meters on the wells drilled under the project.
52. The drilling of deeper wells brings a risk of contamination of lower aquifers through leakage from surface water or the higher aquifer. The risk would be mitigated through careful site selection and through requiring the sealing off the upper aquifers by concrete/grout casing through the upper aquifers and stainless steel casing. Well design would be approved by IDA, and execution of well drilling, casing and welding would be carried out by licensed drilling companies and carefully supervised by project staff, govemment (including local water monitoring units) and international consultants.
Sustainable Land Use
53. The major environmental risks of farming at the southern govemorates are salination of farm land and wind erosion. In many areas, the salt levels in well water are moderate to critical and do not allow leaching. Sites where serious risks of salination cannot be mitigated, have therefore been excluded from the project. In general, the risk would be managed through training of farmers in irrigation management and in leaching practices. Wind erosion would be reduced through careful monitoring of new constructions in irrigated fields and through planting wind- breaks. Annex3 Page 18 of 20
Sustainable Farming Practices
54. High productivity farming in the arid conditions of the southern governorates requires careful on-farm husbandry, particularly soil and water management. The risk of sub-optimal farming practices would be mitigated by training, both through extension and on-site training for farmer groups. The project would not finance pesticides and would encourage the use of integrated pest management techniques. Efforts to enhance animal health and care would increase efficiency of production and decrease non-productive use of grazing and water resources.
Biodiversity
55. The project would have a minimal effect on biodiversity. The emphasis on traditional practices in field school- and paravet training, as well as on bee-keeping as an off-farm activity, would increase appreciation for plant and animal biodiversity, and would enhance the respect for traditional knowledge systems.
56. The fisheries component would not affect the threatened coastal lobster population. Increased coastal fishing, by providing and equipping a limited number of boats, is not expected to have a measurable impact on the small (sardine, mackerel) and large pelagic (tuna, sharks, etc.) fish population.
Archeological Sites
57. The project is not expected to provide a risk to archeological sites. One proposed irrigation site was in fact eliminated as it threatened an archaeological site, and others were dropped to avoid affecting the water table in the cities in the region. Water use near or upstream of these sites would be monitored through the water meters installed on newly drilled wells. It is expected that there may be some positive impact on the Naqb al Hajr historic site, by better land management adjacent to the site.
K. Monitoring, Supervision and Evaluation
Monitoring of Risks 58. Risks have been thoroughly analyzed and minimizing, avoiding and mitigating measures have been deployed. Monitoring of all critical assumptions and risks would be continuous throughout the project period (through project monitoring and evaluation, supervision missions, mid-term review, independent evaluation). In the event that these or other risks nonetheless threaten implementation, and the government would not implement agreed upon solutions, then remedies would be employed, going from restructuring to cancellation. Monitoring of Implementation and Impact
59. Monitoring of project implementation and impact would be continuous throughout the project. The basis would be the key performance indicators developed in the design summary (Annex 1), which were agreed at negotiations. The detailed monitoring framework would be designed and supervised by the monitoring and evaluation specialist. The finance manager and the M&E specialist would be jointly responsible for the Management Information System (MIS). Annex 3 Page 19 of 20
Monitoring by the beneficiary target groups of project execution and impact would be built in from the start, involving at least one formal meeting a year in each community.
60. In order to track the impact of the project on incomes and welfare at the household level, a limited number of families would be monitored regularly throughout the project by the M&E system set up by the project's M&E Specialist.
Supervision
61. A project launch workshop would be held shortly before the expected date of effectiveness. This would provide "just in time" training in procurement, disbursement, accounting, auditing and management procedures. Thereafter, regular IDA supervision would take place every six months, according to a supervision plan that was worked out at appraisal (see Annex 10). Supervision would be led from the Yemen Resident Mission, with support from headquarters. This will allow close and frequent follow-up, particularly in the initial stages of the project. Supervision resources required are estimated at 25 weeks in FY98, and thereafter 18 weeks annually, with a special provision of additional resources in FY 2001 to conduct the proposed mid-term review. At least once a year, supervision missions would contain a financial analyst to verify procedures and give some hands-on training. At least once a year supervision missions would contain an economist to follow up on the macroeconomic parameters and to measure to what extent project implementation and costs and benefits were in line with forecasts.
Mid-Term Review
62. In view of its novel implementation methodology and to allow for redesign and adjustment of project inputs and components, a mid-term review should take place late in the third year of the project (target date - November 2000). It would involve a social scientist specialized in participatory approaches, an economist, specialists in irrigation, finance, project management, off-farm/SME, and others according to need. The mid-term evaluation would examine the status of project execution and impact, and follow up on the overall framework and risk environment. It would also canvas the opinions of a representative sample of beneficiaries. As necessary, it would propose restructuring or reallocation of funds and propose changes for the continuation of the project.
Impact Evaluation
63. Impact evaluation by an independent monitoring team would be conducted towards the end of the project implementation period. It would be appropriate to repeat the exercise about eight or nine years after project start up, i.e., two or three years after completion. The basic reference would be the development objectives and the related performance indicators listed in the design summary. Ways in which the second impact evaluation would be conducted and financed (the evaluation would be well after the IDA Credit had closed) would be examined during implementation and decided at the time of the first evaluation.
Completion Report
64. Not later than six months after the completion of the project, the Government would submit to IDA a Project Completion Report summarizing the achievements of the project and its impact vis-a-vis objectives. Annex 3 Page 20 of 20
Table 10: Distributionof Costs and Benefits Land DevelopmentComponent (YR Millions) Hadramawt Farmers Gov't. Society Al-rudud Farmers Gov't. Society Benefits 3.285 14 3.299 Benefits 680 4 684
Costs _ Costs Cropping 1,768 89 1.856 Cropping 390 23 413 Capital Investment 0 1,033 1,033 CapitalInvestment 0 72 72 Land Allocation 0 7 7 Land Allocation 0 1 1 Crop Development 0 97 97 _ Crop Development 0 10 10 Irrigation Development 0 49 49 _ Irrigation Development 0 10 10 PMU 0 45 45 PMU 0 9 9 Transfers from Gov't. 1,189 -1.189 0 Transfers from Gov't. 63 -63 0 Total Costs 2,957 130 3,087 _ Total Costs 453 62 515 Net Benefit 329 -117 212 Net Benefit 227 -59 169
Shabwa Farmers Gov't. Society Suwari Farmers Gov't. Society Benefits 2,111 0 2,111 Benefits 916 5 921
Costs Costs Cropping 998 53 1.051 Cropping 526 31 556 Capital Investment 0 730 730 Capital Investment 0 151 151 Land Allocation 0 5 5 Land Allocation 0 2 2 Crop Development 0 28 28 Crop Development 0 14 14 Irrigation Development 0 15 15 Irrigation Development 0 10 10 PMU 0 42 42 _ PMU 0 9 9 Transfers from Gov't. 719 -719 0 Transfers from Gov't. 132 -132 0 Total Costs 1,717 155 1,872_ Total Costs 658 84 742 Net Benefit 394 -155 239 Net Benefit 258 -79 179
Abyan Farmers Gov't. society Maifa Farmers Gov't. Society Benefits 2,751 0 2,751 _ Benefits 1,400 8 1,408
Costs Costs Cropping 1.748 83 1,831_ Cropping 805 46 851 Capital Investment 0 847 847 _ CapitalInvestment 0 229 229 Land Allocation 0 5 5 -Land Allocation 0 3 3 Crop Development 0 0 0 Crop Development 0 23 23 Irrigation Development 0 29 29 Irrigation Development 0 22 22 PMU 0 39 39 _ PMU 0 20 20 Transfers from Gov't. 802 -802 0 Transfers from Gov't. 208 -208 0 Total Costs 2,550 202 2,752 _ Total Costs 1,013 134 1,147 Net Benefit 201 -202 -1 Net Benefit 387 -126 261
l______I_ Land Development Total 1,7 9 6 1 -737! 1,059 REPUBLIC OF YEMEN
SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
PROCUREMENT PLAN
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_ ,,______. _ _ Pounenertof -Gdods _ _ id- I Pumpeas(pSmlpsIoIs) ICB Nw98 Dec98 Jan9goMar 99 Apr99 May99 Jun99 oP9on Bld-2Etchial Eequlp,mt ICB Nov9go Dec98 JanS9 lMr99 Ap 99 MayPs Jun99 0199on Bidt3 S rams . ICB N1ov96 Dec9 Jan99g MA99 Ap(9 May90 Jun999 BJ99en
Pocureeidntof Veileks A EquIpment . . .__ Did-1-Vehk" b Ioftnnyes lC Nowv97 Dec 7 Ju 98 mar96 Me 98 Ap 989 r e oan REPUBLIC OF YEMEN
SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
PROCUREMENT PLAN
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0) Annex 5 Page 1 of 2
REPUBLICOF YEMEN
SOUTHERNGOVERNORATES RURAL DEVELOPMENT PROJECT
IMPLEMENTATIONAT THLECOMMUNITY LEVEL
1. This is a participatoryproject: the designhas been drawn up in a partnershipbetween communities,target group individuals,the consultant/Governmentpreparation team, and IDA. Participationand partnershipare also the keynotesof implementation,where they would lead throughdialogue to the identificationand implementationof a program of activitiesthat are prioritiesfor the communityin its development,and for the alleviationof the poverty of the poorestmembers of the community. This program is designedto be the essentialunifying mechanismthat would make the project's several componentsand geographicalareas into an implementableprogram.
2. In each of the 40 communitieswith which the project would work, communitiesand individualtarget group memberswould have to make choices about which componentscan and shouldbe implementedin their community. Project interventionswould be based on a participatoryapproach throughout the project area.
3. Participationhas been a fundamentaltheme of this project since the earliest days of design,including the PNA, the preparationand appraisalmissions and the work of the Committeefor the Selectionof Beneficiaries(Chapter II). Differentforms of participatoryrural appraisalshave been implementedduring preparationand similar thoughmore detailed methods would be used during implementation.
4. During implementation,willingness to cooperatewith the project on a participatorybasis will be an essentialcriterion in selectionof communities. With respect to land development, those communitiescovered by the work of the Committeefor the Selectionof Beneficiaries have alreadyagreed to a participatorymethodology. Any communitywhich meets other criteria but is unwillingto join in the participatoryprocess would not be includedin project activities.
5. The participatoryprocess would be initiatedthrough the selectionof communities. Duringthe first year of the project, field staff would first identifythe communitieswhich have high concentrationsof poor dispossessedfarmers and other poor people by studyingthe lists of dispossessedand by consultingcommunities. Communitiesfilling the outline criteria would be approachedand separatemeetings with men and women held in the followingsequence:
- a first meetingwould be arrangedto includegroups of up to 50 people (in larger communitiesor in separatehamlets, it would be necessaryto hold this meetingmore than once). Duringthis meeting,project staff would introducethe project, its methodologyand criteria for inclusion,and its proposed activities,and answer any questionswhich mightarise;
- a secondmeeting would be held at least one week later to discuss issuesbrought up by the members of the communityand to discusswhether; the communitymeets project criteria and would like to participatein the project; Annex 5 Page 2 of 2
where necessary,further meetings would be held to create a committeein the community(or to agree on the use of an existingcommittee) to be the prime interfaceof project staff (either a communitycommittee or, where land is being allocated- a water user associationWUA). In the case of a communitycommittee, the project would interveneas necessaryto ensure that this committeeis representativeof all social groupsand strata living in or usingthe area;
- throughthe meetingsand throughdiscussions with subgroupsof villagersand committeemembers, a programof projectrelated activitieswould be established (agriculturalextension, environmental awareness interventions, paraveterinarians, proposals of candidatesfor off-farmincome training, training activitiesfor women, etc.). The use of the communitydevelopment fund (whereavailable) would be discussedin a series of meetingsuntil it was firmly establishedthat a particular investmentwas the most effectiveform of investmentsupport to the community,that it met project economic,financial and sustainabilitycriteria, that adequate participationand cost-sharingwere forthcoming, and that it would benefitpeople equitably. The programwould be establishedon an annual basis to ensure a coherentplan in each community,but it would be flexible and subjectto modificationsby negotiationsbetween the project and the community;and
- throughoutthe project period, regular formal and informalmeetings would be held betweenproject field staff and communitymembers to jointly supervise,monitor and manageproject interventions. Communitymembers would keep records of the work of contractors,be they builders or extensionagents and they would therefore be the first line of monitoringof project investments.Training will be providedfor this purpose.
6. On the project side,the dialoguewould be led by participatorydevelopment coordinators (PDCs), under the supervisionof the chief technicaladvisor and with other back-upand technicalsupport as needed. In the first six months of the project,training of PMU staff and furthertesting of the methodologywould be carriedout. By the end of the first year of the project,it is expectedthat about five communityprograms would have been agreed.
7. A GTZ-financedproject "InnovationDevelopment in the AgricultureSector" (IDAS) has been testingparticipatory methodology in two of the governoratesconcerned (Lahej, Abyan) and it has been agreedthat the two projectswill cooperatein methodology,training and programming. Annex 6 Page 1 of 2
REPUBLIC OF YEMEN
SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
PROJECT COSTS AND FINANCING
A. Project Costs
1. The total project costs are estimated at US$45.8 million including taxes and duties. Base costs are US$40.4 million and contingencies are US$5.4 million (13 percent of base costs). The foreign exchange component is US$28.5 million or 62 percent of total project costs. Project costs are estimated at March 1997 prices. The breakdown of costs by component is shown in Table 2. Detailed cost tables are presented in Working Paper No. 20. Physical contingencies are estimated at 8 percent of base costs and price contingencies were calculated on the following domestic and international inflation rates.
Table 1: Annual Estimated Inflation Rate (%)
Year International Domestic Exchange Inflation rate Inflation Rate (YRIUS$) 1997 3.00 5.5 135.02 1998 2.80 4.1 141.56 1999 3.05 3.7 145.72 2000 3.05 3.1 149.73 2001-2 3.14 3.1 149.73
FiguresBased on MN2CO,estimates - January 7, 1997.
Table 2: Project Cost Summary (in US$ million)
°/e °%Total Foreign Base Local Foreign Total Local Foreign Total Exchange Cost (Rials '000) ------US$ '000)-
Land Allocation and Development Land Allocation 26,447 2,962 29,440 196 22 218 10 1 Land Development 939,346 1,642,735 2,582,081 6,957 12,167 19,124 64 47 Crop Development 390,125 353,167 743,291 2,889 2,616 5,505 48 14 Subtotal 1,355,947 1,998,864 3,354,812 10,043 14,804 24,847 60 61 Off-Farm Income Development Livestock 56,310 58,333 114,643 417 432 849 51 2 Fisheries 29,542 13,796 43,338 220 219 102 32 1 Other Revenue Earning Enterprises 276,812 242,434 519,246 2,050 1,796 3,846 47 10 Subtotal 362,664 314,563 677,227 2,686 2,330 5,016 46 12 Community Development 244,646 677,625 922,271 1,812 5,019 6,831 73 17 Subtotal 244,646 677,625 922,271 1,812 5,019 6,831 73 17 FutureProjects Preparation - 132,117 132,117 - 979 979 100 2 PMU 143,439 227,234 370,673 1,063 1,683 2,745 61 7 TotalBaseline Costs 2,106,696 3,350,404 5,457,100 15,603 24,814 40,417 61 100 Physical Contingencies 174,087 278,052 452,139 1,289 2,059 3,349 61 8 Price Contingencies 286,118 579,419 865,537 430 1,629 2,058 79 5 TotalProject Costs 2,566,901 4,207,875 6,774,775 17,322 28,503 45,824 62 113 Annex 6 Page 2 of 2
B. ProposedFinancing Plan
2. The Bank would finance about 54 percentof projectcosts. These would comprise irrigationimprovement, about 50 percentof the crop developmentactivities, funds for sector studyand future projectpreparation activities and the Project ManagementUnit (PMU);IFAD would financethe off-farm activitiesincluding the fisheries, livestock,vocational training, start- up capital and communitydevelopment funds, which total US$ 11.3 million or 25 percentof the total project costs;the beneficiarieswill contribute50 percentof the crop developmentcosts and a portion of the irrigationdevelopment component, which amountsto about 11 percent of the projectcosts; and the governmentwill financethe balance of US$4.4million, or about 10 percentof the project costs.
C. Disbursement Schedule
The project is expectedto be completedin 5 years. The estimateddisbursement schedule is given below:
Table 3: Estimated Disbursement Schedule by Financiers
IFAD IDA Semester Semestral Cumulative % Semestral Cumulative % 1 0 0 0 0 OTO 2 523.75 523.75 5 1739.42 1739.42 7 3 523.75 1047.50 9 1739.42 3478.84 14 4 1377.76 2425.26 22 2867.27 6346.11 26 5 1377.76 3803.02 25 2867.27 9213.38 37 6 1214.38 5017.40 44 4426.75 13640.13 55 7 1214.38 6231.78 55 4426.75 18066.88 73 8 1243.30 7475.08 66 2242.40 20309.28 82 9 1243.30 8718.38 77 2242.40 22551.68 91 10 862.12 9580.50 85 738.57 23290.25 94 11 862.12 10442.62 93 738.57 24028.82 97 12 416.78 10859.40 96 338.58 24367.40 99 13 416.78 11276.18 100 338.58 24705.98 100 Total 100 100 REPUBLIC OF YEMEN
SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
SUMMARY OF STAFF AND EQUIPMENT
-. ______=______.______=______=_ Annex___nne Sunimry of lai Eq,uinentl PoOt Nunt*er Duramn Sbta VeNhicesComputer Uhbib B6 Total Cod Staff Total ___e (PY; Phones DSA Salod Years Cad ______~ . _ Your ______aioa .IOoSIOI ______._____I ProjeclOireotr I 6 I I I IHO 000 24000 6 144000 ._ PsorlcpsRoryDeebpmno Calr 6 5.5 _ I / 5 SF 1500 12000 27.5 330 WeResmorcesEngineer 2 4.5 2 2 2 2 F 410 12000 9 108000 uleEOflier. 1= _ 6-I l 0.5 *_D Ha N100 1440 6 66000 FinanceMmhVnib _.t In gwhb H65 1 01170 Au,aena,ut _ 1 : 2 1 I 00 50I 1440 5 7200 _____ SunlorWIDOlIlew 1 5.5 1 I Ha 500 144a 5.5 79,200 sit MA _1 bS 1 1 0 HO 50 14400 55 .7920D Bu*Nss Devl. Advisors 1 55 1 4 4 4 75 12000 22 2640DI Itntlloenl Pmofesaom ___ .__. CTAJSodooltd 1 4 1 1 . I HQ 4p0 1 0 4 40000i SenorWaterResocesEngw 11 1 1 1 I I HQ 300100O410 3 gulprt-Slaw_. 300000 Jdvens 1; 5:__ 1 3 0 ___ IVa lous 1500 3000 06 198000 Accounant I 1 0.3 .1 0 H PrcummmntOff..er 120 6000 6 36000 1 41 1 0. 0 1 200 6W0 Lhrsn tOfer 4 24000 I 1 1 D Varnus 750 12000o Cleilu(Secreaules 5 6000 _ l2 I 1 0.3 Al HQ 0 30o 12 3600
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REPUBLIC OF YEMEN
SOUTIERN GOVERNORATES RURAL DEVELOPMENT PROJECT
LAND DEVELOPMENT AND IRRIGATION COMPONENT
Proposed Sites for Development
NO. sm XUDI M-A (DISTRICT) AREA (feddans)
WADI BADRAMAUT __ __ 1 Hinen A1-Qatn 235 2 Barwai Al-Qatn 495 3 Boor(West) 1 Seim 225 4 Boor (East) Sciyun 110 6 Sharuf Tarim 60 7 Rudud Tarim 25 8 Al-Sarv Tarim 70 9 Ba'aal Ta-m 140 10 At-larab TarIM 240 11 Oilaer Tanm 40 12 Al-Wasta Tarim 70 13 Ba-Ateer Tarim 60 14 Inat Tarit . 80 15 Bil-Hafidh Tarim 90 16 Dhubai'a SahL 90 17 Ukm-A-Iimu Sali .150. 18 Ohayl Omar. Sah 135 Sub-TotalWadi 2,305 Hadraut .
___ __ SECABW A ______19 Yj Mdfa 500 20 Al Malbooa IMeifi'a Soo Sub-Tdtal Shabwa ABYAN 21 Khabt Al Asloom Ja'r 1.000 22 Al Nana' AhNvar .1.000 Sub-Total Abyan 2,000 ._____ TOTAL 5305
Proposed Rehabilitation of State Farnms
DRAMAWT SF I AI Swairy Tanm - 595 SFP2 Al Rudud Tarim 325 SF 3 Mcifa'a Hajr Meifa'a 960 TOTAL 1,880 Annex 9
REPUBLIC OF YEMEN
SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
NUMBER OF BENEFICIARIES
Direct Beneficiaries
Land Component (9,689 feddans in 5 feddan plots) 1.950
Off-Farm Income Development Paraveterinarians 500 Fisheries 280 Technical Training Men 1,500 Women 3,000 Business Training 1,300 Microfinancial Services 3,000 SME Credit 200 Subsector Beneficiaries 500
Subtotal 8380 Subtotal after adjusting for one beneficiary receiving two types of support, say 6.800 TOTAL AFTER ADJUSTMENT 8_750 Beneficiaries
Community Development Beneficiaries
In the 25 communities not receiving land 15,000 families In the 15 communities receiving land 8,000 families TOTAL 23.000 families Annex 10
REPUBLIC OF YEMEN
SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
SUPERVISION PLAN
Supervision Mission Composition Date Staff Week
1. Launch Workshop and Task Manager, Sociologist, November 14 Initial Supervision Procurement Specialist, 1997 Disbursement Specialist, and Irrigation Engineer
2. First Regular Task Manager, Sociologist, May 1998 9 Supervision Mission Irrigation Engineer, WUA Specialist, Economist, Community Development Specialist, Procurement Specialist, and Financial Analyst
3. Second Regular Task Manager, Sociologist, November 9 Supervision Mission Economist, Irrigation 1998 Engineer, WUA Specialist, and Community Development Specialist
4. Mid-Term Review Task Manager, Sociologist, November 15 Mission Irrigation Engineer, WUA 2000 Specialist, Economist, Community Development Specialist, and Procurement Specialist
5. Two Regular Task Manager, Sociologist, Annually 9 (each) Supervision Missions Irrigation Engineer, WUA 1998-2003 Each Year Specialist, Community Development Specialist, and Economist, Financial Analyst AnnIx
REPUBLIC OF YEMEN
SOUTHERN GOVERNORATES RURAL DEVELOPMENT PROJECT
SELECTED DOCUMENTS AND DATA AVAILABLE IN THE PROJECT FILE
WORKING PAPERS
Working Paper No. 1 Selectionof Project Beneficiaries Working PaperNo. 1a Land Reform WorkingPaper No. 2 Land Survey and Demarcationand Development WorkingPaper No. 3 Land Developmentand Irrigation WorkingPaper No. 4 Water Users Associations WorkingPaper No. 5 Water ManagementPlans, GroundwaterMonitoring and Studies WorkingPaper No. 5a GroundwaterPotential in Hadramawt WorkingPaper No. 6 TechnicalAdvice to Farmers WorkingPaper No. 6a Agriculture Working Paper No. 6b LivestockSector Working PaperNo. 6c Livestock Projects Working PaperNo. 7 Poverty Strategy in the Project Working PaperNo. 7a ParticipatoryApproach and Mechanisms WorkingPaper No. 7b Women's EconomicActivities WorkingPaper No. 7c. Off-Farm Activities WorkingPaper No. 7d Fisheries WorkingPaper No. 7e Collaborationwith SFD WorkingPaper No. 8. CommunityDevelopment WorkingPaper No. 8a EnvironmentalProtection through Communities Working Paper No. 9 ImplementationSchedule Working Paper No. 10 Terms of referencefor Project Staff Working Paper No. 11 Legal Texts Working PaperNo. 18 Financialand EconomicAnalysis Working PaperNo. 18a CroppingPatterns and Farm Budgets Working Paper No. 19 Project Costs and Financing Working PaperNo. 20 Cost Tables Working PaperNo. 21 Annual PovertyLines Working PaperNo. 23 ContractualArrangements for Carrying Out the Project MAP SECTION
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