Document of The World Bank Public Disclosure Authorized

Report No: 259 16-MOR

Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF EURO 25 MILLION (US$26.8 MILLION EQUIVALENT)

TO THE

KINGDOM OF MOROCCO

FOR THE Public Disclosure Authorized RAINFED AGRICULTURE DEVELOPMENT PROJECT

May 15, 2003

Public Disclosure Authorized Water, Environment, Social and Rural Development Department Middle East and North Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective April 18, 2003) CurrencyUnit = MAD MAD 1 = US$O.lO US$1 = MAD9.92

FISCAL YEAR January 1 -- December 31

ABBREVIATIONS AND ACRONYMS

ADS Social Development AgencylAgence de de'veloppement social BAJ Social Priorities ProgramlProgramme des priorite's sociales BD Budget DirectoratelDirection du budget CAS Country Assistance StrategylStrate'gie de coope'ration CCSS Central Comssion for Supervision and Monitoring1 Commission centrale de supervision et de suivi CGP Project Management UnitICellule de gestion du projet CIP Communal Investment PlanlPlan d'investissement communal CIPDR Permanent Interministerial Rural Development Council1 Conseil interministtriel permanent de de'veloppement rural CLMVA Rainfed Agriculture Development Commission1 Commission locale de mise en valeur agricole CMV Agricultural Development CenterlCentre de mise en valeur CPRDR Provincial Core Rural Development Committee1 Comite' provincial restreint pour le de'veloppement rural CT Extension CenterlCentre de travaux CTP Provincial Technical CommitteelComite' technique provincial DAF Land Development DirectoratelDirection des ame'nagementsfonciers DERD Training, Research and Development DirectoratelDirection de 1 'enseignement, de la recherche et du de'veloppement DPA Provincial Agricultural DirectoratelDirection provinciale de l 'agriculture DPAE Planning and Economic Affair Directorate1 Direction de la planif cation et des afaires tconomiques DRH Human Resources DirectoratelDirection des ressources humaines EA Environmental AssessmentlEvaluation environnementale EAM Methodological Support TeamlEquipe d'appui me'thodologique EMP Environmental Management PlanlPlan de gestion de 1 'environnement EPP Participatory Programming TeamlEquipe de programmation participative FDR Rural Development FundFonds de de'veloppement rural FMR Financial Monitoring ReportlRapport de suivifinancier GDP Gross Domestic ProductlProduit national brut GOM Government of MoroccolGouvernement du Maroc INRA National Agricultural Research Institutellnstitut national de la recherche agronomique IBCD Irrigation Based Community Development Prograd Programme de de'veloppement rural inte'gre' centre' sur la PMH IFC International Finance CorporationlSocie'te'financi2re internationale IM Implementation ManuallManuel de proce'dures MAD Moroccan DirhamlDirham marocain MADR Ministry of Agriculture and Rural Development1 MinistPre de l'agriculture et du de'veloppement rural M&E Monitoring and EvaluationlSuivi et e'valuation MOF Ministry of Finance and PrivatizationlMinistPre desfinances et de la privatisation NSC National Steering CommittelComite' national de pilotage NGO Non-governmental OrganizationlOrganisation non-gouvernementale O&M Operation and MaintenancelExploitation et entretien OPA Farmers OrganizationIOrganisation professionnelle agricole ORMVA Regional Agricultural Development Authority/ Office re'gional de mise en valeur agricole PAGER Potable Water ProgradProgramme d'approvisionnement groupe' en eau rurale PAZ Priority Action ZonelZone d'action prioritaire PERG Rural Electrification ProgramlProgramme d'e'lectrification rurale groupie PCLES Drought Emergency ProgramlProgramme de lutte contre les effets de la se'cheresse PMVB Rain fed Development SitelPe'rimPtre de mise en valeur bour PNRR Rural Roads ProgramlProgramme national des routes rurales RADP Rainfed Agriculture Development Project1 Projet de de'veloppment rural inte'gre' de mise en valeur des zones bour RC Rural CommunelCommune rurale SOE Statement of ExpenditureslReleve' de de'penses SA Special AccountlCompte spe'cial SEPS Studies and Monitoring ServiceslSewice des e'tudes et du suivi TGR TreasurylTre'sorerie ge'ne'rale du Royaume UGP Pronvincial Management UnitlUnite' de gestion provinciale

Vice President: Jean-Louis Sarbib Country ManagerDirector: Theodore Ahlers Sector ManagerDirector: Petros Aklilu Task Team LeaderITask Manager: Laurent Msellati

MOROCCO RAINFED AGRICULTURE DEVELOPMENT PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 2 2. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 3 3. Sector issues to be addressed by the project and strategic choices 6

C. Project Description Summary

1. Project components 6 2. Key policy and institutional reforms supported by the project 9 3. Benefits and target population 9 4. Institutional and implementation arrangements 10

D. Project Rationale

1. Project alternatives considered and reasons for rejection 14 2. Major related projects financed by the Bank andor other development agencies 15 3. Lessons learned and reflected in the project design 16 4. Indications of borrower commitment and ownership 17 5. Value added of Bank support in this project 17

E. Summary Project Analysis

1. Economic 18 2. Financial 19 3. Technical 20 4. Institutional 21 5. Environmental 22 6. Social 23 7. Safeguard Policies 25 F. Sustainability and Risks

1. Sustainability 25 2. Critical risks 26 3. Possible controversial aspects 28

G. Main Conditions

1. Effectiveness Condition 28 2. Other 28

H. Readiness for Implementation 30

I. Compliance with Bank Policies 30

Annexes

Annex 1: Project Design Summary 31 Annex 2: Detailed Project Description 39 Annex 3: Estimated Project Costs 50 Annex 4: Cost Benefit Analysis Summary 52 Annex 5: Financial Summary 59 Annex 6: Procurement and Disbursement Arrangements 60 Annex 7: Project Processing Schedule 71 Annex 8: Documents in the Project File 72 Annex 9: Statement of Loans and Credits 73 Annex 10: Country at a Glance 75 Annex 11: Social and Beneficiaries Assessment 77 Annex 12: Environmental Assessement 85 Annex 13: Drought Preparedness and Incentive Framwork 92 Annex 14: Project Implementation 101 Annex 15: Rural Development Policy Letter 113

MAP(S) Rainfed Agriculture Development ProjectlProjet de de'veloppement rural intkgrk de mise en valeur des zones '%our" (IBRD 3 1289) MOROCCO Rainfed Agriculture Development Project Project Appraisal Document Middle East and North Africa Region EASRD Date: May 15,2003 Team Leader: Laurent Msellati Sector Director: Letitkkng Sector@): General agriculture, fishing and forestry sector Zountry Director: Theodore 0.Ah1 (40%), Irrigation and drainage (20%), Roads and Project ID: PO69124 & highways (20%), Other social services (lo%), Central Lending Instrument: Specific Investment Loan (SIL) government dmh&ration (10%) Theme(s): Other environment and natural resources management (P), Rural services and infrastructure (P), Social risk reduction (P), Civic engagement, participation and community driven development (S)

[XI Loan [ ] Credit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Loan Currency: Euro Amount (US$m): 26.80 Borrower Rationale for Choice of Loan Terms Available on File: Yes Proposed Terms (IBRD): Variable-Spread Loan (VSL) Grace period (years): 5 Years to maturity: 20 Commitment fee: 0.75% Front end fee (FEF).. on Bank loan: 1.00% Financing Plan (US$m): Source Local Foreign Total BORROWER 11.00 11.70 BRD 6.90 19.90 26.80 LOCAL COMMUNITIES 2.60 1 0.00 2.60 rotal: 20.50 I 20.60 I 41.10 Borrower: KINGDOM OF MOROCCO Responsible agency: MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT Address: Direction des amenagements fonciers (DAF) Contact Person: Mr. Mohamed Milourhmane, Director Tel: 212-37-29 99 45 Fax: 212-37-69 84 34 Email: [email protected] Estimated Disbursements ( Bank FY/US$m):

Annual 0.60 2.00 4.50 6.00 5.70 5.20 2.80 Cumulative 0.60 2.60 7.10 13.10 18.80 24.00 26.80 Project implementation period: 6 years Expected effectiveness date: 01/01/2004 Expected closing date: 1213 112009 A. Project Development Objective

1. Project development objective: (see Annex 1) The Rainfed Agriculture Development Project (R4DP) is the first phase of a wider program aimed at assisting the Ministry of Agriculture and Rural Development (MADR in French) in implementing its recently adopted rural development strategy (the “2020 Rural Development Strategy”) in rainfed areas. The overriding goal of the RADP is to improve the socio-economic conditions of smallholder farmers and herders in rainfed areas by promoting local participatory development and fostering sustainable agricultural growth. To this end, the proposed Project would have the following specific objectives:

0 To build institutional capacity for project identification and implementation in rainfed areas, in partnership with local organizations.

0 In seven priority areas: (a) to improve the household incomes oflocal populations and their access to basic rural infrastructure; and (b) to promote sustainable development of rainfed agriculture farming systems and reduce their vulnerability to drought. This project has been developed around three guiding principles: (a) to align all existing programs for rainfed agriculture development with MADRs objectives, as laid out in the “2020 Rural Development Strategy”; (b) to develop new approaches for rainfed agriculture development, taking into account the impact of recurrent droughts and regional differences; and (c) to focus on “Priority Action Zones” (PAZs), selected on the basis of criteria reflecting the level ofpoverty of the local population, the level of degradation of their natural resources and the lack ofbasic rural infrastructure and services.

2. Key performance indicators: (see Annex 1) Progress against these objectives would be measured and monitored by the following indicators: a. the local and central institutional capacities for project formulatiodimplementation in rainfed areas have been strengthened (measured by the number of Communal Investment Plans --CIP- implemented as planned) and a mechanism for technical and financial partnership between the various institutions in development has been put into place (share of resources other than those of MADR in the financing of the CIP is increasing); and b. in the PAZs : household incomes of the targeted populations have increased (based on household surveys), their vulnerability to drought has been reduced (year-to-year variations in incomes are decreasing), access to basic infrastructure has improved (based on rural surveys) and, consequently, socio-economic indicators have improved (based on mid-term and final evaluations). Annex 1 presents a general framework to establish the monitoring and evaluation (M&E) system for the project. Impact and result indicators, as well as targets, are given as examples and will be finalized for each component upon completion ofthe baseline studies and ofthe CIP.

B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 221 15-MOR Date of latest CAS discussion: May 7, 2001 Morocco’s CAS is structured around four main themes: (a) promoting human development and inclusion policies for vulnerable groups and marginal areas; (b) enhancing conditions for economic growth and private sector development; (c) reducing the vulnerability of the poor, especially in rural areas; and (d) improving govemance.

-2- To apply these themes in rural areas, the CAS emphasizes on: (a) improving the poverty focus of public policies and expenditures, in particular by acceleration of rural infrastructure programs and a set of integrated and participatory rural development programs targeted at the poorest areas; and (b) reducing agricultural vulnerability and environmental threats. The proposed project is explicitly included in the CAS. It supports the key objectives of equity and inclusion of local people living in rainfed areas by providing them with income-generating opportunities (agricultural and non-agricultural), as well as access to basic infrastructure and services. The project is also consistent with the Bank’s new draft rural development strategy, “Reaching the Rural Poor”, which focuses on poverty reduction and improved livelihood in rural areas, as well as on sustainable agriculture development. In 2002, MENA developed a new regional strategy which also provides a context. The proposed project fits several of the new strategy’s areas of focus, more importantly: improving public sector performance; setting a framework for private investment and publidprivate partnerships; and integrating issues of improved use of scarce water resources, more productive female participation, and development of human capital through education and training.

2. Main sector issues and Government strategy: Sector Background. With a gross domestic product (GDP) per capita of about US$1,250, Morocco is a lower middle-income country. However, national GDP annual growth fell from 4.4% during 1986-1991 to 1.9% during 1991-98, causing the country to lag behind others in the MNA Region. With the population increasing at 1.8% annually, this low growth rate has implied virtual stagnation of per capita incomes. The contribution of agriculture to overall growth turned negative during 1991-1999: minus 0.3% per annum., representing a sharp drop from the positive contribution of 0.8% per annum during 1986-9 1. This lack of growth was a key reason for the increase in rural poverty. The principal causes of poor sector performance were recurrent drought, an incentive structure favoring import substitution largely of lower value cereals and slow growth and diversification in export markets. In Morocco, almost half (47%) of the total population, and most of the poor, live in rural areas. Agriculture remains a major component of the economy (about 17% of GDP) and the leading employer (about half of the work force). Hence, agricultural performance plays a crucial role in determining the socio-economic conditions of rural households. About 86% (7.5 million ha) of arable land is rainfed. Rainfall is erratic and consequently creates wide fluctuations in yields and production.

Agro-climatic Areas Rainfall (mm) Surface (‘000 ha) % of Surface Favorable Superior to 400 2 610 30 Intermkdiaire 300 400 2 088 24 Dkfavorable Oriental 200 ii 300 1 044 12 Dkfavorable Sud 200 ii 300 1 044 12 Montagne 400 a 1000 1305 15 Prksaharien et oasis Inferior to 200 609 I

Although there are some large rainfed farms, the rainfed sector consists primarily of medium and small traditional farms involved predominantly in cereal, legume and livestock production which, under “normal” rainfall conditions, contribute about 70% of agricultural GDP. Cereal production is the most significant agricultural activity, accounting for about 70% of all agricultural land. It is therefore the major determinant of agricultural GDP, and its high variability under erratic rainfall leads to high

-3- variations in agricultural GDP. Rainfed areas also provide about 75% of total cereal, legume and pulse production, 70% of oil production, 25% of milk and cultivated fodder, 18% of horticulture products and 15% of sugar production. Pastoral and agro-pastoral livestock production covers about 13 million ha of rangelands, which provide more than one-third of the total livestock feed needs and 70% of total meat production.

Sector Issues. Despite recent efforts by the Government of Morocco (GOM), the performance of agriculture has been lagging and growth has stagnated. The rural sector today is characterized on the social front by a worrying increase in poverty and on the ecological front by worsening natural resource degradation (water, soil, forests and rangelands). These factors contribute to increasing pressure on arable land and increasing vulnerability to drought. Under these circumstances, rainfed areas are facing major issues: Climatic fluctuations and vulnerability to drought. Risk from the variations in climate and rainfall, including frequent droughts, is the principal feature of rainfed agriculture. Drought is a structural phenomenon for Moroccan agriculture and one that is growing in importance. While long-term analyses suggest that historically, major droughts have occurred on average once every eight years, recent decades have seen an increase in their frequency. According to official data, ten ofthe sixteen years from 1985 to 2000 were drought years. Droughts have a strong impact on rural incomes and employment opportunities, as well as contributing to disruptive rural-urban migration. They also have major effects at the sector level: the drought of 1994-1995 led to a drop in cereal production from 96 million quintals in the previous campaign to 17 million quintals, with a lowering of agricultural added value by 50% from the average for 1989-9494 and a sharp drop in rural employment. In the livestock sector, the drought of 1981 caused losses to the national herd in the order of 30% for cattle and 40% for small ruminants. Drought episodes also act as a trigger to land erosion and other forms of environmental degradation as short-term responses to drought by farmers and herders put pressure on resources, mainly rangelands and forests. Troubling poverty. The latest Poverty Update (PU) findings (Report No. 21506-MOR, March 30, 2001) show that while poverty declined from 21% to 13% of total population between 1984 and 1991, it returned to 19% in 1998, and affected 5.3 million people. The vulnerable population also increased dramatically over the same period, from 9 to 12 million, or about 45% of total population. Poverty remains a predominantly rural phenomenon and the number of rural inhabitants living in extreme poverty has tripled from 1991 to 1998. The PU indicates that 7 out of 10 socially marginalized persons (defined in terms of poverty and exclusion) are rural. Poverty is more acute in the Central North, the East and the Central South regions where 25% of the population is affected. Poor performance of rainfed agriculture is a major factor in this growing rural poverty. Social indicators in rural areas ofMorocco are now similar to those in countries with much lower per capita incomes, and the gap between urban and rural living conditions is considerable. For example: access to potable water and electricity is universal in urban areas but reportedly about 42% in rural areas; illiteracy stands at 37% in urban areas but at 67% in rural areas (54% of rural children do not attend school); and 57% of villages in rural areas do not have access to usable roads. A large technological __gap. Despite the availability ofimproved technology, particularly in cereal and livestock production, Moroccan rainfed agriculture remains largely traditional. This "technological gap" is evident with agricultural intensification, notably in mechanization and the use of production inputs. For instance, the number of tractors in rainfed areas does not exceed 43,000, while the needs are estimated at 77,000. Similarly, only 50% of farmers are using fertilizer, and this percentage drops to 33% for pesticides and 16% for certified seeds. A low level of investments. For many years, rainfed rural areas have suffered from low investment in basic infrastructure, including access roads, small and medium-scale irrigation, potable water,

-4- electrification and communications, as well as services such as health, education (especially for girls) and agricultural research and extension. For example, agricultural public investments represent on average about 12% of total public investment. However, over 60% of MADR’s investment budget goes to large-scale irrigation with little going directly to poor rainfed areas. Other ministries have a pronounced urban bias in their investment programs. a Fragile ecosystems. Demographic growth and human pressure on agricultural lands in the rainfed areas have resulted in the destruction of vegetative cover and consequent erosion, the intensity of which depends on the topography and nature ofprecipitation and wind. Moroccan soils are fragile, particularly in the arid and semi-arid areas, which cover almost all ofthe country and are susceptible to various forms of erosion. It is estimated that more than half the lands are exposed to some form of erosion and 25% of the watershed surfaces face a sizable risk of erosion. Erosion is aggravated by inadequate land management and cultivation practices as well as by low adoption of soil and water conservation techniques.

Government Stratem. In response to growing rural poverty, the objectives of equity and inclusion have been repeatedly stressed by King Mohamed VI and have become integral parts of the GOM’s program. GOM is intensifying its efforts towards the poorest areas through several measures: (a) extending the coverage of its health and education program (the “BAJ” program) from 16 to 46 provinces; (b) accelerating the rural infrastructure programs for potable water (PAGER), rural roads (PNRR) and electricity (PERG), with a view to reaching 60-70% of the rural population by 2004; and (c) introducing a series of integrated and participatory rural development programs targeted at disadvantaged areas, most notably the Rainfed Development Sites (Pkrimdtres de mise en valeur bour, PMVB). In an attempt to reduce the impact of the recent droughts from April 2000 to June 2001, GOM has also implemented an ambitious drought emergency program, injecting some 6 billion dirhams (US$550 million) in quick disbursing programs in rural areas. MADR has responsibility within GOM for agriculture, rural development and natural resource management. Confronted with lack of growth, increasing poverty and accelerating natural resource degradation, MADR has undertaken a major rethink of its approach. This began with a process of study and workshop that led to the adoption of a plan to eliminate rural poverty by 2020, the “2020 Rural Development Strategy”, published in December 1999. In the Strategy, broad based rural development, including agriculture and off-farm employment, as well as infrastructure, is the key to sustainable rural poverty alleviation. The Strategy adopts three guiding principles for implementation: (a) decentralization (“dkconcentration” of responsibilities to MADR provincial and local representations); (b) multi-sectoral integration; and (c) participation of all development stakeholders. This vision is now being translated by MADR into action plans within the Five Year Plan (2002-2004), with a priority on rainfed areas. Key points are:

0 A more coherent institutional vision for rural development. MADR will: (a) focus on its core business of agricultural development; and (b) facilitate and coordinate rural development programs by mobilizing other key players (including both public and private sectors, and NGOs), and assisting local governments (collectivitks locales) and communities in formulating and implementing their development programs;

-5- A “promam approach” for rainfed area-based development, in which MADR will include a strong institutional development component in the proposed project to develop the capacity and tools for identifying, preparing, implementing and monitoring new operations; For regionally adapted approaches - basically poverty reduction approaches in the case of poor, low-rainfall and remote areas; and agricultural growth promoting approaches for higher rainfall areas; “Deconcentration” and participation, decentralizing decisions and implementation as close to the field as possible and involving rural people. This agenda has to be managed within the broader processes of decentralization within central and local government and will require restructuring and human resource development for MADR itself; and Partnerships with the civil socieq; mainly NGOs, farmer organizations (Organisations professionnelles agricoles, OPA) and public foundations, such as the Agence de dkveloppement social (ADS) and Fondation Mohamed V.

3. Sector issues to be addressed by the project and strategic choices: The proposed project is the second of three Bank-supported integrated rural development operations through which GOM is seeking to implement the “2020 Rural Development Strategy”. The first (Irrigation Based Community Development Program (IBCD) FYO1) applies the strategy to poor mountainous areas where the small scale irrigation is the prime resource. The proposed RADP applies the strategy to purely rainfed areas. A third operation, scheduled for FY04, will focus on the forested and watershed areas. The proposed project will thus implement all the points set out in the Government’s Strategy (see B.2 above). The specific issues addressed are:

0 the need to put in place central, regional and local institutional structures for integrated rural development targeted at poverty alleviation in marginalized rainfed areas;

0 the need to develop new types of partnership between community-based institutions, local government, civil society organizations and official agencies; and

0 the need to develop a structured response to the issue of climatic fluctuation.

C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown) : The proposed project consists of two complementary components: (a) institutional strengthening aimed at improving and harmonizing MADR’s multiple approaches to integrated rural development, developing a structured response to drought, and putting in place the capacity and tools (both at the central and local levels) for identifying, preparing, implementing and monitoring rural development programs in rainfed areas; and (b) development activities in PAZs which are among the poorest areas of the country and suffering from major handicaps in terms of rural infrastructure and access to basic social services. Activities to be implemented were identified in six zones, in the Provinces of Boulemane, Khemisset, Khouribga, Sidi-Kacem, Taroudant and Tata. Activities in a seventh zone, in the Province of Errachidia, will be identified during the first two years ofproject implementation and included thereafter. In line with MADR’s regionally adapted approaches, development activities will fall into two categories corresponding to two different types ofrainfed areas:

-6- (4 povertv reduction activities in low-rainfall and remote areas, including the Atlas Mountains (Taroundant Province), Pre-Saharan Oases (Tata and Errachidia Provinces), High Eastern Plateau (Boulemane Province), and the Central Arid Zone (Khouribga Province), the last two being considered as part of the Bour ddfavorable (see definition in Section B.2.); and (b) amicultural growth promoting activities in higher rainfall areas (Bour favorable), including the Cereal Plains (Khemisset Province), and the Rif Foothills (Sidi-Kacem). Component A - Strenpthening of ImplementationCaDacitv for Rainfed Agricultural Development This component has been designed to help implement the principles and objectives of the “2020 Rural Development Strategy” in rainfed areas and to develop a structured response to drought. The proposed project aims at developing a promammatic approach for rainfed areas development in order to integrate activities within a coherent framework, to create synergies and to promote good practices. It will achieve this by: (a) strengthening MADR’s implementation capacity at the central level for developing and managing the rainfed agriculture development program, and for ensuring adequate monitoring and evaluation of this program (composed of numerous operations with similar approaches). In addition, the proposed project will provide technical assistance to help MADR prepare and implement a restructuring plan for its field offices;

(b) strengthening the local implementation capacity of MADR s provincial (DPNORMVA) and local (CT/CMV) representations as well as of local government and community institutions. The proposed project will provide technical assistance and support training activities to help prepare local participatory CPs, including economic and social investments; and

(c) developing new instruments and institutional capacity to improve support services for rainfed agriculture, notably a drought management strategy, including drought-related policy making at the national level, the development of an early warning system for drought in the seven PAZs, and the piloting of a weather-based index insurance scheme, managed by MAMDA (the agricultural mutual insurance company) and supported by IFC. The proposed project will also support the development of demand-driven research funding mechanisms. In addition, the proposed Project will support: (a) the strengthening of the decentralized national research network; (b) the preparation of technico-economic reference manuals for each PAZ; and (c) the preparation of studies to improve collective rangeland management.

Component B - Rural Development Activities in Prioritv Areas Under Law No. 33-94, which allows the State to intervene in legally designated rainfed development sites (PMVB), the proposed project will finance activities aimed at promoting sustainable agricultural development, improving access to basic infrastructures and services, and developing income-generating activities, both off-farm and on-farm. In the project area, seven PMVBs have so far been identified. Activities will be implemented over a period of (a maximum of five) years per site. Other PMVBs may be funded in the Province ofErrachidia upon completion ofdiagnostic and evaluation surveys. Activities are structured in three sub-components: (a) agricultural and pastoral development, aimed at increasing the productivity of agricultural systems, improving natural resource management and mitigating the effects of drought, notably through soil and water conservation, and land development works; (b) rural infrastructure development (including small and medium-scale irrigation systems, pastoral water points, rural roads, and other non-agricultural infrastructure) and the provision oftechnical

-7- assistance to Rural Communes (RCs) for the formulation and implementation ofthe CIPs; and

(c) support to local initiatives to strengthen the capacity of local organizations in identifying their own development needs and plans, support education and skills training activities, including financing equipment for on-the-job training and promoting micro credit organizations, farmer associations, and income generating activities.

Implementation of Component B will be based on three principles: (a) activities will be identified through a participatory approach in order to meet the needs of the beneficiaries and therefore ensure sustainability; (b) activities will be adapted to local socio-economic and agro-climatic conditions, using specific development models (Archdtypes) which will be formulated for each PAZ; and (c) decision making and implementation will be delegated as close to the field as possible, by strengthening the programming and coordination role of the Provincial Core Rural Development Committee (CPRDR) and by building the capacity of RCs. The following cost estimates were prepared based on field visits and beneficiary assessments using rapid rural appraisal techniques. Because of the central role given to the “participatory” approach in the proposed Project, particularly for the preparation of CIPs, the breakdown of the costs between and within the sub-components of Component B can only be indicative. Therefore, the exact nature of the activities will be determined while preparing the CIP, taking into account beneficiaries’ priorities, constraints and capacities, and national development strategies. The use of FDR to finance rural infrastructure will allow that flexibility. Furthermore, 30% of loan proceeds for Component B will be set aside in an “unallocated” category. This will allow to expand activities, according to the circumstances, and could also provide financing for additional PMVBs within the PAZs, depending on the progress in implementing the participatory approach or on results ofthe mid-term evaluation.

A. Strengthening ofImplementation Capacity for Rainfed 0.0 0.0 Agricultural Development A. 1. At MADR Central Level 1.oo 2.4 0.50 1.9 A.2. At the Local Level 5.40 13.1 2.40 9.0 A.3. Rainfed Agriculture Support 0.0 0.0 - Drought Preparedness 1.30 3.2 0.90 3.4 - Production Systems Improvement 1.20 2.9 0.40 1.5 0.0 0.0 B. Rural Development Activities in Priority Rainfed Areas B. 1. Agricultural and Pastoral Development 11.80 28.7 8.73 32.6 B.2. Rural Infrastructure Development 0.0 0.0 - Agricultural Infrastructure 3.70 9.0 2.60 9.7 - Rural Roads 6.90 16.8 4.40 16.4 - Other Rural Infrastructure 7.50 18.3 5.60 20.9 B.3. Support to Local Initiatives 2.00 4.9 1.oo 3.7 Total Project Costs 40.80 99.3 26.53 99.0 Front-end fee 0.27 0.7 0.27 1.o Total Financing Required 41.07 100.0 26.80 100.0

-8- 2. Key policy and institutional reforms supported by the project: The proposed project supports the development of an integrated and coherent program for rainfed area development in line with GOM’s “2020 Rural Development Strategy”. Thus it will help GOM to implement three key innovative approaches of the Strategy - decentralization, multi-sectoral integration and participation (see B.2. above). In addition, the proposed project will support: (a) the review and subsequent reform of MADR’s field structures in line with the “2020 Rural Development Strategy” and GOM’s overall decentralization policy; (b) the implementation ofnew mechanisms (including demand-driven mechanisms) to strengthen institutional capacity at the communal level and foster participation at the community level; (c) capacity building of local NGOs; and (d) the development of an integrated and structured capability for drought management.

3. Benefits and target population: Benefits. Expected quantifiable benefits are substantial increases in farm production and incomes (essentially from crops and livestock), mainly due to productivity improvements in rainfed production systems. More difficult benefits to quantify include: (a) a reduction in the instability of farm production levels - and therefore of incomes - due to the implementation of drought preparedness strategies and mitigation measures; (b) public savings, including reductions in govemment subsidies to the current drought insurance system and reductions in debt write-offs with the rural credit organizations following drought episodes; and (c) increases in off-farm incomes from support to local initiatives. Non-quantifiable benefits derive mainly from the institutional strengthening activities in Component A, the impact of which will go far beyond the scope of the proposed project, principally: (a) the empowerment of local communities, interest groups and individuals, as decision-making power is progressively devolved to the local level and capacity is built; (b) the increased efficiency of MADR’s interventions in rainfed areas as a whole (not only the PUS); and (c) the creation of synergies between MADR’s various structures and other players in development.

Proiect Area. The Project interventions would be implemented in seven Pus, which have been selected on the basis of criteria such as the extent of poverty, the level of natural resources degradation, trends in past public investment, access to basic infrastructure and services in the area (Boulemane, Errachidia, Khouribga, Taroudant and Tata), as well as the potential for agricultural growth (Khemisset and Sidi Kacem).

Target Population. Field studies (see the Social and Beneficiary Assessment summarized in Annex 1l), have identified ten of the poorest rural communes where the project will initially be implemented. The number of potential beneficiaries in the project area is estimated at 15,400 households with 91,200 people living in 230 douars (communities). Some priority groups were identified during preparation and include: (a) the douars in Tata, Taroudant and Boulemane provinces where social cohesion is strong, (b) women’s groups in Tata and Khouribga where male emigration is pervasive; and (c) farmers’ associations in Khemisset and Sidi Kacem where agricultural potential is significant. A similar study will be carried out for Errachidia. In a given community, the targeting of the poor will take place at the time of CPformulation. A CIP will comprise actions benefitting the whole local communityAarge groups, such as rural public infrastructure and arable land improvement works, as well as actions benefitting specific groups andor individuals such as soil conservation activities and most of the support to local initiatives (training, etc). In all cases, but particularly for the latter type, specific selection criteria were identified and are presented in the Project Implementation Manual (IM). They will be used for targeting the poorest and

-9- most vulnerable in the communities. These criteria include: (a) geographic targeting to allow new communities to become eligible; and (b) eligibility criteria for local initiatives, both for beneficiaries (defined on the basis of available assets and level of consumption) and for sub-projects based on a list of possible areas ofactivity.

4. Institutional and implementation arrangements: Imdementation Period: 6 years Given the emphasis on institutional strengthening and recognizing the longer time frame required for effective local participatory planning, the project is expected to be implemented in six years from January 1,2004, to June 30,2009 and is expected to close on December 3 1,2009. Project coordination and implementation arrangements have been based on those adopted for the Bank-supported IBCD program and these arrangements are summarized in detailed in Annex 14.

Proiect Coordination Similar to the IBCD program, project oversight and coordination would be carried out largely through existing institutions at the national and local levels. (a) At the Central Level,

The Permanent Inter-ministerial Rural Development Council (Conseil interministBrie1 permanent du dkveloppement rural, CIPDR) comprising the Secretary Generals of all the ministries involved in rural development, with MADR providing the Secretariat, will be responsible for defining the strategic directions of the program, monitoring its implementation and approving CIP financial plans.

The National Steering Committee (NSC). The PMVB Steering Committee, established in 1996 under the Dkcision no. 7117/AGR/DAF within the MADR, monitored project preparation from the onset. A new Dkcision from MADR, will define NSC's attributions and organization which will include representatives from the various ministries involved in the project. This Committee will ensure overall coordination of the activities and approve work programs, budgets and progress reports. Furthermore, MADR will ensure better coordination of integrated rural development projects, including forestry and rural infrastructure projects co-financed by the Bank. (b) At the Provincial Level The Provincial Technical Committee (CTP), chaired by the Governor, will be responsible for coordination in each PAZ, through its sub-committee, the Provincial Core Rural Development Committee (CPRDR). The CTP will be responsible for reviewing the CIPs, ensuring their consistency with long-term objectives and sectoral programs implemented in the province and coordinating the preparation of a "financing plan" based on inputs from Government departments and communes. e The Provincial Director of Amiculture (DPA) or the Director of ORMVA, depending on the location of the PAZ, would be the Secretary of the CPRDR. He/she would facilitate its meetings and be responsible for overall Project monitoring in his/her DPA/ORMVA. (c) At the Communal Level e The Communal Council (Conseil communal), which comprises representatives elected by the local population, has overall responsibility for preparing, approving and implementing the CIPs constitutes an innovation compared to the IBCD program, designed to decentralize project design and

-10- supervision to the lowest possible level in order to create maximum opportunity for RC and community participation. The Rainfed Amiculture Development Commissions (Commissions locales de mise en valeur agricoZe - CLMVA) comprising community representatives and Government technical staff will be set up in each PMVB to coordinate project progress and supervise implementation. These commissions are provided for in the legislation governing rainfed area development (Law No. 33-94) which allows their membership and terms of reference to be expanded to cover the broader scope of the proposed project.

Proiect Imulementation As in the case of project coordination, project implementation would take place as much as possible through existing institutions. MADR would be the executing agency through its central directorates and its provincial and local structures (DPA\CT and ORMVA\CMV) which will coordinate their activities with all stakeholders involved in the project, in particular with the other technical departments represented in the province. Project implementation arrangements will be as follows: At the Central Level, the overall project implementation monitoring, implementation ofthe activities that are the responsibility of MADR and reporting to the Bank, will be the responsibility of a Project Management Unit (Cellule de gestion du Projet, CGP) which will be created under the Department of Land Development (Direction des amknagementsfonciers, DAF) in MADR. Central Supervision and Monitoring Commission. The project will benefit from the support of the existing Central Supervision and Monitoring Commission (Commission centrale de supervision et de suivi, CCSS), an inter-departmental working group on rainfed area development. The CCSS will provide technical and methodological advice to the implementing teams regarding the preparation and implementation ofthe CIPs, ensure inter-departmental coordination, capitalize on lessons learnt, and develop MADR's overall integrated rural development program. The Commission will also provide technical support to the CGP. At the Provincial Level, the respective DPAs or ORMVAs, depending on the PAZs, will be responsible for the implementation ofthe project, with the exception of: (a) the agricultural advisory services which will be provided through the local extension centers (CT\CMV); and, (b) non agricultural infrastructure that will be implemented by other provincial technical departments. The Governor, as CTP chair, will ensure that these departments send all technical and financial implementation reports to the Project Management Unit (CGP) in MADR. A Provincial Management Unit (Unit& de gestion provinciale, UGP) will be established within the DPAs/ORMVAs as the permanent secretariat of CRPDR for monitoring project implementation. UGP's role would be to: (a) consolidate at the provincial level all financial information in order to prepare progress reports; (b) send all progress reports to DAF at the central level; and (c) ensure the strict adherence to Bank's guidelines, in particular with regard to procurement and disbursement.

Local Particiuatorv Propramming The proposed project will test local participatory programming that empowers local stakeholders to identify problems and to program solutions in the CIP in a prioritized and coherent sequence. This is the first step toward the full empowerment of communities and local government whereby funds are directly managed by them (The "Community-Driven Development Model"). The proposed project will provide support to the RCs for the formulation and implementation of their CIP which will cover a period of about five years and include two parts: (a) an infrastructure development program prepared at the communal level; and (b) a local development program prepared at the community level under CLMVA

- 11 - supervision. The CIP will be presented first to the Communal Council for approval and then to the CPRDR, where the financing plan of the infrastructure investments will be prepared. The CIP would be implemented on the basis of annual priority programs to be agreed upon by all parties. Supuortinrr Structures. The following teams will provide methodological and technical support in implementing the proposed Project:

0 Methodolorrical Support Team. At the central level, this team (Equipe d’appui mkthodologique, EAM) which is part ofthe CCSS, will develop the tools and methods for an efficient implementation of the project. EAM will include core staff from CCSS in line with the Ministry Decision being prepared regarding CCSS reorganization. Consultants financed by the project will provide short-term technical assistance to EAM.

0 Participatorv Promamminn Team. At the provincial level, this team (Equipe de programmation participative, EPP) will work with beneficiaries, including RCs and douars, to identify, prepare and monitor the implementation of the CIPs. The team will include staff from DPAdORMVAs and CT/CMVs, and will be strengthened by relocating additional staff to the field offices, by recruiting community development workers (animateurs), and by hiring short-term consultants for the preparation of the CIPs. The representatives of other ministerial departments will also be invited to participate in the process oflocal programming and to become an integral part of the EPP.

Role of the Rural Communes. Under the Communal Charter (Charte communale), RCs are expected to play an active role to ensure the full economic, social and cultural development of the local community. They may mobilize human, technical and financial resources to play this role, in particular in the definition and execution of infrastructure programs. In practice, RCs in rural areas have quite limited financial and technical capability but are vital representatives ofthe communities. Under the Project, the elected Communal Council is expected to be involved in preparing the CIP by distributing information, mobilizing the population and associating itself with the process from project identification, so that the Council effectively “owns” the CIP. RCs will be expected to present and justify their CIP to the CLMVA and CPRDR.

Role of Communities and Local Associations. Together with the decentralized local government structure of the RCs, other community institutions will play a part in representing local areas (e.g., villages or groups of villages within the RC, or specific interest groups (e.g., cooperatives, water user associations, women handicrafts associations, herders associations etc.). The growth and strengthening of these groups will be supported directly by the project (Component B3) and the groups will participate formally in the programming process through their membership in the enlarged CLMVA, as well as through the RC, where they will be able to influence the development of the CIP through their area based elected representatives.

Beneficiary Contributions to Investments. The beneficiaries will share the cost of investments and take responsibility for subsequent maintenance. Their contribution could be in cash, labor or materials. The share will vary depending on the nature of the activities and the socio-economic conditions of the beneficiaries. It will be agreed upon with the community during the formulation of the CIP and specified in the CIP document. For agricultural activities, beneficiaries will contribute according to Law 33-94 and to the Code des investissments agricoles. For other investments, RCs and users will contribute according to the criteria ofeach sectoral program.

Procurement Procurement arrangements are summarized in Annex 6. Detailed procedures are contained in a Draft Implementation Manual (Manuel de Prockdures) which will be finalized after the negotiations.

-12- Disbursement The Borrower would establish a Special Account (SA) in MAD with the Treasury (Trksorerie gknkrale du Royaume, TGR). The authorized allocation would be limited to MAD 25 million equivalent, representing approximately four months of estimated disbursements from the IBRD Loan. Initially, the allocation would be limited to MAD 11 million equivalent, with the full allocation being available when disbursements reach EURO 3 million equivalent. Full documentation for expenditures under contracts requiring the Bank's prior review will be submitted with each corresponding application. Disbursements for goods contracts below US$300,000, works contracts below US$500,000, and service contracts and training below US$lOO,OOO for consulting firms and US$50,000 for individual consultants would be made on the basis of Statements of Expenditures (SOEs). Each "sous-ordonnareurs" will maintain documentation to support project expenditures and make them available for review by Bank supervision missions and project auditors.

Financial Manapement The financial management arrangements are detailed in Annex 6 and summarized below. Financial Management System (FMS). The existing FMS system in MADR, the implementing agency for the project, is based on principles and procedures defined by the legal framework applicable to the public sector and more specifically to governmental institutions. MADR, through DAF, is maintaining an accounting system on a cash basis with an outline of budget components (Morasse) according to the provisions ofthe Public Accounting Law. As a technical ministry, MADR is accountable for budgeting, procurement and preparation of payments under the control of MOF structures accountable for clearing commitments (ContrGleur des engagements et des dkpenses, CED) and payments (Comptable assignataire). At the provincial level, the non-agricultural rural infrastructure component to be financed by FDR, will be implemented by the provincial technical departments under the Governor's supervision. Payments are exclusively made by the TGR from public budget funds and then replenished from the SA for the part financed by the donors. For projects with financing from external donors, the Budget Directorate (BD) within MOF is playing the role of coordinator through which all transactions related to the SA are channeled. BD is accountable for a post review of eligibility ofexpenditures, compliance with legal documents and donor disbursement requirements.

Accounting- and Financial Reuorting. Accounting and financial reporting will be carried out centrally by CGP within DAF. The DPAs and ORMVAs involved in project implementation at the provincial level would maintain simplified accounts and analysis of the activities managed under their responsibility, including transactions processed at the CT and technical department level. The Governors, as "sous-ordonnateurs " of the FDR, will ensure that the relevant accounting and financial information for FDR-funded activities is transmitted in time to the UGP, which will in turn send consolidated financial reports to the CGP on a monthly basis for accounting and monitoring purposes. CGP would be responsible for aggregating the financial data and issuing the Financial Monitoring Report (FMR) to be transmitted to the Bank twice a year no later than 45 days after the close of each calendar semester. For the issuing of the FMRs, CGP will use the recently developed database for the financial monitoring of PMVB projects. A special sub-database will be opened in order to reflect activities related to the proposed project. Customization will be made in order to allow an automatic issuing of the required reports from the consolidated sub-database. m.MADR will appoint an auditor, acceptable to the Bank, to carry out an annual audit in accordance with the International Standards on Auditing as issued by the International Federation of Accountants, the Bank's Guidelines (e.g. Financial, Accounting, Reporting and Auditing handbook, "FARAH") and specific terms ofreference acceptable to the Bank. The auditor will express a professional opinion on the

- 13- annual project financial statements and issue an annual audit report which should be made available to the Bank within six months ofthe close of each fiscal year.

Monitoring and Evaluation Arrawements Project implementation will be monitored at the central, provincial and local levels. The monitoring of the physical and financial achievements will be the responsibility of CGP on the basis of data submitted by the MOF, DERD and INRA at the national level and, at the provincial level, collected by DPAs or ORMVAs from the services of the MADR and other provincial technical services. Monitoring of the project impact will be the responsibility of the Planning and Economic Affairs Department (DPAE). Monitoring should allow CGP and NSC to identify problems and constraints as well as take corrective measures when necessary. In addition, an initial baseline survey, as well as mid-term and final evaluations will be carried out by competent independent organizations under the supervision of DPAE. Support will be provided to MADR (Component A. 1) to implement the M&E activities as planned. In line with the participatory, bottom-up nature of the project approach, there will be an important role for local institutions in monitoring. This role will be formalized and articulated through the CIPs and through the involvement of RCs and the CLMVAs in following implementation and outputs of the CIPs on an annual cycle. The methodology for participatory evaluation will be developed at the start of the project and will include substantial involvement of community and local institutions in the mid-term review (MTR) (see below).

Mid-term Review (MTR) The MTR will be used to evaluate progress on the basis ofthe physical, financial and impact indicators monitored. The MTR will also analyze steps towards the restructuring of MADR and assess impact on project implementation. Finally, the MTR will assess progress in each of the RCs and recommend whether to change the level of support, or to increase/decrease their number.

D. Project Rationale 1. Project alternatives considered and reasons for rejection: Given the extent of poverty and the shortage of economic and social infrastructure in rainfed areas, a long-term horizon (Le., more than 10 years) is needed to move the rural development agenda forward, achieve tangible results and reduce the rural-urban gap. For these reasons, GOM and the Bank have agreed on a long-term vision and see the proposed project as a phase in a long-term program. The possibility of agreeing on an Adaptable Program Loan (APL) approach was considered but rejected for two reasons.

0 First, whilst not a pilot, the project does introduce some innovations (e.g, working directly with RCs, developing the CIP and promoting the development of pluralistic institutional structures at the field level). The project also makes new linkapes in terms of refining and developing: (a) the field level model of inclusive participatory development at the local, communal level (CLMVA); (b) the intermediate structures, notably at the provincial level for managing the interface between local decentralized planning and top/down deconcentrated sectoral planning (CPRDR); and (c) the national management framework for rainfed area development and the structure for inter-ministerial coordination of integrated rural development (CIPDR). These innovations and new linkages need to be tracked during the project period and results used to refine the program. As a result, the definition of the long-term program and the periodic triggers is less precise than typically needed for an APL.

0 Second, GOM relies on Bank support for this project because of the Bank’s strong input into design, including innovations and new linkages. At the end of the project period, it is expected that program

- 14- design will be virtually complete and implementation mechanisms and capacity developed. GOM will then be able to take a decision on the scale and timetable for nationwide application and the financing plan for the full-scale program will be decided at that time. It is expected that in these subsequent phases, reliance will be on other donors with concessional funds, and GOM is therefore unwilling to enter into a program loan commitment with the Bank.

A Learning and Innovation Lending (LIL) would not be appropriate either as the proposed project is not a pilot, but a phase in the further development and scaling up of the ongoing rainfed area program. The extensive existing experience and institutional structure and time needed to move the program forward make the piloting approach and short term horizon of a LIL inappropriate.

2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSR) Ratings (Bank-finance projects only) Implementation Development Progress (IP) Ban k-financed Objective (DO) a) Completed Integrated Rural Development doukkos Rural Development S (Ln. 1848-MOW1988) Fes-Karia-Tissa Agriculture (Ln. 1602-MOW1990) Oulmes Rommani Agriculture (Ln. 2217-MOW1992) vliddle Atlas Agriculture U (Ln. 2082-MOW1990)

Irrigation and Drainage, 3rst Small & Medium Scale S Rural development Irrigation (Ln. 2253-MOR) Participatory Management second Small & Medium S Scale Irrigation (Ln. 2954-MOR)

Improved natural resources (forests second Forestry S and rangelands) and watershed (Ln. 3 156-MOR) management

Rural development through second Rural Electrification S electrification & participatory (Ln. 3262-MOR) approach

b) On-going Improved access to social services Secondary, Tertiary and Rural S and markets by road construction, Roads (Ln.390 1-MOR) rural development, participatory management improved access to potable water, Xural Water and Sanitation S rural deveIopment, participatory (Ln. 4254-MOR)

- 15- management

Zommunity based natural resource Lakhdar Watershed management Management (Ln. 4426-MOR) Protected areas management and ?rotected Areas Management participatory conservation of (GEF) ecosvstems Other development agencies European Union Vatural Resources Management, Participatory Rural Development, PAGER

Kreditanstalt fiir Wiederaufbau Participatory Natural (Germany) Resource Management, PAGER, Small Scale higation Rehabilitation

Agence Franqaise de Developpement Small and Medium Scale Irrigation, PAGER, Forestry Development

UNDP htegrated and Participatory Rural Development

FA0 Natural Resources Management lPlD0 Ratings: HS (Highly Satisfactory), S I Highly Unsatisfactory)

3. Lessons learned and reflected in the project design: Bank experience in integrated rural development and a review of past and on-going projects indicates that:

0 Integration of interventions and commitment of all relevant stakeholders is key to the success of the Project. The institutional framework for rural development in Morocco is characterized by a large number of actors which leads to inconsistencies, bottlenecks and conflicts which are evident at three levels: (a) between social and territorial units (J'maa and Communes); (b) between the local arms of Government (local administration and technical ministries); and (c) between the legal regimes (e.g., for collective lands and forests). Project focus on institutionalizing participation, on deconcentration and on inter-agency coordination reflects this lesson;

0 Extensive participation of beneficiaries during planning, implementation and evaluation helps instill "ownership" and ensures that investments and services are significantly more relevant and responsive to local conditions. The democratization of the country and the growing role of civil society are imposing a radical change in relations between the administration and the public. This can be seen from a "top-down" and excessively centralized approach toward local participatory development and the inclusive and bottom-up approach of the project will capture the benefits of this change;

- 16- Adequate funding mechanisms must be available for community-based, demand-driven approaches in order to foster a real partnership with the administration and to promote income generation and diversified activities. The participatory approach, partnerships and support to local initiatives reflect this lesson; Development programs must respect the scale of intervention. The State must have sufficiently flexible capacity to intervene at the local level. In fact, it has been demonstrated that the smaller the projects, the greater their focus and impact. Deconcentration and local participatory programming through the CIPs reflect this lesson; and A broad range of short-term technical expertise and training for administration staff, producers and communities must be provided. Agriculture and rural development must have sufficient local extension capacity and support in terms of technical production packages and advice. Reflecting this, there is provision within the project to develop adaptive research and extension programs in partnership with the private sector and farmer organizations.

4. Indications of borrower commitment and ownership: The project is an integral part of the national “2020 Rural Development Strategy,” the implementation of which began under the current Five-year Plan with strong political support at the highest level. The adoption in 1995 of Law No. 33-94 on rainfed area development and the implementation of the first projects in 25 rainfed development sites (PMVB) during the period 1996-1999, demonstrates the GOM’s commitment to rainfed agriculture development and local participatory development. In addition, the budget allocated to the PMVB program has regularly increased from 1% of total MADR investments in FY96-FY97 to 5.5% in FY99-FY00, and is expected to average 10% per annum during the current Five-year Plan. Other institutional and legislative measures support the implementation ofthe “2020 Rural Development Strategy,” such as the establishment of the national CLPDR and the provincial CPRDR (see C.4 above), the publication of the Water and Micro-credit Laws, and the reactivation of the FDR to mitigate the impact of drought on the rural poor. Other key laws are being prepared, such as the Forestry Code and the Administrative Decentralization Compact.

5. Value added of Bank support in this project: As discussed above (in Section B.l), Bank support for this project is part of an agreed approach in which the Bank finances activities which: (a) have a direct link to rural poverty alleviation; (b) have strong links to longer- term and inter-sectoral issues where the Bank’s in-country knowledge can add value; (c) can leverage a subsequent large-scale national program; and (d) call on specific global expertise that the Bank possesses. Bank support to the rural sector is based on the 2020 Rural Development Strategy and the program of community driven rural development projects that stemmed from that strategy (see Section B.3 above). By mobilizing financing such as PHRDs and providing advice throughout, the Bank played an important role in the preparation ofthis strategy aimed at an integrated approach to the alleviation ofrural poverty. Based on this shared strategy, GOM has requested Bank support for the development of three integrated rural development operations which are designed to develop longer-term programs (IBCD, RADP, and a future integrated operation in forested areas). All three operations share the same poverty-targeted, community-driven and integrated (inter-sectoral) approach, and GOM sees Bank value added as significant in ensuring consistency of approach, as well as coherent learning and capitalization of these experiences in subsequent phases. In addition, GOM expects that Bank involvement will improve the

- 17- inter-sectoral linkages to the full range of rural poverty alleviation measures (such as BAJ, Rural Infrastructure Programs and Agence de ddveloppement social). Within the Bank’s program, there are also important linkages to ongoing sector work on agricultural growth strategy (FY02EY03) in particular, the work on cereals policy and a proposed rural infrastructure project (FY03). Regarding specific global expertise, the Bank has considerable experience worldwide on community dialogue and operations dealing with poverty alleviation issues, integrated rural development and sustainable natural resource management. The Bank can facilitate access to information in an advisory capacity on design and implementation issues and lessons learned with comparable projects.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): Cost benefit NPV=US$7.65 million; ERR = 16 % (see Annex 4) 3 Cost effectiveness 0 Other (specify) Most project actions are based on a participatory approach. Hence, costs and benefits can only be estimated roughly and the economic analysis is necessarily limited, since many of the specific costs and benefits of the project will only be known at the time of implementation. Nevertheless, a cost-benefit analysis was carried out. The resulting ERRs for each PAZ ranges from 3% to 32% and is 16% for the overall project, corresponding to a NPV ofUS$7.65 million. These returns are acceptable given the rural development character of the program. Tata and Taroudant show lower ERRs of 3% and 9% respectively. In these two provinces, expected interventions focus on livestock production and rangeland management for which a large share of the benefits (e.g., environmental benefits) are difficult to estimate and are not quantified. Tata is also the poorest and most remote and ill-equipped of the six targeted areas. The choice of these provinces and the interventions within them are justified in terms of poverty alleviation rather than increased production. As anticipated, higher retums are expected in Khkmisset, Khouribga and Sidi Kacem, where agro-ecological and socio-economic potentials are higher. Benefits quantified are derived from additional crop and livestock production in the six PMs. They come from four sources: (a) increase in yields; (b) (slight) increase in cropped areas as a result of decreased fallow land; (c) shift from low-value crops, basically cereals, to higher value crops such as fodder for livestock and fruits and vegetables; and (d) increases in meat production in pastoral areas (Tata, Boulemane and Taroudant). Other benefits, more difficult to quantify, have not been included in this analysis. They include: (a) a reduction in the instability of farm production levels, and therefore incomes, due to the implementation of drought preparedness strategies and mitigation measures; (b) public savings, mainly reductions in Government subsidies in favor of the current drought insurance system and reductions in debt write-offs with the rural credit organizations following drought episodes; (c) increases in off-farm incomes suporting local initiatives; and (d) benefits derived from the institutional strengthening activities in Component A, the impact of which will go far beyond the scope of the proposed project, principally in terms ofprogressive empowerment of local communities, increased efficiency of MADR’s interventions in rainfed areas as a whole (not only the PAZs) and synergies between MADR and other partners. A sensitivity analysis was carried out to determine the robustness of the NPV and ERR to changes in key variables. The results indicate that the ERR is particularly sensitive to changes in crop yields and agricultural output prices, as it drops below 10% when these parameters decrease by 10% and 18%

- 18- respectively from the base case scenario. Otherwise, changes in costs and prices of individual inputs and adoption rate ofthe improved technology produce small impacts on the ERR. Economic input and output prices are exogenous variables not under the control of project interventions. Increase in yields as a result of project activities depends on the successful development and extension of field-tested farming technologies, the successful implementation of the drought preparedness activities and the actual implementation of physical investments such as the rehabilitation of the irrigation infrastructure, land improvements etc. The particular sensitivity of project retums to these parameters, notably the vulnerability of rainfed agriculture to erratic rainfall, calls for a close and systematic supervision ofthese components to avoid a negative impact on project returns.

2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) The main financial benefits accruing to farmers are the increase in revenue stemming from intensification and to a lesser extent, diversification towards higher-value crops and increased cropping intensity. On the other hand, production costs are increased by increased use of inputs (land preparation and land management, pesticides, fertilizers and improved seeds). The financial analysis focuses upon the profitability of crops supported by the project. Increases in net revenues as a result of project activities were calculated for all crops and FRRs were calculated for tree crops requiring longer-term investments. The results of the models demonstrate that the possible growth of net income with improved techniques is substantial: more than US$lOO per ha per year in most cases or more than 50% growth in gross income. For olives, the FRR ranged from 11% to over loo%, for almonds from 39% to 56% . These results can only be considered preliminary, however, because as indicated above, many of the costs and benefits will only be known at the time of implementation, when improved farming techniques suitable to the particular agro-ecological conditions of the areas targeted will have been field tested, and when the populations involved will have made their choices concerning the improved technical packages they wish to adopt. However, it is clear that the technical improvements proposed are potentially attractive from a financial point of view. The calculations carried out also suggest that part of the direct investment costs could be absorbed by the beneficiaries, while still maintaining attractive profits. For example, the investment costs of irrigation are estimated at about US$1,830 per ha (with physical contingencies). A financial contribution from the beneficiaries equivalent to 20% of these costs, spread out over 10 years, represents US$37 per year, compared to the growth of income (minimum) of US$lOO indicated in the previous paragraph. As for income, these results can only be preliminary. The calculations can only be made at the time of implementation, when the works to be undertaken have been identified.

Fiscal Impact: On the cost side, the fiscal liability arising from the project is easily manageable for GOM and well within the budgetary allocations for rainfed agriculture in the current Five Year Plan.

0 Proiect investment costs of about US$36.9 million would be bome largely by GOM while the total contribution from beneficiaries is expected to represent about 3% of investment costs. The average annual outlay during the investment period (US$6.2 million equivalent excluding the beneficiaries’ contribution) represents only 3% of MADR’s total investment budget, and 0.3% of the national public investment (Budget Gknkral, Loi des Finances 2001). In addition, through its drought preparadness component the project will help farmers manage their drought risk, thereby controlling fiscal costs.

0 Long-term recurrent costs are equivalent to about US$0.7 million annually, which is less than 0.5%

- 19- of MADR’s total operating budget. Moreover, it is expected that about 30% of these costs would be borne by the beneficiaries. On the revenue side, about US$7.4 million of the project costs consist of taxes and duties and would return to GOM. No other sources of revenue are expected since agricultural activities are normally exempt from taxation. In the long run, however, improved health and (consequently) productivity ofthe rural populations would add to national income, which in turn should have a positive fiscal impact.

3. Technical: Predominant technical issues identified during preparation were related to the high risk and limited opportunities for productivity growth and diversification in marginal farming areas. Three key issues have been analyzed: (a) the availability of adequate technology; (b) the adequacy of support services; and (c) the adverse effects ofclimatic variability. Availability of adequate amicultural technolow for the rainfed areas. Poor performance of rainfed agriculture has been attributed to a lack of technology to improve production and enhance drought resilience of production systems in rainfed areas. However, studies during preparation show that research has generated a vast amount of technology and that local know-how and experience provide many answers to technical problems. Much technology has been developed, with positive results, such as the use of more drought resistant varieties, improved fallow management (minimum and no-till), the use of water harvesting techniques and of grazing reserves for livestock. There are also good opportunities for diversification in these areas, for example with fruit trees and more intensive livestock production (small-holder dairy production and poultry). While many of these technological ideas look promising, information on their economic feasibility and likely adoption by farmers is lacking. In fact, it is not a shortage of technology but rather weak technology transfer and adoption that represents the key technical constraint to rainfed agriculture development. These findings have been illustrated in the Architypes and incorporated into the project design under Component A which will support: (a) participatory adaptive research activities through a demand-driven fund and strengthening decentralized research network; and (b) the preparation oftechnical reference manuals and specific studies for each PAZ. Adequate Support Services. One of the main challenges facing the project will be to promote the available technical improvements among the farmers. This technology transfer will rely heavily on the CT/CMV staff. The study on restructuring MADR’s external services provides a detailed review of the institutional capacity and technical skills of the CT/CMV involved in the project which now has to be translated into clear recommendations in terms of human resource development and management. As a result of this finding, a comprehensive restructuring plan will be developed and implemented with project support. Farmers’ Risk Management for Drought. Greater variability in climate and rainfall in the late 1980s and 1990s and also the expansion of cereal production into more marginal areas have increased vulnerability to drought and therefore increased variability in yield and production. In addition, increases in use of better seeds and fertilizers, while improving yields, also tends to amplify variability as the crops require more water to achieve their genetic potential but can give substantially lower yields when rain is lacking. Farmers exposed to drought over time have adopted long- as well as short-term coping strategies which vary according to the regions and may have positive as well as negative environmental impacts. GOM is increasing spending on drought mitigation and there is a tendency to include more provinces. It is also advocated that micro-financial services to the rural poor will not function properly unless complemented by drought insurance schemes. These issues will be dealt with under the project. At the field level - technical packages and investments will be designed and selected with a view to increasing drought resilience,

-20- and provinces will develop capacities for early warning and drought contingency planning in order to improve the timeliness, targeting and effectiveness of drought mitigation. The project will also work at the national level harnessing the considerable national technical capacity in early warning systems to construct a national drought management strategy which will allow for better national targeting and also the implementation of sustainable pilot models of drought insurance. Furthermore, drought considerations will be better taken into account in national agricultural policy. GOM is now considering changes in the official incentive structure for commodities which will reduce incentives to cropping on marginal rainfed lands and thus reduce environmental risk.

4. Institutional: The major institutional challenges facing the project include decentralization and participation, which would require a reform in the structuring of MADR's field services. The Rural Development Policy Note (Note de Politique de Dkveloppement Rural) discussed during negotiations and presented in Annex 15, includes a section on the restructuring ofthe "deconcentrated" Ministry services. This Note describes the long-term vision for the institutional reforms necessary to promote sustainable integrated rural development. The proposed project will support MADR prepare this reform by providing technical assistance. 4.1 Executing agencies: MADR would be the executing agency ofthe proposed project and has also been officially designated as the Secretariat of the CIPDR. Agricultural infrastructure works and agricultural development activities included in the CPs will be carried out by MADR under the project, while all other rural infrastructure financed by the FDR will be executed by the relevant technical departments represented at the provincial level, under the supevision of the CPRDR chaired by the Governor. 4.2 Project management: The project will establish the CGP. Within the CGP, a full-time project manager will be appointed for the Project and helshe will be assisted by an accountant and a secretary. In each province, the DPNORMVA Director will establish an adequately staffed UGP whose mission would be to monitor project implementation, in particular the financial management aspects. Efficient project management requires a good flow of information and a close coordination between MARD's central and provincial levels, and among the relevant technical departments represented at the provincial level. A joint Decree (Circulaire conjointe) will be sent to the Governors, specifying implementation arrangements and integration mechanisms. The proposed project will also benefit from the long-standing experience of the core members of the CCSS who have been involved in the supervision of the PMVB program since 1996. From project preparation, the CCSS was effective. During the project, CCSS will refocus on its advisory and coordinating role, and implementation will the responsibility of the CGP, the DPAdORMVAs, the CTsICMVs, and the provincial technical departments assisted by the EAM and the EPP. 4.3 Procurement issues: The national legislation on procurement, with some exceptions, is generally in line with the Bank's Guidelines. In particular the following procedures, not provided in the national legislation, must be applied under Bank financing: (a) the two-envelope procedure is not used for bids for works and goods; (b) quantifiable bid evaluation criteria are included in bidding documents and, in the case of goods, no points system is used; and (c) open competitive bidding for consultants is not applied (see CPAR, February 2000). A satisfactory "Assessment ofAgency Capacity to Implement Procurement" was carried out during appraisal and the procurement plan for the first two years of the program has been finalized.

-21 - The overall procurement risk has been judged to be low. 4.4 Financial management issues: As required, the financial management system for this project was assessed by the Bank under OPBP 10.02. The assessment, which included visits to MADR, DAF, MOF, and TGR, focused on the accounting system, internal controls, planning, budgeting and financial reporting systems to be used during project implementation, as well as the format and contents of the project Financial Monitoring Report (FMR) to be submitted by the Bank. The financial management arrangements suggested for the project satisfy the Bank’s minimum financial management requirements. The reporting system used for the IBCD project will be adapted to cover the project, including the rural infrastructure compoment funded under FDR, and this will complement the current financial management system. The risk areas, assessed as medium, are related to: (a) the decentralization of implementation inherent in the participatory approach; and (b) reforms required to strengthen MADR’s deconcentrated services. These risks will be reduced by: (a) the capacity-building measures taken at the central level, including adequate staffing in terms of numbers and skills in the PMU; (b) the detailed description in the PIP of specific rules and procedures; and (c) close supervision by Bank staff during the first year.

5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. It is recognized that the rainfed ecosystems in Morocco are fragile and that the increasing use of these marginal areas for agriculture and livestock production can render them more vulnerable. One of the challenges faced by this project will be to ensure that the optimum ecological balance is maintained in these zones and that the carrying capacity is not exceeded. For these reasons, an Environmental Assessment (EA) was carried out during preparation and an Environmental Management Plan (EMP) and an environmental manual have been prepared. The EA identified a number of positive impacts on the environment and identified issues related to land and irrigation development and to rural infrastructure. The issues related to land and irrigation development concern largely mechanical and chemical land clearing and water management. The issues related to rural infrastructure are those typically associated with investments in access roads and potable water. 5.2 What are the main features ofthe EMP and are they adequate? Key findings and recommendations are summarized in Annex 12. Given the participatory approach adopted and the integrated decentralized programming and budgeting of activities under the project, the content of components cannot be known with precision in advance. As a result, EA and EMP procedures need to be applied to project investments as they are identified. Provision has therefore been made to incorporate an environmental assessment and the design of mitigation measures (if necessary) into the technical study process for each investment. In addition to the preparation of the environmental manual, which sets out review procedures for each type of investment, a training program for all concerned project agencies, RCs and beneficiaries and their institutions, has been designed to ensure awareness on environmental issues and to create the capacity to manage EA and EMP procedures for the program during implementation. The EA raised two minor issues relating to the use of chemicals to remove shrubs (Jujuba spp.) and Doum palm regrowth (Hyphaene thebaica) which trigger the safeguard policy on pest management (OP 4.09). Glyphosate will be used on approximately 800 ha in Khemisset, Taroundant and Khouribga Provinces. A glyphosate management plan has been developed and is presented in the EA. No other pesticide product will be financed by the project.

- 22 - 5.3 For Category A and B projects, timeline and status of EA: Date ofreceipt of final draft: February 20,2002

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms ofconsultation that were used and which groups were consulted? During project preparation, relevant GOM agencies, as well as beneficiaries, were consulted in the course of preparing the EA report. During implementation, the training program and the participatory approach used in the project will ensure a involvement ofthe stakeholders and the concerned population. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? As part of the institutional strengthening component (Component A), the project will strengthen MADR's M&E evaluation capacity, at both the central and provincial levels, and help establish a drought early waming system, where environmental indicators will reflect the objectives and results of the EA. Environmental indicators and monitoring implementation of the EMP will form part of regular project M&E. In addition, the combined effects of the training program, the use of the environmental manual and the systematic involvement ofbeneficiaries and civil society, will ensure that a continuous informed check on environmental aspects is exercised throughout the project. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. The social and beneficiary assessments undertaken during preparation confirms statistical information on the persistence of poverty in the project area. These assessments identified: (a) the material and economic causes of persistent poverty; (b) the adaptive strategies that are used to cope with uncertainty, poverty and drought; and (c) the needs of beneficiaries and the best ways to address them under the RADP. A similar assessment will be carried out during the first year of project implementation for the Errachidia Province The causes of poverty identified in these studies are: First, the depleted resource base, degraded and misused for generations, with limited opportunities for agricultural improvement; Second, the strong out-migration, and the concomitant social effects, including: (a) unbalanced demographics, with youth and the elderly who cannot contribute to productive activities; (b) more households headed by women and lacking the necessary support mechanisms to be efficient decision-makers; (c) a social vacuum left in the local leadership structures; and (d) an overall reduction ofproductive labor in the communities; Third, remoteness and a low level of social infrastructure, which result in literacy rates below the national level, less access to health and infant care leading to higher matemal and infant mortality, and lack ofaccess to markets, all of which contribute to the continuing cycle ofpoverty; and Finally, weak and ill-adapted agricultural support services. The institutional culture of MADR has been one of traditional agricultural extension demonstrations rather than a community oriented organization working in a participatory way to identify problems and to solve them. These social issues will be addressed through a community driven approach taking advantage of the existing social organizational and traditional bonds of solidarity and other organizational forms. The key concept is to promote participation and teach the communities to identify their needs and how to organize progressively to take development into their own hands. 6.2 Participatory Approach: How are key stakeholders participating in the project? The project’s design supports deconcentration, an integrated approach to rural development involving stakeholders at all levels, and partnerships between government, non-government and technical and financial agents and the communities. The beneficiaries will be involved as primary stakeholders in all aspects ofthe program affecting them directly:

0 At identification: community-based needs identification and goal setting is intrinsic to the approach of the program. Trained facilitators and enabling institutional and financial measures will support this;

0 During design: the communities will contribute to the preparation of CIPs;

0 The implementation phase will actively involve beneficiaries in on-farm and natural resource management activities (Sub-component B. l),in construction and management of agricultural infrastructure (Sub-component B.2: Rural Infrastructure) and training and other activities through NGOs and farmer organizations, (Sub-component B.3 : Support to local initiatives); and

0 Participatory monitoring (see Section C.4).

6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? The preparation of the project involved detailed consultations with existing NGOs, as potential service providers, and with farmers organizations as project partners. A detailed diagnostic analyzed and evaluated the experiences, interests, and areas of specialization of these institutions. As a result, a partnership approach has been adopted for the project under which NGOs may provide services on contract under Component B.3, and farmer organizations will be full partners in field level activities. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? The focus of institutional development under the project is at the communal level, on the CRs, communities, local associations and farmers’ organizations. A program of capacity building will allow these organizations to identify and prioritize their needs, and to ensure their delivery through development and strengthening partnerships with government and other non-governmental partners. The project will involve the local communities in development planning through the design of CIPs. The key instrument for articulating community needs, mobilising resources and forging partnership is the CIP, which will link farmer organizations, local level elected institutions, local representations of other ministries and agencies, and NGOs. The project will assist communities to identify the best partners to deliver their community-driven programs, such as the Fonds de Dkveloppement Rural, the Agence de Dkveloppement Social, the Mohamed V Foundation or sectoral programs (e.g,. BAJ, PAGER and PERG).

6.5 How will the project monitor performance in terms of social development outcomes? The project’s M&E system at the community level (see Section C.4) will be participatory and focus on changes in the production systems, and increases in production, marketing, access to social infrastructure, as well as measures to reflect effective organization and participation. The baseline indicators for monitoring will be developed as part of the formulation of each CIP. In addition, the communities will receive training in appropriate tools and methodologies to enable them to record the nature of changes and their impacts.

- 24 - 7. Safeguard Policies:

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. For OP/BP 4.01, as indicated in Section E.5 above, the draft EA has been completed and the EMP is attached in Annex 12. Site specific mitigation measures for any potential adverse environmental impact, and monitoring systems to review their efficacy, will be developed under the project, following procedures in the EMP and the environmental manual. Also, the EMP includes a Pesticide Management Plan to meet the requirements under OP. 4.09. The appraisal mission confirmed that neither OP 4.04 on Natural Habitat nor OP 4.36 on Forestry are triggered. Also, OP 4.12 on Involuntary Resettlement would not apply since the proposed project will not finance any extension of irrigated areas, rural roads construction or rehabilitation that would require involuntary land acquisition or involuntary physical relocation. Project monitoring and supervision will ensure that no such financing takes place.

F. Sustainability and Risks 1. Sustainability: The technical sustainabiliv of the project will be ensured by: (a) the elaboration of reference manuals accessible to all parties concerned; and (b) the development and extension of field-tested farming technology suitable to the particular ago-ecological conditions of each areas. In addition, the drought preparedness component aims to improve the resilience of farming systems in drought-prone rainfed areas. The institutional sustainabilitv of the project will be ensured by: (a) the direct involvement of the rural communes and local communities in the formulation and implementation of their PICs; and (b) the refocusing and strengthening of MADR’s field structures. Financial and economic sustainabilitv will be ensured by: (a) the viability of the farming technologies promoted under the project; (b) adequate financing of the recurrent costs after the investment period by all parties involved, including the rural communes; and (c) the improvement in the socio-economic conditions ofthe targeted populations. Replicabilitv. The project’s planned actions in the six PAZs will be replicable in various ways. First, the reference manuals and farming technology developed and field-tested could easily be exported to other locations with similar ago-ecological conditions (archktypes). Second, the various approaches,

- 25 - methodologies and mechanisms put into place (ex: for formulating CIPs, building partnerships and dealing with drought) can be adapted for other locations. The knowledge acquired by MADR will be transferable across its field structures. CCSS is expected over time to assume responsibility for all integrated rural development programs, and the proposed project will provide methodological and training for this which will facilitate the establishment of a consistent approach to rural development and create synergies and minimize costs.

2. Critical Risks (reflecting the failure ofcritical assumptions found in the fourth column ofAnnex 1): Risk Risk Rating I Risk Mitigation Measure From Outputs to Objective MADR cannot establish its role within S The CIPDR-approved Sector Policy Letter sets Government as coordinator of integrated out MADR’s role in rural development. rural development.

MADR cannot cany out efficiently the S Institutional strengthening is provided under rainfed area strategy and development the project. M&E system and Bank program laid out in the project. supervision will allow for early detection of problems.

MADR’s restructuring of its field M Technical assistance is provided to assist structures is inadequate. MADR in preparing the reforms.

There is a lack ofpersonnel with M A comprehensive traininghecycling program sufficient skills for staffing the EAMs for technical and administrative staff will be and EPPs. implemented.

The governmental and non-governmental M Sensitization workshops will be held in the six partners do not participate in the CIPs. PAZs at project startup. The CIPDR and CPRDRs will actively promote partnership between MADR and other organizations.

The targeted local communities are not S With the active support of EPPs, a participatoq participating as planned. approach is used from the identification of the PICs through their completion. Furthermore, demand-driven funds are available to foster community participation.

There is a prolonged drought and/or a S Early warning systems and crisis management widespread epidemic affecting livestock. programs are in place.

GOM’s strategy against drought is M Drought-resistant crops for which there are ineffective. potential markets are promoted and specific built-in M&E measures will inform sufficiently in advance during project implementation to take corrective actions.

No new drought-resistant farming N The existing technology will be disseminated. technologies can be found. Research includes building on experience and

- 26 - results achieved in comparable countries.

Market prices for agricultural products S The Bank is assisting GOMto reform the fall to uneconomical levels. cereal sector to promote remunerative prices to agricultural producers. Market prices for other agricultural products are more stable.

I From Components to Outputs Sufficient budgetary resources at the N Rainfed agriculture development is a priority central and provincial levels are not and the project is part ofthe GOM’s Five-Year available in time. Plan.

MADR’s staff is not klly committed to S Experience shows that staff are well motivated the use ofa participatory approach with when participatory programs are well designed. the local communities. and adequate training, methodological and logistical support are provided.

Goods and services are not delivered in Procurement planning is given high priority time in sufficient quantities. with assistance from the Bank. Overall Risk Rating S

The overall risk is rated “Substantial”. The proposed project is subject to three major types ofrisk

(a) A climatic risk, inherent to rainfed agriculture which is highly susceptible to variations in rainfall. To address the structural nature of drought, the possibility of its increased frequency over the medium and long-term, and the need for cost effective use of the considerable resources currently expended on drought mitigation, the proposed project will develop an integrated drought management system. It will focus on monitoring and early warning, contingency planning and policies that promote long-term drought resilience, including agriculture research and drought insurance (see Annex 13). (b) A policy risk from the current incentive/price structure for cereals, and from possible future adjustments to that structure. The current structure comprises a high rate of border protection with a high subsidized procurement price for soft wheat for farmers who sell to the official circuits (about 2 percent of farmers nationwide). This structure has led to increasing cereal cultivation on rangelands and to a bias towards soft wheat at the expense of more drought-resistant crops. The present system thus carries risks of environmental degradation and increased vulnerability to drought. GOM is currently reviewing policy and may move towards phasing out protection and producer subsidy. This would achieve several important policy objectives (fiscal savings, elimination of the anti-export bias and environmental protection) but could lead to a loss of farm income, particularly during the adjustment period while cropping patterns change. These risks have been evaluated as comparatively small in the project area, as most farmers are cereal deficit and, like most smallholders nationwide, do not sell in the official market. Some effects are expected on comparative prices and in the labor market through the reduction in person-days employment on the larger cereal farms in the area. These impacts are not expected to be considerable, and it is likely that GOM will introduce compensation measures that will more than offset the negative impacts. In the longer term, the reform is expected to have a positive effect on both incomes and risk, as cropping patterns and land use evolve towards crops and activities for which Morocco has comparative advantage (see Annex 13). The base

- 27 - line survey will provide the departure point for monitoring, and as and when the reforms are introduced, the M&E system will track impacts. The situation will need to be checked again at the time ofthe MTR.

(c) An institutional risk that MADR may not be able to carry out its role in the project, and in rural development in general. This risk has two dimensions. The first one relates to the efficiency of MADR. Analysis carried out during appraisal shows that MADR’s deconcentrated services need to be restructured if they are to perform efficiently. The Rural Development Policy Note presents MADR’s plans for restructuring in the medium term in order to reach fully effective implementation of its strategy. The risk that this commitment cannot be implemented is mitigated by the strong political support existing for regionalization and “deconcentration“ of all public services, and by the technical assistance provided for the restructuring under the project. The second dimension of the institutional risk is related to the “intemated” dimension of rural development. At the local level, the project will use a tested methodology for ensuring an integrated approach to development through local participatory diagnostics and programming, strengthening of the institutional capacity of the rural communes and establishment of local multi-sectoral commissions (CLMVA). There is a risk that departments at provincial and central levels may not cooperate filly, as each department targets its own “sectoral” programs and may be unwilling to cooperate or to eannark resources for the integrated approach. In mitigation of this risk, GOM has put in place coordination and joint programming mechanisms at the provincial level, CTP, and at the central level, CIPDR). It is likely that the current strong political impetus toward regionalization and “deconcentration” will drive the coordination and integration process strongly. This risk, however, needs to be monitored carefully and should be revisited during the MTR.

3. Possible Controversial Aspects: The 2020 Rural Development Strategy assigns a coordinating role in rural development to MADR, and requires other departments to finance and implement rural development activities within an integrated framework established from the base up under the aegis of MADR. This vision, which is central to the project, was intensively discussed within CIPDR before negotiations. The decision which was taken, i.e. to use FDR as an integrating mechanism, should ensure a smooth and flexible framework for the successful implementation of such participatory projects.

G. Main Loan Conditions 1. Effectiveness Condition Standard Conditions ofEffectiveness

2. Other [classify according to covenant types used in the Legal Agreements.] Financial and Audit Standard provisions.

Project Implementation e The Implementation Manual (IM), reviewed during negotiations and acceptable to the Bank, will be revised within six months of loan signing, in order to take into consideration the changes agreed upon

- 28 - during negotiations. Responsibility for overall project implementation shall be vested with DAF who shall be assisted by CGP, which shall be maintained throughout the duration of the project under terms of reference acceptable to the Bank. In implementing the project, the CGP shall be guided at all times by the processes and procedures contained in the IM, including the arrangements regarding the management of the project, its supervision at the central level and at the participatory programming level. On the role of CCSS, the Borrower shall expand CCSS’ original mandate, as described in the Borrower’s Ministerial Decision No. 21/95/AGR/DAF dated May 19, 1995, to include the validation of CIPs and progress monitoring of physical and financial operations, within six months of loan signing. At the provincial level, the project shall be implemented in accordance with the processes and procedures contained in the IM. Except for (a) agricultural advisory services which shall be carried out by CTs and CMVs, and (b) non-agricultural infrastructure which shall be carried out by the relevant provincial services, responsibility for project implementation shall be vested with each relevant DPA or ORMVA, assisted by a provincial management unit. On CIPs financing, the Borrower shall ensure that all rural infrastructure included in CIPs be financed under the Sectoral Programs or by the FDR, in accordance with the Rural Development Policy Note dated May 5,2003, and attached in Annex 15. The Borrower shall provide DPAs, ORMVAs and CTs, with human resources in adequate numbers and acceptable to the Bank to ensure effective project implementation at the provincial and local community levels, all in accordance with the IM. On the Errachidia Province, the Borrower and the Bank shall agree, not later than June 30, 2005, on the program of activities prepared by the Borrower. No activity under the project shall be executed in said province unless: (a) the Borrower shall have first carried out and submitted to the Bank for its review and approval, the diagnostic studies prepared on the basis of terms of reference acceptable to the Bank, with a view to evaluating said activities and their social and environmental impact in said province; and (b) the execution of said activities complies with the provisions of this agreement and the IM.

The Borrower shall carry out the project in accordance with: (a) the Implementation Program set forth in the Loan Agreement; (b) the EMP; and (iii)the IM.

Monitoring, Review and Reporting

0 Standard reporting covenants will apply.

0 For every twelve (12) month period until completion of the project, the Borrower will provide the Bank, for its review and approval, with progress reports prepared in accordance with environmental and performance monitoring indicators set forth in the EMP and agreed upon between the Borrower and the Bank.

0 To ensure adequate planning of project activities, CGP will, no later than October 31 of each fiscal year of the Borrower, prepare and submit to the Bank for review a work program listing all activities to be carried out under the project during the following fiscal year.

0 The Borrower shall at all times implement the EMP in a manner satisfactory to the Bank. The Borrower shall not amend or waive any provision of the EMP without the Bank’s prior agreement.

0 The Borrower shall: (a) maintain an adequate M&E system; (b) by December 31, 2004, carry out a

- 29 - baseline survey; (c) by June 30, 2006, prepare, a Mid-term Implementation Review Report on progress achieved to date and the measures required to successfully complete the project, including changes ofrural comunes or the expansion of the project to other communes in the project area under criteria acceptable to the Bank, if applicable; and (d) by September 30, 2006, review the Mid-term Implementation Review Report with the Bank.

H. Readiness for Implementation a 1. a) The engineering design documents for the first year's activities are complete and ready for the start ofproject implementation. 1. b) Not applicable.

2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 4. The following items are lacking and are discussed under loan conditions (Section G):

1. Compliance with Bank Policies 1. This project complies with all applicable Bank policies. 0 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies.

4 c( Laurent Msellati Letitia A.Obeng Theodore 0.Ahlers 1 Team Leader Sector Director Country Director

- 30 - Annex 1 : Project Design Summary MOROCCO: Rainfed Agriculture Development Project

xtor Indicators: ‘ectorl country reports: :from Goal to Bank Mission) [mprove livelihoods of )cia1 and economic [ousehold surveys (Direction The economy and in particular smallholder farmers in rainfed dicators in rural areas (in e la statistique du Minist2re :he agricultural sector are ireas by promoting local Id outside rainfed areas) e la Prkvision Economique et yowing steadily ?articipatory development and naller year-to-year variations u Plan) Fostering sustainable the agricultural GDP. 30M continues to support IADR statistics (mainly igricultural development. ictively the development of xpenditures in rural :ainfed areas. ouseholds).

Project Development utcome I Impact ‘roject reports: [from Objective to Goal) 0 bjective: dicators: 1. Reinforce, in rainfed areas, An institutional mechanism 0 At the communal and MADR continues to promote institutional capacity for for local participatory provincial levels, xtively the development of project formulation and development is established mechanProject progress rainfed areas. implementation, in partnership and set in motion: Nb. of and M&E reports. with the communes and other functional CPRDRs and GOM supports the integrated local organizations. CLMVAs. 0 Activity reports produced rural development strategy and At the communal and by the Communal ill departments implement it. provincial levels, Councils and other mechanisms for integration partners. are in place: CIPs completed or under implementation, and % of non-agricultural funding (Le., FDR, Sectoral Progams and Beneficiaries). Public investments in rainfed areas are increasing. 2. In the seven PAZ: Incomes ofthe targeted 0 MADR statistics on rural GOM supports actively local B Improve the incomes ofthe populations have increased households. capacity-building. local populations and and their inter-annual Market prices for agricultural reduce their vulnerability to variations are reduced. products remain sufficiently drought. attractive.

B Improve access to public Number of“douars” Project progress and M&E There is no prolonged and social services. accessible by road all year reports. drought, and GOM’s strategy round has increased. against drought is effective. Irrigated areas are expanding. The coordination mechanism established at provincial level for ensuring financing ofthe CIPs by other agencies is effective.

- 31 - Iutput from each utput Indicators: roject reports: [from Outputs to Objective) Zomponent: i.Implementation capacity is trengthened. dADRs implementation Mandate ofCentral roject progress and M&E MADR continues to promote :apacity (at central, provincial Commission for :ports. actively the development of md local levels) is Supervision and Monitoring rainfed areas. :trengthened is refocused and strengthened (Ministerial MADR’s restructuring of its Decree). field services is carried out as The methodological support planned. team and the PMUare staffed, trained and Adequate personnel/skills are operational. available for staffing at DPA Efficient M&E system is in and CT. place. The participatory programming teams in each PAZ are staffed, trained and operational. Number ofstaff trained in environmental risk assessment and mitigation. tural development programs Number of CIPs prepared roject progress reports. Integration is effective and all nclude main non-agricultural Percentage of governmental and is well as agricultural non-agricultural activities in non-governmental partners in ictivities CIP’s (investments amount development participate or number ofactivities). efficiently.

Local capacities are Share ofCIPs financed roject progress reports. Local communities are itrengthened in the seven through Communal ictivity reports produced by participating actively. ’AZS. Councils. le Communal Councils. Number ofnew local associations. Number ofNGO’s and FO’s staff trained.

Zlimatic risks are fully taken Drought preparedness INS’S activity reports New drought-resistant farming nto account in the regional programs including roject M&E Reports. technology is found through ievelopment strategies “banques de projets” are research. daborated. implemented for the seven provinces. System ofrainfall based insurance piloted and evaluated in one province.

Specific participatory research INFU’s decentralized ativity reports prepared by INRA gives sufficient priority ictivities for rainfed areas are research network is VRA and external services. to the seven PAZ. :arried out. strengthened. Numbedmagnitude of pecific surveys. research results directly applicable to rainfed areas.

- 32 - 4ADRs capacity to help the Number offarmers involved 'roject progress and M&E !esearch on new irmers reduce their in the project. eports. rought-resistant technology is ulnerability to drought is Improved drought-resistant uccessful. trengthened. farming technology ipecific surveys. introduced and widely adopted by farmers (as a percentage of areas).

1. Agriculture Development ictivities are implemented in lriority areas. ;arming and pastoral systems Yields ofmain crops have 'roject progress and M&E kequency and duration of re improved through the increased and are more eports. .rought in rainfed areas is not doption ofbetter technology stable through the years ncreasing. nd the carrying out ofland (e.g., barley, wheat, olive, .evelopment works. and meat). 'revalence ofanimal diseases Land development works 3 controlled. completed: ha ofland improvement (agricultural, darket prices for agricultural forest and range), ha ofsoil lroducts remain sufficiently and water protection. ttractive. Improved technology has been developed and adopted by farmers (percentage offarmers, land or herds with improved technology).

3asic rural infrastructure is Km of additional rural 'roject progress reports it the provincial level, the mproved. roads. Jarious reports from :CP validates the CIPs and all Ha ofrehabilitated and levelopment partners, mainly lepartments implement it. improved SMI. he Ministere de 1'kquipment. Other investments according to CIP. luman development in local Number of "conventions" 'roject progress reports :omunities is effective: adult implemented with local Zeports from development iteracy, training, micro-credit, partners. iartners. ;mall and medium scale Number oftrained persons. mterprises. Literacy rate. Number of SME created.

- 33 - Key Performance Indicators Project Components I iputs: (budget for each- Sub-components: omponent) Outputs) A. Strengthening of JS$8.9 million 'roject progress and M&E Timely availability ofthe implementational capacities. eports. necessary budgetary resources A. 1 At central level. at the central as well as A.2. At local level. provincial levels. A.3 Support to rainfed agriculture. B. Developmental activities in JS$3 1.9 million 3ank reports (Supervision). Continued commitment by the PAZ. MADR for local participatory B.1 Agricultural and pastoral development. development. B.2 Rural infrastructure development. B.3 Support to local initiatives.

- 34 - Monitoring: and Evaluation (M&E)r

Organization

Project M&E will be based on existing structures and systems within MADR. The RADP will address institutional strengthening through the following measures: (a) assistance to the M&E system at the central level (DAF and DPAE) as well as in priority action zones (PAZ); and (b) implementation of an early warning system for drought preparedness.

At the community level, the monitoring and evaluation system to be implemented will have a participatory approach. Monitoring indicators will be identified in conjunction with the CIP preparation and will focus on: (a) likely changes that may occur in production systems (e.g., increase in production and key marketing speculations and in natural resource management; (b) access to services and basic infrastructure; and (c) measures to be taken to ensure effective local community participation and organization.

Particular attention will be given to M&E ofthe project’s impact on the poorest and most vulnerable rural populations. Moreover, communities will receive methodological training on monitoring instruments used to gage the occurrence changes and their likely impacts.

Environmental Monitoring

M&E will also include indicators for environmental monitoring by type of land development or investment. Possible result and impact indicators are given in the environmental monitoring checklists in the EMM as well as in the impact identification and characteristics table in Annex 12.

The main environmental risks are related to soil sensitivity to wind and water erosion, degradation of natural resources (water, forests and rangelands), and drought vulnerability ofproduction systems. The Performance indicators will need to take these issues into account. Moreover, particular attention will be given to jujubier chemical land clearing activities and monitoring the use of Glyphosate.

Performance Indicators

On the basis ofpreparation documents from MADR, and with the assistance ofFAO’s Investment Center (ref. The Project Implementation Plan), the following performance indicators are indicative and could be used for each project development objective, as well as results and impact in the seven provinces selected.

Moreover, basic surveys will be conducted during preparation of each CIP to determine “reference situations” and a MTR will help measure the results in project implementation and identify recommendations to ensure sound project execution. These “reference situations” will also include a poverty profile in various rural communes, with a breakdown of the local population regarding agricultural and non-agricultural earnings, access to natural resources and level ofeducation and living conditions. A baseline situation will be established in certain zones with and without project intervention.

- 35 - Component A - Strengthening of capacity reinforcement in the development of rainfed areas

The project’s institutional strengthening at the local and central levels has the following objective:

Objective No. 1: Identification of capacity development and GOA4 intervention in rainfed areas, in collaboration with local organizations.

Indicators I Target- I Number ofCIPs implemented according to forecasts Impacts 10 Percentage ofCIPs financed by parties other than MADR 30% (FDR, Sector Program, Beneficiaries) At the provincial level, number ofworking CPRDRs 6 /At the communal level, number ofworking CMLVAs 10 Public investment increases in rainfed areas 20% At the central level, methodology assistance teams in place Results 1 M&E reports available by semester 2/an At the provincial level, programming teams in place 6 Number ofpersons trained in evaluation of environmental risks 20 Number ofpersons trained in procurement 4 pmber of CIPs prepared 10 bumber ofnew local associations m Number oftrained beneficiaries (community councils, associations, etc.) m Strengthening of national drought observatory 1 brought management plans and project bank in place at the provincial level 6 Assurance system based on rainfall indices tested in one province 1 Number ofINRA SRDs strengthened 5 Number of extension technology packages adopted by farmers m Drought-resistant technolow adouted bv farmers A/D

- 36 - Component B - Implementation of local development projects in the PAZ

The activities ofthis component have the following objectives:

Objective No. 2: Local population revenue increases and drought vulnerability reduction

I I Indicators I Impacts IIncreases in beneficiary incomes IIncreases in incomes of most vulnerable populations__ Reduction of annual revenue fluctuations Decrease in areas subject to erosion and deforestation Results Increase in main crop yields Reduction of annual yield fluctuations Agricultural infrastructures and land development completed I beneficiaries’ participation ratio in investments and maintenance I Water and soil conservation works completed Chemical and mechanical land clearing operations Number of conventions agreed with local partners Credit recovery ratio (fluctuations due to drought) Number ofPMEs created

Objective No 3 : Improvements in access to infrastructures and basic social services

I I Indicators I Impacts Improvement in socio-economic indicators of beneficiaries Improvement in socio-economic indicators of vulnerable populations I becrease in ratio oflandlocked douars I becrease in irrigation water losses Results Rural infrastructure completed Rehabilitation of irrigated areas I Number ofpersons trained I Increase in literacy ratio Number ofPMEs created

The following table shows the performance indicators for the seven priority action zones (PAZ) ofthe project. As previously mentioned, serious efforts will be made at the time ofCIP preparation to establish a reference point for each RC and to define relevant performance and monitoring indicators, using zones with and without project intervention.

- 37 - T >I =I I

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-38- Annex 2: Detailed Project Description MOROCCO: Rainfed Agriculture Development Project

A. Backmound

The Rainfed Agriculture Development Project (RADP) supports the implementation -y the Ministry of Agriculture and Rural Development (MADR) of the “2020 Rural Development Strategy”. This strategy introduces a new generation of integrated rural development projects and gives priority to rural areas that have been relatively neglected in the past by public investment. Moreover, this project falls in the framework ofLaw 33-94 which defines the principles ofrainfed development. Amongst these areas, the rainfed zones are a particular priority. The agriculture in these zones - called “bour” - is relatively backward, despite changes in agricultural policy over the last fifteen years. As a result, the population of these areas constitute one of the poorest “poverty pockets” in the country, and this poverty is particularly deep in the remote areas. These areas include the mountainous regions, the oases, and border areas, all of which figure as a priority for action in the Five Year Plan (2000-2004). The proposed RADP would be implemented as part ofthe new strategy with the objective ofassisting the development of these areas that have been hitherto left behind in the development process. RADP is a priority for GOM, and so is included in the Five Year Plan and in the most recent CAS of May 200 1.

B. Proiect Area and Beneficiaries

Project Area. The priorities for investment in rainfed areas are set out in the Five Year Plan. These priorities include criteria relating to the overall volume of state investments in any given area and socio-economic criteria such as the level of poverty. These criteria have been applied for the RADP to select six homogeneous areas out of the ten ago-ecological zones which exist in the country: the Atlas Mountains (Taroudant); the High Eastern Plateaux (Boulemane); the Pre-Sahara Oases (Tata); the Central Arid Zone (Khouribga); the Rif Foothills (Sidi Kacem); and the Cereal Plains (Khemisset). The project will concentrate its investments in these six “priority action zones” (PAZs) and will also lend methodological support to GOM’s overall program in rainfed areas. The PAZs are shown in the table below. Moreover, the Province ofErrachidia (presaharan oasis like Tata) was added during negotiations and will be subject to diagnostic studies during the first two years ofthe project. Rainfed Development Sites (PMVB). Under Law No. 33-94, GOM intervenes in specifically designated development sites (PMVB). Under RADP, seven of these PMVBs have been established within the six Pus. As the table below shows, each ofthese PMVBs coincides with the area ofa commune, except in Sidi Kacem Province where four adjacent communes will form a single PMVB. The communes in the Province ofErrachidia will be identified during project start-up.

Agroecological Zones Priority Action Zones Rural Communes PMVB “Archhtype” (PAZ) High Eastem Plateaus Boulemane Tissaf (1) 1 Cereal Plains Khemisset Kin Sbit (1) 1 Central Arid Zone Khouribga BCni Ikhlef (1) 1 Rif Foothills Sidi Kacem Ounnama, Mja&ra,TCroual, Zghira (4) 1 Atlas Mountains Taroudannt Tizi ”Test, Ouneine (2) 2 Pre-Saharan Oases Tata Tamout ( 1) 1 I 6 I 6 I 10 171

- 39 - Beneficiaries. In the field surveys conducted in September through November 2001, 230 villages ( douars) with a population of 91,000 people were inventoried. In the different PAZs, douars varied considerably in size, and also in the way the population is organized in the educational level of the elected representatives, and in the presence and structure of civil society organizations. Hence, program activities have to be adapted to local conditions.

Tata I Tagmout 1 21 1028 5279 I 184050 I 50 Total I 10 230 I 15391 91 228 I 573857 I 58 769

C. Project DescriDtion

The project has two complementary components: (a) a capacity building component designed to improve implementation capability for rainfed area development at both national and local levels; and (b) an investment component to finance development activities in the selected priority rainfed areas in seven provinces. The six year program will be in line with the principles and objectives of the 2020 Rural Development Strategy. At the end of this first phase, the program will be extended to other areas. Under RADP, MADR will focus on agricultural development,but will also play an important role in mobilizing other rural development players and in supporting local communities and local governments in formulating their own development programs. MADRs central role in rural development stems from two factors: (a) the key place for agriculture in driving sustainable rural development and poverty reduction; and (b) MADR’s significant field presence. In order to carry out this role to the full extent, MADR will, in due course, have to restructure its field services in order to make them more efficient, to simplify the current complex set up (DPA, CT, ORMVA, CMV, and CDA) and to give priority to developing local level partnership arrangements.

By Component:

Project Component 1 - US$8.90 million

Comuonent 1: Strengthening of Imulementation Cauacitv for Rain fed Agricultural Develoument The institutional strengthening component is designed to improve the efficiency of development programs implemented in priority rainfed areas. Moreover, the benefits of this component are expected to spill over into rainfed areas in general. There are three sub-components.

- 40 - Sub-comuonent A.l: CaDacitv buildinp in MADR headauarters

Methodological Suuuort. This activity is aimed at developing a harmonized and integrated approach in MADR’s various initiatives in rainfed areas. Under RADP, a program of methodological support will strengthen MADR’s central departments to create a capacity to develop and apply new methodologies and tools, to prepare training programs, and to “capitalize” information and experience from a range of on-going and past projects. The support will be flexible and will: (a) build capacity in the Commission centrale de supervision et de suivi (CCSS) to carry out its functions, which are to be extended to cover all MADR rural development programs; and (b) reinforce the capacity of field services involved in RADP to identify and formulate new projects. RADP will help set up a methodological support team Equipe d‘appui mdhodologique (EM) within the project unit (CGP). Key tasks of the four-person team would be: (a) support to the programming teams in the seven provinces during the first there years of the project; (b) the development of methodologies for project identification and M&E and evaluation; and (c) capitalization and difhsion ofinformation on the progress and results ofRADP. The proposed project will finance: Methodological support team (EM) (consultant services, equipment and vehicles, and operating costs); Contributions from a network of resource persons and specialists through periodic support missions (through a framework contract for technical assistance); Preparation ofmanuals and operational handbooks; Revision of the Procedures Manual, including standard terms of reference for the preparation of the Communal Investment Plans (PICs); Preparation of programs of technical and management/administrative training to be implemented by DERD and DRH respectively; Training of trainers; and Carrying out strategic studies on rainfed area development. One of these studies will comprise follow up to work currently under way on “local level approaches” in agriculture, with a view to identifying development packages adapted to the main economic activities in each agricultural area.

Monitoring and Evaluation Svstem (M&E) The M&E system is to be a management rather than a control tool. It will support decision making and therefore improve efficiency. The system will be organized at different levels (communes, CTICMV, DPNORMVA and CGP). There will be two activities: a Monitoring of project activities (physical and financial) will be carried out at the local level by the CTICMV with active involvement of local communities, and at provincial level by the DPA through its studies and monitoring service (SEPS). The major stakeholders in rural development will be included, both public and private, local government, rural people, etc.). Data will then be consolidated centrally by the PMU; and a M&E of uroiect oubuts and impacts will be carried out at MADR headquarters by the M&E Division (DES) of the Economic Affairs Department (DPAE). The system would be designed to allow the identification of: (a) problems and constraints; (b) solutions; and (c) corrective actions. The program provides for: (a) completing, for the seven Pus, the data base network set up at the DAF

-41 - under a UNDP financed project; and (b) supporting DPAE in M&E project outputs and impacts. The methodology developed would be available for use in monitoring all MADR interventions in rainfed areas. RADP will finance: e Development and extension of the DAF network to the seven project provinces (essentially a GIS station and computer equipment); e Support to DES comprising: (a) development of computer programs (essentially supply and adaptation of specific software and related training and support; and (b) international and national technical assistance (including travel, etc.) in year one, primarily to set up an impact monitoring system (including the precise definition of the various monitoring indicators) and to establish a baseline point of reference; e Carrying out ofa mid term evaluation and a final evaluation, with international and national technical assistance under DES supervision; and e Support to SEPS: (a) supply ofcomputer and office equipment; and (b) transport and travel costs.

Support to the Restructuring of MADR Field Services As part ofproject preparation, a study was conducted on the restructuring of MADR field services. The study allowed the preparation of possible reform scenarios and fed into a wider reflection within MADR expected to result in the design of a restructuring plan during 2003. This plan would then be put into operation during the project period. In this context, RADP will provide some finance for technical assistance to help MADR prepare and implement the restructuring plan. Consultants will be recruited for short term missions, notably in the following fields: legal aspects, institutional aspects, finance, and human resources management.

Technical and Financial Management of the Program WPwill finance personnel, equipment and operating costs for a PMU (Cellule de gestion du projet, CGP). The CGP will be located in the Land Development Directorate (Direction des Amknugements fonciers, OAF) and will comprise three people assigned full time to be responsible respectively for national level coordination, accounting and secretarial support. The main tasks of the unit will be: (a) preparing budgets and work programs; (b) consolidating the financial and technical data received from the CTs/CMV and DPAs/ORMVA; (c) mobilizing financial resources and delegating them to MADR’s field services; (d) technical coordination of activities; (e) preparation of financial monitoring reports (FMR), preparation of semi-annual progress reports, and of annual financial accounts; and (9 monitoring ofimplementation.

Sub-component A. 2: Capacitv-Building at the Local Level

Strenpthening of Implementation Capacitv in the DPAs and the CTs/CMVs The objective of this activity is to improve the efficiency of MADR field activities and to strengthen its role as “catalyst” ofrural development. The project will provide resources to the DPAdOMRVAs, CTs/CMV and the seven PAZs for: (a) rehabilitation of lodging and office buildings; (b) purchase of vehicles and equipment; and (c) training and technical assistance.

- 42 - Develoument of Local Programming Cauacity The main objective of this component is to strengthen the capacity for local level programming of the various “partners” of administration to formulate the CIPs and to monitor their implementation. RADP will finance: A program of training and study tours for local government and elected representatives, and for the various associations working in the RADP area. The program will focus on the participatory approach and on management. Training will also be provided for the Local Agricultural Development Commissions ( Commission locale de mise en valeur agricole, CLMVA); Technical assistance to support the participatory programming teams (comprising staff from the DPAs/ORMVA, the CTsICMV, and other agencies) in the preparation ofthe PICs; and

The recruitment of male and female community workers (animateurs/animatrices) (either through UNDP or a consulting firm) to support the participatory programming exercise and to help identify the actions to be carried out under Sub-component B.3, “Support to local initiatives”, which will be carried out with associations and other non-governmental partners.

Sub-ComDonent A. 3: Suuuort to Rainfed Agriculture

Drought Preuaredness This program will support the development of a drought management strategy through a network bringing together the Livestock Department (DE), the Plant Production Department (DPV), the Programming and Economic Affairs Department (DPAE) and MARD’s research institutes (IAV and INRA). Ultimately, the network is expected to include other concerned agencies such as the Minist2re de I ’Equipement and the Mitiorologie Nationale. Activities supported by the project include support for designing and establishing in seven provinces a drought early waming system, preparation of contingency plans, and MADR‘s capacity development for long-term management of drought risk. Activities to be financed include: Design and establishment of an early warning system in seven provinces, including: (a) technical assistance (12 weeks international and three months national in year 1); (b) six provincial workshops for the discussion and adaptation of the methodology; (c) training in the methodology in six provinces; (d) provision of information technology and office equipment, and running costs for seven DPAs/ORMVAs; and (e) provisionhehabilitation of 30 weather stations at CT level; Contingency planning covering: (a) establishment of procedures for drought contingency planning (for seven DPAdORMVAs in collaboration with Provincial Administrations and other Ministries), and identification and preparation of shelf projects; and (b) technical assistance (16 weeks intemational and ten months national in years 2 and 3); and Development of capacity for long-term management of drought risk, including: (a) technical assistance to develop and establish a dynamic model for risk analysis in the livestock sector, in particular during a drought period; (b) a study on encouraging increased livestock offtake during drought (6 weeks international TA and 2.5 months national TA); (c) technical Assistance, and start-up costs for piloting of weather-based index insurance in Khouribga Province; (d) study on the sectoral and macro-economic effects of drought; (e) a synthesis of research on drought-policy linkages; and (f) a synthesis of evaluations of drought management measures. These studies will be financed with concessional bilateral funding.

-43- Support to the Improvement of Production Svstems RADP provides for actions to improve production systems by strengthening advice and technical support available to producers. The actions comprise: e Preparation at project start-up of technical and economic reference handbooks for each PAZ, together with studies on collective rangeland management for three provinces (Boulemane, Taroudant, and Tata);

0 Implementation of selected adautive research operations. These would be identified through participatory diagnosis and through concerns raised by farmers. The projects would be financed by a specific budget line managed by DERD; and e Strengthening of decentralized research activities, notably of INRA's local level action-research services (Service de Recherche-Dkveloppement, SRD) whose mission is to conduct adaptive research on farmers' fields.

Project Component 2 - US$28.60 million

Comuonent 2: Rural Develoument Activities in Prioritv Action Zones fPAZs) Implementation of the program in the seven priority areas (PAZs) constitutes the second component of RADP. Activities to be financed under the program fall into three sub-components: Improvement of production systems (both agricultural and livestock) and actions to improve environmental conservation and management. These agricultural and natural resource management activities form part of the core mandate ofMADR. Rural infrastructure. In line with MADR's new mission of mobilizing local level participants on the rural development process, RADP will finance consultant services to help RCs formulate their PICs. These plans will be approved by the Conseils communaux and confirmed through the Core Provincial Rural Development Committee (CPRDR) chaired by the Governor. In addition, RADP will finance the agricultural infrastructure under MADR's budget and other rural infrastructure, includng rural roads, under the Rural Development Funds (FDR) for a total amount oa MAD 145 million throuhought the project implementation period. Support to local initiatives to diversify income sources and improve living conditions. Where MADR has no competence, RADP will finance programs with non governmental partners. The cost estimate for this component was made on the basis of a Beneficiaries Assessment. It is a summary estimate that will be refined over the first two years of the project as the PICs are prepared. The investments included are purely indicative and are not in any way targets or indicators on which program performance should be judged. With this in mind, and to reflect the bottom up character of the project approach, an unallocated amount has been set aside to finance the local initiatives under this sub-component.

Sub-comDonent B. 1: Imwovement of Production Svstems

Improvement of agricultural and livestock systems will be the object of two types of support under the project, namely, technical support to producers, and public financing of certain investments in agricultural production capacity.

- 44 - Technical Sumort to Producers Technical support to producers comprises three essential activities: (a) the preparation of technical and economic reference handbooks. These will be “open ended” (Le., able to be updated on a regular basis), and will be adapted to each different project area; (b) a selective action research program ; and (c) strengthening oftechnical support to farmers. Actions (a) and (b) above are already included in Component A.3 described above, and are mentioned here only to show the coherence of the approach and the linkages between components. The strengthening of technical support to farmers will be contracted with MADR field services (CTKMV). Delivery will be through one or two advisers (conseillers agricoles) in each PAZ who will work full time on the task. The advisers will be selected based on their skills and will receive both initial on-the-job training. They will be provided with the logistical support (equipment and transport) that they need to do the job. The jobs will be advertised within MADR and interested candidates who are selected will be assigned to the respective CT/CMV under the program. The job descriptions and profiles will be prepared by the Commission centrale de supervision et de suivi. However, if no suitable candidates come forward, contractual recruitment may be applied. Alternatively, farmer advice and technical support may be contracted out by limited tender to a development agency in cases where competent agencies exist.

Investment in Agricultural Production RADP will contribute to investments in agricultural production that are identified during the participatory programming exercise and that are eligible for financing under MADR’s budget. These investments cover the following activities (small-scale irrigation is covered under Sub-component B.2 below): Land improvement (stone removal and land clearing); Soil and water conservation (stone embankments, dry stone terracing, plantations in ravines, basins, plantations of fruit trees on slopes to prevent erosion, etc.); Pasture and sylvo-pastoral improvement (plantation of fodder trees, compensation for setting aside rangeland, scarification, reseeding, etc.); Agricultural crop development and improvement, but more importantly cereals, fruit tree crops (plantations of olive trees, almond trees, etc.); and Livestock improvement (stud animals, vaccination and drugs, bee keeping equipment and material, parasite treatment baths, etc.).

Sub-comuonent B. 2: Rural Infrastructure

This sub-component is aimed at RADP‘s objective of improving rural living standards. It has been designed and sized to fit with the ongoing national programs for certain investments (rural water, rural roads, etc.), and to complement those programs. As set out above, RADP will finance consultancy services for “animation” and to support preparation of comprehensive PICs. The PICs will include: (a) the investments to be financed under RADP (e.g. small scale irrigation, animal watering points); (b) investments that are the responsibility of the rural communes (e.g., rural access roads); and (c) investments that are the financing responsibility of other government departments. Non-agricultural rural infrastructure, to be identified with precision during the CIPs formulation, would be financed by national sectoral programs (e.g. PAGER for rural drinking water and PERG for rural electricity), the FDR, other funds including those under the authority of the regional and provincial authorities, or through

- 45 - partnership arrangements with NGOs, professional associations, etc. CPRDR will prepare financing plans for the PIC which will be validated by the Communal Councils (Conseils communuux) and approved by NSC.

Irrigation RADP will help improve small-scale irrigation in the project area. Depending on local conditions, investments may include protection or control of water sources, improvement of overall system efficiency, and protection of schemes from the effects ofupstream erosion.

The irrigated area to be covered is estimated at 1,100 ha as follows : (a) Tata - Tagmout PAZ: 300 ha ; (b) Taroudant - Ouneine PAZ: 200 ha ; (c) Boulemane-Tissaf PAZ : 600 ha. In the other PAZs (in Khourigba, Sidi Kacem et Khemisset Provinces), no significant investment opportunities have yet been identified. The program will support the following activities:

0 With the support of farmers, preparation of a topical data base (on GIs) and diagnostic studies of all schemes proposed for upgrading under the project;

0 Support to farmers at each step of the creation of water user associations (AUEA, Association des Usugers des Euux Agricoles), building on existing traditional community organizations;

0 With the AUEA, preparation of an overall development plan, including related actions to improve productivity;

0 Technical studies and implementation of the investments;

0 Advice and training for members of the AUEA(s) for O&M of the schemes and for AUEA management; and

0 In the specific case ofthe BBni lkhlef PAZ (Khouribga Province), a study on further development of groundwater potential for private small scale irrigation.

Rural Roads Rural access needs cover both classified roads, which are the responsibility of the central government but which may not be covered by the National Rural Roads Program (PNRR) and unclassified roads which are the responsibility of local government. RADP will focus only on the unclassified road network which comes under local government. This focus is in line with RADP‘s approach which is based on strengthening the RCs and local associations with a view to building up their capacity to maintain and extend the unclassified network in the future.

The following activities are envisaged under RADP Support to local stakeholders to formulate a program for a network of rural access roads and to include it in the CIP; Support to RCs and local associations to prepare and carry out investments (setting technical standards, contracting, organizing and managing force account) and developing and implementing arrangements for subsequent maintenance; Investment cost sharing with the RCs according to agreed rules. Based on an estimate of the financing capacity ofthe RCs, RADP provides for the development of 240 km of unclassified roads in the seven PAZs, including 120km of improvement of specific “black spots” on existing roads and 120km of new development;

- 46 - 0 Development of the skills of potential contractors in the PAZ areas in order to create a pool of competencies adapted to the technical levels and financing capability ofthe CRs;

Development of plans for setting up groupings of RCs (Syndicats de Communes Rurales) in and around the PAZs for the purpose of managing the network of unclassified roads; and Ex-post evaluation of RADP approaches in order to draw lessons and recommendations regarding possible replicability of the approach.

DrinkinP Water SUDD~~ The national program for rural drinking water supply (PAGER) has a clear strategy and financial resources (both on the national budget and from donor funds) which is adequate to cover, in a relatively short time, most needs for developing drinking water in rural areas. Therefore, RADP's drinking water program will be limited to the support measures which are often lacking under PAGER and to the execution ofcomplementary works if necessary. The following activities are envisaged under RADP:

0 Support to RCs andfor water user associations in drawing up drinking water supply projects, in setting up their partnership arrangements with PAGER and in subsequent O&M; and

0 Development of the skills of potential contractors in the PAZ areas in order to create a pool of competencies adapted to the technical needs in system development, management and maintenance ofthe drinking water schemes.

Rural Electrification Rural electrification is the subject of a major national program (PERG) implemented and financed by ONE and coverage is increasing rapidly. RADP support will be limited to :

0 Support to RCs and communities in drawing up and implementing partnership arrangements with PERG; and

0 Where isolated douars may not be reached by PERG in the foreseeable future, RADP will support local initiatives for alternative shared supply (solar energy or small scale hydro-power) to be developed according to ONE technical standards and financial conditions with a view to ultimate connection to the network. This activity could have an indirect benefit in terms of developing the capacity ofdouars to work together around common projects. This support will be carried out through the community workers recruited under Sub-component B.3. For this reason, no cost has been provided for rural electrification under Sub-component B.2.

Animal Watering Points In the PAZs ofMissour and Tata, and Errachidia there is a clear need to provide animal watering points. Similarly, at Tissaf (Boulemane PAZ) and Tagmout (Tata PAZ), the lack of watering points is a serious constraint. Improvement of the situation is a good entry point for negotiating improved rangeland management programs. Therefore, in these PAZs, the following actions are proposed :

0 A study on participatory rangeland management (this will be financed under Sub-component A.3) ;

0 Support to setting up user associations for animal watering points; Studies and implementation of investments. These are expected to include : (a) for Boulemane, rehabilitation of two hill dams and the creation of four underground cisterns; and (b) at Tata, development of four fully equipped wells; and

-47- 0 Support and training to the associations for O&M, and for related administrative and financial management.

Sub-component B. 3: Sumort to Local Initiatives

The preparation study on partnerships in the RADP area (N Lepartenariat dans le cadre du PDRI-MVB )) final report, February 2002) brought out the following points : The key role of the RCs in the local development process, and by contrast, their lack of facilities and their major training needs (both for elected officers and staff); The scarcity - or even total lack in some provinces - of formal and informal local organizations. Where such organizations do exist they are of very mixed standards and sizes;

0 Pervasive needs for credit, for basic and technical training and for basic facilities;

0 The existence of a national network of skills in certain areas, including (( social animation n, basic training, institutional and skills related training, setting up farmer organizations, micro finance, etc. All these skills are complementary to the classic technical competencies available in MADR, and can be used under RADP to respond to locally expressed demand; and The existence ofthe social fund (I’Agence de Dkveloppement Sociale, ADS) which can be called on by local organizations and local government to help in their programs. The program of support to local initiatives should respond to needs expressed by the beneficiaries. For a total amount ofapproximately MAD20 million, the following broad sets of actions will be undertaken: SumortinP activities (actions facilitatrices), to facilitate the CIPs’ preparation process by financing small community projects for a total amount of about MAD 1.2 million; Support to farmers and professional associations. In line with its strategy of transferring responsibility and skills to farmer associations and cooperatives, MADR may also contract with such organizations to work in the project area. Based on the likely areas of activity and the capacity of likely partners, the annual cost of these activities is estimated at MAD 5 million; Training activities, on subjects propped by communities or their organizations. These training activities will be set up as “training projects” and costed (the cost is expected to be under MAD 60,000 per project, including some equipment for demonstration). MADR will set aside an annual budget of approximately MAD 1.2 million (about MAD 6 million over a five-year period), which would allow for about fifty (about five for each of the 10 Communes) to be implemented either directly by DPNCT or through contractors. The CLMVA would have to approve each request before it can be implemented by DPNCT. Training areas covered would be basic education, and skills training in production, processing and marketing ofagricultural and livestock products, in local handicrafts, or in any other income-generating activity. Setting up micro credit associations and farmer organizations. MADR would contract out the micro credit development activity to specialized partners. Provision has also been made for the costs of setting up a local micro-credit association in eight RCs (total cost MAD 3.2 million). This covers only the costs of setting up the associations; working capital needs cannot be financed under RADP. However, the project will support the esblishment of a micro-credit association if the intermediairy micro-credit institution is able to raise funds from donors or financial institutions. Basic education, training and capacity building for local organizations, RCs. associations (e.a.. AWUA) and local contractors. This support will be provided in modules over several years in order to have a permanent capacity building impact. MADR is expected to contract out the implementation of these modules to partners with a proven national track record. The estimated total cost is MAD 3.75 million.

The target populations for the support described above will vary from PAZ to PAZ, although the RCs will be targeted everywhere, as they are the central players in local level development. Other target groups identified are: (a) the douars in the PAZs of Tata, Taroudant, Boulemane, because in these areas the doars are the locus of social cohesion; (b) women in the PAZs of Tata and Khouribga, as most men are away working outside the province; and (c) common interest groups or skill- or commodity-based organizations in the PAZs of Sidi Kacem, Khouribga and Ain Sbit, where traditional social structures have seen an erosion of their strength and have less operational capacity.

In general, RADP is based on G participation D, particularly effective participation of elected officers, of the representatives of civil society and oflocal organizations in the programming and implementation of RADP activities. For this reason, this sub-component gives priority to the creation of capacity amongst these local actors to participate and to identify and prioritize their needs, and to prepare specific proposals. It will be implemented with the help of the “community workers” provided for under Sub-component A.2.

Imdementation. As outlined above, RADP will finance a number of contracts and agreements with partners. The financial allocation for these agreements has a ceiling of MAD 19 million, calculated as a maximum of 50% of the total project cost. The areas of intervention are expected to include farming advice, micro-credit, small entrepreneur training, strengthening of RC capacity, literacy, informal education, youth technical training, training in participatory approaches, and apprenticeships for the sons and daughters of farmers.

For partnerships with NGOs, RADP will employ the standard contract which has been developed and sets out the financing arrangements, monitoring requirements and dispute resolution procedures, together with annexes comprising the program summary, the training program, estimated costs, etc. The upcoming revision to the law on associations is expected to make this kind of arrangement easier and more flexible.

Some of the activities, such as training and capacity building, could be implemented in the first year of project implementation in order to facilitate CIP preparation.

-49- Annex 3: Estimated Project Costs MOROCCO: Rainfed Agriculture Development Project

A. Strengthening ofImplementation Capacity 0.00 A. 1. At MADR Central Level 0.63 0.30 0.93 A.2. At the Local Level 3.75 1.05 4.80 A.3. Rainfed Agriculture Support 1.54 0.76 2.30

B. Rural Development Activities in Priority Rainfed Areas 0.00 B. 1. Agricultural and Pastoral Development 4.46 5.57 10.03 B.2. Rural Infrastructure Development 0.00 - Rural Infrastructure 1.65 I 1.54 3.19 - Rural Roads 2.61 3.23 5.84 - Other Infrastructure 1.73 3.81 5.54 B.3. Support to Local Initiatives 1.36 0.52 1.88 Total Baseline Cost 17.73 16.78 34.51 Physical Contingencies 0.99 1.30 2.29 Price Contingencies 4.06 Total Proiect Costs' I 20.28 40.86 Front-end fee 0.27 0.27 Total Financing Required 20.58 20.55 41.13

Civil Works 8.33 16.23 24.56 Vehicles 0.25 0.45 0.70 Equipment & Goods 2.67 1.15 3.82 Technical Assistance 2.52 0.17 2.69 Studies 2.65 1.49 4.14 Training and information 0.87 0.26 1.13 Recurrent Costs 3.28 0.56 3.84 1 I Total Project Costs I 20.57 I 20.31 I 40.88 Front-end fee 0.27 0.27 Total Financing Required 20.57 20.58 41.15

- 50 - Estimated Project Cost bv Provinces ('000 US%) I Boulemane I KhCmisset I Khouribga I Sidi Kacem I Taroudant I Tata I Total I A. Exvenditures allocated to PAZ Local implementation capacity strengthening 680 880 700 1,040 700 1,000 5,000 Rainfed agricultural support 340 340 340 340 340 340 2,040 Siih-Tntal 1.11211 1.2211 1-11411 1.m 1.11411 1.340 7.1140

Unallocated Rural Develooment Activities I I 31% 1 12.630 (*I 3 yo 1,050 Unallocated Institutional Strengthening Total 40.870

(*) Includes activities of Component A which cannot be allocated to the PAZ, i.e, strengthening the implementationcapacity at MADR central level &drought preparedness

I Identifiable taxes and duties are 7.35 (US$m) and the total project cost, net of taxes, is 33.75 (US$m). Therefore, the project cost sharing ratio is 79.41% of total project cost net of taxes.

- 51 - Annex 4: Cost Benefit Analysis Summary MOROCCO: Rainfed Agriculture Development Project

A. Introduction

Most ofthe project interventionshnvestments are based on a participatory approach with the populations of the intervention areas in the Priority Action Zones (PAZ). Many of the specific costs and benefits of the project will only be precisely known at the time of implementation, when the populations involved will have made their choices concerning, for example, the improved technical packages they want to adopt (out ofthe "menu" on offer with the project) and the rural infrastructure that they want to improve in their respective areas. It must also be pointed out that not all of the menu will be known at this point since applied research carried out under the project will also generate additional improved technology. At this stage, the project costs and benefits can only be estimated roughly and the financialleconomic analysis is therefore limited. There are nevertheless a certain number of questions which it is necessary to answer concerning the viability of the project as well as the sustainability of its benefits over time. To this end, the following two sections address respectively: (a) the economic returns (internal economic rate of return) of the project in the six PAZs and overall; and (b) the financial profitability of the improved production systems proposed. The analysis was carried out for the seven PAZs, representing distinct ago-ecological zones: the Atlas Mountains (Taroudant); the High Eastern Plateaux (Boulemane); the Pre-Sahara Oases (Tata); the Central Arid Zone (Khourigba), the Rif foothills (Sidi Kacem) and the Cereal Plains (Khemisset). Besides differences in their ago-ecological potentials, these areas vary also considerably in their socio-economic characteristics. During negotiations, provision was made to include another PAZ (Errachidia) in the project. Errachidia has not been considered in the economic analyses, as it has not been appraised yet. However, it belongs to the same agro-ecological zone as Tata (Pre-Sahara Oases), and similar results as in Tata are expected.

B. Economic Returns

Summary of Benefits and Costs:

Net Present Values (million MAD)

Economic values Boulemane Khemisset Khourigba I SidiKacem I Taroudant I Tata I Overall I project Incremental benefits Agricultural production 46.5 48.2 43.0 56.8 21.1 24.3 246.5 Incremental costs 40.9 19.2 21.6 29.2 28.4 33.9 190.1 - Agricultural development 19.0 4.4 9.1 9.2 9.2 12.0 62.89 - Rural Infrastructure 15.2 5.0 10.0 10.0 13.1 11.0 59.45 - Institutional strengthening 6.7 9.8 2.5 10.0 6.1 10.9 50

Net Incremental Benefits 5.6 23.8 38.5 19.1 1.42 9.9 15.9 EIRR 12.5% 25% 32% 16% 9% 3% 16%

- 52 - Main Assumptions: A cost-benefit analvsis was carried out to estimate the Net Present Value (WV) and Economic Internal Rate of Return (EIRR) for each PAZ and for the overall project over a period of 20 years. Based on the Bank’s norm for projects in Morocco, a 10% discount rate was used. The resulting EIRR for each PAZ ranges from 3% to 32 % and is 16% for the overall project, corresponding to an NPV of MAD 76 million. These figures are very acceptable given the rural development character of the program. Tata and Taroudant show a lower EIRR of 3 and 9 % respectively. In these two provinces, expected interventions focus on rangelands for which a large share ofthe benefits (i.e. environmental benefits) are difficult to estimate and are not quantified. Tata is also the two poorest, remotest and ill-equipped provinces of the seven targeted areas. The choice of these provinces and the interventions within them are justified in terms ofpoverty alleviation rather than additional production. As expected, higher returns are expected in Khtmisset, Khourigba and Sidi Kacem, where ago-ecological and socio-economic potentials are higher.

Benefits Expected quantifiable benefits include: (a) substantial increases in farm production and incomes (essentially from crops and livestock), mainly due to productivity improvements in rainfed production systems; and (b) a significant reduction in the instability of farm production levels - and therefore income savings, due to the implementation of drought preparedness strategies and mitigation measures. Benefits more difficult to quantify include: (a) numerous public savings, mainly reductions in government subsidies in favor of the current drought insurance system and reductions in debt write-offs with the rural credit organizations following drought episodes; and (b) increases in (also diversification of) off-farm incomes due to the proposed project’s support to local initiatives. Non-quantifiable benefits derive mainly from the institutional strengthening activities in Component A, the impact of which will go far beyond the scope of the proposed project, principally: (a) the empowerment of local communities, interest goups and individuals, due to the project supporting a progressive devolution of decision-making power to the local level and due to the related capacity building; (b) the increased efficiency of MADR’s interventions in rainfed areas as a whole (not only the PAZs); and (c) the creation of synergies between MADR’s various structures and also with other actors in development. Benefits quantified are derived from additional crop and livestock productions in the six PAZs. They materialize in four ways : (a) increases in yields; (b) slight increases in cropped areas as a result of decreased fallow land; (c) shifts from low-value crops, basically cereals, to higher value crops, such as fodder for livestock and fruitshegetables; and (d) increases in meat production in pastoral areas (Tata, Boulemane and Taroudant). Detailed assumptions regarding the estimation of the agricultural benefits are described below. Based on the findings of the preparation studies, detailed per ha crop budgets have been developed for the main crops covered in each of the seven PAZs for both “with” and “without” project scenarios. The products are fruit trees (olives and almonds), cereals (wheat, barley, corn and oats), legumes (fava beans and lentils), vegetables (potatoes and carrots), forage (alfalfa, fttuque and bersim) and crop by-products such as straw. Given the use of a participatory approach with the populations and the extremely large number of combinations of crops and technical packages that could be possible in the Pus, it was found counter-intuitive and impractical to formulate farm models at this point.

- 53 - Current and exuected yields are based on expert estimates differentiated by ago-ecological region (detailed information on current and expected yields are available in the Pre-Appraisal Report). These yields represent weighted averages based on the frequency of good, average and bad years related to rainfall patterns. Yield increases are based on changes in farming practices made possible by better access to technology and markets, as well as better drought preparedness and improved irrigation in the case ofTata, Boulemane and Taroudant. Improved farming practices involve the use of improved seeds, improved preparation of the land, improved timing and density of seeds planted, higher and better use of fertilizer and pesticides and better maintenance of the crops. Improved irrigation involves a quantity of water available to the crops closer to the optimum at the most critical stages of the plant development cycle and a better equity in water distribution between crops. The expected yield increases pertain only to a part of the project zones, as (a) the new technological package will only be adopted on a fraction of the land and (b) it might not be adopted by farmers in its totality. Depending on the PAZ, it has been assumed that yield increases as a result of the project will occur on 35% to around 50% ofthe project area. Most ofthe areas intensified are located in Sidi Kacem, Khkmisset and Khourigba. In Tata, Taroudant and Boulemane interventions would also focus on rangeland management. This explains the lower EIRR in these three provinces as an important share of the benefits from the improvement ofrangeland management cannot be easily quantified.

IArea expected to benefit from project intensification and diversification (Ha) A 0 C D E E Boulemane 863 355 45 2% 41 % 13% Khemisset 14,060 5,395 1,000 28% 38% 19% Khourigba 8,480 4,165 1,000 23% 49% 24% Sidi Kacem 21,150 7,500 2,000 42% 35% 27% Taroudant 2,055 735 120 4% 36% 16%

A progressive adoption pattern of the technological packages starting in project year (PY) three of 10-30-60% is assumed in the subsequent years of the project. Change in land use. In addition, agricultural benefits will stem from a change in land use, through a shift from lower-value crops (mainly cereals for home consumption) to higher-value crops, such as fodder for livestock production and fruit and vegetables, or a reduction of fallow land. The logic behind this is that improved farming practices and irrigation (Tata, Bouleman and Taroudant) will allow intensification of cereal production and thus free up some of the land currently under cereals for the production of fodder and cash crops. A change in land use of 10% to 27% of the present cultivated area depending on the PAZs is assumed. Overall, the change in land use averages 23%. Quantified benefits of rangeland management are increased meat production from small ruminants. It concerns the perimeters of Tata, Taroudant and Boulemane where at present, 40,000, 12,700 and 50,000 “unitis zoo-techniques ” (small ruminants) are counted. Increase in meat production is expected to start in PY3 and accelerate progressively in the subsequent years. Environmental benefits of rangeland management have not been quantified.

- 54 - Additional agricultural Droductions are shown in the table below. It is expected that they will be easily absorbed by the markets as they are small in relative terms and demand for these products is high and not met. Also, with the possible exception ofKhemisset, most ofthe cereals are consumed in the home (with their by-products used for animal consumption). Access to markets will be facilitated by the rehabilitation of rural roads. Incremental production at full development (tons) Total Boulemane Khemisset Khourlgba Sidi Kacem Taroudant Tata Olives 9,133 745 450 505 6,970 343 120

Almonds 68 ...... I.. ... 61 8 Dates 14 ...... 14 Wheat (durum) 858 158 ... 400 ... 21 0 90 Wheat (soft) 4,600 ... 2,800 ... 1,800 ...... Barley 2,811 5 -200 3,000 -125 90 42 Corn 63 18 ...... 27 18 Alfalfa 1,398 415 ...... 463 520 Lentils 1,030 ... 1,000 30 ...... Fava Beans 1,050 ...... 1,050 ...... Oat 3,863 ... 1,688 850 2,175 ...... Bersim 1,500 ...... 1,500 ...... FBtuque 300 ...... 300 ...... Carrot 760 ...... 550 21 0

Potatoes 490 490 ...... I Straw 8,823 95 3,950 3,420 1,175 92 92

Economic Prices. The calculation of economic prices has been carried out on the basis of border prices adjusted to farm-gate level. In the case of products which are not marketed in significant quantities at the international level, observed financial prices at the farm-gate are considered sufficient approximations of their economic values. Fodders have been valued at the economic price of barley, taking into consideration their nutritive value. The official exchange rate for the Dirham is market determined so that no adjustment has been made. Incremental Economic Benefits. In terms of economic value, fait tree production, particularly olives, is predominant, followed by meat and forage crops. Additional agricultural production at a steady state is approximately MAD 52 million per year, or about US$4.6 million. Incremental benefits occur mainly in Sidi Kacem (35%), Khemisset (17%), Khourigba and Boulemane (16%).

- 55 - Incremental revenue at full development (Dirham) Total Boulemane Khemisset Khourigba Sidi Kacem Taroudant Tata Olives 16,616,946 2,045,646 682,326 743,430 12,015,851 820,913 308,781 Almonds 1,874,259 ...... 1,714,490 159,770 Dates 238,000 ...... 238,000 Wheat (d) 2,161,861 176,288 ...... 190,370 102,911 Wheat (s) 3,705,233 ... 1,551,669 1,692,292 2,153,564 ...... Barley 4,907,010 53,339 689,360 3,370,100 71 1,975 26,901 55,334 Corn 8,120 - 369 ...... - 6,942 15,430 Alfalfa 1,369,163 443,917 ...... 41 1 ,I84 514,061 Lentils 3,444,363 ... 3,352,813 91,550 ...... Fava beans 1,345,750 ...... 1,345,750 ...... Oat 462,058 ... 540,249 459,779 - 78,191 ...... Bersim 1,022,903 ...... 1,022,903 ......

Fetuque 234,735 ...... 234,735 ..I ... Carot 1,300,291 ...... 954,095 346,196 Potatoes 827,081 827,081 ...... Straw 4,627,050 94,500 1,975,000 1,710,000 646,250 109,800 91,500 Meat 7,636,225 4,625,000 ...... 91 1,225 2,100,000 Total 51,781,047 8,265,403 8,791,416 8,067,151 18,052,836 5,132,037 3,931,983 % of total benefits 100% 16% 17% 16% 35% 10% 8%

-costs Additional agricultural and livestock productions are made possible by the combination of several interventions: the development and extension offield-tested farming technology suitable to the particular agro-ecological conditions of the project areas; the rehabilitatiodmodemization of irrigation infrastructure and other physical investments in agro-pastoral production capacity (i.e., pastoral water points). All costs related to these components have been included. Certain other investments have a less direct impact on output in the project area; these include strengthening MADR’s implementation capacity at the central and local levels as well as of the local government and community institutions and improved drought preparedness. For these components, benefits are more widely spread, and therefore only a proportion of the related costs has been taken into account. The costs and benefits (mostly off-farm) related to component B.3 “Support to local initiatives” have been excluded from the analysis on the basis that they would be extremely difficult to quantify. Incremental investment and recurrent costs (with physical contingencies but without price contingencies) have been estimated using COSTAB.

Sensitivity analysis / Switching values of critical items: A sensitivity analysis was carried out to determine the robustness of the NPV and IRR to changes in key variables. The results indicate that the EIRR is particularly sensitive to changes in crop yields and agricultural output prices as it drops below 10% when these parameters decrease by 10% and 18%, respectively, from the base case scenario. Otherwise, changes in cost and prices of individual inputs and adoption rate ofthe improved technology produce small impacts on the EIRR. Economic input and output prices are exogenous variables out of control of project interventions. Increase in yields as a result ofproject activities depends on the successful development and extension of field-tested farming technology, the successful implementation of the drought preparedness activities and the actual implementation of physical investments such as the rehabilitation of the irrigation infrastructure, land improvements, etc. The particular sensitivity of project returns to these parameters, notably the vulnerability of rainfed agriculture to erratic rainfall, calls for a close and systematic

- 56 - supervision of these components to avoid a negative impact on project retums. Also, the economics of farmers risk management strategies to cope with drought will be studied under the project.

C. Financial Profitabilitv of the Production Svstems

A global FRR has not been calculated since only part of the project investments will generate quantifiable production and incomes. Instead, a range of FRRs is presented for the main income-generating investments. Financial Prices. Financial prices have been collected from producers and verified in the local markets where most sales occur. The quantities of forage are calculated in tons of dry matter and valued at the economic price of barley. Agricultural inputs are not taxed except for spare parts and agricultural machinery which are still subject to value added tax (VAT). The main financial benefits accruing to farmers are the increase in revenue stemming from intensification and to a lesser extent, diversification towards higher-value crops and increased cropping intensity. On the other hand, production costs are increased by a higher use of inputs (work for land preparation and land management, increased use of pesticides and fertilizers and use of improved seeds). The financial analysis focuses upon the profitability of crops supported by the project. Increases in net revenues as a result of project activities were calculated for all crops and FRRs were calculated for those crops requiring investments, namely olive and almond trees. The results of the models demonstrate that the possible growth of net income with improved techniques is substantial: more than US$lOO per ha and per year in most cases or more than 50% growth in gross income. For olives, the FRR ranged from 11% to over loo%, for almond from 39% to 56% .

- 57 - Increase in Net incomes CDirhadha and YO) Boulemane Khemisset Khourigba Sidi Kacem Taroudant Tata ...... Olives > 100% 12-21% 13-16% 11-14-39% 95 - >loo% >loo% ...... Almonds 58% 39% 4,526 3,923-1774 6,137 ...... Wh.ea! .(!I...... 144%...... 145 - 154% 127% 1,704 1,183 1,826 ...... Wh.fjat.lfi)...... 55%...... 195% 147% 3,676 1,859 1,678 919 2,027-1276 4,693 ...... Barley 143% 254% 598% 613% 136-149% 123%

1,4151.415 1,3011.301.~ ~ 3,5593.559~.~~~ ...... Corn 123% 111% 117% 10.087 1285 3.058 9.834 ...... Alfalfa 76% 68% 26% 39% 844 1.498 ...... Lentils 80% 487% 1318-1 175 ...... Fava beans 95 1,524 909 1285-2218 ...... Oat 33% 312% 68 - 203% 7,724 6,738 ...... Carot 24% 25% 18,774 Potatoes 178%

These results can only be considered preliminary however, because as indicated above, many of the costs and benefits will only be known at the time of implementation, when improved farming technology suitable to the particular agro-ecological conditions of the targeted areas will have been field-tested, and when the populations involved will have made their choices concerning the improved technical packages they want to adopt. However, it is clear that the technical improvements proposed are potentially attractive from a financial point of view. The calculations carried out also suggest that part of the direct investment costs could be absorbed by the beneficiaries, while still maintaining attractive profits. For example, the investments costs of the rural irrigation works (improvements or extensions) are estimated at about US$1,830 per ha (with physical contingencies). A financial contribution from the beneficiaries equivalent to 20% of these costs and spread out over 10 years, represents US$37 per year, compared to the growth of income (minimum) of US$lOO indicated in the previously. As for income, these results can only be preliminary. The calculations can only be done accurately at the time of implementation, when the works to be undertaken are better known.

- 58 - Annex 5: Financial Summary MOROCCO: Rainfed Agriculture Development Project Years Ending

I Year1 I Year2 I Year3 I Year4 I Year5 I Year6 I Year 7 Total Financing Required Project Costs Investment Costs 1.5 4.4 8.3 8.5 7.4 6.8 0.0 Recurrent Costs 0.5 0.5 0.5 0.6 0.8 1.o 0.0 Total Project Costs 2.0 4.9 8.8 9.1 8.2 7.8 0.0 Front-end fee 0.3 0.0 0.0 0.0 0.0 0.0 0.0 Total Financing 2.3 4.9 8.8 9.1 8.2 7.8 0.0 Financing I BRDllDA 1.2 3.0 6.0 6.2 5.3 5.1 0.0 Government 1.1 1.8 2.4 2.3 2.2 1.9 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User FeeslBeneflciaries 0.0 0.1 0.4 0.6 0.7 0.8 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 2.3 4.9 8.8 9.1 8.2 7.8 0.0 Main assumptions:

- 59 - Annex 6: Procurement and Disbursement Arrangements MOROCCO: Rainfed Agriculture Development Project

Procurement

A Draft Implementation Manual (Manuel de prockdures) was appraised and will be finalized within six months of loan signing to incorporate the changes agreed upon during negotiations. This manual includes procurement guidelines and responsibilities, a procurement plan for the first two years ofproject implementation, prior review thresholds and a procurement supervision plan.

Procurement resuonsibilities

DAF in MADR, through its Project Implementation Unit (CGP), would be responsible for coordinating all procurement-related activities, but not necessarily the quality control of works performed by other agencies. It would be supported in this role by the concerned DPA, ORMVASM and ORMVAT, as well as the CTs, the CMVs, and the Provincial Technical Departments. DAF has considerable experience in managing the PMVB program and is performing well on procurement matters. However, it does not have experience in executing Bank-financed projects and will therefore have to liaise closely with the Department of Hydro-Agricultural Works (Direction des amtnagements hydro-agricoles, DAHA) which is implementing IBCD.

Specific Resoonsibilities for Civil Works and Goods. Component B will be implemented by DPAs and ORMVA Souss Massa who will be responsible for launching all the bids for civil works and goods for agricultural activities and Provincial Technical Departments, mainly the Provincial Equipment Departments for non-agricultural rural infrastructure. However, DAF will provide assistance to the DPA in the preparation of sample bid documents and will call on the Service des travaux des amtliorations foncidres et du remembrement for land development activities, Service des ttudes d'aminagement for technical studies and CCSS for those activities involving other departments. Procurement of goods under Component A will be carried out by CGP.

Specific Responsibilities for Consultant Services and Training. Most of the studies will be implemented by the DPAs and ORMVA Souss Massa, in particular for the preparation of the CIP, the technico-economic reference handbooks and the range management studies. CCSS and EAM will prepare generic terms of reference which will be adapted to each province context. However, for the studies ofnational scope the RFP will be prepared by CGP (DAF) which will be responsible for carrying out the entire selection process.

Procurement Risk Assessment

Though DAF has not been involved with the Bank before, the overall risk assessment has been judged to be low for two major reasons: (a) DAF is part of the General Directorate of Rural Works (AGR) as is the Department of Hydro-Agricultural Works (DHAW) which is implementing the IBCD program and has considerable experience in Bank-financed procurement ; (b) CGP has been managing 40 PMVB over the last six years and performed well on procurement matters. However, DAF must strengthen CGP, particularly with regard to procurement planning, and have in place a system for filing, monitoring and reporting procurement actions. Provincial management units (UGP), including a procurement unit, will be set up within the DPA and ORMVAs to assist with project implementation. Furthermore, the project will finance training in procurement, outside the country (e.g., 3-week training session in Torino/ILO), for four MADR staff.

- 60 - Procurement Arrangements

Procurement for the proposed project would be carried out in accordance with Bank "Guidelines: Procurement under IBRD Loans and IDA Credits", published in January 1995, (revised in January 1999), and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers", published in January 1997 (revised in September 1997, January 1999, and May 2002), and the provisions stipulated in the Loan Agreement.

Although the Moroccan legislation on procurement is generally in line with the Bank's Guidelines, certain rules and procedures are not acceptable to the Bank, as indicated in the Country Procurement Assessment Review (CPAR) dated February 2000. In particular the following procedures must be applied under Bank financing: (a) The two-envelope procedure for submission of bids for works and goods, and opening those envelopes in two different phases, should not be applied. The two envelopes should be opened simultaneously, without requiring the bidders' representatives to leave the room. However, only essential documents that can easily be verified can be opened before opening the financial envelope. These documents concem: the Dkclaration sur l'honneur, Proof ofpayment of taxes, Bid security, and Technical Qualification Certificate;

(b) Quantifiable bid evaluation criteria would be included in the bidding documents and, in the case of goods, no points system would be used; and

(c) The procedure for hiring consultants through open competitive bidding should not be used, but a short list of consultants should be invited. In this case, the public opening of the financial envelopes is conducted in accordance with Bank procedures following completion of the technical evaluation report.

Civil Works. Works procured under the project (US$24.5 million) would include: (a) in the agricultural sector, agricultural and pastoral development (US$8 million), improvement of small and medium scale irrigation schemes (US$3 million) and construction ofanimal watering points (US$0.8 million); (b) rural infrastructure, including rural roads (US$6.3 million) and other infrastructure (US$6 million); and (c) rehabilitation of residential accommodation and office buildings (US$0.4 million). Given the relative simplicity of the works, and their dissemination throughout seven provinces, with the largest contract not exceeding US$5 .O million, they may be awarded through National Competitive Bidding (NCB) procedures, using NCB model documents agreed with the Bank. Works not exceeding US$30,000 may be procured on the basis of at least three written quotations received in response to written invitations addressed directly to contractors, up to an aggregate amount of US$2.5 million.

Goods. Goods consist essentially of vehicles, computer hardware and software, meteorological stations and equipment totaling some US$4.5 million. To the extent possible, contracts for these goods will be grouped into bidding packages ofmore than US$300,000 equivalent and procured following International Competitive Bidding (ICB) procedures, using Bank-issued standard bid documents. Goods with an estimated contract value below US$300,000, may be procured through NCB procedures, and standard bid documents agreed with the Bank will be used. Goods not exceeding US$30,000 may be procured on the basis of at least three written quotations received in response to written invitations addressed directly to national or international suppliers, up to an aggregate amount ofUS$1.7 million.

Consultant Services and Training. Consultant activities related to studies, short term expertise, and capacity building will be financed under the project. In order to establish a short list for consultant

- 61 - Consultant Services and Training. Consultant activities related to studies, short term expertise, and capacity building will be financed under the project. In order to establish a short list for consultant services with an estimated contract amount exceeding US$200,000, expressions of interest will be advertised in the United Nations Development Business periodical and in at least one local newspaper. For such contracts, the Bank's standard Request for Proposals (RFP) document will be used. For contracts below US$200,000, the short list will be prepared by the Borrower, without necessarily the need for advertising for expressions of interest. In this case, the shortlist may comprise entirely national consultants. The selection method will be based on quality and cost (QCBS) for all contracts above US$lOO,OOO for firms. Below these thresholds, and with the exception of the employment of consulting firms through single source for reasons critical to the project, the selection method may be on the basis of Consultants Qualification (CQ). Contract awards to individual consultants shall be made in accordance with the provisions ofpara. 5.1 through 5.3 of the Bank's Consultant Guidelines.

Prior Review Thresholds. All contracts for works exceeding US$500,000 and contracts for goods and equipment exceeding US$300,000 would be subject to prior review by the Bank. For consultant services, all contracts valued at US$lOO,OOO or above for firms, and US$50,000 and above for individuals, together with terms of reference and shortlists would also be subject to prior review. The prior review for works, goods and consultant services would apply to at least 20% of Bank financed procurement. The Bank's review process is presented in Table B.

- 62 - Procurement methods (Table A)

Table A: Project Costs by Procurement Arrangements (US$ million equivalent)

Figures in parentheses are the amounts to be financed by the Bank Loan. All costs include contingencies.

2’ Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff ofthe project management office, training, technical assistance services, and incremental operating costs related to (i)managing the project, and (ii)re-lending project funds to local govemment units.

- 63 - Table AI : Consultant Selection Arrangements (optional) (US$ million equivalent)

I\Including contingencies

Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines) N.B.F. = Not Bank-financed Figures in parentheses are the amounts to be financed by the Bank Loan.

-64- Prior review thresholds (Table B)

Table B: Thresholds for Procurement Methods and Prior Review '

Contract Value Threshold (US$ thousands) I, Works = > 30,000

< 30,000 Three quotations None

!. Goods = > 300,000 ICB All contracts>300,000

>30,000 <300,000 NCB First two contracts

<30,000 National or International First two contracts Shopping L Services

(a) Firms >100,000 All

<100,000 First two contracts and subsequently TORs, regardless of contract value, and all Short Lists (b) Individuals >50,000 See Section V of All TORs, Contracts, CVs Guidelines <50,000 First two contracts and See Section V of subsequently TORs only Guidelines

Total value of contracts subject to prior review: Estimation: US$5 million (20%)

Overall Procurement Risk Assessment

Low

Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-reviewlaudits)

'Thresholds generally differ by country and project. Consult OD 11 -04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance.

- 65 - Disbursement

Allocation of loan proceeds (Table C)

Allocation ofloan proceeds by disbursement categories and percentages financed by the Loan are presented in Table C.

Table C: Allocation of Loan Proceeds

Expenditure Category I Amount in US$million I I Financing Percentage 1. Civil Works 14.00 80% 2. Goods 2.50 I 100% of foreign expenditures, and 85% ofitems procured locally 3. Services and Training 3.20 70% for local consultants 75% for foreign consultants 4. Unallocated 6.83 Total Project Costs 26.53 Front-end fee 0.27 ITotal I 26.80 I I

Withdrawals from the proceeds of the Loan will be based on the traditional disbursement methods of the Bank, using direct payments, requests for special commitments and reimbursement applications, either fully documented or using Statement of Expenditures (SOEs) as per applicable procedures. As projected by the Bank’s standard disbursement profiles, disbursements would be completed four months after project closure and would be made against standard Bank documentation.

Use of statements of expenditures (SOEs): All applications to withdraw proceeds from the Loan will be fully documented, except for: (a) expenditures ofcontracts with an estimated value ofUS$500,000 each or less for works; (b) expenditures of contracts with an estimated value of US$300,000 each or less for goods; (c) US$lOO,OOO or less for consulting firms; and (d) US$50,000 or less for individual consultants and training , which may be claimed on the basis of (SOEs). Documentation supporting expenditures claimed against SOEs will be retained by the Multilateral Financing Department (MFD) and will be available for review when requested by Bank supervision missions and project auditors. All disbursements will be subject to the conditions ofthe Loan Agreement and the procedures defined in the Disbursement Letter.

Special account: To facilitate disbursement of eligible expenditures for works, goods, services and training, the Borrower will open and maintain a Special Account (SA) at the Treasury to cover eligible project expenditures to be managed and administered by the MFD within MOF. The authorized allocation of the SA would be equivalent to MAD 25 million, covering an estimated 4 months of eligible expenditures financed by the Loan. MFD will be responsible for submitting, on behalf of the PMU, monthly replenishment applications with appropriate supporting documentation for expenditures incurred. MFD will retain and make such documents available for review by Bank supervision missions and project auditors. To the extent possible, all eligible project expenditures should be paid through the SA . Specifically all eligible project expenditures of less than US$50,000 equivalent shall be paid from the SA.

- 66 - The SA will be replenished through the submission of Withdrawal Applications on a monthly basis and will include reconciled bank statements and other documents as may be required.

Retroactive Financing:

To facilitate project start-up, and in particular to support the up-front implementation of the Institutional Strengthening Component, Component A of the proposed project, retroactive financing for eligible expenditures within the limit of EURO 2 million would be provided to help cover project expenditures between June 30, 2003 and the anticipated date of the loan signature on September 15, 2003 (but no earlier than 12 months before loan signing).

Financial Management:

General Framework. An assessment ofthe existing FMS system in MADR which is responsible for the project and its dependent structure DAF, the implementing agency for the project, was carried out during appraisal. The main characteristics ofthis system are the following:

0 The existing FMS is based on principles and procedures defined by the legal framework applicable to the public sector and more specifically to government institutions. This system includes three main levels of control before disbursement. The first is the responsibility of the Department of Administrative Affairs (DAA) at the level of MADR, the second is at the level of MOF by the Budget Execution Controller (Contrbleur d ’exicution des dipenses), and the last lies with the Public Accountant (Agent comptable).

0 The accounting system is based on a cash basis and the outline of budget components according to the decree No. 330-66 of April 21, 1967, which includes basic rules for government accounting. The “ordonnateurs” and the “comptables” use separate sets of accounts to record their activities: the “ ordonnateurs” keep accounts on the commitments they authorize versus the budget, while the “ comptables” keep accounts on their cash operations. Reconciliation takes place annually and both statements are submitted to the’Tnspection Gknirale des Finances” and “Cour des Comptes” for control at their request. The official accounting books are maintained manually by the Public Accountant for state budget monitoring purposes according to the legal framework. Such a system does not allow easy identification of project activities and thus cannot be used for reporting purposes. In parallel, separate information systems or reporting systems are operational and ensure follow-up of specific activities and projects. In this context, the budget and accounting bureau within DAA has recently developed a specific database for financial monitoring of PMVBs projects. The systems allows issuing of detailed tables reflecting physical and financial information, by project, zone, implementing entity (DPA and ORMVA), etc. Payments are centralized at the level of the Trisorerie Gknirale du Royaume (TGR) which has fiduciary responsibility of supplementary and specific controls in case of financing by external resources. For expenditures eligible for external financing, the TGR issues a monthly statement of account reflecting the SA transactions. Although this centralization aims at reinforcing the control on the budget execution, the timing needed for the entire mechanism is long. Control on a transactional level is performed by the budget department within MOF who is responsible for : (a) reimbursement of TGR for the financed part; (b) replenishment of the SA; and (c) relationship with donors including requests for direct payments.

0 At the regional level, the DPAs and ORMVAs are effectively playing the role of decentralized unit. Each technical department is represented at the provincial level allowing adequate execution of the

- 67 - annual work program on behalf of the technical department at the central level. The PDA’s director could be designated with responsibility for budget expenditures (sous-ordonnateurs supplkants). In this case, the disbursement procedures would be executed at the Governor’s level with a similar distribution of duties between commitment, disbursement and accounting. Payments from donor contributions is in all cases still the responsibility ofDirection du Budget.

General Assessment. The FMS in place was reviewed with the objective of determining whether the project has in place adequate financial management arrangements as required by the Bank under OP/BP 10.02. This assessment, which included visits to MADR, DAF, one DPA, and MOF, was oriented on the accounting system, internal control mechanisms, planning and budgeting capacity, and financial reporting capabilities, suggested to be used during project implementation, as well as the format and contents of the project Financial Monitoring Report (FMR) to be submitted by the Bank 45 days after each calendar semester. The FMS currently in place satisfies the Bank’s minimum financial management requirements for the purposes ofproject implementation. Based on the above characteristics, MADR and DAF financial management systems do not present accountability issues. However, as explained above, the official accounting system is maintained for budget implementation and accountability vis d vis the parliament and thus cannot be used for project financial monitoring. The annual orientation of the “morusse” does not allow the public accounting system to provide cumulative data and analysis other than the budget allocation. Accordingly, DAF proposed using special financial and accounting arrangements for the project in order to provide the financial data required by the Bank. The recently developed accounting and reporting system developed for PMVBs project will be used for this purpose. Due to the complexity of the project implementation scheme in terms of funds and document flows and the large number of parties involved, it was agreed that the financial management procedures, as well as the management information system for the project, will focus on the relationship between the different structures and on the flows of funds and documents. The structures and project team at the central, provincial and local levels would adopt the defined system. A highly qualified consultant would be retained to implement the system and to assist the project team in reaching the targeted financial management system.

Financial Management Arrangements for the project

Project organization and internal control mechanisms. The system to be used for the project implementation is already in place and is already being used for the implementation of PWBsprojects. The main organizational characteristics linked to the institutional arrangements in place, are the following : (a) At the central level, the CGP within DAF consists of a Project Manager (PM) playing the role of coordinator, assisted by an accounting and financial specialist and a secretariat. The CGP is responsible for coordinating budgeting, planning, procurement, and implementation functions. The CGP team will have primary responsibility for accounting and financial (payments and disbursement) duties. The CGP will rely on the current structures of DAF, DPAs and ORMVAs who have primary responsibility for the above function. However, the CGP team will play an important role in coordination, aggregation of data (budget forecast, planning, progress, accounting, etc.) and preparation of the needed reports to those overseeing the various financial structures. The CGP is responsible for maintaining aggregated books of accounts and records for the project, issuing of the bi-annual FMRs and the annual project financial statements and their submission to the Bank and the auditors. The CGP will also be responsible for preparing all withdrawal applications, SOEs and all related controls of eligibility and compliance with Bank’s

- 68 - requirements and guidelines, (b) At the provincial level, the DPAs and ORMVAs will be responsible for the implementation of the project activities and thus will follow the agreed procedures at the different stages of the transaction process. DPA heads will select a coordinator in charge of the project activities who will play the role of the official vis 2 vis the CGP. The coordinator will be assisted by a UGP which will include an accountant and procurement unit. DPAs and OWAswill maintain simplified accounts and records to reflect the project activities. The sub database used by DAF for PMVBs projects will be installed at the DPA and ORMVA level. The Governor will ensure that accounting and financial information will be transmitted to the UGP on a regular basis by the provincial technical departments.

(c) At the local level, CT and CMV will be responsible for CIP preparation and execution. A Memorandum of Understanding will be signed between DPAs and CTICMV operating in their zones of competence in order to define the relationship, procedures, rules, and reports, etc., to be followed by CTICMV in the implementation ofproject activities.

Proiect Accountinn System. The overall principles for project accounting are the following : Project accounting would cover all sources of project funds, and all utilization of project funds including payments made and expenditures incurred. All project-related transactions (whether involving cash or not) would be taken into account in the accounting and reporting system. Disbursements made by the Bank and the transaction proceeded through the SA maintained by TGR would also be included in the project accounting system. Counterpart funds will be shown separately. Project-related transactions and activities would be distinguished from other activities implemented through PMVBs projects. This distinction would be reflected at the data-capture stage and the use of sub database for the proposed project. An identifiable Trial Balance for the project capturing all project receipts, expenditures, and other payments under the project would be prepared from the sub data base. DPAs and ORMVAs would be held pending transmittal on a monthly basis, separate progress statements @e., spreadsheets summarizing transactions committed andor paid) with copies of all supporting documents for expenditures under contracts requiring the Bank's prior review. Aggregation ofdata would be the responsibility of CGP. A chart of accounts will be issued and submitted to the Bank. The breakdown will reflect the state of budget components and the project activities as described in the project documents (Project Implementation Plan, Project Appraisal Document, COSTAB). The Chart of Accounts should allow data to be captured in a manner to facilitate financial reporting of project expenditures by: (i)project components; (ii)expenditure allocation; and (iii)disbursement categories. Reconciliation between the annual Project Financial Statements, periodic Financial Monitoring Reports and the budget accounts would be carried out by the CGP. A coordination with specialized services of Budget Department of MOF is crucial in order to ensure a close follow up ofthe SA and Loan Account, transactions and balances.

Flow of funds. Based on the agreed design and institutional arrangements, the funds will be managed according to the current legal framework for the execution ofpublic expenditures. (a) At the central level payments will be made by TGR and those eligible for Bank financing will be

- 69 - reimbursed from SA funds. (b) At the regional level, payments are decentralized and will be made at the Governor level. The same procedures for reimbursement will be followed. Special attention will be made for transactions executed by CTICMV. Payments would be subject to close control by DPAS structures. An annual payment plan, by category, will be issued by the CGP in collaboration with DPAs. Such a plan aims at improving the payment process and to strengthen collaboration with BD.

Financial Monitoring Reoorts (FMR) for the project are to be generated from the computerized sub data base installed recently at the DAF level. These reports would be management-oriented (i.e., summaries rather than transactional details) and would be used for the financial monitoring ofthe implementation of the project. The FMR includes the following main tables : e Summary of expenditures committed and disbursement by component e Summary ofexpenditures committed and disbursement by category e Summary ofthe procurement process and procedures for activities not subject to Bank‘s prior review 0 Summary of sources and uses of funds The format and content of the reports was agreed during appraisal and the sub-components financed by RDF will be itemized in sub-tables and issued as required. The summary described above will be linked in terms of financial data to the M&E.

Proiect Financial Statements (PFS) will be issued annually and submitted to the auditor. PFSs would include (i)a statement of sources and utilization of funds or Balance Sheet, indicating funds received from the Bank, from the state budget and beneficiaries, project expenditures, and assets and liabilities of the project; (ii)schedules classifying project expenditures by components and expenditure categories; (iii)a Special Account Reconciliation Statement; and (iv) a Statement ofWithdrawals made on the basis of Statements ofExpenditure (SOEs).

m. MADR will appoint an auditor acceptable to the Bank, to carry out an annual audit according to the International Standards on Auditing as issued by the International Federation of Accountants, the Bank’s Guidelines (e.g. Financial, accounting, reporting and auditing handbook, “FARfLH”) and specific Terms of Reference (TORs) acceptable to the Bank. The auditor will express a professional opinion on the annual project financial statements, SOEs and SA transactions and will issue an annual audit report which should be made available to the Bank within six months of the close ofeach fiscal year.

The audit would be comprehensive and cover all aspects of the project (Le., all sources and utilization of funds, and expenditures incurred). The audit will be carried out in accordance with International Standards on Auditing. Terms of Reference (TORs) for this assignment should cover an audit of financial transaction, and an assessment of the financial management system, including review of internal control mechanisms. All the involved entities at the central and regional levels would provide the auditor with access to project-related documents and records, and information required for the purposes of the audit. The Auditor would carry out a concurrent audit during the fiscal year, to bring to management’s attention any issue, which needs to be addressed. This would strengthen internal controls, and would also facilitate early completion of the annual audit.

- 70 - Annex 7: Project Processing Schedule MOROCCO: Rainfed Agriculture Development Project

Project Schedule Planned Actual /Time taken to prepare the project (months) I 20 I 23 I I First Bank mission (identification) I 06/01/2000 I 06/01/2000 I /Appraisal mission departure I 0 1/24/2002 I 04/30/2002 I Negotiations 05/06/2002 04/22/2003 Planned Date of Effectiveness 0 1IO 112004

Prepared by: Ministry ofAgriculture, Rural Development, and Water and Forests (MADR)

Preparation assistance: TARGA, FAOJCP and individual consultants. Preparation work for the project was also supported by a PHRD Grant from the Government of Japan.

Bank staff who worked on the Droiect included: Name Speciality Laurent Msellati rask Team Leader Marie-HClhne Collion Lead Agriculture Services Specialist (Co- TTL) Christopher Ward Lead Operations Officer Douglas Lister Senior Agriculture Economist Marie-Laure Lajaunie Water Resources Specialist Pierre Rondot Community Development Specialist Concepcidn del Castillo Senior Social Scientist Hassan Lamrani Senior Operations Officer Samia Msadek Manager, Financial Management Meryem Benchemsi Financial Management Specialist Nicole Glineur Environmental Reviewer Stefanie Brackmann Environmental Reviewer Paloma Anos Casero Social Reviewer Dominique Bichara Senior Counsel Hovsep Melkonian Senior Disbursement Officer Hassine Hedda Finance Analyst Christine Allan Operations Analyst, Editor Sylvie Pittman Program Assistant Laila Moudden Team Assistant Cornelis de Haan Livestock Adviser - Peer Reviewer Adolfo Brizzi Sector Manager - Rural Development - Peer Reviewer Willem Zijp Operations Adviser - Peer Reviewer Antonio Cittati Senior Procurement Specialist Petros Aklilu Sector Manager - Rural Development

- 71 - Annex 8: Documents in the Project File* MOROCCO: Rainfed Agriculture Development Project

A. Project Implementation Plan A draft Project Implementation Plan has been prepared and includes a Synthesis Report and seven (7) annexes.

B. Bank Staff Assessments Country Procurement Assessment Review, February 2000 PCD, dated November 20,2000 Preparation mission, BTO Report dated December 7,2000 Pre-appraisal mission, BTO Report dated December 12,2001 Pre-appraisal/appraisal mission, BTO Report dated March 12, 2002 Appraisal Completion Memorandum dated May 7,2002

C. Other Identification Report - "Programme de dkveloppement des zones bour - Rapport d'identijkation - Version finale - Ministdre de I'agriculture, du dkveloppement rural, et des eaux et for&, Dkcembre 2001 11

Preparation Report - "Royaume du Maroc - Programme de dkveloppement rural intkgrk de mise en valeur des zones bour - Rapport deprkparation". FA0 Investment Centre, Report No. 0 11023 CP-MOR, April 2, 200 1. Working Paper 1 - "Note de rkjlexion sur les programmes de Iutte contre les effets de la skcheresse - Document de travail - John Morton et Laurent Msellati, 15 mars 2001". Institutional Assessment - "Restructuration des services extkrieurs du Ministdre de I'agriculture, du dkveloppement rural, et des eaux et for& et Montage institutionnel du programme DIU-MVB - Version dkfinitive, 31 octobre 2001". Technology Assessment - "Bilan des acquis de la recherche agronomique en matidre d 'agriculture pluviale - Rapport final - Ministdre de I 'agriculture, du dkveloppement rural, et des eaux et forits, 18 novembre 2001", Draft Implementation Manual - "Manuel d'exkcution - Version provisoire - Ministdre de I'agriculture, du dkveloppement rural, et des eaux et for&, Fkvrier 2002" Environmental Impact Assessment - "Rapport de I'ktude d'impact environnemental - Version pnale - Ministdre de I'agriculture, du dkveloppement rural, et des eaux et for& I1fkvrier 2002". Beneficiaries Assessment - "Lepartenariat dans le cadre du programme DIU-MVB - Versionfinale - Ministdre de l'agriculture, du dkveloppement rural, et des eaux et forits, Fkvrier 2002" Procurement risk assessment - "Evaluation de la capacitk de passation des marchks des DPA et de la DAF, 28 fkvrier 2002" - Aide-M6moire Pre-appraisal'Appraisa1 Mission, Annex 4.

*Including electronic files Annex 9: Statement of Loans and Credits MOROCCO: Rainfed Agriculture Development Project As of April 16,2003 Difference between expected and actual Original Amount in US$ Millions disbursements” Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev’d PO75806 2003 MA-Adult Literacy (Alpha Maroc) 4.10 0.00 0.00 0.00 4.52 0.00 0.00 PO73531 2002 MA-Social Development Agency 5.00 0.00 0.00 0.00 6.24 0.75 0.00 P0 6 5 7 36 2001 MA-INFORMATION INFRASTRUCTURE SECTOR 65.00 0.00 0.00 0.00 65.00 65.00 65.00 P0 5 69 78 2001 MA-IRRIGATIONBASED COMMUNITY DEV. 32.57 0.00 0.00 0.00 29.27 3.45 0.00 P0 6 5 7 57 2000 MA-SUSTAINABLE COASTAL TOURISM DN. 2.20 0.00 0.00 0.00 1.29 0.92 0.00 PO48314 2000 MA-PROTECTED AREAS MANAGEMENT 0.00 0.00 9.80 0.00 9.74 7.29 0.00 PO63918 2000 MA-LEGALAND JUDICIAL DEVELOPMENT 5.30 0.00 0.00 0.00 5.62 4.35 0.00 PO52247 I999 MA-PILOT FISHERIES DEV. 5.00 0.00 0.00 0.69 3.13 4.05 0.00 P0 0 5 5 25 1999 MA-HEALTH MANAGEMENT 66.00 0.00 0.00 0.00 55.05 61.73 41.68 PO05524 1999 MA-FEWMEDINA REHAB. 14.00 0.00 0.00 0.00 11.71 12.45 1.55 PO05519 1999 LAKHDAR WATERSHED MG 4.00 0.00 0.00 0.00 3.27 3.27 0.00 PO05521 1998 MA-WATER RESOURCE MGMT. 20.00 0.00 0.00 3.28 8.97 10.89 0.00 PO43725 1997 MA-RAILWAY RESTR 8 PRlV 85.00 0.00 0.00 0.00 65.50 72.71 20.00 PO42414 1996 MA-COOWMONSOCIAL PRO 28.00 0.00 0.00 0.00 1.95 3.80 0.00 P0 0 5 50 3 1996 SEW& WATER REUSE I1 40.00 0.00 0.00 0.00 25.38 24.59 5.53 PO05501 1996 MA-SPI EDUCATION 54.00 0.00 0.00 8.00 17.22 23.47 6.75

Total: 430.17 0.00 9.80 11.98 313.86 298.73 140.51

- 73 - MOROCCO STATEMENT OF IFC's Held and Disbursed Portfolio Ju~30 - 2002 In Millions US Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 2000 Maghreb Inv. Mgt 0.00 0.02 0.00 0.00 0.00 0.02 0.00 0.00 2000 Maghreb Invest P 0.00 5.00 0.00 0.00 0.00 2.50 0.00 0.00 2001 Medi Telecom 66.38 0.00 22.13 336.63 66.38 0.00 22.13 336.63 1987193 SETAFIL 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Portfolio: 66.38 5.02 22.13 336.63 66.38 2.52 22.13 336.63

Aaorovals Pending Commitment FY Approval Company Loan Equity Quasi Partic 2002 SGRI 0.00 0.00 0.90 0.00

Total Pending Commitment: 0.00 0.00 0.90 0.00

- 74 - Annex IO: Country at a Glance MOROCCO: Rainfed Agriculture Development Project M. East Lower- POVERTY and SOCIAL & North middle- Morocco Africa income ~ Development diamond‘ 2001 Population, mid-year (millions) 29.2 301 2,164 Life expectancy GNI per capita (Atlas method, US$) 1,180 2,000 1,240 I GNI (Atlas method, US$ bil/ions) 34.4 601 2,677 T Average annual growth, 1995-01 I Population (%) 1.7 2.0 I.o GNI Gross Labor force (%) 2.5 2.9 1.2 primary Most recent estimate (latest year available, 1995-01) capita nrollment Poverty (% ofpopulation below nationalpoverty line) 19 Urban population (“A of totalpopulation) 56 58 46 Life expectancy at birth (years) 67 68 69 I Infant mortality (per 1,000 live births) 47 43 33 Chiid malnutrition (“A of children under 5) 15 11 Access to improved water source Access to an improved water source (% ofpopulation) 82 89 80 Illiteracy (% ofpopulation age f5+) 50 34 15 Gross primaly enrollment (% of school-age population) 90 97 107 1 -Morocco Male 98 103 107 Lower-middle-incomegroup Female 83 90 107 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1981 1991 2000 2001 Economic ratios’ GDP (US$ billions) 15.3 27.8 33.3 33.7 Gross domestic investmenVGDP 26.1 22.6 24.4 25.0 Trade Exports of goods and serviceslGDP 20.2 24.1 31.2 30.8 Gross domestic savingslGDP 11.5 17.0 16.2 19.6 T Gross national savingslGDP 15.5 21.1 22.8 24.4 Current account balancelGDP -12.2 -1.5 -1.2 -0.8 Interest paymentslGDP 4.8 3.9 2.8 2.9 Total debVGDP 66.9 78.5 53.8 52.9 Total debt service/exports 38.1 26.7 25.6 20.2 Present value of debVGDP 47.9 Present value of debffexports 124.0 Indebtedness 1981-91 1991-01 2000 2001 2001-05 (average annual growth) GDP 4.6 2.5 0.9 6.5 3.7 -Morocco GDP per capita 2.4 0.8 -0.8 4.8 2.1 Lower-middle-incomearouD Exports of goods and services 8.0 5.1 4.4 14 4.1 STRUCTURE of the ECONOMY 1981 1991 2000 Growth of investment and GDP (Oh) (% of GDP) Agriculture 12.9 20.1 13.5 I Industry 34.1 30.9 32.2 31.6 Manufacturing 18.1 17.2 17.6 17.4 15 Services 53.0 49.0 54.3 52.6

Private consumption 69.4 67.5 626 62.3 -15 General government consumption 19.1 15.6 19.1 18.2 -GDI +GDP Imports of goods and services

1981.91 1991-01 2000 2o01 Growth of exports and imports (%) (average annual growth) Agriculture 8.4 -0.3 -16.2 23.0 T I Industry 3.1 3.4 2.5 3.0 20 Manufacturing 4.3 2.8 3.5 4.0 lo Services 4.2 3.0 4.1 5.2 0 Private consumption 4.6 2.6 0.1 40 General government consumption 3.1 3.8 0.4 14.5 -10 Gross domestic investment 2.1 3.5 13.6 8.1 -Exports +Imports Imports of goods and services 4.4 6.2 7.8 2.3 I Note: 2001 data are preliminary estimates. .. I . .-

- 75 - Morocco

PRICES and GOVERNMENT FINANCE 1981 1991 2000 2001 , Inflation (X) Domestic prices (% change) I Consumer prices 12.5 8.0 1.9 2.0 Implicit GDP deflator 9.7 6.5 1.6 1.o Government finance (% of GDP, includes current grants) Current revenue 22.9 22.9 28.2 24.6 1 96 97 98 99 DO I Current budget balance -1.4 1.4 -0.2 -1.4 -GDP deflator -0'CPI Overall surplusldeficit -13.3 -3.1 -6.2 -0.8

TRADE 1981 1991 2000 2001 Export and import levels (US$ mill.) (US$ millions) Total exports (fob) 2,320 5,094 7,404 7,256 ~ Agriculture 653 1,331 1,719 1,745 Phosphorus rock 740 346 431 445 I Manufactures 380 2,374 3,997 3,822 Total imports (ci9 4,341 7,455 11,480 11,394 Food 892 594 1,338 1,370 Fuel and energy 1,184 991 2,039 2,026 Capital goods 746 1,680 2,388 2,237 95 96 97 98 99 00 01 Export price index (1995=100) ' I import price index (1995=100) Terms of trade (1995=100)

BALANCE of PAYMENTS 1981 1991 2000 2001 Current account balance to GDP ("A) (US$ millions) 1 Exports of goods and services 3,082 6,712 10,513 10,541 Imports of goods and services 5,310 8,285 12,459 12,380 I Resource balance -2,228 -1,573 -1,946 -1,839 Net income -702 -1,115 -667 -944 Net current transfers 1,069 2,275 2,427 2,520 Current account balance -1,862 -413 -387 -263 Financing items (net) 1,775 1,195 -28 2,248 Changes in net reserves 86 -782 415 -1,985 Memo: Reserves including gold (US$ millions) Conversion rate (DEC, /oca//US$) 5.2 8.7 10.6 11.3

EXTERNAL DEBT and RESOURCE FLOWS 1981 1991 2000 2001 (US$ millions) :ompositionof 2001 debt (US$ mill.) Total debt outstanding and disbursed 10,215 21,666 17,945 17,834 IBRD 801 3,295 2,837 2,500 IDA 40 38 27 25 G: 1,671 A. 2 500 Total debt service 1,574 2,378 3,333 2,627 IBRD 85 471 497 452 IDA I 1 2 2 Composition of net resource flows Official grants 98 563 191 Official creditors 1,099 575 -305 458 Private creditors 202 -157 -449 -570 Foreign direct investment 59 317 10 Portfolioequity 0 0 147 E: 5.640 World Bank program Commitments 363 676 0 8 \ - IBRD E - Bilateral Disbursements 100 357 138 61 I - IDA D - Other multilateral F - Private Principal repayments 37 230 308 280 ;- IMF G - Short-terr Net flows 63 127 -170 -220 Interest payments 48 242 191 173 Net transfers 15 -115 -361 -393

Note. I nis taae was proaucea trom tne uevelopment tmnomtcs central aataDase.

- 76 - Additional Annex 11

Social and Beneficiairies Assessment

A. Introduction

The approach for the implementation of the RADP Program constitutes a profound innovation in the thinking of agricultural development and beneficiary participation. Forming part of the "2020 Rural Development Strategy", RADP has developed an approach that is truly integrated, multi-dimensional, and responsive to the particular needs of each of the zones of intervention, both technically and socially. In this approach, participation and local decision making by the beneficiaries is the key to success ofthe program. Where the old top-down methods have not succeeded in improving the productivity of rainfed areas in Morocco, this approach may enjoy success by: (a) community organization and the implementation of local participatory development programming; (b) increasing the ownership of the beneficiaries and other stakeholders in the program; (c) strengthening the capacities of local organizations to work efficiently for the communities' benefit; and (d) providing the environment to make participation work. There are two key questions that the preparation studies and others have addressed: (a) who are the beneficiaries and what is their social structure and capacity to organize effectively ? and, (b) how can the partnerships be created to ensure the participation of the organized beneficiaries in order to effectively execute the program's proposed activities ? Three sets of information and assessments have examined these issues. The first set was compiled into the "Monographies des provinces retenues" (TARGA-Aide, December, 2000). Further work was undertaken on the issue of beneficiaries and possible partners during the FAO/CP Preparation Mission. However, information as to how participation would be ensured and how to make it work on the ground was insufficient. Therefore, a Beneficiary Assessment and Partnerships was carried out from September through November 2001 to provide information as to how this process should occur in order to avoid potential blockages to participation as a result ofsocial, economic or institutional factors. This Annex summarizes the analyses undertaken during the preparation of the DIU-MVB and indicates the criteria for design of the interventions during project implementation. These are the point of departure for the creation of specific participation and partnership strategies in each of the selected communes.

B. Beneficiarv Assessment

Proiect Areas and Archetvues The priority areas for intervention cover different ago-ecological areas where development models, archetypes have been identified, and these have led to the identification during project preparation of six priority action zones and ten rural communes which are described in Annex 2. A seventh zone, corresponding to the province of Errachidia, was included as requested by GOM during negotiations. This concept is built around the premise that these areas are prototypes of different resources of rainfed areas, and that the people using these resources have adapted to them, and have ways of allocating and using resources that are intricately bound with the way in which these populations are themselves organized. In each of these areas there are particular features of social organization that can either be constraints or opportunities for the active participation ofthe population.

- 77 - The identification of the social organization in each region is therefore crucial to establish an effective participatory mechanism and sustainable models for self-development to develop the human and institutional resources of these areas that have been consistently marginalized due to their isolation, and where poverty has reached a critical level.

Beneficiaries and Targeting Mechanisms Beneficiaries. The field studies which were carried out defined the number of potential beneficiaries in the project areas and the population distribution is summarized below. Individual data sheets for each of the selected localities, together with the basic information of each archetype by locality have been prepared and can be found in the Social Assessment Report.

TOTAL 10 230 15,391 91,228

Overview of Social Conditions. Social indicators in the selected provinces are below national average.The following indicators were chosen within the list presented in the Table at the end of this Annex: e Unemployment Rates. The inverse of the activity rate is the unemployment rate. At the national level, for males, this is 17.1% in urban areas and 10.9% in rural areas. The lower percentage in rural areas may be explained by the fact that many of those looking for work and not finding it have left the area. Three of the Program provinces have higher unemployment for urban males with 22.8% in Boulemane, 23.8% in Khemisset and 24.3% in Khouribga. Two provinces have substantially higher rates in rural areas, with 20.9% in Khouribga and 21.1% in Tata. For females at the national level, 29.6% of urban and 10.5% of rural females are unemployed. Four of the six provinces have much higher urban female unemployment, with 42.5% in Boulemane, 47.4% in Khouribga, 37.6% in Sidi Kacem and 41.9% in Tata. Female unemployment is higher than the national average in the rural parts of Boulemane (16%), Khouribga (21.4%), and Sidi Kacem (16.7%), and lower in Taroudant (4.1%) and Tata (1.5%). These figures show both that many women would like to be working in both urban and rural parts of many Program provinces, and that one must keep local characteristics in mind in the two southern provinces of Taroudant and Tata, rural women do not want to work, while their urban sisters do. In general, unemployment ranges from somewhat similar to much higher than the national average for both males and females in nearly all the Program provinces. This means that improved agriculture and more non-agricultural activities are especially needed in these provinces.

- 78 - e Access to Drinking Water. Two final indicators illustrate both limited access to social benefits and the types of programs rural populations may request, given their scarcity. One is access to drinking water, either through running water in the home (census data) or access to potable water in or near the village (PAGER data). While 74.2% of all urban households had running water in 1994, only two of the Program provinces were fairly near that level (Boulemane and Khouribga) while the rest were about 10% or more below that. The national average for rural areas was 4%, and Program provinces ranged from 1.4% in Khouribga to 6.4% in Taroudant. Another way to look at this is through access to potable water, either running in the home or available at a nearby standpipe, in which much progress has been made recently. The 1999 data from Direction de 1’Hydraulique show that rural access to potable water ranges from 29% (Sidi Kacem) to 80% (Tata) in Program provinces, the average for which is 49.43%, much higher than it has been. Yet only half of these rural residents have access to nearby clean drinking water, so there is still a substantial demand. e Access to Electricity. Access to electricity is another goal of rural populations. They use it for light, to operate television sets and refrigerators, and sometimes for pumps to reservoirs or for irrigation of nearby fields. In 1994 there was a great urbadrural disparity, with 80.7% ofthe urban population and 9.7% of the rural population with household electricity. All urban populations in the Program provinces had lower rates, ranging from 66.2% to 77.1%. The rural provinces were all in the 5%-6% range with the exceptions of Taroudant (10.3%) and Tata (16.9%). These higher figures may be a result of group projects to provide rural electricity that have been operational in some southem provinces. The State also has a recent program (PERG) to provide electricity to rural areas, but we do not have data on current increased coverage.

Targeting- Mechanisms. Priority provinces were selected based on criteria such as the extent of poverty, the level of natural resource degradation, trends in past public investment, access to basic infrastructure and services in the area (Boulemane, Khouribga, Taroudant and Tata), as well as the potential for agricultural growth (Khemisset and Sidi Kacem). In addition, the poorest households in each of the zones will be selected as a matter of priority. These criteria will be developed on the basis of existing information as well as additional data to be gathered during the initial phases of the preparation of the CIP in each PAZ. These data will further show the economic and social distinctions within communities that will be the basis for identifying the most vulnerable groups. Targeting will be developed along two dimensions: e Identification of the populations (douars or local interest groups) in the most remote and poorest areas. These are also likely to be the most vulnerable from the social organizational point of view in that they will include the landless households headed by women, and men with little or no education and/or unemployed; and e Selection by the poor beneficiaries of the activities which are most critically needed by them, particularly focusing on immediate improvements in rural infrastructure, and selected key actions in livestock improvement (since the landless population and women are likely to depend heavily on a small number of livestock and are most vulnerable to drought). Also, training will be focused on the ways in which community organizations can be included to guarantee the participation ofthe segments of douars or interest groups that are normally excluded or are reticent to participate due to either low social status or lack ofeducation.

Social Orpanization and Communitv Solidarity The premise underlying the beneficiary assessment is the recognition that the social organization governing the people is the fundamental building block to establish participatory mechanisms. This analysis focused on the degrees of solidarity and cohesion and the existing mechanisms that can

- 79 - contribute to institutionalizing participation of the population including the poorest and most marginal. The social assessment identified how the Douar (basic buildingblock of social organization in Morocco, grouping together households that are linked by kinship and common resources) continues to play a role in promoting the solidarity of these relatively small communities. The study found essentially two different types ofdouars:

0 Douars that continue to reflect the social organization in the organization of space: small homogeneous settlements where solidarity exists in religious, cultural, and resource management activities; and

0 Douars where the mobility of population has resulted in the douar (social unit) not being coincident with the population’s settlement (dispersed among other settlements of other douars). In this case people still identify with the social unit, and attend to religious and cultural functions associated with it, but because of the spatial dispersion and lack of common resources to manage, these areas would be more fruitfully organized according to a common interest base. In either scenario, these manifestations of solidarity are indices of the potential for collective work and participatory life. The traditional organizational forms, and the degree offormalization of roles have to be taken into account in the formation of formal associations to ensure that the essentially egalitarian forms of collective life are maintained in the creation ofnew forms of associations.

Particiuation and Organization At the community level, the target groups proposed for FL4DP are articulated around these different types of social and physical spaces characterized by douar-level solidarity. In the case of the Provinces of Tata, Taroudant, Boulemane, and partially Sidi Kacem, the target group can be the local settlement constituted in an association framed by the social organization and it must reflect the internal equilibrium and dynamics of the groups in order to maintain legitimacy and representation. This implies an in-depth knowledge of the local social stratification and the distribution of wealth. In those areas particularly affected by out migration, such associations must be formed around the women that are the most affected and who are the key players in the continuity of agricultural production. In areas where the douar is dispersed, such as Khemisset and Khourigba, as well as in Tissaf with nomads, priority would be given to the formation of associations around common interests particularly agricultural production, community infrastructure, and other community activities. The analysis of the potential for good associations should be measured around the capacity to undertake activities of common interest, such as in Ain Sbit where important agricultural activities are perfectly integrated into a regional economy. In such instances the associations can function effectively if they maintain the balance of social and economic interests internal to the groups. The existence of a participatory culture is one index of the potential for the formation of associational forms, but it is not an automatic guarantee of their success. These forms of collective life have to be guided and empowered. This is the objective of the component of institutional strengthening both technically in MADR and in the rural development component notably the support to local initiatives with a strong emphasis on training and planning at the community level. Experiences of successful existing organizations will be used as key examples to demonstrate the capacity and methods for successful mobilization of the population. One good indicator of this potential is the gradual return of university graduates to their areas of origin where they often take up the agricultural activities of their parents. They can be the central pole around which new innovations can be tested, and can act as

- 80 - catalysts for change. The community level organizations will work jointly with the RCs, the elected representative body at the lowest level in rural areas, to ensure the participation of the population in the preparation ofthe CIPs. At this level there will be a need for guidance and training to translate development plans into sustainable actions. The RCs, as a formal institution, should also be assisted with training to ensure its credibility, legitimate representation and transparency. The capacities of the RCs are at this point highly differentiated. A typology ofthese capacities was developed in the beneficiary analysis and these must be taken into account in the definition of training programs required to institutionalize and strengthen management capacities. Lessons learned from other projects show that there must be close involvement of technical, financial and community level representatives in the formulation of the CIPs since these constitute a leaming as well as a planning tool.

Gender In all the selected areas, a fundamental part of the social assessment was the role held by women both in the community structure as well as in agricultural production. Any intervention selected, and the modalities for the organization of women must be grounded in the specific analysis to be undertaken during the preparation of the CIPs. These should focus on the role of women in different douars, including their allocation of time and labor, their effective roles as decision makers and resource managers (monetary as well as in-kind) in the absence of males (due to migration), degree of stratification, labor exchanges, etc. The organizations or associations must be grounded on an analysis of the distribution of labor and time availability of women, and oriented towards productive and self-selected activities identified by women for women. The CIPs should reflect the poverty-targeted criteria: inclusion of the female headed households and other vulnerable groups of women (widows, elderly, without resident family, etc.), as high priority areas of intervention. Some subprojects already identified, to be implemented under Component B.3, include health and nutrition education, literacy programs, and alternative livelihood activities, in addition to potable water, as high impact and urgent interventions.

C. Other Stakeholders Governmental Ties. The other interested groups that could influence the success of the Program all have some degree of connection to GOM. These include MADR, which must support the objective of self-development of the communities in the long term in order to achieve the social development goals, as well as the overall goal of economic improvement of the program. This will require intensive training at the level ofthe CTs/CMV and their interaction with the communities. The Rural Communes (RCs). The RCs, with their elected officials, is the key action space for the implementation of the program. The Communal Council, representing the whole commune, will have a key role overseeing CLMVA to identify and plan the interventions required on the basis of their constituents' development priorities. In this task, the Communal Council will be supported by a team of "community workers" (animateurs). RCs often have very limited funds and should welcome program activities that can bring benefits to their constituents. In order to avoid capture of project benefits by the most articulate and politically experienced RCs, the distribution of funds and interventions must be based on the presentation of articulated and integrated proposals which reflect the needs of the population of each RC, and that the process is transparent. CooDeratives and Farmer Organizations. The study on partnerships identified different forms of organizations in the PAZ, including specific products, collective service management, chambers of agriculture, cooperatives and local agricultural development organizations. The situation on the ground shows that there is considerable diversity in the efficacy, legitimacy, and capacity ofthese organizations.

- 81 - The study outlines that the organizations which are based on traditional forms function better than formal, government-organized ones. The experiences of the cooperatives show that the rules are not convincing to the members, nor followed, and that local interests and elite capture of benefits dominate in their management. The formation of farmers organizations, be they on the douar or around a common interest, should therefore create incentive to establish viable institutions that are managed by the cooperative members without external government intervention. Training activities are also a key factor of success, especially for smallholders in rural and most marginal areas of the country.

D. Guiding Princides and Recommendations for Actions The social and institutional context described above determines the principles on which specific actions should be modeled for project organization, training and implementation.

Project Organization The assessments have demonstrated that the most appropriate social level and unit for intervention (at the levels ofhouseholds, douar, agricultural holdings, village, etc.) will vary, and that actions must be based on this knowledge of local level social organization. This will identify the appropriate leaders, interlocutors and audiences at each organizational level to ensure effective and transparent organizations. From the local organization level up, the linkage must be made between the basic unit ofintervention and the overall commune. The process of reformulation of individual actions into a communal-level development program (CIP) will require careful coordination and intensive discussion and agreements between the members of the local organizations/associations and the wider level communal representatives and interlocutors, both governmental and non-governmental.

Training The immediate and high priority activities to be undertaken at the onset of the program should include capacity building of existing organizations and training to strengthen the capacity for group formation. The proposed project will finance training activities to specifically:

0 Develop local programming capacity (Sub-component A.2) to include local elected representatives of the communes and other partners to formulate the CIPs with a focus on participatory approaches and management; and

0 Reinforce the capacity for the creation of both technical and financial partnerships (Sub-component B.3), with training programs that inform and promote formal and informal local organizations, and ways to make them effective, requiring both technical as well as institutional skills. Experiences with non-governmental partners and other institutions abound in Morocco and would serve as a frame of reference.

Imdementation The proposed components and organization will provide the initial and essential environment for implementation of the program. Community organization and training will be the first block to the formulation of an action program with the consensus, agreement, and coordination at the level of the communities involved. During implementation, close monitoring of the rhythm of actions to the organizational capabilities of the commune and their capacity to manage and internalize innovations and changes in agricultural activities will be essential. The acceptance rate of actions, even when these have prior consent of the community, will vary depending on the degree of cohesion and trust among its members. This monitoring and guidance of the development process would be supported by the proposed research development activities and necessary measures to adapt activities as the context changes progressively throughout the program.

- 82 - In additional to intensive training, cited as one of the earliest program interventions, all analyses have recommended that activities which are responsive to key community needs be among the first actions in the program. These would offer a goal and a challenge to form functional associations. Important among these in particular, would be those activities that mainstream women as well as youth and returning migrants into the context of development by intervening in actions that affect them the most (water, sanitation, health, and literacy, and local small-scale revenue and employment-generating activities).

Partnerships The social assessment has identified many non-governmental institutions that may be potential technical and financial partners to local organizations in the communes which are few and ofmixed standards and sizes. A key finding of the partnership study is the great range of variations in the capacity and experience of potential partners identified. The selection of partners for specific kinds of activities, and the criteria of their past record of experience, is key to the formation of partnerships that will truly assist and support local community initiatives. The focus of partnerships to work with local community organizations should be on: e Micro-credit, because ofthe pervasive need for credit in poor rainfed areas;

0 Skills related to community organization, participatory approaches, and agricultural organizations; and

0 Community contracting for small infrastructure and its maintenance and monitoring. The modalities for the establishment of partnerships could include Conventions and Agreements between the communal organizations and the selected partner, or by the establishment of contracts for specific works. Other modalities may be designed on the basis ofthe activities to be implemented and the wishes ofthe communities. To be effective, the modalities and mechanisms outlining respective areas of action and responsibilities of partnerships, particularly in the early stages, must be calibrated and carefully tailored so that each partner can respond to the challenges and responsibilities without being overwhelmed. Special attention must be given to take into account the measure of added work those partnerships would entail monthly, seasonally, or annually, particularly in the case of activities and organizations for women. Estimating the capacity of the most appropriate partners for local associations is neither easy nor standard, and because of this the speed at which partnerships can be established must be necessarily slow at the beginning of the program in order to err on the side of caution, while maintaining a close scrutiny of the dynamics of the partnership development. The responsive partnership is a two way street and agreement between the local communities and autonomous associations and the extemal partners. Both must interact as equal partners without the establishment of a vertical and stratified relationship, and the local associations must be trained so that their side of the partnership is dynamic, transparent and productive. They must have the capacity to monitor the actions on the ground and both partners must be accountable.

Errachidia Province

Errachidia Province, included in the project area during negotiations following GOM's request, did not undergo a social evaluation of its beneficiaries. This review will be undertaken during the first year of the project, based on TORS acceptable to the Bank, and will be financed by the project. The results of this evaluation will be reviewed during a joint review between the Bank and MADR, and an activity program for the province under the project will then be mutually agreed upon.

- 83 - -84- Additional Annex 12

EnvironmentalAssessment

The environmental assessment impact study of the RADP, disclosed on March 8,2002, is organized in 5 chapters :

0 Institutional Setting; 0 Project Description; 0 Description ofthe Natural and Human Environment of the Project; 0 Impact Identification and Evaluation; and 0 Mitigation Measures and the Environmental Management Plan (EMP).

A. Institutional Setting

A number of institutions are dealing with environment management in Morocco: e The Environment Department within the “Ministzre de I ’amdnagement du territoire, de I ’urbanisme, de 1’habitat et de 1 ’environnement” is the most important institution assigned to coordinate GOM actions in the area of environmental protection. It is also responsible for preparing and implementing new legislation to integrate environmental protection in the project preparation and approval process. e Other ministries involved include: MADR, dealing with natural resources management; and the Ministry of Equipment, which is responsible for various programs of infrastructure development in rural areas (water supply, electrification, and rural roads). Morocco does not yet have specific regulations for environmental protection. However, aspects of environmental protection affecting water, forestry and rainfed area development are covered by specific laws which include provisions for environmental protection.

B. Proiect Description

Rural development in rainfed areas is now a priority for GOM and programs are being developed based on the following strategic approaches: e “Deconcentration” to the local level to allow development actions to be adapted to specific local problems (natural, human and technical);

0 Partnership approaches to program development and execution using participatory mechanisms together with the beneficiaries; and e Integration of actions across sector boundaries to maximize the effects.

The objectives of the project are : e Increased incomes and welfare in six priority rainfed areas; 0 Improvement ofproduction systems; and 0 Establishment ofan institutional framework for rainfed agriculture development, including strengthening MADR’s implementation capacity.

- 85 - Project activities comprise: local level development actions (land management, water and soil conservation, social infrastructure, improved technology and productivity in production systems) and institutional development and capacity building (training, conceptual and methodological support etc.).

C. DescriDtion of the Natural and Human Environment of the Proiect

The project will focus on seven priority rainfed areas. These regions are among the poorest of the country and suffer from major shortcomings in terms of rural infrastructure and access to basic social services.

0 Provinces of Tata and Errachidia: oasis areas characterized by extreme poverty, low agricultural potential and lack ofsocial infrastructure. Province of Taroudant: Atlas Mountains area, major access problems, environment protection problems (especially watershed erosion).

0 Province of Boulemane: High Eastern Plateaux area, pastoral system.

0 Province of Sidi Kacem: Fruit tree production is the dominant system in this area which lies below the Rif Mountains.

0 Province of Khemisset: cereal production is dominant in this area, posing challenges of rainfed system development and drought effects management.

0 Province of Khouribna: again, cereal production potential and the drought management challenge in the Central Dry Zone.

The major environmental issues in these regions include :

0 Water and wind erosion;

0 bank erosion by flooding rivers;

0 unbalanced ecosystem use;

0 landscape degradation; and

0 vulnerability to drought and desertification.

D. ImDact Identification and Evaluation

Project activities are expected to have positive impacts on the natural and human environment including:

On the Natural Environment:

0 reduction in erosion and stabilization ofwatersheds in mountain areas; 0 stabilization ofriver banks to avoid flood erosion; 0 water resources protection below the watersheds concerned by the project; 0 surface soil conservation for agriculture; 0 desertification control; 0 preservation ofthe ecological balance; and 0 conservation ofthe mountain forest landscape.

- 86 - On the Human Environment: e employment oflocal people in implementation will provide incomes to the local population; e increased availability offirewood and plants that produce honey will benefit the local population; e increases in agricultural production and incomes will benefit farmers; e the health and sanitary status of the population will improve; e the human environment will improve in rural areas; e some villages will benefit from improvements in access; e provision of social services and links to markets will improve; e incomes are expected to increase generally in the project areas; e water resources and potable water supplies will be conserved; and e the conservation of irrigated areas will contribute to the natural and cultural patrimony.

E. Mitigation .Measures and the EMP

Mitigation measures and the EMP are summarized in the following table. A training program for concerned project agencies, communes and beneficiaries has been included in the project to ensure adequate environment management capacity (cost $25,000 annually).

The impacts are presented in the table according to program component, project activities and environment component. This table gives the impact characteristic according to three criteria, and describes the impact and the mitigation measure proposed.

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-9 1- Additional Annex 13: Drought Preparedness and Incentive Framework

MOROCCO: Rainfed Agriculture Development Project

The purpose ofthis Annex is to evaluate two specific areas ofrisk to the project, inter alia, the recurrent drought which primarily affects rainfed agriculture and the pricelincentive framework, mainly the cereal policy, and to describe how these risks will be dealt with and taken account of in the project.

A. Introduction

Drought is a structural phenomenon for Moroccan agriculture, and one that is growing in importance. While long-term analyses suggest that major droughts have occurred historically in Morocco on average once every eight years, recent decades have seen an increase in the frequency of droughts: according to drought definitions, ten of the years from 1985 to 2000 can be seen as drought years. Periods of drought have a strong impact on rural incomes and employment opportunities and contribute to unplanned rural-urban migration. Drought has major effects at the sectoral level: the drought of 1994-1995 led to a drop in cereal production from 96 million quintals in 1993-1994 to 17 million quintals, with a lowering of agricultural added value by 50% from the average for 1989-94 and a sharp drop in rural employment. In the livestock sector, the drought of 1981 caused losses to the national herd in the order of 30% for cattle and 40% for small ruminants. Drought episodes also act as a trigger to desertification and other forms of environmental degradation as short-term responses to drought by farmers and herders put pressure on resources.

There is a long history of government action to mitigate the effects of drought in Morocco. One of the current interventions, the Programme de Sauvegarde du Cheptel, (a program consisting mainly of various forms of subsidy to livestock feed, but also livestock water supply and animal health measures) dates back to 1969. Small programs of labor-intensive public works have also been implemented as a drought response since the early 1980s. In response to the failure ofthe 1995 harvest, a "Projet de Lutte Contre les Effs de la Sdcheresse" was executed between 1995 and 1998, with Bank support, with a total budget ofUS338 million.

In April 2000, GOM announced a 15 month "Programme de Lutte Contre les Effs de la Sdcheresse" (PLCES), with a total financing of US$650 million, drawn from several existing and new budgets of GOM (and subsuming the Programme de Sauvegarde du Cheptel for that year). These funds were spent mainly on labor-intensive public works and on subsidies to livestock feed. As discussed later in this Annex, there has been a tendency for drought expenditure to grow and become less constrained by objective definitions of drought.

When characterizing drought as a structural feature of Moroccan agriculture, it is important to note that "structural" is not equivalent to "permanent" or I' continuous". To be a meaningful concept, drought must be distinguished from general aridity of climate, as "a deficiency of precipitation from expected or normal". The definition of "expected or normal" is itself problematic, given the existence of medium-term cycles of dryer and wetter years, the distinct possibility of a truly long-term decline in rainfall, and the probability of a long-term increase in evapo-transpiration with rising global temperatures. But it is important for planning, for the efficient use of resources, and for international credibility that "drought" continues to be defined in such a way that it is seen as a departure (however frequent) from a long-term norm. Defining drought in a practical way, that also relates to a state-of-the-art understanding oflong-term climate change, is therefore vital.

- 92 - B. Drought Preoaredness

The structural nature of drought, the likelihood of its increased frequency over the medium and long-term, the considerable resources expended by GOM on drought mitigation, and the need to target those resources better and avoid their institutionalization, all point to the need for an integrated system of drought management.

IntePrated Drought ManaPement Svstem

Such a system can be seen as consisting offour components (see Figure 1): e monitoring and early warning; 0 contingency planning; e limited-term interventions ofmitigation, relief and rehabilitation; and e policies that promote long-term drought resilience.

Several of the foundations of an integrated drought management system are already in place in Morocco: MADR has brought together the Livestock Department (DE), the Plant Production Department (DPV), and the Programming and Economic Affairs Department (DPAE), in a network aimed at addressing drought preparedness and management in a comprehensive way. Further, the National Drought Observatory (Observatoire Nationale de la Sgcheresse) has been established and is based at the Institut Agro- Veterinaire Hassan 11 in Rabat, as a result of a decision to locate it physically in an academic institution allowing multi-disciplinary collaboration among the various research institutions working in this field. MADR objectives are: e the development of an early warning system allowing the triggering of an emergency program to mitigate the short-term effects of drought; and

0 the refining of decision-support tools, for the medium- and long-term integration ofdrought risks into economic planning.

Systems of data collection and analysis for the routine monitoring of expected harvests and rangeland conditions already exist, though not specifically focussed on drought. The management of drought mitigation measures during 2000-200 1 involved the setting-up of inter-sectoral and inter-institutional committees at the provincial level which can form the basis for future drought contingency planning.

The following sections discuss how each component of an integrated drought management system can be constructed capitalizing on existing experiences in Morocco.

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-94- MonitorinP and Earlv Warning

A monitoring and early warning system (EWS) will have three linked objectives: to allow the planning and timely execution of drought mitigation measures; to allow a systematic and transparent allocation of resources to drought-stricken areas; and to provide an improved understanding of the effects of drought to feed back into appropriate mitigation measures and long-term policy.

Because the most important level for the planning and execution of drought mitigation measures is likely to be that of the province, the first and third objectives demand a system where the authority responsible for drought contingency planning is a priority recipient of early warning information, and where EWSs are designed and operated with local conditions in mind. These conditions include the very seasonal impacts that rainfall deficits will have on different agricultural activities. This further demands a degree ofparticipation, so that the views of farmers and herders on the severity of drought and its local impacts are taken into account.

The second and third objectives require various institutions of central government to be recipients of information. The first objective in particular requires objectivity, because information will affect the calls made by provinces on central financing, and the geographical allocation of funds within provinces. In addition, the EWS must be cost effective in order to optimize its financial sustainability.

What is therefore needed is an EWS whereby data (e.g., on yields, livestock condition and socio-economic indicators) can be collected at a local level, and combined with meteorological data and remotely-sensed data to serve both the provincial and national decision makers. Such an EWS should make use of the existing systems of monitoring the agricultural economy, in particular the Suivi de la Campagne Agricole managed by the DPV, and the Suivi des Parcours et de la Conjoncture de I'Elevage managed by the DE. A cost-effective drought monitoring and EWS will, to a great extent, use the same personnel and the same methodologies to collect the same data as the existing systems.

However, a drought EWS must not limit itself to the monitoring of crop and rangeland conditions for two major reasons: conceptually, because it must also incorporate indices of human well-being; and practically because it must be tied to eventual action by the provincial administrations, the DPAs, the ORMVAs, the external services of other ministries and local NGOs. It is vital that the development of an EWS should start from the basis of existing data collection systems and that there should be an open exchange ofexperience for the mutual improvement of all the systems, but also, an EWS should retain its specificity of objectives and audiences.

These objectives and criteria can be met by a network of institutions, centered at the provincial level on the DPA, and at the central level on MADR's network. The DPAsIORMVAs will be responsible for synthesizing early warning data coming from the CTsEMVs, and quantitative data coming from MADR's central directorates and other ministries, into a classification of each Cede into four states of alert: normal, alert, alarm and emergency. Such an exercise should be carried out monthly, at least in the final stages of the agricultural season and during the dry season (it is carried out quarterly in other parts ofthe world, but given that drought impacts are felt quite suddenly in the Moroccan agricultural sector, a monthly reporting period is recommended here).

- 95 - Data would come from various sources:

(a) climatological and remotely sensed data from the Direction de la Mktkorologie Nationale and the Centre Royale de la Tklkdktection Spatiale; (b) local climatological data from weather stations maintained at CTs and elsewhere, and possibly soil moisture data;

(c) quantitative data (e.g., crop yields and livestock prices) from the CTs, and from NGOs and Associations operating in conjunction with CTs; and

(d) qualitative and participatory data (e.g., reports of conflict and indices ofwell being) from NGOs, Associations and communities.

The information described under (b), (c) and (d) above will be subjected to preliminary analysis and synthesis at the DPA level before being transmitted to MADR in Rabat.

Contingency Planning

During the agricultural season 2000-2001, GOM implemented, from its own resources, a massive program of drought mitigation and drought relief, the Programme de Lutte contre les Effets de la Skcheresse (PLCES). While this program was not planned in advance of the declaration of drought, the experience ofthe PLCES has laid the groundwork for a true system of contingency planning.

The key level for planning and action in the PLCES was that of the province, with Commissions Provinciales (CPs) set up specifically for drought management, and made up of the Governor, the heads of line departments, the Presidents of Communes, the President of the Provincial elected body, and representatives of farmers’ organizations. In some provinces (and elsewhere for some purposes) the DPAs acted as Secretariats to the CPs. Elsewhere it was the provincial administration that took this role.

The importance of the provincial level tallies with experience in other countries (e.g., experience at District level in Kenya). While there were probably ways in which the decentralization of the system, in terms of delegation of signatory powers and the timeliness of transfer of funds could have been improved, a more important lacuna was a system of project identification and approval in advance - the constitution of a group ofprojects that can be activated given signals from the early warning. There is no reason why such a group of projects could not be drawn upon under regular development budgets in non-drought years as long as a project or projects of suitable size were identified each time a project was selected for execution. As the major form of drought mitigation measures is that of labor-intensive public works, it will almost certainly be necessary, and especially in the PAZs of RADP, to establish transparent systems whereby drought mitigation projects under clear declaration of drought can operate under different rules of beneficiary participation to development projects. Subject to this proviso, there is no reason why projects included under CIPs of RADP cannot simultaneously be included in province-level banks ofprojects.

The CPs should be maintained as standing committees to deal with drought contingency planning (a more restricted membership might be appropriate outside periods of drought intervention). The DPA should perform secretariat services for the Commission. However, it is recognized that this may not be practical in all provinces. Even without a formal designation as CP secretariat, the DPA should be responsible for the local operation of the EWS, and the transmission of early warning information to the CP. Again without necessitating formal designation as secretariat, the DPA should engage in the contingency

- 96 - planning of agricultural drought mitigation measures, setting out procedures which can be adopted by the external services of other ministries.

Among the tasks ofthe CPs will be: Ensuring that there is a group of labor-intensive public works project proposals which can be activated when the need arises. These proposals should be: 9 identified in a participatory manner; and 9 accepted as developmentally sound and technically feasible by the highest necessary administrative level necessary. If these projects are implemented during non-drought periods, other project proposals should be prepared as soon as possible;

Ensuring that local systems for monitoring and managing public works and distributions of stocks can be put into place as soon as the need arises; and keeping central government informed of warning stages, so that any further administrative approval necessary for mitigation projects can be approved as quickly as possible.

Procedures for delegating contingency funds to the provincial level will need to be examined carefully, given the opposed needs for financial control and timely action. It is not presently recommended that physical stocks of food and feed be kept at provincial level, except possibly in some of the most distant and isolated provinces.

Mitigation Measures

Until now, the approach to drought mitigation in Morocco has been based firstly on labor-intensive public works, and secondly on the distribution of free or subsidized livestock feeds of various kinds. Other measures have included veterinary care, provision of water to livestock, distribution of cereals for human consumption and forgivenesshescheduling of debts. Labor-intensive public works should remain the backbone of drought mitigation and criteria for identification are mentioned above. Public works programs should be submitted not only to financially control against approved budgets but also to monitor costs per unit output compared to benchmarks from regular development programs.

The distributiodsubsidy of animal feed, which was the most important component of the Programme de Sauvegarde du Cheptel, attracted increasing concern over its possible negative environmental impacts, as well as its increasing costs. Consequently, the decision was taken during 2001 (apparently at a high level and definitively), to end this activity.

This decision opens the possibility for other forms of drought time assistance to the livestock sector, particularly those that encourage greater flexibility in animal numbers to match the fluctuating availability ofresources. The aim is to encourage livestock-owners to sell more animals during the onset of drought, before livestock prices become too low and before animals lose condition and value; and (if it can be achieved at sufficient scale) reducing pressure on rangelands by reducing animal numbers. Such encouragement can be envisaged either as a project-type activity of assisted destocking, explicitly using public resources to augment the incentives to livestock owners, traders or transporters; or as a series of policy reforms and infrastructure investments that reduce constraints to drought time trade, or some combination ofthese.

Overall, there remains a need for much better targeting of the program. Firstly, drought programs in Morocco have tended to grow rather than diminish, and the economic sustainability of continuously committing sums similar to the PLCES of 2000-2001 must be questioned. Secondly, public confidence

- 97 - in the EWS will begin to diminish if it is not seen to discriminate between years and between geographical regions.

The need for targeting is accompanied by opportunities. Although a majority of recent years have been considered “drought years”, loosely defined, not all years have seen the same severity of drought. The impact of drought on different provinces and natural regions has also been very variable. The impacts of rainfall deficits of varying degrees, and during different seasons, will be felt very differently by households predominantly dependent on cultivation, on livestock production and on non-farm income. We do not yet know enough about these differential impacts, but one of the few studies carried out has concluded that “one year of drought following a normal rainfall year has far fewer impacts at the household level than is currently assumed”. A better understanding of the impacts of, and responses to drought at the household level will greatly help the targeting for which there is a need.

Long-Term Policv

As well as early warning and specific measures to mitigate the impacts of drought, drought management must be integrated with long-term policies that reduce vulnerability to drought. Four policy areas appear as particularly relevant:

0 agricultural research; 0 drought insurance; 0 resource tenure policies, particularly on rangelands; and 0 national policies to promote cereal cultivation.

Amicultural Research

Agricultural research must focus not only on agricultural technologies to deal with aridity, but also to deal with high variability of rainfall, and constant uncertainty over future rainfall patterns. Research must take into account existing farmer and herder strategies to deal with drought, both long-term adaptive strategies and short-term coping strategies, bearing in mind that the latter may well increase desertification and vulnerability to drought in the long term. A careful integration of participatory and scientific research is called for that enables farmers to minimize the risks of drought, while not missing the opportunities for production in better years.

Related to this, seasonal weather forecasts in Morocco are still only of moderate accuracy, but advances in seasonal forecasting nationally and internationally are being made continually. At present, the dissemination of seasonal forecasts to farmers would be of very limited use and possibly counter-productive: there have been cases elsewhere in the world where public confidence in officiallscientific forecasts was badly damaged by premature dissemination. However, as scientific capacity improves, models for disseminating forecasts to ordinary farmers, which address farmers’ real information needs and the ways in which they manage external information, should be evolved.

Insurance

The most efficient and sustainable measures for insuring crops against drought is currently an issue of keen global debate, but the arguments for weather-based index insurance are becoming increasingly clear. Morocco’s current crop insurance system covers a relatively small cultivated area and is subject to high transaction costs when the full costs of the involvement of GOM and parastatal personnel are factored in. It is highly subsidized, which is problematic for sustainability, replicability and equity. Insurance of whatever model is only likely to be a viable option in the more favorable of the rainfed

- 98 - areas. However, for the reasons given above, it is worth experimenting with alternatives such as weather-index insurance. In addition, ongoing initiatives by IFC to create new institutions for weather-based insurance at the global level and specifically in Morocco, will provide an important foundation for piloting weather-based insurance through RADP. The creation of an institution separate from MAMDA to deal with weather-based risks, as envisaged in IFC‘s initiative, will in the long run be necessary, but is not strictly a pre-condition for technical assistance and start-up costs to be funded under RADP.

Rangeland Tenure

One major issue for policy coherence in Morocco is support to livestock production, particularly extensive livestock production. The manner in which farmers have adapted to the structural nature of drought is by integrating livestock into their farming systems. Approximately 73.5% of farm households practice ruminant livestock production. While this figure is slightly lower for poor farmers, livestock production can still be seen as the key adaptive strategy to drought risk even poor farmers. Furthermore, particularly in the more marginal areas, extensive production involving common property rights in pastureland, and transhumant systems are still extremely important. These factors allow livestock to be kept alive even during seasons when no cultivation is possible. They can therefore act as a store ofvalue that can be utilized to generate cash for consumption and for agricultural production.

Livestock production is thus a key strategy for dealing with drought for farmers, both rich and poor, and for the agricultural system as a whole. However, this realization has not been fully incorporated into the mainstream ofnational agricultural policy. There has been progress, especially in some provinces, on the recognition of traditional rights to pasture land and support to pastoral institutions. But in other provinces the weakening or disappearance of traditional structures and the failure of new administrative structures to take a role in resource management, has created a situation of de facto open-access grazing, which wealthy herders (especially those who can transport animals by lorry) can take advantage of, to the detriment of poorer herders and the environment. New initiatives are needed to encourage sustainable collective range management.

C. National Cereals Policy

A related area ofrisk that could increase the vulnerability of farming systems in the short term is that of the national incentive structure for cereal production. A high level of protection and a guaranteed high procurement price for soft wheat has led to an expansion of cereal cultivation and particularly of soft wheat. The cultivated area of the country has risen from 5.5 million ha to 9.9 million ha over 30 years, largely at the expense of pasture and as a direct result of GOM policies that have favored cereal cultivation, notably that of soft wheat. A case is made, according to many analysts, that Moroccan agriculture has been diverted from activities, notably livestock production, which are better adapted to its arid environment and for which it maintains a comparative advantage. The policy has been very costly in terms of subsidy and has distorted incentives towards cereals and away from other cash crops and has had negative environmental consequences in terms of degradation of former rangelands. In addition, the expansion of cereal production into more marginal conditions has significantly increased the exposure of farmers to risk, including drought risk.

Over the last year, the reform of national cereal policies has been put firmly on the agenda in Morocco. GOM has begun to consider the need to reduce the burden on the national budget, to allow market-based incentives to drive agricultural growth, and to align the country with international trade requirements by “delinlung” subsidies to rural areas from incentives to produce a particular crop.

- 99 - Changes under consideration include the progressive reduction of border protection, the elimination of the guaranteed producer price, the development of a free market in cereals, and the implementation of some form of compensation program aimed at easing the adjustment process to a new cropping pattern and at protecting the vulnerable small producer. Although the reform would have explicit economic and social objectives, it could also have a positive environmental impact in view of the contribution of the current subsidy and protection of cereal cultivation to environmental degradation.

The process is currently at the stage of technical study and feasibility analysis. The measures have not been decided and no timetable has been put on likely implementation. However, on the hypothesis that full liberalization and deprotection is introduced over the next few years, GOM is carrying out modelling to determine the likely effect on incentives, cropping patterns and farm incomes. Early results show that most small cereal producers are unlikely to suffer negative impacts as they are cereal deficit, and the reform will effectively reduce the price of cereals purchased by farm households towards border price levels. Nationwide, only 5% of farmers with less than one hectare cultivated sell any cereals. About 12% of farmers with 1-3 ha sell cereals and 20% of those with 3-5 ha also sell (source: Etude sur la rkforme de lafilidre ckrkalidre, Rapport # 1, October 2001, based on the Enqubte Structure 1998). Negative impacts may be felt in the short term in the larger cereal growing areas (including Khouribga and Khemisset), and could have an impact on the poorer farmers who are the project target group, through the reduction in person days employment on the larger cereal farms in the area. These impacts are not expected to be considerable, and it is likely that GOM will introduce compensation measures that will more than offset the negative impacts. In the longer term, the reform is expected to have a positive effect on both incomes and risk, as cropping patterns and land use evolve towards crops and activities for which Morocco has comparative advantage.

- 100- Additional Annex 14: Project Implementation

MOROCCO: Rainfed Agriculture Development Project

A. Imalementation Strategy

RADP is one of the GOM’s priority programs and as such is included under the 2000-2004 Five-Year Plan which is based in turn on principles set out in MADR’s “2020 Rural Development Strategy” published in 1999. This program is built upon three guiding principles:

0 Adherence to a vision ofdevelopment that takes local specificities into account and that is based on the establishment, for each PAZ, of a development model referred to as an costrchetype));

0 Recognition of the structural nature of the drought in order to attempt to mitigate its effects; and

0 Promotion of local participatory development through the strengthening ofpartnerships.

The basic idea of local participatory development is to make beneficiaries accountable through the strengthening of local partnerships, in order to ensure the sustainability of investments over time and the socio-economic efficiency of resource transfers from the State to beneficiary areas. The participation of all partners, and particularly of populations and their representatives at the level of RCs, at all stages of project processing, from the diagnostic and selection of actions and priorities, up to the implementation of investments and decisions about their modes of management, is intended to contribute to the goal of greater accountability on the part ofthe stakeholders.

The RCs will have a major role to play in the area of planning. Under the program, RCs will be assisted formulating and implementing a number of CIPs spanning a period ofabout five years and consisting oftwo parts, i.e., : (a) an infrastructure component; and (b) a local development component. CIPs would be implemented on an annual basis, formally linking beneficiaries to public services and other partners for technical interventions andor specific financing operations that will have already been identified. The practical logistics involved in the planning, formulation, validation and implementation of CIPs will rely on mechanisms and structures defined within the framework of the IBCD program (approved by the Bank during FY2001 and currently in its start-up phase).

B. Local Participatory Propramming

The program’s mode ofoperating is based on a local participatory development process, occurring in a given geographic action area that corresponds to a circumscribed zone equivalent to one or several RCs, and on the idea that local actors to be held accountable for their actions. This process is expected to culminate in the development of CIPs.

CIPs are developed according to the following sequence:

0 Acquiring knowledge of the milieu: such knowledge is acquired by making contract, within the RCs, with officials of the (Conseil Communal) and by informing them of the project’s goals and objectives. A cursory study of the RCs capacity must be carried out in order to obtain an idea of its potential. The RC’s resources (e.g., tax revenues, etc.) must be estimated, its organizational and technical capacities weighed, its ability to mobilize its managers assessed, and then, the RC’s main problems identified.

- 101 - This identification will occur through dialogue with the leaders in order to develop modes of intervention for the outreach teams. The issue of the level of diagnostic to be made (i.e., whether on the basis of douar or lineage) and the identification of the most vulnerable population groups, will be taken up at this stage. This familiarization with the environment should conclude with the gathering of information on intervention programs that other ministries are planning to carry out during project implementation. Local capacitv-building : local elected officials and others believed to be involved in the CLMVA will need to be trained before any needs identification takes place, so that these various parties can play their role in the process. Simultaneously, the various structures existing, or in the process of being created, shall be subject to some preliminary organization in order to structure demand. The identification of needs will occur during meetings with the populations so that they can organize themselves and identify those best suited to represent them in the subsequent phases of the process. This organization will result in the formation ofworking groups or committees, so that those responsible for this identification mission can work with the smaller groups and define their needs and priorities. Finally, this stage will culminate in meetings where conclusions are disseminated on to the populace. The pooling of data on needs at the communal level will be handled by the identification team. Technical formulation of the Communal Investment Plan (CIP) will include pre-feasibility studies intended to gauge technical feasibility and provide an estimated cost ofthe activities envisaged. Communication of the content of the CIP to the RC will occur with the population at an information workshop designed to provide a venue for the exchange of ideas and the acknowledgment of municipal problems. At this meeting, the action plan will be dscussed and actions prioritized as a function of the potential capacities of the RC. The meeting will conclude with formal approval of the CIP under discussion. Presentation of the RC’s CIP to the CTP. Once the CPhas been established, the RC must present it to the provincial authorities for their information and validation. Development of the financing plan. The CPRDR, within the CTP, shall be responsible for developing financing plans for the CIPs, through recourse to the sectoral programs of the relevant ministries affected by these actions or to external (public or private) sources of financing identified during the initial familiarization phase. FDR will be the preferred financial integration instrument and will be replenished up to MAD145 million to finance non-agricultural rural infrastructure under RADP as of 2005. In the final stage, the RC, along with the CLMVA, will establish the sequence ofevents for the first year ofthe CIP.

Development of the CIPs and implementation of the bottom-up approach to participatory planning will rely on the following teams: Methodological Support Team (Eguipe pour I ’appui mCthodoIoaigue (EAM). Located at the central level, EAM is responsible for: monitoring and exploiting the participatory method of local planning being implemented; designing training programs for the staffs of public and private institutions to be involved in program implementation; training the trainers and monitoring all rural development programs/projects currently underway in order to harmonize their approaches and create the synergies required to maximize the efficacy of MADR’s interventions in the rainfed areas. The EAM will have four permanent staff members drawn from various central directorates and will receive secretarial support. The program will make financing available to the EAM for: (a) mobilizing a network of resource persons in areas of expertise that it lacks, such as environment, participatory approaches,

- 102- farmers’ organizations and specific techniques; (b) conducting research on methodologies and training approaches; (c) organizing training sessions for trainers; (d) raising the skill levels of MADR staff; (e) setting up a mechanism for evaluating methodologies; and (f) performing studies of a strategic nature. This team shall be attached to the Commission Centrale de Supervision et de Suivi (CCSS).

0 Participatory planning team (6quipe de proarammation participative, EPPL Located at the provincial level, these teams, created for the preparation of CIPs with beneficiaries (who are mainly the RC and douars), will embrace the technical services of the DPAs and the technical staff of the CTs, which will have a broader agricultural advisory mandate than the current extension function. These teams will be strengthened by the following means: (a) redeployment of technical staff to the field; (b) recruitment of male and female community workers, either through UNDP or a consulting firm, for a period not to exceed two years; and (c) the use of technical assistance to supply the additional skills profiles required for the development of the CIPs (e.g., outreach to rural populations, civil engineering, electrical networks, development of small and medium enterprises, and professional training) and to produce the written version of the CIP. Representatives of other Departments will also be invited to participate in the local planning work and to be stakeholders in the EPPs. These teams shall be responsible for outreach, for the monitoring and supervision of outreach work and of the participatory diagnostic and for helping municipalities carry out their CIPs. They should be able formulate CIPs at the rate of three the first year and four the second year, to be executed during project implementation.

Role of the Rural Communes (RCs). As indicated in the Municipal Charter, the RC must play an active role in enduring that the collectivity realizes its full economic, social and cultural potential, in keeping with national policy priorities. It must mobilize the human, technical and financial resources required in order to play this role, especially in the definition and implementation of an equipment program. The CC representing the Municipality shall facilitate the task of drawing up the CIP by disseminating information, mobilizing populations, involving itself in identification work so as to be capable of approving the work carried out and manipulating the tools ofparticipatory planning. They will present their CIP at a meeting of the CPRDR within the CTP, and will defend and justify the actions contained in this CIP. They will work in close collaboration with the Administration within CLMVA.

Role of Local Communities and Associations. Other organizations, both formal and informal, will participate, alongside the RCs, in the implementation of RADP. This especially includes local associations (e.g., douars or local development associations) and interest groups (e.g., irrigation users’ associations, female artisans, herders, etc.). The project directly supports the strengthening and development of these organizations (under Component B.3). Moreover, they will be full-fledged stakeholders in the bottom-up approach to planning due to their contribution within the CLMVA and their representation at the level of the municipalities, where they will be able to promote their interests in the formulation and implementation of the CIPs.

Beneficiaries’ Contribution to Investment. Beneficiaries will contribute to the implementation of the interventions requested. This contribution, whether in the form of cash, labor or materials, will be required for the implementation of the investment as well as for the maintenance of equipment and infrastructure. The amount of the contribution depends on the action requested as well as on the source of financing. Agricultural interventions under the PMVBs will be financed as stipulated under Law No. 33-94, and the level ofcontribution for other actions will be defined upon project start-up and made generally known at the time the CIPs are being drawn up.

- 103- C. Institutional Set-ur,

Proiect Coordination. Coordination and programming of activities under the program will be handled by the following entities: Permanent Interministerial Council for Rural Development (Conseil interministkriel uermanent chargk du dkveloppement rural, CIPDR). This council, comprising the Secretary Generals of all the ministries involved in rural development, with MADR providing the Secretariat, will be responsible for defining the strategic directions of the program, implementation monitoring, and approval of financing plans for the CIP; National Steering Committee (Comitk national de pilotage, CNP). The PMVB Steering Committee, established in 1996 under the Dkcision No. 7117/AGR/DAF within the MADR monitored project preparation from the onset. A new Dkcision from MADR, will define the new attributions and the NSC organization, which will include representatives from the various ministries involved in the project. This Committee will be in charge with ensuring overall coordination of the activities and approve the work programs, budgets and progress reports. Furthermore, MADR will ensure a better coordination of the integrated rural development projects, including the forestry and rural infrastructure projects co-financed by the Bank. Central Commission for Supervision and Monitoring (Commission Centrale de Supervision et de Suivi, CCSS). This Commission, created by Decision No. 21/95/AGR/DAF of May 19, 1995, consists of representatives of the central departments involved in rainfed projects and is a preferential and dynamic framework which integrates MADR’s actions into rainfed areas. The CCSS is responsible for: (a) setting up organizational and institutional procedures for rainfed projects; (b) validate projects; (c) make credit available; and (d) monitoring and evaluating projects and their impacts. This Commission will focus on program validation, monitoring their physical and financial implementation and capitalizing on their experience, whereas project preparation tasks will be progressively transferred to the DPA and ORMVAs. The methodology assistance team will assist in implementing the rainfed agricultural development program. The Core Provincial Committee for Rural Develooment (Comitk urovincial restreint du dkveloppement rural. CPRDR). The program’s institutional set-up provides for the creation of a CPRDR, an outgrowth of the Provincial Technical Committee (Comitk technique provincial, CTP) presided over by the Governor, who is also the sous-ordonnateur of the FDR (as per Administrative Circular of the RADP dated November 28, 2001. The Director of Agriculture (within DPA), or ORMVA director in the case of Taroudant and Errachidia Provinces, will serve as Secretary of the CPRDR. This Committee will ensure the harmonization of CIPs submitted from the grassroots level and presented to it by the RCs with the assistance of the CT/CMVs and DPA/ORMVAs. The CPRDR will comment on the plans presented and will proceed to harmonize them with long-term objectives and other sectoral programs being carried out in the province. Communal Councils (Conseils Communaux) and Rainfed Agsicultural Development Commissions ( Commissions Locales de Mise en Valeur Awicoles. CLMVAs). The CCs represent the residents of the municipality and are responsible for its development. They approve the CIPs, as indicated above. The CLMVAs to be set up at the level of each geographical area will have the following tasks: (a) studying proposed programs drawn up with the population and put into proper format by the EPP (i.e., staff ofthe DPAs/CTs and ORMVAs/CMVs supported by provincial representatives of other ministries and technical assistance); and (b) ensuring that actions proposed at the agricultural level are collectively coherent. CLMVAs will meet twice a year. The CT teams, with technical assistance, will be responsible for supporting the municipality’s various decision-making bodies (e.g., CCs and CLMVA) in the formulation and monitoring ofthe CIPs during the first year of the project.

- 104- Proiect Management. MADR will be responsible for implementing this project through its Directorate for Land Development (Direction des Amknagements Fonciers, DAF) and provincial and local representations (DPNCTs and ORMVA/CMVs) who will coordinate their activities with other relevant parties, mainly the regional technical departments. More specifically, the program will be implemented by the following entities: At the central level : Program Management Unit (Cellule de Gestion du Programme. CGP). This unit, to be created within the DAF, will include a national Program Manager (Coordonnateur national, CN) who will be assisted by a Financial and Accounting Manager and secretarial support. The unit’s functions will consist of: (a) secretarial support to the Steering Committee; (b) centralized gathering of budgets and activity programs; (c) compilation of technical and financial data received from the CTs, CMV and DPAs; (d) mobilization and provision of financial resources; (e) technical coordination of activities; (f) preparation of financial monitoring reports (Rapports de Suivi Financier, RSF), bi-annual activity reports, and the project’s annual accounts; (g) presentation ofthese reports to the program’s CP, to the Bank and to auditors; and (h) monitoring and evaluation of implementation. At the local level : The DPAs and the ORMVAs of Souss Massa and Tafilalet, in which the project’s interventions would take place, will be responsible for: (a) lending specialized technical support to the RCs for the formulation of CIPs; (b) participation in the CLMVAs; (c) providing the CTs with guidance and direction pertaining to the harmonization of the proposed schemes; (d) procurement for the agricultural components; and (e) management ofthe ex-post monitoring and control of activities carried out by the CTs and by local organizations. The Provincial Technical Departments will be responsible for implementing the non-agricultural rural infrastructure component, which will be financed by the FDR. Similarly, these departments will be responsible for procurement and for controlling and monitoring the execution of works in their field of expertise. Extension Centers (CTs) and Agricultural Development Centers [CMVs) will have the following tasks: (a) participating in the local programming process by working in collaboration with technical assistance selected for the purpose; (b) continued (( interfacing )) with local populations activities and interventions selected under the various CIPs are implemented, and ensuring that they are monitored regularly; (c) helping to plan and implement adaptive research programs; and (d) implementing agricultural extension and advisory programs.

D. Staffing Needs

During the appraisal mission, the additional staff numbers required for effective project implementation were estimated at the central and well as at the provincial levels.

At the central level Proiect Management Unit (PMU). The PMUcurrently consists of nine staff members and will be in charge of managing the RADP. It will need to include a National Manager who will work full time on this project and will be assisted by a Financial and Accounting Manager and by secretarial support staff. The methodological support team (EAM) will have four permanent higher-level staffers drawn from the various central directorates and will receive secretarial support from the DAIF. The project will also provide EAM with financing to mobilize specialized expertise and to obtain the assistance of a network ofresource persons.

- 105- At the Provincial Level Field-level teams will be reinforced through : (a) the redeployment of technical staff to the field, in accordance with requirements identified in the table shown below; (b) recruitment of male and female community workers through UNDP or from a consulting firm, for a period not to exceed two years; and (c) the use of technical assistants to provide the skills profiles needed to draw up the CPs (e.g., in the areas of rural outreach, civil engineering, electrical networks, small and medium enterprise development, and professional training) and for the production of the written version of the CIPs.

Redeployment of additional human resources under the RADP

Province Multidisciplinary Team Procurement office Adviser (CT) Outreach agents Nbr. Profil Nbr. Profil Nbr. Profil Boulemane 1 Pastoralist 1 PV 1

Khemisset 3 Ago-economist 1 PV 1 Zootechnician GR technician Khouribga 1 Ago-economist 1 AccountingiAdmin. 1 PV 1

Sidi-Kacem 3 Ago-economist 1 Accounting/Admin. 2 PV+PA 2 Horticulturalist Computer sp. Tata 3 GRengineer 1 Accounting/Admin. 1 PV 1 Ago-economist Pastoralist Taroundant 2 PV+PA 1

Total 11 3 8 7 + 1 Coordinator

E. Budpetarv Planning

The project’s budget planning would be handled by the DAF for those activities financed under MADR’s budget. Budgetary planning of activities financed by the FDR will also be the responsibility of the DAF, under supervision of the CPIDR and the CNP. In order to provide greater flexibility and to bring the decision-making process as close as possible to the RCs, budget planning could be based on the new rules and principles contained in the Budget Management Guide emerging from the results of Administrative Circular 12/2001 dated December 25, 2001 concerning the adaptation of the State’s budget planning and implementation to the framework of regionalization. This guide makes provision for performance contracts, developed by means of an iterative process, between the central admmistrations and their regionalized services.

The circular’s text mentioned the option of making budgetary credits more global, thereby giving greater autonomy and broad responsibility to the managers of regionalized services, with managerial authority at the level of the State budget line item (the requirement of a prior stamp ofapproval from the MOF is abolished as far as credit transfers from one budget line to another are concerned).

Other actions that are part ofthe CPs but that are not financed by the proceeds ofthe Loan shall be financed in the following manner:

0 Through sectoral programs currently under implementation, in the case of eligible actions pertaining to them;

- 106- 0 Through more flexible mechanisms, such as the use of agreements between the project and its technical and financial partners, e.g., the ADS or various NGOs. The project might enter into agreements using the standard formats for StateNGO partnership agreements that are currently being studied by GOM; and

0 Through the Agricultural Development Fund (Fonds de dkveloppement agricole, FDA) in the case of private farm-level investments.

F. Use of the Rural Develooment Fund (Fonds de Ddvelovvement Rural, FDR)

Financing; of Rural Infrastructure. FDR resources will help finance non-agricultural community infrastructure. These integration activities will require greater flexibility in the use of funds; specifically, funds must be provided to the provinces without being earmarked in advance for specific purposes by the central services. The FDR has the advantage that it is multisectoral and is under the direct control of the Prime Minister. Consistent with what has been under the emergency anti-drought program and the IBCD Project, implementing an integrated participatory rural development policy will require supplementary funding, with no predetermined sectoral allocation, that can be managed by the provinces on a truly inter-ministerial basis.

FDR Use. Funds necessary to finance non-agricultural infrastructure will be delegated by the Prime Minister who is in charge ofthe FDR, to the Governors who will then assume responsibility for the FDR at a secondary level. The amount of funds required to finance this non-agricultural rural infrastructure financed by the FDR under the project is estimated at MAD 145 million for the life of the project. These funds will come from the proceeds ofthe Caisse de compensation.

Rules governing the use of supplementary funds and control mechanisms. General criteria and conditions for the use of incremental FDR funds will be set out in the Procedures Manual to ensure that these decentralized interministerial funds are properly used. They will be assigned to sub-projects as described in the CIP financing plan, and the basis against which audits and controls are conducted will be determined.

0 Financing Decision. Before it can be included in a Partnership Agreement for supplementary FDR financing, a project must respect the following principles: (a) it must not be part of the existing sector program budget; (b) it must have been discussed with the community and target groups concerned; (c) it must be an appropriate private investment for which at least partial public funding is justified; (d) where a contribution is required from the target population or the community itself, the project must be the subject of a specific agreement describing in detail the commitments and responsibilities of each stakeholder and the implementation procedures; and (e) it must meet the rules established for existing programs in these sectors, in particular the technical criteria (see table attached to the Minutes of Negotiation) and rules for sharing contributions and responsibilities.

0 Proiect Audits. Finally, the principles governing allocation of FDR funds will be set out in an instruction from the Prime Minister, and the program audits examining the selection and performance of infrastructure works must certify that they have been properly implemented, both in terms ofprocedures and substance. The audits will also be able to make recommendations to the CIPDR on improvements or changes which could be introduced to improve these principles.

- 107- MONTAGEFINANCIER DU PROJETDRI-MVB

Actions de dkveloppement agricole Infrastructures non agricoles

Budget gtntral de 1’Etat Fonds de dkveloppement rural (FDR) (Ordonnateur - MADR) (Ordonnateur - Premier Ministre)

PROVINCE (Sous-ordonnateur - Gouverneur)

-108- Figure 1 :Organicramme du Ministkre de l'aericulture et du dkveloppement rural

I ! LE MlNiSTRE i

CONSEIL GENERAL DU DEVELOPPEMENT AGRiCOLE

INSPECTION GENERALE DE L'AGRICULTURE

I LE SECRETARIAT , GENERAL I - I I

COOPERATiON Administration Du Genie Rural (AGR)

Direction Amenagementr Amenagementr 06veloppement de 1 des Fonciers (OAF) 1 Hydro-agricoies Du ia Gestion de 3;;;; 3;;;; 1 1 I'lrrigationDirection (DDGI) 1

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OFFICES REGiONAUX DE DE L'AGRICULTURE

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12- Additional Annex 15: Rural Development Policy Letter MOROCCO: Rainfed Agriculture Development Project

Progiamme de developpement rural intCg1-C de mise en vrleur des zones << bow n

A. DEVELOPPEMENTRURAL ET LUTE CONTRE LES DISPARITCSREGIONALES : UNEPRIORITE DU GOUVERNEMENT

La mise a niveau de f'economie nationale constitue une priorit4 du gouvernemenr marocah. Cette mise a niveau ne peut 4tre atteinre sans un developpemeni du monde rural en raison de son poids demographique et economique,

1. Cne nouvelle stratCgie pour le dkveloppement rural au Maroc

La strategie du Gouvemement en matiere de developpemenr agricole et rural a ete formulee dans deux documents complementaires : la Stmregie ,1020 dc diveloppenrenr rural (decembre 1999) et la Srrardgie dc devrlcppenreiir a long ierme de I'clgricrclnrre nrarocaine Cjuillet 2000). La Straiigii. 2020 met en evidence le retard social et I'extension de la pauvreti dans le monde rural, les disparites villes-campagnes, la mise en valeur insuffisante du potentiel de production agricole et sa sensibilite croissante aux alias climatiques, et enfin, la degradation des ressources naturelles.

Pour coniger les dbskquilibres et insuffisances actuelles, la Snurigie 2020 se propose de mettre en place des programmes d'action conGus autour de trois idees motrices : la << tkrn'rririalisurion de I'agnculture - afin de mieux adapter les plans d'action aux realitb locales,

la (( purticiption D - afin de mobiliser plus efficacement les acteurs dans le processus de develop@ement,et enfin (( I'integrution N - visanr en paniculier la mise en coherence des programmes sectoriels afin de maximiser leurs synergies aupres des actcurs locaux.

Les zones (( bour M. en raison de leur impomnce dkmographique et gbgraphique, de leur taux ileve de pauvrere, mais aussi de leur potrnticl agricole encore sous- exploitc, constituent une priorite du Plan de developpemenr economique et social 2000-2004 et de la Strategie 2020 de developpcment rural.

Lcs principes de pariicipa?ion, de re.qrun.~ahilltafione( d 'or,yani.vation rqfiwcie des populations rurales sont consideres comme des imperatifs. Les agriculteurs, en effet, doivcnT : -113- (a) avoir l’initiative de la programmation de leur developpement, quc celui-ci conceme les exploitations individuelles ou la gestion de leurs terroirs, (h) ’ pouvoir s’appuyer sllr des mkanismes de financement souplcs et rapproches et (c) pouvoir dtsposer des instruments de suivi et d’evaluarion de leurs actions,

2- Les objectifs de la strathgie de developpcment rural

La politique de developpement rural depasse I’etroite vision de I‘agriculturc en mi que simple secteur de production de produits alimentaires pour s’interesser aux liens que le sectcur agricole developpe avec les autres secteurs de l’economie. Daw ce contexte, la strategic de developpement rural s’est fixee comme objectifs : l’accroissement de la production agricole pour contribucr a la demande alimentaire interieure et A la demande des marches exdrieurs ; I’augmentation de I’emploi et des ‘revenus dans l’agriculntre ; .. la creation et la diversification de I’emploi dans les activites para el exti- agricolis ;

I’arret des processus de diyradation anthropique de l’environnement ; , la mise a niveau et f’amelioration de I’education et de la formation professionnelle des hommes ct des femmes wales ; 1’ameliorati.on des services lies a la qualitd de la vie et du bien-etre des populations rurales ; et la correction des desequilibres regionaux et intra-regionaux en matiere d’infrastructures, d’amenagement du territoire et d’opportunites de d4veloppemem.

3- Le programme d’inteivention

En reponse ij I’accroissement de la pauvreti rurale, le Gouvernement a intensifie ses interventions en fenforpant ses programmes en faveur des zone les plus desherit&s, avec notamment : (a) l’extension geographique du programme (( BAJ n ; (b) l’ac&leration des programmes d’infrastructure rude pour I’eau potable (PAGER), 1es routes rurales (PhXR) et I’electrification rurale (€‘ERG); et (c) la mise en oeuvre d’une serie de programmes de developpement rural integre et participatif ciblds sur les zones defavorisies. Ces programmes concement en priorlti les zones definies dans le Plan quinquennal2000-2004, a savoir les zones de montagne, fiontalieres et oasiennes, et sont appuyes par la Banque mondiale, le FDA, la Commission Europeenne, le PNUD et la FAO.

A travers ces programmes, le monde ‘rural repit une enveloppe annuelle d’eoviron 10 milliards Dh, soit environ 40% de I’investissement public, , donr iI convient de mesurer l’impact r&l qui peut &re ameliore a travers une allocaticin plus efficace et plus kquitable de ces ressources. , .

Par ailleurs, afin de reduire. l’impact des rkentes secheresses, le Gouvernement a en outre mis en oeuvre d’avril 2000 a juin 2001, un programme ambitieux de lutte coiltre les fits de la secheresse en injectant environ six milliards de dirham (550 millions’ EU) a travers des

-114.- programmes a decalssement rapide en faveur du monde rural, fmit d'une fone volonte yolitique d'operw de manikre iniegree e1 de s'appuyer sur un modc de financemcnt (( dccentralise )) en utilisant le Fonds de Developpement Rural (FDR).

6. MISE EN EUVRE D'UNE POLlTlQUE DE DEVELOPPEMENTRURAL INTEGRE: DESAPPROCHES NOUVELLES

La mise en euwe de ceue stratdgie, destioee principalement a faire reculer la pausreid dams les zones les plus desheritkes, requiert de la part du Gouvememetit une secie de r&formes a entreprendre dans le moyen terme: (a) des refomes institutionnelles afin d'etabllr un cadre reyional et d'ameliorer i'efficacite dans I'allocation des resources : (h) des reformes reglementaires et legislatives pour un partenariar efficace : et (c) la mise en place au niveau local dc m6canismes de financement (( deconcentres D.

A cette fin le Ministere de ]'Agriculture et du Developpement Rural a cngab'le une reflcxton et un larse debat dam quatrc domain- essentiels, a savoir : le r61e du Ministcre dans le developpemcnt rural, la reorganisation de ses services extericurs pour joucr efficacement son rBle, le renforcement des partennriats et le financement du developpement rural.

En outre le conseil et le comite interministeriels permanents du developpement rural ont et6 crees par decret no 2-98-974 du 5 janvier 1999. Ccs institutions son1 chargees?au niveau national,'& proposer la strategie, de definir ICs orientations et de suivre Ies programmes.

1. Le r6le du ministere dsns le dkveloppement rural

LeMinistere de 1'Agriculture et du Developpement Rural met le dkveloppement agricole au caw de 'ses interventions et est igalcment investi d'une mission d'animation et d'intermediation asec les ,autres departments ct panenaires sociaux en matiere de developpement rural, a travers la prkparation et la rklisation de projets de developpement rural intkgre.'Ce rirle dans ]'animation du monde rural lui est confer8 par les attributions qui lui ont ete fixties par le dkret n"2-98-372 du 2 asril 1998, sa mission en tant cp'animateur du comitk interministeriel pehanent du developpement rural, ICs liens etroits qui unissent developpement agricole et devetoppement, rural,.son reseau dense de StmctureS de proximitk et sa. connaissance profonde des populations rurales.

2. La rhrganisation des services exterieurs du ministere

Pour accomplir les missions dont il est investi en matiere de developpement ayricole et de developpement rural, aux cbtes d'autres acteurs gouvernemeotaur el non gouvernementaux, le ministere a prCpare un projet de restructuration de ses sewices exterieurs selon quatre principes fondamenmux :

regionalisation et decentralisati~nI ' 6 spkialisaiion des metias ,

mobilisation des synergies ; et , 3

-115- amelioration de la gouvemance.

La region s’impose comme un choix politique national dans lequel le Ministere de 1’ Agriculture et du Developpement Rural devrait s’inscrire en s’y deployanl, Le Ministere de 1’ Agiculture et du DCveloppement Rural doit donc disposer imperativcment d’un cadre rCyiorlaI qui : {a) constituerait un espace ’ d‘qnimation, de coordination er de synthese susceptible d’elaborer une vision coherente du developpemenr ag’ricole dans son territoire ; (bj serait con~11 en tant que relais vis- a- vis de l’administration centrale pour faire approuver les budgets et les programmes ; (c) paniciperait a I’eiaboration des contrau- plans regianaux de dkveloppement rural ; et (d) assurerait les missions consulaires auprhs des instances rdyionales et vcillerait i Iri coordination dans ce sens.

Le projet de restructuration sera de nature a donner naissance’a des structures spkialisees, disposaril de moyens ‘necessaires pour preparer et executer des projets de developpement intege.

Toutefois , il est important de souliger que le cadre institutjonnel definitif des prqins de diveloppement integre sera arrQte en fonction des decisions, qui wont prises en matiere de restructuration du Ministire de 1 ‘Agriculture et du Dbveloppemenr Rural.

3. Le renforcement des organisations rurales locales pour tin partenarist efficxe

Les options participatives mises en avant par la strategie de developpement mal ne sant envisageables qu’avec des organisations rurales eficaces et motivees. Toutefois, a l’cxccption de quelques associations professionnelles et cooperatives qui op4rent A I’echelon national, la grande majorite des agriculteuts et des organisations rurales ne disposent ni des competmces ni des moyens techniques qui leur seraient necessaires pour participer efficacemeni a’la preparation e1 A l’execution de leurs programmes de d6veloppement. I1 est donc prioritaire de renforcer leurs capacites dam ces domaines afin de leur permettre d’etablir un partenariat constructif et durable avec Ics services de I’administration et les operateurs prives intewenant dans leur region.

4. La mise en place d’un mdcmisme de financement adapt6 au dkveioppement rural

II est desormais largement admis au sejn du Gouvernement qu’il est necessaire de mettre en auvre des projets de developpement rural integrb fondes sur les principes de developpement local ‘partkipatif et d’une programmation participative ascendante des investissements. Ainsi, dans sa lettre d‘orientation relative a la’pr6paration de la loi de finances 2003, Monsieur le Premier Minisne a insiste pour que les approches nouvelles deja entamees en matiere de diveloppement rural integre soient gheraliskes et traduites, de maniere explicite, dam la 1oi de finances, a travers la perennisdtion de l’alimentation du Fonds de developpemcrit rural (FDR) dont I’impact n’est plus A demontrer.

Par ailleurs, le Comite technique permanent pour le developpement rural a avalise une politique de developpement rural fond6e sur les principes de deconcennation et d‘integration de projcts inttyres avec d’une part le renforcement de I’integration de certains projet5 en cows el d’autre part, la preparation de prqiets integrbs B meme en ceuvrc dulant le prochain plaii qui nquenna 1,

C. LE PROJET DE DEVELOPPEMENT RURAL INTEGREDE MISE EN VALEUR DES ZONESu BOURu (DRI-MVB)

Le projet propose constituc I’une des etapes dam la mise en oeuvre dc la Strategie 2020 de developpement rural pour laquelle le Gouvernement a fait appel a la Ranque mondiale pour appuyer trois operations ‘de developpement rural integrk : le Projer de developpement rural intigre centre sur la petite et moyenne-hydrauliiue (DRT-PMH) met en euvre la stratesic dam les zones montagneuses pauvres autour de petits perimetres irrigues ; le DIU-MVB se concentre sur les zones (4 bourn, dans leur definition large de zones ou domine I’agriculture pluviale ; et IC programme de developpement rural inteyre des zones forestieres et pCri-forestieres (DRl-for&), en cours de preparation, se conccntrera sur les bassins-versantset les zones forestieres.

1. Les objectifs et la stratkgie d’inteivention du DRI-MVB

L’ob.jectjf global a long ternie du DRl-MVB consiste a ameIiorer les condihons socio- economiques des petits agriculteurs et eleveurs dans les zones (( hour )) en promawant le developpement partkipatif local et en encourageant une croissance agricole durable. LeDRT-MVB est construit autour de trois idees-forces : (a) Menre en coherence I’ensemble des programmes de developpement rural et de mise en valeur des zones <{ bow H avec les objectifs de la Strategie 2020 de developpement rural ; (b)’ Developper de nouvelles approches pour le developpement de I‘agriculture dam les zones (( boui,i en tenant compte ‘du caractere stnicturel de la secheresse et des specificites regionales;:et (c) Concentrer les interventions sur les zones d’action prioritaires choisies selon des criteres refletant le niveau de psuvrete des populations lomles, le niveau de degradation de leurs ressources naturelies er le manque d’infrasmrctures et de services sociaux de base.

2. La Mise en euvre du DRI-MVB

La d6marche du DRI-MVB repose sur la mise en auvre d’un processus de programmation locale participative, dans me aire territoriale d’action donnee, correspondant a une zone limit&, equivalsnte it I’aire d‘une .ou de plusieurs communes rurales, et la responsabilisation des acteurs locaux dans la mise en auvre des plans d’investissement communaux (PIC) qu’ils auront elabores. La formulation de ces PIC, qui sera animee par des equipes de programmation participative, passerait par les etapes suivantes :

- La connaissance et Ie’diagnostic du milieu conceme ; - Le renforcement des capacjtk IocaJes (formation. appui ...) ; - L’identification et la hierarchisation des besoins des popul~tions; - La validation daPIC par les conseils communaux. :

-117- - L‘approbation des PIC par le comite provincial restreint de developpement riiriil. emanation du comite technique provincial (CJP) : - L’elaboration des plans de financement des PIC par iedit comite.

3. Le montage institutionnel du DRI-MVB

La ob.jecti6 du DRI-MVB en matiere d’amelioration des conditions socio-economjques des populations rurales et de rcnforcement ‘des capacites de I’administration et des organisaiims professionnelles locales ne peuvent Qtre atteints sans I’adaptation des mdcanismes institutioiinels et organisationnels qui regissent les interventions dans les zones (( bow M Ainsi, le DKI-MVB appuiera le projet de restructuration des services exterieurs du’ Ministere de I’Agriculture et du Developpement Rural et disposera d’un montage institutionnei s’appuyant sur les institutions existantes, a l’instar de ce qui se fait dans le cadre du DRI-PMH,

Au niveau central, le Coniite interministeriel permanent du developpemenr rural sera charye de la coordination globale ‘du projet. Un Comite national de piloraye dudit. projer, compose des reprbentants des directions du Ministere de I’Agiculture et du Developpcmcnr Rural et de ceux des autres ministexes concemes sera‘instituk: Ce Comite sera chary4 de I’approbation et du suivi de l’exdcution des actions du projet. Enfin, la Commission centrale de suivi et de supervision des projets de mise en valeur en (( bour )> aura pour mission la validation, le suivi des realicatians physiques et financieres et la capitatisarion des experiences des projets de PMYB et du DRI-MYB.

Au niveau provincial, le comite technique’ provincial (CTP) sera responsable de la coordination, par l’intermediaire du comite provincial restreint de developpement rural dont le directeur provincial de I’agriculwre ou le directeur ,de ‘I’office regional de mise en valeur agricole, selon le cas, assurera le secretariat.

Au niveau cammunal, le consell communal aura un r81e important a jouer dans la preparation et I’ex&ution des PIC. En particulier, le conseil devra approuver les Plans d‘investixwnrent commiivuiix (PIC) et des commissions locales de mise en valeur agricole elargies (CLMVA) seront creh et constitueront un cadre de concertation au niveau des “munes rurales,

4. Les modslitbs de fiancement des plans d’investissement communaux

La preparation et IC financement des PIC s’inscrivent dans le processus de deconcentration et de decentralisation qu’il convient de pounuivre afin de mieux responsabiliser les acteurs locaux, notamment en ddkguant pouvoir de decision et resources financiercs,

Partant de ces principes, les plans de financement des PIC seront elabores par les comitks provinciaux restreints de developpement rural qui devront ve~ller au respect de la compldmentarite entre sources de financement, notamment cells des collectiv~ttislocales, dcs programmes sectoricls ct du pmkt

’6

-118- Le recours au FDR pemertra, compte tenu de sa flexibilite, de completer les financements des programmes sectoriels non cowem en matiere d'infrasirymres des non agricoles conformemcnt aux orientations de Monsieur le Premier Minisrre. Ces fonds seront mobilises pour la mise en auvre des PIC qui devrait inlervenir a partir de I'exercice budgktaire 2005, selon If montage financierjoint en Annexe.

8

-119-