Project Appraisal Report

Home , African Development Bank, Togo

AFRICAN DEVELOPMENT BANK GROUP

Public Disclosure Authorized PROJECT: TOGO AGRO-FOOD PROCESSING ZONE PROJECT (PTA-

TOGO)

COUNTRY: REPUBLIC OF TOGO

PROJECT APPRAISAL REPORT

Public Disclosure Authorized

RDGW/AHFR

July 2018

Translated Document

Table of contents

Currency Equivalents, Fiscal Year, Weights and Measures, Acronyms and Abbreviations, Project Profile, Executive Summary, Results-Based Logical Framework, Implementation Schedule i-vii

I. STRATEGIC THRUST AND RATIONALE ...... 1 1.1 Project Linkages with Country Strategy and Objectives ...... 1 1.2 Rationale for Bank Involvement ...... 2 1.3 Aid Coordination ...... 3 II. PROJECT DESCRIPTION ...... 4 2.1 Project Components...... 4 2.2 Technical Solutions Adopted and Alternatives Explored ...... 8 2.3 Project Type...... 9 2.4 Project Cost and Financing Arrangement...... 9 2.5 Project Area and Beneficiaries ...... 11 2.6 Participatory Approach for Project Identification, Design and Implementation ...... 12 2.7 Bank Group Experience and Lessons Reflected in Project Design ...... 12 2.8 Key Performance Indicators ...... 13 III. PROJECT FEASIBILITY ...... 13 3.1 Economic and Financial Performance ...... 13 3.2 Environmental and Social Impact ...... 15 IV. PROJECT IMPLEMENTATION ...... 18 4.1 Implementation Arrangements ...... 18 4.2 Project Monitoring and Evaluation ...... 20 4.3 Governance ...... 21 4.4 Sustainability ...... 22 4.5 Risk Management ...... 22 4.6 Knowledge Building ...... 23 V. LEGAL FRAMEWORK ...... 23 5.1 Legal Instrument ...... 23 5.2 Conditions for Bank Involvement ...... 24 5.3 Compliance with Bank Policies...... 26 VI. RECOMMENDATION ...... 26

Appendix I: Togo’s Comparative Socio-economic Indicators ...... I Appendix II: Current Bank Portfolio in Togo ...... II Appendix III: An Analysis of Togo's Fragility ...... III Appendix IV: Agro-food Processing Zone (ZTAs) : ...... VII Appendix V: General Table of ADF and TSF Grant and Loan Resource Allocation ...... IX Appendix VI: Details of the Economic and Financial Analysis ...... X Appendix VII: Map of PTA Intervention Area in the Kara Region ...... XII

CURRENCY EQUIVALENTS – May 2018

Currency Unit : CFAF UA 1 : CFAF 780.9 UA 1 : xx EUR EUR 1 : CFAF 655.957

FISCAL YEAR 1 January – 31 December

WEIGHTS AND MEASURES Metric System

ACRONYMS AND ABBREVIATIONS

ADF African Development Fund (of the Bank Group) AFD French Development Agency ANGE National Environmental Management Agency APA Advance Procurement Action ATC Agricultural Transformation Center (Villages level) DED Detailed Engineering Design FEED Front End Engineering Design FRP Full Resettlement Plan CSP Country Strategy Paper (of the Bank) DCE Bidding Documents DPA Agricultural Policy Document (2016-2030) DWS Drinking Water Supply ECOWAS Economic Community of West African States ERR Economic Rate of Return ESIA Environmental and Social Impact Assessment ESMP Environmental and Social Management Plan GCF Green Climate Fund GHG Greenhouse Gas HDI Human Development Index ICAT Technical Advice and Support Institute ICT Information and Communication Technologies INDC Intended Nationally Determined Contribution INFA National Institute of Agricultural Training ISS Integrated Safeguards System ITRA Togo Institute for Agronomic Research PDA Public Development Assistance PGPP Pests and Pesticides Management Plan PMU Project Management Unit PPF Project Preparation Fund RAP Resettlement Action Plan SESA Strategic Environmental and Social Assessment SME Small and Medium-Sized Enterprise TFP Technical and Financial Partners TSF Transition Support Facility (Bank Group) VRD Roads and Main Networks WB World Bank WSC Water and Soil Conservation ZTA Agro-food Processing Zone (AFPZ)

PROJECT INFORMATION SHEET

Client Information ______BORROWER: Republic of Togo

EXECUTING AGENCY: Agency for Promotion and Development of Agropoles in Togo (APRODAT)

Financing Plan Amount Amount Amount Source Instrument (UA M) (CFAF M) (USD M) ADF (including PPF) 4 635 3 619 700 Grant ADF 8 040 6.278 830 Loan TSF (Pillar I) 8 320 6 497 500 Loan BOAD 12 804.92 10 000 000 Loan Saemaul Globalization 3 524.19 2 752 220 5 000 Grant Foundation (South Korean) Government (including 7 741.95 6 046 080 Budget PPF) TOTAL COST 45 066.07 35 194.33 * PPF advance: UA 995 000 Key Financial Information on the Loans and Grants

Maturity (years) 40 Grace Period (years) 10 First Period (years) 10 Amortisation Rate (%) 2.0 Second Period (years) 20 Principal Amount Amortisation Rate (%) 4.0 Service Commission (%) 0.75 Commitment Fee (%) 0.50 Interest Rate (%) 0 Concessionality (%) 61

NPV (baseline scenario) CFAF 56 959 375 ERR (baseline scenario) 23.23%

Timeframe – Key Milestones (expected) Concept Note Approval March 2018 Project Approval July 2018 Effectiveness October 2018 Last Disbursement December 2023 Completion September 2023 Last reimbursement December 2058

Executive Summary

A. Project Overview

A1. The Togo Agro-Food Processing Zone Project (PTA-Togo) is a pilot project implemented as part of the Togo Agropoles Strategic Development Plan 2017-2030 and the Feed Africa Initiative 2016-2025. The aim of the project is to create conditions conducive to private investment, notably in the processing of agricultural products, the supply of inputs and marketing, in the Kara region. The main outcomes expected from the Project are as follows: (i) increase in the productivity and agricultural production of import substitutes (rice, maize, soybean, broiler meat) and exports (cashew nuts and sesame); (ii) increase in the share of agricultural products processed in situ (from 19% to 40%) through private investment in the Agro-park (90,000 tons/year of rice paddy, 15,000 tons/year of maize, 10,000 tons/year of soybean, 20,000 tons/year of feed, 10,000 tons/year of cashew nuts and 10,000 tons/year of sesame, production of 3 million chicks per year, slaughtering of 2 million broilers/year); (iii) Strengthening of the people’s food and nutritional security; (iv) creation of wealth and employment, including for young people and women; (v) Preparatory studies funded by the Project Preparation Fund (PPF). These studies focused on: (1) analysis of the agribusiness environment and market potential; (2) development of a master plan for the Agro-park; (3) full studies on the electrical and telecommunication networks of the Agro-park; and (4) preliminary detail design studies of mini-dams, irrigated schemes, drinking water supply systems and access roads.

A2. The project will bring direct benefits to about 303,000 people in the Bassar, Doufelgou, Kéran, Bastar and Dankpen Prefectures, 51% of whom are women, and indirect benefits to the estimated 769,940 people of the Kara region. The main impacts expected from the project for the direct beneficiaries are as follows: improved food and nutritional security and incomes thanks particularly to better access to markets, agricultural inputs, agricultural services and financing. To that end, it is expected that the project would lead to: (i) an increase in private investments thanks to a more favourable business environment for the establishment of infrastructure in the Agro-park (roads and sundry networks, single window, training room, maintenance centre, incubation centre, etc.); (ii) increase in agricultural production capacities thanks to expected rural infrastructure (dams, irrigated areas, roads, etc.); (iii) capacity building for operators in the 10 multipurpose agricultural transformation centres (ATCs) (inputs, farm equipment, technologies, financing, harvest aggregation, etc.). The project will be implemented following the value chain approach through a partnership between the State (facilitator and regulator), the private sector (promoter) and professional farmers’ organisations (FOs). In addition to capacity building for FOs (technical and organisational management), the project will support the operation of consultation frameworks for priority chains, to ensure the inclusion of farmers and agreements with the private sector.

A3. This pilot project will be implemented over a five-year period at a total pre-tax cost of about UA 45,066,070 (about CFAF 35.194 billion), broken down as follows: (i) ADF loan: UA 8.04 million (17.8%); ADF grant: UA 4.046 million (10.3%); TSF loan: UA 8.32 million (18.5%) (ii) BOAD: UA 12,804,920 (28.4%); (iii) Saemaul Globalization Foundation: UA 3,524,190 (7.8%); and (iv) State: UA 7,741,950 (17.2%). The project has four components: (a) support policy, governance and incentive measures; (b) infrastructure for processing and accessing agricultural inputs and services; (c) capacity building for actors in priority agricultural chains; and (d) coordination, management, monitoring and evaluation. It will be implemented by the Agency for the Promotion and Development of Agropoles in Togo (APRODAT), which was established by Decree No. 2018-036/PR of 27 February 2018 to promote and develop ten agropoles over the next fifteen years.

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B. Needs Assessment

B.1 Despite the strong contribution of agriculture to the country’s GDP, estimated at 40% on average and bringing together 60% of the population, with 87% of assets often family-owned and revolving around agriculture, Togo’s level of investment in the agricultural sector remains weak compared to its needs. Public spending, including that of donors, remains low: it went from CFAF 25 billion in 2010 to CFAF 50 billion in 2013-14 and CFAF 44 billion in 2016. Private investments are quite insufficient compared to the needs and potential of the agricultural sector, owing to, among other things, a less-than-enticing environment, lack of infrastructure and poor structuring of agricultural sectors. Investment and management weaknesses explain to a large degree the low agricultural productivity and insufficient access to domestic (import substitution) and export markets. The PTA of the Kara region, which is part of the Agropoles Strategic Development Plan 2017-2030, will have to help mobilise private financing to transform the agro-food sector, including for the six promising sub-sectors that were identified following preliminary studies and broad consultations.

C. Bank’s Value Added

C.1 The Bank’s goal, through the 2013-2022 Ten-Year Development Strategy, including the Feed Africa 2016-2025 Strategy and its Agro-Food Processing Zones (ZTAs) flagship programme, is to increase private investment in the agricultural sector through facilities and incentives implemented by the State. In that connection, the Bank and its partners have the relevant expertise and financial resources to facilitate the preparation and implementation of this type of project. The experience accumulated by the Bank through its previous interventions in the agricultural and rural, infrastructure, governance and private sectors not only in Togo but in the rest of Africa argues in favour of such intervention, which concerns both the public sector (for this project) and the private sector (the principal investor, the Kalyan Group, has submitted a financing request to the Bank that is currently under review). The Bank also wishes to support the country in the transformation of its agriculture by promoting private investment through the incentive measures built into the project, concerning, in particular (i) the business environment; (ii) establishment of basic infrastructure; and (iii) improvement of the operation of the sub-sectors.

D. Knowledge Building

D.1 Since the Togo-ZTA planned for the Kara region is a pilot operation for the country, a comprehensive mechanism will be set up to monitor and evaluate the outcomes and impacts of the project and the Agropoles Strategic Development Plan 2017-2030. In addition to building the technical, financial, managerial and other capacities of actors, the project will put in place an adapted mechanism for monitoring the performances of the pilot project, but also of the Agropoles Strategic Development Plan 2017-2030 for the Agency for the Promotion and Development of Agropoles in Togo (APRODAT) and institutional actors. The external evaluation of the project, which will be supervised by the Board of Directors of APRODAT, will should help to provide baseline as well as end-of-project data. In addition, studies and support specific to APRODAT will be set up for an in-depth examination of the major issues (including legal, institutional and financial issues, public-private partnerships and community involvement). Lastly, it is expected that information-sharing platforms would be set up, analytical reports would be produced, and consultation meetings would be organised to share experiences and learn useful lessons from this innovative project to be used by national authorities and those of the Bank.

Results-based Logical Framework of Togo-ZTA

NAME: Togo Agro-food Processing Zone Project (PTA-Togo) GOAL: Contribute to inclusive agricultural growth, which will create wealth and jobs, and to the reduction of food imports through increased private investment in priority value chains, including agricultural processing and the supply of inputs and agricultural service.

RESULTS CHAIN PERFORMANCE INDICATORS MEANS OF RISKS AND MITIGATION Indicators Baseline situation Target VERIFICATION MEASURES (including SCI) National Statistics, 1. Contribute to reducing the volume of food imports per 1. Value of food imports in USD / per capita 21.3 (2014) 16 (2030) capita Statistics of the

2. % of population living below the poverty line (less than United Nations 2. Contribute to reducing the poverty rate (especially in USD 1.90/Day) 49.1% (2015) 25% (2030) System rural areas)

IMPACT 2.1 Increase in household food security levels Demographic and 2.2 Decrease in % of children affected by chronic 32.1% (Kara region) 28.9% (2025) Health Survey 2013- malnutrition (including girls) 2014 (Baseline situation) Risk 1: Land security is not 1. The share of locally processed agricultural products has 1.1 Share of agricultural production of the project region 19% 36% Baseline Survey enough to attract the private increased processed in situ and End-of-Project sector and protect farmers Reports Mitigation 1: SESA has 1.2 Private investments catalysed in agribusiness in the 0 >100 identified mitigation Kara region (USD million) National statistics measures, including decrees 2. The living conditions of rural inhabitants of the project to implement the Land Code area have improved 2.1 Rate of household access to basic social services in the (i) 16%; (ii) 11% (i) 43%; (ii) 22% and establishment of the project-affected villages has improved: (i) Electricity; (ii) Kara one-stop-shop all-weather roads (within 5 km) Risk 2: Inadequate attention 2.2 Number of direct and indirect jobs created / enhanced (of 0 39,000 to the needs of women and which 50% are held by women) youth Mitigation 2: The 2.3 Crop yields of crops t/ha: (i) Irrigated rice (double- (i) 2; (ii) 1.5; (iii) 1; (i) 10 ; (ii) 4; (iii) 2; Demographic and Foundation's SESA

MES cropping); (ii) lowland rice; (iii) rain-fed rice; (iv) Corn; (iv) 1.2; (v) 0.5 ; (vi) (iv) 3; (v) 1; (vi) 1; Health Survey in (including RAP, ESIMP and (v) soybeans; (vi) sesame; (vi) cashew nuts; 1; (vii) 0.5 (vii) 1 Togo 2013-2014 PDC), and gender and

OUTCO nutrition-sensitive 2.4 % of children aged 6-23 months with a minimum 10.5% (Kara region) 20% participatory approach will acceptable diet have positive effects on the population

Risk 3: Climate change and harmful population practices could degrade natural resources (NR) Mitigation 3: Integrated NR management and the development of alternative livelihoods should scale up the project impacts. v

A / Support Policies, Governance and Incentives 1.1 Land Code implementing regulations are enacted 0 1 Baseline and Risk4: Lack of private 1. Support to improve the institutional framework of 1.2 SSEA-related implementing legislation is enacted 0 1 Project sector interest could limit the ZTA 1.2 The national directorates of the Ministry of Industry in 0 1 Completion investment in the Agro-park charge of food quality are equipped and trained Surveys Reports Mitigation4: (i) Meetings 0 1 2. Establishment of the ZTA Governance System 2.1 APRODAT's capacities are built have been held with the 2.2 The Agro-park management company is operational 0 1 private sector (including the 3. Support to non-financial and financial institutions 3.1 The capacity of training, advisory support and 0 1 Kalyan Group, a key certification structures is built investor), and their needs taken into account; (i) 3% ; (ii) 15% 3.2 Percentage of partner FI portfolios invested in (i) 0.3%; (ii) 10%) (ii) The Project will finance agriculture: (i) Banks; (ii) MFIs B / Support infrast. for processing, production and infrastructure for the

access to agricultural inputs and services 0 46 ha Baseline data: year development of the Agro- 4.1 Area of the Agro-park and developed (VRD+BC) 4. Implementation of Agro-Park development (i) 0 ; (ii) 0 ; (iii) 0 ; (i) 90T; (ii) 15T; (iii)10T; 2017 park site and production 4.2 Annual capacity of Agro-park industrial units (x1000): infrastructure (iv) 0 ; (v) 0 ; (vi) 0 ; (iv) 10T; (v)10T; (vi)20T; areas; (ii) support for the (i) Rice; (ii) Corn; (iii) Soybean; (iv) Sesame; (v) Cashew (vii) 0 ; (viii) 0 (vii) 2000; (viii) 3000 implementation of PI

nuts; (vi) Feed; (vii) Broiler chicken; (viii) Chicks reforms is planned (land,

Project semi- standards and quality 5. Infrastructure for production aggregation and access 5.1 No. of ATCs built and equipped 0 10 annual activity control, PPPs, etc.); and (iii) to agricultural inputs & services 5.2 Total length of rehabilitated roads 0 100 Km reports Technical assistance (legal,

6. Establishment of agricultural production support 6.1 Number of small dams built (capacity in m3) 0 2 (Vol. >15 M.m3) technical, management, infrastructure 6.2 Area covered by studies (i) Irrigation schemes; (ii) 0 (i) 1500 ha; (ii) 1500 PPPs, etc.) will be made Lowlands developed (ha) ha available to APRODAT. C / Capacity building of sector actors OUTPUTS 0 7. Capacity building of priority value chain POs 7.1 No. of ATCs with capacity built 10 Bank Supervision 0 7.2 No. of key OPAs trained and supported 50 Reports 0 7.3 Number of farmers with access to services provided by 10 000 (incl. 30% wom.) Risk 5: Project delays due to ATCs (inputs, harvest management, e-farming, etc.) 10 000 (incl. 30% wom.) APRODAT's lack of control

8. Capacity building for communities 8.1 No of OPA support sub-projects completed (2 ATCs) 0 6 over the Bank's procedures) 8.2 Number of improved stoves installed 0 5000 Mitigation 5: Substantial 8.3 Number of civil status documents established through 0 50 000 institutional support (see

the project action plans) is planned for

APRODAT within the 9. Strengthening access to state services 9.1 Capacity building of state services in participatory 0 1 framework of the project.

approach, gender, health and nutrition, etc. 1 9.2 Capacity building for SESA implementation 0 0 1 9.3 Monitoring of ESIA, ESMP, RAP and PGPP (ANGE)

1 D / Coordination, management and monitoring and Financial management /accounting/procurement procedures 0 evaluation and systems prepared and implemented Steering and Coordination, Procurement, Financial Number of PM Plans submitted on time and approved 0 5 Management Annual audit report submitted on time 0 5 Audit, Monitoring and Evaluation Number of semi-annual progress reports submitted on time 0 10 Project baseline and completion surveys conducted 0 2

Components: (1) Support Policies, Governance and Incentives; (2) Resources by component: (1) Component A: UA 4.983 million (11%); (2) Sources of funding: (i) ADF loan: UA 8.04 million, ADF Grant (with Support Infrastructure for Processing, Production and Access to Component B: UA 30.339 million (67%); (3) Component C: UA 4.440 PPF): UA 4.635 million; (ii) TSF: UA 8.32 million; (iii) BOAD: UA Agricultural Inputs and Services (3) Capacity Building for Agro-industrial million (10%); (4) Component D: UA 5.304 million (12%) 12.80 million; (iv) Saemaul Foundation: UA 3.52 million; (v) State: UA

KEY Sector Actors; (4) Coordination, Management and Monitoring and 7.74 million

ACTIVITIES Evaluation

Project Implementation Schedule Year 2018 2019 2020 2021 2022 2023 Quarter 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Preparatory activities Project appraisal Loan, grant negotiations and approval Signing of loan/grant agreements and compliance with conditions precedent to first disbursement Publication of General Procurement Notice Finalisation of selection of key staff and project launch I / Support policies, governance and incentives Recruitment of the technical assistance firm at APRODAT and delivery of services: preparation of procedures manual, legal instruments, specifications of the management company, Technical Assistant to the Contracting Authority (ACA), training, etc. Procurement of equipment and capacity building for: APRODAT, Quality Directorates in charge of quality

(Min.industry), Agricultural Technical Services, Agro-Park Management Company, etc. Recruitment of firms and feasibility study for two new ZTAs (OTI and Haut Mono) Selection of and capacity building for non-financial and financial institutions (equipment and training): guarantee funds, IT equipment and agribusiness-oriented training II/ Support infrastructure for processing, production and facilitating access to agricultural inputs and services (i) Architectural Studies and preliminary project design and bidding documents (APD/DCE) for the Agro-park; (ii) APD/DCE for small dams and irrigated areas; (iii) complete studies on dam B9; (iv) Access roads and Agricultural transformation Centres-ATC (10) Development of the Agro-park including roads and sundry networks (drinking water, electricity, sanitation, roads, etc.), DWSS, WTP and BC: selection of service providers &works implementation Rehabilitation of access roads (national budget)and construction of 10 ATCs (ADF/TSF) selection of service providers and works implementation III/ Capacity building for actors in agricultural sectors Capacity building for 10 ATC (sector structuring, technical and management training, support for input procurement/management, agricultural services including e-farmers platform, etc.) Support for the implementation of priority sub-projects in the key sectors of 2 pilot ATCs (Saemaul Globalization

Foundation) Capacity building for rural communities: local planning, environmental management, nutrition manufacture of improved stoves, civil status documents, etc.) Capacity building for central and decentralise services (local development approach, action plans for protected areas and pesticides, ESMP/RAP, missions and training, etc.) IV/ Project coordination and management Implementation of the financial, administrative and accounting management system Establishment of the baseline situation and implementation of the monitoring and evaluation system Coordination and management, monitoring and evaluation and communication Technical assistance to APRODAT (procedures manual, engineering, legal matters, etc.) Annual audit reports Mid-term review Completion report

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REPORT AND RECOMMENDATION OF BANK GROUP MANAGEMENT TO THE BOARD OF DIRECTORS CONCERNING THE AWARD OF LOANS AND GRANTS TO THE REPUBLIC OF TOGO TO FINANCE THE TOGO AGRO-FOOD PROCESSING PROJECT (PTA-TOGO)

Management hereby submits this report and its recommendation concerning a proposed loan of UA 8.04 million from the African Development Fund (ADF) country allocation and UA 8.32 million from the Transition Support Facility (TSF), as well as a grant of 4.635 million from the ADF allocation, to the Government of Togo to finance the activities of the Togo-ZTA.

I. STRATEGIC THRUST AND RATIONALE

Project Linkages with Country Strategy and Objectives

1.1.1 Following the end of the implementation period of its Accelerated Growth and Employment Promotion Strategy (SCAPE) 2013-2017, the Togolese Government has started preparing its National Development Programme 2018-2022 (NDP 2018-2022), which is expected to be adopted in 2018. The NDP 2018-2022, which will be the sole reference for the AGROPOLES DEVELOPMENT PROGRAMME IN TOGO (PRODAT) Government’s activities over the medium term (including for this project), builds on three The Agropoles Development Programme in Togo- activities (i) establishing an excellence PRODAT (2017-2030), approved by Decree No. logistical hub for international trade; (ii) 2017-110/PR of 29/09/2017 is the strategic creating jobs through the development of agro- development plan for Togo's agropoles. The main processing centres (case of this project), objective of the programme managed by the Agence de promotion des Agropoles (APRODAT) is to manufacturing and extractive industries; and accelerate economic growth and reduce poverty (iii) consolidating social development and through better performance of the primary, strengthening inclusion mechanisms. At a secondary and tertiary sectors. The specific recent Cabinet meeting held on 7 March 2018, objectives are to: (i) develop irrigation schemes, rural infrastructure and agricultural mechanisation; the Government also approved draft legislation (ii) promote the value chain approach for priority on the Land Code that would be more sectors with a market (national and export); (iii) favourable for investment, particularly in the develop agro-industry and the supply of agricultural agricultural sector. The Government has also services; (iv) develop the ICT sector; (v) promote research, innovation and training; (vi) build the set its Intended Nationally Determined capacities of sector actors. Thus, in the long term, Contribution (INDC), to limit the effect of the Government targets structural transformation climate change; in that connection, this project of the agricultural sector through the promotion of will help in achieving the INDC goals 10 ZTAs or 'agropoles' over the next 15 years. The ZTA or "Agropole" is defined as a "given concerning adaptation to climate change geographical area in which professional (considered a risk) and strengthening the organisations (companies, farmers’ organisations, resilience of the production systems and etc.) which maintain functional relations in the sustainable livelihoods. activities of production, processing, services and marketing of products of plant, animal, fisheries or forestry origin". The Kara Region CTA is, therefore, 1.1.2 The country has also formulated and the first to be implemented, with in particular the adopted the Agricultural Policy Paper (DPA) Bank's support. for the period 2016-2030. The overall objective of the DPA 2016-2030 is to help speed up economic growth, poverty reduction and improvement in living conditions, while ensuring social inclusion and environmental protection. The project should, therefore, help to achieve the specific objectives of the DPA, namely to ensure, in a sustainable manner: (i) food security; (ii) readjustment of the agricultural trade balance; (iii) improvement of agricultural income levels; (iv) creation of decent jobs in the agricultural sector

and reduction of labour instability; (v) and maintenance of a high growth rate. In that regard, the Agropoles Strategic Development Plan 2017-2030 (PRODAT 2017-2030) established by Decree No. 2017-110/PR of 29 September 2017, designed to establish ten (10) agropoles over the next fifteen (15) years, underpins Togo’s PTA. The project will ultimately facilitate private investment in the agro-industrial sector for the development of value chains of interest in terms of import and export substitution.

1.1.3 Lastly, this project is also part of the Bank’s Country Strategy Paper (CSP) 2016-2022, Pillar 1 of which concerns the “development of inclusive growth and agribusiness competitiveness poles”, through the development of agro-industrial processing zones known as “agropoles”.

1.2 Rationale for Bank Involvement

1.2.1 Togo’s average GDP growth over the 2011-2015 period was 5.3%, compared with 2.7% for the 2006-2010 period. However, in the Human Development Index (HDI) rankings for 2015, Togo was ranked 162nd out of 188 countries with a score of 0.484. The incidence of poverty fell from 61.7% in 2006 to 58.7% in 2011 and 55.1% in 2015, but the level of poverty remains high. The rate of extreme poverty did not improve tangibly, going from 28.6% in 2006 to 30.4% in 2011 and then to 28.7% in 2015. In 2015, the incidence of poverty in rural areas stood at 68.9%, compared with 34.3% in Lomé and 37.8% in other urban areas. The rate of under-employment rose from 22.1% in 2011 to 24.9% in 2015, according to data from the 2011 and 2015 QUIBB1 surveys. The breakdown of that rate by social category indicates a level of unemployment, and even under-employment, of about 53.2% for women and about 59% for young people. In 2014, the prevalence of chronic malnutrition among children under 5 was 28% at the national level and 32% for the Kara Region.

1.2.2 Despite the political and economic progress made, Togo remains a fragile country, because its average score following the Country Policy and Institutional Assessment (CPIA) of the Bank and the World Bank is 3.2 out of 6. Despite structural reforms undertaken by the Government between 2006 and 2015, the country’s environment remains tense, with political protests since 2017, notwithstanding the intensification of dialogue between the Government and the opposition. Another source of fragility concerns the economy’s high level of dependence on the phosphate sub-sector (+40% of export revenue) and income from seaport and airport traffic, on the one hand, and socio-economic spatial disparities, on the other.

1.2.3 The country’s economy remains largely dominated by agriculture which, in 2015, employed 72.6% of the population and accounted for 47.6% of GDP, while services accounted for 36.2%, and industry 16.2%. There are barely 22 large agro-industrial enterprises in the country and they supply less than 5% of the products processed and sold on the domestic market. According to customs statistics for 2014, Togo imported the equivalent of USD 160 million dollars of food products (including 100,000 tonnes of rice), but only exported the equivalent of USD 50 million. Over the period 2011-2014, the agricultural trade balance recorded a deficit of about CFAF 60 billion, owing primarily to growing imports of food products.

1.2.4 The constraints analysis shows that agriculture remains unproductive and not integrated into the markets, owing to limited access to agricultural equipment, inputs, financing and land, especially for women and young people. These challenges are compounded by low level of support infrastructure for agricultural production, storage, processing, packaging and marketing. This is true for the products targeted by the project in terms of import substitution

(rice, maize, soybean, broiler meat) or export (cashew nuts, sesame). The project is located in the Kara region, deemed a priority area in the implementation of the PRODAT 2017-2030, based on the following criteria: (i) geographic position; (ii) socio-economic infrastructure; (iii) natural potential (water, arable land, etc.); and (iv) possibility of growing high-value-added crops.

1.2.5 The Bank has a comparative advantage in the implementation of this project financed through the public sector window and designed to create favourable conditions for private investors (the main one being the Kalyan Group, which is interested in cashew nuts and sesame, and has submitted a financing request to the private sector window that is currently being reviewed). Moreover, the Bank’s intervention, which is aimed at helping in the PARTNERSHIP WITH THE PRIVATE SECTOR implementation of the Agropoles Strategic Development Plan 2017-2030, is perfectly in Project preparation was facilitated by studies line with the Feed Africa Strategy 2016-25, conducted on key agricultural value chains, whose goals are to: (i) help eliminate extreme potential markets and the business environment. poverty; (ii) end hunger and malnutrition; (iii) The mission conducted extensive consultations make Africa a net food exporter; and (iv) with the private sector, including: move Africa to the top of export-oriented  The focus group held with the Private Sector to global value chains where it has a identify their expectations, particularly in comparative advantage. The project will also terms of the business environment; help to achieve the objectives of the Bank’s  Focus group with commercial banks and Ten-Year Strategy (2013-2022), especially its financial institutions, to assess the risks they operational priorities concerning the face; development of infrastructure, the private  Targeted interviews with private groups that sector and inclusive growth. expressed interest in financing the agro-park, including (i) the Kalyan Group, a key investor that requested financing from the Bank; (ii) 1.3 Aid Coordination SOMDIAA (malting), (iii) NIOTO (oil mill); etc.

1.3.1 Within the Government, external aid  Consultations made during the investment promotion days in the Kara Agropole is coordinated by the Ministry of Planning, organized on 05 and 06 April 2018 by Togo’s Development and Economy and Finance. Chamber of Commerce and Industry (CCIT) Since 2010, the Government has put in place and the National Employers Council (CNP) an official development assistance framework  Exchanges made in the field with agricultural known as Official Development Assistance cooperatives and SMEs having invested in (ODA), which is the reference structure for several value chains (fish farming, market technical and financial partner (TFP) support. gardening, poultry farming, etc.), which made The framework, which is divided into 11 it possible to identify their constraints sectoral committees, including one on  Interviews with the government services agriculture, is a platform where TFPs (including Togo Invest) in charge of the exchange information and align their promotion of private investment interventions with the country’s policies and strategies. The Bank’s collaboration with the TFPs, therefore, revolves around the sectoral committees, joint review activities and co- financing. The Bank, which is very active, co-chairs with Germany the TFP committee on the agricultural sector. It also plays a leadership role in the dialogue on economic infrastructure, Agro-Food Processing Zones or ‘agropoles’, fiscal reform and inclusive finance.

1.3.2 Togo’s main TFPs in 2016 were the following: West African Development Bank (BOAD) with 11.43% of total PDA; Compassion International (10.54%); World Bank (9.69%); European Union (8.75%); Global Agriculture and Food Security Programme - GAFSP (7.05%); United Nations system (6.73%); International Fund for Agricultural Development (6.60%); China (5.48%); Arab Fund (5.44%); Global Fund (4.56%). The AfDB disbursed USD 17.40 million in 2016, representing 3.94% of PDA; the sectoral breakdown of the PDA was as follows: infrastructure (29%); social protection and employment (25%); governance (13%); agriculture (13%); health (10%); water, sanitation and environment (6%); education (3%).

Sector or sub- Importance sector* GDP Exports Labour Agriculture 31% 14% 66% of the workforce Stakeholders-Annual public spending (average) 2011-2015 Total agricultural Government (internal expenditure of technical and Total public expenditure of the Years public resources) (in financial partners-TFPs (in agricultural sector (in CFAF) CFAF) CFAF) 2010 12 962 743 316.30 13 036 336 918.00 25 999 080 234.30 2011 18 969 601 917.75 8 945 649 877.19 27 915 251 794.94 2012 24 334 975 318.35 13 346 112 440.15 37 681 087 758.50 2013 14 453 025 773.66 31 579 754 732.06 46 032 780 505.72 2014 14 981 443 966.86 35 636 939 006.25 50 618 382 973.11 2015 14 229 608 562.00 37 196 105 916.22 51 425 714 478.22 2016 14 566 951 868.00 30 152 960 156.22 44 719 912 024.22

Aid Coordination Level Existence of thematic work groups [Yes] Existence of a comprehensive sectoral programme [Yes] Role of AfDB in aid coordination*** [M]**** Source: DPD being finalised

II. PROJECT DESCRIPTION

2.0.1 The overall objective of the project is to promote inclusive agricultural growth that creates jobs and reduces imports thanks to incentive measures for private investment in key areas (rice, maize, soybean, sesame, broiler meat and cashew nuts).

2.0.2 The specific objectives of the project are to: (i) facilitate private investments in key areas thanks to policy support, governance and incentive measures; (ii) promote the development of priority value chains through the establishment of infrastructure to support production, storage and processing; and (iii) build the capacities of stakeholders in priority agro-industrial areas.

Project Components

2.1.0 Project preparation was largely informed by the conduct of several PPF-funded studies, including the following: (i) Studies on priority agricultural sectors, potential markets, and the business environment; (ii) Study on the development of the agro-industrial park master plan; (ii) preliminary design study of dams, irrigation schemes, DWS and electrification of 6 villages; (iv) Detail design study of Agro-park electrification and access to the ICT network. Thus, these studies underpinned the design of this pilot project, which is developed as the first Agro-food Processing Zone (ZTA) in the Kara region and in the country. It includes measures to support political, regulatory and institutional reforms with a view to attracting private investment, as well

as measures to improve rural infrastructure in the project area and build the capacities of stakeholders in priority areas in terms of import substitution (rice, maize, soybean, broiler meat) and exports (cashew nuts and sesame). Specifically, the project has a multidimensional approach:

2.1.1 At the institutional level, several measures in favour of private investment are planned under the project, including:  Capacity building of the Agropoles Promotion and Development Agency of Togo (APRODAT), established by Decree No. 2018-036/PR of 27 February 2018 to achieve the objective of implementing ten agropoles in the next 15 years (see paragraph 4)  Support for the future semi-public company for the promotion and management of the Kara Agro-Park, to promote private investment in agro-processing and input supply. and agricultural services  Improvement of the regulatory and institutional framework for private investment in agribusiness, in particular through:  The operationalisation of land reform through technical assistance for the drafting of implementing decrees relating to agricultural and rural land law voted by the National Assembly on 5 June 2018, including the establishment of a single land tenure office;  Support to the Directorates and Agencies of the Ministry of Industry in charge of the implementation of ongoing reforms in standardization and metrology, through provision of equipment (including laboratory equipment) and training;  Improvement of access to financing, particularly for SMEs and cooperatives, by setting up a guarantee fund with financial institutions and by providing ad hoc support (IT equipment and training);  The study to be carried out by the TA firm for the development of the Agro-park business plan taking into account the targeted markets (national, regional and international), the business environment, and possible desirable incentives;  Measures to build the capacities of universities and other research, training and advisory support institutes operating in the agro-industrial sector (IT and laboratory equipment, training, etc.)

2.1.2 At the physical level, the infrastructure development works planned under the project to improve the private sector intervention environment will concern three major entities, namely:  A central portion or Agro industrial-park composed of developed land with roads and sundry networks (drinking water supply, sanitation, electricity, ICT, etc.), logistical support and specialized facilities and services (cold chain, laboratory and certification, business services, waste treatment, single window, etc.); a joint savings company will be responsible for promoting and managing the Agro-park, where private companies invest in the processing of agricultural products and the provision of services and inputs.  Agro-transformation centres (ATCs), located in 10 village centres, are multipurpose platforms for use by agricultural operators comprising: (i) an aggregation, sorting and primary storage centre; (ii) an input distribution centre; (iii) a service centre (agricultural credit, business centre, farm equipment rental and maintenance, zoo-sanitary clinic, etc.); (iv) a food quality control and seed certification service; (v) an education and training centre for producers.

 Agricultural production zones: They cover zones targeted to provide agricultural products to the Agro-park through the ATCs. They will benefit from public investments (dams, irrigated areas, roads, etc.) that will help to boost agricultural productivity for the selected areas.

2.1.3 Concerning the strengthening of value chain actors to favour greater inclusion, the project will support implementation of the following measures:

 Support the establishment and capacity building of consultation frameworks of the main targeted sectors, to facilitate business relations with the private sector;  Enhance the capacities of the Agricultural Production Organisations (OPA) of the ten (10) Agricultural Transformation Centres identified in the three agricultural zones (irrigated, lowland and rain-fed) with the Saemaul Foundation for Globalization;  Improve the capacity of village communities in participatory diagnosis, participatory local planning, and the formulation and implementation of community projects (Saemaul Foundation for Globalization);  Support capacity building of government services and other partners involved in the implementation of project activities;  Support the implementation of priority sub-projects in support of agricultural sectors identified by two ATCs (Saemaul Foundation for Globalization);  Support for the implementation of risk mitigation measures as identified in the Environmental and Social Strategic Assessment (SESA): compensation of displaced/affected persons, compensation, protection of sensitive sites, etc.

2.1.4 The components, sub-components and activities of the project are presented in the following table.

Components Cost CFAF M) Description of the Components A/ Support A1/ Improvement of the policy, regulatory and operational framework policy,  Technical assistance for the preparation of instruments for governance and implementation of the Land Code (voted by the National Assembly on 5 incentive June 2018), the specifications of the Agro-park management company measures and operationalisation of the single window 4.98  Support for the development of a legal, regulatory and operational framework for the Strategic Environmental and Social Assessment (SESA)  Support for the national departments responsible for quality, standards and metrology (facilities, training) at the Ministry of Industry  Technical assistance for the implementation of private investment promotion measures in the Agro-park (including instruments and incentives), financial and management procedures and support for project management (APRODAT)  Convening of an investment promotion forum for the ZTA (2)

A2/ Establishment of the ZTA governance system  Institutional support for APRODAT’s capacity building (staff, legal, technical and management assistance, training, etc.)  Support for the preparation of the specifications of the Agro-park management company, its recruitment (CAT) and monitoring of performance quality  Feasibility study for two new ZTAs (OTI and Haut Mono regions)

Components Cost CFAF M) Description of the Components A3/ Strengthening State and non-State public institutions  Support for non-financial institutions (computer and laboratory equipment and training): research institutes (Togo Institute for Agronomic Research (ITRA)), consulting (Technical Advice and Support Institute (ICAT)), training (CIDAP, INFA-Tové), Technical Advice and Support Institute (ICAT), universities, etc.) and seed control/certification  Support for financial institutions: Establishment of a risk insurance fund, procurement of equipment (computer hardware and software), and capacity building for banks and financial institutions (including in agribusiness) B/ / B1/ Agro-park development infrastructure (Broukou) Infrastructure  Architectural, detailed engineering design/bidding documents studies and for processing supervision of construction work and accessing  Site development works & roads and sundry networks (roads, drinking agricultural water supply, sanitation, electricity, telecommunication, fencing, etc.); inputs and drinking water supply station, water treatment, etc. services  Construction of buildings: (i) administrative and residential block; (ii) 30.91 services block (training centre, conference centre, laboratories, etc.); (iii) socio-collective infrastructure block (school, health centre, hotel, etc.); (iv) etc.  Agro-park electricity supply (CEET) and fibre optic telecommunication works  Assistance for the establishment of a business incubator (provider) B2/ Infrastructure for aggregation and access to agricultural inputs and services  Establishment of basic infrastructure for 10 ATCs located in 10 village centres covering the three agricultural production areas (irrigated, lowlands, rain-fed), under the ADF: - Technical studies and supervision of the construction of ATCs - Construction works on 10 ATCAs (harvest storage stores, input storage hangars, cooperative offices) - Procurement of agricultural, cleaning and logistical equipment  Detailed preliminary design study of the main road (100 km) and secondary roads (50 km):  Work on the rehabilitation of roads (100 km) including ancillary structures  Control and supervision of rehabilitation works on the main road B3/ Support infrastructure for agricultural production  Detailed engineering design/bidding documents studies for three mini- dams and irrigated areas (1 500 hectares)  Supervision of the construction of two mini-dams (Vol>15 Mm3)  Full technical and economic studies on the B9 dam with irrigated areas  Construction of two mini-dams for agricultural use (potential of 1,500 hectares) and industrial use (4,000 - 5,000 m3/day for the Agro-park) C/ Capacity C1/ Capacity building for agricultural producers (with the Foundation) building for  Networking of sub-sectors (rice, maize, soybean, sesame, cashew nuts actors in priority and broiler meat) and development of consultation frameworks agricultural (Foundation) sectors 4.44  Building of the technical and management capacity of 10 ATCs of villages situated in the three agricultural zones (irrigated, lowlands, rain- fed) – Saemaul Foundation  Establishment of an information system for use by FOs (e-farmers, e- aggregation, e-inputs, e-services, etc., ADF)  Increased access to financing by FOs (guarantee fund)  Training and TA of state workers on the Saemaul Foundation approach

Components Cost CFAF M) Description of the Components C2/ Strengthening central and decentralised services  Training and technical assistance from State services (with ICAT) in the participatory, gender, nutrition and local development approach  Implementation of the safeguards included in the SESA: (i) Preparation of a resettlement policy framework; (ii) Preparation of a wastewater and solid waste management blueprint; (iii) Preparation of an environmental best practices manual; (iv) Implementation of the Environmental and Social Impact Assessment Plan (ESMP) and pesticide management plan; (v) Environmental and social baseline situation  Monitoring implementation of the Environmental and Social Management Plan ESMP (ANGE), RAP (ANGE) and PGPP (ANGE)  Procurement of motorcycles and computer equipment (agricultural regional administration) D/Coordination, 5.30  Steering and coordination management,  Procurement monitoring and  Administrative, financial and accounting management evaluation  Monitoring and evaluation (M&E)

2.2 Technical Solutions Adopted and Alternatives Explored

2.2.1 The aim of the Togo PTA is to contribute to the transformation of Togolese agriculture to achieve inclusive agricultural growth that would reduce poverty and food imports and also create jobs. Expected investments would come from both public funds (to attract private investments) and private funds (including in the processing of agricultural products, supply of inputs and agricultural services), to ensure better integration of import substitutes (rice, maize, soybean, broiler meat) and exports (cashew nuts and sesame). The measures envisaged under this innovative project include: (i) establishment of a conducive political, regulatory and institutional framework that would attract direct private financing and also facilitate access to financing for small and medium-sized enterprises (SMEs) and cooperatives (insurance funds and technical support for banks); (ii) development of an Agro-park, including roads and main networks (clean water, electricity, sanitation and ICTs) in order to facilitate the establishment by private parties of processing units, agricultural services and access to inputs; (iii) rehabilitation of access roads to production areas and markets, fully connected to regional and national road networks; (iv) establishment of Agricultural Transformation Centres in 10 village centres (aggregation of harvests, supply of inputs and services, capacity building, financing, etc.); and (v) construction of mini-dams (2) and conduct of detailed studies for other infrastructure (irrigated areas, developed lowlands, partial control of water in rain-fed areas), while waiting for the mobilisation of additional financing (including green climate funds). The project will also cover the costs of detailed studies on the construction/equipping of basic social infrastructure needed to develop economic activities and improve the living conditions of the local population (drinking water and electricity). The capacity building segment for actors (beneficiaries, State services, training and research centres) will be implemented through a participatory approach, with the support of the Saemaul Foundation. The costs related to the implementation of the Environmental and Social Impact Assessment Plan (ESMP) will be fully supported by the project.

Table 2.2: Alternatives Explored and Reasons for Rejection

Alternatives Short Description Reason for Rejection

Implement a Finance the  The State has neither the intention nor the resources to traditional project development of invest sustainably in tools to increase agricultural to support the agricultural production improvement of production  The sustainable increase in agricultural production is agricultural infrastructure and only possible if sufficient private investments are production equipment mobilised for processing and marketing Finance only Exclude from the  The sharp drop and even stoppage of river water flow partial water project the represents a major risk, especially for rice control in the construction of dams  Drilling capacities are too low; only one dam may be project and irrigated areas able to permanently supply water to the Agro-park

2.3 Project Type

2.3.1 The Togo-PTA is a public investment project which aims to create the requisite conditions for boosting private investments in six priority areas, in particular in the processing of agricultural products, supply of inputs and provision of agricultural services and marketing.

2.4 Project Cost and Financing Arrangement

2.4.1 Project cost: The total project cost is estimated at UA 45.07 million (CFAF 35.19 billion), net of taxes and custom duties. The cost is broken down as follows: UA 25.53 million (CFAF 19.94 billion) in foreign exchange and UA 19.53 million (CFAF 15.26 billion) in local currency. It comprises provisions for physical contingencies and price escalation estimated at 2% each, on average. The provision for price escalation was estimated based on the current and projected levels of inflation of the cost of the local currency and the foreign exchange at 2% and 1.5% per year, respectively, on average. The provision for physical contingencies is estimated at between 0% and 3%. A summary of the estimated project cost by component and by expenditure account is presented in Tables 2.3, 2.4 and 2.5 below, while the details are provided in the Technical Annex to the project appraisal report.

Table 2.3: Summary of estimated costs by component (CFAF million) (UA '000) PROJECT COMPONENTS Local Foreign Local Foreign % % currency exchange Total exchange currency Total Dev. C.B A. SUPPORT POLICY, GOVERNANCE & CAPACITY BUILDING 2 379.97 1 457.20 3 837.17 3 047.53 1 865.94 4 913.47 38 11 Support policies & improvement of ZTA operational framework 633.97 583.20 1 217.17 811.79 746.79 1 558.58 48 4 Establishment of ZTA governance system 488.00 672.00 1 160.00 624.88 860.49 1 485.37 58 3 Strengthening of State and non-State public institutions 1 258.00 202.00 1 460.00 1 610.86 258.66 1 869.52 14 4 B. DEVELOPMENT OF PROCESSING AND ACCESS INFRASTRUCTURE 7 214.96 15 457.40 22 672.35 9 238.69 19 793.08 29 031.77 68 67 Kara (Broukou) Agro-park infrastructure 2 150.81 4 896.06 7 046.87 2 754.10 6 269.37 9 023.46 69 21 Access to input infrastructure and agricultural services 1 279.64 2 975.84 4 255.48 1 638.57 3 810.54 5 449.11 70 13 Production support infrastructure /b 3 784.50 7 585.50 11 370.00 4 846.02 9 713.17 14 559.20 67 33 C. STAKEHOLDER CAPACITY BUILDING 2 425.82 1 019.40 3 445.22 3 106.24 1 305.33 4 411.57 30 10 Producers of key sectors 2 150.81 4 896.06 7 046.87 2 754.10 6 269.37 9 023.46 69 21 Rural communities 1 279.64 2 975.84 4 255.48 1 638.57 3 810.54 5 449.11 70 13 Central and decentralised services 3 784.50 7 585.50 11 370.00 4 846.02 9 713.17 14 559.20 67 33 D. PROJECT MANAGEMENT & COORDINATION 2 797.70 1 244.84 4 042.55 3 582.44 1 594.01 5 176.45 31 12 TOTAL BASE COST 14 818.45 19 178.84 33 997.28 18 974.91 24 558.35 43 533.26 56 100 Physical contingencies 169.83 338.20 508.03 217.46 433.06 650.53 67 1 Financial contingencies 267.15 421.86 689.02 342.09 540.19 882.28 61 2 TOTAL PROJECT COST 15 255.43 19 938.90 35 194.33 19 534.46 25 531.61 45 066.07 57 104

Table 2.4: Summary of project costs and expenditure categories

(CFAF million) (UA '000) EXPENDITURE CATEGORIES Local Foreign Local Foreign % % currency exchange Total currency exchange Total Dev. C.B I. Investment costs 12 371.80 18 667.24 31 039.04 15 841.99 23 903.26 39 745.25 60 91 A. WORKS 6 170.21 14 397.15 20 567.35 7 900.90 18 435.43 26 336.33 70 60 Dams and development schemes 3 000.00 7 000.00 10 000.00 3 841.48 8 963.45 12 804.92 70 29 Infrastructure 2 960.21 6 907.15 9 867.35 3 790.52 8 844.55 12 635.07 70 29 Construction and rehabilitation 210.00 490.00 700.00 268.90 627.44 896.34 70 2 B. GOODS\a 431.97 867.38 1 299.35 553.14 1 110.67 1 663.81 67 4 Vehicles 57.00 171.00 228.00 72.99 218.96 291.95 75 1 Equipment, materials and inputs 374.97 696.38 1 071.35 480.15 891.71 1 371.86 65 3 C. SERVICES\b 3 442.27 3 402.72 6 844.99 4 407.80 4 357.15 8 764.96 50 20 Training 1 149.52 766.35 1 915.87 1 471.95 981.30 2 453.25 40 6 Technical assistance 213.75 1 211.25 1 425.00 273.71 1 551.00 1 824.70 85 4 Studies 1 160.25 1 088.87 2 249.12 1 485.69 1 394.29 2 879.98 48 7 Various studies 641.70 784.30 1 426.00 821.69 1 004.29 1 825.98 55 4 Preparation advance 518.55 304.57 823.12 664.00 390.00 1 054.00 37 2 Contractual services 885.00 295.00 1 180.00 1 133.24 377.75 1 510.98 25 3 Audits 33.75 41.25 75.00 43.22 52.82 96.04 55 - D. MISCELLANEOUS 2 327.35 - 2 327.35 2 980.15 - 2 980.15 - 7 II. Recurring costs 2 446.65 511.60 2 958.25 3 132.92 655.10 3 788.01 17 9 A. PERSONNEL 1 572.00 - 1 572.00 2 012.93 - 2 012.93 - 5 B. TRAVEL EXPENSES 407.43 - 407.43 521.70 - 521.70 - 1 C. MAINTENANCE, OPERATIONS & REPAIRS 295.10 454.22 749.32 377.87 581.63 959.50 61 2 D. OVERHEAD EXPENSES 172.13 57.38 229.50 220.40 73.47 293.87 25 1 TOTAL BASE COST 14 818.45 19 178.84 33 997.28 18 974.91 24 558.35 43 533.26 56 100 Physical contingencies 169.83 338.20 508.03 217.46 433.06 650.53 67 1 Financial contingencies 267.15 421.86 689.02 342.09 540.19 882.28 61 2 TOTAL COST OF THE PROJECT 15 255.43 19 938.90 35 194.33 19 534.46 25 531.61 45 066.07 57 104

Table 2.5: Schedule of expenditures by component (in UA thousand) PROJECT YEARS COMPONENTS Total 2017 2018 2019 2020 2021 A. SUPPORT POLICIES, GOVERNANCE & INSTITUTIONAL CAPACITY BUILDING 2 646.68 1 611.11 710.68 7.12 7.21 4 982.79 Support policies & improvement of ZTA operational framework/a 1 392.21 125.88 39.13 7.12 7.21 1 571.55 Establishment of ZTA governance system 714.67 643.71 171.23 - - 1 529.61 Strengthening of State and non-State public institutions 539.80 841.51 500.31 - - 1 881.62 B. DEVELOPMENT OF PROCESSING AND ACCESS INFRASTRUCTURE 3 418.78 11 660.38 14 583.38 677.02 - 30 339.56 Kara (Broukou) Agro-park infrastructure 475.53 3 472.24 4 830.56 677.02 - 9 455.35 Access to input infrastructure and agricultural services 2 443.54 2 072.12 1 127.76 - - 5 643.42 Production support infrastructure/b 499.70 6 116.02 8 625.07 - - 15 240.79 C. STAKEHOLDER CAPACITY BUILDING 1 382.98 1 312.24 1 070.38 336.94 337.45 4 439.97 Producers in key sectors 926.07 1 134.61 926.61 301.52 301.52 3 590.32 Rural communities 60.33 74.47 61.98 21.80 22.11 240.68 Central and decentralised services 396.58 103.16 81.79 13.62 13.82 608.97 D. PROJECT MANAGEMENT 2 110.66 873.57 828.69 743.00 747.83 5 303.74 TOTAL COST OF PROJECT 9 559.08 15 740.07 17 479.64 1 764.07 1 092.49 45 635.35

2.4.2 Financing Mechanism: The project will be financed by an ADF loan and grant, a TSF loan, BOAD and the Korean Fund, to the tune of UA 8.04 million (17.8%), UA 4.635 million (10.3%), including the PPF refund of UA 995,000; UA 8.32 million (18.5%), CFAF 10 billion (UA 12.8 million), USD 5.068 million (UA 3.52 million), respectively, and the Togolese Government to the tune of CFAF 6.046 billion, (including the PPF counterpart of CFAF 46.08 million). The breakdown of expenditure by source of financing and according to the list of goods and services is presented in Table 2.6.

Table 2.6: Project financing plan (CFAF Million) (UA '000) SOURCE OF Local Foreign Local Foreign % FINANCING Currency Exchange Total Currency Exchange Total ADF loan 1 887.43 4 391.41 6 278.83 2 416.84 5 623.16 8 040.00 17.8 TSF loan 2 250.64 4 246.86 6 497.50 2 881.93 5 438.07 8 320.00 18.5 ADF grant 2 374.41 1 245.30 3 619.70 3 040.41 1 594.59 4 635.00 10.3 BOAD 3 331.70 6 668.30 10 000.00 4 266.21 8 538.71 12 804.92 28.4 Korean Fund 2 122.27 629.95 2 752.22 2 717.55 806.64 3 524.19 7.8 State of Togo 3 288.99 2 757.09 6 046.08 4 211.52 3 530.43 7 741.95 17.2 Total 15 255.43 19 938.90 35 194.33 19 534.46 25 531.61 45 066.07 100.0

2.5 Project Area and Beneficiaries

2.5.1 In the 2016-2020 Agricultural Development Programme, 10 ZTAs or ‘agropoles’ were identified among the priorities to be financed over the next 15 years. Ongoing studies on the Project Preparation Fund (PPF) are concentrated in the Kara region, which is deemed a priority by the Government, considering the current level of poverty, the high agricultural potential (rice in particular), the opportunities in terms of synergy offered by ongoing projects (PARTAM, PBVM, PDRI-Mô and PDRD) and the presence of a dynamic private sector (including the Kalyan Group). The project covers the Bassar, Doufelgou, Dankpen and Kéran prefectures in the Kara region, located between latitudes 9° 00’ and 10° 00’ North and between longitudes 0°15’ and 1°45’ East.

2.5.2 The population of the Kara region comprises 769,940 inhabitants distributed as follows: 184,693 inhabitants in urban areas and 585,247 inhabitants in rural areas. The activities envisaged for the project will affect about 303,419 people directly, of whom 151,710 will be

women. The population that would be indirectly affected is estimated at around 769,000 people (51% women).

2.6 Participatory Approach for Project Identification, Design and Implementation

2.6.1 The project formulation was facilitated by the establishment of an Inter-Ministerial Steering Committee involving all stakeholders. Discussions between the key players (private sector, OPAs, banks, etc.) and the Bank’s mission continued during private investment promotion days in the Kara region, held on 5 and 6 April 2018 by the Chamber of Commerce and Industry of Togo (CCIT) and the National Council of Employers (CNP). Targeted meetings were held with the private sector, including with the Kalyan Group, which has applied for a loan from the Bank’s private sector window to finance its planned investments in the Agro-park for sesame and cashew nuts. Several meetings were also held with TFPs including the World Bank, the French Development Agency, GIZ, UNIDO and FAO. At the local level, the people and local chiefs were involved and their expectations on major issues have been addressed including the issue of compensation for impacted persons. Awareness and information campaigns for various social groups (men, women and young people) were conducted throughout the project formulation process.

2.6.2 The consultation momentum that emerged during the project preparation phase will be maintained during the implementation phase through: (i) an APRODAT steering entity comprising representatives of major stakeholders (including the private sector and civil society); (ii) technical assistance to strengthen the APRODAT; (iii) participatory approach selected for the implementation of activities to be funded by, among others, the Saemaul Foundation; (iv) the results-based and project impact monitoring and evaluation mechanism; and (v) joint supervision missions. Special efforts will be made during project implementation to ensure that women participate in all forms of consultation undertaken under the project.

2.7 Bank Group Experience and Lessons Reflected in Project Design

2.7.1 The current portfolio consists of 13 operations for a total commitment of UA 212.71 million spread across ten national operations of UA 102.81 million (48.33%) and three multinational operations of UA 109.90 million (67.88%). The main sectors are transport (75.55%), economic and financial governance (13.88%), and the social sector (8.77%). The portfolio’s performance is deemed satisfactory, with an average age of two years (more than 50% of the projects approved between 2015 and 2017). The conditions precedent to the first disbursement under the loan and grant agreements were fulfilled in time for all the portfolio’s projects.

2.7.2 The CSP 2011-2015 completion report shows that implementation of the Bank’s assistance strategy is positive overall. The two regional road projects helped to create 5,000 temporary jobs and 750 permanent jobs and improve traffic flow through a fivefold reduction in travel times in some large cities. The Bank’s support in governance enabled the Government to: (i) operationalise the Court of Auditors; (ii) produce management accounts by the Public Treasury; (iii) improve the public procurement process; (iv) adopt trade and transport facilitation measures: and (v) establish the Togolese Revenue Board.

2.7.3 Lessons learned from the implementation of the previous CSP, the IDEV long-term evaluation report (sixth selectivity criterion) and periodic reviews of the CSP brought to light recurring difficulties relating to counterpart resource mobilisation, slow pace of the procurement

process, disbursement red tape, and weaknesses in quality-at-entry of operations. Several project design measures were therefore taken, including: (i) mobilisation of PPF resources to finance the feasibility studies; (ii) allocation of an amount of CFAF 206 million in the State budget for 2018; (iii) signing of a decree establishing the APRODAT and appointing the Board of Directors; (iv) use of advance procurement action; (v) inclusion of poor people (including women) and protection of the environment; and (vi) synergy of inter-sector interventions (energy, transport, water, telecommunication).

2.7.4 The measures that have been taken into account in the project’s design, with a view to accelerating its implementation, are as follows: (i) mobilisation of PPF resources to finance feasibility studies (development of the Agro-park, dams and irrigation schemes, rural roads, DWS) and the preparation study; (ii) the establishment, since December, of a Preparation Monitoring Committee co-chaired by the Bank's Office and the Office of the Prime Minister, which meets weekly; (iii) inclusion of an amount of CFAF 206 million in the 2018 State budget; (iv) signing of the Decree establishing APRODAT and the appointment of members of the Board of Directors and the acting Director General of the Agency; and (v) use of advance procurement (including for the recruitment of project staff); (vi) ongoing appraisal of a financing request submitted by the main private investor (Kalyan Group) (vii) inclusion of destitute populations (including women) and environmental protection through SESA and (viii) synergy of inter-sector interventions (energy, transport, water, telecom).

2.8 Key Performance Indicators

2.8.1 The key performance indicators such as those presented in the project’s logical framework are the following: Impact indicators (i) level of household food security; (ii) value of food imports per capita; (iii) percentage of the population living below the poverty line (less than USD 1.90/day) (iv) percentage of children suffering from chronic malnutrition (including girls); Output indicators: (i) share of agricultural production from the region processed in situ; (ii) number of direct and indirect jobs created/strengthened (including 50% women); (iii) trend of yields of priority sub-sectors (rice, maize, soybean, sesame, cashew nuts); (iv) rate of household access to basic social services (electricity, roads); (v) Volume of private investment catalysed in agribusiness in the Kara region; Output indicators: (i) % of partner FI portfolios invested in agriculture by Banks and MFIs; (ii) Number of dams constructed (capacity in m3); (iii) Number of ATCs built and strengthened; (iv) Number of km of rehabilitated roads; (v) Financing volume mobilised by the private sector; (vi) level of people’s access to a civil status document (including 70% women).

III. PROJECT FEASIBILITY

3.1 Economic and Financial Performance

3.1.1 The project is designed to generate a minimum of eight (8) types of benefits: (i) increased value added of cashew nuts by boosting their productivity from about 36.8 kg/tree to about 73.5 kg/tree, representing a yield improvement from 368 kg/hectare to 735 kg/hectare; for an area of 3,027 hectares (including new trees covering 1,500 hectares), production is likely to reach 2,229 tonnes/year; (ii) processing of cashew nuts into higher value-added products such as almonds, cashew nut juice and biogas; (iii) additional farm products from sesame and soybean; (iv) enhancement of most of the agricultural production benefitting from the facilities and climate regulation function of forest cover created by cashew trees, particularly for rice and maize; (v) improvement of the people’s welfare by preventing drought and hunger, boosting food security, reducing labour insecurity for families and in particular for women and vulnerable

groups, improving the people’s life expectancy, increasing their income to allow them to have access to health care and education, etc.; (vi) improvement of animal production and livestock breeding owing to the quality and abundance of pasture and water; (vii) effects of carbon sequestration (carbon credit); and (viii) creation of temporary and permanent jobs resulting from the benefits generated by the project.

3.1.2 Financial Analysis: A significant part of the impacts listed above are not subject to commercial transactions, or are not even tangible and, therefore, do not lend themselves to financial performance analysis, based on existing markets. Under these conditions, it was not deemed relevant to include them in a quantitative analysis, based on the production model or income-generating-activity approach. Nonetheless, it was possible to carry out a FARMOD analysis based on the following five (5) models: (i) cashew nut production; (ii) rice production resulting from the development of the Agro-park; (iii) maize production; and (iv) soybean production.

3.1.3 In light of the above, the financial analysis related to the dividends from agricultural production was conducted for the cashew nut production and processing models, as well as for the crops mentioned above. The operation cycle is 25 years.

3.1.4 The financial analysis led to the following results: (i) a financial impact of about CFAF 4.45 billion per year as of the fourth year of operation projected over 25 years, in line with similar operations, depending on the lifespan of the investments; this means that the financial dividends from the project over the operating period exceed the cost of investment needed for its financing; (ii) a cost/benefit ratio of 1.48, meaning that the benefits are higher than the cost of investments; (iii) an internal rate of return of 23.84%, which is higher than the capital opportunity cost (capital cost of financial resources for investments under the project) estimated at 12%. Based on these results, it can be concluded that Togo’s PTAT has a rate-of-return profile that offers a financial justification for the cost of the project’s investments.

3.1.5 Economic Analysis: The economic analysis was conducted using the reference price method, namely prices under economic efficiency conditions, in accordance with the “Pareto” optimum criterion. It was also conducted based on a comparison between the “without project” and the “with project” scenarios of the production models discussed in the financial analysis. In this model, cashew nuts were considered a tradeable commodity, meaning that they could be traded outside the country (FOB delivery at the port and CIF delivery at the Hamburg Port). Under these conditions, the reference price of cashew kernels (economic price) is evaluated based on the ex-ante balance of this crop to obtain the export-parity farm gate price. Labour was estimated at 65% of its financial value of CFAF 1,000/day, considering the inelasticity of demand for labour in the country as a whole and in the project area in particular.

3.1.6 Based on realistically defined assumptions, the project’s economic rate of return is estimated at 23.91%, with a cost/benefit ratio of 2.14. Consequently, the overall rate of return of the project may be deemed satisfactory in light of these results.

3.1.7 Sensitivity Analysis: The sensitivity tests conducted based on a reduction in production prices helped to measure the stability of the financial and economic performance indicators. The tests show that prices will have to be reduced to 27.20% (profitability threshold) to offset the additional financial and economic benefits generated at the financial and economic levels respectively, with the IRR and ERR equivalent to the opportunity cost of capital, or 12%. This test shows that the project’s rate of return is robust, although it was not performed on all endogenous values of the model. Nonetheless, the price variable is more significant, being the only

variable that is not subject to the management, and hence operation, of the project. A summary of the sensitivity analysis is presented in the annex to the report.

3.2 Environmental and Social Impact

3.2.1 Environment

3.2.1.1 In accordance with the requirements of the Integrated Safeguards System (ISS), the project was classified in Category 1, considering the scope of its environmental and social impacts. A strategic environmental and social assessment (SESA) was conducted to ensure that the incidence of the future activities carried out in the project area are already taken into account and possible mitigation measures have been identified. The SESA was approved by the Togo National Environmental Management Agency (ANGE) on 23 February 2018. A summary of the study was published on the AfDB website on 27 February 2018.

3.2.1.2 The SESA will be implemented taking into account the AfDB and BOAD safeguards policies and will be in conformity with the environmental laws of the Republic of Togo for each activity to be developed on the site. In that regard, environmental and social impact assessments (ESIAs), resettlement action plans (RAPs) and pest and pesticide management plans (PPMPs) are being prepared to study in more detail the impact of the Agro-park infrastructure, the infrastructure of the production area (dams, rural roads, irrigated areas, developed lowlands and social infrastructure), and the electricity and telecommunication line.

Positive Environmental Impacts

3.2.1.3 From an environmental standpoint, the project will contribute to: (i) improved control of water resources in the three agricultural zones (water-fed, lowlands and irrigated) and of their availability throughout the year (thanks to mini-dams, among other things); (ii) flood risk management (effects on flooding); (iii) creation of wet zones conducive to the development of biodiversity; (iv) restoration of the plant cover of the hills located near the facilities and protection of the natural habitats and banks of the water courses on which dams are built; and (v) development of the biomass through the production of steam or any other type of energy from agricultural by-products (cashew nut shells, etc.).

Negative Environmental Impacts

3.2.1.4 The SESA revealed the most significant negative impacts that might be generated during construction and operation of the project, namely: (i) loss of biodiversity; (ii) ecological fragmentation; (iii) disruption of fish habitats; (iv) degradation of air quality; (v) greenhouse gas emissions; (vi) water pollution; (vii) soil pollution through the contamination of chemical inputs; and (viii) production of solid waste and waste water. Several mitigation measures have been proposed to contain the negative impacts, including standard measures to be implemented during construction of infrastructure (watering, compensatory reforestation, awareness-raising, waste management plan, etc.) and specific measures to be taken during the operation phase. The SESA has established appropriate lists of mitigation measures as well as occupational health and safety measures for each product line. For each specific impact assessment to come, a detailed Environmental and Social Management Plan (ESMP) will be prepared based on these indications. A social and environmental management plan (ESMP) will also be developed to promote the provision of resources and the establishment of a framework conducive to the identification, management and monitoring of the project’s impacts, while observing the Bank’s safeguards measures.

3.2.2 Social

Positive Social Impacts and Enhancement Measures

3.2.2.1 At the local level, the beneficial effects of the PTA relate to: (i) development of intensive agricultural activities in the project area; (ii) creation of direct and indirect jobs, especially for young people; (iii) technical education for farmers through training and internships; (iv) development of the primary sector (livestock farming, agriculture, fishery, etc.); (v) opening-up of the main production centres; (vi) strengthening of means of transport (production roads) and means of storage (stores); (vii) increase in gross income per farmer; and (viii) increase in the people’s purchasing power as a result of improved nutritional intake and living conditions of households. At the national level, the project will help to boost food production, especially rice production, and reduce rice imports.

3.2.2.2 Enhancement measures have been built into the PTA. The project will support the construction of social infrastructure to improve the people’s living conditions through: (i) the conduct of comprehensive studies on the establishment and rehabilitation of mini-drinking water supply (DWS) systems; (ii) long-term electrification of village centres; (iii) implementation of various activities to build the capacities and facilities of the 10 village centres; and (v) installation of 5,000 improved fireplaces, and reforestation.

Negative Social Impacts

3.2.2.3 The major social, economic, security and health impacts are as follows: (i) physical or economic displacements; (ii) loss of tangible and intangible cultural heritage, (iii) nuisances such as noise and dust during construction work; (iv) increase in the incidence of endemic, parasitic, water-borne and sexually transmitted diseases; (v) increased risks of accident during construction works: (vi) social disturbances and conflicts due to a population influx and deepening of social disparities; and (vii) increased competition for the use of resources. Just like for the environmental impacts, mitigation measures have been proposed to manage the negative social impacts. These measures involve compensation for the affected population, education on health, security and work schedules, supply of individual protective equipment (IPE), arrangement of work schedules and detour routes, etc. These measures will be included and explained in detail in the Environmental and Social Management Plan (ESMP) of upcoming impact assessments. The Environmental and Social Management Master Plan (ESMMP) includes strategic measures for the management of social and environmental impacts.

3.2.3 Environmental and Social Management Master Plan

3.2.3.1 SESA provides for strategic environmental and social measures to create a framework for identifying, managing and monitoring project impacts. These measures concern: (i) strengthening the political, institutional, environmental and social framework (implementing texts dealing with the SESA); (ii) sound knowledge of the area (baseline situation); (iii) management of natural resources; (iv) surveillance, monitoring and evaluation; and (v) training of actors involved in environmental and social management and education of the people. The implementation of these measures will be supported by the APRODAT and the relevant State entities. Implementation of the ESMMP will be under the responsibility of the APRODAT, which will recruit an Environmental Expert and a Social Development Expert. The implementation of the ESMMP will be monitored by various technical services under the coordination of the ANGE. The total cost of the environmental and social strategic measures is CFAF 486,000,000, which has already been taken into account.

3.2.4 Involuntary Resettlement

3.2.4.1 Resettlement action plans are being prepared for the Agro-park and rural infrastructure. Based on the estimate of land area that will be affected and the value of the land in the area, a provision of CFAF 800 million has been set aside to compensate affected persons. A resettlement master plan will also be prepared as part of the project. Although it is not a tool proposed by the Bank’s ISS, the resettlement policy framework (RPF) is required as a precaution, to specify the procedure by which land that is not currently affected by the project will be developed subsequently.

3.2.5 Climate Change

3.2.5.1 Togo and the Kara region are facing severe deforestation related to tree-cutting for farming and alternative income-generation needs. The rate of deforestation is about 15,000 hectares/year, compared with a reforestation rate barely exceeding 3,000 hectares/year. This situation exacerbates the problem of climate change by depleting carbon stock. The PTA also has the potential to contribute to greenhouse gas emissions, owing to tree-cutting for the farmland development, rice production and building of dams.

The PTA economic model will help to strengthen climate resilience through less-carbon-emitting activities throughout the agricultural production chains. These activities will involve: promotion of diversified agro-ecological systems and application of green technologies for waste management, as well as production of renewable energy that helps to reduce greenhouse gas emissions. The potential impacts are the following: (i) reduction of deforestation; (ii) increase in farmers’ incomes; (iii) enhanced food and nutrition security in the communities; (iv) soil productivity; (v) waste management through organic composting; (vi) employment of women and young people; (vii) use of improved, drought-resistant grains and seeds; and (viii) improved management of water resources.

3.2.6 Gender

3.2.6.1 According to the 2010 general population census, the Togolese population comprised 48.6% men and 51.4% women, while the rural population, which lives essentially on agriculture, comprises 48.8% men and 51.2% women. The project area is one of the poorest, with a fairly visible impact on women and children. Women are involved in most of the product lines: rice, soybean, sesame, maize. Land insecurity, access to improved seeds, equipment and markets to sell their crops are major problems for women in the area.

3.2.6.2 The following measures and actions will be taken to boost the role of women and maximize their contribution to the project: (i) grouping of women farmers by food product line (rice, maize, soybean and sesame); (ii) allocation of at least 30% of developed land to groups of women farmers; (iii) allocation of a 30% quota, at least, for women industrial promoters in the CTA; (iv) facilitation of women’s access to modern agricultural production and processing equipment: inputs (seeds, fertilizers and phytosanitary products), processing materials and equipment (rice parboiling, maize husking); (v) building of the entrepreneurial capacities of women’s groups in the production, storage, processing, packaging and marketing of agricultural products; (vi) building of women’s capacities in business plan preparation, marketing and networking for the market and access to financing; (vii) facilitation of access to basic services, such as water and electricity; and (viii) facilitation of the process of obtaining civil status documents, such as identification and nationality cards. The budget to be allocated for specific gender promotion and women’s empowerment activities is UA 7.2 million. The project is

classified under category 2, according Gender Marker System. For a detailed gender analysis of the entire value chain and the budget for implementation of the gender component, see Annex B.7.

IV. PROJECT IMPLEMENTATION

4.1 Implementation Arrangements

4.1.0 The PTA-Togo will be implemented by the Agency for the Promotion and Development Agropoles in Togo (APRODAT) which was established by Decree No. 2018- 036/PR of 27 February 2018 to steer the implementation of the Togo Agropoles Strategic Development Plan. The Ministers responsible for Agriculture and Industry respectively will provide joint supervision of APRODAT which has two organs: (i) a Board of Directors, chaired by the Prime Minister, and comprised of seven active members (public and private) and observer members, and (ii) a Directorate General (DG). The Board of Directors will meet quarterly to review and approve the work programme and activity reports. The Directorate General to be set up with project support will eventually comprise five Directorates: the Directorate of Legal, Administrative and Financial Affairs, the Directorate of Forecasting, Planning, Monitoring and Evaluation, the Directorate of the Promotion of Financing and Investments, the Directorate of Facilities and Works Control and the Directorate of Training, Research and Development. A team of experts will be recruited to build APRODAT's capacity, particularly in the implementation of the PTA. This team, under the responsibility of the Director General, PTA Coordinator, will include: an Administrative and Financial Officer, an Accountant, an Agro- Industry Specialist, an Investment Specialist, a Monitoring and Evaluation Specialist, a Procurement Specialist, a Rural Infrastructure Specialist, an Agronomist (Development), an Environment and Social Specialist, a Social Development Specialist, a Legal Officer, an Internal Auditor and Specialist in Organisation Management, Gender and Capacity Building. The PTA implementation team will be supported by a Project Assistant and Drivers. Similarly, the Project will support APRODAT in partially covering equipment and personnel costs and in setting up the administrative, financial and accounting management system required for the project financed by the Bank. In accordance with the provisions of the Presidential Decree establishing APRODAT, the entity in charge of promoting and managing the Kara Agro-park will be managed as a semi-public company involving the State and the private sector and will therefore have administrative, financial and accounting management autonomy.

4.1.1 Procurement Arrangements

4.1.1.1 The procurement of goods (including non-consultancy services), works and consultancy services, financed by the Bank as part of the project, will be carried out in accordance with the Procurement Framework for Bank Group-Funded Operations, October 2015 edition and the provisions set out in the Financing Agreement. More specifically, the procurements will be carried out as follows:

 Borrower’s Procurement System (BPS): Procurement methods and procedures (PMP) based on Togo's procurement system including its laws and implementing decrees (Law No. 2009-013 of 30 June 2009 and implementing Decree No. 2009-277/PR of 11 November 2009 relating to the Public Procurement Code as well as its subsequent implementing decrees and texts), based on standard national competitive bidding documents (SNCBDs) or other bidding documents as approved during project negotiations for works and low-complexity goods contracts provided for in the project and generally available in Togo.

 Bank Procurement Methods and Procedures (BPM): The Bank's standard BPM, based on the relevant standard competitive bidding documents (SCBDs) for major and more complex works and goods contracts, as well as consultancy services, deemed to be the most appropriate. Given the delays in procurement and in order to limit their impact on project implementation, the Government submitted to the Bank a request to use advanced procurement action (APA) to make procurements for: (i) the recruitment of APRODAT's key project implementation staff (Director General, Administrative and Financial Officer, Accountant, Agribusiness Specialist, Investment Officer, Procurement Specialist, Legal Officer And Internal Auditor, Specialist in Environmental and Social Issues, Rural Infrastructure ,Specialist, Specialist in Organisation Management, Gender and Capacity Building); (ii) procurement of APRODAT furniture and office equipment provided for under the project; (iii) the recruitment of a consulting firm for the development of a summary preliminary design and a detailed preliminary design of Agro- Park facilities; and (iii) the recruitment of a consulting firm for the development of the detailed preliminary designs for studies on small dams/irrigated areas and roads ; and (iv) procurement of office furniture for APRODAT and the Kara Agro-Park Management Company.

4.1.1.2 Procurement Risk and Capacity Assessment (PRCA): The assessment of country, sector and project risks as well as of the capacity of the executing agency (EA) for procurement purposes was conducted1 for the project and the outcomes served to guide the decision on the choice of procurement system (Borrower or Bank) used for specific activities or for all similar project activities. The Project Executing Agency is the Agency for the Promotion and Development Agropoles in Togo (APRODAT) which is a public institution with legal personality and management autonomy. It is under the joint supervision of the Ministries responsible for Agriculture and Industry. APRODAT is not fully operational because only the Board of Directors and the acting Director General have been appointed and therefore the procurement risk is deemed "high". In fact, APRODAT does not yet have procurement bodies (Procurement Officer, Public Procurement Board and Procurement Control Board), while staff members have not yet been appointed or recruited, particularly the Procurement Specialist, dedicated to the Project and having the required qualifications and experience. In order to reduce the risk to "low", APRODAT will have to recruit a Procurement Specialist and set up procurement bodies. Moreover, the Bank will finance technical assistance in which procurement will be taken into consideration. The Borrower and the Bank will agree on a procurement plan for the first 18 months of the Project, which will be updated annually or as needed, in order to reflect the actual project implementation needs. Any revision of the plan will be subject to prior approval by the Bank. Appropriate risk mitigation measures have been included in the PRCA action plan outlined in paragraph B.5.9 of Annex B5.

4.1.2 Financial Management and Disbursement Arrangements

4.1.2.1 Established on 27 February 2018, APRODAT is in the process of being set up. Whereas the Board of Directors which will act as the PTA Steering Committee has been appointed pursuant to Decree No. 2018/036/PR of 27 February 2018, and its Chairman appointed Acting Director General, it will be necessary to wait for the recruitment of financial management staff and the establishment within APRODAT of an operational financial management system to ensure full transparency, traceability and accountability in the use of PTA funds. To this end, the Togolese Government will have to take the following actions:

1 See the Technical Annexes for more details

(i) Completion of the organisation chart in accordance with the principles of internal oversight, particularly the separation of incompatible functions, and the appointment of the heads of services making up the directorates mentioned in the Decree, especially those of the directorates involved in the implementation of the SCPP (Administrative and Financial Officer, Accountant, Procurement Officer, etc.);

(ii) Development of the administrative, financial and accounting procedures manual, on which its internal oversight system will be based, covering all management cycles: expenditure management cycle (procurement procedures for goods and services), asset management cycle (fixed assets, inventories, etc.), cash management cycle (scheduling, disbursement, cash monitoring and control, etc.), resource mobilisation cycle (fundraising, direct payments, etc.), accounting, financial and budgetary information cycle, personnel management cycle, control and internal audit cycle;

(iii) Development, where appropriate, of an operations manual for facilitation and financial intermediation activities (access of processing units to financing);

(iv) Establishment of an integrated multi-project and multi-user management system to ensure the keeping of budgetary, analytical and general budget accounts. General accounting has to be a private accrual accounting system, applying the SYSCOHADA standards and taking into account the specific features of development projects;

(v) Establishment of internal audit mechanisms, with the recruitment of an Internal Auditor who will ensure that the SCPP control system is operational and effective; and

(vi) Establishment of external audit mechanisms through the hiring of independent external auditors on a competitive basis and in accordance with the terms of reference agreed with the Bank, in line with the Bank's requirement that audit reports be submitted no later than 30 June of the year following the year audited.

4.1.2.2 Pending the establishment and operationalisation of APRODAT, the overall fiduciary risk, incorporating the inherent risk and the risk of non-control resulting from the evaluation of the agency’s financial management capacity, will remain high. Details are provided in the Technical Annexes of the Appraisal Report.

4.1.2.3 Disbursements: Bank financing will be mobilised in accordance with the rules and procedures of the Bank Disbursement Manual through the three disbursement methods: (i) direct payment (for the procurement of works, goods and services and other relatively high-cost expenditure...); (ii) the special account (mainly for operating expenditure); and (iii) reimbursement, where appropriate.

4.2 Project Monitoring and Evaluation

4.2.1 Technical and Financial Monitoring. The Project Monitoring and Evaluation Officer appointed from within the project management unit will be responsible for collecting, analysing and compiling information on physical achievements and financial execution. For this purpose, he/she will have a roadmap with quantitative indicators on Project progress, relating to implementation of the sub-components. Such monitoring will make it possible to obtain, every six months, the following information for each activity: physical objective, achievement level, expected costs, actual costs, differences and explanations for possible deviations. This information will be used to prepare the half-yearly project progress reports. Moreover, in

addition to the Steering Committee’s review work, the Bank will carry out two supervision missions per year, to which should be added a mid-term review mission.

4.2.2 Impact Assessment. The Project impact assessment will be conducted through participatory studies. The first step in this assessment will be the study of the baseline situation which will aim at determining the level of the following indicators at Project year zero: (i) current average household income; (ii) major crop yields (t/ha); (iii) current production levels; (iv) industrial processing rates; (v) level of organisation of supply of inputs and delivery of agricultural services (including mechanization and electronic payments); (vi) level of organisation of marketing; and (vii) volume of funding mobilised. The same study will be conducted at project completion based on the same sample.

4.3 Governance

4.3.1 According to the 2017 Mo Ibrahim Report on the Assessment of Global Governance in Africa, Togo is ranked 26th out of 54 countries assessed (compared with 33rd in 2016) with a score of 51.7 over 100. This relatively average ranking notwithstanding, Togo with an average improvement of +10 points, is ranked 2nd best reforming country in governance over the period 2007-2016, behind Côte d'Ivoire (12.6), and ahead of Zimbabwe (+9.5) ), Rwanda (+8.7) and Liberia (+6.5). In 2016, it was the only country whose global governance had steadily improved with progress in each of the 14 sub-categories of the IIAG. With regard to corruption perception, the 2017 Transparency International Report ranks Togo 117th out of 180 with a Corruption Perception Index (CPI) of 32 compared with 29 in 2014, on a scale of 0 (high corruption) to 100 (very low corruption).

4.3.2 In order to support the ongoing reform momentum in the country and foster good governance, the Bank, in close collaboration with the IMF and other partners, has regularly maintained sustained policy dialogue with the Togolese authorities through reform and institutional support operations. In 2017, the Bank approved budget support totalling UA 9.53 million for the Governance and Agribusiness Promotion Support Programme (PAGPA), which focuses on reforms aimed not only at creating an enabling environment for private and public investments for the promotion of agribusiness but also at improving revenue mobilisation to enhance investment expenditure. The government has undertaken significant strategic and structuring reforms as part of this reform support operation. These include (i) the revision and adoption of the Land Code; (ii) preparation of the national agropoles development strategy; and (iii) preparation and adoption of the private sector development strategy. Other major reform measures planned for 2018 are underway, namely, the preparation and adoption of the country's national industrialisation policy and strategy, as well as the issue of decrees on the organisation and functioning of national entities responsible for quality, standards and metrology.

4.3.3 The SCPP, which is a continuation of PAGPA, will contribute to the improvement of governance in the agricultural sector through the operationalisation of the major reforms mentioned above as well as amendments to the institutional, legislative and regulatory arrangements required for the development of Agro-Food Processing Zones (ZTAs). The Project also includes a component to provide technical, methodological and material capacity building for APRODAT, the agropoles governance and steering structure, the devolved administrative services involved in staple crop promotion, private sector development as well as training institutes.

4.3.4 Lastly, the activities planned, particularly through the Korean Saemaul Foundation, will enhance project inclusiveness by involving the beneficiaries (including women and young

people) in the decision-making process. Specific actions are planned to build the people’s capacity so that they can organise themselves in cooperatives, improve their agricultural performance and interact with other actors (especially the private sector).

4.4 Sustainability

4.4.1 The project is in line with a sustainable development approach and its sustainability is based on the fact that most of the activities to be financed were identified with the collaboration of stakeholders. The participatory approach implemented during the project preparation phase, with the State as "facilitator", the private sector as "investor", and the professional agricultural organisations (PAOs) as "direct actors", should create the conditions for good sustainability of project outputs and impacts. The key actors (producers, private sector, financial institutions, etc.) of the six priority value chains (rice, maize, sesame, soybean, broiler chicken and cashew nuts) were therefore consulted, particularly during the studies (Agro-park, water supply, irrigation, roads, electricity, ICT, etc.) and their concerns were taken into account in the context of this project.

4.4.2 The Project will help not only to improve the political, regulatory and institutional framework for the establishment of planned Agro-Food Processing Zones (ZTAs), but also to mobilise significant resources for the construction of basic infrastructure (roads, clean water, sanitation, electricity, ICT, etc.) needed to encourage private investment, particularly within the Agro-park. Such private sector (leader) involvement is the guarantee of easier access to markets (national, regional and international), technology and financing (especially for PAOs and SMEs). This public-private partnership is a key to the sustainability of the approach advocated by the Project.

4.4.3 The various actions targeted by the project, such as capacity building for entrepreneurial culture, business management and the organisational spirit of beneficiary groups, are likely to foster inclusive growth. These effects will provide an additional guarantee for sustainable achievements, while allowing continuation of the momentum ushered in beyond the end of the project. Secondly, the technical assistance provided for under the project will have a positive direct impact on the capacity of national institutions and PAOs to make optimum and sustainable utilisation of the infrastructure put at their disposal. This initial activity will thus enable each professional organisation to regularly generate resources capable of supporting the identified activities and facilitate the implementation of other sub-projects that are likely to make investments more profitable. This component is, therefore, essential to ensure the sustainability of the actions.

4.4.4 Furthermore, with the complete modernisation of infrastructure, works and irrigation equipment projected in the study reports, including the introduction of equipment and more efficient varieties in water use, abstractions on already heavily reduced water resources will be minimized. Lastly, for road maintenance, project will utilise the mechanisms already defined under the current National Transport Strategy.

4.5 Risk Management

4.5.1 The main risks associated with the project implementation were identified their potential impacts analysed and the mitigation measures specified (see table).

Risks Risk level Mitigation measures/actions Mitigation 1: The SESA has identified mitigation Risk 1: Land security measures are measures in the project, including the insufficient to attract the private sector and Moderate implementing decrees of the new Land Code and protect small farmers the establishment of single window for land tenure in Kara Mitigation 2: SESA (including RAP, and ESIMP, Risk 2: The significant benefits expected PDC), and Saemaul Foundation participatory and from the project could be monopolised by a High gender sensitive approach and nutrition of the will minority have positive effects for the people Risk 3: Climate change and harmful practices Mitigation 3: IWRM and the development of of the people could degrade natural resources Moderate alternative livelihoods should sustainably enhance (NR) the project effects Mitigation 4: (i) (i) Meetings were held with the private sector (including Kalyan Group, key investor) and their needs taken into account; (ii) the Project will finance infrastructure for the Risk 4: Lack of interest by the private sector development of agro-parks and production areas; could limit investments planned in the Agro- Moderate (iii) support for the implementation of NP reforms park is planned (land security, standardization and quality control, PPP, etc.); and (ii) technical assistance (including legal, technical, management, PPP etc.) will be made available to APRODAT Risk 5: Delays in project implementation due Mitigation 5: Substantial institutional support (see to poor knowledge of Bank procedures by High action plans) for APRODAT is envisaged under the APRODAT project Mitigation 6: The SESA provides for the Risk 6: The significant benefits expected implementation of actions (Population from the project could be monopolised by a Moderate Resettlement Action Plan, ESIMP and PDC) that minority will have positive impacts on the people

4.6 Knowledge Building

4.6.1 This Project differs from those conventionally financed in Togo by the Bank, mainly because of the following innovations: the development of public-private partnership in the agro- industrial sector to finance all the needs of competitive sectors. Through documented monitoring and evaluation of the innovations, lessons learned by the State, the private sector (agribusiness, banks, etc.) and consultation frameworks from priority sectors will be drawn. These lessons learned will not only be taken into consideration by APRODAT but will also be used by the Bank in experience sharing between the regional member countries. At the end of the project, the lessons learned will be consolidated in the completion report.

V. LEGAL FRAMEWORK

5.1 Legal Instrument

5.1.1 The project will be financed through an ADF grant of UA 4.635 million (including the PPF refund of UA 995,000), an ADF loan of UA 8.04 million from the country allocation, and a TSF loan (pillar 1) of UA 8.32 million.

5.2 Conditions for Bank Involvement

5.2.1 The ADF and TSF loans and the ADF grant will be subject to the following conditions:

Conditions precedent to effectiveness:

a) The effectiveness of the ADF and TSF Loan and Grant Agreements will be subject to the fulfilment by the Borrower, to the satisfaction of the Fund, of the conditions set forth in Section 12.01 of the General Conditions applicable to Loan, Guarantee and Grant Agreements of the African Development Fund as may be amended periodically.

b) ADF Grant: The effectiveness of the ADF Grant shall be subject to its signature by the Donee and the Fund and in according accordance with the provisions of the General Conditions Applicable to the Grant Agreement of the Fund as may be amended periodically.

Conditions precedent to first disbursement

a) Loan and Grant: In addition to effectiveness of the ADF and TSF Loan Agreements and the ADF Grant Agreement, the disbursement of the loan and grant resources shall be subject to fulfilment, by the Borrower, and to the satisfaction of the Fund, of the following conditions:

b) Provide the Fund with evidence of the completion of the Executing Agency's organisational chart and the filling of positions of responsibility, including the positions of Directors and Service Heads, Procurement, Financial Management, Accounting, Internal Audit and Monitoring and Evaluation Officers.

Special Conditions Precedent to the Disbursement of Loan and Grant Resources for Works Involving Expropriation

a) Loan and Grant: In addition to effectiveness of the ADF and TSF Loan Agreements and the ADF Grant Agreement and fulfilment of the conditions precedent to first disbursement, the disbursement of the loan and grant resources for works involving expropriation shall be subject to fulfilment, by the Borrower, and to the satisfaction of the Fund, of the following conditions

b) Submit to the Fund the reports of environmental and social studies (Environmental and Social Impact Assessment, Environmental and Social Management Plan, Populations Resettlement Action Plan and Pests and Pesticides Management Plans) of the Agro-park and rural infrastructure approved by the National Agency for Environmental Management (ANGE); and

c) Provide, as work progresses, and before any work begins on an area concerned, evidence of compensation and/or resettlement of project persons affected in that area, in accordance with the ESMP and the Resettlement Framework Plan (RFP) and the relevant African Development Bank Group rules and procedures, in particular the Involuntary Resettlement Policy and its Integrated Safeguards System. It is specified that when this compensation or resettlement is not possible, either totally or partially, due to the impossibility of identifying the beneficiaries or in the event of litigation or other impossibility beyond the Borrower’s control duly justified and acceptable to the Fund (hereinafter referred to as "Contentious Cases"), the condition may be deemed to 24

be fulfilled if the Borrower provides evidence that the resources allocated to the compensation and/or the resettlement of the Contentious Cases are deposited in a bank account acceptable to the Fund specifically earmarked for such compensation and/or resettlement, or remitted to and deposited with a trustworthy third party acceptable to the Fund.

Other Conditions

a) ADF and TSF Loans: The Borrower undertakes, to the satisfaction of the Fund, to:

i). Provide, prior to the request for disbursement of ADF and TSF loan resources in special accounts, evidence of the opening by the Executing Agency of a special ADF account and a special TSF account, in the name of the Project, with a bank acceptable to the Fund, intended to receive the resources of each loan.

b) ADF Grant: The Donee undertakes, to the satisfaction of the Fund, to:

i). Provide, prior to the request for disbursement of Grant resources in the special account, evidence of the opening by the Executing Agency of a special account, in the name of the Project, with a bank acceptable to the Fund, intended to receive the resources of the Grant.

Commitments: The Borrower undertakes, to the satisfaction of the Fund, to:

(i) prepare and forward to the Fund for opinion, no later than four (4) months after effectiveness of the ADF and TSF Loan Agreements and the Grant Agreement, for opinion, the Administrative, Financial and Accounting Procedures Manual, the basis of its internal control system, covering all management cycles: expenditure management (procedures for the procurement of goods and services), asset management (fixed assets, inventories, etc.), cash flow management (authorisation, disbursement, monitoring and control of cash flow, etc.), resource mobilisation (requests for transfer of funds, direct payments, etc.), accounting, financial and budgetary information, personnel management, control and internal audit cycle;

(ii) prepare [no later than twelve (12) months after effectiveness of the ADF and TSF Loan Agreement] an operations manual for financial facilitation and intermediation activities in view of access to financing by processing units;

(iii) set up an integrated multi-project and multi-post management system to ensure that the budgetary, cost and general accounting modules of the Project are kept in accordance with the financial management rules for Fund-financed projects;

(iv) set up internal audit mechanisms, with the recruitment of an internal auditor who will ensure that the Project's control system is operational and effective;

(v) implement the Project and have it implemented by the Executing Agency and its contractors in accordance with : (a) the relevant rules and procedures of the Fund; (b) national law; and (c) the recommendations, requirements and procedures contained in the ESMP;

(vi) not to commence work in a given area without the project-affected persons in that area having been fully compensated in accordance with Section 4.03 paragraph ii) above; and

(vii) provide the Fund with half-yearly reports on ESMP implementation, including any shortcomings and corrective actions initiated or to be initiated, and any documents reasonably necessary for monitoring the Project’s implementation.

5.3 Compliance with Bank Policies

5.3.1 The Project will contribute to three of the Bank's High-Fives, namely: (i) "Feed Africa"; (ii) "Industrialise Africa"; and (iii) "Improve the quality of life for the people of Africa". It is also consistent with the Bank's environmental and social management policies, guidelines and procedures.

VI. RECOMMENDATION

6.1 Bank Management recommends that the Board of Directors should approve an ADF grant of UA 4.635 million (including the PPF refund of UA 995,000), an ADF loan of UA 8.04 million under the country allocation and a TSF loan (pillar 1) of UA 8.32 million to the Togolese Republic for the purpose and under the conditions set out in this report.

Appendix I: Togo’s Comparative Socio-economic Indicators Togo COMPARATIVE SOCIO-ECONOMIC INDICATORS

Develo- Develo- Year Togo Africa ping ped Countries Countries Basic Indicators GNI Per Capita US $ Area ( '000 Km²) 2017 57 30,067 80,386 53,939 Total Population (millions) 2017 7.7 1,184.5 5,945.0 1,401.5 2500 Urban Population (% of Total) 2017 40.1 39.7 47.0 80.7 2000

Population Density (per Km²) 2017 141.4 40.3 78.5 25.4 1500 GNI per Capita (US $) 2016 540 2 045 4 226 38 317 1000 Labor Force Participation *- Total (%) 2017 81.0 66.3 67.7 72.0 Labor Force Participation **- Female (%) 2017 81.0 56.5 53.0 64.5 500

Sex Ratio (per 100 female) 0

2000 2012 2016 2010 2011 2013 2014 2015 2017 97.9 0.801 0.506 0.792 2005 Human Dev elop. Index (Rank among 187 countries) 2015 166 ...... Popul. Liv ing Below $ 1.90 a Day (% of Population) 2015 49.1 39.6 17.0 ... Togo A frica Demographic Indicators Population Grow th Rate - Total (%) 2017 2.6 2.6 1.3 0.6 Population Grow th Rate - Urban (%) 2017 3.7 3.6 2.6 0.8 Population < 15 y ears (%) 2017 41.8 41.0 28.3 17.3 Population Growth Rate (%) Population 15-24 y ears (%) 2017 19.4 3.5 6.2 16.0 2.8 Population >= 65 y ears (%) 2017 2.8 80.1 54.6 50.5 2.8 Dependency Ratio (%) 2017 80.6 100.1 102.8 97.4 2.7 2.7 Female Population 15-49 y ears (% of total population) 2017 24.5 24.0 25.8 23.0 2.6 Life Ex pectancy at Birth - Total (y ears) 2017 61.0 61.2 68.9 79.1 2.6 2.5 Life Ex pectancy at Birth - Female (y ears) 2017 61.7 62.6 70.8 82.1 2.5 Crude Birth Rate (per 1,000) 2017 34.1 34.8 21.0 11.6 2.4 2.4

Crude Death Rate (per 1,000) 2017 8.3 9.3 7.7 8.8 2.3

2010 2014 2016 2005 2012 2013 2015 2017 Infant Mortality Rate (per 1,000) 2016 50.7 52.2 35.2 5.8 2000 Child Mortality Rate (per 1,000) 2016 75.7 75.5 47.3 6.8 Total Fertility Rate (per w oman) 2017 4.4 4.6 2.6 1.7 Togo A frica Maternal Mortality Rate (per 100,000) 2015 368.0 411.3 230.0 22.0 Women Using Contraception (%) 2017 22.2 35.3 62.1 ...

Health & Nutrition Indicators Phy sicians (per 100,000 people) 2008 5.8 46.9 118.1 308.0 Life Expectancy at Birth Nurses and midw iv es (per 100,000 people) 2008 30.0 133.4 202.9 857.4 (years) Births attended by Trained Health Personnel (%) 2014 44.6 50.6 67.7 ... 80 Access to Safe Water (% of Population) 2015 63.1 71.6 89.1 99.0 70 60 Access to Sanitation (% of Population) 2015 11.6 51.3 57 69 50 Percent. of Adults (aged 15-49) Liv ing w ith HIV/AIDS 40 2016 2.1 39.4 60.8 96.3 30 Incidence of Tuberculosis (per 100,000) 2016 46.0 3.8 1.2 ... 20 Child Immunization Against Tuberculosis (%) 10

2016 79.0 245.9 149.0 22.0 0

2010 2015 2005 2012 2013 2014 2016 2017 Child Immunization Against Measles (%) 2016 87.0 84.1 90.0 ... 2000 Underw eight Children (% of children under 5 y ears) 2014 16.2 76.0 82.7 93.9

Prev alence of stunding 2014 27.5 20.8 17.0 0.9 Togo A frica Prev alence of undernourishment (% of pop.) 2015 11.5 2 621 2 335 3 416 Public Ex penditure on Health (as % of GDP) 2014 2.0 2.7 3.1 7.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 2016 123.9 106.4 109.4 101.3 Primary School - Female 2016 120.8 102.6 107.6 101.1 Infant Mortality Rate Secondary School - Total 2011 55.1 54.6 69.0 100.2 ( Per 1000 ) Secondary School - Female 2007 30.7 51.4 67.7 99.9 100 90 Primary School Female Teaching Staff (% of Total) 2016 16.2 45.1 58.1 81.6 80 Adult literacy Rate - Total (%) 2015 63.7 61.8 80.4 99.2 70 60 Adult literacy Rate - Male (%) 2015 77.3 70.7 85.9 99.3 50 Adult literacy Rate - Female (%) 2015 51.2 53.4 75.2 99.0 40 30 Percentage of GDP Spent on Education 2016 5.1 5.3 4.3 5.5 20 10

2005 2010 2013 2011 2012 2014 2015 2016 Environmental Indicators 2000 Land Use (Arable Land as % of Total Land Area) 2015 48.7 8.6 11.9 9.4 Agricultural Land (as % of land area) 2015 70.2 43.2 43.4 30.0 Forest (As % of Land Area) 2015 3.5 23.3 28.0 34.5 Togo A frica Per Capita CO2 Emissions (metric tons) 2014 0.4 1.1 3.0 11.6

Sources : AfDB Statistics Department Databases; World Bank: World Development Indicators; last update : May 2018 UNAIDS; UNSD; WHO, UNICEF, UNDP; Country Reports. Note : n.a. : Not Applicable ; … : Data Not Available. * Labor force participation rate, total (% of total population ages 15+) ** Labor force participation rate, female (% of female population ages 15+)

Appendix II: Current Bank Portfolio in Togo

Share Approval Disburs Amount Amount Sect. Project Name Commit Window Date Rate Disbursed Approved (%) (%) Toilets for all in Sokodé through the valorisation AWF 19/04/2013 860 540 1 003 905 85 .72 of faecal sludge

Sanitat. Sub-Total - Water and Sanitation 0.6% 860 540 1 003 905 85.72

Water &

PPF- Agropoles Development Project ADF 29/02/2016 762 950 995 000 76.68

culture Sub-Total - Agriculture 0.6% 762 950 995 000 76.68

Agri Resource Mobilisation and Institutional Capacity TSF 09/10/2014 2 970 136 5 000 000 59.40

Building Support Project (PAMOCI) TSF 17/02/2016 580 492 3 080 000 18.85 Tax Governance Support Project (PAGFI) TSF 17/02/2016 2 309 346 11 920 000 19.37

ernance Governance and Agribusiness Promotion Support 05/12/2017 2 320 000 2 320 000 100.00

Gov Programme 05/12/2017 7 210 000 7 210 000 100.00 Sub-Total - Governance 18.2% 15 389 974 29 530 000 52.12 Kara and Lomé Markets Reconstruction and ADF 22/01/2014 1 015 852 1 930 000 52.63 Traders Support Project ADF 22/01/2014 855 893 1 650 000 51.87

FAPA- Market Reconstruction Support Project FAPA 26/01/2015 539 652 561 771 96.06 ADF 28/10/2015 593 914 6 670 000 8.90 Youth Employability and Integration Support Social NTF 28/10/2015 654 655 6 500 000 10.07 Project TSF 28/10/2015 31 754 1 330 000 2.39 Sub-Total - Social 11.5% 3 691 720 18 641 771 19.80

y Pilot Phase of the Rural Electrification SEFA 08/08/2017 0 684 629 0.00 Programme CIZO

Energ Total - Energy 0.4% 0 684 629 0.00

Project to Support the Financial Inclusion of TSF 22/08/2016 512 357 1 152 173 44.47 Vulnerable Women (PAIFFV) Sub-Total - Finance 0.7% 512 357 1 152 173 44.47 Finance Total - National 24.4% 21 217 541 52 007 478 40.80 Benin/Togo: Project to Rehabilitate the Lomé - Cotonou Road and Facilitate Transport on The ADF 05/10/2011 1 587 374 4 810 000 33.00 Abidjan-Lagos Corridor – Phase 1 Togo/Burkina Faso Road Rehabilitation and ADF 27/06/2012 15 082 941 17 800 000 84.74

ls ADF 27/06/2012 23 168 917 30 230 000 76.64

Transport Facilitation on the Lomé-Ouagadougou CU9 Corridor TSF 27/06/2012 15 648 435 21 500 000 72.78 EU-AITF 23/02/2015 922 956 991 198 93.12 ADF 16/12/2016 96 118 9 000 000 1.07

Transport ADF 16/12/2016 0 930 000 0.00

Multinationa Benin/Togo: Lomé-Cotonou Road Rehabilitation GEF 16/12/2016 0 6 303 265 0.00 (Phase 2) and Coastal Protection Project TSF 16/12/2016 0 18 350 000 0.00 TSF 16/12/2016 0 30 000 0.00 Sub-Total - Transport 67.9% 56 506 740 109 944 463 51.40 Total - Multinationals 67.9% 56 506 740 109 944 463 51.40 Total - Public Sector 76.1% 77 724 281 161 951 941 47.99 Container Terminal AfDB 15/07/2011 36 005 049 36 005 049 100.00 Container Terminal (Priv. Sect. Credit Enhance

ate 75.6% AfDB 04/11/2015 0 14 852 083 0.00 Facility)

Priv Sector Sub-Total – Non-Sovereign 23.9% 36 005 049 50 857 132 70.80 GRAND TOTAL 100.0% 113 729 331 212 809 073 53.44

Appendix III: An Analysis of Togo's Fragility

Fragility factors The situation, challenges and resilience measures supported by Measures supported by identified by the General State Policy with assistance from Technical and African Development fragility Financial Partners (TFPs) Bank intervention under assessment PTA-Togo (2018-2023) Political, 1. Legitimate policies and political governance (legitimacy, inclusivity, consolidation of the institutional and State and trust in its institutions) security-related factors Legitimacy: Togo has made significant progress which has PTA proposes a series of undoubtedly set the country on the path to achieving long-lasting initiatives designed to resilience. Its achievements to date include increased security and improve the legal, stability, an economic recovery which has seen average growth rates regulatory and institutional of 5% during a ten-year period, the implementation of major framework for a number of institutional and economic reforms, a return to stability, the sectoral policies, in order strengthening of social cohesion and enhanced regional to in turn improve cooperation. The TFPs continue to largely commend the Togolese economic governance and Government for its efforts to rebuild its infrastructure and revive the the transparency of country's economy since cooperation resumed in 2006. Yet, despite government action. The these improvements, the process of reconstruction following the introduction of a new Land political and democratic crisis is far from complete. Beginning in Code addresses the issue of August 2017, the country once again witnessed a series of political institutional credibility and demonstrations calling for a return to the country’s constitution of trust systematically, in 1992 that limited the number of presidential terms of office to two. order to improve certain The draft law excluding key provisions on retroactive application pockets of fragility detected were rejected by the opposition, hence a referendum will be held in in political governance. order to separate the two parties, who agreed to take part in negotiations in February 2018 under the supervision of the The consultation President of Ghana, Nana Akufo-Addo. In addition, ethnic and frameworks including regional polarisations between the North and South of the country traditional leaders and continue to undermine its political stability, and underpin the NGOs strengthen the local entrenched political splits between Togo's political figures. The ownership and inclusion relative slow pace of democratic transition and the weakness of the process. country's institutions are major challenges for political governance in Togo. This has aggravated the mutual mistrust that exists between the dominant coalitions and led to poor ownership of sustainable mechanisms for respectful, inclusive and constructive dialogue within the political class and between the elite. The implementation of the Governance: Togo has taken a number of steps to improve its proposed system of situation. This process, coordinated by the Permanent Secretariat governance for agropoles for Reforms, has enabled several relevant texts to be drafted; these and the operationalisation include a public procurement code, documents on the of a one-stop land service operationalisation of the Court of Auditors, the General are measures designed to Inspectorate of Finance, the creation of a Treasury one-stop service supplement the action and the production of reports on the budget review law. Both already instigated by the centrally and locally, the capacity of the Togolese administration government in order to remains weak with regard to contract management and award improve political, procedures, as well as the planning, implementation, monitoring and economic and financial evaluation of programmes and projects for the development or governance. Improvements assimilation of the principle of accountability. to organisations responsible for quality, Transparency: Despite remarkable progress, corruption perception standards and metrology in the country remain high, with Togo ranked 117th out of 179 will boost the capacities of countries in 2017 on Transparency International's Corruption control and anti-corruption bodies to deliver improved Perception Index, compared with 116th out of 176 countries in 2016. quality of services to the The country's corruption perception rating also places it below the population. international average for the 176 most corrupt countries (32

III

and allocation of rights to natural resources: the lack of

transparency and good governance in the award of public contracts and the abuse of private operational permits for mining on large areas of land are symptomatic of major, unresolved problems and weaknesses in the governance of natural resources. To remedy this situation, the Government decided to set up an institution with the resources needed to fight this type of corruption, and the High Authority for the Prevention and Fight against Corruption (HATPLC), an independent administrative body, was established on 28 July 2015. Its members were appointed on 3 January 2017 and officially sworn in on 7 February of the same year. The purpose of this anti-corruption body is to promote and strengthen efforts to prevent and combat corruption and similar violations within government services, public institutions, private enterprises and non-governmental organisations. It enjoys financial and administrative autonomy, and must also ensure the protection any individual who, acting in good faith, reports the details of established offences to the relevant public authorities. Since this organisation is neither a law enforcement body nor a court of law, it is obliged to forward all substantiated complaints to the Public Prosecutor so that investigations may be conducted and state action initiated.

2. Questions of security and violence, and security sector capacity and performance

Security: Despite Togo's largely stable security situation, sporadic PTA makes no direct incidents with the potential to destabilise the country continue to contribution to issues of occur, justifying continuous efforts towards social sector reform in security. It does, however, order to address the diverse and now recurrent demands for better offer solutions to food conditions for individuals in the education and health sectors. More insecurity, and it works to generally, security problems are reflected in acts of violence against mitigate risks that could people and property and the criminalisation of the economy, worsen the security including the informal sector or even illegal exploitation of natural situation. resources.

3. The justice sector (inclusive access to justice, the rule of law and independence of the judiciary, as well as checks and balances)

Weakened judicial system: Successive crises arising from the PTA makes no direct democratic transition, and sanctions imposed by Togo's main contribution to the justice technical and financial partners for a decade have taken a system. However, it significant toll on the judicial system. With its ability to operate addresses the issue of diminished by the various causes of fragility, this system has been social and spatial manipulated for political purposes by the entire political class, and inclusion, a source of appears undermined by a lack of independence, problems of social injustice, by corruption, and inadequate technical and material resources. mainstreaming the Therefore, even after the end of the crises, those seeking justice concerns of vulnerable

Financial and 4. Strengthening the economic base and the resilience of communities (equitable access to Economic infrastructure and the benefits of natural resources) Factors Togo's macroeconomic performance has been encouraging, and this A range of structures and has undoubtedly enabled its return to growth. However, the situation forms of support offered by remains fragile and extremely sensitive to exogenous shocks and the PTA are likely to help unpredictable climatic events because of the structure of the create an environment country’s economic fabric, which witnessed little change in recent conducive to diversifying years. Growth remains at a structural disadvantage because of low the country’s economy, overall productivity and high production factor costs. Similarly, which has an agricultural although improvements in education have enabled the workforce to sector representing nearly expand, the accumulation of physical capital has stagnated since the 40% of its GDP. The 1990s, contributing to the steady decline in overall factor creation of agropoles and productivity since 1980. Togo needs to make the most of its greater professionalization geographical position and turn it into an asset. With the of agriculture will mitigate modernisation of its seaport and airport, and considering that the the effect of exogenous country is the hub for ASKY Airline, it has at its disposal the shocks and offer new structuring infrastructure required to recapture its past position. opportunities for the private sector, which is a driver of economic growth. Social Factors: 4. 5. The increased mobilisation of resources to develop opportunities for employment, revenue Poverty and and inclusive access to basic social services, with a focus on the crucial role played by the Inequality State; improved financial governance and an appropriate refocusing of the functions of the State

Inequalities: The pace of progress in human development varies by The range of activities region and prefecture, and is insufficient to meet the Agenda 2030 supported by PTA aims to sustainable development objectives. Although slow progress can be produce an environment seen in education and healthcare, as well as in living standards of conducive to the the Togolese population, several factors are holding back this operationalisation of improvement: the presence of inequalities, which reduce the impact agropoles as a key plank in of growth on poverty reduction, the absence of any real structural the structural transformation, which restricts economic opportunities, and a lack transformation of the rural of progress towards gender equality, which has a knock-on effect on social fabric, which is more the development of businesses and skills. Beyond these observations, affected by inequalities and the country faces enormous difficulties to deliver human widespread poverty among development for a young and growing population which is women caused by barriers increasingly mobile in the search for work, and these difficulties to economic opportunities. should be factored into the vast reform programme the Government embarked upon following the resumption of cooperation with its various donors.

Revenue sources: The economy’s reliance on the phosphate sector, PTA's proposals include as well as seaport and airport traffic, is a source of fragility. The the active involvement of greatest share of the country's GDP is produced by two prominent the private sector, business sectors, namely the Port of Lomé and the mining of a huge particularly agricultural

Regulatory framework (the State’s role in service provision): Togo PTA’s geographical enjoys the advantage of having renovated the road network that location is an initial connects the country to its neighbours, and developed good quality response to the imbalance urban roads in the capital city, even though their condition has in the provision of services deteriorated as a result of the political and democratic crisis. noted between urban and Impediments to the development of infrastructure to improve the rural areas. PTA proposes quality of the State’s service provision vary in magnitude from one a number of elements sector of activity to the other. Progress has been observed in the designed to facilitate the international transport sector, despite the persistence of significant implementation of regional disparities. However, sectors covering public utilities such agropoles, and in terms of as water, waste treatment, electricity and transport are finding it their operationalisation, hard to take off due to lack of swift and efficient action), as well as agribusiness centres of financing delays. The unbalanced distribution of public services excellence with all public across regions and sections of the population constitutes another service rights necessary fragility factor which could, in the long run, exacerbate socio- will be constructed to political tensions if corrective action is not taken to eradicate the promote the successful potential for a social divide. socio-economic integration of communities.

Appendix IV: Agro-food Processing Zone (ZTAs) : A Flagship Programme of the “Feed Africa Strategy”

A/. What is an Agro-food Processing Zone?  An Agro-Processing Hub is a well-defined, centrally managed tract of land developed, subdivided and dedicated to supporting firms and other stakeholders engaged in agro-processing and related activities, located throughout the production area surrounding the hub. (FAO, 2017);  Agro-food Processing Zones are agro-based spatial development initiatives designed to concentrate agro-processing activities within areas of high agricultural potential to boost productivity and integrate production, processing and marketing activities. These initiatives may or may not be granted Special Economic Zone status;  They are purposely built shared facilities to enable agricultural producers, processors, aggregators and distributors to operate in the same vicinity in order to reduce transaction costs and share business development services for increased productivity and competitiveness.

B/. Main Objectives of Agro-food Processing Zones (ZTAs)

The main objective of an Agro-food Processing Zone is to transform the African rural landscape into prosperous economic zones through the development of agro-industry in major agricultural production area. Its specific objectives are to:  Promote private investment, particularly in agro-industry, in order to increase value addition to agricultural products and facilitate marketing;  Increase productivity and agricultural production of sectors with a market potential at national (substitution of imported products) and international (exports) levels;  Increase the contribution of the agriculture sector to GDP, and to wealth and employment creation, especially in rural areas. C/. Main Geographical Entities of a Agro-food Processing Zone

The Agro-food Processing Zone is a geographically defined area designed to cover one or more agricultural production areas relevant to the priority value chains identified following the conduct of studies. It comprises three major entities which should be perfectly connected by proper transport infrastructure:

 A Hub or an Agro-park consisting of a developed area with roads and main networks (clean water, sanitation, electricity, ICT, etc.), logistics and specialized facilities and services (cold chain, laboratory and certification, business services, waste treatment, etc.), all of which are required for the conduct of agro-industrial activities by the private sector. The ownership and management of the hub are often left in the hands of an independent entity, usually in the context of a public- private partnership arrangement.

 Agricultural Transformation Centres (ATCs): The ATC is a physical complex of facilities centrally located in the middle of a farming community, where required services are offered to farmers, including:  Aggregation, sorting and primary storage centres for agricultural products  Agricultural input distribution platforms (seeds, fertilizers, etc.)  Service centres (agricultural credit, business centres, rental and maintenance of agricultural equipment, zoo-sanitary clinic, etc.)  Food quality control and seed certification  The extension and training centre for producer organisations  Basic social services (schools, health centres, DWS, etc.).

VII

Centres de transforAgricultural- Centres de mation Transformation- Conglomérats transforAgricultural- agricoleCent res agricoles modernes mation SerresModern Transformation - Services ExploitationsFarms Clusters Zones de agricoleCentres publics et Green Houses Utilities modernes transformation Entretien Modern Agro- and Exploitations agricole du sol Livestock Farms Processing Ground piscicoles Fish Farms Zones Accueil Maintenance Recherche et Centres de santé développement, Centres deHospitality bibliothèqueResearch and Centre de formationDevelopment, nutritionHealth Centres Nutrition Library TrainingMécanisation Centre Écoles Centres Terrain de Centre de Mechanisation sport Schools réparation Sports Repair Shop ChambresGrounds froides Centre de Chambres de Plateforme agro-industrielle conférence maturationCold Stores Salles de réunionConference EntreposageRipening Agro-Industr ial Hub Centre Chambers Meeting Room WarehousingLogistique des Conditionnement marchés Complexe des affaires terminauxTerminal / administratif Markets Packaging Business/Administrative Centres de Centres de Logistics Complex transfor- transforAgricultural- Agricultural mation mation - Transformation- Commercialisation agricoleTransformation agricoleCentres Centres Marketing

 Agricultural production zones: These correspond to the zones targeted to supply agro-parks with basic agricultural products via Agricultural Transformation Centres (ATCs). They can benefit from public investments that can facilitate the increase of agricultural productivity and the production of the farmers of the sectors selected for the Agro-food Processing Zone.

D/. Key Success Factors:  A ZTA should be based on an Agricultural Transformation Strategy and Plan that targets areas of high agricultural potential, which are provided the basic infrastructure (water, electricity, roads / tracks, etc.) by the State (facilitator) in order to promote private investment (promoter), especially in agro-industrial activities.  The implementation of ZTAs should be facilitated by the State by creating a conducive policy, regulatory and institutional environment for innovation, skills transfer and private investment, including through tax and customs incentives. Agro industrial-parks should provide the private sector with reliable hard and soft infrastructure required by agro-industries to become competitive (uninterrupted power supply at a competitive cost, good road infrastructure, clean water, ICT, waste treatment, proximity to the administrative regulatory offices and the one-stop-shop system).  The structuring and operation of consultation frameworks for priority value chains should be supported and encouraged by the State. The objective is to improve the functioning of the value chains in order to improve the performance of the actors.  Inclusion of local communities and capacity building for smallholder farmers are essential for ensuring the success of ZTA initiatives. Building the capacity of local communities, smallholder farmers and SMEs is imperative for improving their agricultural performance and their access to agricultural markets, and for preventing potential conflicts.

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Appendix V: General Table of ADF and TSF Grant and Loan Resource Allocation

LIST OF GOODS AND SERVICES ADF Loan TSF Loan ADF Grant TOTAL LC FE Total LC FE Total LC FE Total LC FE Total

A. WORKS Developments - - - 1 037.73 2 421.36 3 459.09 - - - 1 037.73 2 421.36 3 459.09 Infrastructure 1 883.56 5 303.74 7 187.30 274.42 645.99 920.40 - - - 2 157.97 5 949.73 8 107.70 Construction & Rehabilitation - - - 38.86 90.50 129.36 - - - 38.86 90.50 129.36 Sub-total 1 883.56 5 303.74 7 187.30 1 351.00 3 157.85 4 508.85 - - - 3 234.56 8 461.59 11 696.15 B. GOODS - - Vehicles - - - 8.00 24.01 32.01 42.54 127.61 170.15 50.54 151.62 202.16 Equipment - - - 169.12 314.40 483.53 53.32 99.24 152.56 222.44 413.65 636.09 Sub-total - - - 177.13 338.41 515.54 95.85 226.85 322.71 272.98 565.26 838.25 C. SERVICES - - - 1. TRAINING - - - 86.66 57.63 144.29 181.57 120.78 302.35 268.23 178.41 446.64 2. TECHNICAL ASSISTANCE - - - 145.31 823.14 968.45 67.93 385.10 453.04 213.24 1 208.25 1 421.49 3. STUDIES - - - Various studies 70.21 85.82 156.03 642.60 785.33 1 427.93 65.13 79.65 144.78 777.94 950.80 1 728.74

Preparation advance ------605.00 390.00 995.00 605.00 390.00 995.00 Sub -total 70.21 85.82 156.03 642.60 785.33 1 427.93 670.13 469.65 1 139.78 1 382.94 1 340.80 2 723.74 4. Contracting services - - - 173.11 57.69 230.80 183.09 61.00 244.09 356.20 118.68 474.89 5. Audit ------28.81 35.21 64.02 28.81 35.21 64.02 Sub-total 70.21 85.82 156.03 1 047.68 1 723.79 2 771.47 1 131.54 1 071.74 2 203.29 2 249.43 2 881.36 5 130.79 D. MISCELLANEOUS - - - 192.07 - 192.07 - - - 192.07 - 192.07 E. STAFF ------1 640.31 - 1 640.31 1 640.31 - 1 640.31 F. OPERATION 349.90 - 349.90 10.82 20.12 30.93 148.09 261.31 409.40 508.81 281.43 790.23 Unallocated 113.17 233.60 346.76 103.23 197.90 301.13 24.62 34.68 59.30 241.01 466.19 707.20 TOTAL 2 416.84 5 623.16 8 040.00 2 881.93 5 438.07 8 320.00 3 040.41 1 594.59 4 635.00 8 339.17 12 655.83 20 995.00

Appendix VI: Details of the Economic and Financial Analysis

SENSITIVITY ANALYSIS

Summary of scenarios Present values: Fall in Price -2.5% Fall in Price -5% Fall in Price -25% Fall in Price -26.36% Fall in Price -30% Fall in Price -32.5% Fall in Price -35% Variables cells: Profitability threshold Price drop 0.00% 2.50% 5.00% 25.00% 27.20% 27.50% 30.00% 35.00% Resulting cells B35: NPV 56 304 609.37 53 489 949.80 50 689 002.81 28 775 079.70 26 418 125.95 26 097 545.92 23 433 724.71 20 783 616.09 IRR 23.23% 22.24% 21.24% 12.95% 12.00% 11.87% 10.78% 9.67% Cost/Benefit Ratio 2.03 1.98 1.93 1.55 1.51 1.50 1.45 1.40

Appendix VII: Map of PTA Intervention Area in the Kara Region

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