Socialist Republic of Viet Nam Ha Giang: Commodity-oriented Poverty Reduction Programme Final project design report Main report and appendices Document Date: 6-Jul 2014 Project No. 1663 Report No: [Insert report number] Asia and the Pacific Division Programme Management Department Socialist Republic of Viet Nam Ha Giang: Commodity-oriented Poverty Reduction Programme Final design report Contents Currency equivalents iv Weights and measures iv Abbreviations and acronyms v Map of the Programme area vii Executive Summary viii Logical Framework xvi Strategic context and rationale 1 A. Country and rural development context 1 B. Rationale 2 Programme description 5 A. Programme area and target group 5 B. Development objective and impact indicators 5 C. Components 6 D. Lessons learned and adherence to IFAD policies 14 Programme implementation 16 A. Approach 16 B. Organizational framework 18 C. Planning, M&E, learning and knowledge management 20 D. Financial management, procurement and governance 25 E. Supervision 27 F. Risk identification and mitigation 27 Programme costs, financing, benefits and sustainability 28 A. Programme costs 28 B. Programme financing 29 C. Summary benefits and economic analysis 30 D. Sustainability 32 List of Tables Main Report Table 1. Main CPRP risks and mitigation measures. xv Table 2. Key positions of Programme Coordination Unit 19 Table 3. Programme Costs by Component and Output 29 Table 4. Financing Plan by Component and Output (USD‘000) 30 Table 6: Major Economic Indicators for Vietnam 34 Table 7. Types of socio‐economic development planning inputs. 36 Table 8. Households in Ha Giang experiencing CC-induced Events during the last 5 years 39 Table 9. Adaptation options taken by people in Ha Giang in upland (Thai An) and lowland (Tan Trinh) areas 40 i Socialist Republic of Viet Nam Ha Giang: Commodity-oriented Poverty Reduction Programme Final design report Table 10. Lending by AGRIBANK Ha Giang to households and individuals by Sub-sector (31 October 2013) 44 Table 11. Lending by AGRIBANK Ha Giang to ENTERPRISES, COOPERATIVES by Sub-sector 44 Table 12. Structure of the Ha Giang VBSP financing at 31 October 2013. 45 Table 13: Sub-Component 2.2: Potential Risks and Mitigating Issues 98 Table 14: Sub-Component 2.2: Potential Risks and Mitigating Issues 107 Table 15. Key positions of Programme Coordination Unit 131 Table 16. Principal elements of programme planning, M&E, and learning system 160 ii Socialist Republic of Viet Nam Ha Giang: Commodity-oriented Poverty Reduction Programme Final design report Appendices Appendix 1: Country and rural context background 34 Appendix 2: Poverty, targeting and gender 48 Appendix 3: Country performance and lessons learned 62 Appendix 4: Detailed Programme description 86 Appendix 5: Institutional aspects and implementation arrangements 129 Appendix 6: Planning, M&E and learning and knowledge management 158 Appendix 7: Financial management and disbursement arrangements 170 Appendix 8: Procurement 174 Appendix 9: Programme cost and financing 180 Appendix 10: Economic and Financial Analysis 206 Appendix 11: Draft Programme implementation manual 226 Appendix 12: Compliance with IFAD policies 228 Appendix 13: Contents of the Programme Life File 230 iii Socialist Republic of Viet Nam Ha Giang: Commodity-oriented Poverty Reduction Programme Final design report Currency equivalents Currency Unit = Vietnamese Dong (VND) US$1.0 = 21,000 Weights and measures 1 kilogram = 1000 g 1 000 kg = 2.204 lb. 1 kilometre (km) = 0.62 mile 1 metre = 1.09 yards 1 square metre = 10.76 square feet 1 acre = 0.405 hectare 1 hectare = 2.47 acres iv Socialist Republic of Viet Nam Ha Giang: Commodity-oriented Poverty Reduction Programme Final design report Abbreviations and acronyms ARD Agriculture and Rural Development AWPB Annual work plan and budget BMPs Better Management Practices CC Climate change CDB Commune Development Board CIG Community interest groups COSOP Country Strategic Opportunities Programme CPC Commune People’s Committee CAA Climate adapted agriculture DARD Department of Agriculture and Rural Development DA Designated Account DOLISA Department of Labour Invalids and Social Affairs DoNRE Department of Natural Resource and Environment DPC District People’s Committee DPI Department of Planning and Investment DPPR Decentralized Project for Poverty Reduction EFA Economic and Financial Analysis GDP Gross Domestic Product GSO Government Statistical Office GoV Government of Viet Nam HCMC Ho Chi Minh City ICT Information communication technology IFAD International Fund for Agriculture Development IRR Internal rate of Return MARD Ministry of Agriculture and Rural Development M&E Monitoring and Evaluation MTR Mid-term Review MFI Micro Finance Institution MIS Management information system MoF Ministry of Finance MoLISA Ministry of Labour Invalids and Social Affairs MoSEDP Market-Orientated Socio-Economic Development Planning MoU Memorandum of Understanding NGO Non-Government Organization NTP National Target Programme NTP-NRD National Target Programme on the New Rural Development NTP-RCC National Target Program to Respond to CC ODA Official Development Assistance PCF People’s Credit Fund PCR Programme Completion Review PCO Programme Coordination Unit PD Programme Director PLF Programme Life File PO SEDP Planning Officer PPB Programme Preparation Board PPC Provincial People’s Committees P-PC Public – Private Collaboration PPP Public – Private Partnership v Socialist Republic of Viet Nam Ha Giang: Commodity-oriented Poverty Reduction Programme Final design report PSC Programme Steering Committee RFS Rural Finance Specialist RIMS Results and Impact Management System SBV State Bank of Viet Nam SCG Savings and Credit Group SEDP Socio-Economic Development Plan SF IFAD Strategic Framework SIP Strategic Investment Plan SEDS Socio-economic Development Strategy SME Small and Medium Enterprise SMS Strategic Management Service SOE Statements of Expenditure SRI System of Rice Intensification ToR Terms of Reference ToT Training of trainers VAT Value Added Tax VBARD Viet Nam Bank for Agriculture and Rural Development VBSP Viet Nam Bank for Social Policy VC Value Chain VCDO Value Chain Development Officer VCMDO Value Chain and Market Development Officer VDB Village Development Board VFU Viet Nam Farmers’ Union VND Vietnamese Dong WSCF Women’s Savings and Credit Facilities WSF Women’s Social Fund WU Women’s Union vi Socialist Republic of Viet Nam Ha Giang: Commodity-oriented Poverty Reduction Programme Final design report Map of the Programme area vii Socialist Republic of Viet Nam Ha Giang: Commodity-oriented Poverty Reduction Programme Final design report Executive Summary1 1. Background: The Commodity-based Poverty Reduction Programme in Ha Giang Province (CPRP) is financed through an International Fund for Agricultural Development (IFAD) loan (USD 10 million) and co-financing from the Government of Viet Nam and programme beneficiaries. There is a financing gap of USD 10 million which IFAD intends to fill through existing or future PBAS resources, once available. The CPRP was identified during the development of the Viet Nam Country Strategic Opportunities Programme 2012-2017 (COSOP), which has a strong pro-poor, climate adapted and market-oriented agriculture development thrust, and was integrated into the pipeline of projects that received Government of Viet Nam’s (GoV) approval. The CPRP is fully aligned with the GoV’s Socio-Economic Development Strategy (SEDS), National Target Programme on New Rural Development (NTP-NRD), National Target Programme on Response to Climate Change (NTP-RCC) and the CC action plan for the agriculture and rural development (ARD) sector. 2. Rationale and Approach: Ha Giang, with a population of 756,000 people, including 22 ethnic minority groups, is one of four poorest provinces in Vietnam. The province, where only 19% of land is classified for agricultural use, is characterised by its mountainous kaast geography, a harsh climate, limited rural infrastructure and relatively low literacy levels, particularly amongst the majority ethnic minority population. DoLISA reports that, in 2012, 30.1% of total population were living under the poverty line and 20.6% were living just above the poverty line (DOLISA, 2012). 3. Ha Giang province has been supported by IFAD through the Ha Giang Development Project for Ethnic Minorities between April 1998 and June 2004 and the Decentralized Project for Poverty Reduction (DPPR) between August 2005 and end-September 2011. Both projects were rated as “successful”. Project successes included (i) a sharp drop in household poverty levels; (ii) the mainstreaming of a comprehensive decentralization and community empowerment strategy; and (iii) infrastructure development supporting enhanced agricultural production and market access. Under the DPPR, four areas identified for future poverty reduction included: (i) the promotion of market- oriented production; (ii) the strengthening of linkages between enterprises and farmers; (iii) further intensification of linkages between ‘growth clusters’ and poor areas in the province; and (iv) the development of upland production systems with due attention to climate change adaption. The outcomes of both projects are described in detail in Appendix 3, Annex 1. 4. To more rapidly reduce poverty, the Provincial Government has identified the need for more decentralised, participatory and market-oriented planning, as mandated by the NTP-NRD, and for pro- poor investment in market-oriented production and processing systems.