ministry of foreign affairs, danish embassy in addis ababa...

Ministry of Foreign Affairs, Danish Embassy in Addis Ababa, Ethiopia

File no.: 104. Etiopien.805.ADD.

External Grant Committee Meeting 7 October 2014

Agenda Item no.: 2 1. Title: Greening Agricultural Transformation in Ethiopia

(GATE) 2. Partners: Public institutions (Ministry of Finance and Economic

Development, Ethiopian Agricultural Transformation Agency; Climate Resilient Green Economy Facility)

3. Amount: 177.5 million DKK 4. Duration: 3 years (December 2014 - December 2017) 5. Presentation to the

programme Committee: 17 December 2013

6. Previous Grants: N/A 7. Strategies and policy

priorities: “The Right to a Better Life - Strategy for Denmark’s Development Cooperation” (2012), “A Greener World for All - Strategic Framework for Natural Resources, Energy and Climate Change” (2013), “Growth and Employment - Strategic Framework” (2011)

8. Danish National Budget

account code: § 06.32.01.05 Etiopien (150 million DKK); § 06.34.01.70 Klimapulje (27.5 million DKK)

9. Desk officer: Tigist Kebede Ayalew 10. Head of Representation: Stephan Schönemann 11. Summary: Currently among the poorest and most vulnerable countries in the world, Ethiopia has set itself an ambitious goal of achieving middle-income status by 2025 through building a green economy with carbon neutral growth. Agriculture is singled-out as a key target area for growth and poverty reduction. At the same time agriculture – and forestry – are identified as major challenges to achieving the target of carbon neutral growth and hence as crucial areas of intervention. Aligned to Ethiopian policy priorities, the objective of the thematic programme, Greening Agricultural Transformation in Ethiopia, is “to sustainably increase rural incomes” with a total budget of 177.5 million DKK. The Danish support is designed i) to accelerate a ‘green’ transformation of the agricultural sector with a focus on the Ethiopian small-holder farmers and ii) to gather speed to the main-streaming and implementation of Ethiopian climate resilient green economy initiatives within agriculture and forestry. The latter is supported through the Danish special climate envelope (Klimapuljen).

Note to the External Grant Committee Ethiopia is among the newest priority countries in Danish development policy. Since 2011, a number of high-level meetings between the Government of Denmark and the Government of Ethiopia have confirmed the intention of deepening the partnership, including within development cooperation and climate financing, and with a preferred strategic entry point around sustainable and inclusive green growth. Reflecting the relatively new and in some areas untested partnership, a decision has been taken by Denmark to develop first the thematic programme in question and then, as the partnership is expected to take shape over the coming years, comprising also strengthened political and commercial ties, to develop a country policy paper and a country programme. A potential second phase of the thematic programme would then be expected to form part of a coherent country programme formulation process.

Ministry of Foreign Affairs of Denmark

ETHIOPIA

GREENING AGRICULTURAL TRANSFORMATION IN ETHIOPIA

(GATE)

THEMATIC PROGRAMME DOCUMENT

Final Draft

17 September 2014 Danida File. no. 104.Etiopien.805.ADD

Thematic Programme Document GATE, Ethiopia

Final Draft 17 September 2014 ii

COVER PAGE Country: Ethiopia Thematic Programme Title: Greening Agricultural Transformation in Ethiopia (GATE) 2014 - 2017 Start-End Date: December 2014 – December 2017 (3 years and 1 month) Support Budget: DKK 177.5 million (DKK 150 million from the Development Fund and DKK 27.5 from the Climate Envelope)

Thematic programme objective To sustainably increase rural incomes Budget

(DKK mill)

ATA engagement

Engagement objective 1

To implement the Agricultural Transformation Agenda in a climate smart manner

ATA implementation 143.5

Contingencies, 1% 1.5

Special studies, reviews, audits 2.0

Technical assistance 3.0 Total ATA engagement budget

150.0

CRGE engagement

Engagement objective 2

To strengthen the Government of Ethiopia’s efforts to mainstream and implement CRGE initiatives

CRGE Facility funding 23.5

CRGE capacity development programme 3.0

Special studies, reviews, audits 1.0 Total CRGE engagement budget (Climate Funds)

27.5

TOTAL GATE BUDGET, DKK million

177.5


Final Draft 17 September 2014 iii

TABLE OF CONTENT Cover page ii Abbreviations iv Map of GATE programme target regions v

1 PROGRAMME CONTEXT..................................................................................... 1

1.1 Introduction ......................................................................................................................... 1

1.2 National thematic context and policy framework .......................................................... 1

1.3 Synergies ............................................................................................................................... 2

2 PRESENTATION OF THE GATE PROGRAMME ............................................ 2

2.1 Background .......................................................................................................................... 2

2.2 Programme objectives ........................................................................................................ 3

2.3 The ATA engagement ........................................................................................................ 3

2.4 The CRGE engagement ..................................................................................................... 5

2.5 Programme design and ‘theory of change’ ...................................................................... 6

2.6 Programme justification ................................................................................................... 10

2.7 Gender equality and HRBA ............................................................................................. 11

2.8 Results framework ............................................................................................................. 12

2.9 Support modalities ............................................................................................................ 15

2.10 Capacity building and technical assistance ..................................................................... 15

3 PROGRAMME MANAGEMENT ......................................................................... 16

3.1 Programme and engagement level management ........................................................... 16

3.2 Programme monitoring, reporting and reviews ............................................................ 16

3.3 Donor coordination .......................................................................................................... 16

3.4 Risk analysis and risk management ................................................................................. 17

4 PROGRAMME BUDGET AND FINANCIAL MANAGEMENT ...................... 18

4.1 Programme budget ............................................................................................................ 18

4.2 Flow of funds and financial management ...................................................................... 19

Annex 1 Brief descriptions of engagement partners Annex 2 Detailed results framework Annex 3 Detailed budget Annex 4 Risk assessment matrix


Final Draft 17 September 2014 iv

ABBREVIATIONS AGP AT

Agricultural Growth Programme Appraisal Team

ATA Agricultural Transformation Agency BMGF CC

Bill and Melinda Gates Foundation Climate change

CIDA CRGE

Canadian International Development Agency Climate-resilient green economy – Green economy strategy

CSO DAC

Civil Society Organizations Development Assistance Committee (OECD)

Danida Danish International Development Cooperation DFID Department for International Development DKK Danish Kroner EoD Embassy of Denmark, Ethiopia EE FARA FCU GATE

Executing Entities Forum for Agricultural Research in Africa (Ghana) Federal Coordinating Unit Greening Agricultural Transformation in Ethiopia, thematic programme

GE GGGI

Growth and Employment Global Green Growth Institute

GoE Government of Ethiopia GTP Growth and Transformation Plan 2010/11 – 2014/15 GTP-2 Second phase of the GTP HDI HRBA IE IFPRI

Human Development Index Human rights Based Approach Implementing Entities International Food Policy Research Institute

IMF MEF MFA M&E

International Monitory fund Ministry of Environment and Forestry Ministry of Foreign Affairs Monitoring & Evaluation

MLE Monitoring, learning and evaluation MoA Ministry of Agriculture MoFED MPTF

Ministry of Finance and Economic Development Multi-Purpose Trust Fund

MRV Monitoring Reporting and Verification NEC NGO

Natural Resources, Energy and Climate Non-Governmental Organisation

NPC National Planning Commission PIF Agricultural Sector Policy and Investment Framework PPD PPP PSNP RBOA SNNP SRAP SRM TA

Planning and Programming Directorate Public Private Partnership Productive Safety Net Programme Regional Bureau of Agriculture Southern Nations Nationalities and People Sector Reduction Action Plans Sector Reduction Mechanism Transformation Agenda


Final Draft 17 September 2014 v

TAS Technical Advisory Services, a section within the Ministry of Foreign Affairs/Danida

TC Agricultural Transformation Council UNDP United Nations Development Programme USAID USD

United States Agency International Development United States dollar

MAP OF GATE PROGRAMME TARGET REGIONS


Final Draft 17 September 2014

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1 PROGRAMME CONTEXT

1.1 Introduction The cooperation between Denmark and Ethiopia is strategic in nature and based on a shared interest in peace and stability, poverty reduction and food security. At the same time there is a joint commitment to the global agenda on climate change and green growth that was jointly identified by Denmark and Ethiopia as a strategic entry point for a first consolidation of the still new Danish-Ethiopian development partnership. There is strong coherence between the detailed and comprehensive strategic focus for sustainable and inclusive green growth of Ethiopia, with a special focus on agriculture, and the range of policies of Denmark that are designed to guide the development cooperation. From the Ethiopian side, there is an advanced policy framework with regard to promoting poverty reduction and green growth, as reflected in the Growth and Transformation Plan (GTP, 2010-2015), the Climate Resilient Green Economy Strategy (CRGE) and the sector specific Agricultural Sector Policy and Investment Framework (PIF). From the Danish side, relevant strategies include the Right to a Better Life, the Strategic Framework for Natural Resources, Energy and Climate (NEC) and the Strategic Framework for Growth and Employment (GE). Furthermore, there is full alignment with the EU+ Joint Cooperation Strategy for Ethiopia. Thus, the suggested thematic programme – Greening Agricultural Transformation in Ethiopia (GATE) - will contribute to strengthening the Danish-Ethiopian partnership in an area which forms a core part of the Ethiopian development vision. At the same time, the GATE programme builds on Denmark’s comparative advantages as well as a specific and valuable set of knowhow from past experience.

1.2 National thematic context and policy framework Ethiopia, with a population of 91.7 million, is among the world’s most vulnerable and poorest countries with a per capita income of USD 550, ranking 173 out of 187 in the HDI 2014, but Ethiopia has demonstrated notable prospects for poverty reduction and sustained growth during recent years. Poverty headcount shows strong improvement from 38.9 percent of the population living below the national poverty line in 2004 to 29.6 percent in 2011. In terms of economic development, the Ethiopian economy has grown by more than 7 percent over the past 10 years and has been fairly successful in translating this growth to higher living standards. The Ethiopian Government aims at achieving middle-income status by 2025 through building a green economy with carbon neutral growth. The national development plan, the GTP, sets out the short to medium term framework 2010-2015. The aim is to attain the MDGs in addition to ambitious goals of strengthening public institutions, decentralisation, mobilising domestic revenues, fighting corruption and promoting gender equality. The GTP emphasises the pivotal role of agriculture in bringing Ethiopia to middle income status, recognising that the sector is contributing about 46 percent of Ethiopia’s GDP and up to 90 percent of export earnings. The next GTP (GTP-2, 2015-2020) is presently under formulation and is expected to continue the policy directions and development vision with only a few major adjustments concerning even higher priority given to the greening agenda, gender and youth issues. The Government has formulated a vision for the transformation of the agriculture sector. The Agricultural Transformational Agenda specifically spells out the action needed annually to transform the sector and the accelerator role of the Agricultural Transformation Agency herein. A reference point is the sector specific Agriculture Sector



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Policy and Investment Framework (PIF) 2010/11 – 2019/20, prioritising 14.6 million smallholder farming households that contribute 90 percent of the agricultural GDP and 85 percent of employment. Special attention is given to women and youth. The aim is an increase in agricultural production by about 8.1 percent annually, with an annual allocation of 12-17 percent of the national budget to the sector. The GTP and sector strategies are supported by the CRGE (2010-2030) that sets the green agenda with ambitious goals for streamlining climate through all sectors by all actors and for achieving carbon-neutral growth. Whereas Ethiopia has a stated goal of being a frontrunner among developing countries in building a green economy, the CRGE also reflects Ethiopia’s high vulnerability to climate change and frequent exposure to climate extremes. The country has one of the highest rates of soil nutrient depletion and natural resources degradation in Sub-Saharan Africa. Ethiopia ranks number 125 out of 189 in the 2014 Doing Business Index. The role of the private sector and Public Private Partnerships is included in Government policies and strategies. According to the Government of Ethiopia (GoE), preference is to be given to farmers groups and cooperatives as key private actors in its approach to sustainable Public Private Partnerships and to address, in a collective manner, sustainable agriculture, natural resources management and climate change issues.

1.3 Synergies The suggested thematic programme, GATE, complements the joint application of Danish development and humanitarian support to building resilience through social protection, food security and adaptation to climate change. A key development engagement in this regard is the Government’s Productive Safety Net Programme (PSNP) that Denmark has supported since 2011. The PSNP focuses on the low-potential and more vulnerable and food-insecure regions of Ethiopia and currently reaches more than 6 million food insecure people. With the new thematic programme, the Danish approach will be supplemented by engagements in four high potential regions (Tigray, Amhara, Oromia and the Southern Nations, Nationalities and People (SNNP), (see map on Page v). The four high potential regions will be targeted for implementing GATE activities at regional, local and enterprise/farm level, following the GoE’s geographical prioritisation of the Agricultural Transformation Agendas and the Agricultural Growth Program. Synergies will also be established with the GGGI Ethiopia which works with key stakeholders, at especially the federal level, involved in the suggested thematic programme. While several international partners provide more traditional support to Ethiopia’s agricultural sector, the suggested thematic programme will through a lean and strategic selection of two development engagements place Denmark in a distinctive position to empower and work with central actors in government and other relevant stakeholders on greening agricultural transformation for inclusive, green growth and development.

2 PRESENTATION OF THE GATE PROGRAMME 2.1 Background The Greening Agricultural Transformation in Ethiopia (GATE) thematic programme has a total budget of DKK 177.5 million for the period December 2014 – December 2017. The GATE programme contains two development engagements, one DKK 150 million engagement with the Agricultural Transformation Agency (ATA) and a second DKK 27.5 engagement with the Climate Resilience and Green Economy (CRGE) Facility, financed from the special Danish Climate Envelope. The first 10 months of the programme period is



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an Inception Phase, introduced as a consequence of engagement partners being young institutions with their own results frameworks only partly in place, and since engagement partners may be subject to changed or potentially expanded ‘green’ mandates in mid-2015 as a likely result of the future GTP-2.

2.2 Programme objectives The thematic programme objective of GATE is

Thematic objective:

To sustainably1 increase rural incomes The objective reflects directly the GoE’s Agricultural Sector Policy and Investment Framework (PIF)2 and is further fully aligned to Danida’s development strategy and policy framework. Engagement one – the ATA engagement - will provide Danish funds and technical assistance for strategic activities that will work towards an increased climate smart planning, implementation and monitoring of the national Agricultural Transformation Agenda. The ATA engagement objective is

Engagement objective 1:

To implement the Agricultural Transformation Agenda in a climate smart manner3

Engagement two - the CRGE engagement - will provide Danish funds for the CRGE Facility account (pooled with funds from e.g. the UK, Norway and Austria) to support Programmes and projects, and the CRGE Capacity Development Programme. The CRGE engagement objective is

Engagement objective 2:

To strengthen the Government of Ethiopia’s efforts to mainstream and implement CRGE initiatives in the agriculture and forestry sectors.

2.3 The ATA engagement The Agricultural Transformation Agency (ATA) was set up in 2011 as a high-level ‘change agent’ to support the GoE’s efforts of transforming the agricultural sector. The agency is under the strategic direction and leadership of the Agricultural Transformation Council (chaired by the Prime Minister and co-chaired by the Minister of Agriculture). The Agricultural Transformation Agenda, a set of about 80 strategic key strategic deliverables across priority program areas, is developed annually by MoA in cooperation with ATA, and is

1 In line with Danida’s Green Growth Guidance Note (June 2014), the term ‘sustainably’ used in the thematic programme

objective refers to the sustainability of environmental aspects (‘green’) in addition to those of economic and social aspects. 2 The PIF objective is “to sustainably increase rural incomes and national food and nutrition security”. The latter has been left out

of the GATE objective since it is covered by ongoing support for the Productive Safety Net Program. 3 ‘Climate Smart manner’ refers to approaches that proactively facilitate environmentally sustainable agricultural development and

promote adaptation and resilience to a changing climate through (a) development/rehabilitation of the natural resource base and more sustainable and efficient use of natural resources (b) minimizing environmental impacts such as pollution; (c) contributing to low-carbon economic development; (d) minimizing the vulnerability of human and natural systems to extreme climate events due to climate change, and (e) building capacity of farmers and other stakeholders to adjust and respond to the effects of climate change.



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sought financed by GoE and development partners as an integrated part of the national budget planning process. While the MoA and many other partners at the federal and regional level play critical roles in identifying and implementing most of these deliverables, the carving out of the specific Transformation Agenda is providing additional focus and attention to the most crucial bottlenecks in the enabling environment that need to be addressed to achieve the ambitious GTP production targets - doubling national production of key agricultural crops from 2005 to 2015. The Transformation Agenda thereby serves as a high level government planning instrument for a concerted effort to transform the agricultural sector, with emphasis given to increasing production. In parallel, the ATA (in close cooperation with MoA) could well be seen as the main strategic government tool for providing overlook, planning and implementation of the Transformation Agenda, while at the same time building capacity in other agencies for the wider agricultural development agenda. For more information on ATA and the Transformation Agenda, please refer to Annex 1. The ATA facilitates change by working with multiple stakeholders including the Ministry of Agriculture (MoA), other federal ministries, regional governments, civil society, the private sector, NGOs, and development partners in developing strategies that address systemic bottlenecks in specific areas of the sector, and supporting partners in executing the interventions identified (mainly provision of know-how and capacity building, often by posting staff in the partner institutions). To ensure these efforts have impact at the household, community, and national levels, ATA uses an integrated approach, focusing on (a) selected value chains (teff, wheat, maize, livestock etc.), (b) important systemic structures (i.e. seed, soil health, cooperatives, etc.), and (c) crosscutting initiatives (i.e. climate and gender). Only in rare cases – when there is no obvious public sector owner of a specific needed intervention - is ATA meant to implement special projects itself. At present, most of ATA’s Transformation Agenda implementation partners are national ministries and regional governments, and the involvement of private sector actors and civil society organisations for implementation is still fairly limited and thus sought increased. Although not originally part of its mandate, ATA has already made a clear commitment to addressing climate and environmental issues though building capacity in the extension system for both providing climate information and promoting conservation agriculture. In addition, ATA’s activities in natural resource management (e.g. soil fertility and intercropping) and efficiency measures (e.g. cooperative storage and value chain initiatives) demonstrate clear commitment corresponding well to Danish priorities. However, it is realised internally in ATA that these mainstreaming efforts have not been creating as many results as would be desired. Especially the absence of clear green definitions adapted to the Ethiopian context and the absence of a consolidated strategy on how to actually address climate and environmental issues has meant that ATA has only to a limited degree been capable of fully mainstreaming climate change (‘greening’) into its internal operations and into the actual planning, prioritization and implementation of Transformation Agenda. The ATA has been successful in attracting financial and technical assistance from a number of international development partners, both for its establishment, operation and for financial contributions to Transformation Agenda. However, only limited untied or core funding has yet been provided; there are no single joint financing mechanisms in place; most contributors require separate accounting, monitoring and reporting; and there is no joint donor coordination mechanism or ATA donor working group. This means that the agency is increasingly being stretched in its efforts to satisfy diverse agenda and special needs, and that transaction costs are unlikely to be optimal.



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The ATA engagement is a package of financial and capacity building support that builds on ATA’s achievements so far. Funds will be used for:

Further developing and operationalising ‘climate smart’ mainstreaming of planning, prioritizing and monitoring both internally in ATA and externally with its implementation partners, including the CRGE Facility. A thorough draft greening road map which contains a range of needed climate change/green definitions adapted to the Ethiopian context, specific suggestions for a screening methodology to be applied internally in ATA, as well as recommendations for selected priority interventions to be financed during the Inception Phase has been prepared by ATA as a part of the GATE engagement formulation. The gradual implementation of the ‘greening road map’ will constitute one of the major results of the engagement.

Co-financing of specific parts of the Transformation Agendas that from a strategic point of view are considered either ‘climate smart’ or with certain revisions to approach and methodology could become increasingly ‘climate smart’. Specific screening criteria (including ‘climate proofing’) for the Transformation Agenda has been developed by ATA as a part of the ‘greening road map’. The larger share of funds will be directed through the provision of sub-grants to implementing partners, including MoA, CSOs, and private sector actors.

Provision of technical assistance to strengthen ATA capacity to develop and implement new policies, procedures and strategies needed for efficient donor relations and to gradually increase the involvement of the private sector and Public-Private-Partnerships across the Transformation Agendas.

2.4 The CRGE engagement Since the CRGE initiative was launched in 2011, extensive planning exercises have been made including the preparation of the ‘CRGE Vision for a climate resilient green economy’, the ‘CRGE Green Economy Strategy’ (2011) and the ‘CRGE Facility Operations Manual’ (2014). The institutional set up, including the decision making procedures, is thus in place for implementing the CRGE interventions. The GATE programme will thus be able to benefit from the investments made earlier in establishing and operationalising the CRGE Facility. It is the expectations of the GoE that development partners will increasingly channel bilateral and multilateral climate funds through the CRGE Facility, which also provides opportunities to use climate finance to complement other existing forms of investments, and thereby bolster Ethiopia’s core climate-compatible development activities in areas such as food security, energy, infrastructure development and natural resources management. Implementation of the CRGE Strategy involves both mainstreaming climate change into existing development investments, and the introduction of new activities. During 2014 and 2015, it is anticipated that the CRGE initiative will go beyond greening and informing the GTP to being fully integrated and aligned with GTP-2. The CRGE initiative is still fairly recent and consequently partly untested when it comes to actual implementation and monitoring of effects. With financing from UK and Austria, a fast track initiative was only introduced early 2014. The CRGE Secretariat apprised a number of programmes and projects from priority sectors and regions and the first approved fast track projects were launched end March 2014. It has been assessed that the projects and programmes approved are of sufficient quality, but proposals had to go through many iterations before they reached that sufficient level of quality.



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The finalisation of the systems and procedures for the CRGE Facility is ongoing, and based on lessons emerging from the first round of fast track projects, the operational procedures will be revised as necessary. In addition, important assessments and further system development will only be undertaken during 2014 and early 2015, including (a) a CRGE results matrix and a M&E system for the CRGE Facility (UNDP has contracted a consultant team to develop the M&E system), (b) a fiduciary risk assessment of the CRGE Facility (DFID in cooperation with Norway), and (c) an environmental and social safeguards manual based on World Bank procedures (DFID is supporting the CRGE Facility in elaborating that manual). Since the CRGE Strategy is guiding Ethiopia’s efforts to ‘green’ its economy, its implementation is closely related to the programme objective of the GATE thematic programme. The underlying principle behind the CRGE engagement is that by supporting strategic priority interventions, the Danish support can both achieve tangible results at the programme level (through up-scaling), but also generate increased capacities as lessons, which will enhance the capacity of sector stakeholders to integrate CRGE in their works (which will be required for GTP-2). The CRGE engagement is a Danish provision of funds to be used for:

Financing of agriculture and forestry project and programmes proposals under joint calls for proposals, aligning fully with the procedures and principles of the CRGE Facility. More details on the CRGE Facility, its organisation, its grant mechanisms and systems can be found in Annex 1.

Financing specific capacity building needs, especially at regional and local government levels.

The rationale for including the forestry sector in the GATE thematic programme is that developments in the two sectors are closely interlinked at the local level, but not served by the ATA engagement.

2.5 Programme design and ‘theory of change’ The inherent logic of the GATE programme is best illustrated by a walk-through of the results chain diagram overleaf, containing both the objective hierarchy and the specific objectives and outcomes of the two engagements. In the absence of a country programme, the thematic programme objective of GATE does in principle not need to feed in upwards into a strategic objective. However, a sustainable increase in rural incomes (the thematic programme objective) is desirable in order to achieve something at a higher level of the impact pathway, and most logically - when considering Danish and Ethiopian priorities – a potential working title of the strategic objective of the country programme would be “to contribute to democratic and inclusive green growth, reduction of poverty, and promotion of stability and peace”.



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OBJECTIVE HIERARCHY

Strategic Objective* Thematic Objective

Engagement Objectives

Engagement Outcomes

* this could have

been potential objectives of a country programme

Greened agri-cultural production: Climate smart farm-ing technologies and practices are

developed and promoted within smallholder farmer production through key agricultural sys-tems Sustainable use of natural resources: Technologies and

practices relating to sustainable on-farm

Natural Resources Management and Water Resources Development, are promoted through

key agricultural sys-tems and gradually adopted by small-holder farmers Greened value chains: Value chain actors* understand and start adopt climate smart technologies and

practices along selected value chains (*post-production level)

TO CONTRIBUTE TO DEMOCRATIC AND INCLUSIVE GREEN GROWTH, REDUCTION OF POVERTY AND

PROMOTION OF STABILITY AND PEACE*

ATA engagement: To implement the Transformation Agenda (i.e.

production and productivity) in a climate smart manner (i.e.

greening) (DKK 150 mill)

SUSTAINABLY INCREASE RURAL INCOMES

CRGE engagement: To strengthen GoE’s efforts to mainstream and implement CRGE initiatives (i.e. green growth,

resilience and GHG reductions) in the agriculture and forestry sectors (DKK 27.5 mill)

Greened community based production and NRM: Community based watershed

management enhanced and crop and livestock production practices improved

Forests managed by

participatory principles: Selected forests are protected, re-

established and/or sustainably managed to provide ecosystem services and carbon sequestration

EOb1 EOb2

Outc 2.1

Outc 1.2 Outc 2.2

GATE RESULTS CHAIN (Greening Agricultural Transformation in Ethiopia)

IFM FFS carried out

Outc 1.1

Outc 1.3

Diagram 1: GATE results chain



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The ATA engagement will contribute to ‘sustainably’ through its ambition to have the Transformation Agenda carried out in a climate smart manner, and it will contribute to ‘increased rural incomes’ mainly through the funds provided to co-fund selected Transformation Agendas (mainly growth oriented activities to achieve increases in production). Three outcomes have been grouped together in the diagram to illustrate that they all – but using different tools and focusing on different aspects of agricultural transformation – will contribute to carrying out the Transformation Agenda (and achieve production increase), and increasingly (as a direct consequence of the GATE engagement) in a ‘climate smart’ manner. The split into the three grouped outcomes reflects the thematic organisational set-up of ATA and its own results framework to which the GATE engagement has sought to align as far possible. Outcome 1.1 “Greened agricultural production” focuses on the development and promotion of climate smart farming technologies and practises from a production point of view. This will be done through working within those key agricultural systems, such as research system (outputs could be research on improved seed and inter/double-cropping), extension system (training of development agents and farmers’ training centres (FTC) development), input supply (seed, balanced and organic fertilisers), and risk insurance (addressing e.g. climate uncertainty). Outcome 1.2 “Sustainable use of natural resources” focuses on the sustainable development and use of natural resources, as opposed to the production focus of Outcome 1. While the two are of course highly interrelated at farm level, specific attention to natural resources has been found important by ATA as also reflected in the draft ‘greening road map’. The aim is to promote technologies and practises through the extension system and see a gradual adaptation of for example conservation agriculture, household level water conservation and irrigation (including irrigation efficiency measures), agro-metrological information, and agroforestry. Outcome 1.3 “Greened value chains” focuses on those actors above the production level in selected value chains in which the ATA has been mandated (e.g. teff, maize, wheat, livestock) by the GoE. Examples of deliverables that may be co-financed are facilitation of linkages between technology suppliers and operators with regards to agricultural mechanisation (threshers, planters, harvesters, small tractors, shellers) and facilitation of commercialisation via product market linkages. While the successful achievement of Outcome 1.4 “Increased human and institutional capacity” will mean that the climate mainstreaming of the Transformation Agenda has been achieved, it also has an influence on the ‘greening’ of the other three outcomes and in the effectiveness and efficiency of ATA operations (especially the joint donor efforts). This is illustrated graphically by the vertical orientation of the outcome. Firstly, for the greening outputs, main emphasis will be on finalising and formally adopting the draft ‘greening road map’, and implementing it gradually, both internally and externally. Outputs would for example be climate mainstreaming of the GTP-2 planning process (including M&E), greening of Transformation Agenda planning, monitoring and evaluation, internal ATA reviews, special strategic ‘greening’ studies (supporting the greening ambitions contained in the other outcomes), introduction of green audits (especially when undertaking and updating value chain studies/strategies), application of green screening procedures (including climate proofing), and undertaking green baseline surveys. Secondly, for the donor coordination,



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main emphasis will be on capacity building guided by the Technical Advisor. The capacity building is assumed to increase institutional efficiency and lower transaction costs of ATA operations and of Transformation Agenda, and thus ultimately to also increase the engagement’s contribution to the thematic objective. The CRGE engagement will contribute to both ‘sustainably’ and ‘rural income’ through providing additional funding for the CRGE strategy, which aims at reaching middle-income status by 2025 with net-zero greenhouse gas emissions effect, while simultaneously building climate change resilience. The additional funding is thus expected to have an incremental positive effect on the total CRGE achievements. As a consequence of the agreed GATE prioritization of agriculture and forestry, two separate outcomes have been formulated to illustrate the specific CRGE ambitions selected for the two sectors. Outcome 2.1 “Greened community based production and natural resources management” focuses – on the request of the CRGE technical unit in the Ministry of Agriculture – on watershed management and crop and livestock production, mainly applying a community based approach4. Examples of potentially approved projects (following the calls for proposals) could be: selected participatory watershed management projects (models already developed and tested by MOA), fodder production for livestock, emission minimisation (mitigation) by livestock herd optimization, limiting free grazing and closing areas for rehabilitation and community based action research on improving crop cultivars/drought resistant varieties. The combined focus on sustainable use of natural resources and crop and livestock production (aiming at higher and more sustainable productivity of land, water and livestock herds) will contribute directly to meeting the engagement and thematic objectives. Outcome 2.2 “Forests managed by participatory principles” focuses on the protection, re-establishing and/or sustainable management of selected forests in the four regions. Models already successfully developed and tested by especially civil society/NGOs will be scaled up. It is expected that the proposals funded for example may cover participatory forest management projects including value chain approaches to developing non-timber products (vegetable and fruit production, honey, herbs and essential oils, coffee and spices), reforestation, eco-tourism, sustainable timber production, and also water conservation. The MEF will increasingly be involved in model evaluation/revision. The combined focus on increased income from alternative economic opportunities (ecosystem services) and environmentally sustainable practises (e.g. carbon sequestration) will contribute directly to the engagement objective and to the thematic objective. Outcome 2.3 “Strengthened human and institutional capacity” focuses on building capacity to better plan, implement and monitor CRGE funded programmes in CRGE units of federal ministries but especially at regional and local (woreda) levels. The capacity building efforts will also work towards better learning from the GATE funded programmes (of which some will have piloting features) across the wider CRGE context. Of special emphasis will be training in environmental and social safeguards, planning, proposal preparation, management (including performance and financial management), reporting, and M&E. The outcome will have a positive effect on the two other outcomes in terms of effectiveness and efficiency of

4 The key difference to outcome 1.2 of the ATA engagement is that watershed management and related management of e.g. land

management for crop and livestock production needs a community approach to be effective. ATA focuses almost exclusively on the farm-level, and no overlaps or duplication of efforts is therefore expected. In addition, coordination between ATA and the CRGE secretariat (ultimately ensured by the Embassy’s participation in the CRGE Advisory Board) will ensure that their respective regional initiatives do not operate in the same woredas.



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funds utilization, but may also have a direct positive effect on the mainstreaming of the CRGE Facility’s operation (sharing and application of lessons learned and best practises).

2.6 Programme justification The strong commitment of Ethiopia and Denmark to the global agenda on climate change and the importance of green growth provide the strategic and preferred entry point for the GATE programme. Hence, the programme will strengthen the Danish–Ethiopian partnership in an area which forms a core part of the Ethiopian development vision and where Denmark has a comparative advantage. The GTP emphasizes the role of the agricultural sector in bringing Ethiopia to middle-income status by 2025. The GTP is supported by the CRGE strategy that convincingly sets the green agenda, and by the Transformation Agenda that specifically spells out the action needed annually for ATA to meet its roles and responsibilities for transforming the agricultural sector jointly with the Ministry of Agriculture and others. The ATA and the CRGE Facility are therefore the preferred GATE partner options for both the GoE and for Denmark. Combined with the agricultural sector’s importance and the priority given to green growth, the relevance is accordingly considered very high; both regarding the objectives of the GATE thematic programme and regarding the selection of the two engagement partners and their respective engagement objectives. The GATE thematic programme will contribute to and strengthen already established GoE initiatives, each with their own results frameworks and expected achievements in terms of long term impact (e.g. on income, production, productivity, resilience, efficiency in the use of natural resources, and GHG emissions). The expected impact of GATE will accordingly be incremental as well as longer term (outside the programme period) and will thus not be measured on its own. By nature, GATE impact will be highest in those locations benefitting more directly from the assistance, e.g. communities or farmers in selected woredas. However, it is also expected that there will be a positive and more indirect effect from GATE activities in terms of human and institutional strengthening. When designing the programme and agreeing on the engagements’ various outcomes, high priority has been given to aligning to and making use of existing institutional structures, and furthermore to support – or further strengthen - interventions that are already practised and to a large extent already have proven their effectiveness. This should ensure full ownership and ready-to-implement results frameworks. In that respect, effectiveness is expected to be high, although ATA is still in a process of being internalised across GoE structures (see institutional risk no. 3 in Annex 4) and although the CRGE Facility has not yet finalised its first round of fast track initiatives and actual implementation experience therefore remains limited (see institutional risk no. 6 in Annex 4). The establishment of ATA as well as the CRGE has been resource demanding; requiring significant financial and technical support from a large number of international and national contributors. The GATE programme will thus be able to build on those earlier efforts without having contributed financially. No cost-efficiency analysis has been finalised for either ATA or the CRGE Facility, but ongoing and planned reviews are being carried out by other development partners and are expected to point to potential efficiency as well as effectiveness gains. Essentially, efficiency is relatively unknown given the early stages of the two engagement partners’ operation and it will be monitored accordingly. The Inception Phase allows for any necessary adjustments to the engagement support as a consequence of the reviews and experiences made. That said efficiency is expected to be high, especially when findings and recommendations of ongoing analyses are applied and as the two partners



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mature and gradually learn from experience and best practises. Furthermore, the GATE assistance for ATA is also aimed at strengthening institutional capacity in terms of more effective operations and thus increased efficiency (outcome 1.4 of the results framework). Building capacity for greening and for an efficient implementation while at the same time scaling up the activities of young but already existing GoE institutions are the main elements of the design logic of the GATE programme and they will all per se be contributing to a high likeliness of sustainability. Both institutions are posed to continue operation beyond present and potential future phases of the GATE programme, although ATA has an anticipated life-span of another 10-15 years only, at such time when the transformation can be handled directly by the institutions and systems targeted by ATA’s interventions. In summary, the GATE programme and its engagement partners are found to be an excellent strategic opportunity for Danish-Ethiopian cooperation and partnership. There are associated risks, as explained in Annex 4, but if they are dealt with openly and constructively, the partnership and its engagements are considered fully justified.

2.7 Gender equality and HRBA The GATE programme’s approach to addressing gender equality and applying a HRBA is by nature made up from the two engagement partners’ policies, strategies and actual implementation with the four principles of non-discrimination, participation & inclusion, transparency, and accountability. However, from an overall perspective, the GATE programme ultimately seeks to empower small holder farmers; applying an inclusive, participatory bottom-up approach in working with the right holders (through supporting the extension system and community based programmes and projects) while at the same time strengthening the agricultural systems and institutions that set and develop the framework conditions under which the small holder farmers are operating (focusing more on the top-down approach of duty bearers, especially at regional and local levels). With regards to the latter, the GATE programme has ensured that the two engagement partners have sufficient policies and strategies in place that respect the four basic principles throughout their operations, and – from a more practical implementation point of view – has ensured that civil society organisations and the private sector can participate on equal terms. The GATE programme and its engagements will respect the GoE’s general policies for the participation of women and youth, stating that at least 30% of the beneficiaries of any development activity should be female, and at least 10% young (above 18 years). This is reflected in the results framework indicators. For the ATA engagement, the partnership will build on and further strengthen ATA’s formal guidelines, policies and procedures with regard to its expressed “ATA Stakeholder Responsibility”, covering

(a) Non-discrimination ensured e.g. through a dedicated gender cross-cutting team following ATA’s Gender Mainstreaming Guidelines, and in the direct targeting of female headed households with adapted technologies and approaches,

(b) Empowerment and participation ensured e.g. through stakeholder involvement and building of ownership at local levels,

(c) Social and environmental impacts ensured e.g. through the application of environment and social impact studies,

(d) Transparency ensured e.g. through reporting quarterly to the Agricultural Transformation Council and



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(e) Accountability .e.g. ensured through close interaction with MoA and the Agricultural Transformation Council and through independent external financial and performance audits as well as having an internal audit function.

The ATA engagement will specifically (under Outcome 1.4) finance activities to further develop internal policies and procedures needed to mainstream the “ATA Stakeholder Responsibility”, and likely also in further ensuring a systematic approach to gender disaggregated M&E as well as introducing ‘gender audits’. For the CRGE engagement, gender and HRBA will be guided by the social and environ-mental safeguard mechanisms developed by the World Bank for the Productive Safety Net Programme which are presently being adapted to the CRGE facility with regard to:

(a) Non-discrimination, empowerment and participation ensured by the application of the safeguard mechanism and the bottom-up planning system which the CRGE proposal preparation follows

(b) Social and environmental impacts ensured through the criteria developed for appraising the proposal financed by the CRGE Facility and through also the application of the safeguard mechanism

(c) Transparency ensured through reporting to the management committee chaired by MOFED) and

(d) Accountability ensured through close interaction with the Inter-ministerial Committee and through independent external financial and performance audits.

2.8 Results framework As a major principle, the GATE thematic programme relies as far possible on the partners’ existing operational as well as performance measurement systems and the GATE engagement results framework has been designed accordingly. However, the CRGE M&E framework has not yet been finalised and furthermore, systematic national reporting on green indicators (which is thought to be a part of the new GTP-2 framework and thus apply to both ATA and CRGE) will only be finalised mid-2015. Also, ATA realises internally that its present indicators outcomes and intermediate objectives do not sufficiently capture green issues. An increased greening of ATA’s M&E system is a part of Outcome 1.4, carried out parallel to that of aligning agricultural performance measurement under the AGP to that of the GTP-2. As a consequence of the above, the GATE programme will revise its results framework by the end of the Inception Phase. For ATA, final outcome indicators, baselines and targets will be set for the remaining period, and outcomes could potentially be reformulated if necessary to reflect any changes in its performance measurement system or organisation. In parallel, outputs and output indicators is to be formulated for the remaining programme period. For CRGE, outcomes and outcome indicators may need revision during the Inception Phase, and baselines and targets should be set. CRGE engagement outputs and output indicators are as such not possible to set, since GATE is ‘funding a fund’ where programmes or projects are per definition not pre-determined. Taking into consideration the need for a future results framework to be fully aligned to and supporting GATE’s theory of change and engagement objectives, two indicative results frameworks have been prepared based on a priori expectations for outcomes and for ATA also for outputs. Full tables are presented in Annex 2, and a summary at outcome level is provided in the tables below.



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For the Inception Phase, the results frameworks will be based mainly on process indicators, but for ATA also a limited set of relevant outputs screened and found to be contributing to climate mainstreaming within ATA and the Transformation Agenda. Those results frameworks specifically for the Inception Phase can be found also in Annex 4.

GATE Programme Results Framework Thematic Programme Greening Agricultural Transformation in Ethiopia (GATE)

Thematic Programme Objective

To sustainably increase rural incomes

Impact Indicators National statistics at regional level for:

Increase in average household income

Increase in average agricultural productivity and production

Decrease in GHG Emission

Summary of ATA Engagement Results Framework

Engagement Objective 1 To implement the Transformation Agenda in a climate smart manner5

Outcome 1.1 Climate smart farming technologies and practices are developed and promoted within smallholder farmer production through key agricultural systems6

Outcome indicator 1.1 Incremental number of small holder farmers in selected woredas of the four regions who are aware of and have access to climate smart production technologies and practices

Outcome 1.2 Technologies and practices relating to sustainable on-farm Natural Resources Management and Water Resources Development7, are promoted through key agricultural systems and gradually adopted by smallholder farmers

Outcome indicator 1.2.1 For selected woredas of the four regions: Total incremental area of smallholder farm land (ha) that has been (a) rehabilitated, (b) irrigated or (c) applied with relevant Sustainable Land Management Practices (SLMP)

Outcome indicator 1.2.1 For selected woredas of the four regions: Increase in yield (kg) per unit of irrigated land or water used (for selected crops, to be decided)

Outcome 1.3 Value chain actors understand and start adopting climate smart technologies and practices along selected value chains

Outcome indicator 1.3.1 Average % reduction in post-production losses along selected value chains8

5 ’Climate Smart manner’ refers to approaches that proactively facilitate environmentally sustainable agricultural development and

promote adaptation and resilience to a changing climate through (a) development/rehabilitation of the natural resource base and more sustainable and efficient use of natural resources (b) minimizing environmental impacts such as pollution; (c) contributing to low-carbon economic development; (d) minimizing the vulnerability of human and natural systems to extreme climate events due to climate change, and (e) building capacity of farmers and other stakeholders to adjust and respond to the effects of climate change 6 Systems refer to key systemic structures in agriculture such as extension, research, rural finance and input markets 7 Natural Resources Management refers to practices that protect and enhance the environment such as conservation agriculture,

and Water Resources Development includes Household Irrigation which includes the efficient extraction and use of shallow ground water (for example, though strengthened performance standards for pumps) 8 Relevant sustainable land management practices will be further defined and approaches developed during the Inception Phase



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Outcome indicator 1.3.1 Area of wheat/maize/teff farmland (ha) inter-cropped with nitrogen fixing pulses

Outcome 1.4 Human and institutional capacity for climate mainstreaming within ATA and its key implementation partners and for donor coordination is enhanced

Outcome indicator 1.4.1 The ‘greening road map’ is been approved and being implemented

Outcome indicator 1.4.2 Joint-programming and reporting policies and procedures for ATA are in place

Summary CRGE Engagement Results Framework Engagement Objective 2 To strengthen the Government of Ethiopia’s efforts to mainstream

and implement CRGE initiatives in the agriculture and forestry sectors

Outcome 2.1 Community based (1) watershed management9 enhanced and (2) crop and livestock production practices improved

Outcome indicator 2.1.1 The incremental increase in the land area (hectares) put under community based watershed management practice as a consequence of GATE funding

Outcome indicator 2.1.2 The incremental number of small-holder farmers benefitting from the CRGE interventions as a consequence of GATE funding

Outcome 2.2 Selected forests10 are protected, re-established and/or sustainably managed to provide ecosystem services11 and carbon sequestration12

Outcome indicator 2.2.1 The incremental area of forested land (hectares) at regional level as a consequence of GATE funding

Outcome indicator 2.2.2 The relative increase (percentage) in carbon sequestration at regional level as a consequence of GATE funding

Outcome 2.313 Human and institutional capacity to plan, implement and monitor CRGE Facility funded programmes is strengthened at federal and regional and local levels, and lessons learned from pilot projects financed by GATE funds are applied in the wider CRGE context

Outcome indicator 2.3.1 The four regions submit financing proposals of higher quality to the Federal Implementing Entities (sectoral ministries)

Outcome indicator 2.3.2 The four regions monitor and report according to plans and requirements of the CRGE Facility

9 Community based watershed management in this context is defined as the practice where organized community groups undertake physical and biological watershed management practices on defined watershed area within their kebele 10 Selected forests in this context are forests owned by the government but managed and used by communities 11 Ecosystem services in this context refers to indirect services of forest to humans in the form of enhanced soil fertility, water availability, food, and spiritual and cultural values 12 Carbon sequestration in this context refers to services of forests in absorbing carbon dioxide from the atmosphere and storing it in different forms of the forest carbon pools. 13 To be evaluated by the CRGE Facility Secretariat based on annual questioning of the Federal Implementing Entities who collect and consolidate the regional proposals.



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2.9 Support modalities The GATE programme will use a mix of different support modalities, ranging from soft earmarked funds (e.g. for screened and selected Transformation Agenda deliverables and for capacity building in both ATA and CRGE) to partly untied funds (i.e. for the two CRGE sectors where funds could be pooled with those of other contributors). The vision is that ATA, by the end of the GATE programme period, will have a joint financing mechanism in place that would allow for untied support for core operations during a potential second phase of GATE.

2.10 Capacity building and technical assistance Since the two engagements are entered with already established institutions, to which considerable efforts and funding has been invested by GoE and international development partners, the need for capacity building and technical assistance is found to be limited. However, a full time Technical Advisor has been identified by ATA as justified in terms of transferring skills for donor coordination and for managing the increasing number of Transformation Agenda implementation partners, including private sector (through sub-grants provided by GATE funding). The Technical Advisor will be formally employed by Danida, but will in all other respects be fully integrated into ATA’s organisation and own capacity building strategy that for example focuses on the importance of the transferring of skills in order for Ethiopian nationals to gradually take over those positions presently held by diaspora or international consultants. Minor funding for necessary capacity building in terms of climate mainstreaming internally and externally in ATA is included under Outcome 1.4. For the CRGE engagement, a budget has been included under Outcome 2.3 for building capacity in CRGE units of federal ministries, regional bureau staff, woreda staff in environmental and social safeguards, planning, proposal preparation, management (including financial), M&E and reporting. The GATE funding for capacity building will be targeted the CRGE Facility capacity programme, where other development partners’ capacity building contributions are also directed and coordinated.



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3 PROGRAMME MANAGEMENT 3.1 Programme and engagement level management Programme level management will be limited to high-level consultations between the Embassy and the MoFED (the two signatories to the programme agreement) as and if needed. Both parties can call for meetings on ad hoc basis, and official minutes will be taken and agreed upon if considered needed by any of the parties. The two engagements will be managed by the partners following their own administrative and management procedures (described in the two engagement documents) that have been analysed and found to be satisfactory to other donors’ requirements (including the World Bank and USAID). The Embassy will coordinate directly with the two engagement partners on any issue related to the agreements, and will for example participate in CRGE Advisory Board. The Embassy will agree annually with ATA on the selection of Transformation Agendas that can be co-financed with GATE funding, based on the result of ATA’s climate screening.

3.2 Programme monitoring, reporting and reviews The Embassy and the partners will agree to a draft revised results framework at latest one month prior to an Inception Review planned to take place in September/October 2015. A time plan for the Inception Phase needs to be prepared and agreed right after programme start, and a number of meetings pre-scheduled. No consolidated GATE Inception Report will be prepared, but a brief Management Note from the Embassy will accompany the two Inception Reports to be prepared by the partners. Apart from the Inception Reports, which will be based mainly on achievements of the agreed process indicators (Annex 4), the intention is that no specific formalised progress reporting will be required from the partners. The Embassy will rely on partner consolidated progress reporting submitted according to their own procedures as long as they contain necessary information to satisfy the engagement results frameworks. At the end of each financial year, the Embassy will prepare a consolidated table of progress against targets at outcome level (or selected outcome indicators) which will be reported to the Danish MFA. The Inception Review will be carried out by Technical Advisory Services of the Ministry of Foreign Affairs, Denmark. The Inception Review will be guided by TORs prepared by the Embassy in accordance with Danida’s guidelines for Mid-term Reviews.

3.3 Donor coordination At this point of time August 2014, ATA has six major donors (Please refer Annex 1 page 5 for the list of donors and their contribution) while five development partners are presently committing financial funding and technical support to CRGE (DFID, Austria, Norway, UNDP and World Bank). It is expected that the number of development partners supporting the two engagements will increase over the coming years. There is a conceived need for the two organisations and for the involved development partners to consider modalities to help reducing transaction costs and more efficient donor interaction. Presently, ATA is considering joint programming arrangements to combine flexibility in implementation with mechanisms for enhanced dialogue (contained in Outcome 1.4). The Embassy will actively engage and support ATA in this effort and will work with other development partners to develop mechanisms that will ensure that financial and results based reporting are streamlined to reduce transaction costs. The Embassy will also be part of the Advisory Group, a donor group that closely work with the CRGE facility.



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At sector level, donor sector coordination activities take place both within the agricultural sector and the environmental sector. Denmark will, to the extent possible, participate in the Rural Economic Development and Food Security sector working group (RED-FS) for the agriculture sector and the Informal Climate Change Partners group for the environment and forestry sector.

3.4 Risk analysis and risk management Agricultural transformation and green growth is solidly anchored in the Government’s plans and considered to be a key area of intervention in the continued economic and social development of Ethiopia. This is reflected in national budget prioritisations and the robust support from a broad group of international donors. While the risk of economic turbulence cannot be entirely excluded, economic projections suggest continued growth. Politically, Ethiopia will face national elections during the period of implementation but significant political chocks are not foreseen. As such, at the context level, no major risks are found. The process leading to GTP-2 is well underway; with a continued strong focus on agricultural green growth. Should preparations slow down due to a drop in political attention during the national elections, the sequencing of the GATE programme’s phases could be delayed. However, the substantial importance given to the GTP-2 by the GoE suggests that this is a less likely scenario. The GATE programme will require substantial cross-ministerial and institutional cooperation. Key partners – ATA and CRGE – are relatively young organisations, and ministries are still developing their coordination capacity. Potential institutional weaknesses and capacity gaps will be assessed closely and tackled when needed to avoid the risk of slow implementation and potentially emerging overlap in tasks and/or mandates. As a well-performing young institution, ATA could be pushed to undertake more tasks and increasingly be responsible for direct implementation. This risk could be further aggravated by low capacity and few resources among some of its implementing partners. By stretching ATA’s own capacity the sustainability of ATA could be threatened. Parallel to the building of internal capacity at ATA there is a need for effective donor coordination securing focus and harmonization of engagements and modalities. At CRGE there is a need to improve the involved institutions’ core capacity for project preparation, implementation and financial management, especially a decentralised levels; without those, delays in both activities and disbursements could be likely. Through the GATE programme, funding will be allocated to this crucial build-up of administrative capacity at relevant levels of the organisation. The design of the GATE programme and the two development engagements is specifically addressing and thus mitigating most of the programmatic and institutional risks. Further risk responses and a full overview of the risk assessment and risk management framework are provided in Annex 4.



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4 PROGRAMME BUDGET AND FINANCIAL MANAGEMENT 4.1 Programme budget Development Engagement 1: ATA engagement

Budget (DKK mill)

Outcome 1.1 Greened agricultural production: Climate smart farming technologies and practices are developed and promoted within smallholder farmer production through key agricultural systems

29.8

Outcome 1.2 Sustainable use of natural resources: Technologies and practices relating to sustainable on-farm Natural Resources Management and Water Resources Development, are promoted through key agricultural systems and gradually adopted by smallholder farmers

26.5

Outcome 1.3 Greened value chains: Value chain actors understand and start adopting climate smart technologies and practices along selected value chains

57.4

Outcome 1.4 Strengthened capacity: Human and institutional capacity for climate mainstreaming within ATA and its key implementation partners and for donor coordination is enhanced

29.9

Sub-total, ATA outcomes 143.5 Contingencies, 1% 1.5 Special studies, reviews, audit 2.0 Technical assistance 3.0

Sub-total, Development engagement 1 150.0 Development Engagement 2: CRGE Engagement

Outcome 2.1 Greened community based production and NRM: Community based watershed management enhanced and crop and livestock production practices improved

15.7

Outcome 2.2 Forests managed by participatory principles: Selected forests are protected, re-established and/or sustainably managed to provide ecosystem services and carbon sequestration

7.8

Outcome 2.3 Strengthened capacity: Human and institutional capacity to plan, implement and monitor CRGE Facility funded programmes is strengthened at federal and regional and local levels, and lessons learned from pilot projects financed by GATE funds are applied in the wider CRGE context

3.0

Sub-total, CRGE outcomes 26.5 Special studies, reviews, audit 1.0

Sub-total, Development engagement 2 (Climate Funds) 27.5 GRAND TOTAL GATE PROGRAMME (DKK MILLION)

177.5

A more detailed budget showing annual allocations and budgets from other sources is provided in Annex 3.



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4.2 Flow of funds and financial management Funds from the Embassy will be disbursed to the two development engagement partners as follows: ATA engagement ATA will develop consolidated annual work plans and budgets for all ATA interventions including activities supported by Danida, following the procedures laid out in ATA’s manuals. Plans and budgets that are sought financed with Danida funding will be presented to the Embassy for endorsement following a ‘climate proofing/screening’. Requests for release of funds will be submitted to the Embassy on a half-yearly basis and will be supported by financial reports on the utilization of previous allocations and a cash flow projection for the coming period. The funds will be transferred directly from the Embassy into a bank account maintained by ATA. MoFED and MoA will be informed about such transfers. Accounting and procurement will be based on ATA’s financial manual and procurement manual which have been approved by GoE and also found satisfactory to other international developments partners such as the World Bank, USAID and the Netherlands. The ATA is expected - following its Guideline for Sub-granting to GoE Institutions, NGOs and Private Sector Partners - to transfer a significant and increasing part of its funding from Denmark to its implementing partners14. Hence, it will be the responsibility of ATA to monitor and report on other implementing partners’ (sub-grantees’) achievements and fund management. After each financial year, the ATA will present internal and external audits of the accounts maintained by ATA. These audits will be financed by the Embassy and comprise inspection of accounting records, cash and bank holdings, verification of physical inventories, examination of the procurement function and compliance with the accounting manual. Finally, if deemed necessary, the Embassy will commission independent financial audits that may also assess fiduciary risks, procurement and value-for-money of both ATA and sub-grants. CRGE engagement Funds for the CRGE Facility will be transferred directly from the Embassy into a dedicated bank account maintained by MoFED in the name of the programme following transfer requests from MOFED. Requests for release of funds will be submitted to the Embassy on an annual basis and will be supported by financial report on the utilization of previous allocations and a list of CRGE interventions that the CRGE Facility proposes for Danish support for the coming period. Accounting, procurement and auditing will follow GoE procedures. Denmark maintains the right to conduct independent financial audits of the programme account. The intention is that such audits will be conducted jointly with other development partners supporting the CRGE Facility. Financial management and flow of funds for the two engagement partners are further elaborated in the two development engagement documents.

14 During the Inception Phase, an estimated 43% is intended to be transferred to sub-grantees.

Thematic Programme Document ANNEXES GATE, Ethiopia

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ANNEX 1 BRIEF DESCRIPTION OF PARTNERS THE AGRICULTURAL TRANSFORMATION AGENCY (ATA) 1 EXECUTIVE SUMMARY Organizational Overview The Agricultural Transformation Agency (ATA), an agency within the Government of Ethiopia, began operations in August 2011 with the mission to catalyze the transformation of the agricultural sector in Ethiopia and thereby enable the country to achieve middle income status by 2025. It reports to the Transformation Council, which is chaired by the Prime Minister, with the Minister of Agriculture as the Deputy Chairperson. ATA achieves its mandate by engaging public, private, and civil society partners through 1) catalyzing the implementation of a targeted set of integrated interventions that will make immediate productivity and income increases for a large number of smallholder farmers and 2) supporting agriculture sector stakeholders in developing and implementing solutions to systemic bottlenecks in order to transform the agriculture sector. Strategic Priorities ATA focuses on a set of priority value chains, addressing both crops (wheat, maize, teff, barley, sorghum and sesame) and livestock. It has established five strategic priority areas to address the needs of these key commodities, covering value chains, systems (such as soil, seeds and cooperatives), cross-cutting initiatives (including a focus on Climate & Environment and Gender issues), special projects (such as fertilizer blending), and partnerships and coordination. In order to achieve specific and measurable results, the ATA focuses on a narrow set of activities across multiple program areas that have the highest potential of catalyzing transformational change for the greatest number of smallholder farmers in Ethiopia. ATA supports the transformation agenda by enabling its public partners to execute on specific deliverables and by leading the effort on critical deliverables that have no clear public sector owner. Funding & Approach ATA secures funds from the Government of Ethiopia and from development partners, and since its inception, has secured over $50 million USD. ATA adjusts its budgets annually and semi-annually to meet the requests of the Transformation Council and to take advantage of successful programmatic opportunities that are poised for quick scale-up with the potential to rapidly achieve high impact on a large number of farmers including women and youth. As a dynamic, young, and focused organization that is working to secure the transformation of Ethiopian agriculture, ATA brings new approaches to solving major problems facing the sector. While many of these challenges relate to transforming past practices that have limited effectiveness, ATA’s strategic vision also delivers the new, innovative ideas and technologies necessary to secure better lives for men, women, and youth smallholder farmers. 2 MANDATE The mandate of the ATA is addressing the systemic bottlenecks in the agriculture sector and to catalyse the implementation of a targeted set of integrated interventions that will make immediate impact for a larger number of women, men and youth smallholder farmers in Ethiopia. The ATA works in partnership and support the Ministry of Agriculture (MoA) and other public, private, and non-governmental organizations to enhance their capability and contribute to the achievement of the doubling of the national production of key crops from 2005 levels by 2015, and an average annual growth rate of at least 8.1% in the agriculture sector during the Growth and Transformation Plan (2010-2015).


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To achieve its mandate, the ATA carries out the following activities:

Develops multi-year strategies in key program areas with its public, private, and NGO partners.

Guided by strategies, works with public sector partners to develop the transformation agendas for the agricultural sector. A transformation agendas consists of multiple deliverables that if achieved would transform the sector; deliverables are adjusted from year to take advantage of changes within the sector.

Catalyzes the implementation of priority deliverables, which are “owned” by a specific public institution or department.

In rare cases, leads the implementation of special projects where there is no public sector owner.

3 ORGANIZATIONAL STRUCTURE ATA currently has 220 staff and works with its implementing partners in 251 woredas15 in four regions. As the demands for ATA’s involvement in the agricultural sector have grown, so has its organizational structure and staff size. ATA expects organisational growth to slow dramatically in the coming years. The ATA’s engagements take place across a targeted set of issues and geographies and are organized through four types of Program Teams.

Value chains: ATA’s value chain programs address the production and marketing needs of specific crops that have the greatest potential to impact smallholder farmers. In consultation with the Transformation Council and the MoA, the ATA has prioritized seven crops and livestock that, when taken together, contribute to the vast majority of agricultural production in Ethiopia. The priority crops are teff, wheat, maize, barley, sorghum, sesame, and coffee.

Systems: These programs are the key building blocks to address the main systemic bottlenecks in all value chains so that increased crop production and income generation can become sustainable. Systems activities ensure that all farmers have access to the highest quality improved seed and fertilizer, that the right agronomic and soil fertility information is provided to inform sustainable production practices, and that farmers have access to reliable markets to realize increased income.

Crosscutting Initiatives and Analytics: These programs focus on issues that cut across multiple programs and seek to address specific areas that are important to the long-term viability and sustainability of the value chain and systems programs. These areas include: Climate Change Adaptation & Environmental Sustainability; Gender; Technology Access & Adoption; Information and Communication Technology; and Monitoring, Learning & Evaluation.

Special Projects: This area contains projects where there is no public sector partner and ATA has taken the role of lead agency. Special projects are limited in number but may be drawn from any of the programmatic areas of ATA. Special Projects include Public Private Partnerships, Ethiopia Soil Information System (EthioSIS), and Fertilizer Blending.

All of the ATA’s work takes place through partnerships with multiple stakeholders. These include the MoA and Regional Bureaus who own and drive the agriculture agenda at the federal and

15 “Woreda” is an administrative division in Ethiopia (managed by a local government), equivalent to a district with an average population of 100,000.


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regional levels; development partners who provide critical thought partnership and financial support; the private sector, NGOs and civil society organizations who are often implementing many of the initiatives within the agriculture sector; and public sector and farmer organizations at the woreda and kebele level who are often on the front line of engaging and supporting Ethiopia’s smallholder farmers. ATA uses a hybrid staffing model consisting of both national and international staff in order to rapidly establish ATA and achieve results. Over time, ATA will gradually replace all contract employees who are not long-term, local recruits (see below) so that the institution if fully a nationally-run organization. There are three types of employees at ATA: Long Term Local Recruits; International Seconded Employees; and Consultants (International and Local). 4 STRATEGIC ‘SWOT’ ANALYSIS As a dynamic, young, and focused organization that is working to secure the transformation of Ethiopian agriculture, ATA brings new approaches to solving major problems facing the sector. Like any organizations, ATA has a number of key strengths to build upon, but also weaknesses to improve, key opportunities to take advantage of, and threats/risks it must mitigate. Based on a self-assessment conducted by ATA, the following table outlines key strengths; weaknesses, opportunities, and threats (SWOT) for the Agency.

5 KEY GOVERNMENT PARTNERS Transformation Council The ATA reports to the Agricultural Transformation Council, which was formed at the time ATA was created and provides strategic guidance to ATA on the transformation of the agriculture sector. The Council is chaired by the Prime Minister with the Minister of Agriculture acting as the Deputy Chair; ATA serves as the Secretariat. Other members of the Council include the Chief Executive of Cabinet Ministers, Minister of Finance and Economic Development, Minister of Water and Energy, Minster of Trade, Director General of the Ethiopian Institute for Agricultural Research, and the Agricultural Bureau heads of the four highest producing regions of the country (Amhara, Tigray, Oromia and SNNP).


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Ministry of Agriculture The Ministry of Agriculture has the ultimate responsibility for the development of the agriculture sector. The MoA and ATA work together to support the transformation of agriculture in Ethiopia through coordination, cooperation, and alignment. The CEO of the ATA and the Minister of Agriculture meet on a weekly basis to make sure that both organizations are addressing the issues highlighted by the Transformation Council regarding programmatic and operational issues deemed critical for the transformation of Ethiopia’s agriculture sector. These weekly meetings also enable the Minister to provide ongoing feedback to the ATA in his capacity as the Deputy Chair of the Transformation Council. Regional Bureaus of Agriculture The Regional Bureaus of Agriculture (RBOAs) are key partners in the transformation of the agricultural sector. While ATA’s mandate covers all of Ethiopia, the Transformation Council has prioritized four regions for initial activities. These high producing regions are Tigray, Amhara, Oromia, and SNNPR. The RBoAs and ATA work together to ensure that national targets are achieved at the regional level through capacity building, problem solving, and resource mobilization. Heads of each RBoA serve on the Transformation Council and provide overall guidance on ATA’s activities through this forum. Research and Academic Institutions ATA engages public, private, and NGO institutions to conduct research on specific problems that ATA and others have identified as critical learning areas and for developing new technologies. ATA works with research and academic institutions to carefully analyze areas of importance to the transformation agendas where no clear set of interventions has emerged. Research areas are diverse and include developing improved varieties of seeds, prototyping mechanized equipment, and making fertilizer recommendations for depleted soils based on scientific methods. In other cases, these institutions conduct evaluations of ATA’s activities, develop baselines through field surveys, and undertake analyses of issues so that ATA’s programs are informed by timely and Relevant information. In addition, ATA conducts its own analyses through its analytics unit. Civil Society Civil society partners cover a variety of activities that are prioritized by ATA. These include capacity building through trainings and support services for key partners, conducting implementation activities to support the achievement of targets, and playing a key coordinating role for public and private engagement. Civil society also informs ATA program development and implementation. NGOs often work in programmatic areas where ther is no simple set of interventions to take to scale. In this case, they work in a small enough area to test combinations of interventions in a complex system to identify a limited set of interventions that can drive impact. Once identified, ATA takes on the challenge of how to take these interventions to scale. Private Sector The private sector is recognized as key to Ethiopia’s transformation to a middle income country. ATA’s activities engage the privates sector through coordinated efforts such as building the capacity of independent cooperatives (through NGOs) and facilitating direct connections to international markets. ATA’s PPP Project acts as an entry point for international companies seeking to source agricultural products or establish business operations in Ethiopia. On a smaller scale, ATA with its partners works to create policies and processes that support development of the private sector. For example, ATA has private sector partners in its work with input credit provision to smallholder farmers, establishing a viable contract platform to connect producer with buyer, creation a viable fertilizer blending facilities, and development of a policy-supported direct seed marketing environment to allow private seed companies to sell directly to farmers.


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6 PERFORMANCE MANAGEMENT The ATA requires a harmonized, results-based MLE system that aligns with the Growth and Transition Plan (GTP), uses data-driven and evidence-based approaches, and applies continuous learning and improvement procedures. In addition, the ATA has the mandate and opportunity to improve MLE within the MoA and other relevant partner organizations in the sector. Based on these needs, the ATA’s MLE strategy involves developing an internal and external MLE framework that achieves the following:

Generates objective evidence of progress towards the achievement of results;

Facilitates lessons learning, adaptation and performance improvement;

Enhances the accountability to stakeholders Achieving these objectives requires a rigorous management framework, adequate data, and strong analytical capacity. In realization of these needs, and in support of the agency’s mandate, the ATA MLE team manages a monitoring and evaluation program while also building capacity among program teams to integrate and strengthen specific MLE inputs. Overall, these activities are aimed at enhancing the overall effectiveness of the ATA, as well as strengthening the MLE activities of the MOA-PPD and AGP Federal Coordination Unit (FCU) at national and regional levels. To ensure the highest possible quality, all high level evaluations and baseline surveys are conducted by independent consultants or firms complying with ATA MLE norms and standards. 7 FINANCE Funding ATA is funded by the Government of Ethiopia and from development partners. It adjusts its budgets annually and semi-annually to meet the requests from the Transformation Council and to take advantage of successful programmatic opportunities that are poised for quick scale up with the potential to rapidly achieve high impact on a large number of farmers, women, and youth. The figure below shows that ATA has secured total funding of over USD 50 million since its inception and that ATA is in conversation with many of these development partners for obtaining phase 2 grants. For Ethiopian Fiscal Years 2007, 2008, and 2009, the projected budget is shown in the table above. A significant portion of the expected budget is needed for “Special Projects,” projects that are fully owned by ATA. Whenever possible, ATA will secure funds for a special project prior to commencement. Aside from special projects, the projected budget includes programmatic funds as well as staff funds. Estimates were derived from our current annual budget and are subject to the usually changes based on the progress, needs, and results of the transformation agendas.


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The budget also has factored in plans to scale up our Value Chain Initiatives as well as expand our efforts into additional value chains. In estimating our funding allocations and needs for the next three years, we anticipate a funding gap of $35-40 million USD. Audits and Financial Systems ATA’s audit and financial system improves the business performance of ATA’s operations through proper invoicing, eliminating accounting errors, minimizing record-keeping redundancy, and ensuring compliance with tax and accounting regulations. The Finance Department provides development partners, the GoE, and other stakeholders with understandable, relevant, and reliable financial information. The following internal and external audits have been conducted:

Internal Audit: Completed 07 July 2013.

External Audit: Several external audits have been conducted including those by the Ethiopian Government General Auditor and USAID. The USAID audit was completed in November 2012 and concluded the following: “The office is well organized and financial policies and procedures are in place, and the financial management structure including internal controls are adequate to manage USAID funds. Based on the assessment, the overall risk associated with ATA managing USAID resources is assessed as moderate.”

8 LONG-TERM STRATEGIC OUTLOOK Unlike most government organizations, the ATA has a defined and limited lifespan, which is expected to last approximately 15-20 years. The ATA’s mandate is expected to remain constant throughout its lifespan, but its organizational design, strategy, and tactics to achieve its mandate will evolve as the country’s agriculture sector develops and the challenges change. Transformation is seen as a time-bound activity that should have a clear beginning, middle, and end. At the end of this period, the ATA is expected to have supported the transformation of the agricultural sector into a resilient, responsive, and self-supporting system that meets the needs of the country’s smallholder farmers and contributes to national food security. As shown in the figure below, the ATA lifespan is expected to have three phases with distinct focus areas.


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THE CRGE FACILITY 1 INTRODUCTION Ethiopia’s Climate Resilient Green Economy (CRGE) Initiative outlines the vision, strategy, financing, and institutional arrangements Ethiopia will pursue to attain the triple goals of economic growth, net-zero emission, and climate resilience. A critical part of the institutional arrangements is the CRGE Facility (The Facility), the national financing mechanism that has been created to support the implementation of the CRGE. Included within the responsibilities of The Facility are the mobilisation, allocation and oversight of funds required to help achieve the aims of the CRGE initiative. As well as being environmentally responsible, a climate resilient and low-emission (rather than a carbon-intensive) development pathway should result in significant economic benefits for Ethiopia. The Government of Ethiopia is committed to delivering this vision in line with national and international best practice, drawing on global experience and sharing lessons with other countries tackling similar challenges, and has committed domestic public resources to these ends. Ethiopia also wishes to have access to international resources to support CRGE implementation. This is critical, as preliminary estimates indicate that building the green economy will alone require total expenditure of around US$ 150 billion over the next 20 years2, with around US$ 80 billion of required funding estimated to be capital investment and the remaining US$ 70 billion assessed as being necessary to cover operating and programme expenses. The expectation is that Ethiopia’s development partners will increasingly channel relevant bilateral and multilateral climate funds through the CRGE Facility, which also provides opportunities to use climate finance to complement other existing forms of investment and thereby bolster Ethiopia’s core climate-compatible development activities (in areas such as food security, energy, infrastructure development and natural resources management). In addition to increasing the scale of climate finance potentially available to the country, the CRGE initiative aims to enhance the coordination and targeting of its utilisation, by providing a single coherent system within which development partners, the private sector, civil society and other stakeholders can engage and determine how best to invest in relevant actions. Implementa-tion of the CRGE Strategy will involve both mainstreaming climate change into existing development investments, and the introduction of new activities. Over time, it is anticipated that the CRGE initiative will go beyond greening the GTP and informing it to being fully integrated and aligned with it.

2 THE CRGE ARCHITECTURE The CRGE architecture has been developed to enable a programmatic and transformative approach for implementing relevant activities that minimises the transaction costs, fragmentation and duplication associated with a project-based approach. As far as possible, the architecture also embeds CRGE systems within existing mechanisms for economic and environmental planning and implementation. The system created to help convert the CRGE vision into practical action on the ground, and thus bring about a climate resilient green economy is the Sectoral Reduction Mechanism (SRM). Supporting the operation of the SRM are four core institutions: The Inter-Ministerial Steering Committee: chaired by the Prime Minister’s Office, the Committee sets the criteria and scope for approving action plans, and determine the overarching priorities for the CRGE Facility; The CRGE Management Committee: a standing committee comprising senior representatives of Government line ministries and the National Planning Commission6, responsible for providing


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general oversight for the CRGE initiative as well as determining the optimum allocation of available funds to approved actions and alignment with the GTP; The CRGE Facility: the Government of Ethiopia’s national vehicle established to help mobilise, blend, combine and sequence domestic and international, public and private finance to support the institutional building and implementation of Ethiopia’s CRGE Strategy. The CRGE Facility Secretariat: undertakes day-to-day management of functions of the SRM. The Technical Unit of the Secretariat is housed by the Ministry of Environment and Forest (MEF) and is responsible for the development of standardised guidance, ad-hoc sector specific support and technical back stopping for the SRM, and quality assurance for Sector Reduction Actions in line with agreed guidance and criteria. The Finance Unit and Implementation Unit of the Secretariat are housed in MOFED. All elements of the SRM are supported and enabled by a comprehensive Capacity Development Programme, working at each of the systemic, organisational and individual levels, and encompassing the critical disciplines of analysis and policy, coordination, financing and MRV, and crafted to ensure that the potential of the CRGE Initiative can be fulfilled.

2.1 The CRGE Facility The CRGE Facility sits in and is staffed by the Ministry of Finance and Economic Development (MOFED), with additional support from national and international technical advisers on request. It coordinates closely with other key sector institutions including the MEF, the National Planning Commission and the PMO. The objectives of the CRGE Facility are as follows:

Financial mobilization and allocation: The CRGE Facility is the Government’s vehicle to mobilize, access and combine domestic and international, public and private sources of finance to support the institutional building and implementation of Ethiopia’s CRGE Strategy;

Stakeholder coordination: The CRGE Facility provides a single engagement point where the Government, development partners, the private sector, civil society and other stakeholders can engage and make decisions about how best to utilize available finance in the pursuit of the CRGE vision and goals; and

Unlocking capital at scale - blending investment sources and leveraging: the CRGE Facility will use climate finance to complement other existing forms of investment to bolster Ethiopia’s core climate-compatible development activities, thereby promoting the full integration of CRGE with the GTP.

Under the auspices of the Management Committee, the Secretariat is seated in MOFED and is responsible for the overall management and coordination of The Facility’s portfolio. To ensure it can fully discharge its responsibilities the Secretariat comprises: A CRGE Facility Director who is assigned by the State Minister for External Economic Cooperation of MOFED in consultation with the State Minister for Environment and Forest. The director reports to the Management Committee and is responsible for the day to day management of the Secretariat and efficient and effective operation of the Secretariat. A CRGE Facility Coordinator, who coordinates the Secretariat and ensures effective and efficient operations A Finance Team, based in MOFED, provides administrative and analytical support necessary to the mobilisation, recording, allocation, management and oversight of pooled funds, ensuring that the CRGE Facility satisfies its fiduciary responsibilities to all Finance Partners; and provides project implementation advice. It also provides all administrative and analytical support necessary to receipt and recording of proposals, liaison with the CRGE Technical Team, provides the


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coordination and facilitation of the Management Committee meetings, and monitoring, evaluation and reporting of approved actions. A Technical Team, led by MEF, provides technical support to the implementing entities to generate proposals and facilitates and leads the technical review of proposals. It is also responsible for the measurement, reporting and verification of emissions and vulnerability outcomes stemming from approved actions. The Advisory Board provides expertise and opinion, while having no decision-making authority. 3 CRGE FACILITY FUNDING Recognising the needs of the different targeted Finance Partners, and as the body responsible for fiduciary management and assurance, MOFED has established the following arrangements: The Facility Account - a dedicated account for the CRGE Facility. Ideally, all funds would be channelled directly into the Facility Account. The International Account – for various reasons the Government of Ethiopia recognises that, for the foreseeable future, some investors might be unable to invest directly into the Facility Account. Therefore, to ensure that the needs of all potential financiers can be accommodated, MOFED has contracted the Multi-Partner Trust Fund (MPTF) Office of the United Nations Development Programme (UNDP) to establish and manage a separate ‘International Account’ that will be used to channel funds into The Facility. The role of the MPTF is referred to as Administrative Agent. In effect the International Account will act as a conduit to the Facility Account, as all funds will have to be disbursed through the Facility Account at MOFED prior to being disbursed to implementing partners. Ultimately, the Government of Ethiopia intends that all Contributors to The Facility will be able to put funds directly into the Facility Account, and therefore the use of an Administrative Agent is considered to be an interim management arrangement, designed to promote and enable flexible, coordinated and predictable funding.


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4 PROCESSING APPROVED ACTIONS FOR FUNDING Under the SRM, the Technical Team collaborate with the sector ministries at Federal Level to develop CRGE Sector Reduction Action Plans (SRAPs). SRAPs define the critical reduction objectives and the “what, where, when” priorities for the sector in question. SRAPs will also provide an enabling environment that supports the preparation of investment proposals with relevant Executing Entities (EEs) that cost effectively respond to the priorities of the sector. The Facility funds can be accessed, without restriction, by all types of EEs in partnership with IEs. The primary responsibility for coordinating the development of SRAPs and investment proposals that respond directly to needs identified in these SRAPs has been delegated to the sector ministries which fulfil the role of Implementing Entities (IEs). The Facility has responsibility to provide guidance and support to the IEs in their effort to prepare SRAPs. The Secretariat of the Facility will therefore work closely with the IEs and relevant EEs to ensure The Facility obtains an adequate volume and quality of funding proposals. This will be particularly important, given that the aim of the CRGE is that most part of the pooled funds are channelled to EEs, via IEs. Proposals can be submitted by IEs to one of the following two Windows operated by the CRGE Facility:

The Programmed Window, which provides funds subject to Strategic Agreements; and

The Responsive Window, which provides the mechanism by which earmarked funds can be matched to relevant proposals.

By operating these two windows the CRGE Facility can ensure that all funds can be allocated and utilised on a strategic basis. Exactly the same rules and procedures will apply to both Windows. However, because the Responsive Window has been designed to accommodate disaggregated earmarking, funding through Targeted Agreements can only be channelled through this Window to accomplish the pre-defined action/s. Generally the CRGE Facility will seek to secure as much funding as possible for channelling through the Programmed Window. The Facility will oversee and coordinate all fund mobilisation activities in order to satisfy both of these elements of projected financing requirements. The Facility’s responsibility is to coordinate and enable all available expertise (including that within MEF and other organisations engaged in the design, execution and oversight of the SRM) to ensure the necessary funds are mobilised. The Facility’s Management Committee determines which of those actions that, following detailed technical and financial evaluation will receive funds from The Facility. These decisions are based on the degree to which individual actions fit current strategic priorities as well as the amounts of money that can be allocated from the pooled funds, given the conditions and earmarks that apply. 5 CRGE PROGRAMME IMPLEMENTATION Implementing Entities (IEs) are Federal (FIEs i.e. line ministries) and Regional governments (RIEs i.e. Sector Bureaus). Federal Implementing entities are the interface with the Facility in that they are the only entities that submit SRAPs, receive funds and report results. At the federal level, these entities include The Ministry of Agriculture, The Ministry of Water and Energy, The Ministry of Industry, The Ministry of Trade, The Ministry of Transport, The Ministry of Health, and The Ministry of Urban Development and Construction as well as other relevant ministries and authorities (for example the Basin Authorities). The role of Federal IE’s is to coordinate the preparation of Sector Reduction Action Plans, medium term national level plans that outline priorities and investments at the regional level. FIE’s ensure that SRAPs are prepared based on the SRM, meet standards and rules of the CRGE


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Facility as per this Manual and further guidance, and are fully aligned with GTP priorities. They will ensure transparent, fair process for the selection of beneficiaries and allocation of resources. FIEs directly access the Facility funds, based on approved SRAPs, and release these funds to RIEs, Specialist Financial Intermediaries and EE’s according to the approved plans and the demands of the programmes to be implemented. Regional IE’s are sector Bureaus, such as the Bureau of Water, Irrigation and Energy. Executing Entities do the bulk of actual implementation of work supported by the CRGE Facility. They include non-state actors, such as the private sector, small and micro enterprises, parastatals, academic institutions and NGOs. There are no restrictions on EEs, other than meeting the standards and rules of the CRGE Facility as described in this Manual and further guidance from the Facility. This will include due-diligence and the satisfaction of minimum criteria, for example on accounting standards and ability to account for funds. The Facility intends that, eventually, significant (90%) Facility financing will flow to EEs for implementation of CRGE activities.


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ANNEX 2 DETAILED RESULTS FRAMEWORK ATA Engagement Results Framework The results framework includes output indicators, for which some baselines and targets have been set for the Inception Phase only (please see ATA Engagement document). Final outputs and all indicators will be set and agreed upon at the end of the Inception Phase.

Engagement Title Support to ATA for Greening Agricultural Transformation

Development engagement objective

To implement the Transformation Agenda in a climate smart manner16

Outcome 1.1 Climate smart farming technologies and practices are developed and promoted within smallholder farmer production through key agricultural systems 17

Outcome indicator 1.1 Incremental # of small holder farmers in selected woredas of the four regions who are aware of and have access to climate smart production technologies and practices18

Output 1.1.1 Information on integrated Soil Fertility Management (ISFM) practices and technologies integrated within the agricultural extension system and disseminated to farmers

Output indicator 1.1.1 1. Comprehensive organic fertilizer-use strategy for the agricultural research system

2. Information/extension package on appropriate ISFM technologies and practices

3. # of labs capacitated to test compost quality

Output 1.1.2 Farmer Training Centre (FTC) network enhanced through the establishment of model FTCs that demonstrate integrated climate smart agricultural technologies and practices

Output indicator 1.1.2 # of FTCs that demonstrate a set of integrated climate smart technologies and practices in selected woredas in four regions

Output 1.1.3 Capacity of the agricultural extension system enhanced to provide agronomic advice to farmers based on downscale weather forecasts19. (Thereby promoting production decisions that are adapted to changes in weather conditions)

Output indicator 1.1.3 1. # of automated weather stations installed 2. # of DAs/woreda specialists trained in interpreting agro-met

information into relevant agronomic advice 3. Prototype ICT based agro-met information, communication and

feedback system

Output 1.1.4 Capacity of the financial sector to respond to losses on loans from variable weather events improved. (Thereby ensuring that variable

16 Climate Smart manner refers to approaches that that proactively facilitate environmentally sustainable agricultural development and promote adaptation and resilience to a changing climate through (a) development/rehabilitation of the natural resource base and more sustainable and efficient use of natural resources (b) minimizing environmental impacts such as pollution; (c) contributing to low-carbon economic development; (d) minimizing the vulnerability of human and natural systems to extreme climate events due to climate change, and building capacity of farmers and other stakeholders to adjust and respond to the effects of climate change. 17 Systems refers to key systemic structures in agriculture such as extension, research, rural finance and input markets 18 The indicator will measure access to specific technologies and practices that will be further defined during Inception 19 Agronomic advice to farmers based on weather forecasts is hereby referred as agro-meteorological, or ’agro-met’ information


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weather events do not unduly influence production decisions)

Output indicator 1.1.4 Agreed upon modalities for CRI related to retail loans

Output 1.1.5 Supply of seeds/seedlings related to climate smart agriculture (pulse seeds for better soil management through intercropping, fodder seeds and seedlings for better grazing management, seedlings for perennial crops to promote agro-forestry) increased as a result of community-based seed development

Output indicator 1.1.5 1. Study completed with recommendations on how to improve access to expand community based seed development (CBSP) to incorporate seeds related to climate smart agriculture

2. # of farmer groups that multiply pulse seeds, fodder seeds and seedlings, and seedlings for perennial crops in target woredas

Outcome 1.1.2 Technologies and practices relating to sustainable on-farm Natural Resources Management and Water Resources Development are promoted through key agricultural systems and gradually adopted by smallholder farmers

Outcome indicator 1.1.2 For selected woredas of the four regions: 1.2.1 Total incremental areas of smallholder farm land (ha) that has been (a) rehabilitated, (b) irrigated or (c) applied with relevant Sustainable Land Management Practices (SLMP)20 1.2.2 Increase in yield (kg) per unit of irrigated land or water used (for selected crops TBD)

Output 1.2.1 Information on SFLM practices and technologies integrated within the agricultural extension system and disseminated to farmers

Output indicator 1.2.1 1. Conservation Agriculture (CA) strategy and tailored package 2. Broadly agreed upon framework for integrating sustainable

farmland management into agricultural extension system

Output 1.2.2 Advisory services on household irrigation (HHI) technologies are improved (to promote HHI and efficient use of water resources)

Output indicator 1.2.2 1. # of DAs and woreda specialists trained in HHI best practices in target woredas

2. Gender sensitive HHI best practices identified 3. Technology(ies) identified to reliably map groundwater

Output 1.2.3 Pump supply chain for HHI enhanced

Output indicator 1.2.3 1. Pump testing facility established 2. Roadmap for improving irrigation pump supply chain 3. National pumps standards developed and enforced

Output 1.2.4 Access of smallholder farmers in selected woredas of 4 regions to markets for irrigation enabled products (thereby incentivizing smallholders to invest in water resources development for irrigation at the HH level)

Output indicator 1.2.4 Study on systemic bottlenecks for linking farmers with markets for irrigated production and expanding such markets

Output 1.2.5 Improved supply of key inputs to restore degraded land and improve natural resource base (and thereby improve natural resource base)

Output indicator 1.2.5 Roadmap and business model for promotion of lime

20 Relevant sustainable land management practices will be further defined and approaches developed during Inception


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Outcome 1.1.3 Value chain actors understand and start adopting climate smart technologies and practices along selected value chains

Outcome indicator 1.1.3 1.3.1 Average % reduction in post-production9 losses along selected value chains 1.3.2 Area of wheat/maize/teff farmland (ha) inter-cropped with nitrogen fixing pulses

Output 1.3.1 Inter-cropping, double-cropping and crop rotation of maize/teff/wheat with chickpea and other nitrogen fixing pulses promoted in selected woredas of 4 regions21

Output indicator 1.3.1 1. # of farmers in selected value chains that have received advice on intercropping double-cropping and crop rotation in selected woredas of the four regions

2. # of trained DAs / extension experts providing advice on appropriate intercropping double-cropping and crop rotation techniques to wheat/maize/teff farmers in selected woredas of four regions

3. Double cropping manual developed 4. # of DAs and woredas staff trained on manual 5. # of farmers in selected value chains that have received

comprehensive support for integrated cropping system of chickpea and other pulses

6. Strategy to integrate chickpea and other pulse crops in selected maize, sorghum, teff and wheat crops agro-ecologies

Output 1.3.2 Supply chain for post-harvest technologies related to wheat/maize/teff/sesame developed to meet needs of smallholder farmers (to enable more efficient processes and thus reduction in post-harvest losses)

Output indicator 1.3.2 1. Baseline on post-harvest mechanization in Ethiopia 2. Appropriate post-harvest mechanization promotion and service

models identified

Output 1.3.3 Capacity of farmers in maize/wheat/teff/sesame to reduce post-harvest losses enhanced

Output indicator 1.3.3 Extension package for improved post-harvest techniques for selected value chains

Output 1.3.4 Optimal mitigation and adaptation measures along selected VCs identified, prioritized and piloted

Output indicator 1.3.4 Assess environmental impact and adaptability issues related to climate change along selected value chains to identify and prioritize optimal mitigation and adaptation measures

Outcome 1.4 Human and institutional capacity for climate mainstreaming within ATA and its key implementation partners and for donor coordination is enhanced

Outcome Indicator 1.4 1.4.1 The ‘greening road map’ is approved and being implemented 1.4.2 Joint-programming and reporting policies and procedures for ATA are in place

Output 1.4.1 Knowledge base on climate smart agriculture in Ethiopia enhanced

Output indicator 1.4.1 # of studies / surveys or assessments on climate smart agriculture documented and disseminated

21 Proxy indicators are used measuring better (1) management of natural resources during production and (2) reduction of wastage post-production.


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Output 1.4.2 Improved evidence based climate mainstreaming procedures within ATA

Output indicator 1.4.2 1. Approved improved ATA mainstreaming procedure 2. Revised MLE framework with provisions for measuring

progress on greening aspects of the Agricultural Transformation Agenda and for rigorous evaluation of selected interventions

Output 1.4.3 Climate smart and resilient agriculture mainstreamed into key GoE strategies and programs

Output indicator 1.4.3 GTP 2 document that includes plans for climate smart and resilient agriculture and related MLE framework

Output 1.4.4 Capacity on climate smart agriculture built within ATA partner institutions

Output indicator 1.4.4 # of individuals within ATA’s partner institutions trained in climate smart issues

Output 1.4.5 Gender sensitive interventions mainstreamed within key ATA programs

Output indicator 1.4.5 % of gender sensitive deliverables


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CRGE Engagement Results Framework The results framework includes only indicative outcome indicators. A number of process indicators and deliverables have been set for the Inception Phase (please see CRGE Engagement document). Engagement Objective 2 To strengthen the Government of Ethiopia’s efforts to

mainstream and implement CRGE initiatives in the agriculture and forestry sectors

Outcome 2.1 Community based (1) watershed management22 enhanced and (2) crop and livestock production practices improved

Outcome indicators 2.1 2.1.1 The incremental increase in the land area (hectares) put under community based watershed management practice as a consequence of GATE funding 2.1.2 The incremental number of small-holder farmers benefitting from the CRGE interventions as a consequence of GATE funding

Outcome 2.2 Selected forests23 are protected, re-established and/or sustainably managed to provide ecosystem services24 and carbon sequestration25

Outcome indicators 2.2 2.2.1 The incremental area of forested land (hectares) at regional level as a consequence of GATE funding 2.2.3 The relative increase (percentage) in carbon sequestration at regional level as a consequence of GATE funding

Outcome 2.3 Human and institutional capacity to plan, implement and monitor CRGE Facility funded programmes is strengthened at federal and regional and local levels, and lessons learned from pilot projects financed by GATE funds are applied in the wider CRGE context

Outcome indicators 2.326 2.3.1 The four regions submit financing proposals of higher quality to the Federal Implementing Entities (sectoral ministries) 2.3.2 The four regions monitor and report according to plans and requirements of the CRGE Facility

22 Community based watershed management in this context is defined as the practice where organized community groups undertake

physical and biological watershed management practices on defined watershed area within their kebele 23 Selected forests in this context are: forests owned by the government but managed and used by communities 24 Ecosystem services in this context refers to indirect services of forest to humans in the form of enhanced soil fertility, water

availability, food, and spiritual and cultural values 25 Carbon sequestration in this context refers to services of standing forest in absorbing carbon dioxide from the atmosphere and

storing it in different forms of the forest carbon pools 26 To be evaluated by the CRGE Facility Secretariat based on annual questioning of the Federal Implementing Entities who

collect and consolidate the regional proposals


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ANNEX 3 DETAILED BUDGET ATA Engagement budget by programmatic periods (DKK million)

Programme Budget

Jul17-

Dec17

DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)

56.50 38.50 11.00 NA 106.00

44.60 35.13 46.84 23.42 150.00

101.10 73.63 57.84 23.42 256.00

Development engagement 1 (ATA) Jul17-

Dec17

Engagement

objective

To implement the Transformation Agenda in a

climate smart manner

DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)

Outcome 1.1 Climate smart farming technologies and

practices are developed and promoted within

smallholder farmer production through key

agricultural systems

10.4 6.5 8.6 4.3 29.8

Outcome1.2 Technologies and practices relating to

sustainable on-farm Natural Resources

Management and Water Resources

Development , are promoted through key

agricultural systems and gradually adopted by

smallholder farmers

7.2 6.4 8.6 4.3 26.5

Outcome 1.3 Value chain actors understand and start

adopting climate smart technologies and

practices along selected value chains

6.5 16.9 22.6 11.3 57.4

Outcome 1.4 Human and institutional capacity for climate

mainstreaming within ATA and its key

implementation partners and for donor

coordination is enhanced

18.1 4.0 5.3 2.6 29.9

Total four outcomes 42.2 33.8 45.0 22.5 143.5

0.4 0.3 0.5 0.2 1.5

1.0 0.7 0.9 0.4 3.0

1.0 0.3 0.4 0.2 2.0

44.6 35.1 46.8 23.4 150.0

Oct15-

Jun16

Jul16-

Jun17 Total

PROGRAMMATIC PERIOD BUDGET

Committed support from other partners

Suppport from Denmark

Contingencies

Technical assistance

Special studies, reviews, audits

Total ATA Engagement

Development Engagement 1 (ATA) Dec14-

Sep15

Grand Total ATA budget, DKK million

Total Oct15-

Jun16

Jul16-

Jun17

Dec14-

Sep15


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ATA Engagement budget by calendar year (DKK million)

Programme Budget

2014 2015 2016 2017 Total

DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)

4.7 47.5 24.8 5.5 82.5

4.5 51.9 46.8 46.8 150.0

9.2 99.4 71.6 52.3 232.5

Development engagement 1 (ATA) 2014 2015 2016 2017 Total

Engagement

objective



DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)





1.0 11.5 8.6 8.6 29.8






smallholder farmers

0.7 8.6 8.6 8.6 26.5




0.7 11.5 22.6 22.6 57.4





1.8 17.6 5.3 5.3 29.9


0.0 0.5 0.5 0.5 1.5

0.1 1.1 0.9 0.9 3.0

0.1 1.0 0.4 0.4 2.0

4.5 51.9 46.8 46.8 150.0

CALENDAR YEAR BUDGET



Contingencies




Development Engagement 1 (ATA)



A-19

ATA Engagement budget by Ethiopian fiscal year27 (DKK million)

27 The Ethiopian fiscal year runs from July 8 to July 7. The current year according to the Ethiopian calendar is 2007, which began on 11 September 2014 of the Gregorian calendar

Programme Budget

ETI07 ETI08 ETI09 ETI10 Total

DKK

(million)

DKK

(million)

DKK

(million)

USD

(million)

DKK

(million)

33.0 38.5 11.0 NA 82.5

31.2 48.5 46.8 23.4 150.0

64.2 87.0 57.8 23.4 232.5

Development engagement 1 (ATA) ETI07 ETI08 ETI09 ETI10 Total

Engagement

objective



DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)

DKK

(million)





7.3 9.6 8.6 4.3 29.8






smallholder farmers

5.1 8.6 8.6 4.3 26.5




4.6 18.9 22.6 11.3 57.4





12.6 9.4 5.3 2.6 29.9


0.3 0.5 0.5 0.2 1.5

0.7 1.0 0.9 0.4 3.0

0.7 0.6 0.4 0.2 2.0

31.2 48.5 46.8 23.4 150.0

ETHIOPIAN FISCAL YEAR BUDGET



Contingencies




Development Engagement 1 (ATA)



A-20

CRGE Engagement budget by calendar year (DKK million)

CALENDAR YEAR BUDGET

56.0 112.0 168.0

16.8 10.7 27.5

72.8 122.7 195.5

DKK

(million)

DKK

(million) DKK (million)

Engagement

objective

To strengthen the Government of Ethiopia’s

efforts to mainstream and implement CRGE

initiatives in the agriculture and forestry

sectors

Outcome 2.1. Community based (1) watershed management

enhanced and (2) crop and livestock

production practices improved

10.0 5.7 15.7

Outcome 2.2. Selected forests are protected, re-established

and/or sustainably managed to provide

ecosystem services and carbon sequestration

4.8 3.0 7.8

Outcome 2.3. Human and institutional capacity to plan,

implement and monitor CRGE Facility funded

programmes is strengthened at federal and

regional and local levels, and lessons learned

from pilot projects financed by GATE funds are

applied in the wider CRGE context

1.5 1.5 3.0

0.5 0.5 1.0

16.8 10.7 27.5



Total CRGE Engagement

Grand Total CRGE budget

Total

Development Engagement 2 (CRGE) 2015 2016 Total

2015 2016


Development Engagement 2 (CRGE)


A-21

CRGE Engagement budget by Ethiopian fiscal year (DKK million)

ANNEX 4 RISK ASSESSMENT MATRIX

A-2

2

Contextual Risks Context: Ethiopia

File No:

Risk factor Likelihood Background to assessment Impact Background to assessment

1 Worsened international financial

crisis means that less foreign based

investments are made in Ethiopian

agro-business or shortage of foreign

currency limits import of agricultural

inputs, hampering growth and

development

Unlikely There is a strong policy push and equally determined

plans in place for comprehensive, output-increasing

interventions within the still-dominant smallholder

agriculture to keep the economic growth in the coming

years. Moreover, the government is still the major

supplier of agriculural inputs and foreign investments in

agriculture have been moderate, and mostly made by

diaspora.

Insignificant Despite the economic shock and financial

crisis around the world in the past four years,

the economy in the country has been

growing at more than 7 pct . and in parallel,

the support to smallholder farming and the

investment from private sector has been

growing and expected to continue.

2 Shifting of political prioritization

away from inclusive green economic

growth, i.e. with less GoE focus on

and investments in climate

adaptation and mitigation efforts

directed at smallholder farmers

Unlikely GoE commitment to agricultural and green growth as

presented in GTP, the CRGE and the PIF remains strong.

The general expectations to the GTP-2 being formulated

during 2014/15 is that green commitment will remain

strong and potentially increase, also despite the

continuing financing needs for major infrastructure

projects

Major Should the GoE change priorities, it would

impact the GATE programme negatively, both

the ATA engagement (e.g. through

downsizing the Agricultural Transformation

Agenda) and the CRGE engagement (e.g.

through less resources being directed to the

Facility)

3 Deteriorating regional stability

environment (potential terrorism or

influx of refugees from neighbouring

countries) adds pressure on GoE

resources and diverts the national

development agenda

Likely Continued instability in the Horn of Africa is likely Minor The GoE is internationally recognised for its

engagement in and solid experience with

promoting peace and stablity at the Horn of

Agfrica. Combined with a tight security

system, the GoE has managed to

considerably reduce the occurrence of

terrorist attacks in Ethiopia. Although

Ethiopia now hosts the largest number of

refugees of any African country, the expense

is highly born by the international

community

4 Upcoming elections in 2015 may spur

incidences of public unrest that will

disrupt GATE implementation

Unlikely The present situtation is assessed to be less assertive

and vibrant than previous notably compared to 2005,

where more media and opposition were actively

engaging.

Major Should public unrest materialize, the GoE

attention to the development agenda will be

diverted, and the gradual relaxation of civil

society operation threatened. This will

negatively impact field implementation

(projects and extension system)

5 Climate change related disasters,

especially droughts, floods and hail

storms, put pressure on GoE

resources for long-term investments

in favour of short-term emergency

relief

Likely Erratic weather patterns especially drought is a regular

incident in Ethiopia - severe drought have occurred

several times in the past (1988, 1993, 1994, 1995, 1996,

2006 and 2011).

Minor Drought in Ethiopia mainly affects the low

lands, which are not the geographical focus

of the government's Agricultural Growth

Programme and the GATE programme.

104.Etiopien.805.ADD

Risk response if applicable / potential effect on

development cooperation in context

This will be beyond the capacity of the Embassy,

however, the Embassy will continue to monitor the

situation

The Embassy will monitor the situation and engage in

dialogues with the GoE and other development partners

through the overall Donor Assistance Group (DAG) in

Ethiopia and its the half annually high level meeting with

the PM, as well as through the EU and relevant Art. 8

discussions, and through bilateral high level political

dialogue

This will be beoyund the capacity of the Embassy. The

Embassy will closely observe the regional situation

including through its close dialogue with AU and IGAD

(through the Africa Programme for Peace) .

Denmark will engage in political dialogues and relevant

partner forums at various levels to regularly assess the

situation, raise issues of concern and if necessary adjust

actions in a timely manner, example being revise

implementation period together with implementing

parters

The GoE has set up a disaster risk management system

comprising notably the Early Warning and the Productive

Safety Net Programme to which Denmark is also

contributing financially. This programme successfully

prevented the 2011 drought from progressing to famine.


A-2

3

Programmatic and Institutional Risks Title:

File No:

Programmatic Risks

Risk factor Likelihood Background to assessment of likelihood Impact Background to assessment to potential

impact

Risk response Combined

residual risk

P

1

Delays in GTP-2 finalisation and

commencement means that final

setting of GATE's results framework

will be delayed and Inception

Review postponed

Unlikely The GTP-2 process is reportedly advancing well and on

track. ATA is assisting and building capacity within MoA

for GTP-2 preparations, incl. that of 'green' indicators.

However, 2015 elections may take resources away in the

final stages of its preparation.

Major The final GATE results frameworks - to be

concluded during the Inception Phase - will

mainly be based on GTP-2 indicators. A delay

in GTP-2 will thus prolong the GATE Inception

Phase and the planned Inception Review

would have to be postponed.

Embassy will follow the process closely

and take action as necessary, e.g. in a

flexible approach to extending the

Inception Phase while continuing

implementation without compromising

the achievement of results.

Significant

P

2

Slow or stagnant improvements in

private sector framework conditions

and/or crowding out of the private

sector due to continued or increased

public financing

Likely The GoE is increasing its prioritization of manufacuring

business (most still under state ownership and progress

of privatization is at best very slow) and the PM has

made it clear to the private sector that the government

will prioritise this sector for access to credit and foreign

currency allocations. Thus, the shortage of credit and

foreign currency for the private sectors will continue.

Minor Most of the larger investments in agriculture

(especially in processing and export) are

made by the Ethiopian diaspora or through

foreign direct investment, which does not

depend directly on the Ethiopian financial

market for investment. Moreover, the sector

input supply and output marketing is mostly

dependedent on government and

cooperatives that use local resources.

The Embassy through the ATA

engagement will support private sector

intiatives (directly through the sub-

grants and also, but more indirectly,

ATA's adressing of 'systemic

bottlenecks' in the private sector and

working to improve public private

partnerships) and relevant dialogues

with Ethiopian and likeminded

development partners

Major

P

3

Poor cooperation and coordination

between institutions participating in

the GATE programme, especially

MoA, ATA and CRGE, delays GATE

implementation (effectiveness) or

increases transaction costs

(efficiency).

Likely Cross ministerial and institutional cooperation is often

not sufficient, and there is a risk of overlap of activities

that needs to be addressed. The CRGE Facility is still

young, and actual cooperation with ATA is limited at

present. Ministry of Environment is newly established

and considered under-resourced and will remain weak

in the short term.

Major CRGE financed projects under Outcome 2.1

(Community based watershed management

enhanced and crop and livestock production

practices improved) needs to be closely

coordinated with ATA in terms of lessons

learned (e.g. methodologies, practises,

implementation agents) and location (no

geographical overlap).

Although no formal coordination

mechanism will be introduced, the

Embassy will constantly monitor if

needed coordination is taking place

and call for meetings as necessary. The

coordination requirements are

included in the two engagement

agreements. ATA will specifically be

tasked under GATE to assist CRGE in

building capacity (outcome 2.3).

Minor

P

4

Climate change related disasters,

especially droughts, floods and hail

storms, in the four GATE regions

threatens implementation due to

change in small-holder farmers' and

other value chain actors' priorities

Unlikely As mentioned above, the four regions covered by the

GATE programme are less vulnerable to droughts, but

risks of floods and hail storms ruining harvests is rising

Major Erratic weather patterns and floods and hail

storms may lower small-holder farmers' risk

willingness and thus lower interest in

programme activities

Both GATE engagements give high

priority to climate change adaptation at

farm and community level and along

selected value chains

Minor

Greening Agricultural Transformation in Ethiopia (GATE)

104.Etiopien.805.ADD


A-2

4

Institutional Risks

Risk factor Likelihood Background to assessment of likelihood Impact Background to assessment of potential

impact

Risk response Combined

residual risk

I1 ATA: Conflicting donor agenda

and/or weak support for increased

donor coordination/harmonization

compromises GATE's aid

effectiveness ambitions

Likely ATA-specific donor dialogue is very limited at present,

and some ATA reluctance for joint financing mechanism

has been observed during GATE formulation. Only the

Netherlands are providing un-tied support to ATA at the

moment.

Major Less harmonisation and joint accountability

of ATA will inrease transaction cost and

decrease transparency

Denmark is taking the lead to

harmonize donors support to the ATA.

The capacity building efforts included

in Outcome 1.4 are directly addressing

the risk and performance will also be

measured and reported on in the

results framework.

Minor

I2 ATA: Unclear and/or potentially

overlapping ATA and MoA mandates

threatens GATE effectiveness and

efficiency

Likely ATA does not formally belong to MoA as the leading

sector institution, but has been elevated to report to the

Council and the Prime Minister. While this may be

sensible when seeking to address broader systemic

bottlenecks, it is likely to create friction and difficulties

in achieving buy-in from especially MoA but also other

formal government institutions. Both ATA and the

Transformation Council appear aware of the issue and

seek gradually to clarify and specify roles and

responsbility. MoA and ATA seem to be increasingly

cooperating, for example in the annual formulation and

budgeting of the Agricultural Transformation Agenda

Minor Unless there are clear and transparent split

of mandates, responsibilities and

implementation approach, continued

confusion will be detrimental to ATA's

operational and institutional credibility and

sustainability, and ultimately to the

effectiveness and efficiency of GATE.

A large proportion of GATE grants to

ATA will be channelled on to MoA and

other implementation partners. An

intentional and increasing share of 43%

is included in the engagement

agreement. Embassy will follow closely

ATA's interaction with MoA.

Minor

I3 ATA: expanded mandates and

responsibilities (e.g. push for more

direct implementation or mission

creep ) threatens institutional

performance

Likely With GoE and other development partners experiencing

that ATA has been able to deliver high-quality outputs in

a short time, there are now clear signs that ATA is being

asked to take on more and more activities and

responsibilities, including those of direct project

implementation or project management (the 'special

projects').

Major This could be perceived as a ‘mission creep’

that could derail attention and direct

resources away from the main mandate of

ATA and also from the 'greening' agenda of

the GATE engagement.

Embassy will follow the process

closely, e.g. through its initiatives to

support joint donor dialogue. Financial

support from GATE will be continously

and increasingly be sought directed to

Transformation Agenda deliverables

that are not considered 'special

projects'.

Minor

I4 ATA: Staff turnover, especially in top

management, creates institutional

uncertainty and delay GATE

implementation, especially for the

effectiveness of the Technical

Advisor and support for the ATE

greening agenda

Almost Certain A number of top level managers are likely to leave the

Agency within the GATE programme period

Minor Reportedly, a succession plan has been

prepared. Gradually, more positions will be

held by Ethiopian nationals which is found to

be sensible for institutional sustainability

The provision of a Technical Advisor in

the CEO Office will strenghten

management capacity

Minor

I5 ATA: Low capacity of implementing

partners (sub-grantees at local level)

slows down the needed scaling-up of

interventions

Likely ATA is well-endowed in terms of resources and staffing,

as compared to national institutions in line ministries

and regions. It is therefore in a position to move fast,

but potentially too fast for the long-established sector

players especially at local level implementation to

properly digest and implement the deliverables of

Transformation Agenda.

Major The additional financial resources from GATE

are not meant for further expansion of ATA

internal activities, but primarily for increased

involvement of implementation partners,

including private sector and public-private

parterships. Since this problem is deep

rooted, it may need more time than the

three years of GATE implementation period

GATE will provide resources to build

capacity both internally in ATA (for

proper sub-grant management) and

externally with implementation

partners.

Major


A-2

5

I6 CRGE: poor quality of project

proposals/insufficient number of

quality proposals delay GATE

disbursements to the CRGE facility

Likely During the first round of calls (fast track), proposal had

to go through several iterations to meet quality

requirements.

Minor GATE resources are relatively small

compared to the total amount of funds

available for future calls

Capacity building of Regional Executing

and Implementing Entities is an

integral part of outcome 2.3. Embassy

will - through its participation in the

Advisory Board - follow the process.

Minor

I7 CRGE: materialised fiduciary risks or

unsatisfactory quality of reporting of

the implementing entities (IE)

halt/slow down implementation

Likely Lessons have not yet been learned with regards to the

fiduciary risks or reporting quality of the implementing

agencies.

Major Proper financial management, monitoring

and reports is extremely important and if not

in place, both GATE and the CRGE Facility will

be subject to delays

A fiduciary risk study is presently being

undertaken and findings and

recommendations will be integrated

into operational manuals, and also

addressed by the capacity building

programme supported under Outcome

2.3. Embassy will follow process.

Minor

ministry of foreign affairs, danish embassy in addis ababa...

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