Project Concept Paper

Project Number: 51079-002 October 2019

Proposed Grant and Technical Assistance Grant Afghanistan: Water Resources Development Sector Project

CURRENCY EQUIVALENTS

(as of 10 September 2019)

Currency unit – afghani (AF) AF1.00 = $0.012735

$1.00 = AF78.5228

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund MRRD – Ministry of Rural Rehabilitation and Development O&M – operation and maintenance OP – operational priorities SDG – sustainable development goal TA – technical assistance

NOTE

In this report, “$” refers to United States dollars.

Vice-President Shixin Chen, Operations 1 Director General Werner Liepach, Central and West Asia Department (CWRD) Director Donneth Walton, Environment, Natural Resources and Agriculture

Division, CWRD Team leader Frank Radstake, Principal Water Resources Specialist, CWRD Team members Mohammad Hanif Ayubi, Senior Project Officer (Natural Resources

and Agriculture), CWRD Andrew Bennett, Counsel, Office of the General Counsel Marie Stephanie Igaya, Project Officer, CWRD Christy Planco, Senior Operations Assistant, CWRD Nathan Rive, Climate Change Specialist, CWRD Thomas Robinson, Procurement Specialist, Procurement, Portfolio

and Financial Management Department Mary Alice Rosero, Social Development Specialist (Gender and

Development), CWRD Syed Asim Ali Sabzwari, Environment Specialist, CWRD Aida Satylganova, Social Development Specialist (Resettlement),

CWRD Hans Woldring, Principal Natural Resources and Agriculture

Specialist, CWRD Peer reviewer Jelle Beekma, Senior Water Resources Specialist, Sustainable

Development and Climate Change Department In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page PROJECT AT A GLANCE

PROBLEM TREE

CURRENCY EQUIVALENTS  

I.  THE PROJECT 1 

A.  Rationale 1 B.  Proposed Solutions 3 C.  Proposed Financing Plans and Modality 4 D.  Implementation Arrangements 4 

II.  PROJECT PREPARATION AND READINESS 5 

III.  DELIBERATIVE AND DECISION-MAKING ITEMS 5 

A.  Risk Categorization 5 B.  Project Procurement Classification 6 C.  Scope of Due Diligence 6 D.  Processing Schedule and Sector Group’s Participation 6 E.  Key Processing Issues and Mitigation Measures 6 

APPENDIXES

1. Design and Monitoring Framework 7

2. Project Procurement Classification 9

3. Technical Assistance for Project Preparation 10

4. Initial Poverty and Social Analysis 11

PROBLEM TREE

Low income for local farmer communities

High risk for food insecurity

Inefficient usage by farmers of water resources in rural

areas

Insufficient capacity in communities to adapt to

changing climatic conditions

Outdated and inadequate rural

irrigation infrastructure

Livelihood opportunities in rural areas not fully utilized

Low water and agricultural productivity in rural areas

Increasing occurrence of extreme weather events

Poor condition of existing irrigation systems

Weak institutional support for rural communities to enable access to new technologies

Water conservation opportunities not utilized

Water efficient agricultural practices not applied

Outdated and non-functioning systems

Increasing occurrences of and damage from

floods

Weak institutional capacity to ensure

operation and maintenance

Lack of knowledge on local opportunities to adapt to

climate change

Project Core Problem

Slow introduction and uptake of innovative approaches and water efficiency technologies

Overarching Effect

Direct Effects:

Causes:

I. THE PROJECT A. Rationale 1. Background. The Government of the Islamic Republic of Afghanistan (Afghanistan) has requested the Asian Development Bank (ADB) for support in strengthening water resources management in rural areas. Reduced water security, and subsequent low agricultural productivity, has a direct impact on Afghanistan’s growth prospects. For example, a severe drought in 2018 contributed to the decrease of the gross domestic product from 2.7% in 2017 to 2.2% in 2018.1 Higher water security in rural agricultural areas will increase agricultural productivity, provide better livelihood opportunities, and improve the food security situation in Afghanistan. 2. Agriculture and other rural-based activities remain the predominant engine of economic growth for Afghanistan. The agriculture sector contributed about 20% to the national gross domestic product in 2017 and provides employment and livelihood to at least 40% of the population. Women account for nearly 43% of the sector’s labor force and play a critical role in agriculture and food security. However, Afghan women have little access to decision-making over agricultural inputs, outputs, and product markets, and are still under-represented in local community development councils and water user associations.2 3. Considering that the population in Afghanistan is expected to grow from the current 31.6 million in 2018 to about 50 million in 2040, the Government is concerned about food security in the country.3 The coverage of irrigated agriculture declined from 3.1 million hectare in 1968 to less than 2.8 million ha in 2016. Wheat production, a key indicator used for food security in Afghanistan, has been directly linked with the reliability of irrigation systems, particularly during the critical months of June and July. The 2018 drought caused the wheat production to fall by 71% in rainfed fields and by 6% in the smaller irrigated areas.4 4. Water resources in Afghanistan are under stress because of poor management and water shortages, particularly for irrigated agriculture.5 The subsequent low water productivity is a result of (i) outdated and inadequate rural irrigation infrastructure, (ii) limited capacity by communities to adapt to changing climatic conditions, and (iii) insufficient usage by farmers of technological innovations. Many local farmer communities need knowledge and resources to make a change and initiate more sustainable water resources management practices and ensure adequate operation and maintenance (O&M) arrangements for their local irrigation systems. 5. Government responses. The Government of Afghanistan initiated a number of national and regional programs to support rural communities with improving their development opportunities. Notably, the Afghanistan National Peace and Development Framework 2017-2021 highlights the need for comprehensive agricultural development in rural areas in Afghanistan.6 It highlights that increasing agricultural productivity requires significant multi-sectoral investments in irrigation resources, water management, improved planting materials, and best practices.

1 ADB. 2019. Asian Development Outlook 2019. Strengthening Disaster Resilience. Manila 2 Government of Afghanistan. 2016. National Comprehensive Agriculture Development Priority Program. Kabul. 3 Government of Afghanistan. 2016. Afghanistan National Peace and Development Framework. Kabul. 4 Government of Afghanistan. Personal communications. 5 Although most of the agriculture land is rain fed, around 98% of total water withdrawal is used for irrigation purposes. 6 Government of Afghanistan. 2016. Afghanistan National Peace and Development Framework 2017-2021. Kabul.

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6. The National Comprehensive Agriculture Development Priority Program 2016-2021 and the National Irrigation Program 2016–2025 provide more detailed frameworks for agricultural sector development and reform.7 The Government promotes increasing investments in water management and water harvesting, with rehabilitation of large numbers of irrigation schemes, developing new irrigation networks, and building small water reservoirs. 8 More recently, a Presidential Decree (April 2019) confirmed the Government’s priorities to (i) improve water retention in the watershed (for irrigation and recharge), (ii) reduce and control runoff in the upper parts of the watershed, (iii) improve access to water and livelihoods of smallholder farm households, and (iv) increase reforestation to stabilize sloping lands and control erosion.9 7. To ensure the necessary long-term sustainability of rural investments, the government actively promoted community participation in the design, implementation and operation of rural irrigation and water management infrastructure. In particular, the Ministry of Rural Rehabilitation and Development (MRRD) successfully implemented multiple rural development programs.10 The key to success has been the application of community contracting and procurement, which require in-kind or material community contributions for small-scale infrastructure projects. 8. Remaining challenges. Notable progress has been made to support sustainable rural infrastructure, but a much larger effort is needed. Firstly, the number of small communities that need support largely outnumbers the coverage of existing programs. MRRD reported that over the last 3 years about 12,000 communities already benefitted from the Citizens’ Charter National Priority Program, but that an estimated 18,400 communities are still waiting for support. Technological innovations are not sufficiently reaching farmer communities. Improvements in water and energy efficiency could be introduced through the application of precision (laser) land leveling, sustainable usage of solar energy, and water balance studies using remote sensing.11 9. Adaption to a changing climate will remain a key requirement for rural communities.12 Current climate change models indicate significant warming across the country, and the increasing occurrence of extreme flood or drought events. Future higher temperatures in Afghanistan are expected to increase crop water demand by an estimated 5% (by 2030). Local irrigation systems are more often damaged by local floods, while increasing numbers of the traditional karizes systems are drying up due to the lack of upstream infiltration. 10. Lessons learned. Ensuring effectiveness and sustainability of irrigation infrastructure has been acknowledged as a key challenge in ADB supported investments.13 Experiences in multiple MRRD community contracting projects, including those funded by ADB, and as compared with projects implemented by contractors, demonstrated that (i) overall costs are significantly

7 Government of Afghanistan. 2016. National Comprehensive Agriculture Development Priority Program 2016–2021.

A strategic framework for agriculture sector development and reform. Kabul. Government of Afghanistan. 2016. National Irrigation Program 2016–2025. Kabul.

8 The Government’s Sector Framework is based on its Water Sector Strategic Framework (2006), the Revised Water Law (enacted in 2009), and the National Water and Natural Resources Development Program (2010).

9 Presidential Decree no. 237 dated 25 May 2019, supported through letter no. 962/835. 10 For example, ADB. 2012. Report and Recommendation of the President to the Board of Directors: Community Based

Irrigation Rehabilitation and Development. Manila; ADB. 2014. Report and Recommendation of the President to the Board of Directors: Northern Flood-Damaged Infrastructure Emergency Rehabilitation Project. Manila.

11 Precision (laser) land leveling can reportedly reduce water usage by 22%. 12 ADB. 2016. Economics of Climate Change in Central and West Asia – Adaptation component. Consultant’s Report.

Manila (TA 8119-REG). 13 ADB. 2018. ADB Support for Agriculture, Natural Resources, and Rural Development. Sector-wide Evaluation.

Reference Number: SAP:REG 2018-16. Independent Evaluation: SW-01. Manila.

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reduced,14 (ii) implementation time is generally reduced by several months, (iii) more local jobs are created and the involvement of women in the project activities is higher, and (iv) institutional arrangements are timely established to ensure sustainable O&M of the structures.15 11. Strategic Alignment. The proposed project (the Project) will be aligned with ADB’s Strategy 2030, particularly for the operational priorities (OP) that involve (i) addressing remaining poverty and reducing inequalities (OP1); (ii) accelerating progress in gender equality (OP2); (iii) tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability (OP3); and (iv) promoting rural development and food security (OP5). 16 The technical assistance (TA) will contribute to multiple Sustainable Development Goals (SDGs), including (i) promoting integrated water resources management and restoration of ecosystems (SDG 6), (ii) strengthening resilience and adaptive capacity to climate-related hazards and natural disasters (SDG 13), and (iv) halting and reversing land degradation (SDG 15).17 B. Proposed Solutions 12. The Project will support Afghanistan to strengthen water resources management in rural areas. The Project is expected to comprise the three outputs below and will include policy support to strengthen O&M and rural asset management and promote innovation. Opportunities for agricultural extension and value chain development will be explored as well. 13. Output 1: Modernization of community-based irrigation schemes will support the repair and improvement, through community contracting, of existing community owned low-performing irrigation schemes from intake to downstream escape or end of the scheme. Key activities will include (i) modernization and construction of small-scale civil works such as water control structures, desilting, and lining of canals; (ii) flood protection of irrigation systems, e.g., (piped) cross drainage structures; and (iii) institutional strengthening of community development councils or water user associations.18 The process for the selection and implementation of the community contracting will be based on well-established MRRD procedures and practices. The procedures will be further refined, as needed, during the project preparation. 14. Output 2: Demonstration of climate resilient farming approaches will support communities to adapt to climate change impacts and improve local watersheds. Key activities include (i) the development of water harvesting and storage structures, and (ii) rehabilitation and recharge of dried karizes, and (iii) soil conservation and other water related sustainable land management measures.19 The proposed structures will facilitate the improved management of scarce water resources and improved resilience to the impacts of extreme weather events, i.e., drought and floods. If feasible, the application of nature-based solutions will be promoted.20 15. Output 3: Application of water and energy efficiency technologies in local water management will support participating farmer communities in increasing the resource efficiency of their irrigation systems by introduction of appropriate new irrigation technologies. Key activities

14 MRRD reported that the average cost for some community-based projects such as canal rehabilitation is about $200

per hectare, which is significantly lower than subprojects implemented by contractors. 15 MRRD states that community-based projects on average are operated for at least 20 years. 16 ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, and Sustainable Asia and the Pacific. Manila. 17 United Nations. 2015. Transforming Our World: The 2030 Agenda for Sustainable Development. New York. 18 Details to be considered as part of the ratification of the newly proposed water law. 19 A karize is a traditional underground water system to transport water from an aquifer or water well to the surface. 20 E.g. FAO. 2018. Nature-Based Solutions for agricultural water management and food security. Rome.

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may for example include support for (i) increasing water productivity, including for example precision (laser) land leveling, drip and micro irrigation, and fertigation; (ii) introducing solar energy systems for agricultural production; and (iii) establishing advanced water monitoring systems, including the application of remote sensing. Options for salinity control (soil), agricultural extension and value chain development will be explored as well. 16. These outputs will result in the following outcome: water productivity in rural areas improved. 21 The Project will be aligned with the following impacts: improved livelihood opportunities for rural communities and increased agricultural productivity. C. Proposed Financing Plans and Modality 17. The Project is in the country operations business plan 2020–2022 for Afghanistan.22 The indicative financing plan is in Table 1. The total preliminary project cost is $140 million, of which $100 million is currently expected to be financed by a $100 million Asian Development Fund (ADF) grant. Cofinancing will be sought for an estimated $30 million. In-kind and material contributions from beneficiaries of the community contracting schemes are estimated at $10 million. The government’s contribution consists of government staff time, office space for government staff, meeting rooms, and utilities. 18. Climate adaptation is estimated to cost $75 million. ADB will finance 100% of adaptation costs. The project will contribute to achieving key adaptation priorities for Afghanistan, including (i) rehabilitation of small-scale water resources infrastructure, (ii) strengthening hydrological networks, and (iii) improving watershed management.23

Table 1: Indicative Financing Plan Amount

($ million) Share of Total

(%) Source Asian Development Bank

Special Funds resources (ADF grant) 100.0 71.4 Cofinancing (to be determined) 30.0 21.4 Local beneficiaries 10.0 7.1

Total 140.0 100.0 Source: Asian Development Bank. D. Implementation Arrangements 19. The indicative implementation arrangements are in Table 2. The Ministry of Finance will be the executing agency. MRRD will be the implementing agency. Project implementation will be led by a project implementation unit under a central program management office established in MRRD, with staff financed by the project and supported by project implementation consultants.24 The detailed project implementation unit staffing requirements will still be determined. Possible roles of and coordination arrangements with stakeholders such as the Ministry of Agriculture, Irrigation, and Livestock, the Ministry of Energy and Water, and the National Environmental Protection Agency will be assessed and integrated into the project design.

21 The design and monitoring framework is in Appendix 1. 22 The project is proposed for ADB’s grant program as standby for 2021 (firm for 2022). 23 Government of Afghanistan. 2015. Intended Determined Contributions. Submission to the United Nations Framework

Convention on Climate Change. Kabul. 24 The specific consultant requirements will be assessed and decided during project preparation phase.

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20. The expected project modality is a sector project. Detailed selection criteria and due-diligence arrangements for proposed sub-projects will be finalized during the transaction TA.

Table 2: Indicative Implementation Arrangements Aspects Arrangements Indicative implementation period April 2021March 2026 Indicative completion date 31 March 2026 Management

(i) Executing agency Ministry of Finance (ii) Implementing agencies Ministry of Rural Rehabilitation and Development

Note: The proposed implementation period is based on the assumption that the grant can be approved in 2021. Source: Asian Development Bank.

21. Security remains a continuous concern in Afghanistan. ADB’s toolkit developed for fragile and conflict-affected situations and Central and West Asia Department’s enhanced project delivery approach for projects in Afghanistan will be applied to assess security aspects. Adequate implementation arrangements will be discussed and integrated into the project design to ensure the safety of Government officials, project staff, contractors and consultants.

II. PROJECT PREPARATION AND READINESS 22. About 20 person-months of staff time will be required to prepare the Project. A project preparation TA (Appendix 3) of $1.5 million will be provided on a grant basis and financed from ADB’s Technical Assistance Special Fund (TASF6) to ensure that the ensuing project complies with ADB and government requirements.25 26 23. ADB-financed procurement of goods, works, non-consulting and consulting services will be conducted in accordance with ADB’s Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time). Advance contracting and retroactive financing are anticipated. The specific items of expenditure being proposed for advance contracting and retroactive financing will be assessed and defined during grant processing. It is anticipated that the project will fulfill the “high readiness” criteria before Board consideration. The first sub-project will be procurement-ready by Board consideration, and the request for proposal for the project implementation consultants will be issued by the time of the quality assurance meeting.

III. DELIBERATIVE AND DECISION-MAKING ITEMS A. Risk Categorization 24. The Project is considered low-risk. MRRD has extensive experience with foreign-funded projects including the recently-completed ADB-financed Northern Flood-Damaged Infrastructure Emergency Rehabilitation Project.27 Security in the rural areas, however, remains a risk. 25. The proposed project is categorized as effective gender mainstreaming (EGM) (Appendix 4). Safeguard categorizations are proposed as “B,” “B,” and “C” for environment, involuntary resettlement, and indigenous peoples, respectively, in line with ADB’s Safeguard Policy Statement (SPS, 2009). All structures to be developed are relatively small and possible minor

25 The TRTA is included in the country operations business plan 2019–2021 as firm for 2019. 26 Terms of Reference for Consultants (accessible from the list of linked documents in Appendix 3). The terms of

reference for the firm will be performance based. 27 Implemented together with the Ministry of Energy and Water (MEW).

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environmental impacts can be mitigated. Standard environmental safeguard documents will be prepared. No physical resettlement of people will be necessary for the project. A land acquisition and resettlement framework will be prepared to guide the potential compensation for minor physical impacts on land or crops. None of the ethnic groups in Afghanistan are considered indigenous peoples as defined in the Safeguard Policy Statement for operational purposes. B. Project Procurement Classification 26. The recommended project procurement classification is category A (Appendix 2). Although project procurement is deemed “low risk” because no special or particularly large contract packages are expected, security concerns remain a serious implementation constraint. C. Scope of Due Diligence

Table 3: Scope of Due Diligence Due Diligence Outputs To be undertaken by Technical feasibility studies, including design guidelines TA consultants, staff Climate risk vulnerability assessment TA consultants, staff Economic analysis TA consultants, staff Financial management assessment, financial evaluation, and financial analysis TA consultants, staff Gender analysis, collection of baseline data, and gender action plan TA consultants, staff Operations in fragile and conflict-affected situations TA consultants, staff Project administration manual (including a detailed implementation plan) TA consultants, staff Risk assessment and management plan (including for fraud and corruption) TA consultants, staff Strategic procurement plan, including a procurement risk assessment TA consultants, staff Safeguard documents (IEEs, EMP, EARF, LARF) TA consultants, staff Summary poverty reduction and social strategy TA consultants, staff EARF = environmental assessment review framework, EMP = environmental management plan, IEE = initial environmental examination, LARF = land acquisition and resettlement framework, TA = technical assistance. Source: Asian Development Bank estimates.

D. Processing Schedule and Sector Group’s Participation 27. The ensuing grant is included in ADB’s grant program as standby for 2021 (firm for 2022).

Table 4: Tentative Processing Schedule by Milestone Milestones Expected Completion Date

Consultants mobilization January 2020 Grant fact-finding mission September 2020 Staff Review Meeting November 2020 Board consideration February 2021 Grant signing and effectiveness March 2021

Note: The proposed implementation period is based on the assumption that the grant can be approved in 2021. Source: Asian Development Bank estimates. E. Key Processing Issues and Mitigation Measures

Table 5: Issues, Approaches, and Mitigation Measures Key Processing Issues Proposed Approaches and/or Mitigation Measures 1. Selection and implementation

arrangements for sub-projects, including a large number of contracts

Detailed discussion to be held with Government counterparts to design adequate selection criteria and oversight arrangements, including for potential fraud and corruption risks.

2. Security concerns Lessons learned from existing projects and the application of the FCAS toolkit will ensure adequate mitigation measures.

3. Coordination among different ministries The MRRD will play a key role in organizing and coordinating the government agencies to ensure full support for the project design.

FCAS = fragile and conflict-affected situations, MRRD = Ministry of Rural Rehabilitation and Development.

Appendix 1 7

PRELIMINARY DESIGN AND MONITORING FRAMEWORK Impact the Project is Aligned with Improved livelihood opportunities for rural communities (Afghanistan National Peace and Development Framework 2017-2021)a Increased agricultural productivity (National Comprehensive Agriculture Development Priority Program)b

Results Chain Performance Indicators with Targets and Baselinesc

Data Sources and Reporting

Risks

Outcome Water productivity in rural areas improved

By the end of 2026: a. Agricultural water supply of xx m3 secured (2019 baseline: 0)

MRRD annual reports

Changes in mandates for key relevant ministries may affect grant priorities

Outputs 1. Community-based irrigation schemes modernized

By 2026: 1a. At least 2,000 community irrigation systems modernized (2019 baseline: 12,000) 1b. Flood protection for xx community irrigation systems constructed (2019 baseline: 0) 1c. xx water user organizations operational with at least 40% of women representation (2019 baseline: 0)

1a–1b. MRRD annual reports; completion certificates; third party monitoring 1c. MRRD annual reports; membership certificates; meeting reports

Security concerns affect project implementation or subsequent operations

2. Climate resilient farming approaches demonstrated

By 2026: 2a. xx small scale water harvesting structures constructed and operational (2019 baseline: 0) 2b. xx karizes rehabilitated (2019 baseline: 0) 2c. xx ha of catchment slopes protected by sustainable land management activities (2019 baseline: 0)

2a‒2b. MRRD annual reports; completion certificates; third party monitoring

3. Water and energy efficiency technologies in local water management applied

By 2026: 3a. xx pilots for energy saving irrigation systems implemented (2019 baseline: 0) 3.b. innovative technology demonstration activities implemented (2019 baseline: 0) 3c. xx farmers trained (xx% women) in the application and maintenance of innovative technologies (2019 baseline: 0)

3a‒3b. MRRD annual reports; completion certificates; third party monitoring 3c. Training evaluation forms

8 Appendix 1

Key Activities with Milestones 1. Community based irrigation schemes modernized 1.1 Rehabilitate water control structures (TBD) 1.2 Conduct desilting and lining of canals (TBD) 1.3 Construct flood protection (TBD) 1.4 Organize and train staff of water user organizations (TBD) 2. Demonstration of climate resilient farming approaches 2.1 Develop water harvesting and storage structures (TBD) 2.2 Implement erosion control measures (TBD) 2.3 Rehabilitate and recharge dried karizes (TBD) 2.4 Construct other water related sustainable land management structures (TBD) 3. Water and energy efficiency technologies in local water management applied 3.1 Purchase and mobilize solar energy pumping systems for agricultural production (TBD) 3.2 Apply remote sensing (TBD) 3.2 Establish advanced water and energy balance monitoring systems (TBD) 3.4 Precision (laser) land leveling (TBD) Project Management Activities Engage PIU staff (Q1 Year 1) Engage consulting services (TBD) Procure office equipment (TBD) Prepare quarterly and annual progress reports (TBD) Prepare final project completion report (TBD) Inputs ADB: $100 million (ADF grant) Cofinancing: $30 million (indicative) Beneficiaries: $10 million Assumptions for Partner Financing Not Applicable

ADB = Asian Development Bank, ADF = Asian Development Fund, ha = hectare, m = meter, MRRD = Ministry of Rural Rehabilitation and Development, PIU = project implementation unit, TBD = to be determined. a Government of Afghanistan. 2016. Afghanistan National Peace and Development Framework 2017-2021. Kabul. b Government of Afghanistan. 2016. National Comprehensive Agriculture Development Priority Program 2016-2021.

Kabul. c Links to results framework indicators will be established when the project design is firm. Source: Asian Development Bank.

Appendix 2 9

PROJECT PROCUREMENT CLASSIFICATION

Characteristic Assessor’s Rating Is the procurement environment risk for this project assessed to be high based on the country and sector and/or agency risk assessments?

☐Yes ☒No

Are multiple (typically more than three) and/or diverse executing agencies and/or implementing agencies envisaged during project implementation? Do they lack prior experience in implementation under an ADB-financed project?

☐Yes ☒No ☐Unknown

Are multiple contract packages and/or complex and high-value contracts (compared with recent externally financed projects in the developing member country [DMC]) expected?

☒Yes ☐No ☐Unknown Multiple community contracting package are expected, but none will be complex.

Does the project plan to use innovative contracts (public–private partnership, performance-based, design and build, operation and maintenance, etc.)?

☐Yes ☒No ☐Unknown

Are contracts distributed in more than three geographical locations? ☒Yes ☐No ☐Unknown The project will be implemented in different provinces

Are there significant ongoing contractual and/or procurement issues under ADB (or other externally) financed projects? Has mis-procurement been declared in the DMC?

☒Yes ☐No ☐Unknown Procurement and implementation of large contracts has been slow. Mis-procurement has not been declared in Afghanistan.

Does the DMC have prolonged procurement lead times, experience implementation delays, or otherwise consistently fail to meet procurement time frames?

☐Yes ☒No ☐Unknown MRRD has a good track record for community contracting.

Do executing and/or implementing agencies lack capacity to manage new and ongoing procurement? Have executing and/or implementing agencies requested ADB for procurement support under previous projects?

☐Yes ☒No ☐Unknown MRRD, the implementing agency has good experience with ADB project implementation, including community contracting.

Regional department’s overall recommendation (Frank Radstake) Overall project categorization recommended. ☒ Category A ☐ Category B It is proposed to classify the project as category A, mainly because of the general security risks in Afghanistan. No complex or high-risk procurement arrangements are expected. The project will primarily use community contracting as the main procurement method. All contract will likely consist of relatively small community contract packages, which is considered suitable for the local conditions in Afghanistan. The MRRD, the implementing agency, has a good track record with successfully implementing participatory community contracting, including for ADB projects. Procurement capacity of the implementing agency will further be assessed during the early stage of the TA for the specific requirement for the project. Additional training will be provided during TA and project implementation.

PPFD’s recommendation (Thomas Robinsons, Procurement Specialist) PPFD agrees with the proposed categorization. All projects are Category A in FCAS countries such as Afghanistan. The mentioned experience of MRRD is noted and confirmed. Further details will be discussed during processing, notably the selection and implementation arrangements for the management and quality control of many expected contracts (including fraud and corruption risks). Third-party monitoring and the usage of local expertise will be integrated into the project design.

ADB = Asian Development Bank, DMC = developing member country, FCAS = fragile and conflict-affected situations, MRRD = Ministry of Rehabilitation and Rural Development, PPFD = Procurement, Portfolio, and Financial Management Department, TA = technical assistance. Source: Asian Development Bank.

10 Appendix 3

TECHNICAL ASSISTANCE FOR PROJECT PREPARATION

Appendix 4 11

INITIAL POVERTY AND SOCIAL ANALYSIS

Country: Islamic Republic of Afghanistan Project Title: Water Resources Development Sector Project Lending/Financing Modality:

Sector Department/ Division:

CWRD / CWER

I. POVERTY IMPACT AND SOCIAL DIMENSIONS

A. Links to the National Poverty Reduction Strategy and Country Partnership Strategy The project aligns with the new Afghanistan National Peace and Development Framework (ANPDF) for 2017–2021. The ANPDF is complemented by 12 national priority programs, including one for comprehensive agriculture Development. ADB investments in agriculture and natural resource management are consistent with the national priority program activities. The project also contributes to Afghanistan’s Country Partnership Strategy, 2017-2021, with agriculture being one of the three priority sectors alongside natural resources and energy.

Afghanistan has an estimated population of 31.5 million, of which 49% are females and 51% are males. Agriculture and other rural-based activities remain the predominant engine of economic growth in Afghanistan, although the country has vast potential to exploit large reserves of gas, mineral, and ore resources. Forty-four percent of the working population is dependent on agriculture, including the processing of agricultural and livestock products. The sector also contributes 20 percent to the country’s gross domestic product. 28 The project will contribute to poverty reduction by strengthening water resources management in rural areas. The proposed project is expected to comprise 3 outputs: (i) rehabilitation of community based irrigation schemes, (ii) demonstration of climate resilient farming approaches, and (iii) improvement of water and energy efficiency for local water management. Support will include policy support and technical assistance to strengthen O&M and rural asset management and to promote innovation. The project will also provide technical assistance for capacity development to enhance contribution to gender equality.

B. Poverty Targeting: General intervention Individual or household (TI-H) Geographic (TI-G) Non-income MDGs (TI-M1, M2, etc.)

The project is a general intervention with direct and indirect poverty reduction impacts. Sixty-one percent of households in Afghanistan depend on agriculture for their income. The project will implement an estimated 2,000 subproject in poor rural areas in the South-Eastern and Central provinces, which have often been deprived from such development opportunities. Direct poverty impacts are income generation opportunities from (i) wages accruing through subprojects implemented by community contracting arrangements, and (ii) longer term increased agricultural production. These design features will create community buy-in and a sense of ownership, contributing to social stability and poverty reduction by engaging, among others, men and women farmers and water users, refugees, and ex-combatants. The project is thus expected to significantly improve the socioeconomic situation and mitigate the pervasive poverty in project areas. The project will also contribute to improvement in sanitation and health situation in communities that will benefit from the project.

C. Poverty and Social Analysis 1. Key issues and potential beneficiaries. The direct beneficiaries of the project are men and women farmers whose land will receive increased and more reliable flows of irrigation water. This results in an improvement in agricultural production and productivity, which benefits faming households and wider communities. Farmers and farming communities are among the poorest social groups in Afghanistan. Local communities also benefit from the project in terms of increased employment opportunities from construction activities in rehabilitating irrigation infrastructure. There’s also potential for increased demand for farm labor if land productivity improves. This may be an opportunity for women to get employed. Improved access to clean water will also benefit downstream users of river water and communities relying on shallow and deep wells.

2. Impact channels and expected systemic changes. The improved irrigation water supply, and subsequent expected increased agricultural production will support the entire communities, including the poor and socially excluded. The project may contribute to the following: increased income, improved food security and nutrition because food crops may become accessible and affordable, enhanced household welfare, better health and sanitation, and strengthened governance of water resources and water infrastructure.

3. Focus of (and resources allocated in) the transaction TA or due diligence. The focus during the transaction TA will be on the design and implementation arrangements for the community contracting activities to address risk of elite capture and marginalization of women farmers and water users and ensure that benefits for and needs of vulnerable and poor groups are considered. Another focus may be on the design of the structures to be constructed and rehabilitated, to ensure that they are easily accessible to women and other vulnerable groups like the elderly or persons with disabilities. 4. Specific analysis for policy-based lending. Not applicable.

II. GENDER AND DEVELOPMENT

28 Ganesh, Lea (2017) Women in Agriculture in Afghanistan. Kabul: Afghanistan Research and Evaluation Unit.

12 Appendix 4

1. What are the key gender issues in the sector and/or subsector that are likely to be relevant to this project or program? Afghanistan continues to face severe gender disparities. The Gender Inequality Index for 2016 ranked Afghanistan 154th out of 159 countries. However, improving gender equity is difficult because of the cultural and social restrictions placed on women and girls, such as attitudes about education for girls, seclusion of women, and limited movement outside of the home. Women’s labor force participation, at 29%, is low because of cultural factors, security risks, and a lack of job opportunities, and because they care for their families and homes. Women work mostly in the informal sector, and about two-thirds of employed women work in agriculture.29 Afghan women’s role in the agricultural sector is a paradox. While women play a critical role in agriculture and food security, accounting for nearly 43% of the sector’s labor force, they still remain on the periphery with limited access to productive resources. The feminization of the agricultural workforce in Afghanistan results in part from the coping strategies adopted by women to diversify their livelihoods, which are gendered. Men usually cultivate the lucrative crops, or migrate as seasonal or permanent workers; while women cultivate the family plot for household consumption, care for small livestock, process and/or sell part of their production in local markets. Compared to Afghan men, Afghan women have little access to decision-making over agricultural inputs, outputs, and product markets.30 Time poverty is another issue confronting women, especially those in agriculture. Lack or limited access to good irrigation facilities adds to women’s multiple burden both within the household and on the farm. This requires women and girl children to work longer hours on the farm. They also have to travel long distances to access water, if necessary.

2. Does the proposed project or program have the potential to contribute to the promotion of gender equity and/or empowerment of women by providing women’s access to and use of opportunities, services, resources, assets, and participation in decision making? Yes No The project will ensure that women will be sufficiently consulted and equally benefit from the project activities. The project will also make sure that women are sufficiently represented in the water user groups. Details on the arrangements and targets will be discussed during the implementation of the transaction TA. Women will also have improved access to water for irrigation and consumption through the project. .

3. Could the proposed project have an adverse impact on women and/or girls or widen gender inequality? Yes No Adverse impacts on women could occur if the project fails to ensure that women are sufficiently represented and empowered as members of water user groups. The project will not be responsive to women’s needs if their needs are not considered and they are not consulted in various stages of the project. The transaction TA will ensure that procedures will be discussed and are in place to guarantee appropriate representation by female farmers. Another possible adverse impact is women’s marginalization from employment and access to productive areas if men take over because the irrigated areas have become more productive.

4. Indicate the intended gender mainstreaming category: GEN (gender equity) EGM (effective gender mainstreaming) SGE (some gender elements) NGE (no gender elements)

III. PARTICIPATION AND EMPOWERMENT

1. Who are the main stakeholders of the project, including beneficiaries and negatively affected people? Identify how they will participate in the project design. The key stakeholders include (i) farmers using or requiring irrigation; (ii) the population relying on shallow and deep wells; (iii) industries and businesses; (iv) downstream users of river water; (v) non-farming residents in the communities; (vi) the Ministries of Rehabilitation and Rural Development, Finance, Energy and Water, and Agriculture, Irrigation, and Livestock; vii. members of water users groups. Participation via consultation will be undertaken to the extent possible given the security situation during the transaction TA. Discussion will be conducted on the implementation arrangements for the community contracting, so that (i) the modality is practical for the local conditions, and (ii) poor and vulnerable groups can participate and benefit. 2. How can the project contribute (in a systemic way) to engaging and empowering stakeholders and beneficiaries, particularly, the poor, vulnerable, and excluded groups? What issues in the project design require participation of the poor and excluded?

The project will try to maximize the involvement of local expertise and apply the FCAS approach to ensure adequate stakeholder engagement (considering the security constraints, political context, and socio-cultural norms and practices).

3. What are the key, active, and relevant civil society organizations (CSOs) in the project area? What is the level of civil society organization participation in the project design?

Information generation and sharing (M) Consultation (M) Collaboration Partnership The key CSOs in Afghanistan are the Community Development Councils (CDCs), who will be the main counterparts for the individual sub-projects. The CDCs will also play a key role in establishing the water user associations. Consultations with NGOs may be limited by the prevailing security environment as well as lack of water-sector local NGOs. But the project will try to maximize the involvement of local expertise.

29 ADB. 2017. Afghanistan: County Partnership Strategy (2017-2021). Manila. 30 Government of Afghanistan. 2016. National Comprehensive Agriculture Development Priority Program. 2016-2021.

Kabul.

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4. Are there issues during project design for which participation of the poor and excluded is important? What are they and how should they be addressed? Yes No Factors that hindered the poor’s access to water and irrigation facilities and the management issues of the irrigation facilities must be considered in the project design. The design of the selection criteria for sub-projects and the implementation process for the community contracting arrangements will be thoroughly discussed with the Government counterparts to ensure that the poor and excluded will benefit from the project.

IV. SOCIAL SAFEGUARDS A. Involuntary Resettlement Category A B C FI

1. Does the project have the potential to involve involuntary land acquisition resulting in physical and economic displacement? Yes No

The modernization of the existing irrigation systems, and the possible development of new small-scale rural water harvesting structures, may require minor compensation for land or physical damage. The MRRD however explained that no people will be required to move or relocate.

2. What action plan is required to address involuntary resettlement as part of the transaction TA or due diligence process? Resettlement plan Resettlement framework Social impact matrix Environmental and social management system arrangement None

B. Indigenous Peoples Category A B C FI

1. Does the proposed project have the potential to directly or indirectly affect the dignity, human rights, livelihood systems, or culture of indigenous peoples? Yes No

2. Does it affect the territories or natural and cultural resources indigenous peoples own, use, occupy, or claim, as their ancestral domain? Yes No No indigenous peoples based on the SPS definition.

3. Will the project require broad community support of affected indigenous communities? Yes No No indigenous peoples based on the SPS definition.

4. What action plan is required to address risks to indigenous peoples as part of the transaction TA or due diligence process? Indigenous peoples plan Indigenous peoples planning framework Social impact matrix Environmental and social management system arrangement None

V. OTHER SOCIAL ISSUES AND RISKS

1. What other social issues and risks should be considered in the project design? Creating decent jobs and employment Adhering to core labor standards (M) Labor retrenchment Spread of communicable diseases, including HIV/AIDS Increase in human trafficking Affordability Increase in unplanned migration Increase in vulnerability to natural disasters Creating political instability Creating internal social conflicts (M) Others, please specify ___________

2. How are these additional social issues and risks going to be addressed in the project design? The TRTA will assess and ensure that the participatory community contracting works apply acceptable standards and requirements, in line with ADB’s policies. This includes the participation of women or minority groups in the project activities, and complying with core labor standards especially on paying equal wages for work of equal value, and prohibition of child labor.

VI. TRANSACTION TA OR DUE DILIGENCE RESOURCE REQUIREMENT

1. Do the terms of reference for the transaction TA (or other due diligence) contain key information needed to be gathered during transaction TA or due diligence process to better analyze (i) poverty and social impact, (ii) gender impact, (iii) participation dimensions, (iv) social safeguards, and (v) other social risks. Are the relevant specialists identified? Yes No The due-diligence requirements have been spelled out in the TOR. As the TOR will be performance-based, the firm will propose their most appropriate team, methodology, and implementation arrangements, which will be evaluated by ADB. One of the key outputs of the TRTA will be the poverty, social and gender assessment report, which spells out the poverty, social and gender situation in the project areas, and recommends key interventions within the scope of the project, to address the issues and concerns that will be identified in the report.

2. What resources (e.g., consultants, survey budget, and workshop) are allocated for conducting poverty, social, and/or gender analysis, and participation plan during the transaction TA or due diligence? A gender and social development specialist will be engaged during TRTA to conduct the poverty, social, and gender assessment.