the world bank for official use only...i document of the world bank for official use only report no:...
TRANSCRIPT
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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 57177-BJ
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED IDA CREDIT
IN THE AMOUNT OF
SDR 3.9 MILLION (US$6 MILLION EQUIVALENT)
AND
ON A PROPOSED IDA GRANT
IN THE AMOUNT OF
SDR 16.1 MILLION (US$25 MILLION EQUIVALENT)
AND
ON A PROPOSED GRANT UNDER THE FOOD PRICE CRISIS RESPONSE CORE MULTI
DONOR TRUST FUND
IN AMOUNT OF US$15 MILLION
TO THE
REPUBLIC OF BENIN
FOR THE
AGRICULTURAL PRODUCTIVITY AND DIVERSIFICATION PROJECT
February 24, 2010
Agriculture and Rural Development Unit
Sustainable Development Department
Country Department AFCF2
Africa Region
This document is being made publicly available prior to Board consideration. This does not
imply a presumed outcome. This document may be updated following Board consideration and
the updated document will be made publicly available in accordance with the Bank‘s Policy on
Access to Information.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective January 31, 2011)
Currency Unit = FCFA
FCFA 480 = US$1
US$1 = SDR 0.640229
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
ABE Agence Béninoise pour l’Environnement (Environmental Protection Agency
of Benin)
ACi African Cashew Initiative
AFD Agence Française de Développement (French Development Agency)
AGEFIB Agence de Gestion Fiduciaire des Initiatives à la Base (Local Development
Fidiciary Management Agency)
AIC Association Interprofessionnelle du Coton (Cotton Interprofessional
Association)
BOAD Banque Ouest Africaine pour le Développement (West African Development
Bank)
CAA Caisse Autonome d’Amortissement (Grant and Public Debt Management
Office, Ministry of Finance)
CAADP Comprehensive Africa Agricultural Development Program
CAS Country Assistance Strategy
CEM Country Economic Memorandum
CeRPA Centre Régional de Promotion Agricole (Regional Agricultural Promotion
Center)
CIF Cost Insurance Freight
CIGOP
CNP
Competitiveness and Integrated Growth Opportunity Project
Comité National de Pilotage (National Steering Committee)
CPI
CROS
Consumer Price Index
Commité Régional d’Orientation et de Suivi (Regional Orientation and
Monitoring Committees)
DA Designated Account
DNMP Direction Nationale des Marchés Publics (National Directorate of Public
Procurement)
DPQC Direction de la Promotion de la Qualité et du Contrôle (Quality Control
Authority of Benin)
EFSSP Emergency Food Security Support Project
ERR Economic Rate of Return
ESEFSP Emergency Support to Enhance Food Security Project
ESMF Environment and Social Management Framework
ESOP Entreprise de Service et Organisations Paysannes (Joint Venture between a
Service Provider Firm and Farmers‘ Organization)
ESW Economic and Sector Work
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FAO Food and Agricultural Organization of the United Nations
FCFA CFA Franc
FECECAM Fédération des Caisses d’Epargne et de Crédit Mutuel (Federation of Credit
and Savings Mutuals)
FENAPAB Fédération Nationale de Producteurs d’Anacarde du Bénin (Cashew
Producers Apex Organization of Benin)
FM Financial Management
FRR Financial Rate of Return
GAC Government and Anti-Corruption
GAFSP Global Agriculture and Food Security Program
GDP Gross Domestic Product
GFRP Global Food Crisis Response Program
GTZ German Association for Technical Cooperation (currently known as GIZ,
German International Cooperation)
HDT Handling, Distribution and Transportation
IDA International Development Agency
IDA International Development Association
IMF International Monetary Fund
INRAB Institut National de Recherche Agronomique de Benin (National Agricultural
Research Institute of Benin)
IPR Independent Procurement Review
IRR Internal Rate of Return
IS Information Service
ISP Implementation Support Plan
JICA Japan International Cooperation Agency
KIP Key Performance Indicators
LOA Loan Department of the World Bank
LVHD Low Volume High Density
M&E Monitoring and Evaluation
MAEP Ministère de l’Agriculture, de l’Elevage et de la Pêche (Ministry of
Agriculture, Livestock and Fishery)
MDG Millennium Development Goals
NAIP National Agricultural Investment Plan
NARI National Agricultural Research Institute
NGO Non-Governmental Organizations
NPV Net Present Values
ORAF Operational Risk Assessment Framework
PAD Project Appraisal Document
PADA Projet d’Appui à la Diversification Agricole (Agricultural Productivity and
Diversification Project)
PCU Project Coordination Unit
PDO Project Development Objectives
PDO
PDNA
Project Development Objective
Post Disaster Need Assessment
PDRN Projet de Diffusion du Riz Nerica (Nerica Rice Dissemination Project)
PEFA Public Expenditure and Financial Accountability
PEM Public Expenditure Management
PIM Project Implementation Manual
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PMP Project Management Performance
PMU Project Management Unit
PNPIP Projet National de Promotion de l’Irrigation Privée (National Private
Irrigation Promotion Project)
PPMA Projet de Promotion de la Mécanisation Agricole (Agricultural
Mechanization Promotion Project)
PPR Post Procurement Review
PRGF Poverty Reduction Growth Facility
ProCAD Programme Cadre (Framework Program for all World Bank‘s interventions
in the agricultural sector in Benin)
ProCGRN Programme de Conservation et de Gestion des Ressources Naturelles
(Natural Resources Conservation and Management Program)
PRODEX Agro-Pastoral Export and Market Development Project
PROVAC Projet de Vulgarisation de l’Aquaculture Continentale (Continental
Aquaculture Extension Project)
PRS Poverty Reduction Strategy
PRSC Poverty Reduction Support Credit
PRSP Poverty Reduction Strategy Paper
PSD Private Sector Development
PSRSA Plan Stratégique pour la Relance du Secteur Agricole (Strategic Plan to
Revitalize the Agricultural Sector)
PUASA Emergency Support to Enhance Food Security Project
PUASA Projet d’Urgence d’Appui à la Sécurité Alimentaire (Emergency Food
Security Support Project)
QER Quality Enhancement Review
SCRP Stratégie de Croissance et de la Réduction de la Pauvreté (Growth and
Poverty Reduction Strategy)
SIL Specific Investment Loan
SOE Statement of Expenditures
SONAPRA National Agricultural Promotion Company
SWAp Sector Wide Approach
TOR Terms of Reference
TWG Technical Working Group
UCPA Union Provinciale des Producteurs d’Anacarde (Provincial Cashew
Producers‘ Union)
UGP Unité de Gestion du Programme (Program Management Unit)
VAT Value Added Tax
WAAPP-1C West Africa Agricultural Productivity Project
WDR World Development Report
YARA Fertilizer Company
Vice President: Obiageli Katryn Ezekwesili
Country Director: Madani M. Tall
Sector Director: Jamal Saghir
Sector Manager: Karen M. Brooks
Task Team Leader: Kofi Nouve
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Table of Contents
I. Strategic Context ...............................................................................................................1
A. Country Context ..........................................................................................................1
B. Sectoral and Institutional Context ................................................................................1
C. Higher Level Objectives to which the Project Contributes ............................................4
II. Project Development Objectives ........................................................................................4
A. PDO ...........................................................................................................................4
1. Project Beneficiaries .......................................................................................................4
2. PDO Level Results Indicators ........................................................................................4
III. Project Description .........................................................................................................5
A. Project components ....................................................................................................5
B. Project Financing ........................................................................................................8
1. Lending Instrument ..................................................................................................8
2. Project Financing Table ...........................................................................................8
C. Lessons Learned and Reflected in the Project Design ...................................................9
IV. Implementation............................................................................................................. 10
A. Institutional and Implementation Arrangements ......................................................... 10
B. Results Monitoring and Evaluation ............................................................................ 10
C. Sustainability ............................................................................................................ 11
V. Key Risks ........................................................................................................................ 11
VI. Appraisal Summary ...................................................................................................... 12
A. Economic and Financial Analysis .............................................................................. 12
B. Technical .................................................................................................................. 14
C. Financial Management .............................................................................................. 15
D. Procurement .............................................................................................................. 15
E. Social........................................................................................................................ 16
F. Environment ................................................................................................................. 17
Annex 1: Results Framework and Monitoring .......................................................................... 19
Annex 2: Detailed Project Description .................................................................................... 23
Annex 3: Implementation Arrangements ................................................................................. 41
Annex 4: Operational Risk Assessment Framework (ORAF).................................................... 54
Annex 5: Implementation Support Plan ................................................................................... 58
Annex 6: Team Composition ................................................................................................... 62
Annex 7: Economic and Financial Analysis ............................................................................. 63
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List of Figures
Figure 1: Organizational Chart of the ProCAD......................................................................... 42
Figure 2: Flows of Fund .......................................................................................................... 44
Figure 3: ERR and FRR versus time ........................................................................................ 71
Figure 4: Probability of ERR considering uncertainty for yields and prices ............................... 73
List of Tables
Table 1: Types of Financing Requirements per Value Chain ......................................................3
Table 2: Project Financing Table ...............................................................................................8
Table 3: Estimated changes under PADA ................................................................................ 13
Table 4: List of aquaculture technologies to be demonstrated ................................................... 29
Table 5: Summary situation of major rice production basins in Benin ....................................... 31
Table 6: Relative importance of financing instruments for the targeted value chains ................. 35
Table 7: Project Financing by Categories of Expenditure ......................................................... 45
Table 8: Summaries of Actions by MAEP to strengthen the Project‘s FM ................................. 48
Table 9: Procurement and selection review thresholds .............................................................. 49
Table 10: Project Preparation Action Plan ................................................................................ 50
Table 11: Summary of Main Implementation Focus ................................................................. 59
Table 12: Skills Mix Required ................................................................................................. 60
Table 13: Partners ................................................................................................................... 60
Table 14: Estimated changes under PADA............................................................................... 69
Table 15: Baseline results ........................................................................................................ 70
Table 16: Sensitivity analysis .................................................................................................. 72
Table 17: Distribution assumptions for uncertain variables under PADA .................................. 73
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PAD DATA SHEET
BENIN: AGRICULTURAL PRODUCTIVITY AND DIVERSIFICATION PROJECT
PROJECT APPRAISAL DOCUMENT
AFRICA
AGRICULTURE AND RURAL DEVELOPMENT UNIT
Date: February 24, 2010
Country Director: Madani M. Tall
Sector Director: Jamal Saghir
Sector Manager: Karen M. Brooks
Team Leader: Kofi Nouve
Project ID: P115886
Lending Instrument: Specific
Investment Loan (SIL)
Sectors: General agriculture, fishing and forestry
sector (40%); Crops (40%); Agricultural extension
and research (20%)
Themes: Rural markets (40%); Other rural
development (40%); Rural policies and institutions
(20%)
Environmental Assessment Category: B – Partial
Assessment
Project Financing Data:
Proposed terms:
[ ] Loan [ X ] Credit [ X ] Grant [ ] Guarantee [ X] Other:
Source Total Amount (US$ million)
Total Project Cost: 61.3
Co-financing: Global Food Crisis Response
Program (FPCR-MDTF-Core):
15.01
Borrower: 8.7
Local communities: 6.6
Total Bank Financing: 31.0
IBRD -
IDA 31.0
New 31.0
Recommitted -
Borrower: Republic of Benin
Responsible Agency:
Ministry of Agriculture, Livestock and Fishery
Contact Person: Yénakpondji Janvier Capo-Chichi
Telephone No.: +229-21 30 99 30
Fax No.: + 229-21 30 99 21
Email: [email protected]; [email protected]
Estimated Disbursements IDA (Bank FY/US$ million)
1 Approval and formal commitment of the funds allocated to this project by the GFRP is still pending.
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FY 11 12 13 14 15 16
Annual 2.4 6.5 6.4 6.7 6.0 3.1
Cumulative 2.4 8.8 15.2 21.9 27.9 31.0
Estimated Disbursements GFRP (Bank FY/US$ million)
FY 11 12 13 14 15 16
Annual 0.0 5.9 6.2 2.8 0.1 0.0
Cumulative 0.0 5.9 12.1 14.9 15.0 15.0
Project Implementation Period: IDA: March 22, 2011- August 15, 2016;
GFRP: March 22, 2011- August 15, 2014
Expected effectiveness date: IDA: August 1, 2011; GFRP: August 1, 2011
Expected closing date: IDA: December 15, 2016; GFRP: December 15, 2014
Does the project depart from the CAS in content or other
significant respects?
○ Yes ● No
If yes, please explain:
Does the project require any exceptions from Bank policies?
Have these been approved /endorsed (as appropriate by
Bank management?
Is approval for any policy exception sought from the Board?
○ Yes ● No
○ Yes ○ No
○ Yes ● No
If yes, please explain:
Does the project meet the Regional criteria for readiness for
implementation?
● Yes ○ No
If no, please explain:
Project Development objective: The Project Development Objective of the Agricultural
Productivity and Diversification Project (PADA) is to restore and improve productivity
and value addition for selected value chains in the Recipient‘s territory.
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Project description
Component 1. Adoption of Improved Technologies and Restoration of Productivity
(US$27.3 million; of which IDA support of US$10.0 million and GFRP support of
US$11 million; Government and Beneficiaries: US$6.3 million). Under this component
the Project will finance adoption of improved technologies for the development of the
food security and export-oriented value chains (aquaculture, maize, rice, cashew and
pineapple). It will also support the restoration of the means of production of households
affected by the flood, particularly the productions of cereals (maize and rice), aquaculture,
and livestock.
Component 2. Development/rehabilitation of Irrigation and Market Infrastructures
(US$17.7 million of which IDA support of US$9.0 million and GFRP support of
US$4.0 million; Government and Beneficiaries: US$4.7 million). The component will
finance the rehabilitation and development of small scale irrigation infrastructures to
improve productivity and reduce output variability; and the construction and rehabilitation
of market and storage infrastructures, some of which were destroyed by the recent floods.
Component 3. Value Chain Coordination and Agricultural Financing (US$8.2
million of which IDA support of US$5.6 million and Government and Beneficiaries:
US$2.6 million). This component aims to improve the coordination of targeted value
chains and to help improve access to financial services for project beneficiaries. It will
provide business development services to help address critical supply and demand
constraints to the provision and access to credit and financial services in agriculture. It
will also support building value chain institutions through the organization of value chain
participants into a well structured inter-professions and the organization of producers
around structuring activities, such as rice milling, fingerlings and fish feed production.
Component 4. Sector Program Coordination and Project Management (US$8.1
million of which IDA support of US$6.4 million and Government and Beneficiaries:
US$1.7 million). This component will help strengthen the capacity of the Ministry of
Agriculture, Livestock and Fishery (MAEP) to effectively coordinate the implementation
of the sector program (including PADA) and to manage and monitor the Project.
Safeguard policies triggered
Environmental Assessment (OP/BP 4.01)
Natural Habitats (OP/BP 4.04)
Forests (OP/BP 4.36)
Pest Management (OP 4.09)
Physical Cultural Resources (OP/BP 4.11)
Indigenous Peoples (OP/BP 4.10)
Involuntary Resettlement (OP/BP 4.12)
Safety of Dams (OP/BP 4.37)
Projects on International Waters (OP/BP 7.50)
Projects in Disputed Areas (OP/BP 7.60)
● Yes
○ Yes
○ Yes
● Yes
○ Yes
○Yes
● Yes
○ Yes
●Yes
○ Yes
○ No
●No
● No
○ No
● No
●No
○ No
● No
○ No
●No
Conditions and Legal Covenants:
Financing Agreement
Reference
Description of Condition/Covenant Date Due
Article IV, Section
4.01 (a)
The Recipient has adopted the Project
Implementation Manual;
Before effectiveness
of the Project.
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Article IV, Section
4.01 (b)
The Recipient has established the
Steering Committee;
Before effectiveness
of the Project.
Article IV, Section
4.01 (c)
The Recipient has recruited, for the
PMU, (i) a chief Project coordinator; (ii)
a specialist for procurement; (iii) a rural
finance specialist; and (iv) a value chain
development specialist, each in
accordance with the provisions of
Section III of Schedule 2 to this
Agreement;
Before effectiveness
of the Project.
Article IV, Section
4.01 (d)
The GFRP Grant Agreement has been
executed and delivered and all conditions
precedent to its effectiveness or to the
right of the Recipient to make
withdrawals under it (other than the
effectiveness of this Agreement) have
been fulfilled;
Before effectiveness
of the Project.
Article IV, Section
4.01 (e)
The Recipient shall have (i) opened the
Project Account, and (ii) deposited the
Initial Deposit therein.
Before effectiveness
of the Project.
Schedule 2, Section 1,
A(4)(a)
The Recipient shall establish a regional
steering committee (―Regional Steering
Committee‖) in each of the Relevant
Regions, with functions and resources
satisfactory to the Association.
No later than three
(3) months after the
Effective Date, and
thereafter maintain.
Schedule 2, Section 2,
B.4
The Recipient shall appoint an external
auditor in accordance with the provisions
of Section III of Schedule 2 of the
Financing Agreement.
No later than four
(4) months after
effectiveness of the
Project
Schedule 2, F-3 The recipient shall deposit an initial
amount of (or equivalent to) three
hundred million CFA Francs (FCFA
300,000,000) or such amount as agreed
with the association in to the Project
Account as part of required counterpart
funds.
On or prior to
Effective Date.
Schedule 2, F-4 The Recipient shall deposit in the Project
Account as part of the Counterpart Funds
an amount equivalent to not less than
$375,000 or such other amount as agreed
by the Association.
On the end of the
first quarter, after
the Effective Date,
and at the end of
every quarter
thereafter until the
closing date.
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I. Strategic Context
A. Country Context
1. With a per capita income of US$690 in 2008, Benin ranks in the lower income group of countries. The country has consolidated its democratic process since 1990. The country also
engaged since the 1990‘s in important economic reforms which resulted in a sustained economic
performance with an average annual growth rate of 4.3 percent over 1990-2009. The
development outcomes of this positive growth have, however, been limited due in part to the
relatively high population growth (3.2 percent), and in part to the vulnerability of the Beninese
economy to external shocks, including regular spikes in food prices and recurrent floods Poverty
has been reduced but remains relatively high. According to the latest estimates in 2007, one-third
of Beninese continues to live under the monetary poverty line, while approximately 40 percent of
the population lives in structural (non-monetary) poverty. Access to basic social services has
been improved, in particular in the education, water and health sectors. However, achieving the
Millennium Development Goals (MDG) targets in some other sectors remain a significant
challenge. The economy of Benin is heavily dependent on the agricultural sector, notably cotton,
as well as on re-export trade, mainly to Nigeria. Cotton remains the country‘s major export
commodity. It generally represents 70 percent of total exports, although its share of exports
declined from 75 percent in 1996 to 47 percent in 2006 and further to 40 percent in 2008. Re-
exports represent an average of 7 percent of GDP. The economy remains poorly diversified and
vulnerable to external shocks, as witnessed by a significant deceleration of growth to 2.7 percent
in 2009, from 4.6 percent in 2007 and 5 percent in 2008. This vulnerability underscores the need
to promote economic diversification (including exports) as recommended in the 2009 Country
Economic Memorandum (CEM) for Benin.
B. Sectoral and Institutional Context2
2. The agricultural sector accounts for about 32 percent of GDP and nearly 70 percent of
total employment in Benin. Yields of major crops, including cotton, have remained persistently
low over time. Overall agricultural growth is around 3 percent, which is often offset by the
relatively high population growth (3.2 percent). The agricultural production systems rely on
extensification and family labor, with no or limited use of improved inputs, production methods,
and farm equipment. Access to financing is limited outside the cotton system. The country‘s
agricultural trade performance is generally weak, with a persistently negative agricultural trade
balance. Agricultural exports are concentrated on three groups of products: cotton, fruits
(pineapple), and nuts and oilseed (cashew, soy and cottonseed). To meet the needs for a growing
urban population, Benin continues to import a large share of horticultural products from
neighboring countries (such as Burkina Faso and Nigeria), rice from Asia, wheat, frozen meat
and milk from Europe, and frozen poultry products from Brazil. The sector faces the triple
challenges of diversifying exports (consolidating cotton exports and increasing export volumes
for pineapple and cashew nut), increasing food production, and sustainably increasing farm and
post-harvest productivity.
2 Detailed discussions on the sectoral and institutional context for Benin‘s agriculture is available in a separate,
concurrent, report on ―Sustainable Options for Agricultural Diversification in Benin‖, World Bank Report No.
54495-BJ, Draft (November 2010).
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3. These challenges must be addressed by taking into account the structural vulnerability of
the country‘s agricultural production system to floods and occasional droughts. Benin has been
hit very hard by the recent floods between June and October 2010. The country is currently
considered by the UN system as the country in West Africa most severely affected by floods in
2010.3 While flooding has been a recurrent phenomenon in Benin for some time now, this year
there has seen exceptionally high levels of flooding by the four major rivers of the Country
(Niger, Ouémé, Couffo and Mono) almost simultaneously and this has resulted in widespread
inundation of at least 55 communes out of the total of 77. Food insecurity is rising and will be
widespread within the next year, given some estimates that 40 percent of the harvest (more than
200,000 ha) has been lost, along with many village food stocks and seed supplies. In addition,
substantial flood-related losses were recorded in the livestock and aquaculture subsectors.
National food security stocks are also being drawn down at a fast rate. It is expected that this
would result in severe food shortages and high prices in most of 2011. Given the likelihood of an
immediate food crisis, it is important that quick relief be provided to help restore productivity in
the short run, and strengthen the basis for long term gains in productivity and greater
diversification in agriculture.
4. Improving productivity and strengthening diversification are on the top of the agenda of the agricultural and overall development strategy in Benin. The agriculture sector strategy in
Benin is being defined within the broader framework of the Comprehensive Africa Agricultural
Development Program (CAADP) by which the country commits to achieve a 6 percent growth in
agriculture and to allocate at least 10 percent of the national budget to agriculture as
recommended in Maputo in 2003. The government‘s strategy for agricultural diversification is
supported by three documents: the Growth and Poverty Reduction Strategy (Stratégie de la
Croissance et de la Réduction de la Pauvreté – SCRP)(SCRP/2007-2009 and draft SCRP/2011-
2015), the Benin Development Strategy and Orientation Document (2006-2011), and the
Strategic Plan to Revitalize the Agricultural Sector (Plan Stratégique pour la Relance du
Secteur Agricole -PSRSA)and the related National Agricultural Investment Plan (NAIP)
(PSRSA/NAIP 2010-2014). All these documents base their orientation on the country‘s long
term development strategy (Benin 2025 - Alafia) which establishes the long-term vision of the
country and gives clear directions in relation to the promotion of agricultural value chains. The
vision is that the country must move towards a greater diversification of agricultural production
in order to become a major exporter of agricultural products in 2025.
5. The achievement of this vision would require a sound public and private financing of
agriculture. The concurrent Economic and Sector Work (ESW) on Sustainable Options for
Agricultural Diversification highlights the lack of financing for agricultural activities as an
important factor limiting agricultural growth in Benin. The study underscores the need to alter
the current structure of financing supply and demand, which is characterized by the dominance
of short-term and high interest loans and the scarcity of medium and long-term resources. Table
1 shows the types of financing requirements for selected value chains and how the lack of
medium and long-term financing is directly linked to the well known weak performance of post-
harvest activities and strategic investments in the agriculture sector. The study further highlights
the need for financial sector reforms that would support the promotion and implementation of
specialized financing instruments for accelerated productivity growth and sustainable
3 UNOCHA SitRep # 4 dated October 14, 2010. The current estimate of number of victims from the flooding is
about 800,000, close to 9% of the population.
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diversification in the agriculture sector. Such reforms, and related instruments, would include:
(i) warehouse receipt systems to facilitate a combined access to finance, inputs and markets; (ii)
marketing cooperatives structured around inter-professions for improved control over output and
access to stock-based credit; (iii) matching grants to ease short-term access to credit when
aligned with national development objectives; (iv) lines of credit, guarantee funds, and trainings
provided to commercial banks and micro-financing institutions to support the development of
sustainable financing instruments adapted to agriculture; (v) national agricultural development
funds based on sub-regional successful experiences; (vi) agricultural insurance instruments to
protect farmers and agro-businesses against insurable risks; and (vii) information technologies
and credit reporting bureaus to reduce asymmetric information and ensure greater transparency
in credit information.
Table 1: Types of Financing Requirements per Value Chain
Requirement for: Cashew Pineapple Rice Aquaculture
Operating capital ST ST ST ST
Storage facility MT-LT N.A. N.A. N.A.
Equipment N.A. N.A. MT MT
Processing facilities MT-LT MT-LT MT-LT MT-LT
Investment/infrastructure N.A. MT-LT LT LT
Land development N.A. N.A. LT LT
Notes: ST: Short Term; MT: Medium Term; LT: Long Term; and N.A. Not applicable.
6. The proposed Project, along with the West Africa Agricultural Productivity Project
(WAAPP-1C), are part of the Bank‘s financing package to support the implementation of the
crop and aquaculture development programs of the PSRSA and the related National Agricultural
Investment Plan (NAIP). The crop development program aims to strengthen crop production
systems and increase crop production in order to improve food and nutritional security, reduce
imports, and increase exports; the aquaculture development program aims to increase, on a
sustainable basis, domestic aquaculture production and market supply in order to reduce imports
of frozen fish and seafood. The following targets are defined in the PSRSA/NAIP: (i) increase
rice production from 150,000 tons in 2009 to 385,000 tons in 2015; (ii) increase and stabilize
cotton production at 600,000 tons by 2015; (iii) increase pineapple production from 222,000 tons
in 2009 to 600,000 tons in 2015; (iv) increase cashew processing rate from the current 5 percent
to 10 percent in 2015; and (v) increase fish production from the current 40,000 tons to 60,000
tons in 2015, and reduce frozen fish imports from the current 45,000 tons per year to 36,000 tons
per year in 2015.
7. As identified in the country‘s Growth and Poverty Reduction Strategy - , the agricultural
diversification strategy in Benin has two major components: (i) strengthen food security by
competitively producing staple food products (cereals, roots, tubers, livestock) and import
competing goods (rice and fish) for domestic and regional markets; (ii) increasing export
diversity by increasing export volume of traditional but low volume exports, such as cashew, and
by providing targeted support to emerging high value exports, such as pineapple. The
Agricultural Productivity and Diversification Project (Projet d’Appui à la Diversification
Agricole – PADA) will work to remove the constraints to the development of key value chains
(rice, cashew nut, pineapple and aquaculture), in support to the implementation of the country‘s
agricultural diversification strategy.
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C. Higher Level Objectives to which the Project Contributes
8. This Project is one of the World Bank‘s instruments to achieve the Country Assistance
Strategy‘s (CAS) goal of strengthening competitiveness and accelerating private sector-led
growth. In the agriculture sector, the CAS aims to enhance the contribution of agriculture to
growth (CAS outcome 1.3) by supporting: (i) short-term emergency measures to enhance
domestic food crop production in response to the food price increases, and (ii) medium to longer-
term interventions to improve competitiveness and diversification in the sector. The CAS is
expected to contribute to the following results in the agricultural sector: (i) by 2012, 40 percent
of producers receive extension services; (ii) a new system of cotton and food crops input
distribution system is developed and put in place; (iii) increase in cotton production by 30
percent during the CAS period, to about 360,000 tons; (iv) increase in non-cotton agriculture
export revenues by 3 percent per year; (v) by 2012, 5,000 additional hectares are irrigated and
exploited; and (vi) productivity increased by 15 percent for food crops by 2012.
9. Other instruments, in addition to PADA, for delivering CAS results in the agricultural sector include: (i) an analytical and advisory activity on agricultural diversification, (ii)
emergency food security operations, and (iii) other investment lending operations, including the
West-Africa Agricultural Productivity Project (Fiscal Year 2011) and the Competitiveness and
Integrated Growth Opportunity Project (CIGOP).
II. Project Development Objectives
A. PDO
10. The Project Development Objective is to restore and improve productivity and value
addition for selected value chains in the Recipient‘s territory.
1. Project Beneficiaries
11. Project beneficiaries include farmers, fish farmers, fishermen, agribusinesses and professional groups of farmers and agro-enterprises. The Project is expected to contribute to
increase beneficiaries‘ access to improved technologies, production infrastructure (such as small
scale irrigation systems), agricultural financing and market infrastructure (such as storage
facilities and cold chambers). Beneficiaries are expected at the end of the Project to use
improved techniques and practices regarding the production, processing and marketing of
products from the targeted value chains.
2. PDO Level Results Indicators
12. Key performances indicators are measured in the Project area and include the following: (i)
Number of direct Project‘s beneficiaries, 40 percent of whom are women; (ii) Quantities
processed (milled rice, processed cashew and pineapple juicing); (iii) Quantities exported
(cashew and pineapple); and (iv) Yields of rice, maize, pineapple and cashew (tons/ha) and fish
(tons/ha/year).
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III. Project Description
A. Project components 4
13. Project activities will be organized around the following four components: (i) Adoption
of improved technologies and restoration of productivity, (ii) Development of irrigation and
market infrastructures, (iii) Value chain coordination and agricultural financing and (iv) Sector
program coordination and Project management. Total project cost is US$61.3 million, of which
(i) US$46 million will be financed through the Bank from a proposed US$31 million IDA
allocation and a proposed US$15 million grant from the Multi-Donor Trust Fund for Food Price
Crisis Response Core; (ii) US$8.7 million will be provided in the form of counterpart financing
from the Government of Benin; and (iii) US$6.6 million will come from the contributions made
by Project beneficiaries.
14. Component 1. Adoption of Improved Technologies and Restoration of Productivity (US$27.3 million; of which IDA support of US$10.0 million and GFRP support of US$11.0
million; Government and Beneficiaries: US$6.3 million). This component has two sub-
components: (i) restoration of means of subsistence in flood-damaged areas and (ii) adoption of
improved technologies.
15. Sub-component 1.1 Restoration of productivity (US$8.0 million of which: IDA US$2.0 million; GFRP US$6.0 million). Under this sub-component the Project will support the
restoration of the means of production of households affected by the flood, particularly the
productions of cereals (maize and rice), aquaculture, and livestock. The resources will be mainly
used to: (i) purchase and distribute maize and rice seeds and fertilizers to crop farmers; (ii)
purchase fingerlings for fish farmers; and (iii) purchase and distribute poultry kits, and vaccinate
chicken and small ruminants to help restore subsistence means of livestock producers. This
component will be implemented by the technical directorates of Ministry of Agriculture,
Livestock and Fishery (Ministère de l’Agriculture, de l’Elevage et de la Pêche -(MAEP) and the
Regional Agricultural Promotion Center (Centre Régional de Promotion Agricole-CeRPA), in
collaboration with NGO (in regard to the selection of beneficiaries and the supervision of
Project‘s activities) and with private operators regarding the procurement of inputs, materials and
services.
16. Sub-component 1.2 Adoption of improved technologies (US$19.3 million of which: IDA US$8.0 million; GFRP US$5.0 million; and Government and Beneficiaries: US$6.3
million). This sub-component will finance the adoption of improved technologies for the
development of the food security and export-oriented value chains (aquaculture, maize, rice,
cashew and pineapple). Under this sub-component, the Project will develop a strong partnership
with and complement the Bank-financed WAAPP-1C to support the adoption of readily available
improved technologies and management practices, with the goal to immediately boost farm
productivity and incomes. A list of improved on-farm and post harvest technologies has been
identified for the targeted value chains. For cashew, emphasis will be placed on: (i) varietal
improvement through selection and grafting of existing root stock material and through support
to in-vitro multiplication in partnership with National Agricultural Research Institute of Benin
(Institut National de Recherche Agronomique du Bénin (INRAB), (ii) dissemination of the
planting materials through support to nurseries, (iii) promotion of best farms management
practices through farmers field schools.
4 Value chain specific details are presented in Annex 2.
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6
17. To this end the sub-component will provide matching grants to strengthen producers‘ and
agro-processors‘ financial access to the improved technologies. The sub-component will also
provide competitive grants to finance innovative activities for the development of the targeted
value chains, including rice, cashew, pineapple and aquaculture. The matching grant and
competitive grant mechanisms are defined in the Project‘s Implementation Manual (PIM).
18. Component 2. Development/rehabilitation of Irrigation and Market Infrastructures
(US$17.7 million of which IDA support of US$9.0 million and GFRP support of US$4.0
million; Government and Beneficiaries: US$4.7 million). The component has two sub-
components, namely:
19. Sub-component 2.1. Development/rehabilitation of Irrigation Infrastructures
(US$10.3 million of which: IDA: US$3.6 million; GFRP: US$4.0 million; and Government
and Beneficiaries: US$2.7 million). This sub-component will primarily focus on the rice value
chain. It will be implemented using the same principle as was used with the Bank-supported and
EU-financed Emergency Support to Enhance Food Security Project (ESEFS). The rehabilitation
and development of irrigation systems under this emergency Project uses simple techniques that
are rapid and easily implementable by beneficiaries and local entrepreneurs. This sub-component
will target in priority the rehabilitation and development of irrigation lands under the National
Private Irrigation Promotion Project (Projet National de Promotion de l’Irrigation Privée-
PNPIP), The sub-component will specifically finance the expansion of the successful small -scale
irrigation infrastructure activities, including complementary studies5, works, small equipments,
and capacity building to ensure proper use of irrigation facilities and help rehabilitate perimeters
affected by the floods. The development of private irrigation lands and community irrigation
infrastructure will benefit from matching grants according to clear guidelines (as in Component
1). The project will contract out the realization of works for the small scale irrigation
infrastructure through competitive bidding.
20. A total 9,000 ha of irrigation lands will be developed under the Project. Half of these
lands will be rehabilitated in the Ouémé (2,500 ha) and Glazoué (2,000 ha) production basins
using GFRP resources whereas IDA resources will be used to rehabilitate and expand the
successful small-scale irrigation infrastructure activities on 4,500 ha in the Malanville (2,500 ha)
and Tanguiéta (1,500ha) and Glazoué (500 ha) production basins.
21. Sub-component 2.2. Development of Market Infrastructure (US$7.4 million of
which: IDA: US$5.4 million; and Government and Beneficiaries: US$2.0 million). Under
this sub-component, the Project will finance the construction and rehabilitation of critical market
and storage infrastructures, some of which were destroyed by the recent floods, and provide
critical market information and services. For improved market facilitation, the sub-component
will finance the construction or rehabilitation of critical infrastructure for input and product
storage and marketing. Specific infrastructure construction and rehabilitation activities will be
planned taking into account ongoing initiatives, such as those supported by the Bank-financed
CIGOP and similar value chain development projects (including the one currently being prepared
by the European Union).
22. Component 3. Value Chain Coordination and Agricultural Financing (US$8.2
million of which IDA support US$5.6 million and GFRP support US$0.0 million;
Government and Beneficiaries: US$2.6 million). This component has two sub-components: (i)
5 Key studies for the realization of the irrigation infrastructure have been completed in 2002 and updated in 2009.
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7
building value chain coordination institutions (including facilitation of access to market) and (ii)
facilitation of access to agricultural financing.
23. Sub-component 3.1. Value Chain Coordination (US$5.0 million of which: IDA: US$4.6 million; and Government and Beneficiaries: US$0.4 million). This sub-component
will support the building of value chain institutions through the organization of value chain
participants into a well structured inter-professions and the organization of producers around
structuring activities, such as rice milling, fingerlings and fish feed production. The sub-
component will also finance the Cotton Interprofessional Association (Association
Interprofessionnelle du Coton-AIC). The sub-component will specifically support the creation
and/or strengthening of partnerships between the public and the private stakeholders in support
of improved coordination among the key links of the targeted value chain.
24. Furthermore, to facilitate the marketing of products from the targeted value chains, the
sub-component will finance the provision of business development services, market information
system, quality control systems, and grades and standards, including those pertaining to food
safety. In addition, the Project will work with CIGOP (as well as all relevant on-going projects)6
under this sub-component to pilot the grouping of these support services. In addition, the sub-
component will finance the promotion of Benin‘s products (through participation in trade fairs
and related events, specific packaging, advertizing) and market prospection at regional and
international level.
25. Sub-component 3.2. Facilitation of Access to Agricultural Financing (US$3.2 million
of which: IDA: US$1.0 million; and Government and Beneficiaries: US$2.2 million). This
sub-component aims to help improve access to financial services for project beneficiaries
including to farmers and service providers along the full value chain, through the use of credit
facilitation and guarantee funds. To this end the Project will seek to develop partnerships
between the Project and selected microfinance institutions and commercial banks with a
significant presence in the rural areas, especially in areas where the Project will be operating.
Annex 2 provides the details of use of each instrument.
26. Component 4. Sector Program Coordination and Project Management (US$8.1 million of which IDA support US$6.4 million and Government and Beneficiaries: US$1.7
million). This component has two sub-components: (i) building value chain coordination
institutions, including strengthening the capacities of MAEP in coordinating the agriculture
sector program, and (ii) supporting Project management and monitoring and evaluation.
27. Sub-Component 4.1. Sector Program Coordination (US$2.6 million of which: IDA:
US$1.3 million; and Government and Beneficiaries: US1.3 million). Through this sub-
component, the Project will strengthen the capacity of MAEP to coordinate the implementation
of the PSRSA and the related NAIP currently being finalized by the Government of Benin. The
sub-component will finance studies and consultant services to support: (i) the implementation of
sector coordination tools (planning, monitoring, evaluation, dialogue with other sectors), (ii) the
strengthening of fiduciary capacities (procurement, financial management), and (iii) the
improvement of the quality and targeting of public expenditures in agriculture.
28. Sub-Component 4.2. Project Management, Monitory and Evaluation (US$5.5 of which: IDA: US$5.1 million; and Government and Beneficiaries: US$0.4 million). This sub-
component will finance costs associated with Project management, monitoring and evaluation.
6 Details of the arrangements are described in the Project Implementation Manual.
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These include: (i) incremental costs associated with the staff of the Project Coordination Unit (at
central and departmental levels), including training costs; (ii) equipment and operating costs,
including costs associated with the Project‘s financial management system (including external
audits, periodic activity planning and budgeting at departmental and national levels); and (iii)
costs for establishing and running the Project‘s monitoring and evaluation system.
B. Project Financing
1. Lending Instrument
29. Following the preparation of the PSRSA and the related NAIP, a Sector Wide Approach
(SWAp) was initially envisaged to support agricultural productivity and diversification in Benin
through the implementation of these plans. However, the idea was rejected in favor of a Specific
Investment Loan (SIL). The rationale was that Benin does not currently have the required
institutional framework and fiduciaries capacities to implement a SWAp in the agriculture sector.
It was decided that the Project will be implemented as a SIL, while working to strengthen the
capacity of the MAEP to plan, implement, monitor and evaluate the agricultural sector program.
30. The option of excluding the cotton value from the project activities was considered and
eventually rejected because the central role of cotton in the economy, as the major agricultural
export commodity, as a major source of cash in the rural economy, and as an entry point for
access to credit and advisory services for greater productivity of cotton-based production systems
in Benin. However, the focus on cotton is limited to strengthening stakeholders‘ capacity to
improve the self-governance in the sector.
2. Project Financing Table
Table 2: Project Financing Table
IDA
Credit
IDA
Grant GFRP
7 Others* Total
Cost Project Components (in million US$)
1. Adoption of improved technologies and
restoration of productivity 2.7 7.3 11.0 6.3 27.3
1.1. Restoration of productivity - 2.0 6.0 0.0 8.0
1.2. Adoption of improved technologies 2.7 5.3 5.0 6.3 19.3
2. Development of irrigation and market
infrastructure - 9.0 4.0 4.7 17.7
2.1. Development/rehabilitation of irrigation
infrastructure - 3.6 4.0 2.6 10.3
2.2. Development/rehabilitation of market
infrastructure - 5.4 - 2.0 7.4
3. Value chain coordination and agricultural
financing 3.3 2.3 - 2.6 8.2
3.1. Value chain coordination 3.3 1.3 - 0.4 5.0
3.2. Facilitation of agricultural financing - 1.0 - 2.1 3.2
4. Sector program coordination and project
management - 6.4 - 1.7 8.1
4.1. Sector program coordination - 1.3 - 1.3 2.6
4.2. Project management, monitoring and - 5.1 - 0.4 5.5
7 Approval and formal commitment of the funds allocated to this project by the GFRP is still pending.
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evaluation
TOTAL 6.0 25.0 15.0 15.3 61.3
* Others include Government and Beneficiaries.
C. Lessons Learned and Reflected in the Project Design
31. Lessons are learned from: (i) past Bank and non-Bank projects in Benin, including the ongoing emergency food security project; (ii) past value chain development projects in Burkina
Faso, Niger, Nigeria, Senegal and other countries; and (iii) analytical work, including the 2009
CEM on the constraints for growth and potentials for diversification and innovation, and the
ongoing ESW on agricultural diversification. They highlight the following messages:
Prerequisites for successful value chain development. Value chain development
requires a holistic approach which ensures that critical bottlenecks are removed along the
supply chain. The Project design emphasizes: (i) specific focus on export promotion
(pineapple and cashew) and import substitution (rice and fish); (ii) selectivity in product
coverage, with four major value chains targeted out of the 13 priority value chains
identified in the country‘s agriculture sector strategy; (iii) equitable distribution of value
added by promoting producers groups and supporting integrated value chain models with
shared responsibilities and benefits; (iv) transfer of the management and ownership of
large scale industrial mills to the private sector;
Prerequisites for technology adoption. Availability of credit, inputs and advisory
services are key ingredients for boosting production through productivity-enhancing
technologies. The Project will not only provide matching grants and competitive funds to
facilitate short-term access to finance, but also work to improve the demand and delivery
of sustainable agriculture sector financing services using various financing instruments.
The Project will also draw on lessons learned from the use of guarantee funds in Burkina
and elsewhere to ensure that only viable loans are guaranteed by the fund, as
recommended by the concurrent study on agricultural diversification.
Commodity choice. A key recommendation from both the CEM and the ongoing
Agricultural Diversification ESW is that an effective agricultural diversification strategy
would aim to scale up the production and agro-processing of low volume exports such as
pineapple and cashew nuts, and capitalize on the country‘s endowment to increase
production of import competing commodities such as rice and fish. The Project will
support the implementation of this recommendation.
Support to irrigation. Lessons learned from the implementation of the PUASA,
supported by findings from the Agricultural Diversification ESW, show that dam-based
systems for rice production are not cost-effective. This Project would, therefore, support
the resulting recommendations that rice production be based on low cost irrigation
schemes that use appropriate technology and equipment that are readily available in
Benin. In addition, the small-scale irrigation infrastructure emphasized in the Project is
easily implementable by farmers and local businesses.
Implementation arrangements. Lessons learned indicate that value chain development
institutions must be built on existing bodies that optimize competition and coordination
between various stakeholders. In addition, the roles and responsibilities of each actor
need to be clarified on the onset. The integrated value chain development model adopted
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in this Project allows for greater efficiency through competition and greater scope
through coordination.
IV. Implementation
A. Institutional and Implementation Arrangements
32. The MAEP issued a decree on February 9, 2011 to create the Programme Cadre
(ProCAD), which is a framework program that will be responsible for the management for all
Bank interventions in the agriculture sector in Benin. Through its Program Management Unit
(PMU), ProCAD will be responsible for managing not only the on-going Bank-financed
Emergency Food Security Support Project (EFSSP) and the Emergency Support to Enhance
Food Security Project (ESEFSP), but also the proposed PADA and WAAPP-1C projects as well
as any future Bank-financed projects.
33. The institutional arrangement for ProCAD will be built on the existing capacities of the
Project Management Unit of the EFSSP/ESEFSP, both in terms of logistics and human capacity
as well as the solid technical and fiduciary capacities to manage Bank-financed projects. The
details of the institutional and implementation arrangements are described in Annex 3 and the
PIM respectively.
34. The implementation of the new projects, including the PADA, will be through partnership arrangements. For PADA, the ProCAD will sign memorandum of understanding and
results-based agreements with public service providers, such as the MAEP‘s directorates in
charge of crops, livestock and fishery productions, CeRPA, and INRAB; it will also sign result-
based contracts with private service providers, including financial institutions, NGOs, and
technical operators. The Project‘s implementation arrangements, including for each value chain,
are detailed in Annex 3.
35. The PADA will also have a National Steering Committee, chaired by the Secretary General of MAEP, and comprising representatives of producers‘ organizations, the private
sector, and the ministries of Economy and Finance, Agriculture, Commerce, Industry, and
Development. The Committee will have the responsibility to oversee the project‘s activities
through review of the work plan and the budget, and regular review of the Project‘s reports ,
Regional Orientation and Monitoring (Commité Régional d’Orientation et de Suivi-CROS),
chaired by the President of the Interdepartmental Chambers of Agriculture covering the region,
will also be created with the responsibility over the supervision of program activities at regional
level. A ministerial directive will be issued to create the National Steering Committee and the
CROS.
B. Results Monitoring and Evaluation
36. An M&E system will be developed to monitor expected results to be achieved under the Project, and guidelines on the use this system are provided in the M&E manual, which is part of
the Project Implementation Manual. The Program Management Unit (in charge of the
implementation of PADA) will include a central M&E Unit which will work with all public and
private stakeholders involved in the implementation of Project activities, in order to ensure
adequate monitoring of Project‘s performance indicators. The Direction of Prospective and
Programs of MAEP will play an important role in monitoring the Project‘s support to the
implementation of the agriculture sector program. To this end, the Direction will benefit from
capacity reinforcement. Regular evaluations will be conducted by the Project implementation
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team to help improve the delivery of results, but the Project will also rely on independent
evaluations. Although baseline data exist for the Project‘s key performance indicators, the base
value indicators will be refined at the beginning of Project implementation. The Project M&E
system will also rely on a baseline survey at Project inception and follow-on surveys for
monitoring the Project impact among beneficiaries. Training will be provided to strengthen the
capacity of M&E specialists, both at the Project level, and within the Ministry of Agriculture,
Livestock and Fishery.
C. Sustainability
37. Project‘s sustainability will be ensured through several mechanisms. First, the Project
supports the increase in productivity and value addition of the targeted value chains by
emphasizing the dissemination and adoption of relevant technologies, the provision of matching
grants to facilitate financial access to technological packages, and the provision of advisory
services to ensure effective use of the technological knowledge. Second, the Project puts great
emphasis on the reinforcement of the capacity of the value participants through support to the
development of value chain coordination bodies or interprofessions. This support is expected to
empower these bodies, which must play a key role in maximizing coordination benefits within
the value chains. Third, the Project will finance the development of sustainable mechanisms to
facilitate access to inputs, markets and credits by promoting integrated value-chain development
models (such as the ESOP8 for the rice value chain) or by supporting the development of
warehouse receipt systems. Fourth, the Project is implemented through contractual relationships
with the private sector, which is expected to benefit from a larger volume of activities through
participation in new markets, including the food crop fertilizer‘s market which is traditionally a
missing market in Benin. Fifth, the environmental and social sustainability is ensured through
appropriate mitigation of environmental and social risks, as thoroughly discussed in the Project‘s
safeguard documents. Finally, the Project will also help strengthen the capacities of the Ministry
of Agriculture and other public sector stakeholders regarding the implementation of the country‘s
agricultural investment plan. It is envisaged under this plan the setting-up of an independent and
professionally managed fund to support a sustainable financing of agriculture sector in Benin.
V. Key Risks
38. An Operational Risk Assessment Framework (ORAF) has been prepared for the project (Annex 4). Some of the risks for this Project are those related to the restoration of flood victims‘
productivity. These include: (i) the availability of the required quantity of production inputs
(seeds, fertilizer and other agricultural inputs) to be distributed to the victims within a very short
lapse of time, (ii) the price fluctuations of inputs that are to be distributed to the flood victims,
(iii) the underperforming inputs distribution systems that disrupt and delay the input distribution
operation, and (iv) the inefficient targeting and identification of beneficiaries. These risks are
mitigated through careful planning of activities targeted to households affected by the floods.
Technical directorates of the MAEP will be responsible for supervising the implementation of
8 ESOP stands for Entreprise de Service et Organisation Paysanne, which is a joint venture between an industrial
rice milling firm and producers groups. A typical ESOP operates as follows: the firm supplies inputs, provides
advisory services and collects paddy from producers; the firm also mills the paddy into high quality (import -
competing) rice, and ensures the marketing of the final products; producers usually received grants from a third
party (such as this Project) to finance their co-ownership of the industrial mills; the organization of the production in
the ESOP model follows the standard outgrower scheme, with the additional benefit that producers are co -owners of
the mills, which provides additional guarantee for equitable distributions of values among value chain participants.
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these activities in coordination with the CeRPA and selected NGOs for greater efficiency and
transparency. The Project will also provide training to service providers, include input suppliers,
to ensure that they will make the expected contributions to planned activities.
39. In addition to fiduciary risks, the Project will also face risks associated with the limited
capacity of Project‘s stakeholders, particularly with respect to the activities directly managed by
the commodity groups in the aquaculture, rice, cashew and pineapple value chains. The Project
will mitigate these risks by providing training and consultant services to support and monitor the
implementation of results-based value chain development plans, which will be prepared by these
groups. Climate change and erratic rainfalls (with impact on yields) may affect the overall rate of
return of the Project. These risks are mitigated through the Project‘s emphasis on the adoption of
drought-resistant varieties and cultural practices as well as of small scale irrigation scheme
VI. Appraisal Summary
A. Economic and Financial Analysis
40. The economic and financial analysis of PADA is presented in Annex 7. The analysis (i) presents a baseline review of the Project‘s selected value chains and their economic importance,
(ii) documents the Project‘s expected quantifiable and non-quantifiable benefits, (iii) presents
typical farm models producing cashew, rice, maize, pineapple and tilapia/catfish (―without
Project‖ farm analysis), and (iv) gives an estimate of the Financial Rate of Return (FRR) and the
Economic Rate of Return (ERR) together with a sensitivity and risk analysis.
41. Identification of Project’s benefits. The directly quantifiable benefits are expected to
come from restored productivity, improved crop, horticultural and aquaculture production (rice,
cashew, maize, pineapple and catfish/tilapia), increased production of processed products
(cashew, rice, pineapple) and increased exports (fresh pineapple, pineapple juices, and cashew).
Indirect benefits are expected to come from: (i) improved food security and farm revenues, (ii)
new rural employment opportunities for women (who are particularly involved in rice-processing
activities) and youth, which at the same time could help decrease city migrations, and the (iii)
strengthening of human capital through the capacity building activities and technical assistance
towards value chain apex and grassroots producers‘ organizations and value chains inter-
professions.
42. Methodology. Expected increases in yields are assumed in order to design the ―with-
project‖ situation and appraise the incremental financial benefits (surpluses of rice, cashew,
pineapple, fish and maize) brought about by the project at the farmer level. The incremental
returns from increasing yields of farms have been calculated net of farm costs increases. Almost
all improvements in productivity are associated with increases in farm costs9, due to the increase
in the quantity or quality of purchased technologies or an increase in labor inputs (improved soil
preparation prior to planting, incremental outputs to handle). Whenever data on total incremental
cost of production and processing was unavailable, it has been assumed in the baseline scenario
that the associated increase in cost is 50 percent the increase in productivity10
.
9 The maize value chain will only benefit from flood-related activities (grants for the distribution of fertilizers and
seeds). In this case, no incremental costs at the farm level were considered for maize. 10
This hypothesis was used in several other Projects, such as the WAAPP, the Tanzania National Agricultural
Extension Project-phase 2 (NAERS 2), and Kenya Agricultural Productivity and Agribusiness Project (KAPAP).
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Table 3: Estimated changes under PADA
Enterprise Yield (baseline) Yield (target, with Project)
Rice Inland production systems : 3 tons/ha
Irrigated basins : 5 tons/ha
Inland production systems :
4 tons/ha
Irrigated basins : 6 tons/ha
Maize 1.2 ton/ha (« after disaster » national
estimate)
1.4 ton/ha (« before disaster » level)
Pineapple 60 tons/ha 70 tons/ha
Cashew 0.45 ton/ha 0.85 ton/ha (with improved farm
practices, benefits after 1 year)
1 ton/ha (with improved
technologies, benefits after 5 years)
Aquaculture 2.8 tons/ha/year 2 crops of 5 tons/ha/year
Note: Calculations by the Bank team. Typical farm models were obtained during the identification and
preparation missions in Benin. Targets are those of the results framework (Annex 1).
43. Beneficiaries. From the incremental benefit at the producer scale, the total incremental
benefit has been evaluated by extrapolating the producer-level benefit at the total number of
beneficiaries. The overall project‘s gross benefit has been obtained by aggregating benefits
arising from each enterprise sub-projects. The total numbers of beneficiaries by value chain are
as follows: rice (30,000 under inland and irrigated production systems), maize (50,000), cashew
(75,000), pineapple (10,000) and aquaculture (1,100 farms).
44. Phasing of benefits (pace of adoption). Given the lessons learnt from other projects in
Africa11
targeting agricultural research and technology dissemination, the analysis will
conservatively assume a step-wise realization of average Project benefits. Those were estimated
as follows: 25 percent for year 1; 40 percent for year 2; 60 percent for year 3; 70 percent for year
4; and 80 percent for year 5.
45. Stream of net benefits over 15 years. The total Project costs have been computed with
the overall net benefits (sum of the benefits arising from rice, cashew, pineapple, fish and
maize). Costs from the four Project components were included in the economic analysis as they
lead to productivity and income increases for farmers. The cost to maintain the project after year
5 (recurrent costs) is assumed to be 70 percent -of the fifth year‘s expenditure.
46. Results- Economic and financial rate of return. Under conservative assumptions, the results show that PADA is an economically viable Project. For a 15-year Project lifecycle, and
using a 12 percent discount rate, estimated Net Present Values (NPV) varies between US$53-55
million. Both the FRR and the ERR are above the opportunity cost of capital (30.8 percent and
33.1 percent respectively).
11
See (i) World Bank. 2010. Project Appraisal Document on a proposed Grant in the Amount of USD 120 million to
the Democratic Republic of Congo for a Agriculture Rehabilitation and Recovery Support Project, Report No
49169-ZR. Washington DC; and (ii) World Bank. 2010. Implementation Completion and Results Report on a credit
in the amount of USD34.2 million and on an additional financing in the amount of USD20 million to the Republic of
Mali for a Agricultural Services and Producers Organizations Project, Report No: ICR000243. Washington DC.
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47. The sensitivity analysis shows that the results are very robust against changes in output
prices, but the profitability of the project is sensitive to decreases in yield levels. More
specifically, if yields decrease by 15 percent, the critical value of the rate of the economic rate of
return could be reached. It must be noted, however, that the Project will specifically invest in
irrigation technologies that will mitigate the effects of weather volatility and climate change.
Finally, the baseline Internal Rate of Return (IRR) is at under-optimum level due to conservative
assumptions, so the probability of this ―low performance scenario‖ to happen is quite unlikely.
48. The detailed Economic and Financial Analysis is presented in Annex 7.
B. Technical
49. The project‘s approach builds on lessons learned from: (i) the Benin Agricultural
Diversification ESW carried out in 2010, (ii) past Bank and non-Bank projects in Benin,
including the ongoing Bank-financed EFSSP and ESEFSP, (iii) past value chain development
projects in West Africa (such as the Agro-Pastoral Export and Market Development Project -
PRODEX Project in Niger). The project technical design has been widely discussed with and
agreed upon by the government and stakeholders. Technical considerations relevant to the
Project are as follows:
Value chain approach: Through a holistic methodology, the Project design has included
all the features that are necessary to enhance value chain development and remove
critical bottlenecks (see above ―Lessons Learned and Reflected in the Project Design‖
section).
Technology transfer and adoption of improved materials: through advisory services and trainings performed through Farming Field Schools approaches, extension services
will accompany the distribution of agriculture inputs including improved varieties,
fertilizers, pesticides, etc. Matching grants will be provided to facilitate producers‘ access
to these technologies. As regards to cashew, the acquisition of high performing planting
materials from Brazil and Vietnam will be encouraged. With regards to pineapple, the
Project will support the formulation of fertilizers better adapted to Beninese agro-climatic
and soil conditions. Improved seeds of rice will be certified by the Quality Control
Authority of (Direction de la Promotion de la Qualité et du Contrôle du Benin -DPQC),
Finally, uptake of improved fish feed and fingerlings will be encouraged by prospective
aquaculture advisors following demonstration protocols.
Improvement of irrigation schemes: The Project will specifically finance the expansion
of the successful irrigation infrastructure. Small-scale irrigation technologies (power
pumps, drilling of boreholes, irrigation canals, water control gates), together with
improved land management practices and technical itineraries will be promoted in the
Project areas (inland valley schemes and irrigated perimeters). Land development in the 4
basins (Ouémé, Tanguiéta, Glazoué and Malanville) will seek to maximize alignment
between production and milling capacities (see Annex 2).
Processing and marketing of agricultural products: One of the striking activity of the
Project towards the rice value chain will be the partnerships with the private sector and
medium-scale industrial rice milling firms known as Joint Venture between a Service
Provider Firm and Farmers (Entreprises de Services et Organisations Paysannes-ESOP),
in view of securing the delivery of improved inputs (such as fertilizers and seeds), milling
and marketing of import quality white rice. The industrial milling firms will develop
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close and equitable relationships with rice producers groups to whom they will provide
input credit. In turn, the producers groups will guarantee credit repayment and delivery of
paddy to these firms. In order to help strengthen the business relationship between
producers groups and industrial milling firms, the Project will promote co-ownership of
the industrial mills by financing producers‘ shares in the capital of these mills. Each
production basin will benefit from irrigated land development to secure sufficient paddy
supply to mills.
C. Financial Management
50. The project team has assessed the Financial Management (FM) capacity of MAEP,
especially of the Project Coordination Unit (PCU) previously set up under the Bank-financed
EFSSP and ESEFSP. This unit, which has demonstrated solid technical and fiduciary capacities
to manage Bank-financed Projects, will serve as the Programme Management Unit (PMU) of
ProCAD. The coordination of PADA will be assumed by this PMU. The assessment has
concluded that with the implementation of actions identified to strengthen the coordination unit,
the proposed FM arrangements will satisfy the Bank‘s minimum requirements under
OP/BP10.02. Therefore, for the PMU to be able to handle the additional FM activities of PADA,
it has been recommended (i) to recruit an additional FM Officer, (ii) to set up of appropriate
multi-projects accounting software, and (iii) the preparation of Project Manuals (including FM
and accounting procedures). Taking into account these proposed risk mitigation measures the
overall FM risk rating for this project is Medium likelihood.
51. To minimize the risks of corruption , the following measures are incorporated into the Project design as follows: (i) a technical audit will be carried out every two years to supplement
the annual financial audit, (ii) an Agreement will be made with MAEP, on regular internal audit
missions to be completed by MAEP internal audit department, (iii) a reasonable sample of grants
will be reviewed each year by the financial auditor to ensure that activities were completed
pursuant to the agreed procedures related to the Matching Grant and Competitive Funds
operations and that funds were used for the purposes intended. Annex 3 provides additional
information on FM arrangements.
D. Procurement
52. Procurement of Project activities will be carried out in accordance with the World Bank‘s
―Guidelines: Procurement under IBRD Loans and IDA Credits‖ dated May 2004, revised
October 2006 and May 2010; and ―Guidelines: Selection and Employment of Consultants by
World Bank Borrowers‖ dated May 2004, revised October 2006 and May 2010. The Board of
Executive Directors has approved the revised Guidelines: Procurement of Goods, Works and
Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank
Borrowers and Guidelines: Selection and Employment of Consultants under IBRD Loans and
IDA Credits & Grants by World Bank Borrowers (jointly, ―the revised Procurement and
Consultant Guidelines‖) The procurement activities will also be managed by Project
Coordination Unit (PCU) in charge of managing the Bank financed EFSSP and ESEFSP. The
capacities of this PCU will be transferred to the PMU of ProCAD. The capacity assessment
shows that the current PCU (i.e. the future PMU) is experienced in the management of Bank-
financed projects. The procurement capacity assessment at the MAEP, the Ministry responsible
for the proposed Project, was carried out and actualized in July 2008 and December 2009,
respectively. Following this assessment, it was recommended that a Procurement Specialist be
recruited to support the implementation of the two emergency projects financed by the Bank
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(EFSSP and ESEFSP). The recruitment of the Procurement Specialist is completed. The
Procurement Specialist will be responsible for the implementation of all procurement activities
under the Project. An Assistant Procurement Specialist will be recruited under the proposed
Project to help with the additional procurement activities of PADA.
53. Bank‘s prior and post reviews will be carried out on the basis of review thresholds indicated in Annex 3. The Bank will conduct six-month supervision mission and annual Post
Procurement Review (PPR); the ratio of post review is at least 1 to 5 contracts. The Bank could
also conduct an Independent Procurement Review (IPR) at any time until two years after the
closing date of the Project.
54. In view of (i) the experience of the PCU in carrying out procurement activities for EFSSP
and ESEFSP, (ii) the ongoing recruitment of a Procurement Specialist and the recruitment of an
Assistant Procurement Specialist for PADA, and (iii) the possibility to draw on the support of the
Local Development Fiduciary Management Agency (Agence de Gestion Fiduciaire des
Initiatives à la Base -AGEFIB) procurement experience on a need basis, the overall Project
procurement risk has been rated as moderate. The following measures were agreed upon to
mitigate the remaining risks plan: (i) all procurement activities will be carried out in accordance
with the original or formally updated agreed procurement plan; (ii) the PCU in charge of EFSSP
and ESEFSP will be responsible for the preparation and updating of procurement plan; (iii)
procurement plans will be updated at least annually or as required to reflect the actual project
implementation needs and capacity improvements; and (iv) AGEFIB will continue to provide
procurement support to the Project as needed. ―Guidelines on Preventing and Combating Fraud
and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants‖, dated
October 15, 2006 and updated January 2011 shall apply to the project.
E. Social
55. Stakeholders’ inclusion. Extensive consultations with key stakeholders involving the
private sector (producers, small and medium-sized enterprises engaged in agro-processing and
agribusiness), the public sector (line ministries) and the civil society (roots and apex producers‘
organizations) have been conducted during the preparation stage. Key actors have been involved
in the definition of the scope of activities through participatory approaches. These consultations
have stressed the need to mainstream gender in Project activities, leading to the decision to
ensure that at least 40 percent of Project beneficiaries are women. Specifically in regard to the
development and rehabilitation of small scale irrigation infrastructure and equipment, the
consultations recommended a strong implementation of local communities in the choice of
beneficiaries, to guarantee access to the irrigated lands are consistent with cultural practices in
these communities.
56. Social benefits. With regards to Project‘s positive externalities, PADA is expected to bring welfare and well-being at the household level, due to improved food security (increased
self-consumption) and farm revenues, helping to reduce poverty and malnutrition. Other
beneficiaries are the consumers who will have improved access to agricultural food produce.
New rural employment opportunities for both women (who are particularly involved in rice-
processing activities in Benin) and youth are expected to be brought by the Project (handling of
incremental agricultural outputs) and decrease migrations towards urban areas. The Project will
also strengthen human capital through the capacity building activities and technical assistance
towards value chains apex and grassroots producers‘ organizations and value chains inter-
professions.
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F. Environment
57. The PADA is a Category B Project. Therefore, the environmental and social impacts of
the Project are expected to be moderate, site specific, and manageable. The Project is expected to
have a positive environmental impact through its support for agricultural technologies that
promote the better use of land and water resources. Potential environmental risks could include
point and nonpoint pollution of water sources, and other issues associated with the use of
agricultural chemicals, and negative environmental impacts associated with the rehabilitation of
irrigation or small-scale civil works.
58. Four Bank safeguard policies apply to the Project: Environmental and Social Assessment
(OP/BP 4.01), Pest Management (OP 4.09), Involuntary Resettlement Policy (OP/BP 4.12) and
Projects on International Waterways (OP/BP 7.50).
OP 4.01 is triggered to provide a framework within which Project activities will be
implemented using practical due diligence mechanisms to address potential
environmental and social impacts. The Project will finance the construction and
rehabilitation agricultural facilities (irrigation, storage, processing, etc.), which will
essentially be small-scale civil works. The potential impacts of these infrastructures are
likely to be small-scale and site specific, typical of category B projects. Since the exact
location of these infrastructures to be rehabilitated or built was not known, the borrower
has prepared an Environmental and Social Management Framework (ESMF), which has
been reviewed and disclosed in-country and at the Infoshop prior to project appraisal.
En