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Document of The World Bank
FOR OFFICIAL USE ONLY
Report No: 65588-RW
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 52.2 MILLION (US$80 MILLION EQUIVALENT)
TO THE
REPUBLIC OF RWANDA
FOR A
THIRD RURAL SECTOR SUPPORT PROJECT
FEBRUARY 2, 2012
Sustainable Development Department Agriculture and Rural Development Unit East Africa Country Cluster II Africa Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective November 28, 2011)
Currency Unit = Rwandan Franc (RWF) 600 RWF = US$1
0.6513SDR = US$1
FISCAL YEAR July 1 – June 30
ABBREVIATIONS AND ACRONYMS
AFR AIS APL ASWG
Access to Finance Rwanda Agricultural Investment Strategy Adaptable Program Loan Agricultural Sector Working Group
BDC Business Development Center CAADP Comprehensive Africa Agricultural Development Program CAS Country Assistance Strategy CDD CETSEs CQs DIF DFID
Community Driven Development Commercial Entreprises and Technical Support Entities Consultants’ Qualifications Dynamic Information Framework Department for International Development
CETSEs Commercial Enterprises and Technical Support Entities DOL DP DRC EA
Division of Labor Development Partners Democratic Republic of Congo Environmental Assessment
EDPRS Economic Development and Poverty Reduction Strategy EERR EIA EICV EMPs EMSF
Economic Expected Rate of Return Environmental Impact Assessment Second Integrated Household Living Conditions Survey Environmental Management Plans Environmental and Social Management Framework
ENPV EO
Expected Net Present Value Environmental Officer
EPVR Expected Present Value Ratio ERR ESMF FA FBS FFS FM GAFSP GDP
Expected Rate of Return Environmental and Social Management Framework Framework Agreement Fixed Budget Selection Farmers Field Schools Financial Management Global Agriculture and Food Security Programme Gross Domestic Product
GoR Government of the Republic of Rwanda IC International Consultant ICB International Competitive Bidding
iii
ICR IDA IFAC IFR IPM IS ISR JICA MINAGRI LCs LSP LWH M&E MIFOTRA MoU
Implementation Completion and Results Report International Development Association International Federation of Accountants Interim Financial Reports Integrated Pest Management Implementation Support Implementation Status and Results Reports Japanese International Cooperation Agency Ministry of Agriculture and Animal Resources Least Cost Local Service Provider Land Husbandry, Water Harvesting and Hillside Irrigation Monitoring and Evaluation Ministry of Public Service and Labor Memorandum of Understanding
MTR NAEB NCB
Mid-Term Review National Agricultural Export Board National Competitive Bidding
NEPAD NIS
New Partnership for Africa’s Development National Institute of Statistics
NPK Inorganic fertilizer mixture of nitrogen, phosphate, and potassium (kalium) NPV OAG
Net Present Value Office of the Auditor General
O&M Operation and Maintenance ORAF PAD PAP PCN PDO PFM PIM PIT PIU PM PMP PS
Operational Risk Assessment Framework Project Appraisal Document Project Affected Person Project Concept Note Project Development Objectives Public Financial Management Project Implementation Manual Project Implementation Team Project Implementation Unit Program Manager Pest Management Plan Permanent Secretary
PSTA QBS QCBS RAB RAP RDB REMA RIF RPF RPPA
Second Strategic Plan for the Transformation of Agriculture Quality-Based Selection Quality and Cost Based Selection Rwanda Agricultural Board Resettlement Action Plan Rwanda Development Board Rwanda Environmental Management Authority Rural Investment Facility Resettlement Policy Framework Rwanda Public Procurement Authority
RSSP Rural Sector Support Project RWF SBD SLM SOE
Rwandan Franc Standard Bidding Documents Sustainable Land Management Statement Of Expenses
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SPAT SPIUs SSS
Strategic Plan for the Transformation of Agriculture Single Project Implementation Units Single Source Selection
SPPC Strategic Planning and Program Coordination Secretariat SWAp Sector-Wide Approach TTL Task Team Leader UNCITRAL USAID
United Nations Commission on International Trade Law United States Agency for International Development
WUA Water User Association
Regional Vice President: Obiageli K. Ezekwesili Country Director: Johannes Zutt
Sector Director: Jamal Saghir Sector Manager: Karen Mcconnell Brooks
Task Team Leader: Hardwick Tchale
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REPUBLIC OF RWANDA THIRD RURAL SECTOR SUPPORT PROJECT
TABLE OF CONTENTS
Page
I. STRATEGIC CONTEXT .................................................................................................1
A. Country Context ............................................................................................................ 1
B. Sectoral and Institutional Context ................................................................................. 1
C. Higher Level Objectives to which the Project Contributes .......................................... 2
II. PROJECT DEVELOPMENT OBJECTIVES ................................................................4
A. PDO............................................................................................................................... 4
Project Beneficiaries ........................................................................................................... 4
PDO Level Results Indicators ............................................................................................. 4
III. PROJECT DESCRIPTION ..............................................................................................5
A. Programmatic Objective ............................................................................................... 5
B. Project Components ...................................................................................................... 5
C. Project Financing .......................................................................................................... 8
Lending Instrument ............................................................................................................. 8
Project Cost and Financing ................................................................................................. 8
D. Lessons Learned and Reflected in the Design .............................................................. 9
IV. IMPLEMENTATION .....................................................................................................10
A. Institutional and Implementation Arrangements ........................................................ 10
B. Results Monitoring and Evaluation ............................................................................ 11
C. Sustainability............................................................................................................... 11
V. KEY RISKS AND MITIGATION MEASURES ..........................................................12
A. Risk Ratings Summary Table ..................................................................................... 12
B. Overall Risk Rating Explanation ................................................................................ 13
VI. APPRAISAL SUMMARY ..............................................................................................14
A. Economic and Financial Analyses .............................................................................. 14
B. Technical ..................................................................................................................... 14
C. Financial Management ................................................................................................ 14
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D. Procurement ................................................................................................................ 15
E. Social (including safeguards) ...................................................................................... 15
F. Environment (including safeguards) ........................................................................... 16
G. Other Safeguards Policies triggered............................................................................ 17
ANNEX 1: RESULTS FRAMEWORK AND MONITORING ...............................................18
ANNEX 2: DETAILED PROJECT DESCRIPTION ...............................................................23
ANNEX 3: IMPLEMENTATION ARRANGEMENTS ..........................................................34
ANNEX 4 OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) .....................51
ANNEX 5: IMPLEMENTATION SUPPORT PLAN ..............................................................55
ANNEX 6: ECONOMIC AND FINANCIAL ANALYSIS ......................................................58
ANNEX 7: MAJOR RELATED PROJECTS FINANCED BY THE BANK ........................67
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PAD DATA SHEET
Rwanda
Third Rural Sector Support Project (P126440)
PROJECT APPRAISAL DOCUMENT .
.
Basic Information Date: February 2, 2012 Sectors: General agriculture, fishing and forestry
sector (50%), Irrigation and drainage (30%), Agro-industry, marketing, and trade (20%)
Country Director: Johannes C.M. Zutt Themes: Other rural development (35%), Rural services and infrastructure (33%), Water resource management (17%), Rural policies and institutions (15%)
Sector Manager/Director:
Karen Mcconnell Brooks/Jamal Saghir
Project ID: P126440 EA Category:
B - Partial Assessment
Lending Instrument: Adaptable Program Loan
Team Leader(s): Hardwick Tchale
Does the project include any CDD component? Yes
Joint IFC: No
.
Borrower: Republic of Rwanda
Responsible Agency: Ministry of Agriculture and Animal Resources
Contact: Ernest Ruzindaza Title: Permanent Secretary
Telephone No.:
250252-586104 Email: [email protected]
.
Project Implementation Period: Start Date:
February 23, 2012
End Date: October 30, 2017
Expected Effectiveness Date: April 30, 2012
Expected Closing Date: October 30, 2017
.
Project Financing Data(US$M) [ ] Loan [ ] Grant [ ] Other
[ X ] Credit [ ] Guarantee
For Loans/Credits/Others
Total Project Cost (US$M): 85.00
Total Bank Financing (US$M): 80.00 .
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Financing Source Amount(US$ Million) BORROWER/RECIPIENT 5.00
International Development Association (IDA) 80.00
Total 85.00
.
Expected Disbursements (in US$ Million)
Fiscal Year FY12 FY13 FY 14 FY 15 FY 16 FY17 FY18
Annual 2.00 10.00 15.00 15.00 15.00 15.00 8.00
Cumulative 2.00 12.00 27.00 42.00 57.00 72.00 80.00
.
Project Development Objective(s) In line with the overall APL objective and its programmatic phasing, the Project Development Objectives (PDOs) for RSSP3 are to:
(i) Increase the agricultural productivity of organized farmers in the marshlands and hillsides of sub-watersheds targeted for development in an environmentally sustainable manner; and
(ii) Strengthen the participation of women and men beneficiaries in market-based value chains.
.
Components
Component Name Cost (US$ Millions) Infrastructure for Marshland, Hillside and Commodity Chain Development 72.01
Capacity for Marshland, Hillside and Commodity Chain Development
7.5
Project Coordination and Support 5.5
.
Compliance Policy
Does the project depart from the CAS in content or in other significant respects?
Yes [ ] No[ X ]
.
Does the project require any exceptions from Bank policies? Yes [ ] No [X]
Have these been approved by Bank management? Yes [ ] No [ ]
Is approval for any policy exception sought from the Board? Yes [ ] No [ X ]
Does the project meet the Regional criteria for readiness for implementation?
Yes [ X ] No [ ]
1 Includes US$5 million for resettlement costs to be paid through counterpart funding and physical and price contingencies.
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.
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 X
Natural Habitats OP/BP 4.04 X
Forests OP/BP 4.36 X
Pest Management OP 4.09 X
Physical Cultural Resources OP/BP 4.11 X
Indigenous Peoples OP/BP 4.10 X
Involuntary Resettlement OP/BP 4.12 X
Safety of Dams OP/BP 4.37 X
Projects on International Waterways OP/BP 7.50 X
Projects in Disputed Areas OP/BP 7.60 X .
Legal Covenants
Name Recurrent Due Date Frequency
The Recipient shall not later than one (1) month of the Effective Date, or such other date as may be agreed with the Association, establish, and thereafter maintain throughout Project implementation, the Project Steering Committee (PSC) under the leaderships of MINAGRI with terms of reference satisfactory to the Association and with adequate resources to carry out its functions.
Yes One (1) month after the Effective Date.
To be maintained throughout the project implementation period.
The Recipient shall not later than one (1) month of the Effective Date, or such other date as may be agreed with the Association, establish, and thereafter maintain a Districts Fiduciary Support Team comprising a procurement officer and an accountant to be responsible for a cluster of Districts in which the Project is operative, all with qualifications and experience and terms of reference satisfactory to the Association.
Yes One (1) month after the Effective Date.
To be maintained throughout the project implementation period.
The Recipient shall not later than one (1) month of the Effective Date or such other date as may be agreed with the Association, establish and thereafter maintain throughout Project implementation, a District Implementation Support Team for every District in which the Project is operative, comprising rural engineers, community development specialists, agribusiness specialists, agronomists, monitoring and evaluation specialists, sustainable land management specialists and such other technical specialists as may be agreed with the Association, all with qualifications and experience satisfactory to the Association.
Yes One (1) month after the Effective Date.
To be maintained throughout the project implementation period.
x
The Recipient shall not later than thirty (30) months of the Effective Date or any other date agreed with the Association carry out jointly with the Association, a Mid-Term Review of the progress made in carrying out the Project.
No No later than 30 months of the Effective Date.
Once
The Recipient shall deposit into the Counterpart Fund Account, not later than one hundred and twenty (120) days of the Effective Date, an initial advance sufficient to meet the cost of implementation of Part 1 (d) of the Project during the first Fiscal Year of the Project implementation period, and thereafter replenish the Counterpart Fund Account in advance of every Fiscal year, taking into account the balance of funds in the Counterpart Fund Account and projected expenditures for the following Fiscal Year.
Yes No later than 120 days of the effective date.
Every fiscal year
The Recipient shall, not later than May 31 of each year, prepare and furnish to the Association an annual program of activities proposed for inclusion in the Project during the following Fiscal Year, together with a proposed budget and financing plan for such activities, provided that the annual work plan and budget for the Project for the first year of Project implementation shall be furnished to the Association not later than one (1) month of the Effective Date or such other date as may be agreed with the Association.
Yes May 31 each year beginning in 2012.
Every fiscal year
The Recipient shall furnish to the Association for review, no later than three (3) months prior to the Closing Date, operational procedures with respect to dams constructed or targeted under the Project, including retention of written instructions for flood operations and emergency preparedness at such dams at all times, incorporation of necessary modifications to technical criteria for the evaluation of dam safety further to the advent of new technology or information, and application of such revised criteria to such dams and other dams under the Recipient’s jurisdiction as necessary.
No Three (3) months prior to the Closing Date.
Once
The Recipient, shall, for the purposes of any Large Dam: Submit to the Association for review, and thereafter take all measures required to address the conclusions and recommendations of such review and adopt, Dam Safety Plans, of such scope and detail as the Association shall have reasonably requested and which shall have been reviewed by the Panel and reflect the conclusions and recommendations of such review, as follows:
No No later than one (1) year prior to the filling of the subject Large Dam.
Determined by the number of Large Dams.
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(iii) a Dam Emergency Preparedness Plan no later than one (1) year prior to the initial filling of the subject Large Dam.
The Recipient, shall, for the purposes of any Large Dam: Submit to the Association for review, and thereafter take all measures required to address the conclusions and recommendations of such review and adopt, Dam Safety Plans, of such scope and detail as the Association shall have reasonably requested and which shall have been reviewed by the Panel and reflect the conclusions and recommendations of such review, as follows: (iv)a Dam Operation and Maintenance Plan no later than six (6) months prior to the initial filling of the subject Large Dam.
No No later than six (6) months prior to the filling of the subject Large Dam.
Determined by the Number of Large Dams.
.
Team Composition
Bank Staff Name Title Specialization Unit Meena M. Munshi Senior Economist Senior Economist AFTAR
Noreen Beg Senior Environmental Specialist Senior Environmental Specialist
AFTEN
Hawanty Page Senior Program Assistant Senior Program Assistant AFTAR
Chantal Kajangwe Procurement Specialist Procurement Specialist AFTPC
Svetlana Khvostova Operations Analyst Operations Analyst AFTOS
Loraine Ronchi Senior Economist TTL, initial preparation AFTAR
Hardwick Tchale Senior Agriculture Economist TTL, Appraisal AFTAR
Belinda Mutesi E T Temporary E T Temporary AFMRW
Otieno Ayany Financial Management Specialist Financial Management Specialist
AFTFM
Diego Garrido Martin Consultant Consultant AFTDE
Valens Mwumvaneza Rural Development Specialist Rural Development Specialist
AFTAR
Non Bank Staff Name Title Office Phone City
Thierry Lassalle Institutional Development Specialist, FAO
Amadou Soumaila Lead Irrigation Specialist, FAO Rome
Alberta Mascharetti Agricultural Officer, FAO Rome .
.
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I. STRATEGIC CONTEXT
A. Country Context
1. After remarkable social and economic post-conflict reconstruction from 1994 to 2008, Rwanda’s strategies for poverty reduction2 focus on inclusive growth. The agricultural sector in Rwanda accounts for about 36 percent of Gross Domestic Product (GDP), 80 percent of employment, and in 2010, 45 percent of foreign exchange earnings3. It also provides 90 percent of the country’s food needs. In terms of the country’s growth, the improved performance in GDP growth seen in 2008 (8.5 percent) was largely credited to strong agriculture sector growth that year (14.8 percent), with continued positive performance through to 2011. According to national poverty statistics, poverty remains largely a rural and agricultural phenomenon, with rural poverty at 67 percent. Poverty incidence among families whose main source of income is agricultural wage labor is extremely high at 91 percent. Combined with the dominance of agriculture in employment and food security, productivity growth in the sector is clearly pro-poor. For these reasons, the Government’s national and sectoral strategies emphasize the importance of achieving higher agricultural productivity. Government expenditure in the sector reflects this priority, with allocations rising from 4.2 percent in 2008 to 6.6 percent in 2011 for the Ministry of Agriculture and Animal Resources (MINAGRI). Together with agricultural-related spending in other ministries, Rwanda has met its 10 percent Comprehensive African Agriculture Development Program (CAADP)4
B. Sectoral and Institutional Context
commitment to the proportion of agriculture expenditure in the national budget.
2. Raising agricultural productivity is critical to achieving Rwanda’s vision for its structural transformation from subsistence agriculture to a knowledge-based economy5. As human and other resources are currently concentrated in the agricultural sector, their release from subsistence agriculture to support growth in other sectors is a necessary first step. Furthermore, in this most densely populated country in sub-Saharan Africa, it is the only strategy for environmentally sustainable growth in agriculture. Briefly, the sectoral context in which this needs to take place is characterized by a number of challenges and opportunities. Key challenges include: (i) a binding land constraint that rules out expanding land area for agriculture if growth is to be environmentally sustainable6
2 Economic Development and Poverty Reduction Strategy (EDPRS) and Vision 2020.
; (ii) small average land holdings (0.3 ha); (iii) poor water management (uneven rainfall and ensuing variability in production) resulting from very low levels of irrigation (15,000 ha nationwide); (iv) the need for greater (public and private) capacity from the district to the national levels and the weak extension services for farmers; and (v) limited commercial orientation constrained by poor access to output and financial markets. In
3 World Bank. 2011. Rwanda Economic Update (Spring Edition). World Bank. Washington DC. 4 Comprehensive African Agriculture Development Programme, the agricultural agenda for Africa-led growth and poverty reduction under New Partnership for Africa’s Development (NEPAD). 5 Vision 2020 6 Total arable land in Rwanda is slightly above 1.5 million ha and Rwanda has the highest population density in sub-Saharan Africa (355 inhabitants per km²). In order for the sector to contribute to the Government’s national strategy objectives of higher growth, reduced poverty and economic transformation, intensification is key to achieving these objectives and to containing encroachment on environmentally fragile areas under intense population pressures.
2
terms of opportunities, (i) productivity is low, so the scope for improvement is high, with recent pilot activities in hillside protection and integrated soil fertility analysis yielding excellent results; (ii) use of improved inputs and sustainable land husbandry techniques are far from exhausted; and (iii) agricultural market growth potential is high since Rwanda’s land locked status makes heavier produce relatively competitive in domestic markets, and increased integration into the East Africa community is opening up regional markets. 3. Rwanda is the land of a thousand hills. For every hill, there is a valley, or ‘marshland’—many of which are already under subsistence agriculture. The Government’s strategy for environmentally sound intensification of its hillsides and marshlands is articulated by MINAGRI in its Second Strategic Plan for the Transformation of Agriculture (known by its French acronym, PSTA II). The PSTA II is fully aligned with the country’s national growth and poverty reduction strategies, the Economic Development and Poverty Reduction Strategy (EDPRS and Vision 2020) and formed the basis of the first CAADP-reviewed and approved Agricultural Investment Strategy (AIS) in Africa. Rwanda’s agricultural strategy has four pillars: (i) Physical Resources and Food Production: Intensification and development of sustainable production systems; (ii) Producer Organization and Extension: Support to the professionalization of producers; (iii) Entrepreneurship and Market Linkages: Promotion of commodity chains and the development of agribusiness; and (iv) Institutional Development: Strengthening the public sector and regulatory framework for agriculture.
4. MINAGRI and the Development Partners (DPs) have signed a Memorandum of Understanding (MoU) establishing a Sector Wide Approach (SWAp) for agriculture that: (i) streamlines project implementation across the sector; and (ii) builds capacity at MINAGRI for own-implementation in the future.
5. Additionally, the GoR has developed a solid legal framework for land issues and for farmer organizations. The 2005 Land Law secures tenure rights for all existing private landholders, whether under customary or written law. Implementation of titling has started, with the UK Department for International Development (DFID) support, and should be completed by 2012. Government policy is also working to convert the 2,500 grass root farmer organizations into cooperatives, enabling them to enter into commercial activities under an enhanced regulatory framework (i.e., the Cooperative Law). Nevertheless, these organizations are weak and require greater institutional support.
6. Furthermore, key rural infrastructure investments are critical to meeting the agricultural sector's objectives. First, the GoR is extending access to electricity, particularly in rural areas. Second, investments in rural feeder and secondary roads are needed for rural development. Finally, access to finance remains a key constraint to growth in the sector. The Government of the Republic of Rwanda (GoR), with DP support (e.g., DFID, World Bank and USAID), has consolidated access to finance initiatives under the Access to Finance Rwanda (AFR) trust fund, which has a strong focus on rural finance.
C. Higher Level Objectives to which the Project Contributes
7. The Rural Sector Support Program (RSSP) is MINAGRI’s flagship vehicle for marshland development, constituting a major portion of the first two strategic pillars of the PSTA II. The
3
program is financed by International Development Association (IDA) through a three-phase adaptable program loan (APL), the first phase of which became effective in 2001(RSSP1) and the second phase (RSSP2) in 20087
. Due to a capable Government team and excellent implementation progress, RSSP2 has completed its activities 10 months prior to its planned October 31, 2012 closing date, in January 2012. At Mid-Term Review (MTR) (October 2010) it was apparent that the Project would meet and exceed its triggers for the next phase of the APL before the projected closing date (see Table 1). The Government therefore requested the Bank to advance the preparation of RSSP3.
Table 1 Status of RSSP Phase 3 Triggers
7 Both RSSP1 & 2 were financed fully by the Bank (US$48 million and US$35 million, respectively). Both projects met their APL triggers and have been rated Satisfactory.
Trigger Target Progress December 2011
Trigger status Comment
By the end of the Project, at least 3,300 additional ha of irrigated marshlands have been rehabilitated or developed by the Project
6,410 ha 6,434 ha Over-
achieved
All contracts have been completed. Capacity building activities to be undertaken through RSSP 3.
By the end of the Project, at least 9,900 additional ha of hillsides have been sustainably developed by the Project
9,900 ha 9,917 ha Over-achieved
With the recent update, the trigger has been over-achieved.
By the end of Phase 2, average crop yields on farmed marshlands and hillsides developed under the Project are 100 percent higher relative to the beginning-of-Phase-1 baseline
Rice: 6 t/ha Rice: 6.29t/ha
Over-achieved
Trigger has already been over achieved and the figures are expected to be even higher after the ongoing 2012 season..
Maize: 1.6 t/ha
Maize: 4.05t/ha (ZM607 seed); 5t/ha (Hybrid
seed)
Potato: 17.2 t/ha
Potato: 19.65 t/ha
By the end of Phase 2, crop-derived incomes of farmers assisted by CETSEs are 50 percent higher relative to the end-of-Phase-1 baseline
73,269 FRW
156,304 FRW
Over-achieved
With the recent update from the RSSP2 Impact Assessment survey data, the trigger has been over-achieved.
By the end of the Project, at least 75 percent of the farmers in irrigated marshlands rehabilitated or developed by the Project (RSSP1 and RSSP2) are paying water charges through WUAs
75% 79% Over-
achieved
WUAs were established in 22 marshlands and have taken over from coops the activity of collecting water fees. The legalization is in process, WUAs are ready to apply for official registration now that the Ministerial Order was published in the official Gazette on December 12, 2011.
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8. The Country Assistance Strategy (CAS) (FY09-FY12) highlights the need to activate new drivers to sustain rapid growth, raise incomes and reduce poverty. Agriculture is identified as one of the key sectors for both growth and poverty reduction. The Division of Labor (DOL) exercise conducted by the GoR confirms the Bank's priority engagement in three sectors-agriculture, energy, and transport (including Information Communication Technologies (ICT))-as well as some cross-sector areas. The proposed project aligns with both the CAS' focus on agricultural production and basic infrastructure services and the DOL's indication of the Bank's sectors of engagement. The project is also in line with the World Bank’s Africa Strategy, “Africa’s Future and the World Bank’s Support to It” (March 2011). It supports competitiveness and employment, vulnerability and resilience, and governance and public sector capacity.
II. PROJECT DEVELOPMENT OBJECTIVES
A. PDO
9. In line with the overall Adaptable Program Loan (APL) objective and its programmatic phasing, the Project Development Objectives (PDOs) for RSSP3 are to:
(i) Increase the agricultural productivity of organized farmers in the marshlands and hillsides of sub-watersheds targeted for development in an environmentally sustainable manner; and
(ii) Strengthen the participation of women and men beneficiaries in market-based value chains.
Project Beneficiaries 10. The project beneficiaries for RSSP3 are female and male farmers in the selected marshlands and adjacent hillsides, as well as community members receiving Project support in small groups for value chain activities, either upstream or downstream. The total target number of beneficiaries for RSSP3 is 100,000 people. This takes into consideration the annual target areas of marshlands and hillsides to be developed. PDO Level Results Indicators 11. To achieve the project objectives, the key expected results will be the sustainable development of the marshlands and hillsides as well as the integration of the targeted beneficiaries and organizations into market-based value chains (upstream and downstream) so that incomes are diversified in the community on a long term basis. To measure the progress and achievement of these expected results, the following PDO indicators have been identified:
1. Productivity of targeted areas ($/ha) in:
By the end of the Project, at least 20 cooperatives with business plans and supported by RSSP2 have increased their revenues from sales by 50% relative to the baseline
20 coops 45 coops Over-
achieved
The target for this trigger has already been met and surpassed and the number of cooperatives will keep growing during the last months of RSSP2 implementation.
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i. irrigated marshlands; ii. non-irrigated hillsides.
2. Share of commercialized agricultural products from the targeted area (%, disaggregated by gender);
3. Project beneficiaries involved in up and down-stream activities along the value-chain (number, disaggregated by gender); and
4. Farmers in areas targeted by RSSP that have adopted sustainable land management practices on the hillsides or marshlands (%, disaggregated by gender).
In addition to the PDO indicators, the Results Framework with intermediate indicators and annual targets are presented in Annex 1.
III. PROJECT DESCRIPTION
A. Programmatic Objective
11. The long term programmatic objective of the RSSP APL series (2001 to present) is to help the Government of Rwanda achieve its strategic goal of unlocking rural growth in order to increase incomes and reduce poverty. The series, at its inception, envisioned the first phase (RSSP1) would build the capacity needed to support the adoption of sustainable intensification technologies in developed marshlands and surrounding hillsides, with the second phase (RSSP2) broadening and deepening the support provided to accelerate intensification and commercialization. The proposed third phase will extend and build upon the already successful growth-stimulating RSSP activities of these first two phases, while emphasizing diversification of economic activities to increase and stabilize rural incomes.
B. Project Components
12. In keeping with the preceding phase of the APL (RSSP2), RSSP3 will have three components which reflect: (i) the evolving overall vision for the APL Program; (ii) lessons learned from RSSP2 and Land Husbandry, Water Harvesting and Hillside Irrigation (LWH)8
; (iii) pre-identification technical RSSP 3 field activities conducted in early 2011 and preparation activities; and (iv) related consultations with the Government.
Component 1: Infrastructure for Marshland, Hillside and Commodity Chain Development (Component Cost US$65.4 million: IDA=US$60.4 million; GoR=US$5 million) 13. The objectives of Component 1 are to: (i) expand irrigation in cultivated marshlands through rehabilitation and development; (ii) promote sustainable land management practices on associated hillsides; and (iii) improve economic infrastructure in support of commodity chain development. The component has three sub-components described as follows:
8 LWH Project, whose implementation structure is embedded and contributes to the Government’s own Project Implementation Unit (PIU) for the first of its four strategic axes of the PSTA.
6
Sub-component 1.1: Marshland Rehabilitation and Development 14. The sub-component will finance rehabilitation and development of selected irrigation schemes in marshlands totaling 6,000 ha with high potential for commercialized agricultural production. It will finance preliminary, detailed feasibility and participatory design studies (some of which have already been completed or are on-going), construction and construction supervision. Investments will be demand-driven and a clear selection framework will be applied. Criteria include: (i) readiness for investment; (ii) stakeholder interest; (iii) proximity to market; (iv) environmental and social sustainability; and (v) favorable economic rate of return. The Project will promote lower-cost irrigation technologies in lowland areas where the shallow aquifer is appropriate for low-cost groundwater technologies. The Project will finance rapid groundwater assessments to identify the potential for groundwater exploitation in marshlands to be considered under the Project (see details in Annex 2).
Sub-component 1.2: Sustainable Land Management on Hillsides 15. This sub-component will aim at the development of economically interesting sustainable land management (SLM) on the hillsides. Drawing from and adapting the successful approaches of the LWH as well as the best practices developed under RSSP1 & 2, RSSP3 will finance investments in improving productivity on 17,000 ha of those hillsides directly adjacent to the marshland irrigation schemes to be developed by the Project. Activities supported by the Project will include: (a) promotion of sustainable land management on hillsides immediately adjacent to the marshlands where irrigation investments will be done, using the 3:1 area ratio used in RSSP2; and (b) promotion of cost-effective soil moisture retaining technologies on these hillsides for agricultural production. In view of the positive potential impacts on hillside agricultural productivity, dissemination of the technologies is expected to be farmer-led. Detailed sub-component activities are shown in Annex 2. Sub-component 1.3: Rural Investments for Economic Infrastructure 16. This sub-component will invest in the construction of economic infrastructure for developed marshlands and hillsides to support the integration of organized farmers in diversified value chains. These commercial infrastructure investments will support the economic activities handled by cooperatives or small farmer groups. A Community-Driven Development (CDD) approach will be used and be directly linked to business plans developed by cooperatives with support from sub-component 2.3. Selection criteria have been developed to help prioritize the hillside cooperatives that can best benefit from similar investments. In addition to the selection criteria for marshlands and hillsides, the other criteria for economic infrastructure will include: (i) compliance with local development priorities and the project development objectives; and (ii) women and men, and districts that show interest to contribute either in kind or cash, towards the infrastructure construction; (iii) economic viability; and (iv) environmental sustainability. The full set of specific criteria is shown in Annex 2 and these will be fully elaborated in the Project Implementation Manual. 17. Resettlement activities undertaken as part of Component 1 will follow the procedures laid down in the Resettlement Action Plan (RAP) and will be supported through counterpart funding.
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Component 2: Capacity for Marshland, Hillside and Commodity Chain Development (Component cost US$7.5 million: IDA=US$7.5 million) 18. The objective of Component 2 is to provide multi level capacity needed to maximize beneficiary gains from the infrastructure investments and to ensure the sustainability of Project objectives beyond the life of the APL. Component 2 has three sub-components (Details in Annex 2).
Sub-component 2.1: Capacity Building for Farmer Organizations and Cooperatives 19. This sub-component will support group formation where necessary (e.g., hillsides), and will strengthen Water User Associations (WUAs) and cooperatives to improve their governance and management capacity to deliver quality services to their members. For farmers groups and cooperatives, the key activities will include: (i) mobilization and group formation (particularly on the hillsides); and (ii) management and governance principles. For the WUAs, specific activities will include: (i) emergence, registration, governance of WUAs; (ii) water management and appropriate by-laws including enforcement procedures; (iii) infrastructure maintenance plans based on the recommended principles, as shown in Annex 2; and (iv) establishment, collection and management of water services fees. These activities will be conducted in collaboration with RSSP3 engineers and District Implementation teams to ensure that WUA support is included in District Development Plans. Sub-component 2.2: Capacity Building for Improved Production Technologies 20. This sub-component will support activities to improve production and productivity in the marshlands and hillsides adjacent to marshlands. In line with Government policy for extension and in collaboration with Rwanda Agricultural Board (RAB), the Project will support the up-scaling of the Farmers Field Schools (FFS). The FFS approach builds capacity and empowers farmers to use improved and economically viable practices for sustainable soil, water and pest management with a view of increasing agricultural productivity and profitability. RSSP3 will continue supporting cooperatives to become certified seed producers. Project activities in this sub-component will include: (i) training-of-trainers; (ii) scaling up of the FFS in the marshlands and in the hillsides developed by RSSP2 and RSSP3; (iii) support to interested cooperatives to become certified seed producers in cooperation with RAB; (iv) LWH extension approaches to support intensification of rainfed hillside production, including the establishment of fruit tree nurseries and adapted fruit trees management techniques (grafting, pruning, root pruning, fertilization); and (v) support to innovations for productivity. Sub-component 2.3: Capacity Building for Value Chain Development 21. This sub-component will aim at building the capacity of farmers for value chain development through enhancing their understanding of agribusiness principles. This subcomponent will build the capacity of farmers for market oriented farming at three levels: the producer, cooperative and the agribusiness centre level including half bulk markets. For the producer level which will involve lead farmers, core modules to be developed will include: (i) development of farm budgets/business planning; and (ii) small enterprise management and this
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will also include study tours to visit well established cooperatives. For the cooperative level, support will be provided to business oriented cooperatives through (i) training of the Marketing Committees (cooperative leaders) on marketing of output for onward communication to farmers; (ii) facilitating the recruitment and hiring of professional cooperative managers; and (iii) facilitating the establishment of a mentoring programme for both cooperative staff and cooperatives leaders. The project will support the establishment of Agribusiness Centres in at least three RSSP3 sites which will be selected based on the following criteria: (a) the expected volume of commodity transactions (e.g., rice, maize, potatoes, bananas); and (b) availability of a critical mass of matured cooperatives that provide specific services to their cooperatives’ members.
Component 3: Project Coordination and Support (Component cost US$5.5 million: IDA= US$5.5 million) 22. In keeping with the commitment of DPs in the agricultural sector of Rwanda, the experienced and competent implementation team of RSSP 2 will be merged with the LWH implementation team (i.e., the PSTA Program 1 Implementation Team) to form one implementation unit embedded in the Ministry’s structure. The proposed combined implementation team has adequate capacity to implement both RSSP3 and LWH. Where a few gaps have been identified, Government is already filling such gaps based on the Bank’s earlier recommendations. A detailed description is provided under implementation arrangements in Annex 3. C. Project Financing
Lending Instrument 24. The lending instrument for the RSSP3 is an APL. This is the third phase of a programmatic loan supporting the RSSP since 2001. Project Cost and Financing 25. The estimated total cost for RSSP3 is US$85 million. IDA will provide US$80 million while the GoR will provide US$5 million mainly for the payment of resettlement costs. The detailed component costing is shown in Table 2 below:
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Table 2: Project Component Costs (US$ million)
Project Components IDA Borrower/Recipient Total
% IDA Financing
1. Infrastructure for Marshland, Hillside and Commodity Chain Development 1.1 Marshland rehabilitation and
development 1.2 Sustainable land management on hillsides 1.3 Rural investments for economic infrastructure
41.8
13.6
5.0
-
5.0 -
41.8
18.6
5.0
100%
87.2%
100%
Component sub-total 60.4 5.0 65.4 92.4% 2. Capacity for Marshland, Hillside and Commodity Chain Development 2.1 Strengthening farmer organizations and cooperatives 2.2 Improving production technologies 2.3 Capacity building for value chain development
3.2
2.3
2.0
- - -
3.2
2.3
2.0
100%
100%
100%
Component sub-total 7.5 - 7.5 100% 3. Project Coordination and Support 5.0 - 5.0 100%
Monitoring and Evaluation/DIF 0.5 - 0.5 100% Component sub-total 5.5 5.5 100%
Total Costs (without contingencies) 73.4 5.09 78.4 93.6% Physical contingencies included in the above (5% of component 1)
3.0 - 3.0 100%
Price contingencies included in the above (5% inflation rate)
3.6 - 3.6 100%
Total Project Costs (with contingencies) 80.0 5.0 85.0 94.1%
D. Lessons Learned and Reflected in the Design 27. There are four key lessons documented in the MTR, Aide Memoires and Implementation Status and Results Reports (ISRs) for RSSP1 &2 which have been considered in the design of the RSSP3. These key lessons include: (i) The need to improve farmers’ business skills through for example, the promotion of participatory value chain approaches in addition to the successfully applied methodology of lead farmers. (ii) Close coordination between the infrastructure development and capacity building to enhance farmers’ capacity for the operation
9 Government counterpart funding (US$5 million) will be used to pay for resettlement costs.
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and maintenance of the infrastructure investments, which is critical for the sustainability of the development outcomes. These lessons have been built into the design of RSSP3 by linking irrigation infrastructure and economic investments, as well as providing more resources for capacity building activities, focusing on value-chain development which underlines the main objective of the third phase of the APL. (iii) The need to provide adequate resources for the capacity building activities commensurate with the skills required to enable women and men to benefit the most from project support. (iv) A final lesson from MTR concerns the financing gap that arose during the implementation of RSSP2 due to unforeseen inflation in construction costs and services in Rwanda due to their rapid growth over the period of implementation. There were insufficient price and physical contingencies built into RSSP2 that necessitated significant project adjustments. RSSP3 has therefore budgeted higher contingencies and validated the unit costs during appraisal in order to reduce the risk of cost over-runs during project implementation.
IV. IMPLEMENTATION
A. Institutional and Implementation Arrangements
28. The GoR is the Borrower for the proposed credit. As with the previous phases of the APL series (RSSP1 and RSSP2), the proposed RSSP3 will be implemented through its MINAGRI. MINAGRI in coordination with the DPs signed an MoU establishing a Sector Wide Approach (SWAp) in the agriculture sector in December, 2008. The SWAp is centered on the implementation of the Government’s comprehensive agricultural strategy known as the PSTA II (the Second Strategic Plan for the Transformation of Agriculture). PSTA II is considered by MINAGRI and DPs as the framework for engagement on agricultural development in Rwanda. 29. The Proposed RSSP3 Project Implementation Team (PIT) is going to be a full incremental merger of RSSP2 and LWH implementation teams. The merged RSSP/LWH implementation structure was designed to contribute to MINAGRI’s ‘Single PIU’ in which each of the four programs under PSTA II has a dedicated implementation team under a single implementation coordinating entity. The proposed RSSP3 implementation structure was fully assessed as part of the appraisal process for LWH Global Agriculture and Food Security Programme (GAFSP) additional financing and was further discussed and agreed during RSSP3 preparation. The specific structure of the merged unit for RSSP3 and LWH is found to be adequate to implement both activities. The proposed composition of the merged structure is shown in Annex 3.
30. Project implementation arrangements will take place at four levels: national, provincial, district and community levels. At the national level, the project’s implementation arrangements have been designed to build upon (and build up) the SWAp structure at MINAGRI. The merged structure for RSSP/LWH (acting on behalf of MINAGRI) will be responsible for overall coordination of project implementation including procurement planning, financial monitoring and reporting, disbursement and internal controls, maintenance of project accounts and preparation of project management reports. At the provincial level, the team will be comprised of the Project Provincial Procurement Officer and a Project Provincial Accounting Officer. At the district level, the RSSP/LWH team will deploy a strong implementation team which will oversee the actual execution of activities on the ground and be in constant liaison with
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the local administration and subject matter specialists from the decentralized authorities. The following core competencies will be required for a District Implementation team: rural engineering, agronomy, community development, monitoring and evaluation, agribusiness and SLM. The Project will recruit one member of the core team to be the District Implementation Coordinator. At the community level, the Provincial and District teams will work with community based organizations and their members to identify and implement activities consistent with the project objectives. Farmer Organizations will be involved in monitoring and evaluation of Project activities, in line with the philosophy of the Project to promote participatory M&E and CDD approach.
B. Results Monitoring and Evaluation
31. The M&E system for RSSP3 will built on RSSP 2’s strong performance and will be fully aligned with the MINAGRI M&E system. Following the envisaged coordination and implementation of RSSP3 and LWH, the M&E units of both projects will be merged to streamline processes and to increase efficiency at project level but also at sector level. The merged unit will benefit from the extensive experience of RSSP on one hand and from the specific experience of LWH working on the hillsides on the other. Data collection tools, data management systems, reporting mechanisms and required evaluation studies will be harmonized between the two Projects and carried out jointly whenever possible to reduce costs and to further align with MINAGRI needs and standards. The communication team will also be part of the merged unit, which will allow deepened synergies between the teams, e.g., align work programs and making sure that all the communication tools/channels use up to date and precise data about Project performance.
32. The Project’s Results Framework (see Annex 1) highlights the PDO and intermediate result indicators and the results monitoring arrangements. The set of indicators for RSSP3 reflect the experience gained in the implementation of RSSP2 and LWH. The effectiveness of the results framework and results monitoring will be reviewed and validated at MTR.
33. The key players in the RSSP3 M&E system have been identified at the different levels in line with the Project components. At the national/sector level, the MINAGRI M&E/statistics officers will be the main counterpart for the sector, to make sure data collection and quality are harmonized. Coordination with the National Institute of Statistics (NIS) will allow RSSP3 to draw data from the surveys that are being conducted, e.g., the Second Integrated Household Living Conditions survey (EICV) is providing data for some of the indicators that will be tracked for the project. This will avoid duplication of efforts in the data collection and also further strengthen the capacity of NIS for the future. At the site level, RSSP3 will be mainly working with the cooperatives/WUA and with the districts in data collection. Strengthening the M&E capacity of these players, which is part of the planned activities, will improve the data availability and quality for the project, and also create a culture of results management within those organizations. Overall RSSP3 will use and improve country systems at national/sector and local levels.
C. Sustainability
34. The design of RSSP3 incorporates lessons and best practice aimed at the sustainability
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not only of the Project’s achievements, but that of the entire APL series. Each phase of the RSSP series has received positive Implementation Completion Report (ICR) ratings and feedback for its achievements and impacts. Ensuring that these endure beyond the life of this final phase underpins a number of Project design features including: Significant resource allocation to capacity building from the grass roots level upward; greater integration of participatory value chain activities to strengthen farmer participation and diversification in the market; deliberate linkages between Project-provided infrastructure and further business plan financing through external sources; careful attention to economic incentives for sustainable land management on hillsides; and an explicit focus on WUAs for infrastructure maintenance and sustainability. Furthermore, RSSP3 has strong ownership and commitment from the Government of Rwanda, as shown by the Ministry of Finance’s incremental allocation to RSSP—amidst competing demands—from the additional allocation to Rwanda under IDA 16. The combination of strong Government ownership with best practice design features are all geared towards sustainability of the Project and of the Rural Sector Support Program as a whole.
V. KEY RISKS AND MITIGATION MEASURES
A. Risk Ratings Summary Table
Stakeholder Risk Moderate
Implementing Agency Risk Moderate
- Capacity Moderate
- Governance Low
Project Risk Low
- Design Low
- Social and Environmental Moderate
- Program and Donor Low
- Delivery Monitoring and Sustainability Moderate
Overall Implementation Risk Moderate
Implementing Agency Assessment 35. Implementing Agency Risk is Moderate. The most recent Aide Memoires and ISRs for RSSP2 clearly document satisfactory implementation overall, and specifically with respect to procurement, financial management, and safeguards implementation. The proposed merger of implementation structures for LWH and RSSP, within which the proposed RSSP3 will be implemented, has already demonstrated sufficient capacity to be able to jointly manage all the projects in a satisfactory manner. This is mainly due to the experience obtained in implementing the earlier phases of the APL, and more recently, a scaled-up LWH. An assessment of that merged unit was undertaken during the preparation and appraisal missions for RSSP3 and the recommendations provided have adequately been addressed. The new merged structure has been approved by MINAGRI and is awaiting final endorsement by the Ministry of Public Service and
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Labor (MIFOTRA) for conformity with the GoR’s standards with regards to Single Project Implementation Unit (SPIUs).
Project Stakeholder Assessment
36. Project Stakeholder Risk is Moderate. Support for RSSP is high in Government and among DPs. The agenda of raising productivity, reducing dependence on rainfed agriculture through irrigation, and promoting growth in employment for poverty reduction are aligned with the GoR’s objectives and policy targets (EDPRS), around which DPs organize their budget support. Buy-in among communities and local authorities is essential. Legally, marshlands are Government land. Since RSSP3 targets marshland already under some form of cultivation, good resettlement policy implementation is critical to ensuring that existing farmers in the marshland are given full opportunity to improve their productivity in the marshland or to accept an alternative which makes them at least as well off. Similarly, RSSP3’s hillside activities take place on private land, so community buy-in from landed hillside beneficiaries is critical to the operation’s success. The landless and vulnerable in the Project areas also have to benefit to avoid a ‘have’ and ‘have-not’ scenario within the same watershed. RSSP3 will build upon the success witnessed in RSSP2 in implementing the resettlement policy framework. Initial results from the LWH (whose hillside model will be adopted for use in RSSP3) show considerable productivity gains for hillside farmers that can be shared with potential beneficiaries. It also has an excellent community communication and sensitization program which will be adopted for use under RSSP3. The Project PDOs and design explicitly promote opportunities along the entire commodity chain, balance between female and male beneficiaries and allowing landless and vulnerable people to benefit from Project activities as well.
B. Overall Risk Rating Explanation
37. The Overall Risk rating is Moderate. This is a very conservative rating for a well established Project with demonstrable results over its first two phases. Implementation risks are low due to the strong GoR ownership, good DP coordination mechanisms, and long experience in marshland development. This was verified in the recent implementation assessment of RSSP 2 (at MTR of October 2010). One potential key risk concerns policy changes during implementation that may impact the PDO on market-based diversification. Policies concerning value added activities, inputs, input financing, subsidies, etc., can either promote or constrain greater involvement of potential beneficiaries in diversified value chain activities. As discussed in the Operational Risk Assessment Framework (ORAF), this risk needs to be managed through good dialogue. The World Bank is well positioned to facilitate the dialogue as co-chair of the Agricultural Sector Working Group (ASWG) and due to a solid relationship with the GoR. The overall Moderate risk rating primarily reflects the risk of policy changes that may impact the PDO on market-based diversification. Risks related to cost overruns, environmental, social and weather risks have been well mitigated in the design. Detailed risk assessment is presented in Annex 4.
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VI. APPRAISAL SUMMARY
A. Economic and Financial Analyses
38. The economic and financial analysis shows that if the project implementation is effective and efficient, project-supported investments will bring substantial benefits to farming communities in the project area. The project returns measured as Economic Net Present Value (ENPV) were high and not very variable with an expected mean of RWF 139 billion (US$228 million) and a standard deviation of RWF 6.2 billion (US$10.2 million) - compared to the project budget of RWF 50.02 billion (US$ 82 million). It should be noted that these estimated economic benefits understate the total benefits of the project: The project can be expected to contribute to increased production of commodities on marshlands and hillsides outside the project area; and benefits are also expected to extend beyond the 21 year time-frame included in this analysis.
39. Key drivers of economic returns and their sensitivity to exogenous factors: The analysis assumed a project scope to develop nearly 6,000 ha on marshlands and 17,000 ha on hillsides, 90 drying floors, and 45 storage facilities. Based on these assumptions, the main drivers of project returns in the marshlands are the prices and yield of paddy rice and sweet potato. The model sensitivity analysis shows that a possible 6 percent price decrease for paddy rice would decrease the project return by less than 1 percent. Banana and cassava prices and yields are also important drivers, mainly for the hillsides. As such, changing the hillsides cropping pattern in the with-project situation had little impact on the economic ENPV but switching from bananas to cassava increased the variability of project returns due to higher cassava price variability. The model results show that the project’s economic returns are not highly sensitive to yield/rainfall. Detailed results from the sensitivity analyses are shown in Table 2 in Annex 6.
B. Technical
40. The project is deemed technically sound and completes a full implementation of the three-phase APL which started in 2001. This third phase of the APL is meant to extend and build on successful growth-stimulating RSSP activities, while emphasizing diversification of economic activities to increase and stabilize rural incomes. The Government implementation team has accumulated a lot of experience during the implementation of the first and second phases of the APL, and this provides a lot of comfort in terms of the Borrower’s preparedness to implement the proposed RSSP3. Details are discussed in Annex 3.
C. Financial Management
41. The Bank conducted a financial management capacity assessment for the proposed project, in accordance with the Financial Management Manual for World Bank-Financed Investment Operations issued by the Financial Management Sector Board that became effective on March 1, 2010. Based on the assessment, the Borrower, through the merged implementation unit, has adequate financial management arrangements in the following: (a) capable of ensuring correct and complete recording of all financial transactions and balances relating to the credit resources; (b) capable of facilitating the preparation of regular, timely and reliable financial
15
statements; (c) capable of safeguarding the assets acquired under IDA credit; and (d) are subject to auditing arrangements acceptable to IDA. The financial management capacity is derived from the implementation of the second phase of the APL (RSSP2). The analysis further showed that the residual financial management risk for the project is Moderate. The Financial Management capacity satisfies the Bank’s minimum requirements under OP/BP 10.02. An action plan has been developed to mitigate the residual financial risk, as highlighted in detail in Annex 3.
D. Procurement
42. The Bank conducted a procurement capacity assessment of the merged implementation unit. Based on the assessment, the staff are familiar with procurement procedures, having been involved in the implementation of the previous phases of the APL. It was also noted that current staff are able to manage RSSP2 workload. However, given the merging process between and RSSP and LWH which increased complexity and workload, the staffing level compared to the existing task has decreased. In order to address the capacity gap, the review is suggesting recruitment of additional staff. At Headquarter level, the implementation agency would need one additional Procurement Officer, and one Procurement Assistant in addition to existing staff which include the Head of Procurement Unit and two procurement officers. At decentralized level, the implementing agency would need one Procurement Officer per Province where LWH/RSSP project will have activities. Having appropriate number and qualified staff in place will increase efficiency in project implementation, since procurement advice will be provided on time, fiduciary risk will be minimized. An action plan for mitigating the identified risks is detailed in Annex 3. 43. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated January 2011, and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011, and the provisions stipulated in the Legal Agreement and detailed in the Project Operational Manual and in the Procurement Plan. The “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants” dated October 15, 2006 and revised in January, 2011 will apply.
E. Social (including safeguards)
44. The social impacts of the proposed project are largely positive, in that community and individual welfare will be enhanced as a result of the expansion of the irrigated area of cultivated marshlands, increased agricultural productivity will be achieved through the use of erosion-controlling and productivity-enhancing sustainable land management practices on associated hillsides, and economic infrastructure needs will be financed. Negative social impacts of the proposed project are limited and manageable, and are primarily related to the need for resettlement as a result of land acquisition occasioned by project works, and temporary loss of crops. The project triggers OP 4.12 – Involuntary Resettlement, since envisaged marshland and hillside developments would require land acquisition for dams, reservoirs, borrow areas, roads and canals, thereby necessitating resettlement activities. The payment for resettlement costs (estimated at US$5 million) will be provided through counterpart funding.
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45. The extent of resettlement activities will be determined by the design of the individual sub-projects. These resettlement activities would range from compensation for temporary loss of crops, to actual relocation of Project Affected Persons (PAPs). PAPs currently living in the marshlands will be allocated plots of land from the District authorities, (which will be located at an accessible distance to their agricultural activities) and will be provided with building materials and assistance in physical relocation (moving expenses) from the project. The RSSP2 implementation team has updated the Resettlement Policy Framework (RPF) developed for RSSP2 project. The document has been reviewed by the Bank and found to be satisfactory. The RPF has been disclosed in the World Bank InfoShop (disclosed on November 28, 2011) and in-country both at the Information Gateway of Agriculture and Livestock Sector in Rwanda (http://www.amis.minagri.gov.rw and www.rssp.gov.rw) and at District offices.
F. Environment (including safeguards)
46. The project has been categorized as Environmental Screening Category B – Partial Assessment. Environmental impacts are likely to be short term, site-specific, non-sensitive or irreversible, and in every case, mitigation measures can be designed to reduce the negative impacts. The project triggers OP 4.01- Environmental Assessment, OP 4.04 – Natural Habitats, OP 4.09 – Pest Management, OP 4.11 – Physical Cultural Resources, OP 4.37 – Safety of Dams, and OP 7.50 – International Waterways (see Table below). The RSSP implementation team has prepared an Environmental and Social Management Framework (ESMF) based on the earlier ESMF prepared for RSSP2. The ESMF proposes practical methods of mitigating the negative environmental impacts and includes requirements defined by OP 4.04 and OP 4.11. In addition, the project team updated the Pest Management Plan (PMP) prepared for the RSSP2 to cover RSSP3’s focus on a wider range of crops. The updated ESMF and PMP have been reviewed by the Bank and found to be satisfactory. Both the ESMF and PMP have been disclosed in the World Bank InfoShop (on November 28, 2011) and in-country both at the Information Gateway of Agriculture and Livestock Sector in Rwanda (http://www.amis.minagri.gov.rw and www.rssp.gov.rw) and at District offices.
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [X] [ ] Pest Management (OP 4.09) [X] [ ] Cultural Property ( OP 4.11) [X] [ ] Involuntary Resettlement (OP/BP 4.12) [X ] [ ] Indigenous Peoples (OP 4.10) [ ] [X] Forests (OP/BP 4.36) [ ] [X] Safety of Dams (OP/BP 4.37) [X] [ ] Projects in Disputed Areas (OP/BP/GP 7.60) [] [X] Projects on International Waterways (OP/BP/GP 7.50) [X] [ ]
47. Although none of the sub-projects being considered for selection include dams of over 15 meters in height, one of the potential sub-projects, Rwinkwavu, could be classified as a large dam by the World Bank (see definition of large dams as per OP 4.37 under safeguards in Annex
17
3). Because there is no high-density population downstream from the proposed dam site10
, and there is no technical complexity, a full Dam Safety Panel would not be required. However an independent dam safety assessment will be undertaken by the borrower to confirm whether the proposed sub-project falls under OP 4.37’s classification of a large dam.
48. Borrower’s capacity to implement safeguards: RSSP3 will benefit from the knowledge and experience of the environmental and social (resettlement) specialists in RSSP and LWH as both these teams have demonstrated a strong capacity to implement safeguards activities to a level necessary to comply with the Bank’s safeguards requirements. The team has also been found to be in compliance with relevant national environmental and social regulations and policies.
G. Other Safeguards Policies triggered
49. RSSP3 will rehabilitate and develop irrigation infrastructure on about 6,000 hectares of marshlands located in the Kagera and Ruzizi basins. The Kagera Basin is part of the Lake Victoria and the Nile river basin. The Ruzizi is part of the Lake Tanganyika Basin. The Nile Basin and the Lake Tanganyika Basin are international waterways for purposes of the World Bank’s Operational Policy for Projects on International Waterways (OP 7.50). In line with this Policy, the Bank team triggered this policy and upon request from the Government of Rwanda, issued notifications to all the riparian nations of the respective river basins of the Project, namely: Zambia, Uganda, Tanzania, Sudan, South Sudan, Burundi, Kenya, Ethiopia, Eritrea, Egypt and the Democratic Republic of Congo (DRC). The notifications confirmed that the Project would not have any adverse effects on the quantity or quality of the flow of the waters to any of the other riparians. The notification was issued on December 13, 2011 and responses were expected within thirty (30) days or by January 12, 2012. The Project’s team received responses expressing support for the project from four (4) riparian countries, namely: (1) Kenya; (2) Eritrea; (3) Egypt; and (4) South Sudan. None of the other riparian countries objected to the Project within or after the notice period. The other earlier phases of the APL also issued notifications and received no objections throughout their implementation.
50. Based on the assessment of the Bank Team, and given that no unfavorable responses have been received from any riparians, the Bank Team confirms that the Project will not cause appreciable harm to the other riparians, and will not be appreciably harmed by the other riparians' possible water use.
10 Per RSSP team input, it is illegal to settle in the marshlands per Rwandan law, thus housing in the valleys downstream from the dam sites is few and scattered. These PAPs will be resettled according to WB and GoR procedures, upon sub-project selection.
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ANNEX 1: RESULTS FRAMEWORK AND MONITORING RWANDA: THIRD RURAL SECTOR SUPPORT PROJECT
Project Development Objective (PDO):
(i) Increase the agricultural productivity of organized farmers in marshlands and hillsides of the sub-watersheds targeted for development11
(ii) Strengthen the participation of women and men beneficiaries in market-based value chains. in an environmentally sustainable manner; and
PDO Level Results Indicators*
Cor
e Unit of Measure Baseline
Cumulative Target Values** Frequency
Data Source/
Methodology
Responsibility for Data
Collection
Description (indicator
definition etc.) June 2013 June 2014 June 2015
June 2016
March 2017
1. Productivity of targeted areas ($/ha) in: i. irrigated marshlands ii. Non-irrigated hillsides
$/ha 662 662 +0%
761 +15%
927 +40%
1,125 +70%
1,375 +108%
Annual Survey and
Coop Reports
M&E team
Yearly Net $/ha – Only for RSSP3 Fixed exchange rate
$/ha 470
588
+25% 776
+65% 823
+75% 917
+95%
1,038
+121%
Annual Survey and
Coop Reports
M&E team
Yearly Net $/ha – Only for RSSP3
2. Share of commercialized agricultural products from the targeted area (%) (disaggregated by gender) (disaggregated by marshlands/ hillsides)
%
Marshland 78.9% (RSSP2 rice data) Women 43.12% Men 44.71% (RSSP3) Hillside Women 43.12% Men 44.71%
Marshland Women 78.9% Men 78.9% Hillside Women 45% Men 45%
Marshland Women 79% Men 79% Hillside Women 47% Men 47%
Marshland Women 80% Men 80% Hillside Women 50% Men 50%
Marshland :Women 85% Men 85% Hillside Women 55% Men 55%
Marshland Women 90% Men 90% Hillside Women 60% Men 60%
Annual
Survey and Coop
Reports Group Report
M&E team
RSSP 2 and 3
11 Targeted marshlands and hillsides have not been fully identified yet. Once they are identified all the targets and baselines will be further adjusted accordingly.
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3. Project beneficiaries involved in up and downstream activities along the value chain, of which female
Number %
896 42% RSSP3: 0
1,558 42%
2,864 42%
3,847 42%
5,112 42%
6,206 42%
Annual Survey M&E team
Beneficiaries: Female and male farmers in the selected marshlands and adjacent hillsides, as well as community members receiving Project support in small groups for value chain activities, either upstream or downstream Up and downstream products and activities e.g. Seed production, composting, nurseries, inputs, transporting, processing. Farming activities are excluded.
4. Farmers in areas targeted by RSSP that have adopted sustainable land management practices on the hillsides or marshlands (%)
%
Women 32.4% Men 36.3%
Women 48% Men 50%
Women 60% Men 60%
Women 70% Men 70%
Women 80% Men 80%
Women 90% Men 90%
Annual Survey M&E team
Baseline is only for RSSP3, but target will be for RSSP1 and 2 also LWH since RSSP2, RSSP3 and LWH are part of the baseline. Adoption defined as the use of improved farm methods including: improved planting materials, IPM, soil fertility management, conservation tillage, agro-forestry interventions, intercropping with plant cover and
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green manuring, apply manure/compost & mulching, liming.
INTERMEDIATE RESULTS
5. Direct Project Beneficiaries, of which female
Number %
51,936 42% (Rssp1+2)
57,599 42%
66,016 42%
77,516 42%
93,072 42%
100,000 42%
Bi-Annually
Coop Reports M&E team Female and male farmers in the selected marshlands and adjacent hillsides, as well as community members receiving Project support in small groups for value chain activities, either upstream or downstream.
Intermediate Result (Component One): Sustainable rehabilitation and development of the targeted marshlands and hillsides
6. Area provided with improved irrigation and drainage services
ha 0 700 1700 3200 5200 6000 Quarterly Engineers
Report
M&E team Under RSSP1+2 6184ha were developed. In the new areas for RSSP3 some irrigation service are available for 878 ha, but water availability is not secured. After works, irrigation services will be much improved.
7. Water users provided with irrigation and drainage services (disaggregated by gender)
number
Women 13,389 Men 20,084
Women 14,789 Men 22,184
Women 16,789 Men 25,184
Women 19,789 Men 29,684
Women 23,789 Men 35,684
Women 25,389 Men 38,084
Quarterly WUA officer
M&E team The quality of irrigation services will be monitored at the WUA level with support from the project.
8. Hillsides sustainably developed by the Project
ha 0 2100 5100 9600 15600 17000 Quarterly Engineers
Report
M&E team Definition: Sustainable development of hillsides is defined as occurring when at least
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two of the following practices have been implemented: soil fertility management including appropriate use of organic and/or, IPM, conservation tillage, contour bunding, including bench terraces, planting of permanent crops or when the area is deemed unsuitable for productive use and protected through planting of permanent vegetation.
Intermediate Result (Component Two): Improve the linkages between the beneficiaries and the market-based value chains, and enhance the performance of key players in this area
9. Number of cooperatives which have increased their net revenues by 50% relative to the baseline
number
NA
3
7
15
20
30
Annual Coop and agribusiness Reports
M&E team
RSSP1,2,3: Baseline of each coop will be recorded as they come on board.
10. Increase in share of production sold through cooperatives (disaggregated by marshlands and hillsides)
%
Marshland 44% (RSSP2) 0% (RSSP3) Hillside 0%
Marshland 50% (RSSP2) 0% (RSSP3) Hillside 10%
Marshland 55% Hillside 20%
Marshland 60% ( Hillside 30%
Marshland 65% Hillside 40%
Marshland 70% Hillside 50%
Annual
Coop and senior agronomist Reports
M&E team
Coops (RSSP 2,3). It is assumed that no farmers are selling their produce in RSSP3 new sites through their coops. The assumption is also that no coop from the new sites will have been able to produce and sell after for the first year.
11. Coops having access to finance (number)
number 6 6 10 18 25 30 Annual Coop and agribusiness Reports
M&E team
Will measure if Coops get access to loans. All supported Coops (RSSP 2,3).
12. Users in irrigated marshlands rehabilitated or developed by the Project (RSSP1, RSSP2, RSSP3) paying water
% RSSP1,2 79% RSSP3
RSSP1,2 95% RSSP3 0%
RSSP1,2, 3 95%
RSSP1,2, 3 95%
RSSP 1,2, 3 95%
RSSP1,2, 3 95%
Annual Coop reports WUA reports
M&E team
The level of payment of water charges will be measured starting
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charges through WUAs 0% one year after completion of the rehabilitation works.
13. Operational water user associations
number 22 24 29 31 36 38 Annual WUA reports M&E team RSSP 1,2,3.
14. Coops doing certified seed production
number 7 7 9 13 15 17 Annual Survey M&E team RSSP 1,2,3 All kind of seeds.
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ANNEX 2: DETAILED PROJECT DESCRIPTION RWANDA: THIRD RURAL SECTOR SUPPORT PROJECT
1. The proposed RSSP3 is expected to build on the successful outcomes of the two phases of the APL series (RSSP1 and 2), and will also draw from the experiences under the LWH project which is also supported by the Bank in coordination with other stakeholders. As in RSSP2, there will be three components:
Component 1: Infrastructure for Marshland, Hillside and Commodity Chain Development 2. The objectives of component 1 will be to expand irrigated area of cultivated marshlands through rehabilitation and development, promotion of sustainable land management practices on associated hillsides, and establishment of economic infrastructure in support of commodity chain development. 3. Two options were considered during the appraisal mission for the scope of component 1:
(i) The Government preferred option to develop 7,000 ha for the rehabilitation/development of marshlands, introduction of affordable small-scale irrigation technologies (200-300 ha), and hillside SLM covering 20,000 ha12
. This option needs 5 years to be implemented and costs US$96 million, implying the need for the Government and the Bank to source the additional US$16 million;
(ii) The option feasible under the current US$80 million budget for the Project is to develop 6,000 ha of marshlands with the available financing, introducing affordable small-scale irrigation technologies on 200-300 ha, and applying SLM on 17,000 ha of hillsides. This option would also be implemented in 5 years.
4. The description of the Component 1 of the project is based on the feasible option (option ii) given the current financing of US$80 million. The Bank team notes, however, that the Government strongly prefers the first option. In light of the findings of the technical appraisal, the negotiated project will aim for a target of 6,000 ha of marshland irrigation schemes development. During the Appraisal mission, it was agreed that the Government and the World Bank will work together to seek additional financing for the US$16 million that would be required to achieve the Government’s desired target of 7,000 ha for the marshland irrigation over the project implementation period, and to aspire to a pace of implementation that would make the larger target feasible.
5. Component 1 will comprise three sub-components, (i) Marshland rehabilitation and development; (ii) Sustainable land management on associated hillsides; and (iii) Rural investment for economic infrastructure. The first sub-component will develop 6,000 hectares of marshland irrigated agriculture and will pilot 200-300 ha of affordable irrigation technologies in
12 1,000ha was already developed under RSSP2 on Cyili marshland associated hillside (Cyili marshland met the eligibility criteria following technical, economic and environmental/social studies).
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lowland areas using the productive shallow aquifer (a list of potential marshlands to be considered has been established during the appraisal mission). The second sub-component will support sustainable land management activities on 17,000 hectares by adopting the 3:1 ratio between hillside and marshland areas. The third sub-component will reduce the economic infrastructure gap in the project targeted areas. Performance indicators include the acreage developed for irrigation, the acreage under sustainable land management, and the number of rural commercial infrastructure established. 6. For component 1, the project will adopt a contractual, transparent and accountable framework to improving the performance of irrigated marshland agriculture. Performance Contracts that will be annually evaluated, on the basis of clear objectives, will be signed by MINAGRI, WUAs/Cooperatives and Districts that will summarize the respective commitments of each of the stakeholders. Sub-component 1.1: Marshland Rehabilitation and Development 7. The project will finance rehabilitation and development of selected schemes in marshlands with high potential in rice production and totaling 6,000 ha. Contracts with consultants will be signed for preliminary and detailed feasibility and participatory design studies (some of which have already been completed or are on-going), construction and construction supervision. Investments will be demand-driven and clear selection framework will be applied including (i) readiness for investment; (ii) stakeholder (farmers and Districts) interest; (iii) proximity to market; (iv) environmental and social sustainability; and (v) economic rate of return. 8. Readiness for investment is determined by the availability of detailed feasibility and participatory design studies. The project will initially focus on those schemes where these are available, and where development costs appear reasonable. Cyili (328 ha), Rwagitima-Extension (300 ha) and Rwinkwavu (1,000 ha) could be ready for initiating RSSP3. The tentative list of already identified sites is in Table 2A and includes the outstanding 1,000 ha necessary to attain the Government final objective of 7,000 ha, mostly in the Eastern and Southern Provinces where small scheme marshlands (80 to 150 ha) are available. The findings of these studies will determine if these sub-projects are suitable for inclusion in RSSP3. 9. Interest of farmers is determined by the existence of marshland agricultural activities, with or without existing irrigation infrastructure. In these cases, the project will complement existing farmer-initiated investments by developing complementary irrigation infrastructure. Willingness to contribute to development costs (including for example bush clearing and final land leveling activities) and pay for operation and maintenance (O&M) costs will be gauged as an additional confirmation of farmer interest. Interest of districts is determined by the willingness of districts to play an active role in steering and providing guidance and leadership to WUAs in the organization of scheme O&M and in enforcing compliance with the WUA’s internal rules and regulations. Districts are also expected to play a lead role in the mobilization of stakeholders for the implementation of sustainable land management activities on hillsides.
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10. Environmental and social sustainability will be assessed prior to investment. Only those projects that meet the Bank’s minimum safeguards requirements would be selected. Within the set of projects that meet the minimum safeguards requirements and are deemed to be economically viable, preference will be given to those projects that have the highest positive and/or lowest negative environmental and social impacts. Negative impacts include the impact of water abstraction on downstream riparian countries, loss of wetland habitat and resettlement as a result of the investments. 11. Summary economic rates of return will be estimated during preliminary feasibility studies based on estimated costs and realistic revenues. 12. The project will promote affordable irrigation technologies in lowland areas, in particular inside marshlands where the shallow aquifer is productive enough and not very deep (7 m maximum). A rapid groundwater assessment will be conducted to identify and assess potential for groundwater exploitation in marshlands, including sites covered under the project. The project will develop up to 300 ha to be equipped with affordable small-scale irrigation technologies including PVC tube-wells (10-12 meter deep) and treadle pumps or small mechanized pumps (3.5 hp). In case these studies demonstrate significant potential for groundwater exploitation, the project will finance “public good” elements of the development of viable supply chains of affordable irrigation technologies, including product development, training of local mechanical workshops in the manufacturing, repair and maintenance of affordable irrigation technologies, and development of mass marketing approaches. The project will recruit a consultant for the implementation of this activity. Table 2A: Tentative list of identified marshland sites
Marshland Area (ha) River Basin
Province/ District
Unit Cost (USD)
Total Cost (USD) Observations
A. Expensive 1. Cyili ( 1 dam) 328 Nile South/Gisagara 8,000
2,624,000
2. Rwinkwavu ( 1 dam)
1,000 Nile East/Kayonza 8,500 8,500,000
3. Gacaca ( 1 or 2 dams)
500 Nile East/Kayonza 9,000 4,500,000
4. Rwangingo-Karangazi (1 or 2 dams)
1,100 Nile East/Nyagatare 11,000 12,100,000
5. Muvumba 6 (pumping station and gravity irrigation network)
150 Nile East/Nyagatare 8,500 1,275,000
6. Muvumba 10 & 11 (pumping station and gravity irrigation network)
500 Nile East/Nyagatare 8,500 4,250,000
7. Rugende & Branches (1 or 2
450 Nile MVK/Gasabo 8,500 3,825,000
Alternative technology
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small dams) (200 ha) 8. Rumirabahashyi-Murindi (1 or 2 small dams)
250 Nile MVK/Gasabo 8,500 2,125,000
Alternative technology (100 ha)
9. Gahondo (1 dam)
200 Nile East/Ngoma 8,000 1,600,000
10. Mushaduka (1 dam)
200 Nile South/Gisagara 7,000 1,400,000
11. Mirayi upper (1 dam)
500 Nile South/Gisagara 7,500 3,750,000
B. Less expensive
12. Mukunguri Extension (1 or 2 river weirs)
400 Nile South/Kamonyi 5,500 2,200,000
13. Kirimbi ( 1 or 2 river weirs)
200 Congo West/Nyamasheke 5,500 1,100,000
14. Kamiranzovu ( 1 or 2 river weirs)
140 Congo West/Nyamasheke 5,500 770,000
15. To be identified
412 Nile East/South Provinces
5,500 2,266,000
Areas from 80 to 150 ha
C. Cheaper 16. Nyabirandi 250 Nile North/ Burera 3,000
750,000
17. Ndongozi 120 Nile North/ Burera 3,000 360,000
18. Rwagitima extension
300 Nile East/Gatsibo 3,800 1,140,000
TOTAL 7,000 54,535,000 Sub-component 1.2: Sustainable Land Management on the Hillsides 13. This sub-component will build on a progression from mere ‘hillside protection’ in RSSP1 to economically interesting SLM on hillsides, drawing from and adapting the successful approaches of the LWH project. The project will finance investments in improving productivity on 17,000 ha of hillsides directly associated with irrigation schemes developed by the project. Lessons learned from RSSP1& 2 as well as from LWH in terms of best practices will be adopted. Activities supported by the Project will include: (a) promotion of cost-effective soil moisture retaining technologies on hillsides for agricultural production; and (b) promotion of sustainable land management on hillsides immediately adjacent to the irrigation investments, using the 3:1 ratio used in RSSP2. By increasing agricultural productivity on hillsides, the project aims to provide incentives to farmers to invest in sustainable land management practices and reduce land degradation. In view of the positive potential impacts on hillside agricultural productivity, dissemination of the technologies is expected to be farmer-propelled. As such, coverage of area under sustainable land management is expected to be much larger than what can be achieved through an exclusive focus on conservation. 14. Activities for promotion of rainwater harvesting technologies and sustainable land management practices will include; (i) Grass strips, contour bunding and improved radical
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terracing, as appropriate for slope category and soil depth; (ii) Pasture improvement through trees and grass planting; (iii) Dam and canal buffer zone protection; and (iv) Afforestation of critical hillside ecosystems unsuitable for intensive agriculture and animal production and shallow soils. Other techniques such as liming and organic materials application will be introduced while crop rotation, double cropping and contour cultivation and mulching will be encouraged. These infrastructures will be stabilized using agro-forestry trees, including fruit trees. The specific composition of the support financed under this sub-component will depend on specific conditions of the site (soil, climate, slope, farmer interest, etc) and will be determined during implementation. Under LWH, interventions on hillsides included mostly radical terracing and compost manure. The agronomic performance is noticeable on the terraces cultivated, but the costs of such works remain very high (>US$7,000/ha).
15. The specific composition of the support package under this sub-component depended on specific conditions of the site (soil, climate, slope, farmer interest, etc.) and will be determined during implementation. 16. According to above, and to ensure sustainability of both the infrastructures and the associated gains from irrigation, the Project will develop and propose an affordable approach to RSSP 3 hillsides that still meets the Project objectives of making soil erosion protection on adjacent hillsides an economically interesting activity for hillside farmers. These affordable technologies have been developed based on lessons learned from LWH and RSSP 2. Under this component, resettlement activities will be undertaken and will be paid fully through counterpart funding. Sub-component 1.3: Infrastructure for Commodity Chain Development 17. This sub-component will support construction of rural commercial infrastructure for developed marshlands and hillsides to support the integration of women and men into their value chain activity and/or diversification. This infrastructure will be complemented by Component 2, which provides the training and capacity building for value-chain development. Based on lessons noted at MTR regarding the excess demand for economic infrastructure (RSSP2 Sub-component 2.3) and the need for improved coordination across components and teams, this activity is found in RSSP3 under Component 1 with a scaled up resource allocation. Rural commercial infrastructure concerns all infrastructure that supports the commercial activities handled by cooperatives or small groups. The positive list of eligible investments will comprise for both marshland and hillsides sites: collection centers, storage facilities, input facilities (seeds, organic and inorganic fertilizers), processing (agricultural products) and other value-adding activities); agribusiness centers including half-bulk markets, drying areas, storage facilities (e.g., paddy, fertilizers).
18. Investment in infrastructure in this Component is driven by community demand and is directly linked to the establishment of a business plan developed by cooperatives with support from sub-component 2.3 (below). Such investments would require contributions from the community (either in-kind or through linkages with rural finance. While such investments will cover all marshlands and associated hillsides developed under RSSP3 and those developed at the end of RSSP2, criteria will be developed to identify the hillside cooperatives that can best benefit
28
from such investments. Feeder roads which appear to be critical for linking production basins to markets, will be funded through the upcoming World Bank Rural Roads Operation as well as projects supported by other partners. Finally, the project could support supra-cooperative initiatives for greater value chain integration. 19. Investments will be based on selection criteria for the marshlands and hillsides in addition to: (i) the compliance with local development priorities in conformity with the project development objectives; (ii) women and men, and districts that show their interest to contribute either in kind or cash, towards the infrastructure construction; and (iii) economic viability. As this will be implemented through a CDD approach, the full set of specific criteria will be fully elaborated in the Project Implementation Manual. The level of contribution to the financing of the investments will be modulated according to its commercial nature. Implementation Strategy
20. Sub-component 1.1. The implementation strategy for RSSP3 will build on lessons learnt from RSSP2. The Project Coordination and Support Unit will contact with consulting firms the initial feasibility studies applying selection criteria defined above. The terms of reference of the studies will be similar to those proposed in RSSP2, but in addition will include a rapid groundwater assessment in selected marshlands to identify and assess potential for groundwater exploitation in marshlands and area to be covered. The marshland development works for selected marshlands will be subject to contracts with Rwandan or international qualified companies. The works will be supervised by qualified consultants. The procurement process for studies, works and works’ supervision will remain the same as in RSSP2. Given the substantial quantitative objective of marshland area to be developed or rehabilitated, there is a need to strengthen the present engineering team to ensure a good monitoring and coordination of the studies and works. 21. Sub-component 1.2. The implementation strategy will take into account lessons learnt both from RSSP2 and LWH, but also the improvement to be brought to the consistency of activities (promotion of cost-effective soil moisture retaining technologies and sustainable land management on hillsides adjacent to the irrigation investments). Activities will be implemented under the overall responsibility of cooperatives in cooperation with WUAs as those activities will benefit both hillsides and marshlands. Support from Districts in terms of sensitizing, organization and monitoring will be key for the success of interventions. Qualified firms will be recruited to carry out the studies aiming at defining in detail the activities to be implemented on the adjacent hillside for each marshland. At the same time qualified contractors, consulting individuals/firms will be recruited and HIMO (labour intensive) approach will be adopted for bench terracing and technical support and supervision. 22. Sub-component 1.3. The implementation strategy will take into account lessons learned from RSSP2. Activities will be implemented under the overall responsibility of beneficiary cooperatives and small groups or Districts depending on the type of investment. The establishment of the economic infrastructure will be implemented through a contractual framework that will include technical studies, if need be and works’ supervision by consultant firms, and works by contractors, selected following competitive bidding process. Involvement of other stakeholders will be encouraged in order to promote the integration of the coops into value-
29
chains. However, the involvement of other value-chain players will have to be done in such a way that the interests of the coops members are safeguarded. Costing 23. Based on the average unit costs used for marshland development and the various Sustainable land management technologies on hillsides, the cost of Component 1, as validated during the appraisal mission are summarized as follows: Table 2B: Estimated cost for component 1 Scenarios Sub-components
7,000 ha 6,000 ha
Sub-component 1.1. Marshland Rehabilitation and Development 48,780,852 41,760,852
Sub-component 1.2 - Sustainable Land Management on Hillsides 16,000,000 13,600,000 Sub-component 1.3 - Rural Investments for Economic Infrastructure 5,800,000 5,000,000 Total 70,580,852 60,360,852 Estimation of Water Use under Component 1 (Infrastructure for Marshland, Hillside and Commodity Chain Development) 24. The water requirements for the targeted area are assessed for riparian purposes as follows: Table 2C: Estimation of total annual water abstraction
Item Akagera (Nile Basin)
Rusizi (Congo Basin
Acreage (ha) 6140 340 Net Irrigation Water Requirements (m3/ha/season) 3,000 3,000 Gross Irrigation Water Abstraction with 30% efficiency (m3/ha/season)
10,000 10,000
Annual Total Abstraction with two cropping seasons (million m3)
122.8 6.8
Estimated Dry Season Abstraction Discharge (m3/s) 11.8 0.65 Source: FAO, AQUA STAT
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Table 2D: Comparison of water abstraction, mean annual discharge and average dry season flow Sub-basin/
Basin Mean annual
discharge (km3)
Water abstraction
(Million m3)
Abstraction as
percentage of mean annual
discharge (%)
Average dry
season flow
(m3/s)
Estimated dry season abstraction
(m3/s)
Abstraction as
percentage of average dry season flow (%)
Akagera/Nile 6.87 122.8 1.78 168 11.8 7 Rusizi/Congo 2.75 6.8 0.24 67 0.65 0.97 Component 2: Strengthening Capacity for Marshland and Hillside Commodity Chain Development
25. The objective of Component 2 is to support the market integration of women and men in targeted marshland and hillside areas by intensifying production, promoting diversification into agricultural value addition or upstream markets, and expanding access to markets. The activities in this component are meant to complement the market infrastructure provided in Sub-component 1.2. The Project will focus on strengthening commodity chains for main food staples, including rice, potatoes, maize, and horticulture crops but it will remain responsive to broader proposals where tangible marketing opportunities exist. The project approach will strengthen farmer communities to promote an inclusive development for all including the very poor, the landed and the landless by mainstreaming best practice CDD principles across all project target areas. Component 2 will include three sub-components:
Sub-component 2.1: Strengthening Farmer Organizations and Cooperatives
26. RSSP3 will strengthen producer organizations, including WUAs and cooperatives, with the goal of improving their governance and management capacity so that they can deliver good quality services to their members. Activities are expected to include: (i) mobilization and group formation (particularly on the hillsides); (ii) governance and management training including book keeping and accounting for farmers’ organizations and cooperatives implemented in partnership with Local Service Providers (LSPs); (iii) specific support and training for WUAs in collaboration with RSSP3 engineers and the District; (iv) production and dissemination of reference training material; and (v) organization of exchange visits between cooperatives. See the specific activities in the Technical Annex. The focus of capacity development will depend on the level of maturity of the farmers’ organizations and cooperatives. For RSSP2 cooperatives, special attention will be on value-chain development through business plan development (see Sub-component 2.3) while in new cooperatives created by RSSP3, additional effort will be put on basic governance and production technology. Small group formation will form an integral part of the approach where appropriate, but particularly on hillsides and with women and men in Project areas involved in non-farm activities. As the project progresses and groups and cooperatives gain experience, they would increasingly qualify for receiving capacity support in more complex value chain integration (see 2.3). WUA, by definition, are considered as a separate organization to the cooperative and the sub-component will support their formation, training and formal registration. Districts will be encouraged to include WUA support and activities in the District development plans.
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27. For the specific groups of beneficiaries, the key activities include:
(i) For farmers groups and cooperatives: (a) mobilization and group formation (particularly on the hillsides); (b) governance and management training including book keeping and accounting for farmers’ organizations and cooperatives implemented in partnership with LSPs; and (c) the focus of capacity development will depend on the level of maturity of the farmer organizations and cooperatives. For mature cooperatives, value-chain development through business planning would be emphasized while for new cooperatives basic governance and new production technology would be promoted. Small group formation will form an integral part of the approach where appropriate, but particularly on hillsides and with women and men in Project areas involved in non-farm activities. As the project progresses and groups and cooperatives gain experience, they would increasingly qualify for capacity support in more complex value chain integration (see sub-component 2.3).
(ii) For WUAs, specific support and training in collaboration with RSSP3 engineers and district authorities to include WUA support and activities in the District development plans: (a) Emergence, registration, governance of the WUAs; (b) Water management and appropriate bye laws including enforcement procedures; (c) Infrastructure maintenance plans based on the recommended principles as shown in Table 2E:
Table 2E: Guiding principles for infrastructure maintenance plans
Type of Infrastructure
Annual provisions in percentage of the price as stated on BoQ
Periodicity of maintenance works
Dam 1% 5 years: reparations Main canal
3% 3 years for reshaping 1 year for weed-cutting
Secondary and tertiary canals 3%
Twice a year for reshaping and weed-cutting
Roads 3% 3 years: relining
(d) Establishment, collection and management of water services fees: WUAs will reach all users regardless of their cooperative membership status with a 95 percent minimum rate of fee recovery. WUAs will be trained to develop an efficient collection system that may be inspired by lessons learnt from other Bank projects (e.g., open bidding for fees collectors with a performance contract remunerated through a limited commission, recovery through cooperatives); and (e) To enhance and permanently monitor the progress of WUAs and with their support, a WUA “technical coordinator” could be posted in the associations by RSSP3 during 1-2 years to ensure that each WUA fully endorses all its responsibilities and enforces its established by-laws. At the end of the period, such technical coordinator may be recruited as a WUA permanent member of staff if the WUA can cover the salary without affecting the irrigation scheme maintenance capacities of the WUA. In a smaller size marshland, the technical coordinator would train and mentor WUA managers from several marshlands. Smaller marshlands of less than 200 ha will share a WUA manager with adjacent marshlands of similar sizes. The local WUA managers will run the WUAs activities under the supervision of the steering committee. The WUA technical assistant is understood as a
32
permanent on-site person coordinating all tasks and responsibilities to be carried out by WUAs as listed above. This person would be accountable to the WUAs steering committees and to the Project coordinator for the duration of the assignment.
Sub-component 2.2: Capacity Building for Improved Production Technologies 28. RSSP3 will support activities to improve production and productivity in the marshlands and hillsides adjacent to marshlands. In line with Government policy for extension and in collaboration with RAB, the Project will continue to support the farmer-based extension and the up-scaling of the FFS. The FFS approach builds capacity and empowers farmers to use improved and economically viable practices for sustainable soil, water and pest management in view of increasing productivity and its profitability of agricultural activities. RSSP3 will continue supporting cooperatives to become certified seed producers. Project activities in this sub-component would include: (i) Training-of-trainers for the up-scaling of FFS in marshlands and hillsides for sustainable intensification; (ii) up-scaling of the FFS in the marshlands and in the hillsides developed or to be developed by the project (RSSP2 and RSSP3); (iii) support interested cooperatives to become certified seed producers in cooperation with RAB linking to any ongoing seed projects; (iv) LWH extension approaches to support intensification of rainfed hillside production; and (v) support to innovations for productivity through provision of technical assistance to help link farmers to financial institutions.
Sub-component 2.3: Capacity Building for Value Chain Development 29. Capacity building for value chain development is to be directly linked to the various levels of organized groups discussed above that are meant to play a role in the value chain—starting with the individual producer. As a lesson learnt from RSSP2, it is crucial to allow individual farmers to better plan and develop their farming activities through a thorough understanding of the business. Participatory value chain approaches will be used in addition to the successfully applied methodology of lead farmers. The following three core modules will be delivered: (i) development of farm budgets/business planning to lead farmers; (ii) small enterprise management to lead farmers; and (iii) marketing of output to Marketing Committees. On another level, business plan training will be provided for cooperative management that links directly to investments discussed in sub component 1.3. Beyond this core training, a mentoring program provided by professionally trained service providers in agribusiness and value chain development on retainer will focus on cooperatives leaders and marketing committees for at least the first three years of the program. Criteria can be developed to indicate when cooperative development graduates from the input that local Rwanda Development Board (RDB)-supported business development centers (BDCs) can provide to the (possibly cost-shared) higher level service on retainer under this sub-component. The hillsides benefitting from collective infrastructure under sub-component 1.3 will receive similar support. Building on the several success stories from RSSP2 respecting access to Rural Investment Facility (RIF) for cooperative business plan financing, the RSSP3 should focus on supporting cooperatives to seek financing for innovations through RIF. This includes clear articulation of quality innovation investment proposals and full information for risk assessment by the financial institution.
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Table 2F: Cost estimates for Component 2
Scenarios Sub-components
7,000 ha 6,000 ha
Sub-component 2.1. Strengthening Farmer Organizations and Cooperatives
4,383,200 3,247,000
Sub-component 2.2 - Capacity Building for Improved Production Technologies 3,061,014 2,263,000 Sub-component 2.3 - Capacity Building for Value Chain Development 2,873,029 2,062,000 Total 10,317,243 7,572,000
Component 3: Project Coordination and Support
30. MINAGRI has established an SPIU which will implement LWH and RSSP. This is a progression towards coordinated program implementation under a SWAp arrangement, in keeping with the commitment of DPs in supporting the agricultural sector in Rwanda. As such, RSSP has merged with LWH to form the SPIU which will contribute to MINAGRI’s ‘Single PIU’ in which each of four implementation teams implement one fourth of the GoR strategic plan for the agricultural sector (PSTA II). As part of the LWH scale-up under the GAFSP, the procurement and financial management units of the LWH were merged with the more experienced ones of RSSP2 in order to further the Bank’s support to MINAGRI’s streamlined implementation. The proposed RSSP3 implementation structure is therefore an incremental fulfillment of this commitment. The RSSP team proposed a merged structure which was discussed and agreed during the July-August 2011 mission. The mission found that the proposed structure is adequate to implement both RSSP and LWH activities. The mission recommended that the Project should proceed to review and update Project staff salaries, and formulate terms of reference for all positions. This was done and confirmed at appraisal. The merged structure (shown in Annex 3) has been approved by MINAGRI, but awaits final endorsement by the (MIFOTRA) for conformity with the GoR’s standards with regards to SPIUs. It is expected that this will be finalized before project effectiveness.
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ANNEX 3: IMPLEMENTATION ARRANGEMENTS RWANDA: THIRD RURAL SECTOR SUPPORT PROJECT
1. In accordance with the Paris declaration on aid effectiveness (2005) and the Accra Agenda for Action (2008), MINAGRI and DPs signed an MoU establishing a Sector Wide Approach (SWAp) in the agriculture sector in December 2008. The SWAp is centered on the implementation of the Government’s comprehensive agricultural strategy known as the SPAT II (the second Strategic Plan for the Transformation of Agriculture). SPAT II, finalized in 2008, is built upon lessons learnt from SPAT I, which was developed in 2004. SPAT II is considered by MINAGRI and DPs as the framework for engagement on agricultural development in Rwanda. Under SWAp arrangements, stand alone PIUs will be gradually phased out and MINAGRI capacity will be scaled up to support implementation of the Government’s different projects and programs. 2. SPAT II is divided into 4 programs which are interlinked and implemented by MINAGRI, its agencies and other institutions involved in rural development, often with the financial support of DPs. The four programs are:
Program 1: Physical Resources and Food Production (intensification and development of sustainable production systems); Program 2: Producer Organization and Extension (support to the professionalization of producers); Program 3: Entrepreneurship and Market Linkages (promotion of commodity chains and the development of agribusiness); and Program 4: Institutional development (strengthening public and private sectors and the regulatory framework for agriculture).
3. In order to successfully coordinate and oversee implementation of PSTA II under a SWAp, MINAGRI has accordingly re-organized its structures to streamline working relationships amongst all units, institutions and decentralized entities involved in the implementation of the sector strategic plan. In the new Ministry structure, there are five directorates: Strategic Planning, Crop Production, Animal Resources, Inspection and Certification and Administration and Finance. MINAGRI has also restructured its agencies, reorganizing the six agencies into two Boards: RAB and National Agriculture Export Development Board (NAEB). The Boards are, in the long run, intended to be the Ministry’s implementing bodies for the sector strategy and policies. To accommodate this role, the new structure of RAB is further expanded to include strong administrative and implementing functions at the decentralized levels through four Provincial ‘Zones’.
4. The SWAp implementation structure is composed of four program implementation units, each being a merger of existing Project Implementation Units. The PIT in each SPAT will implement one fourth of the GoR strategic plan for the agricultural sector. Each PIT will have an SPIU Coordinator, and a team of implementation support staff. The PM reports directly to the Permanent Secretary (PS) in MINAGRI. It is important to note the special role of Program 4 Implementation Team. Program 4 of the SPAT pertains to Institutional Development and, therefore, contains all the planning, coordination and policy staff of the Ministry.
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I. Project Institutional and Implementation Arrangements
5. The Proposed RSSP3 Project Implementation Team (see Figure A3) is a full merger of RSSP2 and LWH implementation teams. The LWH implementation structure was designed to contribute to MINAGRI’s ‘Single PIU’ in which each of four implementation teams implement one fourth of the GoR strategic plan for the agricultural sector (SPAT II). As part of the LWH scale-up under the GAFSP, the procurement and financial management units of the LWH were merged with the more experienced ones of RSSP2 since March 2011 in order to further the Bank’s support to MINAGRI’s streamlined implementation. The proposed RSSP3 implementation structure is therefore an incremental fulfillment of this commitment. The proposed merged structure was discussed and agreed by RSSP2 Implementation support and RSSP3 identification mission in August 2011. The merged structure was found to be adequate to implement both RSSP and LWH activities.
6. Project implementation arrangements will take place at three levels: national, district and community level (see Figure A3). As discussed, the Project’s implementation arrangements at the national level have been designed to build upon—and build up—the SWAp structure at MINAGRI. Program 1 Manager for the SPIU, together with his/her strong team at the centre will follow day to day RSSP3 Project implementation. In addition, in districts where RSSP and/or LWH activities are executed, a district implementation team will be deployed to oversee the actual execution of activities on the ground and be in constant liaison with the local administration and other stakeholders. This will ensure continuing effective oversight of key technical and administrative functions that are best performed centrally, while enabling local engagement in the districts where the project activities will be carried out. This in turn will facilitate more regular and meaningful engagement with partners and stakeholders and reinforce the ownership at the decentralized levels.
(a) National Level
7. As the official executing agency for RSSP3, MINAGRI will have overall responsibility for the implementation of the Project at the national level, through an SPIU Coordinator in charge of RSSP & LWH and maintain a strong implementation team, as detailed above. The RSSP & LWH PM will rely heavily on contracts and agreements with implementing bodies, including but not limited to RAB, NAEB and other contactors. MINAGRI boards are expected to have active MoUs with RSSP & LWH Management for the provision of those services which they are judged best to perform on a national or regional scale. For those services best provided by national or international service providers, these service providers will compete for contracts as per standard procurement procedures.
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Figure A3: Merged Organogram for RSSP and LWH Units.
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(b) District Level
8. Given the possibility of having MINAGRI boards implement some of the Project activities, such activities will be implemented at the provincial level through the Zonal Agricultural Offices of RAB and NEB where MoUs exist with the boards.
9. At the District level: a ‘District RSSP & LWH Implementation Support Team will be put in place. The Project Implementation team at the district will follow the day to day activities on the developed sites and link closely with the GoR decentralized authorities for a better coordination and seek their active support for the mobilization of communities and effective enforcement of contracts at each site. The project implementation support team at the District will also have to build capacity among their District Government analogues
10. At the District level the District Implementation support Team will have the technical subject matter specialists who will cover core competencies required for a successful on site implementation. The following core competencies will be required for a District Implementation team: rural engineering, agronomy, community development, monitoring and evaluation, agribusiness and SLM. Other than this core team of competencies, the Project will recruit one member to be District Implementation Coordinator.
11. A Fiduciary Support Team will be hired to support the district implementation Teams. This team will be comprised of the Project Provincial Procurement Officer and a Project Provincial Accountant Officer. This decentralized fiduciary support team will be providing fiduciary support to the Districts implementation Teams in the province where there are posted and will also assist and train Communities on their participation in the project implementation.
II. Financial Management, Disbursements and Procurement 12. A financial management assessment was carried out for the Rwanda RSSP III, to determine whether it has adequate financial management arrangements: (a) capable of correctly and ensuring completeness in the recording all financial transactions and balances relating to the basket fund resources; (b) capable of facilitate the preparation of regular, timely and reliable financial statements; (c) capable of safeguard the assets acquired under IDA credit; and (d) are subject to auditing arrangements acceptable to IDA.
A. Financial Management 13. Budgeting: Both RSSP2 and LWH have adequate budget arrangements documented in their financial management manuals adequate to support the project. The existing budget procedures will be harmonized the FM manuals and will ensure that budget variance analysis will be carried out and adequately addressed in timely manner by the Merged coordination unit. Budgeting procedures will be complemented with the budgeting procedures as prescribed in GOR manuals.
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Accounting Arrangements (a) Financial Management Manual
14. Both RSSP2 and LWH have financial procedures manuals containing chart of accounts that were approved by the World Bank. In light of the proposed the merged implementation unit, project coordination will undertake by negotiations to harmonize the FM manuals and chart of accounts for a more effective operation of the FM team.
(b) Staffing Arrangements
15. MINAGRI has proposed to merge the two standalone project implementation units of the World Bank financed LWH and RSSP2 Projects, the progressive merger is currently working well as assessed by the World Bank as part of the preparation for RSSP3. A new FM structure/team has been finalized and validated (see Figure A3 above) within the framework for the merger. Terms of references for each of these positions have been prepared. In addition, the implementation unit will have increased responsibilities at decentralized levels and will be supported by two provincial accountants currently under RSSP 2 and will be strengthened on a need basis during implementation. The Head of Finance who resigned in May 2011 has effectively been replaced. The Financial Management team continues to be adequate having maintained the qualified and experienced staff from the previous phase.
(c) Books of Accounts
16. The Head of Finance of the merged FM unit will be responsible for setting up and maintaining the Rwanda RSSP3 accounts, preparation and submission of the action plans for accessing the credit and reports; setting up the accounting system will be described in the Financial Management Manual as complemented with GoR FM Manual will be used to track, record, analyze and summarize the RSSP3’s financial transactions. RSSP3’s accounts will be prepared in accordance with article 70 of the Organic Budget Law No 37/2006 and Ministerial Order No 002/2007 relating to financial regulations, and the Credit agreement and the provisions of financing agreement. Appropriate internal controls over the preparation and approval of transactions; recording and consolidated reporting will be documented in the manual ensure that all transactions are correctly made.
(d) Information Systems
17. Both RSSP2 and LWH have TOMPRO accounting software installed in January 2009 and December 2010 respectively and continue to work well leaving the proposed merged implementation unit with two stand alone software packages. The project Coordinator for the merged implementation unit will undertake to ensure the existing accounting softwares are updated during implementation.
18. Financial Reporting: Both RSSP2 and LWH submit Un-audited Interim Financial Reports (IFR) to satisfactory to IDA and in compliance with provision financing agreements. The IFR formats and contents for both projects have been previously agreed with the IDA and include and not limited to: a sources and uses statement; financial assets and liabilities statement, uses of funds by activities for the project, a segregated account reconciliation, accounting policies and explanatory notes prescribed under article 70 of the Organic Budget Law No 37/2006 and Ministerial Order No 002/2007
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relating to financial regulations. These IFRs continue be submitted to the Bank 45 days after the end of each period being reported. RSSP 3 has harmonize its IFR reporting frequency with that of LWH for the FY ending June which and cleared with IDA.
19. Internal Control and Internal Audit: The harmonized financial management manual complemented with GoR FM procedures manuals will document internal control and internal audit procedures. The aspects covered in the Financial Management manual will include: (i) flow of funds; (ii) financial and accounting policies; (iii) accounting system (including centers for maintenance of accounting records, Chart of Accounts, formats of books and records, accounting and financial procedures); (iv) procedures for authorization of transactions, budgeting, and financial forecasting; (v) financial reporting; and (vi) auditing arrangements.
20. RSSP2 has always had an adequate internal audit function. The current internal auditor was recruited in April 2011 replacing the former internal auditor who resigned in December 2010. A risk based internal audit plan for the year 11-12 has been prepared and the shortcomings related to the frequency of reporting, and reference to the Internal audit charter and manual developed by Office of the internal audit have been addressed.
21. The internal auditor currently serves the both implementing units and will continue to conduct reviews which will include ex post verification of expenditure eligibility, as well as ensuring quality of service delivered during project implementation. The findings and recommendations of the Internal Auditor will be used by the project to improve its implementation in areas related to financial management and procurement. The audit will be carried out in accordance with internationally accepted auditing standards.
22. Audit Arrangements: The annual financial statements for RSSP3 prepared by the merged FM unit as well as internal control system will be subject to an annual audit at the end of June fiscal year by the Office of the Auditor General (OAG) of State finances or outsourced to an independent auditor under the oversight of the OAG. Both RSSP2 and LWH submit Audit Reports to satisfactory to IDA and in compliance with provision financing agreements and there are no outstanding audits. The project team has made adequate arrangements for its external audit by reviewing and agreeing with IDA the existing terms of reference. The auditor will provide one single opinion on the annual financial statements in compliance with International Federation of Accountants (IFAC) Standards on Auditing. In addition to the audit reports, the external auditors will be expected to prepare a Management Letter giving observations, comments, and providing recommendations for improvements in accounting records, systems, controls and compliance with financial covenants in the Financing agreement. The project will be required to produce, no later than December 31 following June fiscal year end, audited annual financial statements. In line with the new access to information policy, project will comply with the Bank disclosure policy of audit reports (e.g., make publicly available, promptly after receipt of all final financial audit reports (including qualified audit reports) and place the information provided on its the official website within one month of the report being accepted as final by the team).
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B. Disbursements 23. Both RSSP2 and LWH have segregated Designated Accounts held with the National Bank of Rwanda (NBR) and are working well, RSSP3 will equally have a segregated account at the NBR. RSSP3 will receive disbursements from IDA on the basis of incurred eligible expenditures (transaction-based disbursements). Upon Credit effectiveness, an initial advance (up to the ceiling of the Designated Account (DA)) will be disbursed from the proceeds of the IDA credit and will be deposited into a DA denominated in United States Dollars held at the National Bank of Rwanda. RSSP 2’s existing Project Account denominated in local currency will continue to be held at the National Bank of Rwanda to receive agreed Counterpart Funds. Project payments can then be made from either the Designated or Project Account. Subsequent advances to the DA will be made through submission of Withdrawal Applications (at least monthly) supported by Statements of Expenditures (SOE) which document the initial/previous advance(s). Other methods of disbursements to the project include Direct Payments, Special commitments and reimbursement. Disbursement details including the DA ceiling will be included in the disbursement letter. Monthly bank reconciliations will be prepared by the project accountant, reviewed by Head of Finance and approved by the coordinator. Funds flow procedures for implementation at decentralized levels will be documented in the harmonized FM Manual and supported by the provincial accountants hired under RSSP2 and will be strengthened on a need basis. If ineligible expenditures are found to have been made from the designated and/or operating bank accounts, the project will be obliged to refund the same. If the designated account remains inactive for more than three months, the project may be requested to refund to IDA amounts advanced to the designated account. 24. Authorized signatories will be designated in as prescribed in the GoR financial management manual or with appropriate delegation thereof and communicated to IDA.
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Funds Flow Chart
Disbursements by category 25. The next table sets out the expenditure categories to be financed out of the Credit/Credit proceeds. This table takes into account the prevailing Country Financing Parameter for Rwanda in setting out the financing levels.
Category Amount of the Financing Allocated (expressed in SDR)
Percentage of Expenditures to be Financed
(inclusive of Taxes) (1) Goods, works, non-consulting services, consultants’ services , Training and Workshops and Operating Costs under the Project (except Part 1(c) and 1 (d) of the Project )
46,850,000 100%
(2) Goods, works and services financed by Sub-Project Grants under Part 1(c) of the Project
3,300,000 100%
(3) Refund of Preparation Advance 750,000 Amount payable pursuant to Section 2.07 of the General Conditions
(4) Unallocated 1, 300,000
TOTAL AMOUNT 52, 200,000
IDA Credit
Designated Account (USD) in National Bank of Rwanda
Transactions paid in either USD or RWF by the project and transfers to the decentralized level.
Direct Payments on behalf of RSSP III on a need basis
Accountability
GOR
Project Account (RWF) in National Bank of Rwanda
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Financial Management Action Plan
26. The action plan below indicates the actions agreed upon with the RSSP3 that will be taken to strengthen its Financial Management system to provide reasonable assurance that the Credit and Trust funds will be used for the intended purposes. Relevant dates for completion and responsibilities are also indicated.
Action Status Responsible 1 Undertake to update the existing accounting
software During implementation
Coordinator/ Head of Finance
CONCLUSIONS OF THE FM ASSESSMENT
27. Overall, the residual financial management risk for the project is assessed as Moderate. The Financial Management arrangement indicates that the implementation team satisfies the Bank’s minimum requirements under OP/BP 10.02.
III. Procurement
Procurement Arrangements General Procurement Environment 28. Rwanda’s general Procurement context has Major Law and Institutional framework in place; (i) the current Public Procurement Law was adopted in April 2007. The Law is generally consistent with international standards as it is based on the United Nations Commission on international Trade Law (UNCITRAL) model; (ii) the law establishing the regulatory body, “Rwanda Public Procurement, Authority (RPPA)”; (iii) regulations putting in place National Standard Bidding Documents (SBDs); (iv) the code of conduct; and (v) standard user guide manual. This documentation is available on RPPA website (http://www.rppa.gov.rw/) for public use. Although much is achieved in terms of procurement environment, there is still room for improvement and there is amendment of the procurement law to further strengthen the framework and address deficiencies identified during implementation, continue strengthening capacity in procurement, maintain the program of integrating procurement into the PFM system, enforce the data collection and sustainable information dissemination system, and strengthen the oversight function including internal controls and external procurement audits. 29. Procurement guidelines: Procurement for the Project will be carried out in accordance with the World Bank's "Guidelines: Procurement of Goods, Works, and Non-Consulting Services, under IBRD Loans and IDA Credits & Grants by the World Bank Borrowers" dated January 2011 and "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowers" dated January 2011, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below.
30. For each contract to be financed by the IDA grant, the Borrower and the World Bank will agree upon and record in the Procurement Plan, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame. The Procurement Plan will be updated every six months or as required to reflect the actual project implementation needs and improvements in institutional capacity.
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31. Procurement of Works and Goods. Construction of works valued at a total of about US$52.4 millions and goods valued at a total of about US$ 10 million will be procured under this project. These will include rehabilitation/development of marshlands; Construction of storage facilities and drying bay; and supply of lime and compost manure. Contract packages estimated to cost US$5,000,000 equivalent per contract and above for works and, US$500,000 equivalent per contract and above for goods, will be procured through International Competitive Bidding (ICB) procedures.
32. Contracts estimated to cost less than US$5,000,000 equivalent for works, and less than US$500,000 equivalent per contract for goods respectively would be procured through National Competitive Bidding (NCB) procedures, except for small contracts that may be procured through shopping procedures by comparing prices for quotations received from at least three (3) reliable contractors or suppliers. In such cases, request for quotations shall be made in writing and shall indicate the description, scope of the works, the time required for completion of the works and the payment terms. All quotations received shall be opened at the same time. As a general rule, a qualified supplier who offers goods or materials that meet the specifications at the lowest price shall be recommended for award of the contract. Limited International Bidding (LIB) may be an appropriate method of procurement where (a) there are only a limited number of suppliers, or (b) other exceptional reasons may justify departure from full ICB procedures. Under LIB, Borrowers shall seek bids from a list of potential suppliers broad enough to assure competitive prices, such list to include all suppliers when there are only a limited number. 33. The procurement will be done using the Bank’s Standard Bidding Documents (SBD) for all ICB and National SBD agreed with or satisfactory to the Bank. 34. Framework Agreement (FA), is a long-term agreement with suppliers, contractors and providers of non-consulting services which sets out terms and conditions under which specific procurements (call-offs) can be made throughout the term of the agreement. FAs are generally based on prices that are either pre-agreed, or determines at the call-off stage through competition or a process allowing their revision without further competition. FAs may be permitted as an alternative to the shopping and NCB methods for: (a) goods that can be procured off the shelf, or are of common use with standards specifications; (b) non consulting services that are of a simple and non complex nature and may be required from time to time by the same agency (or multiple agencies) of the Borrower; or (c) small value contracts for works under emergency operations. 35. FAs shall not restrict foreign competition, and should be limited to a maximum of 3 (three) years. FAs shall follow all guiding principles and procedures of NCB under paragraphs 3.3 and 3.4, including but not limited to the procedures for advertisement, fair and open competition, an effective and independent protest mechanism, and transparent bid evaluation and selection criteria. Publication of award of the FA shall follow the procedure described in paragraph 7 of appendix 1, of the WB Procurement Guidelines. Please refer to WB guidelines paragraph 3.6 for details. 36. Community based procurement will be carried out at local level by community based organizations. Many activities supported by the Project at local level will be demand-driven. Local entities will identify, prepare, and/or supervise activities supported by the Project and compatible with the RSSP3 design. While these activities will be procured with the assistance of provincial and District RSSP/LWH Implementation Teams, the communities will be heavily involved in the selection and oversight of activity execution. Further, some activities will be carried out at the local level by
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community based organizations and their members, for which community-based procurement procedures will be used.
37. Procurement of non-consulting services: Non-consulting services which are services that are not of intellectual or advisory in nature will include for instance maintenance of vehicles and IT equipment. The procurement of non-consulting services shall follow the existing World Bank’s SBDs for ICB, or national standard bidding documents for NCB, with appropriate modifications. 38. Selection of Consultants: Consultant services valued at about US$9.6 million to be provided include: Supervision of development works for marshland, Design study for rehabilitation of marshland Technical assistance for bench terracing on the hillsides surrounding marshlands, Environmental Impact Assessment and Environmental Management Plan for marshlands.
39. The consulting services would be provided by consulting firms and some would be provided by individual consultants. The consulting contracts will as far as possible be awarded under the Quality and Cost Based Selection (QCBS). Other methods of selection will be determined for each assignment depending on the type of assignment and the provisions of the Consultant Guidelines and will be indicated in the procurement plan. Quality-Based Selection (QBS) would be followed for assignments which meet the requirements of paragraph 3.2 of the Consultant Guidelines; Fixed Budget Selection (FBS) would be followed for assignments which meet the requirements of paragraph 3.5 of the Consultant Guidelines; Consulting firms for carrying out standard or routine nature assignments such as audits would be selected through Least Cost (LCS) in accordance with paragraph 3.6 of the Consultant Guidelines; and Single-Source Selection (SSS) would be followed for assignments which meet the requirements of paragraphs 3.8 - 3.11 of the Consultant Guidelines and will always require the Bank’s prior review regardless of the amount. Consulting services by firms estimated to cost less than US$300,000 equivalent per contract would be procured following the procedures of Selection Based on Consultants’ Qualifications (CQS) in accordance with paragraphs 3.7 of the Consultant Guidelines. Shortlists for consultants’ services for contracts estimated to be less than US$300,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. Individual Consultants (IC) would be selected on the basis of their qualifications in accordance with Section V of the Consultant Guidelines. Under the circumstances described in paragraph 5.6 of Section V of the Consultant Guidelines, such contracts may be awarded to individual consultants on a sole-source basis. 40. Consultancy services estimated to cost above US$300,000 equivalents per contract for firms and Single Source Selection of consultants will be subject to prior review by the Bank. The selection of Individual Consultants will normally be subject to post review. However, under this project the Bank would prior review the evaluation process for contracts estimated to cost US$100,000 equivalent or above that will include consultants for long-term technical assistance or advisory services for the duration of the project. These prior review contracts will be identified in the procurement plan. 41. Operating Costs: Operating costs for the implementation of this project will include rental of office space, office suppliers and consumables, communication costs, operational and maintenance of office vehicles, operation and maintenance costs for IT Equipment, per idem and travel costs when travelling on duty during implementation of this project, reasonable bank charges, vehicle maintenance costs, fuel, advertising costs, allowances and salaries of contractual staff (excluding the salaries of civil servants).
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42. Others: The project will also finance the cost of workshops, study tours, and various consultations with stakeholders regarding the project. The training, workshops, conference attendance and study tours will be carried out on the basis of approved annual programs that will identify the general framework of training and similar activities for the year, including the nature of training/study tours/workshops, the number of participants and estimated cost. 43. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented in the project implementation manual. Procurement activities will be carried out by RSSP/LWH project. The agency is currently staffed by one procurement specialist and two procurement officers. 44. An assessment of the capacity of the Implementing Agency to implement procurement actions for the project has been carried out on July 30, 2011. The assessment reviewed the organizational structure for implementing the project and the interaction between the project’s staff responsible for procurement function and the Ministry’s relevant. 45. According to the review, the staff in place is familiar with procurement procedures, for having been involved into RSSP previous phases; current staff has been able to manage RSSP2 workload and, recently they were associated with another World Bank financed project, LWH. RSSP2 brought in the association both experience and good number of staff, while, LWH was not staffed properly both in terms of number and experience of staff. 46. From lessons learned through both prior and post reviews and implementation support missions, it is noticed that staff could do better, if the number of staff was adapted to the volume of work. In order to better handle both projects, the review suggests progressive follow up of staffing level. At Headquarter level, the implementation agency would need three Procurement Officers, and one Procurement Assistant in addition to the Head of Procurement Unit. At decentralized level, the implementing agency would need one Procurement Officer per Province where RSSP/LWH project will have activities. Having appropriate number and qualified staff in place will increase efficiency in project implementation, since procurement advice will be provided on time; therefore, fiduciary risk will be minimized. 47. The key issues and risks concerning procurement for implementation of the project have been identified and include: (i) number of staff compared to existing volume of work; (ii) procurement documents including evaluation reports need to be thoroughly reviewed; and (iii) input to procurement (Technical specifications and Terms of References (TORs)) need to be qualitative and timely provided. Before merging the two projects, LWH project was already under staffed in terms of quantity and experience, the merging increased the workload of RSSP staff since, and there was no other recruitment. 48. As part of internal control, implementing agency has introduced a quality assurance process which is carried out by the Head of Procurement Department. During implementation support mission, Bank staff found very useful the system in place, however, in order to strengthen the review system; the mission is advising that management has to associate to the review process, two or three additional technical staff. This would increase efficiency of internal control system, and will help avoiding a number of unseen human errors, which can happen in case evaluation reports are reviewed by only one person.
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49. The mission identified two additional reasons explaining why internal review process needs to be strengthened namely: (a) increase in volume and complexity of procurement activities which resulted from merging of two WB financed projects (LWH and RSSP); (b) cancellation of prior review of procurement by oversight body Rwanda Public Procurement Authority (RPPA) since February 2011. Given the two elements, it is clear that RSSP/LWH as a procuring entity received a bigger and challenging responsibility, which requires appropriate structure in place for the function to be efficiently handled. For control and review to be more efficient, technical staff need to be associated to the reviewing layer and, they can be nominated relatively, based on nature, type of contracts and area of expertise for a given staff.
50. The corrective measures which have been agreed are provided in the below table. The overall project risk for procurement is high. Identified risk Mitigation measure Responsible
institution Timeline
The merging of RSSP2/LWH is under staffed.
At Head Quarter level, recruitment of one additional Procurement Specialist and one Procurement Assistant. Recruitment of one Procurement Officer per Province in which LWH/RSSP project will have activities.
RSSP/LWH project.
At least one month after effectiveness
procurement documents including evaluation reports need to be thoroughly reviewed
Strengthening the procurement reviewing system.
RSSP/LWH project
During project life.
Procurement process delays due to poorly prepared TORs/Technical specifications or changes in technical approach.
Implementation of action plan to be regularly monitored, such that, input to procurement is timely provided to the procurement unit.
RSSP/LWH During project life.
B. Procurement Plan 51. The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on December 22, 2011 and is available at the Project Implementation Unit at MINAGRI. It will also be available in the project’s database and in the Bank’s external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
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Frequency of Procurement Implementation Support
52. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended two implementation support missions to visit the field to carry out post review of procurement actions. Details of the Procurement Arrangements Involving International Competition 1. Goods, Works, and Non Consulting Services (a) List of contract packages to be procured following ICB and direct contracting:
Procurement Packages with Methods and Time Schedule
Ref. No. Contract description Estimated Cost
(US$) Procurement
Method P-Q Domestic Preference
World Bank
Review
Expected Bid
Opening
1. Works – Marshlands Rehabilitation and Development, Improving Productivity in Hillsides Production Systems
1. Rehabilitation of Cyili marshland including construction of dams
2,100,000 ICB NO NO PRIOR April 2012
2. Development works for Rwinkwavu marshland
7,600,000 ICB NO NO PRIOR June 2012
3. Development works for Gacaca marshland
3,780,000 ICB NO NO POST Oct
2012
4. Development Works for Karangazi Rwangingo marshland
10,835,000 ICB Yes NO PRIOR Dec 2012
6 Development works for Kirimbi marshland
890,000 NCB NO NO POST June 2012
7 Construction of 3 storage facilities and 10 drying bays for perimeter 8, Muvumba marshland
625,000 NCB NO NO POST March 2012
8 Construction of 2 drying bays for Rwagitima (extension) marshland
60,000 NCB NO NO POST March 2012
9 Construction of 2 storage facilities and 10 drying bays for Rwinkwavu marshland
360,000 NCB NO NO POST June 2012
10 Construction of 1 storage facility and 3 drying bays for Gacaca marshland
200,000 NCB NO NO POST Aug 2012
11 Construction of 2 drying bays for Cyili marshland
60,000 NCB NO NO POST March 2012
Procurement of Goods
LOT 1: Supply of lime for Rwagitima marshland
120 000 NCB No No Post July 2012
LOT 2: Supply of lime for Rwinkwavu marshland
610 0000 ICB No No Prior July 2012
Lot 3: Supply of lime for Kirimbi marshland
130 000 NCB No No Post July 2012
Lot 4: Supply of lime for Gacaca marshland
110 000 NCB No No Post July 2012
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2. Consulting Services (a) List of consulting assignments with short-list of international firms. (b) Consultancy services estimated to cost equivalent and above US$300 000 per contract and single source selection of consultants (firms) will be subject to prior review by the Bank. (c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than US$ 200 000 equivalents per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.
No Description of Assignment Estimated
Cost (US$)
Selection Method
Review by the World
Bank
Expected Proposal
Submission
1. Supervision of development works for Rwinkwavu marshland 900,000 QCBS PRIOR April 2012
2. Supervision of development works for Cyili marshland 524,000 QCBS PRIOR April 2012
3. Supervision of development works for Karangazi-Rwangingo marshland 900,000 QCBS PRIOR Oct 2012
4. Supervision of development works for Gacaca marshland 480,000 QCBS Prior July 2012
5. Design study for rehabilitation of Kamiranzovu marshland 120,000 QCBS POST Feb 2012
6. Design study for development of Nyabirandi marshland 60,000 QCBS POST Feb 2012
7. Design study for construction of Mushaduka irrigation dam 220,000 QCBS POST Feb 2012
8. Design study for construction of Mirayi dam 300,000 QCBS Prior Feb 2012
9. Supervision of construction works for 3 storage facilities and 10 drying bays in perimeter 8 of Muvumba marshland
65,000 QCBS POST March 2012
10. Technical assistance for bench terracing on the hillsides surrounding Rwinkwavu marshland
60,000 QCBS POST April 2012
IV. Environmental and Social (including safeguards) 53. Safeguards Impacts and Mitigation Measures: Project investments (subprojects) are located in various provinces of Rwanda. The approach for hillside activities in the Project promotes erosion control and prevents encroachment on steeper slope areas through improved yields from good soil stewardship. Marshland and hillside development creates the risk of loss of habitats and ecosystem services, as well as water quality and environmental health consequences from enhanced or expanded irrigated agriculture. Consequently, to enhance environmental planning of marshland and hillside developments in RSSP1 and RSSP2, an overall Environmental Assessment (EA) and Environmental Management Plans (EMPs) for all RSSP subprojects already undertaken have been prepared. Because at this stage of project preparation, the sites of future sub-projects have not been confirmed, the Environmental and Social Management Framework (ESMF) prepared for RSSP2 was updated.
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EAs/EMPs for the sub-projects will be prepared upon identification and prior to sub-project implementation. 54. All components of the RSSP3 project are classified as Category B, as defined by paragraph 8(b) of OP 4.01. As required under OP 4.11, appropriate procedures will be included in the sub-project Environmental Assessments/Environmental Management Plans and contracts. A section of the updated ESMF is dedicated to Occupational Health and Safety, specifically the use of Personal Protective Equipment for all workers. This includes the use of protective gear for agricultural workers applying pesticides and fungicides (as deemed necessary per the specifications of each specific chemical product). 55. The PMP disclosed for RSSP2 has been updated to include Integrated Pest Management (IPM) practices for banana, wheat, pineapple, and some vegetables (onion, green beans, carrot, cabbage and mushroom) – as these crops may be included in RSSP3. The PMP also includes a careful consideration of the combination of agricultural activities planned for RSSP3 sub-projects. 56. On the social safeguards side, the project triggers OP4.12 – Involuntary Resettlement, since envisaged marshland and hillside developments would require land acquisition for small dams, reservoirs, borrow areas, roads and canals, thereby necessitating resettlement activities. The Resettlement Policy Framework (RPF) prepared for RSSP2 was updated and will be used to guide land acquisition and compensation activities at all project sites. Where and if needed, a Resettlement Action Plan (RAP) will be prepared and implemented before the start of the concerned sub-project, upon selection of individual subprojects.
57. Although none of the sub-projects being considered for selection include dams of over 15 meters in height, one of the potential sub-projects, Rwinkwavu, could be classified as a large dam by the World Bank (pending final technical designs determining height and reservoir capacity). The relevant text in OP4.37, for the definition of a large dam is the following: “Large dams are 15 meters or more in height. Dams that are between 10 and 15 meters in height are treated as large dams if they present special design complexities—for example, an unusually large flood-handling requirement, location in a zone of high seismicity, foundations that are complex and difficult to prepare, or retention of toxic materials. Dams under 10 meters in height are treated as large dams if they are expected to become large dams during the operation of the facility.”
58. Because there is no high-density population downstream from the proposed dam site1
, and there is no technical complexity, a full Dam Safety Panel would not be required. However an independent dam safety assessment by one reviewer has been deemed necessary by the Bank’s Lead Dam Specialist in the case that the proposed sub-project, Rwinkwavu, is confirmed to fall under OP4.37’s classification of a large dam.
59. Capacity for Safeguards Implementation: Through Phases 1 and 2 of RSSP, the Project Implementation Unit (PIU) has trained environmental and social specialists to address safeguards
1 Per RSSP team input, it is illegal to settle in the marshlands per Rwandan law, thus housing in the valleys downstream from the dam sites is few and scattered. These PAPs will be resettled according to WB and GoR procedures, upon sub-project selection.
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requirements. The PIU works in close collaboration with the Rwanda Environmental Management Authority to ensure meeting Bank requirements also satisfies national requirements. During Phase 2, notable progress has been achieved in the implementation of safeguards policies, and the PIU has made enormous strides in building capacity in-house to handle these vital functions. It was agreed during RSSP3 project preparation that the merged RSSP/LWH PIU should have 2 full-time members of the Community Development Team focused on social safeguard compliance, with one team member allocated the responsibility of quality control, submission and disclosure of the RPF and Resettlement Action Plans (RAPs). To ensure proper management and oversight of the project environmental risks, it was agreed with the Project Team that the merged RSSP/LWH PIU should have one full-time Environment Officer (EO) focused on environmental compliance. 60. The PIU will collaborate closely with REMA and RDB to ensure that Project-supported activities are in compliance not only with World Bank environmental safeguards policies, but also with national rules and regulations. PIU staff will supervise and monitor the application of the EMPs, PMP, and RPF as each sub-project proceeds through planning, design, and implementation. Funds for implementing the safeguards requirements are included in the RSSP2 budget. The budget includes core RSSP2 aspects (staff, person-weeks, travel, etc.) as well as costs for awareness raising and training (venues, external trainers, communications, etc.) at the local level. 61. Public Consultations: Continuing the practice adopted for RSSP1 and RSSP2, the preparation of the EAs and EMPs involved consultations with local residents on potential environmental impacts and how they could assist in mitigation measures. Preparation of the PMP involved consultations with farmers to assess pest management issues and evaluate current farmer practices given the focus of RSSP3 on several new crops. Preparation of the RPF involved local consultations about the appropriate compensation values, and the process of resettlement activities as followed in RSSP1 and RSSP2. The detailed preparation of all RSSP3 investments in marshland and hillsides development or rural infrastructure will involve consultations with stakeholders, and their preferences will be taken into account before subproject designs are finalized. An important aspect of these consultations involves agreeing with the stakeholders how the EMP will be monitored and implemented during sub-project implementation, and how to continue with best practice Pest Management activities after the sub-projects have been completed. 62. Disclosure: Updated drafts of ESMF, RPF and PMP have been disclosed in InfoShop and locally on November 28, 2011 in accordance with the Policy on Access to Information, which sets out the policy of the World Bank on public access to information in its possession.
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ANNEX 4 OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF)
RWANDA: THIRD RURAL SECTOR SUPPORT PROJECT Stage: Board
Project Stakeholder Risks Rating Moderate
Description: Community buy-in from beneficiaries is critical to the success of the RSSP3, especially given the investments on the hillsides which are private land, and the marshlands are public land in Rwanda.
Risk Management: The agenda for environmentally sustainable use of the marshlands and hillsides is aligned with the GoR’s policy objectives for poverty reduction (EDPRS). The RSSP3 which is fully supported by the Government will guarantee beneficiaries’ ownership through proper mobilization, sensitization and communication through its capacity building activities which have been built within component 2 of the project. Besides, the Project team has extensive experience working with communities under the RSSP1, RSSP2 and LWH. Good resettlement policy implementation is critical to ensuring that existing farmers in the marshland are given full opportunity to improve their productivity in the marshland or to accept an alternative they agree makes them at least as well off. Resp: MINAGRI| Stage: Implementation| Due Date : On-going| Status: Not yet due
Description : The merger of a single large implementation unit for RSSP 3 and LWH may pose implementation risks.
Risk Management: The Bank fully supports the merger as it is in line with Government’s intent to create an implementation capacity for the SWAp. The Bank team has assessed the existing capacity of the merged unit (especially on the technical, financial management and procurement) and found it adequate. Where gaps have been identified, recommendations have been made for improvements and GoR has already taken positive steps to address the capacity gaps. Resp: MINAGRI| Stage: Implementation| Due Date : On-going| Status: Not yet due
Capacity Rating: Moderate Description: With the merger of RSSP and LWH implementation Unit contact management for multiple large contracts may pose a challenge.
Risk Management: Multiyear plan for works’ schedules across all potential sites (as and when identified) should be developed by the technical teams on the Project, in conjunction with procurement to ease multiple contract management.
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Flexible staffing such as short term contracts will be implemented by the Project under the constant advice from the Bank team to help the existing team manage the work load to good levels on work demand basis. Resp: MINAGRI| Stage: Implementation| Due Date : Continuous| Status: Not yet due
Governance Rating: Low Description: Decision making, accountability and oversight processes are organized under the RSSP/LWH Program Manager. This may pose heavy workload that can impact on the quality of decisions. While the quality has been satisfactory thus far, a scale up would increase the burden on the project management.
Risk Management: Based on a technical staff assessment, an operational support assistant was recruited to assist the Project Management. There is need however for continuous monitoring as the RSSP 3 becomes effective. Resp: MINAGRI| Stage: Implementation | Due Date : Continuous | Status: Not yet due
Project Risks Design Rating: Low
Description: Relatively weak capacity in complete set of skills required for a project of this nature i.e. technical/engineering, extension, commercial agriculture and marketing may impede the project’s achievement of the PDOs.
Risk Management: RSSP3 is the third phase of an APL, which started implementation in 2001. Thus far, GoR has accumulated wide experience in dealing with capacity constraints. For example, MINAGRI’s Irrigation Task Force and Dam Safety Panel are in place to provide additional back-stopping and quality control to the project, implementation manuals will be updated to reflect the increased focus of RSSP3, agricultural marketing function will be strengthened in collaboration with lessons from other projects (e.g. LWH), agricultural extension model, including land husbandry will be developed to document the experiences and lessons from other projects, Water User Association Unit has been established to provide capacity building to the newly established WUAs. Resp: MINAGRI| Stage: Implementation| Due Date : Continuous | Status: Not yet due
Description : Capacity for financial management and procurement management, while of good quality, is insufficient for a large scale up. Although the sector has extensive experience with Bank systems, and there is confirmed GoR’s budgetary commitment to the Project at the Cabinet level (i.e. enshrined in the organic budget law), retention of critical decentralized level staff may be an issue due to relatively low remunerative package.
Risk Mitigation: In line with the recommendations for scaling-up capacity of the merged unit, earlier preparation including the Appraisal mission have recommended additional staff and institutional support for improved technical, FM and procurement capacity for the merged structure. Decentralized Capacity: Retention issues at decentralized level will be addressed prior to effectiveness with a review and adjustment of the remunerative package to align the RSSP scale more closely to those of other decentralized activities in
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Rwanda. This is already happening as part of the salary review exercise which is awaiting the approval of MIFOTRA. Resp: MINAGRI| Stage: Implementation| Due Date : Continuous | Status: Not yet due
Description: Low availability of contractors for the type of works required for RSSP3 physical works poses some risk to implementation of project activities. Experience from other phases of the APL as well as of other related activities (e.g. LWH) have demonstrated constraints on local capacity for works contracts (i.e. skills for comprehensive land husbandry, machinery, supervision capacity) and a low number of bidders, particularly for dam construction. The result is high bids and potential for delays.
Risk Mitigation : This risk will be mitigated through the following : (i) Tenders in international technical magazines and websites and in regional publications in addition to the Dgmarket/UNDB and local newspaper will expand the current scope of tender and improve competition; (ii) Grouping similar dam work tenders across multiple RSSP3 sites and across MINAGRI projects and programs will make the tenders more attractive to international bidders and improve competition and quality of capacity; (iii) Revisiting evaluation criteria in order to tackle constraints to competition. Tender requirements as a possible source of rejection of a number of proposals, reducing bid competition are being reviewed with an eye to maintaining final quality; (iv) Development of local capacity such as ongoing efforts to train local agricultural, land husbandry and engineering graduates through internship programs has been introduced. Resp: MINAGRI| Stage: Implementation| Due Date : Continuous | Status: Not yet due
Social & Environmental Rating Moderate Description: The project implementation team has a good track record in implementation of the RAPs and EAs under the previous projects. There is a need to ensure that, if necessary, dam safety measures are properly implemented, given the dearth of experience in medium to large size dam management in Rwanda.
Risk Management: MINAGRI will provide (every semester) status reports on progress of EAs and RAPs, and has triggered OP 4.37 – Dam Safety. A review will be done to determine whether there is need to establish a full Dam Safety Panel or not. In addition, the project has already prepared an ESMF, PMP, RPF which have all been disclosed in-country and on Infoshop.
Resp: MINAGRI| Stage: Implementation| Due Date : |Continuous Status: Not yet due
Program & Donor Rating: Low Description: The RSSP 3 Project is part of the larger GoR interventions to promote irrigation and value chain improvements. The RSSP series have been taken as a model by other DPs with similar interventions (IFAD, AfDB, JICA). Lack of continued coordination among DPs may pose a risk of duplication of intervention and a risk to the success of the Project.
Risk Management: The SWAP coordination document signed by most partners (the SWAp MoU) is actively implemented and forms the framework for the highly active ASWG and its SWAp sub-working group are good avenues for further coordination.
Resp: MINAGRI and DPs| Stage: Implementation| Due Date : Continuous|
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Status: Not yet due Delivery Monitoring & Sustainability Rating: Moderate
Description: Sustainability issues lay at the heart of the innovative implementation design of the RSSP3. By contributing to the establishment, capacity building and experience of the SWAp implementation structure of the Ministry for both RSSP3, LWH and similar programs, the project ensures that implementing agencies have the technical and institutional capacity to maintain project initiatives after project completion (as they form part of the permanent SWAp structure in the Ministry).
Risk Management: M&E systems of the parent project, including an innovative ICT component have consistently been rated as satisfactory. It is important to maintain the rolling baselines and sufficient M&E capacity as RSSP3 becomes effective. This is particularly important to monitor identified service delivery constraints at the decentralized level, which are being addressed for scale up. With a considerable increase in size and scope of activities, it is critical to maintain good contract management. Contract Management – a Multiyear plan for works’ schedules across all potential sites (as and when identified) should be developed by the technical teams on the Project, in conjunction with procurement to ease multiple contract management.
Resp: MINAGRI | Stage: Implementation| Due Date : Continuous| Status: Not yet due
Implementation Risk Rating: Moderate Comments:
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ANNEX 5: IMPLEMENTATION SUPPORT PLAN
RWANDA: THIRD RURAL SECTOR SUPPORT PROJECT
I. Support to Implementation 1. The strategy for the implementation support (IS) for the RSSP3 will focus on addressing the critical issues that may affect project implementation as highlighted in the risk profile of the project (i.e., ORAF, Annex 4). The implementation support plan aims to enhance the client’s quality delivery of the proposed project interventions. As such, the IS will specifically focus on: (i) implementation of the risk mitigation measures defined in the ORAF; and (ii) regular provision of implementation support through semi-annual standard Bank implementation support missions, including technical, institutional, safeguards (environment, social) and fiduciary aspects (financial management and procurement). Since the majority of the task team will be based in country, the team will encourage monthly implementation review meetings so that implementation issues should be addressed in a proactive and timely manner.
2. Semi-annual Bank implementation support missions (including field visits to investments financed under Components 1 and 2) and component 3 activities would concentrate in the follows areas:
• Strategic: To the extent possible, implementation support missions would visit the project implementation team and other stakeholders to: (i) review project activities; and (ii) draw appropriate action plans to address identified implementation challenges, including a clear monitoring and follow-up of progress.
• Technical: Implementation support missions would concentrate on the implementation of the entire project activities at all levels of project implementation. Randomized field visits would serve to verify compliance with the Project Operational Manual and stimulate adjustments to project design, as needed, given results on the ground. During the field visits, the mission will interact with both implementers and beneficiaries in order to validate the progress reports provided. Technical specialists on the team (Engineers/irrigation/land husbandry specialists) will provide technical support towards component 1 activities while market chain/ private sector specialists will provide technical support towards value-chain development and capacity building activities (Component 2).
• Safeguards. The Bank team’s environment and social safeguard specialists will continue providing technical oversight towards the implementation of the mitigation tools that have been developed during project preparation to address the identified risks. Since this is a framework project, preparation of other tools such as EIAs for the newly identified project sites will be undertaken by consultants hired through the RSSP/LWH implementation team. The Bank team members will review the tools developed through consultants.
• Fiduciary: The Bank’s financial management and procurement specialists would provide timely oversight and targeted training to financial management and procurement specialists under the merged implementation structure prior to project Effectiveness and through periodic implementation support during project implementation. These specialists would: (i) prepare staff to work with implementation entities at the provincial, district and community levels in conducting procurement under their respective subprojects, in compliance with the Procurement and Anti-Corruption Guidelines and the Project Operational Manual; (ii) ensure the capacity of staff to
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manage flow of funds and simple accounting procedures, in line with FM guidance; and (iii) work with the project team in building its overall financial management and procurement capacity to improve and facilitate project management. Implementation support towards the project’s financial management arrangements would be conducted semi-annually and, as needed, in response to client needs. Procurement supervision would also be carried out semi-annually during regularly-scheduled Bank implementation missions and/or as when need arises based on client requests.
• Client Relations: The Task Team Leader (TTL) would: (i) coordinate Bank implementation support to ensure consistent project implementation, as specified in the legal documents (i.e., Financing Agreement, Project Operational Manual); and (ii) meet regularly with the client’s senior representatives (i.e., Minister, Permanent Secretary and Project Coordinator) to gauge project progress in achieving the PDO and address implementation bottlenecks, as they arise.
Implementation Support Plan (based on the 18 months Procurement Plan)
Time Focus Skills Needed Resource Estimate (US$)
Partner Role
First twelve months
Supporting development works for identified (and designed) marshlands and hillsides
Irrigation and rural infrastructure engineer, land husbandry specialist, Safeguards, financial management and procurement, agriculture specialist/TTL
150,000/year To be determined
12-48 months Supporting development and completion of works for identified (and designed) marshlands and hillsides; economic infrastructure works; farmer organization, capacity building of WUAs and Cooperatives
Irrigation and rural infrastructure engineer, land husbandry specialist, Safeguards, financial management and procurement, agriculture specialist/TTL, institutional capacity building specialist, market/value-
150,000/year To be determined
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chain development specialist
Other Support to the merged project implementation structure (continuous throughout the project implementation).
Financial Management Specialist, Procurement Specialist, TTL
To be determined
II. Skills Mix Required
Skills Needed # Staff Weeks per
FY #Trips per
FY Comments
Agricultural Economist/Specialist - Task Team Leader
6 3 Country-based
Procurement Specialist 3 2 Country-based Financial Management Specialist 3 2 Country-based Irrigation and Rural Infrastructure Engineer
2 1 FAO-CP, Rome
Environment Safeguard Specialist 3 2 HQ-based Social Safeguard Specialist 3 2 HQ-based Monitoring/Evaluation Specialist 3 2 HQ-based Institutional Capacity Building Specialist
5 2 FAO-CP, Rome
Legal Counsel 1 - HQ-based Market chain/ Private Sector Specialist
5 3 Regional-based
Team Assistant/Logistics 3 3 Country-Based
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ANNEX 6: ECONOMIC AND FINANCIAL ANALYSIS RWANDA: THIRD RURAL SECTOR SUPPORT PROJECT
A. Conceptual Framework for the Economic and Financial Analysis
1. Project Description: The RSSP3 aims to increase the agricultural productivity of project area marshlands and hillsides and to strengthen the sustainable participation of women and men beneficiaries in market-based value chains. The three components and their budgets with prorated contingencies are: (i) Infrastructure for marshland, hillside and commodity chain development (US$66 million); (ii) Strengthening capacity for marshland and hillside commodity chain development (US$8.5 million); and (iii) Project coordination and support (US$5.7 million).
2. Methodology: Three main benefit streams were included in this analysis: (i) Increased value of production on marshlands; (ii) Increased value of production and environmental benefits on hillsides; and (iii) Returns on investment in infrastructure for commodity chain development. Annual benefits and costs of marshlands and hillsides developments were calculated using representative farm models aggregated up to the project level. Similarly, annual returns on rural infrastructure investments were calculated for representative post-harvest infrastructure and then aggregated up to the project level1. A 21-year discounted cash flow model was used to assess the economic and financial prospects of the proposed project. The economic and financial analysis incorporated uncertainty explicitly through quantitative risk analysis using Monte Carlo simulation in the discounted cash flow model. This type of simulation model uses random sampling to account for all values of uncertain variables deemed as possible in the implemented probability distribution ranges. The Monte Carlo simulation model was run for 5,000 iterations in each simulation2
.
3. Assumptions: Due to negligible trade barriers and exchange rate distortions financial and economic prices were assumed identical with one exception. Due to limited alternative employment opportunities for family labor, a shadow price of unpaid family labor was assumed to be 25 percent below the cost of unskilled hired labor. Experts on the project team identified which input variables could be assumed to be fixed, as in a deterministic analysis, and which variables should be treated as stochastic due to their inherent uncertainty. A combination of historical data and expert knowledge was used to quantify the deterministic variables as well as to assign probability distribution ranges to the stochastic variables. All costs and prices were inflation adjusted to June 2011. A discount rate of 12 percent was used to calculate net present value of the investment in accordance with typical Bank practice (as described, e.g., by Belli et al. 1998, p. 179), and for coherence with past practice in Rwanda agricultural operations. The exchange rate was set to 610 RWF per US$. 4. Deterministic variables: The deterministic variables consisted of: Farm cropping patterns; Labor requirements; Off-site environmental benefits from carbon sequestration; Benefits from infrastructure investments; Capacity building costs (i.e., component 2), and Project management costs (i.e. component 3). All assumptions are listed at the end of this Annex.
1 Investment benefits and costs were calculated for grain drying floors and storage facilities. The project will support post harvest facilities, feeder road improvements, and other economic infrastructure as determined by demand. 2 The use of Monte Carlo simulation in evaluating development projects has been outlined, for example, by the World Bank Institute in Belli et al. (2001) and in Asian Development Bank (2002). At the World Bank, risk analysis for project appraisal was developed and promoted by Pouliquen (1970) and Reutlinger (1970). Other comprehensive background publications for quantitative risk analysis include Clemen and Reilly (2001), Mun (2006), and Vose (2008).
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5. Stochastic variables: The stochastic variables consisted of: Capital investment costs on marshlands and hillsides; Crop yields; Crop output prices; Labor unit costs; Planting materials and unit costs; Fertilizer use and unit costs (manure, NPK inorganic fertilizer, and urea); Crop chemical costs; Rice transport unit costs; Irrigation operation and management costs; Economic price of carbon sequestration; and Capital and operating costs for infrastructure investments. All assumptions are listed in Table A6.4 and A6.5.
B. Economic and Financial Benefits of the Project
6. The economic and financial analysis shows that if the project implementation is effective and efficient, project-supported investments will bring substantial benefits to farming communities in the project area. As shown in Table A6.1, the financial ENPV of the project was estimated at RWF 133 billion (US$218 million) with a standard deviation of RWF 6 billion. The economic ENPV was estimated at RWF 138 billion (US$228 million) with the same standard deviation - compared to the project budget of RWF 50.02 billion (US$82 million). The economic EPVR was 4.9 with a standard deviation of 0.2. Neither the financial nor the economic ENPV were expected to fall below zero within the parameters used in this analysis. It should be noted that these estimated benefits understate the total benefits of the project: The project can be expected to contribute to increased production of commodities on marshlands and hillsides outside the project area; and benefits are also expected to extend beyond the 21 year time-frame included in this analysis. 7. Project-supported investments on hillsides will generate over half of the project’s financial and economic benefits. Project-supported investments on hillsides adjacent to irrigated marshlands will result in increased and more stable production of important food crops. Activities will include promotion of cost-effective soil and water conservation technologies and promotion of SLM practices. With the proposed budget of RWF 9.1 billion (US$14.9 million), the estimated financial ENPV is RWF 71 billion with a standard deviation of RWF 5.3 billion, while the economic ENPV was smaller at RWF 72 billion with the same standard deviation. Because farmers will not receive direct compensation based on carbon sequestration in this project, this only increases the economic net benefits by RWF 0.4 billion assuming environmental benefits of carbon sequestration at 0.5 t C per ha per year and an economic carbon price between US$17 and 25/tC. 3 The Economic Expected Present Value Ratio (EPVR) was 12.4 with a standard deviation of 2.4
Note that the expected return includes a prorated share of the capacity development budget in component 2 (US$1.9 million).
8. Project-supported investments on marshlands are expected to generate over 30 percent of the financial and economic benefits. The project will support development of gravity irrigation schemes. In the absence of irrigation, the major crop grown in the marshlands is sweet potato, which is cultivated using traditional methods and harvested once a year. Project-financed investments will provide farmers with reliable access to irrigation, allowing them to shift to cultivation of higher-value crops with two harvest seasons per year. With the proposed budget of RWF 28 billion (US$45.7 million, the estimated financial ENPV from these marshlands investments were RWF 39 billion with a
3 The estimated range of economic or social prices in the RSSP2 Project Appraisal Document was based on findings in Fankhauser (1995). This compares to financial prices such as those used in Biocarbon Fund projects where activities that result in increased carbon sequestration are typically compensated at a level of USD 4-5/t C. 4 It is noted that rates of return (EERR) could only be calculated when costs exceeded benefits in year 1 – i.e., when there was a net investment in year 1. An EPVR is calculated by dividing the net present value of net benefits by the net present value of capital/project investment costs. An EPVR of one indicates a project that breaks even at the selected discount rate.
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standard deviation of RWF 2 billion (see Table 1 of this Annex). Economic ENPV was estimated at RWF 43 billion also with a standard deviation of RWF 2 billion. The Economic Expected Rate of Return (EERR) was estimated at 55 percent with a standard deviation of 4 percent. Note that the expected return includes a prorated share of the capacity development budget in component 2 (US$5.9 million).
9. Investments in grain drying floors and storage facilities are expected to generate 19 percent of the financial and economic benefits. Use of project-financed drying floors will ensure faster and more complete drying of crops thereby reducing storage losses and improving the quality of products so they can command higher prices in the market. Use of project-supported grain storage facilities will reduce storage losses and allow crops to be sold at higher prices compared to those prevailing immediately following the harvest. Under the assumption that the project budget of RWF 3.4 billion (US$5.5 million) afforded the construction of 90 drying floors and 45 storage facilities, the estimated financial and economic ENPV was RWF 26 billion with a standard deviation of RWF 1 billion. The economic EPVR was 12 with a standard deviation of 0.4. Note that the expected return includes a prorated share of the capacity development budget in component 2 (US$0.7 million).
C. Sensitivity of Economic Benefits of the Project 10. Main drivers behind the expected project returns: The estimated project return was not very sensitive to changes in the stochastic variables. For example, it was found that the main driver of overall project returns was the price of paddy rice whereby a possible 6 percent price increase would increase the project return by less than 1 percent5
11. Component 1 budget: Given the assumptions made in this model, with a fixed project scope there is a 29 percent chance that the budget for component 1 could be exceeded due to uncertain investment unit costs. The investment costs could exceed the US$66 million budget by 9 percent or US$6 million. When the budget was maintained at US$66 million, the change in the expected scope lead to an increased variability of project returns (standard deviation doubled from RWF 6 to 12 billion).
. And because over half of the expected project returns were generated through the sub-component for hillsides development, the primary drivers were crop yields and prices on hillsides, particularly banana and cassava. For example, a 10 percent increase in the with-project banana yield increased the economic ENPV by RWF 0.9 billion or <1 percent. The table also shows that, a 30 percent increase in the hillsides capital investment cost would lead to a 0.4 percent reduction in project return. Rice and sweet potato prices and yields were the primary drivers on marshlands. The price of rice, monthly material cost, and initial capital costs were the primary drivers of returns from infrastructure investments.
12. Sensitivity analyses: A range of additional analyses were conducted in the stochastic model to investigate the sensitivity of the results to different factors. Firstly, analyses indicated that changing the hillsides cropping pattern in the with-project situation had little impact on the economic ENPV but switching from bananas to cassava increased the variability of project returns due to higher cassava price variability. Secondly, some risk management may be called for to avoid negative returns in the infrastructure sub-component by ensuring that expected benefit levels from drying floors and storage
5 The change in economic ENPV resulting from a change in a stochastic variable was assessed using a regression analysis of the simulation data. A linear regression coefficient was estimated between the dependent value, economic ENPV, and each of the independent/ stochastic variables. The estimated regression coefficients indicated by how much the economic ENPV changed when a stochastic variable increased by one standard deviation.
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facilities do not fall by more than 5 percent-points. Lastly, results indicated that the economic ENPV of the project was not sensitive to either crop price autocorrelation6
or yield-rainfall correlations.
D. Remarks about the methodology 13. Deterministic vs. stochastic model results: Compared to the deterministic model, the stochastic model estimated 88 percent higher returns from the hillsides component combined with a small reduction in net returns from the marshlands and infrastructure components. Total project economic ENPV was 29 percent higher than economic NPV in the deterministic model. This was due to considerable upside in the assumed ranges for the stochastic variables. The deterministic analysis uses the most likely variable estimates (i.e., modes) and the stochastic analysis uses the full range of variable estimates, which in this case incorporated significant upsides (i.e., positively skewed distributions where the expected values were higher than the mode).
14. Switching values calculated in the deterministic model also showed that the economic NPV was not very sensitive to changes in input assumptions and that rice price and hillsides crop yields and prices were the most dominant factors. In general, the differences between the rankings of the variables in the two models were due to the fact that the stochastic model incorporated probability distribution functions for each variable, while the switching value analysis used fixed values thereby ignoring the probability of variables changing. Some variables had switching values but were not significant or not included in the stochastic sensitivity analysis because they were assumed fixed/deterministic and had not been assigned probability distribution functions (for example, where some with-project planting materials and costs were the same without the project).
15. It has been noted that, a quantitative risk analysis typically requires more input data than a deterministic analysis; on the other hand it offers the opportunity to acknowledge known uncertainties. While the project team has endeavored to examine the most important uncertain variables affecting the project through this quantitative risk analysis, other sources of risks that could not be quantified in this discounted cash flow model were analyzed qualitatively in the Operational Risk Assessment Framework (ORAF).
Table A6.1: NPV, ERR, PVR by component with stochastic and deterministic models Description Stochastic Model Deterministic Model µ = Mean σ = Standard Deviation
Financial ENPV 1
Economic ENPV 1
EERR2 Economic EPVR3
Financial NPV 1
Economic NPV 1
ERR 2 Economic PVR3
RWF million RWF million % ratio RWF million RWF million % ratio
1. Marshlands µ 39,476 43,414 55% 3.3 40,419 44,199 58% 3.4 σ 2,359 2,350 5% 0.1 2. Hillsides: - Crop production µ 70,988 71,938 785% 12.4 37,317 38,229 175% 11.1
σ 5,335 5,335 5208% 1.8 - Environmental Benefits µ 0 384 N/A incl. above 0 367 σ 0 9 N/A incl. above 3. Infrastructure µ 25,818 25,853 N/A 11.9 27,679 27,714 N/A 12.8 σ 976 976 N/A 0.4 Project Management 4 µ -2,658 -2,658 N/A N/A -2,658 -2,658 N/A N/A
6 Autocorrelation can be estimated on a time series in statistical analyses. However, in a Monte Carlo analysis autocorrelation is not a “Problem” but an opportunity to project price developments. So autocorrelation analysis may be incorporated when projecting the development of prices over a time period rather than assume completely random prices. The sensitivity analysis added such a time-dependency where price in year t was equal to the price in year (t-1) plus a random component. This effect is what the economic ENPV was not sensitive.
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σ 0 0 N/A N/A Total Project µ 133,624 138,932 112% 4.9 102,757 107,852 93% 4.4 σ 6,204 6,199 14% 0.2 Note 1: Discount rate = 12%. Note 2: EERR and ERR could not be calculated when Year 1 net benefit was positive (no net investment). Note 3: EPVR and PVR=NPV of net benefits divided by the NPV of capital/project investment costs. Note 4: Project Management = Project Component 3.
PAD Figure 1: Chart of economic Expected Net Present Value (ENPV)
Note 1: ENPV = Expected Net Present Value (RWF million)
Table A6.2: Sensitivity analysis – main stochastic variables driving the total economic ENPV
Stochastic Variable
A 1 StdDev change in variable.. ..leads to change in ENPV Mean Standard
Deviation StdDev/ Mean
Change RWF million
Share of ENPV
Paddy rice-Price-W/P-Season A 260 16 6% 899 0.6% Banana-Yield-WO/P 31,667 5,137 16% -895 -0.6% Banana-Yield-W/P 63,333 6,237 10% 892 0.6% Cassava-Price-W/P 167 31 19% 606 0.4% Sweet Potato-Yield-WO/P 9,500 2,246 24% -524 -0.4% Hillsides-Initial hillside capital investment 1,471 421 29% -475 -0.3% Cassava-Price-WO/P 183 42 23% -450 -0.3% Paddy rice-Yield-W/P-Season A 6,500 204 3% 332 0.2% Banana-Planting Material-WO/P 933 301 32% 315 0.2% Banana-NPK-W/P 153 10 7% -248 -0.2% Note 1: Table only includes the variables with the most impact. Annual variation in variables has different level of impact on the economic ENPV. W/P = with-project situation; WO/P = without-project situation
Table A6.3: Switching values in a deterministic model - total economic NPV Rank (Determ. Model)
Variable Base Assumption
Switching Value 1
Change from Base
Rank (Stoch. Model) 2
1 Paddy rice-Price-W/P-Season A 260 98 -62% 1 2 Banana-Yield-WO/P 30,000 84,118 180% 2 3 Cassava-Planting Material-W/P 6,667 29,350 340% - 4 Maize-Bean Intercrop-Planting Cost-WO/P-Season A 500 2,224 345% - 5 Fruit Trees-Price-WO/P 600 3,068 411% 12 6 Fruit Trees-Yield-WO/P 16,000 81,816 411% - 7 Sweet Potato-Yield-WO/P 9,500 56,337 493% 5 8 Sweet Potato-Price-WO/P 67 397 493% - 9 Marshlands-Initial irrigation capital investment 7,610 50,120 559% - 10 Paddy rice-Labor-W/P-Season A 400 3,015 654% #N/A
63
Note 1: Switching value is the change required to the variable to obtain Economic NPV equal to zero. Note 2: The rank determined in a stochastic model incorporates the assigned probability distribution functions for each variable (see Table A6.2).
* “-“ indicates a stochastic variable that had no significant impact on project return. * “#N/A” indicates a deterministic variable that was not assigned a probability distribution function.
V. References
Asian Development Bank (2002). Handbook for Integrating Risk Analysis in the Economic Analysis of
Projects, Asian Development Bank, Manila. Belli, P., J. R. Anderson, H.N. Barnum, J.A. Dixon, and J.-P. Tan (1998). Handbook on Economic
Analysis of Investment Operations, Operational Core Services Network Learning and Leadership Center, World Bank, Washington, DC.
Belli, P., J. R. Anderson, H.N. Barnum, J.A. Dixon, and J.-P. Tan (2001). Economic Analysis of Investment Operations: Analytical Tools and Practical Applications, WBI Development Studies, World Bank, Washington, DC.
Clemen, R.T and T. Reilly (2001). Making Hard Decision with DecisionTools. South-Western Cengage Learning, Mason, Ohio.
Fankhauser, S. (1995). Valuing Climate Change. The Economics of the Greenhouse. Earthscan, London.
Mun, J. (2006). Modeling Risk. Applying Monte Carlo Simulation, Real Options Analysis, Forecasting, and Optimization Techniques. John Wiley & Sons, Inc. Hoboken, New Jersey.
Pouliquen, L. Y. (1970). Risk Analysis in Project Appraisal. Staff Occasional Papers No. 11. World Bank, Washington, DC.
Reutlinger, S. (1970). Techniques for Project Appraisal under Uncertainty. Staff Occasional Papers No. 10. World Bank, Washington, DC.
RSSP (2010). Rural Sector Support Program – Phase 2. Mid-Term Review Report. Government Project Team. September 21.
Vose, D. (2008). Risk Analysis: A Quantitative Guide. Third Edition. Wiley. Chichester. World Bank (2005). Mid-term Review Mission Aide Memoire. Rwanda Rural Sector Support Project.
World Bank, Washington, DC. January-February 2005. World Bank (2008a). Implementation Completion and Results Report for the Rwanda Rural Sector
Support Project. Report No: ICR0000675. World Bank, Washington, DC. World Bank (2008b). Project Appraisal Document for the Rwanda Second Rural Sector Support
Project. Report No: 43695-RW. World Bank, Washington, DC. World Bank (2010). Technical Document to Aide Memoire. Mid-Term Review and Implementation
Support Mission for Rwanda’s Second Rural Sector Support Project (RSSP 2). 4-15 October 2010. World Bank, Washington, DC.
World Bank (2011a). Aide Memoire. Rural Sector Support Program (RSSP). RSSP 2 Implementation Support Mission. RSSP 3 Preparation Mission. 25 July-5 August 2011. World Bank, Washington, DC.
World Bank (2011b). Aide Memoire. Rural Sector Support Program (RSSP). RSSP 3 Appraisal Mission. 28 November – 9 December 2011. World Bank, Washington, DC.
World Bank (2011c). Economic and Financial Analysis. Rural Sector Support Program (RSSP) 3. September. World Bank, Washington, DC.
64
F. Data Sources CountrySTAT. Monthly national average rainfall data for Rwanda (1997-2008). Accessed 30 August
2011. http://www.countrystat.org/rwa. e-Soko. National average monthly prices by commodity (January 2006 – April 2009) and Daily prices
by commodity, district and province (May 2009 - June 2011). Accessed 25 July 2011. http://www.esoko.gov.rw.
FAOSTAT. National average annual prices by crops (1991-2009). Accessed 18 August 2011. http://faostat.fao.org/
MINAGRI. Average yield data by commodity, seasons, regions (1998-2009). Accessed July 2011. http://amis.minagri.gov.rw.
National Institute of Statistics of Rwanda. Monthly Consumer Price Index, CPI (2006-2011). Accessed 25 July 2011. http://www.statistics.gov.rw
World Bank. The official Manufactures Unit Value Index (MUV). Accessed 18 August 2011. http://data.worldbank.org/data-catalog/MUV-index.
World DataBank. Annual Consumer Price Index, CPI (1991-2009). Accessed 18 August 2011. http://databank.worldbank.org.
65
Assumptions for Deterministic Variables
Table A6.4: Representative farm cropping patterns, planting and harvest times, and labor requirements
Crop
Cropping Pattern
Planting Harvest
Labor Requirement Share of area days/ha
Without-project
situation
With-project
situation
Without-project
situation
With-project
situation Sweet Potato 100% Annual Annual 250
Paddy rice 100% Annual, 2 seasons Annual, 2 seasons
400
Banana 47% 42% Every 10 yrs Annual after 1 yr
800 800
Maize-Bean Intercrop 29% 26% Annual, 2 seasons Annual, 2 seasons
120 350
Cassava 18% 16% Every 18 months Every 18 months
400 400
Fruit Trees 6% 5% Once in Project Period
Annually after 2 yrs
50 50
Napier 11% Annual Annually 90
Source: RSSP3 project team.
Table A6.5 Infrastructure investments - operating periods, quantities, and loss foregone Infrastructure Number of periods Quantity per period Quantity loss foregone, % Price loss foregone, % Drying Floors 4 months/ year 225 t/month 15% 15% Storage Facilities 2*3-months/ year 400 t/ 3-months 15% 20% Source: RSSP3 Project Team.
Table A6.6: Probability Distribution Ranges for Stochastic Variables
Description Unit Without-project situation With-project situation Minimum Most Likely Maximum Minimum Most Likely Maximum
Marshlands-unit investment USD/ha 7,610 7,610 8,525 Hillsides-unit investment USD/ha 875 875 2,663 Drying Floors-unit investment RWF m/unit 14 15 18 Storage Facilities-unit investment RWF m/unit 40 43 45 Yield-Sweet Potato kg/ha 4,000 9,500 15,000 Yield-Paddy rice kg/ha 6,000 6,500 7,000 Yield-Banana kg/ha 20,000 30,000 45,000 50,000 60,000 80,000 Yield-Maize-Bean Intercrop kg/ha 1,000 1,500 2,000 3,500 4,000 4,500 Yield-Cassava kg/ha 8,000 10,000 13,000 25,000 27,500 30,000 Yield-Fruit Trees kg/ha 16,000 16,000 16,000 16,000 16,000 16,000 Yield-Napier kg/ha 8,000 8,000 8,000 Price-Sweet Potato RWF/kg 60 67 80 Price-Paddy rice RWF/kg 220 260 300 Price-Banana RWF/kg 70 80 115 70 80 115 Price-Maize-Bean Intercrop RWF/kg 80 120 240 100 120 135 Price-Cassava RWF/kg 110 140 300 100 150 250 Price-Fruit Trees RWF/kg 200 600 800 300 500 600 Price-Napier RWF/kg 30 80 80 Labor price - financial RWF/day 700 800 1,000 700 800 1,000
66
Labor price - economic RWF/day 525 600 750 525 600 750 Planting Material-Sweet Potato kg/ha 200 250 300 Planting Material-Paddy rice kg/ha 15 15 20 Planting Material-Banana plants/ha 100 1,200 1,500 600 625 650 Planting Material-Maize-Bean kg/ha 40 50 70 25 30 30 Planting Material-Cassava cutting/ha 4,000 7,000 7,333 6,667 6,667 6,667 Planting Material-Fruit Trees plants/ha 150 150 156 150 150 156 Planting Material-Napier cutting/ha 2,000 2,500 3,000 Planting Costs-Sweet Potato RWF/kg 70 130 135 Planting Costs-Paddy rice RWF/kg 350 400 450 Planting Costs-Banana RWF/plant 300 350 400 300 350 400 Planting Costs-Maize-Bean RWF/kg 400 500 600 400 500 600 Planting Costs-Cassava RWF/ cutting 3.5 5.0 6.0 3.5 5.0 6.0 Planting Costs-Fruit Trees RWF/plant 500 500 600 500 500 600 Planting Costs-Napier RWF/cutting 2.0 2.0 3.0 Manure price RWF/kg 5 10 20 5 10 20 Manure-Banana kg/ha 4,000 5,000 10,000 5,000 8,000 10,000 Manure-Maize-Bean Intercrop kg/ha 500 700 1,000 1,000 1,000 2,000 Manure-Cassava kg/ha 1,200 1,500 1,800 5,000 6,000 7,000 Manure-Fruit Trees kg/ha 500 1,200 1,500 2,000 3,000 4,000 NPK-Financial RWF/kg 300 350 400 NPK-Economic RWF/kg 300 350 400 NPK-Paddy rice kg/ha 200 200 250 NPK-Banana kg/ha 130 150 180 NPK-Maize-Bean Intercrop kg/ha 130 150 180 Urea-Financial RWF/kg 400 450 480 400 450 480 Urea-Economic RWF/kg 400 450 480 400 450 480 Urea-Paddy rice kg/ha 50 100 100 Urea-Maize-Bean Intercrop kg/ha 0 50 50 0 50 50 Crop Chemicals-Paddy rice RWF/ha 10,000 12,500 15,000 Crop Chemicals-Maize-Bean RWF/ha 6,000 10,000 13,000 Additional rice transport costs RWF/kg 10 15 15 Irrigation O&M costs-Paddy rice USD/ha 15 50 55 Carbon Price USD/t C 17 20 25 Drying Floors-Material Costs RWF m/month 1.9 2.0 3.0 Drying Floors-Labor day/month 15 18 20 Storage Facilities-Material Costs RWF m/month 4.0 4.3 4.5 Storage Facilities-Labor day/month 15 18 20
67
ANNEX 7: MAJOR RELATED PROJECTS FINANCED BY THE BANK AND/OR OTHER AGENCIES
RWANDA: THIRD RURAL SECTOR SUPPORT PROJECT
Sector issue addressed Project status
Latest Supervision (ISR) ratings
Implementation progress (IP)
Development objective
(DO) Rwanda: Land Husbandry Water harvesting and Hillside Irrigation (LWH)with co financing from GAFSP, USAID and CIDA Sectors: erosion control, hillside irrigation, value chain
On-going MS S
Rural Sector Support Project Phase 2 Sectors: Marshland development, SWC, rural infrastructure, extension, marketing
On-going S S
Rwanda Electricity Access Scale-Up Project On-going S S Rwanda Rural Roads Pipeline N/A N/A Integrated Management of Critical Ecosystems Sectors: Agriculture, Forestry, Environmental management Completed S S
Other Agencies IFAD / DFID / MINAGRI – PSTA Support Project (PAPSTA) Sectors: Agriculture, Forestry, Central Government Administration (SWAp)
On-going N/A N/A
IFAD – Kirehe Community-based Watershed Management Project (KWAMP) Sector: Agriculture, SWC Community Development
On-going N/A N/A
IFAD / MINAGRI – Project (PRICE) Sectors: cash crops ,export crops, fair trade
On-going N/A N/A
African Development Bank / MINAGRI – Livestock Infrastructure Development Support Project (LISP) Sector: Agriculture, livestock, rural infrastructure
On-going N/A N/A
African Development Bank / MINAGRI - Bugesera Agricultural Development Support Project (PADAB) Sectors: Food security, agric development, irrigation, SWC, inputs (seeds), PO's, rural infrastructure (agro-processing, post-harvest)
On-going N/A N/A
African Development Bank / MINAGRI - Bugesera Rural Infrastructure Support Project (PAIRB) Sectors: Rural infrastructure, agric development, irrigation, SWC, inputs (seeds), PO's.
On-going N/A N/A
African Development Bank / MINAGRI – Fisheries and Inland Lake Development Project(PAIGELAC) Sectors: Fishery sector development, inland lakes development, Project
On-going N/A N/A
African Development Bank / MINAGRI - Dairy Cattle Development Support Project (PADEBL) Sector: Agriculture, livestock
Completed N/A N/A
Belgium - Development of Seed Production Capacity (IFSR) Sector: Agriculture
Completed N/A N/A
Belgium- Project for Support to PSTA II On-going N/A N/A
68
Sector issue addressed Project status
Latest Supervision (ISR) ratings
Implementation progress (IP)
Development objective
(DO) Sector: Agriculture Extension and Research Belgium- Project for Support to National Extension Services Sector: Agriculture Completed N/A N/A
Belgium- Improvement of access of farmers to quality plant materials for roots, tubers and fruit crops Sectors: Crop production, roots & tubers, multiplication, input supply, extension, cooperatives
completed
N/A N/A
STABEX : Erosion control Sector: SWC, radical terracing Completed N/A N/A
STABEX: Appui aux projets de diversification Sector : Crop diversification, export promotion, M&E, development crop varieties
Completed N/A N/A
Royal Netherlands Embassy: Cold Storage Facilities Sectors: Rural infrastructure, cold storage, cold chains, horticultural export, produce quality, PO's
Completed N/A N/A
Royal Netherlands Embassy /ISAR : Commodity chain development research programme Sectors: Agric research, commodity chain for potatoes, horticulture, wheat, cows milk production, rural infrastructure
Completed
N/A N/A
GEF/UNDP Sustainable LU Management Project Sectors: Sustainable land use, SWC, extension services, policy & planning
On-going N/A N/A
WTO/World Bank Rwanda Horticulture Export Standards Initiative Sectors: Horticultural export, export standards
Completed N/A N/A
GoR: Masterplan for the Development of Irrigation in Rwanda Sectors: Irrigation development, master plan preparation
Completed N/A N/A
GoR: Quick Win Irrigation Sectors: small marshland rehabilitation and irrigation infrastructure development
On-going N/A N/A
USAID through World Vision Development Activity Programme Sectors: SWC, radical terracing, PO's, food security, extension & proximity services
Completed
N/A N/A
Royal Netherlands Embassy Rural Feeder Roads Project Sectors: SWC, rural infrastructure
On-going N/A N/A
USAID Project on Post Harvest and Storage On-going N/A N/A WFP Purchase for Progress (P4P) On-going N/A N/A
69
70
N O R T H
P R O V I N C E
W E S TP R O V I N C E
S O U T H
P R O V I N C E
KIGALI CITY
E A S T
P R O V I N C E
N YA G ATA R E
G AT S I B O
K AY O N Z A
RWAMAGANA
K I R E H EN G O M A
B U G E S E R A
GASABO
KICUKIRO
B U R E R A
GICUMBI
R U L I N D OG A K E N K E
M U S A N Z A
RUBAVUN YA B I H U
NGOROREROR U T S I R O
K A R O N G I
N YA M A S H E K EN YA M A G A B E
N YA R U G U R U
R U S I Z I GISAGARA
H U Y E
N YA N Z A
R U H A N G O
MUHANGA
KAMONYI
NYARUGENGE
Bugarama
Rwumba Kitabi
Ruramba
KigembeMunini
Karama
Karaba
Gatagara
Masango
Rusatira
Shyorongi
Muhura
Kinyami
Mbogo
Kigarama
Sake
Rukara
Kiziguru
Gabiro
Gatunda
RilimaBugesera
Gikoro
Bicumbi
Gashora
Kanzi
Rwesero
Cyangugu
Bulinga
Ngaru
Mulindi
Muvumba
Kagitumba
Kirambo
Butaro
Nemba
Busogo
Muramba
Kagali
Nyondo
Kabaya
Mabanza
Murunda
GishyitaBwakira
Ngoma
Kidaho
Gikongoro
Gitarama
Butare
Kinihira
Burera
Rubavu Karago
Rutsiro
Gatsibo
Nyagatare
Kabarore
Mukarange
Kigabiro
Ndora
Gasaka
Ngoma
Kagano
RubengeraNyamabuye
Rukoma
Nyamata
Kicuro
RugengeNdera
Ruhango
Busasamana
Ngororero
MuhozaCyeru
Gakenke
Tare
Kamembe
Kibeho
Kibungo
Kirehe
Gisenyi
Mukamira
Gihingo
Nyanza
Kibuye
Rwamagana
Byumba
KIGALI
D E M . R E P .O F
C O N G O
B U R U N D I
T A N Z A N I A
U G A N D A
Lac Kivu
LacIhema
LacKivumba
LacHago
LacMikindi
LacRwanyakizinga
LacBurera
LacRuhondo
LacNasho
LacCywambwe
LacMpangaLac
Mugesera
LacRweru
LacCyohoha
Sud
Lac Muhazi
Kagera
Nyabarongo
Akany
aru
Kagi
tum
ba
Kagera
To Sake
To Rutshuru
To Kisoro
To Kabale
To Kikagati
To Kafunzo
To Bugene
To Lusahanga
To Kirundo
To Ngozi
To Kayanza
To Cibitoke
To Cibitoke
To Walangu
To Nyya-Ghezi
Virunga M
ts.
VolcanKarisimbi(4519 m)
30°00'E 31°00'E29°30'E 30°30'E
29°00'E
29°00'E
30°00'E29°30'E 30°30'E
2°00'S
2°30'S
2°00'S
1°00'S
1°30'S1°30'S
RWANDA
0 10 20 30
0 10 20 30 Miles
40 Kilometers
IBRD 33471R2
JUN
E 2008
RWANDA
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SELECTED CITIES AND TOWNS
AKARERE (DISTRICT) CAPITALS
INTARA (PROVINCE) CAPITALS
NATIONAL CAPITAL
RIVERS
MAIN ROADS
AKARERE (DISTRICT) BOUNDARIES
INTARA (PROVINCE) BOUNDARIES
INTERNATIONAL BOUNDARIES