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Project Concept Note

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: 52035-BJ

EUROPEAN UNION FOOD CRISIS

RAPID RESPONSE FACILITY TRUST FUND

Emergency Project paper

ON A PROPOSED GRANT

UNDER THE

GLOBAL FOOD CRISIS RESPONSE program

IN THE AMOUNT OF 6.5 MILLION

TO THE

Government Of Benin

FOR An

Emergency Support to Enhance Food Security PROJECT

May 11, 2010

Agriculture and Rural Development

Sustainable Development Department

Country Department AFCF2

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.

i

CURRENCY EQUIVALENTS

(Exchange Rate Effective March 2010)

Currency Unit

1 FCFA

1 US$

=

=

=

Franc CFA

490.966 US$

0.7484

FISCAL YEAR

July 1 to June 30

ABBREVIATIONS AND ACRONYMS

AGEFIB

Agence de Financement des Initiatives de Base (Grassroots Initiative Financing Agency)

BAD

Banque Africaine de Dveloppement (African Development Bank)

BCEAO

Banque Centrale des Etats de lAfrique de lOuest (Central Bank of West African States)

CAA

Caisse Autonome d'Amortissement

CAS

Country Assistance Strategy

CDD

Community Driven Development

CECPA

Centre Communal pour la Promotion Agricole (Community-level Center for Agricultural Promotion)

CERPA

Centre Rgional pour la Promotion Agricole (Regional Centre for Agriculture Promotion)

CNRMP

Commission National de Rgulation des Marchs Publics (National Commission of Public Procurement Regulation)

COMTRADE

United Nations Commodity Trade Statistics Database

CPAR

Country Procurement Assessment Report

CPMP

Cellule de Passation des Marchs (Public Procurement Units)

CQS

Consultants Qualification Selection

DA

DGR

Designated Account

Direction de Gnie Rural (Department of Rural Engineering)

DNMP

Direction Nationale des Marchs Publics (National Directorate for Public Procurement)

EFSSP

Emergency Food Security Support Project

EOI

Expression of Interest

ESEFS

Emergency Support to Enhance Food Security

ESMF

Environmental and Social Management Framework

EU-TF

European Union Food Crisis Rapid Response Facility Trust Fund

FAO

Food and Agriculture Organization of the United Nations

FCFA

Franc Communaut Financire Africaine (Central African CFA)

FDM

Fertilizer Distribution Manual

FM

Financial Management

GDP

Gross Domestic Product

GFRP

Global Food Crisis Response Program

GPN

General Procurement Notice

GTZ

German Agency for Technical Cooperation (Deutsche Gesellshaft fuer Technische Zusammenarbeit)

IBRD

The International Bank for Reconstruction and Development

ICB

International Competitive Bidding

IDA

International Development Association

IDB

Islamic Development Bank

IFAD

International Fund for Agricultural Development

IFR

Interim Financial Report

ISA

International Standards on Auditing

ISR

Implementation Status Reports

LCS

Least Cost Selection

LIB

Limited International Bidding

MAEP

Ministre de lAgriculture, de lElevage et de la Pche (Ministry of Agriculture, Livestock and Fisheries)

MDG

Millennium Development Goals

MEF

Ministry of Economy and Finance

NAIP

National Agricultural Investment Plan

NCB

National Competitive Biding

ONASA

Office National dAppui la Scurit Alimentaire (National Agency for Food Security)

PEFA

Public Expenditure Financial Accountability

PIM

Project Implementation Manual

PMU

Programme dUrgence dAppui la Scurit Alimentaire (PUASA) Management Unit

PPR

Post Procurement Review

PRSC

Poverty Reduction Support Credit

PSC

Project Steering Committee

PUASA

Programme dUrgence dAppui la Scurit Alimentaire (Emergency Food Security Support Program)

QCBS

Quality and Cost Based Selection

RCPA

Responsable Communal de la Promotion Agricole (Community-level Agricultural Promotion Agent)

RFP

Request for Proposal

SBD

Standard Bidding Documents

SC

Steering Committee

SPN

Specific Procurement Notice

SSS

Single Source Selection

TOR

Terms of Reference

UNDB

UN Development Business

WAEMU

West African Economic and Monetary Union

Vice President:

Obiageli Katryn Ezekwesili

Country Director:

Madani M. Tall

Sector Director:

Inger Andersen

Sector Manager:

Karen Mcconnell Brooks

Task Team Leader:

Jane C. Hopkins

Benin

Emergency Support to Enhance Food Security (ESEFS)

Contents

Page

A.Introduction1

B.Emergency Challenge2

C.Bank Response: The Project4

D.Appraisal of Project Activities6

E.Implementation Arrangements and Financing Plan10

F.Project Risks and Mitigating Measures12

G.Terms and Conditions for Project Financing13

Annex 1: Detailed Description of Project Components15

Annex 2: Results Framework and Monitoring23

Annex 3: Summary of Estimated Project Costs24

Annex 4: Financial Management and Disbursement Arrangements25

Annex 5: Procurement Arrangements32

Annex 6: Implementation and Monitoring Arrangements41

Annex 7: Project Preparation and Appraisal Team Members46

Annex 8: Statement of Loans and Credits47

Annex 9: Country at a Glance47

Annex 10: Maps50

iii

EMERGENCY OPERATION PROJECT PAPER DATA SHEET

Benin

Emergency Support to Enhance Food Security Project

Africa Region

Date: May 11, 2010

Country Director: Madani M. Tall

Sector Manager/Director: Karen Mcconnell Brooks

Lending instrument: Emergency Recovery Loan

Team Leader: Jane C. Hopkins

Sectors: Crops (60%); Irrigation and drainage (40%)

Themes: Global food crisis response (100%)

Environmental screening category: Partial Assessment

Safeguard screening category: B

Type of Operation:

New Operation [ X ] Additional Financing [ ] Existing Financing (restructuring) [ ]

Financing type: Loan [ ] Credit [ ] IDA Grant [ ] Other [ X ]

Project ID(s): P120052

Total Amount: EUR 6.5 million

Proposed terms: Grant (EUFRF)

Expected implementation period: 16 months

Expected effectiveness date: May 24, 2010

Expected/revised closing date: August 31, 2011

Borrower: Republic of Benin

Responsible agency: Ministry of Agriculture, Livestock, and Fishery

Development Objective:

To increase domestic production of food crops (mainly maize and rice) in targeted areas.

Short Description:

The proposed grant will provide parallel financing to the ongoing IDA-financed Emergency Food Security Support Project (EFSSP) approved in October 2008. It will build on the experience and successes of the EFSSP in expanding access of food crop producers to fertilizer and seed, and will also build on the successes of the Governments umbrella program (the Programme dUrgence dAppui la Scurit Alimentaire (PUASA) - the Emergency Food Security Support Program) in providing food crop producers with increased access to small-scale irrigation infrastructure. Specifically the proposed project will provide financing for the (i) purchase and distribution of fertilizer (2400 tons of NPK and 875 tons of urea) using the same procedures developed under the EFSSP and (ii) development of 3,000 hectares of small-scale irrigation infrastructure techniques successfully implemented under the PUASA using simple techniques that are rapid and easily implementable by beneficiaries and local entrepreneurs.

Financing Plan (EUR million)

Source:

Local

Foreign

Total

Borrower

Total IBRD/IDA

Trust Funds (EUFRF)

Total

0.00

0.00

4.04

4.04

0.00

0.00

2.46

2.46

0.00

0.00

6.50

6.50

Estimated disbursements (Bank FY/EUR million)

2010

2011

Total IBRD/IDA

EUFRF

0.00

4.00

0.00

2.50

Does the emergency operation require any exceptions from Bank policies?

Have these been approved by Bank management?

Yes [ ] No [X]

Yes [ ] No [ ]

Are there any critical risks rated substantial or high?

Yes [X] No [ ]

What safeguard policies are triggered, if any?

Environmental Assessment (OP/BP 4.01)

Pest Management (OP 4.09)

Projects on International Waterways (OP/BP 7.50)

Significant, non-standard conditions, if any:

A. Board Conditions: none

B. Effectiveness Conditions: none

C. Disbursement Conditions: no disbursement for expenditures associated with (i) sub-grants; and (ii) works until the Government of Benin has:

prepared, adopted, disclosed and implemented in a manner acceptable to the Bank, an updated ESMF.

adopted a revised/updated Project Implementation Manual.

D. Dated covenants: the Government of Benin shall

within 45 days of project effectiveness, recruit a Procurement Specialist and a Financial Audit Specialist for the Project Management Unit.

within 60 calendar days of project effectiveness prepare, adopt, disclose and implement in a manner acceptable to the Bank, an updated ESMF.

within 30 days of project effectiveness, adopt a revised/updated Project Implementation Manual (PIM) detailing, inter alia, the operational, financial management and administrative procedures for the implementation of the Project, in form and substance satisfactory to the Bank.

within 30 days of project effectiveness, amend and restate the memorandum of understanding between the Emergency Food Security Support Programs-- Programme dUrgence dAppui la Scurit Alimentaire (PUASA) Management Unit (PMU) and the Regional Centers for Agriculture Promotion-- Centre Rgional pour la Promotion Agricole (CERPAs), under terms and conditions satisfactory to the Bank.

by August 31, 2010, prepare an operational manual related to Component 1 of the Project for piloting the market-based mechanism for the sustainable delivery of inputs (fertilizers and seeds) to food crop producers, including the role of the recovered funds from the subsidized sale of fertilizer.

20

Introduction

1. This Emergency Project Paper proposes to provide a grant from the European Union Food Crisis Rapid Response Facility Trust Fund (EU-TF) under the Global Food Crisis Response Program (GFRP) in an amount of 6.5 million to the Republic of Benin, for a proposed Emergency Support to Enhance Food Security Project (ESEFSP).

2. Between September 2007 and August 2008 food prices in Benin increased by an estimated 32 percent. This unprecedented increase in food prices fueled a significant increase in the general price levels (by 12 percent) over the same period, prompting the government to enact a variety of measures to control prices (the cost of which is unsustainable) and seek the assistance of donors to support an emergency food security program. The Government launched the Programme dUrgence dAppui la Scurit Alimentaire (PUASA) - the Emergency Food Security Support Program in 2008 to address the countrys immediate, short and medium term needs to increase domestic productive capacity and food security. The IDA-financed Emergency Food Security Support Project (EFSSP), approved in October 2008 supported this effort and focused on immediate needs by increasing the access of cereal crop producers to fertilizer during the 2009 cropping season.

3. The tension on food prices persisted in 2009 when average food price levels were even higher (7 percent) than the average levels in 2008. This persistent tension on food prices, despite good crop production seasons in 2008 and 2009, reflects a reduced market supply of locally produced food and underscores the continued urgency of increasing domestic productive capacity. The proposed Emergency Support to Enhance Food Security Project (ESEFSP) will provide parallel financing to the ongoing EFSSP. It will build on the experience and successes of the EFSSP in expanding access of food crop producers to fertilizer and seed, and will also build on the successes of the Governments umbrella program (the PUASA) in providing food crop producers with increased access to small-scale irrigation infrastructure.[footnoteRef:1] Specifically the proposed project will provide financing for the (i) purchase and distribution of fertilizer (2400 tons of NPK and 875 tons of urea) using the same procedures developed under the EFSSP and (ii) development of 3,000 hectares of small-scale irrigation infrastructure techniques successfully implemented under the PUASA. [1: In 2008 and 2009, the government program (PUASA) successfully developed about 5,000 hectares of small-scale irrigation infrastructure using simple techniques that are rapid and easily implementable by beneficiaries and local entrepreneurs.]

4. The operation is consistent with the Government of Benins Emergency Food Security Support Program and their National Agricultural Investment Plan (NAIP). The overall objective of NAIP is to improve Benins agriculture performance to enable its effective contribution to economic growth, food security and the Millennium Development Goals (MDGs). The NAIP gives priority to the production of food crops and the diversification of exports. The project will be implemented in coordination with other donor assistance by the management unit of the PUASA (the same unit that is implementing the EFSSP).

Emergency Challenge

Country Context

5. The primary sector accounts for about 35 percent of Gross Domestic Product (GDP) and employs nearly 70 percent of the countrys workforce, mainly in agriculture. Although cotton remains the major export commodity, its share of exports declined from 75 percent to 47 percent between 1996 and 2006. In September 2009, an International Monetary Fund mission noted that the global economic crisis continues to affect the near term prospects for the Beninese economy. Real GDP growth is expected to slow to 3 percent in 2010, a significant decline from 5 percent in 2008. The slowdown is mainly driven by weak prospects for cotton production and exports, and trade with neighboring countries.

6. Benin was hard hit by the rise in world market prices for food and oil. The aggregate import costs for wheat, rice, maize and fertilizer showed a two-fold increase from about US$120 million in 2007 to about US$328 million in April 2008[footnoteRef:2]. The Government, aware that the social implications of these rising prices can be dramatic, especially for the poor, tried to dampen the impact by reducing duties on food and oil imports, and through price controls and subsidies. These measures (unsustainable due to their high economic and fiscal costs) failed to keep price increases from accelerating and affecting consumers. [2: According to a spreadsheet with estimates of the import costs for rice, maize, wheat, and fertilizers using FAO and COMTRADE data World Bank June 2008.]

7. Domestic production of rice and maize (Benins main cereal staples) decreased in the years leading up to the crisis (by 9 percent in 2006 and another 14 percent in 2007). The reduced production is due to the lack of adequate delivery mechanisms to ensure the provision of certified seeds, fertilizer and other agricultural goods and services needed by producers and rural enterprises. In addition, the overall institutional environment for the agricultural sector does not receive adequate Government support and needs to be strengthened. In 2008, cereal production increased to about 1.29 million tons, compared to 1.16 million tons in 2007. However, the tension on food prices persisted in 2009 when average food price levels were even higher (7 percent) than the average levels in 2008. This persistent tension on food prices, despite good crop production seasons in 2008 and 2009, reflects a reduced market supply of locally produced food and underscores the continued urgency to pursue ongoing efforts aimed at rebuilding and strengthening the productive capacity of the sector in order to reverse the trend (see Appendix 1 of Annex 1 for an updated analysis of the food price situation in Benin).

The Governments Recovery Strategy

8. In response to the global food crisis and rising food insecurity, the Government launched the Programme dUrgence dAppui la Scurit Alimentaire (PUASA) in 2008 to address the countrys immediate, short and medium term needs to increase food security and rebuild the productive capacity of the food crop sector in Benin.

9. The PUASA is costed at about US$145 million. In addition to the IDA grant (US$9 million) approved in October 2008, a number of other donors are providing financing for the PUASA. The Federal Republic of Germany is supporting PUASA through an existing GTZ program (Programme de Conservation et de Gestion des Ressources Naturelles - Program for the Conservation and Management of Natural Resources) by providing fertilizer to producers in the Atacora region. The Islamic Development Bank (IDB) is supporting the PUASA for a total amount of FCFA 1.7 billion through two existing projects. The contribution of the International Fund for Agricultural Development (IFAD) is being provided through the existing Rural Development Support Program (FCFA 0.5 billion). The 2008 contribution of Food and Agriculture Organization (FAO) was estimated at US$ 0.5 million and the Banque Africaine de Dveloppement (BAD) committed to providing FCFA 1.6 billion to support the program. The Governments contribution to the financing of PUASA activities is estimated at US$ 13 million in 2008 and 2009.

10. The PUASA Management Unit (PMU) is the national unit for coordinating donors support, as well as Government interventions, for the promotion of food crop production and food security. Donor agencies meet regularly to share information and coordinate discussions and negotiations with the Ministry of Agriculture, Livestock and Fisheries-- Ministre de lAgriculture, de lElevage et de la Pche (MAED). In 2009-10, an emphasis will be placed on helping the Government improve its Strategic Plan for Agricultural Revival, intended as a sector program aligning all donor and Government interventions.

Rationale for the Proposed Emergency Project

11. In response to a request from the Government of Benin, the Bank developed the Emergency Food Security Support Project (EFSSP) which became effective in October 2008. Within the framework of the PUASA, that IDA-financed project focused on: (i) providing emergency support for expanded access to fertilizer for maize and rice producers; and (ii) supporting the design of a sustainable input delivery mechanism for food crop producers. The project targeted the provision of 8,500 tons of fertilizer at subsidized rates to about 50,000 producers of rice and maize.

12. The most recent implementation status report for the EFSSP gave the project a satisfactory rating. It indicates that 9,800 tons of fertilizer was actually procured with 6,900 tons (81 percent of targeted amount) distributed during the 2009 cropping season (the balance is to be distributed during the upcoming cropping season). The number of farmers benefitting from the fertilizer distribution was less than expected (about 23,000) since the bulk of the fertilizer was distributed to farmers in the central and northern zones where farm size is larger than initially envisioned. In terms of cereal output, 80 percent of the expected result was achieved (118,800 tons against a target of 147,000 tons). The target was exceeded for rice production (where small-scale irrigation infrastructure is more prevalent) and fell short for maize production due to adverse climatic conditions. The project also successfully launched the effort to design a sustainable market-based mechanism for the delivery of inputs to food crops producers, as an alternative to the current public-sector input delivery system. Stakeholders were brought together and the process is underway, with the support of several consultants; an initial report is expected by end-May 2010.

13. The proposed grant will build on the success of the EFSSP in expanding access of food crop producers to fertilizer. In addition, it will help the government scale-up the small-scale irrigation infrastructure activities successfully implemented under the PUASA umbrella program. The small-scale irrigation infrastructure allows farmers to reduce weather-related risk factors and increase the effectiveness, and thereby production, of the use of fertilizer and improved seed varieties.

14. The impact of increased access of food crops producers to improved seeds, fertilizers and irrigation infrastructures will be positive and significant in the short term. The increased food crop productivity will increase the local food supply and food security situation. In addition, by supporting the implementation of the innovative market based mechanisms required for the delivery of agricultural inputs to food crops producers, the grant will also provide a response to the governments goal of developing food crops commodity chains in the medium and long term.

Bank Response: The Project

Brief description of Banks strategy of emergency support

15. The Banks strategy for this emergency project consists of supporting ongoing efforts by the Government of Benin to respond to the increase in food prices by mitigating its short-term impact and stimulating supply response in its main food sectors. The Banks response under the IDA-EFSSP focused on providing emergency support for expanded fertilizer use to increase domestic food production and supporting the design of an innovative mechanism for the sustainable delivery of agricultural inputs to food crop producers.

16. Following a first year of successful implementation of the EFSSP, this grant will help the PUASA continue its fertilizer distribution activities and pilot the market-based input delivery mechanism being developed. In addition it will help PUASA expand its successful small-scale irrigation infrastructure activities which use simple techniques rapidly and easily implementable by beneficiaries and local entrepreneurs. Specifically the grant will support (i) the delivery of 3,275 tons of fertilizer[footnoteRef:3] to about 15,500 producers (12,000 producers of maize and 3,500 producers of rice); (ii) a pilot of the market-based input delivery mechanism developed under the EFSSP; and (iii) the development of 3,000 hectares of small-scale irrigation infrastructure. A detailed description of the project is in Annex 1. [3: As a complementary activity (as was the case under the EFSSP), the Government has committed to financing, through its own resources, the collection and distribution of 545 tons of improved seed.]

Project Development Objectives

17. The project objective is the same as the EFSSP -- to increase domestic production of food crops (mainly maize and rice) in targeted areas. This will mitigate the short-term impact of increasing prices on households and expand food crop farmers access to agricultural inputs in the medium and long term. This development objective will be achieved by: (i) expanding the access of food crop producers to fertilizer and improved seeds; and (ii) expanding the access of food crop producers to small-scale irrigation infrastructure.

Summary of Project Components

18. The project has three components: (i) Delivery of agricultural inputs; (ii) Promotion of small-scale irrigation infrastructure; and (iii) Support for project coordination, monitoring and evaluation.

19. Component 1: Delivery of agricultural inputs (2.42 million). This component aims at delivering 3,275 tons of fertilizer and 545 tons of improved seeds to about 15,500 producers (12,000 producers of maize and 3,500 producers of rice) during the 2010 cropping season; the distribution of the improved seeds will be financed by the Government. The fertilizer will be subsidized at about 40 percent of the market price, using the same delivery and cost recovery mechanisms used for the successful implementation of the EFSSP. This component will also insure the incremental costs associated with the provision of technical advisory services to beneficiaries on the proper use of the provided inputs. In addition, this component will support a pilot (during the 2011 cropping season) of the market-based input delivery mechanism being developed under the EFSSP.

20. Component 2: Promotion of small-scale irrigation infrastructure (3.48 million). Through this component, the grant will help increase the access of cereal producers to irrigation services, in order to intensify food production. In 2008 and 2009, the Governments PUASA Management Unit successfully developed about 5,000 hectares of small-scale irrigation infrastructure, using simple techniques that are easily implementable by beneficiaries and local entrepreneurs. This grant will help expand these activities, using the same procedures, by targeting an additional 2,000 hectares of small-scale irrigation perimeters in the Niger river valley, and about 1,000 hectares in the lowlands of the hill region and in the Mono and Couffo rivers valleys. In addition, it will support the construction of post-harvest infrastructure, specifically 35 storehouses and 70 drying areas, in these same regions to decrease post-harvest losses that can often reach 35 percent of production.

21. Component 3: Support for project coordination, monitoring and evaluation (M&E) (0.34 million). This component will provide institutional support to strengthen the PUASA Management Unit (PMU), in carrying out its coordination, fiduciary and M&E responsibilities. The monitoring and evaluation activities will include an analysis of national food crop (maize, rice, cassava and yam) market price trends over the 2008-11 time period. In addition, the grant will support training, acquisition of equipment, office supplies and other incremental operational costs.

Geographic Selection and Targeting Criteria

22. Targeting of priority perimeters. In May 2009, PUASA brought together representatives of producer organizations and local and regional agencies of the MAED to decide on the priority perimeters to be developed in each region. Priority has been given to areas currently exploited by producers.

23. Individual beneficiary targeting. In the small-scale irrigated perimeters, all producers (men and women) sharing the ownership of the common land resources will be beneficiaries. With respect to the fertilizer distribution, the PMU in collaboration with Directorate of Agriculture and the local agricultural extension services (CECPA) will carry out an extensive information campaign regarding the terms and conditions and producer groups will take the lead in selecting the beneficiaries based on these criteria. To ensure production, the PMU envisions allocating 60 percent of the fertilizer to larger producers (those who cultivate more than two hectares) and 40 percent to those cultivating on smaller plots.

Eligibility for Processing under OP/BP 8.0

24. Consistent with OP/BP 8.00, the activities planned under this project are intended to support the Governments objective to enhance domestic food crop production in the short and medium term, in order to ensure food security. In the short term, it will strengthen the emergency mechanisms put in place by the Government for the delivery of fertilizers and improved seeds. It will also expand producer access to irrigation services. Thus, it will contribute to generating additional cereal stocks to supply the market and, consequently, produce positive impact on the rural populations livelihood and on the urban consumers access to food. In the medium and long term, it will help put in place the structural mechanisms required for a sustainable input delivery system for food crop producers.

25. The success of the project-financed activities (emergency provision of fertilizer and small-scale irrigation perimeters quickly implemented by local actors) and the impact on the beneficiaries within the timeframe depends on the use of flexible and accelerated procedures as allowed under OP/BP 8.00, particularly in the processing of project preparation, safeguards compliance, procurement, and disbursement arrangements. Without such provision, the projects inputs would not be mobilized quickly enough to contribute to the urgent needs.

Consistency with Country Assistance Strategy (CAS)

26. This projects activities are closely aligned with the existing Country Assistance Strategy (CAS)s three strategic objectives: (i) accelerating private sector-led growth; (ii) improving access to basic services and ensuring greater efficiency of public expenditures; and (iii) promoting better governance and strengthening institutional capacities. With regard to these strategic objectives, the Bank Group places a very strong emphasis on reengaging with, and supporting, the private sector and enterprise development, agricultural diversification as well as the development of growth-inducing infrastructure. A future agricultural diversification project is envisaged to support promising commodity chains from production to transformation/export. That operation would also be a vehicle for responding to the food price increases.

Expected Outcomes

27. The expected outcome of the project is an increase in domestic food crop production. The key performance indicators for the project and their targets are the following: (i) an increase in rice production in the project areas of 3,500 tons; (ii) an increase in maize production in the project areas of 12,000 tons; and (iii) a total of 15,500 farmers (direct beneficiaries) receive project benefits.

28. The intermediate outcome indicators and targets for Component 1 are: (i) 3,275 tons (2,500 tons of NPK and 775 tons of urea) of fertilizer procured and distributed; (ii) 545 tons of improved seed distributed; (iii) 15,500 hectares treated/cultivated using adequate doses of fertilizer; (iv) 15,500 producers use adequate dose of fertilizer; and (v) a market-based input delivery mechanism is adopted and tested.

29. Intermediate outcome indicators and targets for Component 2 are (i) 2,000 hectares of small-scale irrigation infrastructure developed in the Niger river valley; (ii) 1,000 hectares of small-scale irrigation developed in the lowland areas of the hills region and in the Mono and Couffo rivers valleys; (iii) 3,000 producers installed in the small-scale irrigation perimeters; and (iv) 35 storerooms; and (v) 70 drying areas constructed.

Appraisal of Project Activities

Technical

30. Addressing the lack of delivery systems for agricultural inputs and equipment is a key issue in boosting food crop production in Benin. Without access to fertilizer, certified seeds and other agricultural goods and services, agriculture production remains essentially at subsistence level, with low technology and little marketable surplus. The challenge is to provide support for the government-run emergency mechanisms to ensure the short-term distribution of these goods and services, while developing more sustainable market-based mechanisms for the medium to long-term. During the 2011 planting season, the grant will support a pilot of the innovative market-based mechanism being developed under the EFSSP.

31. Since 2008, PUASA has successfully promoted techniques that are very simple, rapid and easily implemented by local actors for the development of small-scale irrigation infrastructures. Small-scale irrigation infrastructure decreases weather-based risks associated with food crop production and increasing the effectiveness of fertilizer and improved seed. By increasing access of producers to irrigation services, the grant will help increase rice production and productivity and thereby increase food security.

32. Extension services will accompany the distribution of fertilizer and the development of small-scale irrigation to ensure proper use of inputs and small equipment. The extension services proposed are based on standard, well accepted technical packages in Benin, which are consistent with global good practice.

Economic and Financial

33. Economic and financial analysis of this emergency operation has not been carried out given the short preparation period. However, according to the PUASA Management Unit estimates, the economic impact of increased provision of fertilizer and improved seeds is positive and significant, with an increase of rice and maize yields by about 100 percent per hectare. In the irrigated perimeters, these yields will be higher, reaching about 5 tons per hectare, against 1 ton for maize and 2 tons for rice in ordinary conditions.

34. With regard to financial aspects, there is a need to set up sustainable financial mechanisms to promote the producers access to agricultural inputs. This Grant will pursue the activities initiated under the EFSSP by piloting the innovative market-based delivery mechanisms being developed.

Fiduciary

35. Financial Management. The PMU which is responsible for the implementation of the Bank-financed EFSSP will also be responsible for the implementation of this project. The financial management risk is assessed as moderate. The PMU is staffed with an experienced financial management specialist who has already implemented Bank-financed projects and there is an appropriate computerized accounting system in place. The Fertilizer Distribution Manual (FDM), describing the procedures that govern the emergency fertilizer delivery mechanisms (including cost recovery), was prepared by the PMU for the implementation of the EFSSP and was found satisfactory to the Bank. It will be updated to reflect lessons learned during the implementation of the EFSSP (for example the cost recovery is coordinated by the local extension services (CECPA) rather than the National Agency for Food Security (ONASA) due to their proximity and close contact with the beneficiaries.

36. To strengthen the PMUs capacity to manage the sub-grants to producer organizations and communities for the development of small-scale irrigation infrastructure (works and small equipment acquisition), the Agence de Financement des Initiatives de Base (AGEFIB) will be contracted to support the PMU. Specifically, AGEFIB will strengthen the financial management capacity of producer organizations and pre-screen disbursement requests of the communities before payment by the PMU. AGEFIB has a strong experience in community driven development projects as well as Bank-financed operations. The pre-screening will include the collection and the review of supporting documents. AGEFIB will then provide a clear recommendation for payment to the PMU. A specific implementation manual for this component, including simplified financial management procedures to be used by the communities, will be prepared as part of the overall update to the Project Implementation Manual (PIM) not later than 30 days after effectiveness.

37. Procurement. All procurement will be carried out by the PMU with the support of AGEFIB. A procurement officer will be recruited to support the PMU in carrying out these responsibilities. The principal procurement activities will involve goods (in particular fertilizer and small motor pumps) and civil works for the construction of small post harvest infrastructure. The development of the small-scale irrigation systems will use Community Participation in procurement. The thresholds for the methods of procurement and consultant selection and for prior review have been based, by and large, on those that have been found to be appropriate for Benin. More rapid methods for procuring the goods and consulting services which are particularly urgent are specified in the procurement plan and are within the provisions of OP/BP 8.00.

Environmental and Social

38. From an environmental and social safeguard standpoint, the proposed project is a Category B project. This suggests that environmental and social impacts of the project, for the most part, will be minimal, site-specific and manageable to an accepted level. The proposed grant will include: (i) provision of fertilizer, improved seed and extension services; (ii) development of small-scale irrigation infrastructure; and (iii) construction of small post-harvest drying and storage facilities adjacent to the irrigated plots. This emergency operation triggers three World Bank safeguard policies: the Environmental Assessment policy (OP/BP 4.01), the Pest Management policy (OP/BP 4.09), and the Projects on International Waterways policy (OP/BP 7.50). The Involuntary Resettlement policy (OP/BP 4.12) is not triggered since the development of the small-scale irrigation infrastructure is confined to plots currently being cultivated for which there is clear land tenure. In addition, in the course of the project implementation there will be no restriction to sources of livelihood or access to sources of livelihood.

39. The Environmental and Social Management Framework (ESMF) prepared for the EFSSP is being updated to take into account the small-scale irrigation activities and post-harvest infrastructure proposed under this grant and appropriate elements will be incorporated in the PIM. The ESMF provides guidelines and procedures for environmental and social screening, designed to help avoid, mitigate or minimize impacts resulting from unbalanced use of agrochemicals. Close attention is paid to safe storage and handling of fertilizers, as part of the safeguard review. The ESMF includes a chapter dealing with pesticide management issues. This chapter addresses the selection, safe use, storage and disposal of pesticides and their package materials in order to avoid health impacts on farmers and their families and avoid impacts on the environment.

40. As required under OP 7.50, the Niger River Basin Authority was notified of the proposed project. Their response, stating their non-objection to the proposed project, was received on February 4, 2010. The revised ESMF will provide guidelines for assessing and mitigating any potential impacts on the flood and stream flows to the downstream water resources and aquatic systems. As an exception to the general Bank policy of disclosure before appraisal, as authorized under OP/BP 8.00, the updated ESMF will be publicly disclosed in Benin and at World Banks Infoshop within 60 days of project effectiveness.

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

Cultural Property (OPN 11.03)

X

Indigenous Peoples (OP/BP 4.10)

X

Involuntary Resettlement (O/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

41. In Benin, gender equity in terms of access to agricultural services and land varies from one region to another, depending on socio-cultural practices. In the hills region for example, it is expected that the plots in the irrigated perimeters will be largely attributed to women. In the Niger valley, women and mens access to the irrigation infrastructure and accompanying agricultural inputs seems to be equitable in the Borgou region, but a priority is given to men in the Alibori region. In the Mono and Couffo valleys, socio-cultural practices give clear priority to men. In general, the project will promote as much as possible gender equity in the access of producers to agricultural inputs and services delivery. The local authorities in charge of land management and leaders of producer organizations will be sensitized to give priority to the vulnerable layers of the population, in the selection of the beneficiaries.

Lessons learned

42. Bank experience to date with emergency response operations has underscored the need to approach the immediate challenge with realism and simplicity. As such, the proposed project relies on strengthening the emergency mechanisms in place for fertilizer provision to producers and on simplified procurement procedures. By collaborating with the delivery agencies of the MAED (that are knowledgeable in extension services) and with the other donor agencies that expressed their will to contribute to the emergency operations the project will be able to provide concrete results in the short-term.

43. The Bank experience in the cotton sub-sector shows the capacity of Benin actors (producer organizations and private operators) to successfully conduct collective actions intended at setting up the needed market-based agricultural input delivery mechanisms. This project will support that process, in cooperation with the Government and its other internal and external technical and financial partners.

Implementation Arrangements and Financing Plan

44. The Emergency Support to Enhance Food Security Project (ESEFSP) will be implemented over a sixteen (16) months period using the same institutional set-up as the EFSSP.

45. The Project Steering Committee (PSC), established in 2008 by a Minister of Agriculture departmental order, will be responsible for overall project oversight. The PSC includes representatives from: (i) the Ministry of State; (ii) the Ministry of Economy and Finance; (iii) the MAED; (iv) producer organizations; and (v) the private sector. The Delegation of the European Commission will be invited as an observer to the PSC. The PSC will ensure the inter-ministerial oversight of the project and will approve annual work plans, annual budgets, mid-term reviews, and annual assessment reports.

46. The PUASA Management Unit (PMU), located within the MAED, will be in charge of project implementation. The PMU was established in 2008 by a Minister of Agriculture departmental order and is composed of a Project Coordinator, an Agronomist, an Irrigation Specialist, a Monitoring and Evaluation Specialist, an Accountant and administrative staff. These staff will be maintained under the proposed project and the unit will be further strengthened by the recruitment of a Procurement Officer.

47. The PMU will be responsible for implementing and monitoring the day-to-day project activities including budgeting, procurement, disbursement, financial management, reporting, supervision, management of the operational account, and auditing. It is responsible for contracting with the fertilizer and equipment suppliers, and other entities involved in the implementation of the project, to ensure effective delivery of the planned goods and services. In addition, it will make sure that the fertilizer cost recovery mechanism, as described in the Project Implementation Manual, is functioning well.

48. Key implementing partners are: (i) the Regional Centers for Agriculture Promotion (CERPA) of the MAED; (ii) the Community-level Centers of Agricultural Promotion (CECPA) of the MAED; (iii) the Directorate of Rural Engineering (DGR) of the MAED; (iv) the producer organizations; and (v) the Grassroots Initiative Financing Agency (AGEFIB).

49. The CERPA and CECPA will be responsible for: (i) facilitating the contractual relationship between the PMU and the producer organizations, including the fertilizer cost recovery activities; (ii) storing and distributing the fertilizer and improved seed; (iii) providing advisory services; and (iv) strengthening the technical capacity of the producer organizations. The DGR will be responsible for: (i) the specific identification of the small-scale irrigation sites; (ii) the design of the irrigation perimeters and technical description of work to be done; and (iii) monitoring the quality of implementation. AGEFIB will be responsible for pre-screening disbursement requests submitted by local communities and will strengthen their financial management capacity when necessary (see Annex 6 for a more detailed description of the roles of various partners in the implementation of the project).

50. Fertilizer Cost Recovery: The fertilizer cost recovery activities are managed by the community agricultural promotion agent (Responsable Communal de la Promotion Agricole - RCPA) of the CECPA the public-sector agent in closest proximity with the producers. They are responsible for facilitating the contractual relationship between the PMU and the producer groups for the provision of subsidized fertilizer. Producer groups are required to reimburse the cost of the subsidized fertilizer, in cash or in kind, within three months of the harvest. The PUASA had an 85 percent recovery rate during the 2008 agricultural campaign using this method. For 2009, the cost recovery rate, one month after harvest, was 26 percent. The recovered funds are deposited in a commercial bank account managed by the PMU. These funds constitute a revolving fund to be used for future input purchases and costs associated with piloting the market-based input delivery mechanism being developed. The procedures for the fertilizer distribution and cost recovery are detailed in the Fertilizer Distribution Manuel approved by the Bank for the implementation of the EFSSP.

51. Monitoring and Evaluation: The M&E of the project is seen as a key part of the project implementation process. The M&E system of the PMU will be strengthened and updated in order to assume the M&E activities under this project. The updated M&E system will be oriented towards: (i) monitoring compliance with the PIM; (ii) tracking progress toward the achievement of the project outputs and outcomes; (iii) assessing sustainability of outcomes; and (iv) monitoring compliance with the ESMF. The M&E specialist in the PMU is responsible for the supervision of all M&E activities under the project, for quality control of data collected at decentralized levels, and for data compilation for quarterly reporting. The accountant is responsible for analyzing the data related to fiduciary matters.

52. Communications and visibility: The grant will support dissemination of information about the project and project activities to the target beneficiaries through the media, especially radio and television services (national, private and community based station).

53. Bank supervision: As required under OP/BP 8.00, the shift from ex-ante to ex-post risk mitigation and control measures requires task teams to intensify their supervision efforts through frequent missions and ex-post reviews. A budget of 220,000 has been made available for supervision of the project. The core supervision team would consist of an Agricultural Economist, Rural/Agricultural Development Specialist, Financial Management and Procurement Specialist, an M&E Specialist and a Safeguards Specialist. The team would be supplemented as needed with additional specialists (for example, a specialist on private sector input distribution systems or small-scale irrigation systems). At least four full supervision missions (covering all aspects of the project) would be carried during the sixteen (16) months implementation period. In addition, focused meetings and working sessions with the Benin project team will be carried out as the need arises.

Project Risks and Mitigating Measures

Risk factors

Description of risk

Rating of risk

Mitigation measures

Rating of residual risk

Country and/or Sub-National Level risks

Systemic Corruption

A 2007 Governance Diagnostic Survey was disseminated nationally and showed that public services playing a central role in the development of the country, like customs, taxes, the judiciary, the policy, electricity and water, public works and to a minor extent health and education are seriously affected by poor governance and corruption. The survey results also showed that users of public services spend substantial sums on non-official payments to access public services. The Ministry of Administrative and Institutional Reform has been mandated to lead the preparation of the National Governance Strategy and an Action Plan based on the governance diagnosis and other strategic Government documents. TORs for the preparation of the national governance strategy are finalized. The Corruption Perception Index for 2009 ranks Benin 106 out of 180 countries, compared to the ranking of 96 for 2008.

M

Poverty Reduction Support Credits (PRSC) 4 and 5 have supported Government's efforts at promoting better governance through financial management, civil service and justice reforms. A final operation in the series (PRSC-6) under preparation for FY10 will continue to support governance reforms. Government is now implementing its second PRSP with broad-based new monitoring and reporting mechanisms, including an important new role for the localities.

L

Sector Governance, Policies and Institutions

Sector Specific Risks

Uncertainty of land tenure status for farmers

M

Interventions will be directed to villages with secured land tenure. In addition the development of small-scale irrigation infrastructure will be carried out on plots already under cultivation with clear tenure status. The post harvest drying and storage infrastructure will be constructed adjacent to these plots on their own common land.

M

Risk of a climatic shock (drought or flood)

M

The small-scale irrigation infrastructure developed will help farmers have better water control and thereby decrease the risk associated with climatic shocks.

L

Operation-specific risks

Technical/design

Seed and fertilizer are not used by farmers in the recommended manner.

M

Training and targeted technical advisory services will be supported by the project.

L

Difficulty in recovering fertilizer cost for revolving fund.

M

The project will support a communications campaign and sensitization activities to recall the reimbursement dates, location, and thereby stimulate producers, to fulfill their commitment. Fertilizer is provided to producer groups rather than individuals as a social accountability measure to help ensure cost recovery.

M

Implementation Capacity and Sustainability

Implementing agencies may lack technical and managerial capacity to adequately implement the project activities in a timely manner.

M

The project will be implemented by the PUASA Management Unit (PMU), in collaboration with various agencies of the MAED. The PMU and these agencies have been strengthened and are successfully implementing the ongoing Bank financed project.

L

Large proportion of farm households has limited capacity to boost production (lack of machinery, technical knowledge, inputs etc.).

M

The project will provide producers with access to inputs, equipment and services through their organizations.

L

Inadequate capacity for planned surveillance, surveys and monitoring and evaluation.

M

Technical assistance will be provided to PMU to review and revise the M&E plan (including information on instruments for data collection, actors responsible, timing of data collection) and the staff will be trained.

L

Inadequate capacity to implement and monitor community activities under Component 2

M

A project implementation manual that clarifies operational and financial management procedures for the sub-projects of the communities will be prepared not later than one month after effectiveness. In addition, AGEFIB (an agency with strong experience in the implementation of Community Driven Development approaches) will provide technical support to PMU and to communities.

L

Financial Management

Weak capacity of Producers Groups and Unions in handling FM activities of the sub-project under component 3.

Poor management of the Fertilizer Cost Recovery Fund

S

With the support of AGEFIB, the PMU will strengthen the capacity of beneficiary communities to handle FM activities.

An operational manual for piloting the market-based input delivery mechanism including the role of the recovered funds from the subsidized sale of fertilizer - will be established in form and substance satisfactory to the Bank. Until then, funds recovered will be deposited into an escrow account.

M

Procurement

The implementation entities in charge of the implementation of the project may not have acceptable knowledge of Bank procurement guidelines

S

AGEFIB (an agency with a strong experience of Bank financed projects, including using community driven development approach.) will continue to support the PMU procurement activities. In addition, a procurement officer will be recruited to strengthen the PMU.

M

Social and Environmental Safeguards

Some localized environmental impacts may be possible if environmental concerns are not taken into consideration in the development of small-scale irrigation infrastructures and storage facilities, and in the use of agro-chemicals.

M

The Environmental and Social Management Framework (ESMF) prepared for the Bank financed ESMF will be updated and implemented to take into consideration the potential negative impacts associated with the project.

L

Overall Risk (including reputational risk)

M

Terms and Conditions for Project Financing

54. Financing terms: The project will be financed on 100 percent grant terms (net of taxes) with proceeds from the European Union Rapid Response Food Crisis Facility Trust Fund.

55. There are no Board and Effectiveness conditions.

56. Disbursement conditions: no disbursement for expenditures associated with (i) sub-regional grants, and (ii) works, until the Government of Benin has:

prepared, adopted, disclosed and implemented in a manner acceptable to the Bank, an updated ESMF

adopted a revised/updated Project Implementation Manual

57. Dated legal covenants: the Government of Benin shall

within 45 days of project effectiveness, recruit a procurement specialist and financial audit specialist for the Project Management Unit.

within 60 calendar days of project effectiveness prepare, adopt, disclose and implement in a manner acceptable to the Bank, an updated ESMF.

within 30 days of project effectiveness, adopt a revised/updated Project Implementation Manual (PIM) detailing, inter alia, the operational, financial management and administrative procedures for the implementation of the Project, in form and substance satisfactory to the Bank.

within 30 days of project effectiveness, amend and restate the memorandum of understanding between the Emergency Food Security Support Programs -- Programme dUrgence dAppui la Scurit Alimentaire (PUASA) -- Management Unit (PMU) and the Regional Centers for Agriculture Promotion-- Centre Rgional pour la Promotion Agricole (CERPAs), under terms and conditions satisfactory to the Bank.

by August 31, 2010, prepare an operational manual related to Component 1 of the Project for piloting the market-based mechanism for the sustainable delivery of inputs (fertilizers and seeds) to food crop producers, including the role of the recovered funds from the subsidized sale of fertilizer.

Annex 1: Detailed Description of Project Components

Benin: Emergency Support to Enhance Food Security (ESEFS)

1. The project activities will be implemented through three components. Component 1 is devoted to agricultural inputs (fertilizers and improved seeds) delivery. Through component 2, the grant will help scaling-up the EFSSPs activities in promoting small-scale irrigation infrastructures. Component three will provide institutional support to the PUASA Management Unit (PMU).

Component 1: Delivery of agricultural inputs (2.42 million)

2. This component aims at (i) delivering fertilizer and improved seeds to about 15,500 producers (12,000 producers of maize and 3,500 producers of rice) in 2010, and (ii) piloting the market based input delivery mechanism developed under the EFSSP during the 2011 planting season.

3. Provision of fertilizer. The project will procure about 875 tons of fertilizers for 3,500 producers of rice and 2,400 tons for about 12,000 producers of maize, in total 3,275 tons of fertilizers for about 15,500 producers during the 2010 cropping season. This support will cover about 15,500 hectares of cereal crops (3,500 hectares of rice and 12,000 hectares of maize) and generate an additional production of about 15,500 tons of cereals (rice 3,500 tons and maize 12,000 tons). As under the EFSSP, the fertilizer procured by the project will be distributed at a subsidized rate (40 percent of the estimated market price). The cost-recovery on the fertilizer sales will allow the Government to finance the pilot of the market-based input delivery mechanism system in the following year.

4. Provision of improved seeds. As a complementary activity (as was the case under the EFSSP), the Government has committed to financing, through its own resources, the collection and distribution of 545 tons of improved seed (rice 245 tons and maize 300 tons) to about 15,500 producers. The stock will be collected from local seed producers supported by the Directorate of Agriculture. The PMU will manage the operation in collaboration with the Directorate of Agriculture and the Centres Rgionaux pour la Promotion Agricole (CERPA) and the Centres Communaux pour la Promotion Agricole (CECPA)[footnoteRef:4], respectively for the collect and the distribution. The Government will subsidize the distribution of the improved seeds at 100 percent. [4: The Centre Regional de Promotion Agricole (CERPA) is the regional agency of the Ministry of Agriculture, Livestock and Fisheries; the Centre Communal de Promotion Agricole (CECPA) is the community-level unit of the CERPA.]

5. Distribution mechanisms. The PMU will ensure the transportation of fertilizers and improved seeds to the storage facilities of the CERPA and CECPA. The CERPA and CECPA will be responsible for managing the stocks and, in collaboration with producer organizations, distributing the inputs to final users. Each beneficiary will sign a contract with the PMU specifying the quantity of fertilizers and improved seeds he/she needs and his/her commitment to reimburse 60 percent of the total fertilizer cost, at the latest five months after the harvest. Producer organizations will facilitate the contact and contractual arrangements between their members and the PMU.

6. Fertilizer cost recovery. The Government, through the PMU, will be responsible for recovering the fertilizer cost, which represents 60 percent of the total amount committed for fertilizer provision. The recovered funds (about 1.374 million) will be secured in an escrow account to be opened in a commercial bank acceptable to the Bank. A total amount of US$4.8 million (3.2 million) is expected to be recovered from the fertilizer cost recovery of the EFSSP (the government had an 85 percent recovery rate during the 2008 agricultural season and one month after the 2009 harvest has recovered 26 percent). In total about 4.57 million will be secured and available to pilot the innovative market-based input delivery mechanisms for the 2011 planting season (see below). The procedures for the cost recovery are described in Annex 6 and further detailed in the Fertilizer Distribution Manual.

7. Piloting of market-based input delivery mechanism: The EFSSP is helping the various stakeholders design a market-based mechanism for the sustainable delivery of inputs (fertilizers and seeds) to food crop producers. The analytical work has begun and is expected to be completed and validated by end-May in the first quarter of 2010. The mechanism will consist of contractual partnership between producer organizations and private-sector operators (banks, wholesalers, importers, and distributers). The PMU will use the funds accumulated from the fertilizer cost recovery of both the IDA-financed EFSSP and this project (the ESEFSP) to support the implementation of this mechanism during the 2011 planting season. The ESEFSP will support this effort, inter alia, by providing funds to strengthen producer organizations. An operational manual for piloting the mechanism - including the role of the recovered funds from the subsidized sale of fertilizer - will be established in form and substance satisfactory to the Bank and validated by August 31, 2010. It will also lay out the criteria (e.g. efficiency, access, user satisfaction, etc.) for evaluating the pilot and an evaluation will be organized to document lessons learned and inform the design and implementation of the final mechanism.

Component 2: Promotion of small-scale irrigation infrastructure (3.48 million)

8. This components aim is to increase the access of food crop producers to irrigation services, in order to intensify food crop production in the Niger river valley and in the lowlands of the hills region and in the Mono and Couffo rivers valleys. In particular, the component will support the development of additional 2,000 hectares in the Niger river valleys and 1,000 hectares in the lowlands of the hills region and in the Mono and Couffo rivers valleys. The component will also support the construction of related post harvest infrastructure, specifically 35 storehouses and 70 drying areas.

9. The technology for developing the small-scale irrigated perimeters relies on simple techniques that are rapid and easily implementable by the beneficiaries and local enterprises. In-depth technical studies are not necessary with this technology. The project will rely on the experience of the PMU in developing this type of small-scale irrigation infrastructure. In 2008 and 2009 about 5,000 hectares of small-scale irrigation infrastructures were developed under the PUASA.

10. Development of small-scale irrigation perimeters in the river valley regions: The technology for developing the small-scale irrigation infrastructure in the river valleys consists of a tubed drilling (on average 2 per 3 hectares, six to ten meters deep) equipped with a motor-driven pump. Local entrepreneurs are skilled at undertaking this task and motor pumps with the appropriate flow (10 and 20 liters per second) are available on the local market. However, given the quantity of pumps to be purchased, they will be procured through an international competitive bidding process and distributed to beneficiaries.

11. Perimeters are partitioned into 0.10 hectare plots, surrounded by small flood banks (0.5 meters wide by 0.4 meters high). The flood banks are constructed manually with soil taken from the perimeter and compacted. Water channels to conduct water to the individual plots are also constructed manually. The initial plowing of the plots is carried out with tractors or cultivators provided by the Agricultural Mechanization Program subsidized by the Government. The smoothing of the plot surface is realized manually providing temporary employment to villagers, minimizing the cost of the construction, and providing an opportunity to train the beneficiaries in the maintenance of the physical infrastructure. Lessons from past experience demonstrate the capacity of beneficiaries to conduct these activities successfully.

12. Development of small-scale irrigation perimeters in the hill region shallows. The aim in the hill region shallows is to retain surface water longer and create extra irrigation possibilities in the shallows. The technology consists of manually constructing small flood banks (0.5 meters wide by 0.4 meters high), following contour lines and using soil taken in the perimeters and compacted. Drain channels are also manually constructed to evacuate the water surplus in the case of strong rains. As described above, plowing is carried out with tractors or cultivators provided by the Agricultural Mechanization Program. The smoothing of the plots concerns only the space between two flood banks and is done manually.

13. The shallows perimeters are equipped with artisanal wells (approximately 6 to 10 meters deep and 1 meter in diameter) that are easily constructed by local entrepreneurs. The walls of the wells are protected by reinforced concrete tubes. Each well is equipped with a motor pump (of the same capacity and availability described above) and can cover, on average, three to five hectares.

14. Post harvest infrastructure. According to Direction de Gnie Rural (DGR) norms, 200 square meters of drying area is necessary for each 50 hectares of irrigated perimeter. In total 35 storerooms of 150 square meters of surface and 70 drying areas of 200 square meters of surface will be constructed around the irrigated perimeters. Local enterprises are skilled in the construction of storerooms and drying areas.

Component 3: Support for project coordination, monitoring and evaluation (0.34 million)

15. The PUASA Management Unit (PMU) will be in charge of the implementation of the project. The PMU was established in 2008 by a departmental order signed by the Minister of Agriculture, Livestock and Fisheries[footnoteRef:5] and has been responsible for the implementation of the IDA-financed EFSSP. The PMU is composed of: (i) a Coordinator responsible for the overall project management, (ii) an Agronomist responsible for the promotion of agriculture systems, (iii) a Rural Engineer, responsible for the development of small-scale irrigation infrastructures; (iv) a M&E Specialist, and (iv) an Accountant. [5: Arrt N460/MAEP/D-CAB/SGM/DPP/DRH/SA du 07 novembre 2008, portant nomination des membres de lUnit de Gestion du Programme dUrgence dAppui la Scurit Alimentaire et du Programme de Diversification Agricole par la Valorisation des Valles (PDAVV)]

16. In particular, the PMU will be responsible for the following activities: (i) planning, programming, and budgeting of activities to be financed; (ii) preparation and management of the contractual partnership with the public and private service delivery agencies and producer organizations; (iii) supervision and control of the field activities; (iv) administration of critical technical and fiduciary functions (procurement, monitoring and evaluation, feed-back from the beneficiaries, financial management); and (v) preparation of quarterly reports and end-of-project report.

17. The support provided under this component will strengthen the PMU by supporting its coordination activities, including: (i) developing a program implementation manual, (ii) setting up a computerized financial management system, (iii) improving the M&E system and its implementation, (iv) carrying out an impact evaluation study to analyze national food price trends, and (v) updating and implementing the ESMF. In addition the project will support training, acquisition of some equipment, office supplies, and other operational costs.

Geographic Selection and Targeting Criteria

18. Targeting of priority perimeters. In May 2009, PUASA brought together representatives of producer organizations and local and regional agencies of the MAED to decide on the priority perimeters to be developed in each region. In the Niger valley, 1,000 hectares will be developed in the county of Malanville and 1,000 hectares in the county of Karimama. In the Mono and Couffo Valleys, 200 hectares will be developed in 7 counties (5 in Bopa, 10 in Houeyogbe, 20 in Grand-Popo, 55 in Lalo, 50 in Aplahoue, 10 in Klouekanme, and 50 in Dogbo). In the Hills region swamps, 800 hectares will be developed in 5 counties (60 in Zogbodome, 220 in Bant, 200 in Savalou, 270 in Glazoue, and 50 in Sav). Priority has been given to areas currently exploited by producers.

19. Individual beneficiary targeting. In the small-scale irrigated perimeters, all producers (men and women) sharing the ownership of the common land resources will be beneficiaries. With respect to the fertilizer distribution, the PMU in collaboration with Directorate of Agriculture and the local agricultural extension services (CECPA) will carry out an extensive information campaign regarding the terms and conditions and producer groups will take the lead in selecting beneficiaries based on these criteria. To ensure production, the PMU envisions allocating 60 percent of the fertilizer to larger producers (those who cultivate more than two hectares) and 40 percent to those cultivating on smaller plots.

Appendix 1

Analysis of Food Prices in Benin

1. Between January 2005 and September 2007, food prices fluctuated around a relatively stable mean. Month-to-month reductions or increases in the food price index did not exceed 6 percent and 4 percent, respectively. Following the global food price crisis, Benins food prices rapidly increased by an estimated 32 percent between September 2007 and August 2008. This unprecedented increase in food prices has fueled a significant increase in the general price levels by 12 percent over the same period.

2. On average, food prices have remained 20 percent higher in the post-crisis period, as compared to the pre-crisis food price levels. This compares to the observed 11 percent variation for the general price levels in the economy. The tension on food prices persisted in 2009 when average food price levels were 7 percent higher than the average levels in 2008. This compares to an average increase of 3 percent for the whole economy. The persistent tension on food prices, despite good crop production seasons in 2008 and 2009, reflects a reduced market supply of locally produced food.

3. A similar trend is being observed across West Africa. In Burkina Faso, the price of cereals (millet, sorghum, maize, local rice) increased by 14 percent between 2008 and 2009 while production increased by more than 40 percent. The emerging evidence suggests that private food stocks in several countries across West Africa were substantially depleted during the 2007-2008 food price crises. Taking advantage of the two consecutive normal agricultural seasons in 2008 and 2009, producers have directed some of their productions to the replenishment of their stocks. Private food stocks play an important role in regulating sharp swings in food prices. Persistently higher food prices represent serious threats to food security, particularly for urban consumers and net food buyers in rural areas. This emergency operation is expected to strengthen the basis for a more sustained increase in food production in the targeted regions.

Annex 2: Results Framework and Monitoring


Project Development Objectives

Project Outcome Indicator

Use of Project Outcome Information

To increase domestic production of food crops (mainly maize and rice) in targeted areas

Rice production in project areas (tons)

To inform policymakers on progress on achieving outcome indicators

To inform policymakers on the potential of innovative institutional mechanisms for the delivery of agricultural inputs

Maize production in project areas (tons)

Direct Project Beneficiaries (number), of which female (%)

Intermediate Outcomes

Intermediate Outcome indicators

Use of Intermediate Outcome Monitoring

Component 1: Delivery of Agricultural Inputs

Improved access to and adoption of fertilizers and improved seeds among targeted 15,500 food crops producers

Improved market-based mechanism for input delivery

Fertilizer procured and distributed to farmers (tons)

To validate agronomic suitability of inputs and extension services

To demonstrate producers organizations and private operators capacity to run innovative agricultural inputs delivery mechanisms

Improved seed distributed to farmers (tons)

Producers using adequate dose of fertilizer (number)

Area cultivated /treated with adequate dose of fertilizer (ha)

Proposal of market-based input delivery mechanism for food crop producers adopted and tested (yes/no)

Component 2: Promotion small-scale irrigated infrastructure

Improved access to small-scale irrigation infrastructure in the the Niger river valleys, lowlands of the hills region and in the Mono and Couffo rivers valley

Improved access to storage and post-harvest facilities

Small-scale irrigated perimeters developed in the Niger river valley (ha)

To gauge investment in agricultural infrastructures

To validate investment in agricultural infrastructures

Small-scale irrigated perimeters developed in the lowlands of the hills region and in the Mono and Couffo rivers valleys (ha)

Producers settled in small-scale irrigation perimeters (number)

150 m2 capacity storage facilities constructed (number)

200 m2 capacity drying areas constructed (number)

Arrangements for Results Monitoring and Evaluation

To provide a comprehensive summary of the results, please note that this table combines the results monitoring of the two parallel financed operations the IDA GFRP-financed Emergency Food Security Support Project (EFSSP) approved in October 2008 and the proposed EU GFRP-financed Emergency Support to Enhance Food Security Project (ESEFSP). For implementation and completion (ISR/ICR) reporting purposes for this operation, please refer to the relevant results for the EU-funded ESEFSP (in bold). For further details on the EFSSP operation, please refer to the relevant Emergency Project Paper (Report No. 44942-BE)

Outcome indicators

Baseline

(2008 for IDA and 2009 for EU)

Progress to date under IDA-funded EFSSP

Target Values

Data Collection and Reporting

2009

2010

2011

Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

Rice production in EFSSP (IDA-funded) project areas (tons)

42,000

(estimate)

34.854

48,000 (additional 6,000 tons)

-

-

PMU quarterly reports

CERPA/CECPA

database

CERPA/CECPA

PMU

Rice production in ESEFSP (EU-funded) project areas (tons)

58,000

(estimate)

-

-


-


CERPA/CECPA

database

CERPA/CECPA

PMU

Maize production in EFSSP (IDA-funded) project areas (tons)

45,000 (estimate)

83,946


-

-


CERPA/CECPA database

CERPA/CECPA

PMU

Maize production in ESEFSP (EU-funded) project areas (tons)

190,000

(estimate)

-

-


-


CERPA/CECPA

database

CERPA/CECPA

PMU

Direct project beneficiaries (for IDA-funded EFSSP) (number)

of which female (%)

0

22,602

50,000

-

-



CERPA/CECPA

PMU

Direct Project Beneficiaries (for EU-funded ESEFSP) (number)

0

-

-

15,500

-



CERPA/CECPA

PMU

Output indicators

Baseline

(2008 for IDA and 2009 for EU)

Progress to date under IDA-funded EFSSP

Target Values

Data Collection and Reporting

2009

2010

2011

Frequency and Reports

Data Collection Instruments

Responsibility for Data Collection

Component 1: Delivery of agricultural inputs

Fertilizer procured and distributed to farmers under IDA-funded EFSSP (tons)

0

6,900

8,500

-

-


Procurement records, invoices and receipts

PMU

Fertilizer procured and distributed to farmers under EU-funded ESEFSP (tons)

0

-

-

3,275

-



PMU

Improved seeds distributed to farmers under IDA-funded EFSSP (tons)

0

1,294

1,300

-

-



PMU

Improved seeds distributed to farmers under EU-funded ESEFSP (tons)

0

-

-

545

-



PMU

Area cultivated / treated with adequate dose of fertilizers under IDA-funded EFSSP (ha)

0

50,458

54,000

-

-


CERPA/CECPA Data base

CERPA/CECPA

PMU

Area cultivated / treated with adequate dose of fertilizers under EU-funded ESEFSP (ha)

0

-

-

15,500

-



CERPA/CECPA

PMU

Producers using adequate dose of fertilizer under IDA-funded EFSSP (number)

0

22,602

50,000

-

-



CERPA/CECPA

PMU

Producers using adequate dose of fertilizer under EU-funded ESEFSP (number)

0

-

-

15,500

-



CERPA/CECPA

PMU

New agricultural input delivery mechanisms set-up and tested (IDA and EU funded financing) (yes/no)

No

No

Study underway

No

Mechanism designed & adopted

No

Operational manual developed & adopted

Yes

Mechanism piloted & evaluation report submitted


Validation workshop report

PMU

Component 2: Promoting small-scale irrigated perimeters (new component under the EU-funded ESEFSP)

Area of small-scale irrigated perimeters developed in Niger river valleys (ha) under the project

0

-

-

1,000

2,000


CERPA/CECPA

/DGRE Data base

CERPA/CECPA

/DGRE/PMU

Area of small-scale irrigated perimeters developed in the lowland of the hills region and in the Mono and Couffo rivers valleys (ha)

0

-

-

500

1,000


CERPA/CECPA

/DGRE database

CERPA/CECPA

/DGRE/PMU

Producers settled in the small-scale irrigation perimeters developed (number)

0

-

-

1,500

3,000


CERPA/CECPA

/DGRE database

CERPA/CECPA

/DGRE/PMU

150 m2 capacity storage facilities constructed (number)

0

-

-

0

35


CERPA/CECPA

/DGRE database

CERPA/CECPA

/DGRE/PMU

200 m2 capacity drying areas constructed (number)

0

-

-

0

70


CERPA/CECPA

/DGRE database

CERPA/CECPA

/DGRE/PMU

50

Annex 3: Summary of Estimated Project Costs


Project costs by expenditure category (millions of Euros)

Categories of expenditures

Euros (millions)

1. Goods and equipments

3.35

2. Works

1.69

3. Sub-grants

0.76

4. Consulting Services and Trainings

0.27

5. Operating costs

0.17

6. Unallocated

0.26

Total Grant

6.50

Project costs by component (millions of Euros)

Component

Euros (millions)

Component 1: Delivery of agricultural inputs

2.42

Component 2: Promotion of small-scale irrigation infrastructures

3.48

Component 3: Support for project coordination and M&E

0.34

Unallocated

0.26

Total

6.50

Annex 4: Financial Management and Disbursement Arrangements


Summary of the Financial Management Assessment

1. The PUASA Management Unit (PMU) which has been implementing the IDA-financed EFSSP will be responsible for the implementation of this Grant. The project consists of the following three components: (i) delivery of agricultural inputs (2.42 million); (ii) promotion of small-scale irrigation infrastructure (3.48 million); and (iii) institutional support to the PMU (0.34 million).

2. A financial management assessment was carried out in accordance with the Financial Management Practices Manual issued by the Financial Management Board in November 2005. The objective of the assessment was to determine whether the PMU had acceptable financial management capacity. A PMUs arrangements are acceptable if they are capable of recording accurately all transactions and balances, supporting the preparation of regular and reliable financial statements, safeguarding the Projects assets, and are subject to auditing arrangements acceptable to the Bank. These arrangements should be in place when project implementation starts and be maintained as such during project implementation.

3. The conclusion of the assessment is that the financial management arrangements for the project meet the Banks requirements under OP/BP 10.02 and are adequate to provide, with reasonable assurance, accurate and timely information on the status of the project required by IDA.

4. The financial management risk is assessed as moderate. The PMU is staffed with an experienced financial management specialist who has already implemented Bank-financed projects and there is an appropriate computerized accounting system in place. The Fertilizer Distribution Manual (FDM), describing the procedures that govern the emergency fertilizer distribution mechanisms and cost recovery procedures, was prepared by the PMU under the IDA-financed EFSSP. It will be updated to reflect lessons learned in the implementation of the EFSSP (for example, the field agents of the Local Agricultural Extension Services (the CECPA) were found to be better placed to manage the cost recovery than the National Agency for Food Security as originally stipulated in the FDM) and applied to the fertilizer distribution and cost recovery activities of this grant.

5. Regarding the sub-grants to communities and producer organizations for the development of small-scale irrigation infrastructure, it was agreed that the PMU will contract with AGEFIB (Agence de Financement des Initiatives de Base) to provide technical support, strengthen the financial management capacity of producer organizations, and prescreen disbursement requests of the communities before payment by the PMU.

Country Issues

6. The Overall Inherent Risk of the public financial management system in Benin is rated as Substantial. The 2008 Public Expenditure and Financial Accountability (PEFA) assessment noted that key risks remain in the following areas, namely: weak accounting recording and reporting system. But these risks will not impact the project as it will not rely on the public financial management system.

Fiduciary Risks and Mitigation Measures

7. The FM risk assessment and mitigations measures are summarized in the table below:

Risk

Risk Rating

Risk Mitigation MeasuresConditionalityResidual Risk Rating

Inherent Risks:

S

M

Country:

Weak governance and anti- corruption institutions.

S

The government has taken strong measures for fighting against corruption. Issues relating to internal control, reporting and auditing reforms are ongoing. But this risk will not impact the project as it will not rely on the national accounting and auditing system.

M

Entity Level

The PUASA Management Unit (PMU) FM capacity, and in particular the capacity to manage the fiduciary aspects of a WB project with community-driven development components, might be weak.

S

A service contract will be signed between the PMU and AGEFIB to provide fiduciary support at the community level. AGEFIB is a fiduciary agency with recognized experience in implementing community -driven development projects and management of Bank-financed operations.

M

Project level

Communities responsible for sub-projects (the development of small-scale irrigation infrastructures) under component 2 may have weak capacity regarding fiduciary aspects.

Insufficient knowledge and experience with IDA fiduciary procedures, in particular CDD procedures, may delay project implementation.

S

S

Dedicated accounts will be opened for each producer group or union and a specific implementation manual detailing all FM procedures and simple FM tools to used by the communities, will be prepared. AGEFIB will provide FM training to the financed communities and will insure the correct documentation of their expenditures. Other technical institutions of the Benin MAED (CERPA and Direction du Gnie Rural) will handle the technical oversight of the small-scale irrigation infrastructure development.

The project FM staff will benefit from the support of AGEFIB as a fiduciary agency which had strong experience in assisting communities under several IDA financed projects in Benin. IDA supervision mission could also help to identity and address weaknesses.

M

M

Control Risks:

S

M

Budgeting

Budget preparation process may be delayed as different stakeholders are involved in the project implementation.

S

The FM specialist of PMU will help stakeholders prepare realistic budgets consistent with the disbursement plan.

M

Accounting

Lack of adequate qualified accountant within the PMU.

S

The contract of the FM specialist recruited under the IDA-financed project must be extended until the end of the EC grant. AGEFIB[footnoteRef:6] will prescreen all disbursement requests prepared by local communities check and provide clearance for payment to the PMU. [6: AGEFIB (Agence pour le Financement des Initiatives de Base), a fiduciary agency with strong financial management capacity that provides fiduciary support for some Bank financed projects.]

M

Internal Audit

Lack of formal FM procedures for the sub-projects to be implemented by producer organizations or unions.

S

The Project Implementation Manual including FM procedures will outline approval and authorization procedures with clear segregation of duties. The key implementing partners such as CERPA (regional agency of the MAED), their local units (CECPA), and the DGR (Direction du Gnie Rural) will be involved in the supervision of the irrigation infrastructure construction and will provide clearance before any payment to producer organizations. AGEFIB will be responsible for checking for the correct documentation of expenditures at the community level.

The Project Implementation Manual will be revised to include operational and fiduciary procedures for implementation of the community-level small-scale irrigation infrastructure sub-project within one month of project effectiveness.

M

External Audit

Project audit reports likely to be submitted late.

Weak capacity of the Chamber of Accounts.

S

A private external auditor has been recruited for the EFSSP. The TOR and contract will be expanded to include the proposed grant.

L

Funds Flow

Funds may be diverted or used for non project eligible purposes especially at community level.

S

Dedicated accounts will be opened by all producer organizations involved in the project. AGEFIB will provide appropriate capacity building activities and verify the reliability of the producer groups record keeping and expenditures.

M

Reporting

Delay and difficulties in the preparation of acceptable Interim Financial Reports (IFRs).