Document of The World Bank Report No: 33790-CM PROGRAMDOCUMENT ONA PROPOSED INTERNATIONALDEVELOPMENT ASSOCIATION DEVELOPMENT POLICY GRANT INTHEAMOUNT OF SDR 17.3 MILLION (US$25.0 MILLION EQUIVALENT) A N D A PROPOSEDGRANT FROMTHE GLOBAL ENVIRONMENTFACILITY TRUST FUND INTHEAMOUNT OFUS$lO.O MILLION TO THE REPUBLIC OF CAMEROON FOR A FOREST AND ENVIRONMENTDEVELOPMENT PROGRAM January 31,2006 Environmentally and Socially Sustainable Development 3 Country Department 07 Africa Region This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS (ExchangeRateEffectiveEstimationfor January31,2006) Currency Unit-CFA Franc 539 FCFA = US$1 FISCALYEAR January 1-December 31 ABBREVIATIONS AND ACRONYMS A A P Assessment and Action Plan ACCT Agent Comptable Central du Trbor (Accountant o fthe Central Treasury) ANAFOR National Agency for Forest Development (ex-ONADEF) ARMP Public Markets Regulatory Agency BEAC Banque des Etats d 'Apique Centrale (Central Bank o f the Central African States) BF Basket Fund CAA CaisseAutonome d 'Amortissement (National Debt Management Agency) CAMAIR Cameroon Airlines CAS Country Assistance Strategy CFAA Countryfinancial accountability assessment CFAF Franc de la Communautd Financibre d'Afrique (Franc o f Central African Community) CIDA Canadian International Development Agency COFOG Classification o f Functions o f Government COMIFAC Conference o f Ministers incharge of Forests inCentral Africa COTCO Cameroon Oil Processing Company CPAR Country Procurement Assessment Review CTS Comite' Technique de Supervision (Techincal Oversight Committee) DAG Directorate o f Administration and General Affairs DCP MINFOF Projects Coordination Directorate DFAP MINEP Wildlife andprotected areas directorate DGE Division des Grandes Entreprises (Revenue Department Division dealing with large companies) D P MINFOFPlanningDirectorate EIA Environmental Impact Assessment EMP Environmental Impact MitigationPlan ERR Economic Rate o f Return EU European Union FCFA Franc de la Communautd Financibre d'Afrique (Franc o f Central African Community) FEDEC Foundationfor the Environment and Development o f Cameroon FEDPG Forest and Environment DevelopmentPolicy Grant FEICOM Cameroon fund for community development FREP Forestry Revenue Enhanced Programme FESP Cameroon's National Forest and Environment Sector Program FSF Protected area and wildlife fund GEF Global Environment Facility GoC Government of Cameroon GTZ Gesellschaftfir Technische Zusammenarbeit (German development agency) HIPC Heavily IndebtedPoor Countries IDA International DevelopmentAssociation IGF Inspection Ge'ne'raledes Finances (Finance General Inspector's Office) IMF International Monetary Fund IPDP Indigenous Peoples Development Plan IUCN InternationalUnion for the Conservation o fNature KfW German International Development Bank LBG Limbe Botanical Garden MINEF Ministryo fEnvironment andForests MINEFI Ministryo fEconomy andFinance M I N E P Ministryo fEnvironment andNature Protection MINFOF Ministryo fForests andWildlife MTEF MediumTerm Expenditure Framework NTFP N o ntimber Forest Products OED Operations EvaluationDepartment o f the World Bank ONADEF National office for the development o f forests PAME Protected Area Management Effectiveness score PGT Payeur Gtndral du Trdsor (Treasury General Payment Officer) PNDP National Program for participatory development PRGF Poverty Reduction and Growth Facility PRSP Poverty Reduction Strategy Program QAG Quality Assessment Group o f the World Bank RFA RedevanceForestidre Annuelle (Annual area-based forest fee) RIGC Capacity Buildingfor Forest Community Management SAC Structural Adjustment Credit SCWPA Strategy for conservation o f wildlife and protected area SG MINFOF General Secretariat SIGEFI Systdmede Gestion Financidre (Financial Management System) SNH Socidtd Nationale des Hydrocarbures (Cameroon's National Oil Company) S N V Netherlands-based, International Development Organisation UFA Long term forest management unit U N D P UnitedNations Development Program U S A I D United States Agency for International Development UTOs Techmcal Operational Unit comprising a forest concessionand adjacent park. vc Ventede Coupe (Small harvesting permits) WB World Bank wcs World Conservation Society WWF World Wide FundForNature ZICGCs Zones d'Intdr6t Cyndgdtique a Gestion Communautaire (Community managed game reserves) ZIC/ZICCG Private game reserves Vice President: Gobind T. Nankani Country Director: Ali M.Khadr Sector Manager: Joseph Baah-Dwomoh Task Team Leader: Giuseppe Topa TABLE OF CONTENTS INTRODUCTION................................................................. ...................... ....................................................1 I. COUNTRYCONTEXT................................................................................................................... THE 1 .................... ......................................................... 1 B. Macroeconomic Outlook and E.SectorLinks to Governance..................................................................................................... A. Program Description.......... B. Program Components........................................................................................................................ .8 111.WORLDBANKSUPPORTTOTHEGOVERNMENT FESPPROGRAM................................ ,.......................9 A. Links to Cameroon's CountryAssistance Strategy........................................................... B. Consolidation of Previous C. Collaboration with Other DevelopmentPartners..................... D.Links with Other WorldB E. Past Experience and LessonsLearned ..................... 12 F.Analytical Underpinnings...,,.,.,,,,,,,,.....,,,,,,..,,,,,,,,..,......,,...,,....,,,,,,....,,..,,...,..,,,.....,,,..,,,..,,..,.. IV. THEPROPOSEDIDAAND GEFFORESTANDENVIRONMENTPOLICYDEVELOPMENT GRANTS........ .............................................................................................................................................. 14 A. Operation Description...................,.....................~......................................,.....................,...,,..,..,,,..,.,14 ................................. .......... ...................... 15 C.Agreed Actions and Conditions....... ~...... ~..........~.~..................~.................................... 20 ~ ~ ~ V. IMPLEMENTATION OF THE PROPOSEDGRANT..................................................................... 23 A. Implementation, Monitoring and Evaluation .................................. B. Fiduciary and ProcurementAspects .............. ................,.......................,,,..,,,..,..,,.., ...,25 ,, C.Disbursement andAuditing ......................26 D.Poverty and SocialAspects ........................................................................................... E. Economic and Financial Aspects...................................................................... VI. RISKS, RISKMITIGATIONAND EXITSTRATEGY............ F.Environmental Aspects........... ................ ..............................................,........3 1 ANNEX 1:POLICY MATRIX OF KEY ACTIONS AND INDICATORS ................................................................... 34 ANNEX 2: SUMMARY DESCRIPTIONOFTHE FORESTAND ENVIRONMENT SECTOR PROGRAM.. .......,....,.....39 ANNEX 3: CODE OF CONDUCT ADOPTED BY FESP SUPPORTING PARTNERS ................................................. 44 ANNEX 4: THE MULTI-DONOR BASKETFUND FORTECHNICAL ASSISTANCE ............................................... 51 ANNEX 5: FORESTAND ENVIRONMENT SECTORPOLICYLETTER ................................................................ 53 ANNEX 6: ENVIRONMENTALAND SOCIAL ASSESSMENT REPORT SUMMARIES ........................................,,,83 ANNEX 7: MATRIX OF STAKEHOLDER PARTICIPATION PLAN................................... ................................. 107 ANNEX 8: FINANCIAL AND ECONOMIC ANALYSISAND INCREMENTAL COST ANALYSIS ANNEX 9: PROTECTED AREA MANAGEMENT EFFECTIVENESS BASELINE AND TARGET VALUES,. , ANNEX 10: MONITORING EVALUATIONSYSTEM AND ................................................................................. - ............................ 110 ....I19 ANNEX 10 (CONT'D): MONITORING EVALUATION AND INDICATORS AND BASELINEVALUES ...........,.....124 ANNEX 11:FORESTAND GREENENVIRONMENT SECTORMEDIUMTERM EXPENDITURE FRAMEWORK 141 ..128 ANNEX 12: FIDUCIARY RISK ASSESSMENT ................................................................................................. 143 ANNEX 13: FINANCIALTRANSFER MECHANISMS ....................................................................................... 171 ANNEX 14: STATUS OF BANK GROUP OPERATIONS .................................................................................... 174 ANNEX 15: FUND RELATIONS NOTE ............................................................................................................ 175 The Forest and Environment Development Policy Grant was preparedby a team consisting of Giuseppe Topa, Laurent Debroux, Clotilde Ngomba, Mohammed Bekhechi, Carole Megevand, Florence Charlier, Gilles Veuillot, Robert Robelus, Cyprian Fisiy, Jean-Michel Pavy, Serge Menang and Sheela Reddi. Peer Reviewers were Kevin Cleaver and Odin Knudsen. REPUBLIC OF CAMEROON FOREST AND ENVIRONMENT SECTOROPERATION IDA & GEF GRANTSPROGRAMSUMMARY' Borrower Government o f Cameroon Amount IDA SDR 17,3 million( US$25 millionequivalent) GEF US$10 million Terrns IDA Grant GEF Grant Tranchmg Three tranches Description The operation represents the IDA and GEF contribution to a multi-donor national forest and environment sector development program initiated and led by the Government o f Cameroon. It will help consolidate and scale up recent successful forest sector policy reforms, support capacity-building, and strengthen forest and environment institution by expanding their work programs in the fields o f environmental monitoring, policy oversight, law enforcement, forest management, biodiversity conservation, and community-based forest activities. Benefits The operation will benefit the national economy, local governing bodies, and Cameroon's population at large. Given the concentration o f poverty in rural areas (where most o f the poor live and where 64 percent o f all inhabitants are poor), the hardship and l o w wages typical o f forest employment, and the forest's role as the principal source o f cash income for the rural poor - the operation i s self-targeting on the poor. Through its focus on sectoral policy, institutional reform, law enforcement, regulation o f production forest and environmental monitoring, rehabilitation o f degraded national parks and biodiversity conservation sites, the FEDPG will have a strong positive impact on the environment. Risks The operation carries significant risks associated with political and financial sustainability. For the Bank, there are also fiduciary and reputational risks. The FEDPG integrates comprehensive measures to address or mitigate each risk. Furthermore, the operation is designed and sequenced to build institutional capacity to address effectively the root cause o f these risks. In assessing the operation, the team found that important political, economic and reputational risks would be also associated with not supporting this operation. Given the Bank's considerable involvement insector reforms over the past several years in Cameroon, lack o f follow up attention to the sector would entail the weakening or reversal o f successful reforms, encourage abuse by vested interests, and halt the reformprogress inpartially reformed institutions, newly created management systems and governance structures. The potential downside associated with inaction far outweighs the risks associated with the operation itself. Operation ID PO70656 For the flrst time and at variance with OD 9.01, the proposed operation will use GEF Trust FundGrant resources to fmance a development policy operation. To allow this to happen, the GEF Council discussed and approved the design of the operation on May 19-21, 2004 and a waiver of OD 9.01 was granted on April 13, 2005. INTRODUCTION The results-based Country Assistance Strategy for Cameroon presented to the Board in August 2003 featured the present result-based operation in the base case lending scenario. The operation i s instrumental in supporting the Strategy's two pillars o f poverty reduction: improved pro-poor economic management and service delivery, and economic diversification and accelerated growth. This operation will help pave the way for the a gradual transition o f the Bank's Cameroon portfolio from traditional investment instruments to more integrated programmatic lending linked to policy reforms and results achieved. It will do so by allowing the Government to use its newly reformed national procurement and financial management procedures in the utilization o f the IDA and GEF Grants proceeds for implementing the present operation. I.THECOUNTRYCONTEXT A. RecentEconomicDevelopments 1. Cameroon's macroeconomic performance through 2004 was broadly solid, with real growth registering about 4 percent since 1997 and inflation remaining low. However, in 2004, the business climate was adversely affected by the Treasury's accumulation o f domestic payment arrears and slow progress in restructuring o f loss-making public enterprises. Real GDP growth for 2004 i s estimated at 3.5 percent, lower than initial estimates because o f weaker-than-expected manufacturing activity, driven in part by lower-than-expected electricity generation. Early estimates o f growth projections for 2005 are below 3 percent, with sluggish manufacturing output and weak consumption caused in part by fiscal consolidation. As a result, per capita income growth i s estimated to have slowed to less than 1percent in 2005. Inflation remained low in 2004, reflecting a good harvest and sluggishdomestic demand. Inflation i s estimated to have been about one percent in 2005. The surge in international oil prices has not significantly affected inflation in Cameroon because fuel prices were adjusted only partially. Consistent with slowing activity levels, credit to the private sector grew marginally duringJuly 2004-June 2005 but i s expected to accelerate during the second semester o f 2005, bringing broad money growth to 4.5 percent. High international oil prices are helping strengthen Cameroon's overall external position. Non- oil exports are estimated to have declined by 4 percent in 2005, after two years o f growth, because o f weaker exports o f primary commodities known for strong year-on-year variations. Manufactured exports remain weak, and the economy's price competitiveness appears to have changed little inrecent years. 2. Fiscal performance, particularly non-oil revenue, weakened considerably in 2003/2004 and budget pressures were accommodated by an increase in domestic arrears and extra-budgetary spending. The non-oil primary deficit widened from 0.3 percent o f non-oil GDP in 2003 to 1.5 percent in 2004. Non-oil revenue declined by 0.8 percentage points o f GDP. Income taxes reflected a higher-than- expected loss from the income tax reform introduced in 2004, while the decline o f VAT and revenue appeared to reflect a slowdown o f activity in the formal sector and shortcomings in revenue administration due to various reforms introduced in 2004. Cash expenditure increased by 0.5 percent o f GDP, despite a decline in budget allocations by 0.4 percent. This indicated significant expenditures executed in 2004 related to previous budget years and extra-budgetary spending. Overall budget balance weakened by nearly 1.5 percent of GDP to a deficit o f 0.8 percent o f GDP. This was financed by higher foreign financing (project loans and debt relief), an accumulation o f external arrears, and low payments on domestic arrears and debt. As a result o f the above weaknesses in fiscal performance, the 2000 PRGF arrangement could not be completed. 3. In 2005, Cameroon embarked on a Staff-Monitored Program with the IMF and adopted an ambitious program to restore the fiscal position. This program sought to mobilize non-oil revenue in the context o f the secular decline in oil output, contain non interest current expenditure, strengthen public investment implementation and restructure/privatize major loss making enterprises. The successful 1 implementation of the IMF Staff-Monitored Program led to the adoption o f a new PRGF on October 24, 2005, and opened the possibility for Cameroon to reach the HIPC completion point in the second quarter of 2006. Immediate policy priorities highlighted in the PRGF program include: (i)enhancing the transparency o f fiscal operations; (ii)increasing public investment, including HIPC-funded, spending; (iii)accelerating the restructuring and privatization of public enterprises to limit current or future budgetary costs; and (iv) improving governance and the business environment. B. Macroeconomic Outlook andDebt Sustainability 4. Lookingforward, the macroeconomic framework is expected to remain stable. The medium-term macroeconomic framework targets a gradually increasing growth rate. The Government's fiscal projections are built on lower oil revenue, higher non-oil revenue, rationalized public expenditures, and more targeted spending in priority sectors. The overall fiscal balance, excluding grants, i s projected to reach 1.6 percent of GDP in 2005 and 0.7 percent in2006. Total revenues excluding grants are expected to decline slightly from 17.8 percent o f GDP in 2006 to 16.5 percent o f GDP by the end of 2008, as a result o f an expected oil revenue decline from 5.5 percent o f GDP in2006 to 3.7 percent in 2008. The oil revenue shortfall would be partially offset by increasednon-oil revenue projected to reach 12.8 percent o f GDP in2008. Selected Economic Indicators Economic Indicators Actual Estimate Proj. 2002 2003 2004 2005 2006 I GDP growth rate - at constant prices 1 4.0 I 4.1 I 3.5 I 2.8 I 4.2 I r N i o l i GDP growth rate - at constant pnces I 4.9 I 4.9 I 4.7 1 3 7 I 4.1 1 Inflation rate (CPI) 2.8 0.6 0.3 1.3 1.80 Government revenue (excl. grant)/GDP 16.5 16.1 15.1 16.9.0 17.8 Primary budget balance/GDP 3.8 3.4 1.9 3.9 3.4 IIGovernment expenditure/GDP 15.7 15.4 15.9 15.3 17.0 Overall fiscal balance (excl grant)/GDP 1I 0.8 1I 0.7 II-0.8 11 1.6 II 0.7 1I Current account balance/GDP -6.1 -2.1 -3.0 -2.4 -1.2 NPV o f External public debt after past debt relief/GDPt 49.6 39.0 35.8 31.1 27.5 External debt sen-ice as % o f exports o f goods and sen.ices (before debt relie9 27.7 26.0 23.0 20.2 17.1 External debt senrice as Yo o f exports goods and services (after debt relief) 10.0 8.7 7.0 6.7 3.6 5. Financing needs. The proposed program i s consistent with both the overall Government's Medium Term Expenditure Frameworks (MTEFs) and with the detailed MTEFs prepared for priority sectors including health, education, road, forests and the green environment. According to the MTEF operating and capital expenditures funded domestically as a percentage o f the GDP are projected to double by 2008 in the forest/environment sector. While external financing i s critical to successful implementation o f the proposed operation, it does not crowd out Government's own efforts to adequately fund the sector nor does it inflate artificially the resources available for the sector. O f the sector expenditures projected over the forthcoming five years (US$185.3 million) excluding the salaries, 48.1 percent would be met by Government resources, and 31.5 percent through contributions by development partners which leaves a US$25.7 million financing gap over five years (see Annex 11 on MTEF for the forest and green environment sector). Averaging 13.8 percent o f the total cost o f the investment, the financing gap i s expected to reduce significantly during implementation (not-yet committed pledges of various development partners have been excluded from the calculation o f available funding). At any rate, 2 the program is robust enough to be executed well even in case the funding gap were not significantly reduced. C.The Forestand EnvironmentSector Setting 6. Geography and biodiversity. Stretching over 475,000 square kilometers between Central and Western Africa, Cameroon extends from the arid fringes o f the Sahara inthe north to the humidrainforest biome o f the Congo Basin inthe south, with a range o f climatic and vegetative zones inbetween. Interms o f biological diversity, the country i s second only to the Democratic Republic o f Congo in Africa, with some 409 species o f mammals (including half o f Africa's 52 species o f higher primates), 848 species o f birds, nine thousand species o f vascular plants (of which at least 156 are endemic), 171 species o f amphibians, 210 species o f reptiles, and 138 species o f fish. Cameroon has one o f the highest proportions o f land area devoted to conservation in Africa. Some 14percent o f the country's territory i s designated as national parks, reserves, sanctuaries and conservation concessions, whether these concessions are existing or in the process o f being gazetted or negotiated. Permanent production forests cover about six million hectares. Parks and permanent production forests are demarcated through an extensive process o f public consultation inwhich a wide range o f stakeholders participate. 7. Theforest sector in the Cameroonian economy. The forest sector i s Cameroon's largest non- public sector employer and its second largest source o f export revenue after petroleum, accounting for 28.2 percent o f non-petroleum exports between 1992 and 2000. Cameroon also possesses one o f the continent's most developed, technologically advanced and dynamic wood processing industry. Forestry and related activities accounted for 8.9 percent o f gross domestic product between 1992 and 2000, and the sector has grown 4.7 percent a year since 2000. The sector shows signs o f gradually diversifying in coming years into a broader range o f forest products and environmental services. 8, Forest reforms and developments. Recent reforms have bolstered the forest sector's contribution to rural development and economic growth. Policy changes between 1994 and 2004 fostered new investment which expanded the number o f processing units from 38 to 70, significantly raising the number o f those employed inthe sector. Fiscal Reforms and improved forest revenue collection increased state fiscal revenues, from about US$14 million in 1994 to US$60 million eight years later. Revenues to local governing bodies rose from close to zero to US$10 million a year. The wood processing industry has begun a shift towards secondary processing as a result of improvements in the larger investment climate, raising the value-added within the sector while volumes harvested and the area under active logging have started to decline. Overall the sector i s projected to grow at around 4 percent per year until 2015 - providing a much needed source o f both local and central public revenues. Increases in employment level are also projected. 9. Forest loss. Expansion o f agriculture and fuelwood collection are the principal cause o f deforestation in Cameroon. These occur mostly in drier northern areas where commercial logging i s virtually nonexistent. In the humid south, forest loss i s highest along roads in proximity to major cities, where the transport costs associated with illegal logging are lower. In the 1990s a zoning plan was introduced in the south, dividing forests into permanent production forests, community and communal forests, and protected areas. The present operation will introduce a similar, participatory zoning plan in the north. 10. Despite Cameroon's large areas o f protected forests, the sector's strong performance in recent years has not been matchedby comparable improvements in sustainable forest management or protection o f forest ecosystems. As a result, the rate o f Cameroon's forest loss remains around 0.65 percent per year (that i s the average for all o f Africa). While illegal loggingby the forest industryhas been significantly reduced, it has persisted and expanded within the informal sector along with the commercial trade o f bushmeat and poaching o f endangered species. D. Sector Linksto PovertyReduction 11. Forests in the economy of Cameroon. Forests have a profound significance for poverty reduction inCameroon. Directly employing over 12,000 workers, the sector is far and away the largest employer in rural areas, and enjoys exceptionally low cost o f job creation relative to other manufacturing sectors, making it a logical focal point for expanding employment. Given the concentration o f poverty in forest zones, the hardship and low wages typical o f forest employment inCameroon, and its role as the principle source o f cash income for the rural poor, the impact o f forest development on the poor i s significant and self-targeting. In addition to providing exchange for necessities that require cash payment, like school fees, medicine, and clothing, forests are likewise a source o f food, shelter, domestic energy, and traditional medicines, which are essential to the vast majority o f Cameroon's poor. 12. Forests role in achieving the Millennium Development Goals. Forests offer opportunity for economic growth and perform ecosystem functions o f immense regional and global significance. A large proportion o f the poorest people in Cameroon concentrate in and around forests, making forests vital to their livelihoods, and central to their food security, vulnerability, and seasonal income streams. Improved forest stewardship and addressing problems o f poverty in forest areas are therefore key to achieving the Millennium Development Goals particularly MD Goal One (Reducing Extreme Poverty) and MD Goal Seven (Achieving Environmental Sustainability). National commitments to the MDGs cannot be achieved unless substantial progress i s made to target poverty reduction amongst forest dependent people. 13, Forests in Cameroons Poverty Reduction Strategy Paper. The Joint IDNIMF Staff Assessment o f the Cameroon Poverty Reduction Strategy Paper (Report No. 26243) singles out the forest sector as an engine o f specifically pro-poor economic growth, as well as an important area o f economic diversification, providing a hedge against the vulnerability o f national income to export price shocks implicit inthe country's still significant reliance on oil revenues. The USSlO million per year the forestry sector provides local governments makes it the first source o f funds for community infrastructure, E. Sector Links to Governance 14. Forests as a source of political patronage. Like with other countries in the sub-region, Cameroon's forests have often represented a means through which political elites distributed privileges, mobilized and rewarded political support, and enriched themselves at the expense o f the country. Until well into the 1990s, Cameroon's forests were part o f a well-organized machinery o f influence between patrons and clients. Government officials in charge o f regulating the forest sector operated as gate- keepers o f harvesting rights, while higher ranking authorities maintained direct relations with the timber industry and other vested interest groups. Corruption was particularly damaging to the forest sector, where it not only represented a leakage o f much needed public resources, but also impeded larger volumes o f quality foreign investment fi-om being realized in Cameroon, encouraged illegal logging in national parks, and undermined the legitimacy and credibility o f the state. 15. Governance reforms in theforest sector. Portrayed inthe press as one o f the most corrupt nation states in the World, in 1998 Cameroon's Government acted to improve its international image, and identified the forest sector as an area inwhich to demonstrate its capacity to break with past practices and showcase its commitment to reform. Led by a strong team of reformers and supported by the World Bank and IMF within the frameworks o f the Third Structural Adjustment Credit (SAC 111) and Poverty Reduction and Growth Facility (PRGF) respectively, governance reforms in the forest sector benefited from increasingly broad political and popular support. They became a testing ground for innovation and a prototype for reforms in other sectors, 4 16. Forest sector reforms. The reforms themselves consisted o f the following measures among others: (i) New legislation on community forests, the environment, social and environmental impacts, and a new strategy for managing protected areas; (ii) Demarcation o f the permanent forest estate into commercial, protected, and community and communal zones; (iii) Introduction o f longer and more predictable concession contracts, and o f bank guarantees to facilitate compliance with fiscal and environmental regulations; (iv) Use o f public information and independent observers to ensure transparency in forest auctions and law enforcement; (v) Suspension o f all un-monitorable logging permits and introduction o f auctions for all harvesting rights; (vi) Clear definitions o f forest management requirements and introduction o f mandatory management plans; and (vii) Adoption o f a new forest taxation and forest revenue recovery system. 17. Impact of the reforms on transparency. The success o f the reforms can be measured by a number of direct and indirect indicators. Recovery o f forest fees and taxes rose to over 90 percent. Transparency in allocation of forest concessions, payment of sector and corporate taxes, and application of penalties were established for the first time. Independent observers were integrated as a welcome complement to Government control and their official role reflected in regulations. From June 2001 to August 2004, a BritishNGO, Global Witness, inits capacity of independent observer, completed 120 control missions of which 107 jointly with forest control authorities and 13 independently. Global Witness published the results o f its findings in 119 missions' reports and four summary reports inEnglishand French which was disseminated in Cameroon and internationally. Over US$6.8 million o f penalties have been collected or are in the process of being recovered, excluding impending court cases related to criminal forest activities. Over 2,500 articles on forests and forest-related issues were published in the Cameroonian press between 2000 and 2004. These transparency achievements are maintained and enhanced through regular updates posted in the internet. Through its website (www.minef.cm) the Ministry in charge o f Forests provides information to the public not only on Cameroonian forest-relevant laws and regulations but also on sensitive matters such as cases of illegal logging and poaching of protectedspecies; fines paid and cases in court, auctioning o f concessions and results o f the award process; and satellite images showing o f forests3 with a level o f details that allows the identification o f illegal logging operations, 18. Political commitment and institutional capacity. Such positive reflections o f political commitment notwithstanding, political buy-in proved a necessary but not sufficient condition for the sustainability and long-term success o f sector reforms. With a shrinkingand unmotivated staff, paid one fourth o f the FCFA pre-devaluation salary level, forest institutions have had to rely on a small number of reform champions, short-term funding, and ad-hoc partnerships. Capacity building remains a persistent priority: law enforcement, policy oversight, program monitoring, and technical support all require further efforts to strengthen the institutions responsible for them. Capitalizing fully on the improved economic environmentresulting from the reform process will require an expansion o f field programs. 11.THE GOVERNMENT'SFORESTANDENVIRONMENT SECTORPROGRAM A. ProgramDescription 19. Cameroon's Forest and Environment Sector Program (FESP) i s a ten year program developed jointly by the Government of Cameroon, its development partners, and the World Bank. It was adopted in June 2004 as a common sector development framework for government institutions, local governing bodies, communities, the private sector, NGOs, and other partners active in the forest domain. Its implementation entails the alignment o f future donor support to fit into a consolidateddevelopment effort. It also involves the merging or repositioning o f ongoing individual projects to fit the FESP objectives and implementation structures (a process that i s already well advanced). 3This is currentlyavailable for the South of the country, where all commercialloggmgis located. Images shown are those produced collaborativelywith the GlobalForestWatch Programof the World ResourcesInstitute. 5 20. The FESP exemplifies the country's integrated approach to donor alignment, governance, community participation, sustainable forest management, and biodiversity conservation. The intellectual foundation of the Program rests in the notion that forest management, biodiversity conservation, social equity and governance are highly inter-dependent and must be approached simultaneously. The country's biodiversity resides in integrated landscapes consisting o f production forests, national parks, and populated rural lands. As such, policy reforms in the forest and green environment must deal simultaneously with economic and social aspects o f forests and biodiversity while establishing strong linkswithrural development andfostering good governance. 21. Consolidating the achievementsof SACIII.Grounded in the implementation o f Cameroon's 1993 Forest Policy and 1994 Forest Law, the Program i s designed to deepen and scale up recent forest policy reforms and secure those initiated under the Third Structural Adjustment Credit for Cameroon (SAC 111). The FESP focuses on strengtheningnational institutions and the role o f civil society, in order to create conditions in which local communities and the private sector can gainfully engage in the sustainable management, conservation, and development o f forests and other natural resources. 22. The Program i s designed to play a vital role in enacting the policies laid out in the National Biodiversity Strategy and Action Plan (NBSAP) and the Strategy for Conservation o f Wildlife and Protected Area (SCWPA). These instruments call for securing some 40 protected areas, and increasing the present protected area network from 14 to 17 percent of the national land area. The FESP i s also charged with setting up instruments to bring Cameroon into compliance with the 1994 Convention on Biological Diversity (CBD), and more specifically with the recommendations o f the CBD Conferences o f the Parties (COP) 111, IV, and V on critical ecosystems, threatened endemic species, ecosystem approaches, and sub- regional linkages. 23. Capacity building. At the very core o f the program i s the rehabilitation and rejuvenation o f human resources responsible for the management o f the green environment. Halted to curb public expenditures in the late eighties and early nineties, no new recruitments have taken place since to compensate for staff retirement or premature death, and for enabling forest and environment institutions to face new challenges. As part o f the preparation o f FESP these institutions have elaborated and sought Government support for a four-year (2006-2009) recruitment strategy, covering 1550 new staff (600 in 2006, 400 in2007, 300 in 2008 and 250 in 2009, all qualifications included). This strategy will offset the impact o f the departure o f two thirds o f current staff o f MINFOF and MINEP who expect to retire inthe coming six years, thereby improving staff quality and motivation without significantly increasing the salary bill. Expected recruitments will be complemented by a training program which has just been launched with 150 staff trained during the past six months. The cost for the implementation o f the new staffing strategy has been reflected in the Medium-term Expenditure Framework for the Forestry and Environment Sector. Thanks to the momentum created by the FEDPG, and the support that this Program enjoys by the Government a whole, the recruitment o f 600 staff to work as eco-guards in national parks and protected areas has started. New staff are expected to be operational by June 2006. 24. A program o f physical investments will help rehabilitate infrastructure and purchase new equipment, while management systems for personnel, assets, inventory, material flows and financial resource will be entirely reconstructed. 25. Decentralization and refocusing of Government Institutions. The program will strengthen the oversight and regulatory functions o f the Ministry o f Forests (MINFOF) and the Ministry of the Environment (MINEP) at the center and in the field. In so doing the Program calls for Government institutions to relinquish functions such as direct production, marketing and implementation of work which can be more effectively carried out by the private sector, local communities, or NGOs. This process was put into motion during program preparation with the restructuring o f ONADEF into ANAFOR, which involved the separation of over 500 forest sector workers whose jobs had lost relevance, and the foundation o f plans for recruiting and training o f new staff. 6 26, Transparency and disclosure. The Program's commitment to transparency makes the generation and availability o f information a natural priority. It seeks to define regulations that meaningfully guide environmental monitoring and impact assessments, and stresses the creation and dissemination o f knowledge resources like multiple resource inventories and cartographic materials to inform local resource use. This purpose i s complemented by a strong environmental awareness component which articulates the value and application o f these knowledge resources. Independent observers serving on commissions in charge o f public auctioning o f concessions and harvesting rights, as well as observers working with the government to control commercial logging and detect illegal logging, provide services that foster public confidence and improve the public image o f forest policy. The Program supports these services in a number o f ways, including the issuance o f public reports detailing cases o f infraction and explaining how appropriate penalties were determined. 27. Incentives. Deterrence of illegal activities i s balanced by incentives for sustainable forest and wildlife management and responsible hunting.The incentives are directed at highquality private investors who are able to complete management plans in a timely manner and ensure compliance with those plans' components. The approval process for logging concessions and community hunting zones will be streamlined, with a number o f existing institutional bottlenecks specifically targeted, 28. Incentives are also built into the FESP's biodiversity conservation component, which seeks to complete the delineation and upgrade the management effectiveness o f Cameroon's estate o f protected areas - which are to contain at least 90 percent o f the country's combined biological diversity, New partnerships and financial instruments are already in the pipeline, designed to promote long term interest inlocal management of protected areas, and to ensure the active participation of local people inwildlife and habitat management.4Local participation i s purposefully predicated on rural livelihoods and income generation schemes designed to make the forest framework attractive to local communities. Inaddition to private and small farmers' plantations, the Program seeks to position cooperatives and community-based economic organizations as suppliers to the lucrative urban fuelwood market. 4 GEF and IDA support will target eight under-funded "Ecosystemunits" comprising of UTOs, UFAs and community forests centeredaround (a) Waza with Lac Chad and Logone plains, @) K o q , Takamandaand Rumpi Hills complex, (c) Bakossi and Mount Kupe complex, (d) Campo hla'an andCampo-Marinecomplex, (e) rlfbam andDiem, (9Ndongorowetland, (g) BoubaBek/Nki complexet (h)Benouecomplex. 7 B. Program Components 29. The Government Program consists o f five components and several subcomponents: Component Subcomponent Estimated US$ cost 1.EnvironmentalRegulation and InformationManagement 7.49 million Environmental regulations Environmental Monitoring Communications and environmental awareness 2. Production ForestsManagement 30.68 million Completion of the Country Zoningplan Forest Management Plans Woodproduct industrialization Control operations and sanctions Valorization of Non-Timber Forest Products 3. ProtectedArea, Biodiversity andWildlife Management 33.15 million Biodiversity planning & zoning Knowledge & information management Participatory protected areas & community wildlife areas management Design & implementation of protected area management plans Optimization of economic benefits of protected areas & hunting zones Legal and institutional reform ofprotected area and hunting zones management Sustainablefinancing of wildlife &protected areas National Biodiversity Strategy and Action Plan update 4. Community Forest Resources Management 26.44 million Capacity buildingfor communityforest and natural resource management Reforestation andforest regeneration Promotion of fuelwood supply 5. InstitutionalStrengthening,Training and Research 87.53 million Transition of ONADEF into ANAFOR Strengthening the Environment Ministry Rehabilitating education and research inforestry & environment sector Capacity building and decentralization 8 111.WORLD BANKSUPPORTTO THE GOVERNMENT FESPPROGRAM A. Links to Cameroon's CountryAssistance Strategy 30. The operation i s featured in the base case lending scenario o f the August 2003 joint IDNIFC Country Assistance Strategy for Cameroon (Report No. 26555). Its objectives, links to the CAS and PRSP. Its role in supporting the CAS strategic pillars i s shown in the following table and following paragraphs. IIKTEGRATION OFOL'TCOMES INTOCr\MEROON'S RESCLTS-BASEDCOUN'IRY ;\SSISTASCE S'JX-\lXGY I CASOUTCOMES PRESENT OPERATION'S OUTCOMES PILLAR 1.INSTITUTIONAL FRAMEWORKFOR IMPROVEDPRO-POORECONOMIC MGT. & SERTrICE LocalGovernment bodiesreceive shares for SACIII reforms are mantamedandmonitored,includinga taxattonsystem that enables the transfer of 40 percentof revenues from forest area fees to localgoverningbodies for developmentimttattves At least 60 percent of concessions awarded 75 percentof productionforests (UFA) are managedaccordingto begmimplementation of forest management approvedforest managementplans and the remamder have plans under preparatton Of communittesrequesttngsupport perceive All Communittes' requests to exercise thelr priority rights on Ve/entes de this support as timely and useful(82 Coupes are processed and all requests to estabhsh community forests are community forests have expressed interest) processed,all rejecttonsare justified and notlfiedto concernedcornmumties within reasonabletime periods Capacityof localgovernmentis strengthened SACIII reforms are mamtamedandmonitored,includingthe mplementauonof a taxation system that enables the transfer of 10 percent of revenuesfrom forest area fees to localcommumttes for development inittatlves 31. In addition to the above measurable contributions to CAS'S Pillar One, the proposed operation will contribute to the CAS'S Pillar Two (Improved Basic Service Delivery) by securing the transfer o f a significant share o f forest taxation revenues to rural communities, thus making rural health care and education affordable to the poor especially in East, South, Littoral and South-West provinces. The program will also contribute to reducing constraints (and associated costs) to private sector development by improving forest sector governance, particularly in the areas o f business licensing, permit operations and enforcement o f service standards in the relations between Forest Sector Institutions, Industry and small scale local investors. 32. The proposed operation relates strongly to two broader objectives set out inthe Strategy. Firstly, it seeks to build on Cameroon's reform and poverty reduction gains o f recent years through its treatment o f governance issues. Secondly, it embodies the transition from project-specific to programmatic lending which the CAS prescribes for FY2006. The operation will contribute to these CAS objectives by helping 9 the Government expand its budget allocation to sector programs using newly reformed national procurement and financial management procedures. These links to the country's public expenditure management and fiduciary controls are meaningful well beyond the forest sector itself, and the performance assessments to be carried out within the operation's timeframe will be scaled up and applied to other sectors in the context o f the PRSC planned for FY2006. B. ConsolidationofPreviousBank-assistedWork inthe Forest andEnvironmentSector 33. The proposed operation builds upon the achievements o f the reform process that were assisted by IDA'SThird Structural Adjustment Credit or SAC I11 (1998-2004). The objectives o f the forest component of SAC I11were to: (i) promote sustainable exploitation o f Cameroon's forests; (ii) preserve ecological stability; (iii) promote economically efficient, high value-added, and unsubsidized processing industries; and (iv) encourage all stakeholders to participate inforest conservation and management. 34. SAC I11achievements included: (i) the establishment o f a regulatory framework for the design, approval, and monitoring o f sustainable management in production forests; (ii) competitive system to a award commercial forest logging rights inthe presence o f an independent observer; (iii) profound changes inthe forest taxation system supported by ajoint forest revenue enhancements programby the Ministries in charge of Forests and Finance; (iv) a forest operation control and supervision system involving independent observers in field inspections and periodic interpretations o f satellite imagery; (v) the establishment o f a consultative body through which the Ministries in charge o f Justice, Finance and Forests could exchange information on pending civil and criminal court cases. 35. While the most important forest and environment sector reforms were initiated through SACIII, and a suitable body o f policy, regulations and incentives i s now in place, the new more sophisticated framework that was created calls for more institutional capacity and more extensive collaboration among Government, NGOs, civil society, and the private sector. Their importance, notwithstanding SAC I11 achievements, can only be viewed as preconditions to the FESP Program, which will bring about the investment and buildcapacity on the ground to modernize and fully develop Cameroon's forest sector. C. Collaborationwith Other DevelopmentPartners 36. TheInternational Monetary Fund. The strong collaboration maintainedbetween the Bank and the IMFduringthe past six years will continue under the proposed operation. Past IMF focus on transparency and economic reforms was instrumental in helping the Government reform the forest sector. SACIII and related forest sector issues and reforms featured prominently in the IMF's Poverty Reduction Growth Facility as well as in the Government of Cameroon's letters o f intent to the IMF. The joint Bank-IMF assessment o f the Poverty Reduction Strategy Paper commented favorably on the objectives, policy measures, and actions proposed for the FEDPG operation, and these were subsequently incorporated into the HPC framework. Bank involvement in the forest sector through the proposed operation will help maintain forest sector fiscal revenues at appropriate levels, contribute to budgetary discipline and improved governance inthe forest sector. 37. The European Union and Bilateral Development Partners. The EU, United Kingdom, Germany, Canada, France and the Netherlands were among the first development partners to ahowledged that fragmentation and poor coordination had underminedthe success o f their past assistance inthe forest and environment sector. Along with the World Bank, they undertook to harmonise their assistance within the framework o f the National Forest and Environment Sector Programme and to use this Program as the framework through which they would increasingly channel support through common mechanisms. The main common mechanisms will be: (i) budgetary support aimed at supplementing national forest and environment budget allocations, and expanding sector programs; and (ii) pooled technical assistance. These Partners committed to maintaining alignment and harmonization in the forest sector, utilizing common monitoring and evaluation tools and organizing joint review missions. T o this end, the 10 representatives o f Canada, Germany, France, the Netherlands, the United Kingdom, the European Union, the Afi-ican Development Bank, the World Bank, FAO, UNDP, WWF, S N V and I U C N signed, on January 5, 2006, a long term agreement called code o f Conduct (Annex 3). Participation fi-om other Partners i s strongly encouraged by the Government and i s expected to follow. 38. The pooled technical assistance i s financed jointly by interested donors through an arrangement known as `TA Basket Fund'. This Fund will be managed jointly by the Government and GTZ-IS (see Annex 4). The approach allows for strong linksbetween funding, technical support, and results. While the GEF and DFIDwill join the Bank inproviding financial support directly to the Government, donors with less confidence in direct budget support instrument can contribute through the Basket Fund.DFID, CIDA and the French Cooperation have indicated their interest in contributing to the Basket Fund, but the French will only be able to do so after the completion o f the HIPC process. French financing will focus on enabling forest companies to fulfill their obligations with respect to forest management plans - a function that i s strongly supportive o f the forest management policy area o f the FEDPG operation. The contract between the MINFOF and the GTZ-IS, the co-executing agency for the Basket Fund, was signed in May 2005. The recruitment process for the international financial expert and the national administrative expert i s completed and the experts are expected to be operational during the fourth quarter o f 2005. Contributions to the Basket Fundhave been confirmed by DFID and Canada, and disbursement o f DFID funds has started. In the unlikely event that contributions to the Basket Fund were to prove insufficient, the Government committed to use its own resources to meet most essential technical assistance needs. 39. The UK government will provide direct fundinginsupport o fthe FESP through both instruments: budget support usingthe same financial mechanisms established for the World Bank Development Policy Grant (three tranches released based on achievement o f results), and through the technical assistance Basket Fund. Its combined contribution to the FESP will be L7.7 million (equivalent to US$14 million) and of this L3.7 million (equivalent to US$6.8 million) will go through direct budget support. D.Linkswith OtherWorldBankOperations 40. The FEDPG operation has strong links to four World Bank projects: the Chad Cameroon Pipeline Project, the Cameroon Environment Oil Technical Assistance Project (CAPECE), the Cameroon Railway Concession Project, the Cameroon Community Development Program Support Project (PNDP), as well as the forthcoming Poverty Reduction Support Credit. 41. The Chad-Cameroon Pipeline Project. Two national parks, Mbam Djerem and Campo Ma'an, were established to offset the impacts o f the Chad Cameroon Pipeline project on biodiversity and the environment. Requested by the Government, the World Conservation Society (WCS) has completed the first draft o f the management plan for Mbam Djerem. This document will be subjected to public consultation prior to final approval in the coming months. Inthe case o f Campo Ma'an the management plan has beenprepared incollaboration with the World Wildlife Fund(WWF). This plan has already been submitted to public consultation and endorsed by all relevant authorities. It i s expected to be signed by the Prime Minister and become operational momentarily. Both plans are co-funded by the Chad-Cameroon Pipeline Consortium through the Foundation for Development and Conservation (FEDEC), a Government-sanctioned national NGO which i s also financing an Indigenous Peoples Development Plan (IPDP) for the Baka, Kola, and Aka Pygmy populations inthe southern Atlantic forest. Core staffing and additional budget resources and overall responsibility for managing these environmental offsets will be provided by MINFOF. Under the FEDPG, the Government agreed to forestall any investments in forests usedby indigenous peoples until such time as the IPDP i s completed. Inthe framework o f the FEDPG 11 operation the Government will also complete the procedure to transform a part o f the DengDeng Forests (where primates can still be found) into a wildlife reserve and secure its integrity. At the time o f printing the present document, discussions regarding the future of Bank support to Chad portion of the Chad Cameroon Pipeline were still inprogress between the Bank and the Government o f Chad. The outcome o f these discussion i s not expected to have an impact on the rationale, feasibility, and funding of operations at Campo Ma'an andMbam Djerem. 42. The Community Development Program Support Project (PNDP). The FEDPG provides the framework for communities to engage in community forest activities. In addition, helping collect and allocate to local communities a portion o f forest area-based fees, the operation will help consolidate communities' investment capacity and match PNDP-funding for local investments. Links with the PNDP will provide an effective instrument to monitor and periodically audit the use o f funds accrued to local communities as a share forest taxation o f commercial forestry taking place intheir vicinity. 43. The Cameroon Railway Concession Project. The environmental management plan o f the Bank supported privatization of the railway system o f Cameroon (CAMRAIL) provides for expert assistance and independent monitoring to implement and evaluate activities that discourage the use o f the railway system by illegal poachers and loggers. The present operation will consolidate and continue activities undertaken by the private operators under the Cameroon Railway Concession Project after its completion. 44. Broader L i n h with the Bank Program in Cameroon. The FEDPG will help pave the way for the switch from traditional investments to programmatic lending in Cameroon. It will do so by providing an opportunity to observe and test the reformed national procurement and financial management procedures the Government will use to finance the PRSP. The fiduciary risk assessment carried out inpreparation for the present operation (see annex 12) builds upon the C F M P E M F A R work carried out in collaboration with the Bank. It identifies measures to be implemented to address enduring systemic weaknesses and highlightsaction to be taken in case procurement and financial management were to exhibit other major shortcomings. E.PastExperienceandLessonsLearned 45. World Bank support to the forest sector in Cameroon began with three provincial rural development projects in 1978, 1980 and 1984. These involved development of small-scale industrial plantations and erosion control. In 1982, the first full-fledged forest project was approved. It ended in 1990 following troubled implementation and cancellation o f about US$12.0 million o f a US$17.0 million loan. Between 1990 and 1997, the Bank focused exclusively on policy dialogue to improve Cameroon's policy framework and to eliminate major distortions. 46. Some o f the lessons learned during the extended period o f collaboration indicate that for forest sector programs to succeed: (i)clear rules o f the game must be established and enforced by effective institutions that enjoy high level political support; (ii)a clear division o f roles must be maintained between public institutions and private entities, and civil society organizations; (iii) transparency and public information are indispensable to prevent or counter corruption, and to restrict vested interests; and (iv) direct and indirect costs of conservation should not impose a burden on local and national economies, but should be more equitably sharedwith support by the global community. 47. The design o f the proposed operation was informed by the lessons learned through: (i) the 2002 evaluation o f overall World Bank involvement in the forest sector in Cameroon (OED, I S B N 0-7658- 5 The biodiversity value of the Deng Deng area has been recognizedduring the preparation of the Chad Cameroon Pipeline Project.The originally proposedpipeline trajectory was modified to avoid disturbance of this area. Not all the DengDengarea is equallyrich inbiodiversity:largeareas are degraded, but others continue to harborprotectedspecies such as primates, 12 0940-0); (ii)the implementation of SAC I11 as evaluated in the project's 2004 Implementation Completion Report; (iii) the 2003 QAG evaluation o f quality o f supervision by the Bank (QAG SAC I11 Review o f Quality o f Supervision Report); and (iv) the evaluation o f the GEF supported Cameroon Biodiversity ConservationProgram (PCGBC). 48. The September 2004 Implementation Completion Report ratedthe development objective o f SAC 111's forest component as "satisfactory" and its institutional sustainability "likely" but contingent on continued engagement. It was apparent that continued support by the Bank and other partners were required to build the capacity o f that Ministry's two successor agencies, the Ministry o f Forests and Ministryof Environment, which are now responsible for the full and continued implementation of SAC I11reforms through the operations o fthe FESP. 49. Specific lessons applied to the proposed operation were: 0 To ensure success o f reforms and reform implementation efforts, development partners should work not only with the executive branch o f the Government, but with a broader range of partners including the legislature, the public at large, NGOs, and community development partners. 0 Getting the correct framework and high-level Government buy-in are more important than physical investments. Through the forest component o f SAC 111,the Bank realized that unless healthy institutions are created and distortions eliminated, results on the ground cannot be achieved. 0 Forest sector reforms require a clear understanding o f issues and options by all stakeholders. Clarity o f expected outcomes, a focus on fundamental objectives, and flexibility to adapt to changing situations are important factors for the success o f forest sector reforms and operations. 0 Creating a strongly appropriate regulatory, institutional, legal, and incentive framework i s critical for achieving desired goals. Establishing an effective and legitimate rule o f law provides a balance between positive incentives that reward compliance to the law, and the deterrent value o f penalties for breaking the law. 0 In the context of Cameroon's forest sector, a result-based instrument such as sectoral structural adjustment tends to be far more effective and feasible than other types of lending instruments. 0 Biodiversity values should be given more prominence in land use planning. Individual area- based project interventions can be very complex to manage and are less likely to have an enduring impact than broad landscape-based nationalprograms. F.AnalyticalUnderpinnings 50. The FEDPG builds upon a comprehensive body o f analytical work undertaken by the Government o f Cameroon, various donors and the World Bank. This analytical work covers forest and environment as well other relevant extra sectoral themes. 51. Forest and environment analytical work includes the following studies among others: a sector expenditure review coordinated with the broader expenditure review carried out under the HPC, the preparation o f a forest Medium-Term Development Framework, a forest taxation review, forest revenue analyses and audits of forest revenues transferred to local governing bodies, a forest sectoral environmental and social assessment, analyses o f forest and environmental policies and institutions, an assessment o f the protected area network, studies on the impact o f forest law enforcement on illegal logging and rural livelihoods, a fiduciary risk analysis, and a communications assessment. Inparallel with 13 the preparation o f the FEDPG operation, the Bank conducted a piece o f economic and sector work to analyze and measure the impact o f the reforms Cameroon adopted over the past ten years. The Bank (DEC, WBI, ARD and AFR) also undertook a particularly detailed analysis o f how the introduction o f the auctioning system in the allocation o f logging rights contributed to the broader transformation o f the forest sector. Both studies should be publishedby the Bank shortly. IV.THE PROPOSEDIDAAND GEFFORESTAND ENVIRONMENTPOLICY DEVELOPMENTGRANTS A. OperationDescription 52. The development objective o f the proposed Forest and Environment Policy Development Grant (FEDPG) is to strengthen public and private efforts to achieve socially-, economically-, and ecologically- sustainable use o f national forest and wildlife resources. The FEDPG represents the IDA and GEF contribution to the implementation of the FESP. Initiated and led by the Government o f Cameroon, the FESP i s a multi-donor national forest and environment sector development program that brings an array o f existing sector development projects and ad-hoc donor-supported and donor-led efforts into a common framework. 53. The FEDPG will help consolidate and scale up the forest sector policy reforms introduced under SACIII, support capacity-building, and strengthen the public good functions o f forest institutions, expanding work programs in environmental monitoring, policy oversight, law enforcement, forest management, biodiversity conservation, and community-based forest activities. The FEDPG i s built ... around five policy areas that mirror the five components o f the FESP. These are: Environmental Regulations and Information Management .. Management o f Production Forests Management o f Protected Areas and Wildlife Management o f Community Forest Resources Institution Strengthening, Training, and Research 54. The program i s defined through conditions for Board approval, milestones and conditions for tranche release. Conditions for Board approval have been met before negotiations demonstrating the Government commitment to the operation's goals and its preparedness to implementation. Milestones cover program implementation steps and outcomes. The most important o f these milestones have been selected to serve as specific conditions for tranche release. Other measures agreed upon with the Government must be met at all time during program implementation and reviewed at the time o f tranche release. These are: (i) the reform framework established through the SAC I11 i s maintained; (ii) the government forest and environment program i s adequately funded and satisfactorily implemented overall as reflected through the agreed milestones and annual workplans; and (iii)a sound macroeconomic framework i s maintained. 55. For the first time and at variance with OD 9.01, the proposed operation will use GEF Grant resources to finance a development policy operation. To allow this to happen, the GEF Council reviewed carefully and approved the design o f the operation on M a y 19-21, 2004 and a waiver o f OD 9.01 was granted on April 13,2005. 56. IDA financial assistance will be US$25.O million. Bank-administered resources from GEF (US$lO million) will be fully blended with IDA'Sand will support the Forest and Environment Sector Program according to the same modalities, matrix o f conditions and other features proposed for the FEDPG. DFID resources (US6.8 million) will be provided to the Government according to the same modalities and tranches used for IDA and GEF, bringingthe amounts available to the Government in the 14 form o f budget support for the implementation o f its FESP to US$41.8 million. Fundingper contributor per tranche would be as follows. Funding Source First Tranche SecondTranche Third Tranche Total US$ million US$million USS million US$million IDA Grant 9.8 8.1 7.1 25.O GEF Grant 3.8 3.1 3.1 10.0 DFID Grant 1.2 2.8 2.8 6.8 Total US$ Equiv 14.8 14.0 13.0 41.8 B. Policy Areas (i) Policy Area 1:Environmental Regulations and Information Management 57. FEDPG will help the Government strengthen MINEP's capacity to monitor the green environment, observe the environmental impact o f its national forest and environment program FESP, and ensure that this Program's environmental management plan i s implemented thoroughly and successfully. While Cameroon possesses adequate environmental laws and safeguards, institutional weakness make such instruments irrelevant on the ground. Effective monitoring i s hampered by data and baseline values that can inform environmental planning, targeting, priority setting, and assess results. Additional constraints lay in the quantity and quality equipment and qualified staff o f the newly created Ministry o f Environment. 58. Conditionsfor Board approval in this policy area demonstrate Cameroon's recognition of and shared commitment to information management. In addition to issuing clear regulations governing the FEDPG Environmental Impact Assessment (EM) and adopting the related Environmental Impact Mitigation Plan (EMP), the Government earmarked funding for first year EMP activities in its 2005 national budget. A team of qualified and fully equipped staff responsible for monitoring implementation o f the EMP has been located inpremises provided by MINEP, and terms o f reference for the first routine environmental controls are in place. The Government also designed and disclosed an Environmental Impact Assessment, Resettlement Policy Framework, and Indigenous Peoples Development Plan, in two prominent national newspapers inbothnational languages (French and English). 59. Milestones marking implementation o f the government program inthis policy area will reflect the stages through which the Environment Ministry will acquire capacity to monitor the environmental impact o f the FESP, implement its Environmental Management Plan, centralize environmental monitoring responsibilities including those currently provided by the CPSP in relation to the Cameroon Pipeline, and integrate the various project information management systems into the consolidated CIDE. 60. Conditions for the second and thirdtranche releases include the evaluation o f how effectively and widely the mitigation measures laid out by the Environment Management Plan will have been implemented. Terms o f reference for evaluating the impacts o f the FEDPG will be arrived at in participatory fashion and the evaluation's results will be made publicly available. 61. Outcomes expected of this policy area include that at the completion o f the operation, the Environment and Forest Ministries will have the capacity to monitor and evaluate the social and environmental impacts o f national forest policies and individual programs in the field of green environment. Avenues for public consultation and civil society collaboration will have been created or 15 improved, and the public will have fuller access to information on the management o f public environmental goods (for more details on outcomes see policy matrix inAnnex 1). (io Policy Area 2: Management of Production Forests 62. The operation will focus on the protection and long-term management o f production forests. It will ensure the generalized implementation and monitoring o f forest management plans throughout the production forest estate and will complete Cameroon's land-use instrument through a zoning plan for the northernregions where deforestation i s more intense. While forest management plans are now mandatory in Cameroon, and many forest companies have complied with their obligation to produce such plans, most plans were only recently approved by the Government, and the control o f field operations i s only starting. 63. More specifically the operation will help: (i)complete the forest estate zoning plan; (ii) ensure implementation on the ground o f forest management policies and plans; (iii)promote efficiency and value-added in timber processing and reduce waste; (iv) ensure efficient control o f forest production field operations by industry, as well as law enforcement and application o f penalties; and (v) valorize non- timber forest products (NTFP). 64. Conditionsfor Board approval inthis policy area indicate Cameroon's commitment to creating a rigorous but fair and predictable environment for serious forest industries engaged in sustainable forest use and product processing. Conditions for Board approval include the examination, approval or justified rejection o f forest management plans for all concessions awarded prior to 2001, the publication o f a status report including all forest violations detected and penalties applied from January 2000 to August 2005 and the adoption o f a comprehensive forest control regulation which sets out the procedures for detecting and reportingviolations o f the forest law, the chain o f control and the modalities for applying sanctions, 65. Milestones marking the implementation o f the FESP in this policy area cover various facets o f a comprehensive action plan to make sustainable forest management a reality: (i) an industrialization plan that promotes economic growth while reducing inputs and waste o f raw materials; (ii) a participatory forest land use plan adapted to the realities of the northern regions; a computerized log tracking system allowing secure real time follow up of data showing physical and fiscal flows of timber from harvest sites to export markets; (iii) forest control operations and public disclosure of sanctions applied against illegal logging and poaching; and (iv) improved collaboration between the State and forest industry by institutingservice standards the state will commit to abide by, and increasing the quantity and quality o f opportunities for consultation with industry. 66. Conditions for tranche release inthis policy area relate to the management plans inplace for UFA concessions and community forests. Forest Management Plans o f all UFA concessions awarded before January 2002 and Simple Management Plans of all community forests approved before June 2005 will have been reviewed by the Forest Administration prior to the release o f the second tranche. Comparative satellite imagery taken in 2003 and 2007 will be used to determine whether illegal logging i s under control inunallocated UFAs and protected areas -this i s a specific condition for third tranche release. 67. Outcomes in this policy area include that at the end o f the operation: (i) operations in the forest public forest estate will be contingent upon the implementation o f management plans by the concessionaire; (ii) illegal logging will be halted in the most vulnerable forests (i.e. concessions not yet allocated to private companies and unmanaged national parks), and will be significantly reduced in the rest of the state forests -at the end o f the operation, it i s expected that: 100 percent o f production forests will be allocated for management, 75 percent of them will be covered by management plans, and the remainder will have management plans in preparation; (iii)forest laws and regulations will be fully enforced, and violators actively and publicly pursued; (iv) a draft land use plan prepared collaboratively by concerned ministriesusinga highly participatoryprocess will be available for the north o fthe country; 16 and (v) high quality information on the status of forests and protected areas will be available and accessible to the public. (iii) Policy Area 3: Management of ProtectedAreas and Wildlife 68. The operation will help secure Cameroon's protected area network by improving regulations, increasing human and organizational capacity, adopting a landscape approach and a well-structured phased approach to gradually increase the effectiveness o f protected areas management. The result will be a framework in which new public and private partners can participate in expanding or accelerating the implementation o f the national program for biodiversity protection. 69. With 14 percent o f national territory designated as protected areas, Cameroon is a major contributor to the conservation o f global diversity assets and a recipient o f international funding for conservation. However the donor-driven, location-specific, and time-bound nature o f past projects has not allowed Cameroon to create a national capacity to manage conservation programs adequately and for the long term. Protected area and wildlife management are constrained by weak infrastructure, markedly insufficient and unreliable funding, an absence o f management plans, and inadequate frameworks for collaboration between the Government, local communities, professionals in the field adventure tourism, and NGOs. 70. Conditionsfor Board approval demonstrate the Country's high degree o f preparedness to move ahead with program implementation. They include a review o f the protected area network to ensure that it covers over 90 percent o f the country's biodiversity, the preparation o f work programs for eight national parks and surrounding landscapes (UTOs) and the completion o f baselines measuring the current management effectiveness o f all Cameroon's nationalparks. 71, The operation will help implementation o f the 2003 Wildlife and Protected Areas strategy and promote its continuous updating to assure appropriateness and relevance. It will support Government institutions in planning and zoning protected areas through information and knowledge management, sustainable financing, legal reforms, and design o f management plans for wildlife and protected areas. These plans will have provisions for the participation o f local communities inprotected area and hunting zone management and contain strategies for optimizing the economic benefits that communities enjoy. 72. The operation will focus on the upgrade o f management effectiveness o f eight UTOs totaling 50 percent o f the territory o f the protected areas, while setting the stage and facilitating implementation of effectiveness upgrade o f the entire protected area network. 73. Milestones marking implementation o f the government program in this policy area will include: (i)steps related to protectedarea management capacity building; (ii)instruments that clarify local people's rights and obligations in protected areas; (iii) various social surveys and the measurement of protected area management effectiveness; (iv) design, adoption and implementation o f park management business plans and community-based wildlife management plans; (v) application o f particularly strong anti-poaching measures along the railways and in the Campo Ma'an area; (vi) physical demarcation of selected protected areas; and (vii) a national public health campaign to inform public o f the hazards related to consumption o f illegal bushmeat. Milestones will also include: (i) the preparation or adaptation of regulations conforming with the 2003 Wildlife and Protected Area Strategy concerning ZIC/ZICC (private and community managed game reserves), and community access to wildlife management; (ii) creation o f autonomous PA and wildlife management; and (iii) revenues in protected area; raising diversification o f income sources for park management and local development; financial controls and partnership with foundations. 74. Conditions for release of the second and third tranches relate to the creation o f three additional UTOs and to significant improvements in the management effectiveness o f eight focal UTOs. 17 Improvements will be measured inthe field usingthe WWF/WB Alliance Kitmethodology and compared to pre-operation baseline values. Conditions also include the update o f the Biodiversity strategy and transformation o f part o f the Deng Deng forest into a wildlife reserve. 75. Outcomes o f the operation foresee management effectiveness scores in the selected locations to have moved from the baseline average value o f 28 to 45, and logging companies employing biodiversity conservation measures in those concessions located in proximity to ecologically sensitive areas. Local communities will participate meaningfully in the management o f protected areas and hunting zones, and endangered species will be effectively protected. The outcome o f the operation will also include creating the foundation for modem, autonomous management o f protected areas by a broader range o f potential partners. (iv) Policy Area 4: Management of Community Forest Resources 76. The operation will deepen understanding o f community forestry issues and strategies, improve quality o f ongoing community efforts in natural forests, improve and scale up community based tree planting schemes, help communities and local cooperatives manage woodlands to trade sustainably produced fuelwood around urban centers (fuelwood masterplan); and re-assign to communities or other managers state plantations formerly controlled by ONADEF (a recently dissolved parastatal). At the core of this component are improvements o f the institutional and regulatory frameworks on one hand, and implementation o f high-quality community-based forest management plans on the other. By design, these plans will systematically integrate production and biodiversity concerns whatever the primary purpose o f the community area under management (small scale timber processing, timber extraction, sustainable fuel wood production, managedhunting,medicinal plant production, etc.). 77. According to the Cameroonian forest and wildlife policies and regulations, community forests are established in what i s called "the non-permanent forest domain" where communities have the right to alter the tree cover based on their needs and preferences, where conversion o f forest to other uses i s allowed. While Community forests are usually inthe vicinity o f villages and, under normal circumstances have only limited biodiversity interest, their management can incorporate features that can result in a significant contribution to biodiversity conservation. For this reason, community forest management plans will systematically integrate biodiversity concerns whatever the primary purpose o f the area under management might be. More specifically, the preparation o f management plans will include a survey o f community forest by teams composed o f MINFOF staff and a reputable environmental NGO. These teams will work with the communities to identify the presence o f threatened and protected species in proposed community forests and outline measures that ensure protection o f endangered species as part o f the management plans and future monitoring arrangements. The teams will also advise the communities on conservation o fprotected species living beyond the boundaries o f community forests. 78. The operation will help translate into action community forest concepts that are well grounded in Cameroon's forest policy but that lack adequate incentives and straightforward mechanisms to attract meaningful local participation. Community forestry concepts and programs are relatively new in Cameroon. Despite explicit Government commitment to helping communities manage forests for their own benefit, significant portions o f benefits fi-om community forests have been captured by logging and trucking businesses. Although the number o f community forests has continued to increase over the past five years, current efforts appear to be generally unsustainable and fail to significantly contribute to rural poverty alleviation. 79. Work in this policy area will help improve community forestry approaches, regulatory frameworks, and activities inthe field stressing quality over quantity, especially inthe case o f community forest initiatives which have proved problematic in the past. The program will be guided by the recommendations o f a comprehensive 2004 DFID-financed Review o f Community Forestry undertaken 18 by the Government. Community forest initiatives such the Fuelwood Masterplan will seek to replicate successful schemes undertaken inNiger and Mali. 80. Conditions for Board approval include the publication o f a study on the use o f forest sector revenues by local communities in fiscal year 2003, completion o f the conversion o f ONADEF into ANAFOR, and the selection o f a qualified contractor to carry out a community forest scheme financed through HIPC funds (Projet Gestion Communautaire des RessourcesForestieres et Fauniques,or RIGC). 81. Milestones marking implementation in this policy area will include the incorporation o f recommendations o f the 2004 Community Forestry Review into community-based forest management schemes. All requests by local communities interestedin initiating new community forestry activities, or in exercising priority rights on sales o f standing timber Ventes de Coupe (VC) will be followed up diligently. To strengthen the community forest framework, MINFOF will introduce new regulations and implement a field program to develop five fuelwood masterplans and community woodland management operations around urban centers in the northern regions. New regulations and incentives to make tree planting more attractive will also be adopted, and a planting program targeting a minimum o f 1,500 people, local groups and investors will be developed by MINFOF in collaboration with and implemented through ANAFOR. Milestones also include a series o f evaluations o f community forest initiatives carried out by the Government incollaborationwith technical and financing partners. 82. Conditions set down for release of the second tranche involve the successful implementation o f at least 10 highquality community-based management plans as reflected intheir respective progress reports. These management plans will integrate social, economic and biodiversity conservation concerns adequately. Release o f the third tranche requires the reassignment o f all plantations on state-owned gazetted forest lands previously managed by ONADEF. 83. Outcomes relating to this policy area apply to a comprehensive incentive framework in place to stimulate communities to engage in and benefit from: (i) community-based management o f natural forests and huntingzones; (ii) tree planting; and (iii) woodland management and trade o f wood fuels. It i s also expected that the reassignment o f plantations and delegation o f management responsibility from the State to other entities will mark the end o f Government engagement in costly production activities in which its comparative advantage proved to be limited. (v) Policy Area 5: Strengthening Institutions, Training and Research 84. The proposed operation will support capacity building across forest institutions. It will stimulate the Government to make investments in infrastructure and human resources enabling MINEP and MINFOF to develop sufficient capacity to fulfill their mandates inthe framework o f the forest policy and the regulatory instruments created through SACIII. Capacity building will begin with upgrading management procedures and practices to bring MINEP and MINFOF into compliance with the requirements o f recently approved national procurement and public finance management reforms. Work in this policy area will entail rehabilitation of physical infrastructure, staff redeployment, staff training, and procurement of equipment. The operation will also support the final stages o f restructuring the National Office for the Development of Forests (ONADEF) into the streamlined National Agency for Forest Development (ANAFOR), and the launch of ANAFOR as a promoter o f plantation schemes implemented and largely financed by individuals, organized groups, and the private sector. 85. Support under this policy area will address the disconnect between Cameroon's well advanced forest policies and the weakness o f institutions, including scarce, poorly equipped and un-motivated staff inthe field, and decrepit infrastructure. 86. Conditions for Board approval demonstrate strong commitment to re-launching forest and environment programs as well as a sound understanding o f the challenges at hand. They include the 19 preparation of annual workplans by the technical Ministries and the parliamentary approval o f budget resources consistent with the FESP and the FEDPG operation. All key positions inMINEP and MINFOF have been filled. MINFOF and MINEP introduced a Finance Ministry-approved computerized financial management system that i s in line with the requirements o f the public finance management reform. The steps by which national budget and external funding are made available to MINFOF and MINEP are clearly defined. The Government also prepared a procurement plan and the first bid documents consistent with the recent procurementreform. 87. Milestones in this policy area will reflect key steps toward enabling Government institutions to provide essential public services and interact productively with local communities, industry and the civil society at large, This will include improvement o f infrastructure, rendering Forest and Environment Ministry planning and evaluation units operational, and ensuring that MINFOF and MINEP are able to produce and review their annual workplans effectively. It will also include the rehabilitation o f 40 percent of MINFOF's field offices (postes forestiers), provision o f training programs on forest related policies and regulations, and improving human resource management through improved accountability and recognition o f performance. Interaction with civil society will be through bi-monthly meetings with industry, multi-partner provincial level consultations at the time of work plan and preparation and monitoring. Finally it will include various public information activities on usingthe internet, the press and the radio to maintain and enhance sector transparency. 88. Conditions set for release o f the second tranche relate to financial management within the Forest and Environment Ministries, which will have fully deployed computerized financial management and control systems by the tranche release date. The SICAF system will be fully rolled out at central, provincial, and departmental levels, and be fully compatible with the DEPMIsystem usedby the Ministry of Finance and Economy. Release o f the third tranche i s conditional on the improved status o f those infrastructure.and facilities that are slated for rehabilitation especially at the field level. 89. Outcomes inthis policy area revolve around a revitalized Forest and Environment Ministries, well endowed with the human and technical resources sufficient in quantity and quality to perform the role expected o f them in the following areas: oversight o f forest and environmental policies, enforcement o f laws applicable to forests and wildlife, assessment o f the social and environmental impacts o f human activities in forest ecosystems, productive interaction with industry and other private sector economic partners, collaboration with communities, NGOs and civil society inthe management and conservation o f forests and wildlife resources. It i s also expected that ANAFOR will be fully established in its advisory role inthe field o f private and community plantation schemes. C. Agreed Actions and Conditions 90. Agreed actions and conditions under the proposed FEDPG operation will peg tranche release to progress in the implementation o f the overall Government FESP and to the satisfaction o f specific conditions. Its progress will be appreciated through milestones which will measure the performance o f the FESP as a whole and its annual workplans. Conditions for Board approval (completed before negotiations), conditions for disbursement, and milestones are presented in the Operation's Policy Matrix shown in Annex 1. This matrix i s featured in the Government's letter o f Development Policy for Forests and the Green Environment. Major development partners adopted the matrix as a means to measure progress and coordinate financial and technical support. 91. In addition, the disbursement of the Grant is subject to broader conditions (see Box 1) to be satisfied at all time during program implementation and reviewed at the time o f tranche release. These conditions seek to ensure that the integrity o f the operation's reform package i s maintained and that appropriate conditions continue to exist for successful implementation o f the Government program. 20 I Box I Condzfionsto be met at alf time and reSnewedat the time tranche rehase of The Government forest and environment program as reflected through the agreed milestones and annual workplans i s generally on track and consistentwith the reformframeworkestablishedthroughthe SAC Ill. A soundmacroeconomic frameworki s maintained. 92. Financing will be arranged inthree tranches, the first to be released on completion o f prior action and the other two following satisfaction of tranche release conditions. Box 2: CondifionsforBoardAppmvaland Releaseoftbe First Tranche Government adoption of the FEDPG Environmental Impact Mitigation Plan (EMP) and funding for first year's relevant activities includedinthe draft 2005 national budget for the forest sector. Suitablepremisesand ateam of adequatelytrainedand fully equipped staffare assignedto effectivelymonitor implementation of the FEDPGEMP. Regulationson environmentalimpact assessmentare issued. The Environment Impact Assessment, including the EMP, the Resettlement Policy Framework, and the Indigenous Peoples Development Plan disclosed in two national newspapers and made accessible to the public in municipal administration facilities. Terms of reference for main EMP activities beginninginJanuary2005 madepublicly available. Examination of Forest Management Plans (FMP) for all concessions (UFAs) awarded prior to 2000 and approval of those deemed to conformwith requirements Status report describingall forest violations, penalties applied, transactionsconcludedandpendingbetweenJanuary 2000 and August 2005. Updatedledger of forest violationscreated. Forest Ministry's comprehensive regulatory system adopted: chain of custody control, control methods and procedures, and proceduresfor applyingsanctions againstforest crimes. Work programs for eight FocusUTOs preparedandreadyfor implementation. Baselinedata availableto measurethe managementeffectivenessof all nationalprotectedareas. Study completed on the use of FY2003 forest sector fiscal revenuesby local communities. ANAFOR restructuringcompleted, with personnel reassigned accordingto plans, management structures, the FY2005 work program, and financial control structures. Qualified contractor selected to carry out the HIPC-funded Capacity Building for Forest Community Management (RIGC) project. Forest Ministrymanagementpositionsfilled andjob descriptionsrevised. A new coded budget and accounting system approved by the Finance and Economy Ministry (MINEFI) and adopted by the Forest andEnvironmentMinistries. The Directors of Budget and Treasury instructed by MINEFI to allocate budget lines to MINFOF and MINEP, into which externalfunding will be made availableby externalpartners. MINFOF and MINEP financial managementand control computerized; the SICAF systemis operationaland fully compatible with the DEPMI systemusedby MINEFI. MINFOF and MINEP 2005 Annual Work Plans consistent with the FEDPG, and include national and externalresources as part oftheir 2005 budget proposalsto Parliament. Procurementplanpreparedandbid documentsreadyfor launchfor the main goods and servicesof the FY05 workplan. 21 Box 3: Conditionsfor Release oftbe Second Tranche Allocation o f funds for implementation o f annual work plans is consistent with Medium Term Expenditure Framework estimates and at least 75 percent o f the budget allocated inthe previous year will have been made available in a timely fashion and used for program implementation. The FY 2005 EMP activities implemented and adequate institutional capacity for social and environmental monitoring created. Examination completed o f Forest Management Plans o f all UFAs allocated prior to January 2002, and o f all Simple Management Plans (Plans Simples de Gestion) for community forests attributed before June 2005. Signed contracts with companies meeting requirements and implementation o f appropriate measures, including the withdrawal o f concession if appropriate, for companies failing to meet requirements. Two additional Focus UTOs created (Management Effectiveness Score, MES <20); three are equipped with essential management tools (2055)' . The national Biodiversity strategy i s updated, and part of the Deng Deng forest where primates cans still be found has been transformed into a wildlife reserve. At least 90 percent of the plantations established on state-owned forest gazetted land and previously managed by ONADEF are reassigned to appropriate management structures to competitively-awarded plantation contracts, to new UFAs or integratec into existing UFAs, contracted to local communities management; degazetted in urban centers, integrated into parks and othei protected areas or environmental protection zones with no production purposes. Rehabilitation o f at least 50 offices or other infrastructure at the technical directorates, and provincial and departmental levels. 6 Minimumscores to be achieved in each UT0 are as follows: Ndongoro (6), Bakossi Kupe (17,Bouba Bek & Nlii(29), hlbm Djerem(31), Campo Ma'an (33, Korup (44), Benoue (47) et Waza (50) 7 Indicative scores to be achieved in each UT0 are: Ndongoro (13,Bakossi Kupe (26), BoubaBek & Nlii (43), hham Djerern (46), Campo Ma'an (52),Korup (57),Binoui (59) and VC'aza (62). 22 V. IMPLEMENTATIONOFTHE PROPOSEDGRANT A. Implementation,MonitoringandEvaluation 93. Implementation. The Finance, Forest and Environment Ministries will be responsible for implementing this operation on behalf o f the Government. Their responsibilities will be inline with their normal institutional mandates. Applicable procedures will be those o f the Government o f Cameroon. World Bank support will be channeled through the Ministry o f Finance and Economy which will maintain overall responsibility for coordinating Government activities, and for commissioning external audits to assure ministerial compliance with financial management, administrative, and procurement procedures. The Forest and Environment Ministries in turn will be directly responsible for implementing the FEDPG program and for satisfying the conditions o f tranche release. To this end, MINFOF's and MINEP's work programs and budgets submitted annually for Parliament's approval will be structured to reflect the milestones agreed upon for the overall program and the conditions for tranche release. Provincial delegations o f the Forest Ministry will carry out activities in the field, and both the Forest and Environment Ministries will expand collaboration with local governing bodies, community organizations, NGOs, and the private sector. 94. The two Ministries' work in implementing the FEDPG program will focus on essential regulatory, law enforcement, and public service functions. Program activities like resource inventories, facilitating the elaboration o f management plans, environmental education, and managing community forests and huntingareas will be contracted out to other partners and service providers. The Government will commit to procure essential specialized technical assistance in the fields o f financial management, procurement, auditing, internationalmonitoring and auditing to ensure the quality o f implementation. 95. Sustainability and replicability concerns have been integrated into program design from various perspectives. From an institutional and financial perspective the FESP has been mainstreamed into permanent national institutional settings, a medium term sector policy, medium terms funding priorities and national financial management mechanisms. It has also been integrated into a ten-year multidonor sector development program which enjoys strong support, funding and funding commitments from key Development Partners. These Partners have chosen to use the FESP as a means to harmonize their sectoral goals, objectives, funding and monitoring arrangements. To this end, the representatives o f Canada, Germany, France, the Netherlands, the United Kingdom, the European Union, the African Development Bank, the World Bank, FAO, UNDP, WWF, S N V and IUCN have signed, on January 5, 2006, a long-term agreement called Code o f Conduct (Annex 3). The potential for replication o f biodiversity conservation and program mainstreaming into regional development planning and management i s high given the Program's adoption o f internationally recognized environmental monitoring tools (the PAME Tool Kit), its support to certification processes and its strong links with broader public sector reform processes, decentralization, national environmental policies, legislation and safeguards. 96. At FESP's completion recurrent costs will have grown only modestly (around US$3 million per year) compared to the pre-FESP situation. US$2 million o f these would finance the management o f protected areas, a field in which there i s growing international support and for which the FESP intends to develop innovative long term fundingmechanisms. Financialprogram sustainability i s ensuredby the fact that the Government i s by far the largest contributor to the FESP. The 2006-20 10 Forest and Environment Sector Medium Terms Expenditure Framework shows that a steady flow o f national financing will continue after the end o f planned IDA and GEF support, when the most intense phase of new investments will have been completed. One should also note that national funding for most FESP supported activities i s generated within the forest and environment sector. Based on existing legislation, part o f the funding i s mechanically apportioned to FESP institutions and programs and submitted to Parliament as part o f the national budget approval process. 23 97. Monitoring and evaluation for the FEDPGprogram was designed to: (i) accountability and foster transparency in the management process; (ii) provide the Government and donors common and realistic reference and measurable parameters to measure progress; (iii) record progress in relation to milestones and conditions for tranche release; (iv) engage stakeholders in information sharing; (v) integrate financial planning and execution with physical and geographic information on work program implementation, milestones and tranche release conditions; and (vi) identify implementation problems and propose corrective measures. 98. The starting point for the monitoring and evaluation system is the policy matrix that details the issues the operation intends to address, the outcomes expected, the milestones o f the Government program, and the parameters chosen for tranche release. This matrix i s common to the Letter o f Sector Development Policy and the present operation. Definitions, baselines, and values o f expected results were worked out during program preparation to facilitate monitoring by the Government and other interested parties. Particular emphasis was placed on indicators o f results rather than process indicators. Annex 10 provides a description o f the operation's M&E system, including performance parameters, baselines and targets values. To ensure that FEDPG performance reflects appropriately the broader performance o f the o f the forest and environment sector, the FEDPG monitoring system will extend beyond measuring program specific indicators to also include indicators that reflect the country's overall performance in environmental management, governance and social equity inthe forest sector. 99. Progress in some o f the sensitive areas such as wildlife and biodiversity conservation, management o f national parks and reduction o f illegal logging will be measured through well defined protocols which leave minimum room for subjective interpretation and minimize risks o f conflicting perceptions regarding performance. For example, progress in protected area management will be scored according to the "Tracking Tool" developed by the World B a n W W F Alliance, consistent with the recommendations o f the World Commission on Protected Areas Management Effectiveness. Progress in the fight o f illegal logging will be measured in terms o f variations in the length o f logging roads located within unallocated forest concessions and national parks, observed in time series o f satellite images interpretedin collaboration between the Government and the Global Forest Watch Program o f the World Resources Institute. Parameters, baselines values, methods and sources to review time series o f relevant parameters are integrated into the program's monitoring system. 100. W h i l e various departments o f the Ministries o f Finance, Forests and Environment will be involved in gathering and analyzing program relevant information, monitoring o f overall program implementation will be centralized by the Cooperation Division o f the Ministry o f Forests. This division will consolidate monitoring reports, maintain relations with national and international partners, consolidate annual work programs, and monitor satisfaction o f tranche release conditions. The Environmental Impact Assessment Monitoring Unit o f the Environment Ministry will monitor and report on the implementation o f the FESP environmental management plan. MINFOF's provincial delegations will be the focal points o f the Monitoring Unit, and in that capacity they will be in charge o f collecting necessary data at local levels; they will also be in charge o f disseminating reports at the provincial level. External evaluations and audits o f accounts will be undertaken under the auspices o f the Ministry o f Finance and Economy. Most o f the baseline, progress data and reports produced under this Program will be made publicly available though the website www.minef.cm, along with other sector performance and governance data. 101, Implementationreviews will buildupon the positive experience gained duringthe supervision o f the forest component o f SAC I11(P054443), and will incorporate the recommendations issued by the December 2002 QAG Quality o f Supervision Assessment for this operation. DFID will supplement World Bank supervision by posting two specialists with time bound contracts with the Bank at the World Bank resident mission in YaoundC. The specialists will assist the task team leader and facilitate communications among the various stakeholders involved inthe operation. 24 B.Fiduciary and ProcurementAspects 102. A Medium-Term Expenditure Framework for the forest and green environment sector, reflecting the PRSP's forecasts, has been integrated into the country's overall MTEF, and budget allocations approved by Parliament as part o f the national budget. The sectoral MTEF and the year 2006 approved budget reflect well the Government commitment to provide adequate resources to finance the FESP.MINEF1 will transfer appropriate amounts of funds into a Treasury account managed by MINFOF and MINEP. The mechanism o f transfer will be consistent with the principles and procedures established in the course of the national reform of public finance. Nevertheless, given the relative novelty of the mechanism, the Minister o f Finance and Economy has issued an instruction to the Directors for Budget and Treasury as well as to concerned Ministries' staff detailing the procedures that must be followed and based upon which financial management reviews and audits will be conducted (summary inAnnex 13). 103. By helping focus the attention of central financing authorities and technical ministries, and by including the adequacy o f financial management among the key issues for Bank supervision, the present operation i s expected to result in smoother transfers o f national funds to MINFOF and MINEP, while improving central control over expenditures, and creating accountability for results. Implementation o f the Program will reflect the outcome o f Cameroon's public finance management reform. With this in mind, MINFOF, MINEP and MINEFIhave adopted new budget codes which facilitate fund allocation and expenditure oversight by central financial authorities. Reflecting the importance o f securing high quality financial management to MINFOF and MINEP as they implement the FEDPG, the European Union approved two-year funding for a financial management expert who i s currently in place helping MINFOF and MINEP use the financial management procedures issued by the MINEFI, and establish computer capabilities to manage financial data at the central and field levels. Additional short-term assistance inthis area will be provided under the Basket Fund, as appropriate. 104. Following a Country Procurement Assessment Review (1999), the PRGF (2000-2002), the HIPC Assessment and Action Plan (September 2001) and a Country Financial Accountability Assessment (CFAA) inJune 2002, the Government of Cameroonhas embarked on a number o f far reachingreforms: (i)reforming the public finance management regulatory instruments; (ii)improving the budget preparation process; (iii)reforming the budget nomenclature; (iv) integrating the information system o f the Ministry o f Finance and Economy by linking the system used by the Budget and Treasury directorates; (v) assigning sector ministries responsibility for authorizing the payment o f their expenditures; (vi) starting the definition o f a reform o f internal auditing; (vii) closing numerous accounts open in commercial banks; and (viii) and creating o f a Government audit office, the Chambre de Comptes. Progress in various elements of these reforms was reflected as HIPC completion point triggers. A World Bankreview of August 2004 and a March2005 WB/IMF Joint Staff Assessment o f Cameroon's PRSP progress report reveal good progress inmany areas. 105. Regarding the public finance agenda, the Integrated Financial Management System (EMS) i s now operational, budget expenditures are now classified on an administrative, economic, and detailed functional bases. Law 2003/005 which specifies the responsibilities, organization, and functioning o f the external control audit body for state finances (Chambre des Comptes) o f Cameroon's Supreme Court was adopted by the National Assembly during the March 2003 session and promulgated by the Head o f State on April 21, 2003. The President and two members of the audit court were nominated in 2004 and the remaining 15 financial magistrates are currently being nominated. The newly created Audit Institution i s expected to become operational shortly. Until recently, implication o f line ministries in budget preparation has beenmodest. The unifiedbudget codes newly adopted by the central economic authorities and technical Ministries are expected to help better budget tracking through execution and payments. In preparation for the proposed operation, budget preparation by the Ministries in charge o f Forests and Environment followed the procedures recommended in the public finance review and introduced budget planning and execution systems inline with MINEFI'snew standards. 25 106. A comprehensive Fiduciary Risk Assessment (FRA) focused on the FEDPG was completed in January 2005. Given the Grants' link with overall public expenditure management and fiduciary control systems, the assessment used the forest sector as the entry point but extended its analysis beyond the forest sector. While the public financial management systems o f Cameroon continue to present significant fiduciary risks, the Government has demonstrated strong commitment to public finance reform and made important progress in improving public financial management over the past two years. All new systems and regulations have been designed, but are not yet fully operational and concerns remain over some areas of budgeting, expenditure controls and the absence o f an operational supreme audit institution (cout des comptes). The Fiduciary Risk Assessment found that the current level o f fiduciary risk i s BIC (mediumihigh), but that trends are positive with respect to most indicators. A summary of the risk assessment i s inAnnex 12. The Assessment arrived at a number o f recommendations that the Government committed to implementing prior to and during the FEDPG in order to limit fiduciary risks.Among other recommendations: (i)developing a financial management and audit system for the newly created ANAFOR; (ii)closing special funds cash accounts in commercial banks, entrusting transactions to a public accountant and systematizing audits; (iii) giving Forest and Environment Ministers full authority to authorize expenditures; (iv) making internal quarterly fiscal reports and quarterly expenditure reviews mandatory at MINFOF, and MINEP during the implementationo f the FEDPG; (v) requiring MINEP and MINFOF financial directors to issue administrative accounts presenting details o f budget execution, and the Public Accountant to issue the compte de gestion or Public Accountant Report at the end o f each fiscal year. 107. The public procurement system has been profoundly reformed over the last three years. Administrative transparency and accountability have been promoted through systematic monitoring of procurement by specialized commissions and independent observers, as well as by ex post monitoring by independent auditors. A new procurement code was adopted in September 2004, articulating clear rules for bidding and defining the different types o f bids, thresholds, and procedures. A new procurement regulatory agency, the Agence de Regulation des March& Publics (ARMP) was created, and i s fully operational as are specialized tender and control commissions, and appointed independent observers. 108. Important progress in procurement reform notwithstanding, a recent review conducted by an independent auditor revealed that badpractices like subdividingcontracts in order to remain below central contracting limits persist, technical files are at times o f a low quality, technical evaluations not as objective as they should be, tender processes experience delays between commitments and payment orders, and cases o f misconduct are not adequately pursued and sanctioned. 109. The Government has agreed that quality o f implementation o f new financial and procurement procedures by MINFOF and MINEP should be audited annually. The audits will examine adequacy and compliance with procedures, highlight difficulties, recommend remedial action and draw lessons to be used as procedures are applied to other sectors and inthe context o f the first PRSC for Cameroon. C.DisbursementandAuditing 110. Disbursement. The proposed GEF and IDA grants will follow the Bank's relevant guidelines for development policy operations. Disbursements will be in three tranches, one to be released at effectiveness based on Board conditions met before negotiations, and two tranches to be released as relevant conditions are met. The disbursement o f the first tranche will coincide with the beginning o f the Cameroonian fiscal year. As per Program design, subsequent disbursements will be geared to the budgets of following years. In the event o f delays in fulfilling second and third tranche agreed conditions, disbursements will be delayed accordingly. Such delays will be taken into account at the time o f the preparation o f annual work plans and budget preparation. The expected time to disburse the IDA and GEF resources i s four years, and its expected closing date December 3 1, 2009. 26 111. In line with a preference explicitly expressed by the Government, IDA and GEF funds will be deposited into an account opened by the Government at the Caisse Autonome d'Amortissement o f Cameroon (CAA). Funds will be made available to MINEP and MINFOF through an account labeled PSFE (FEDPG) in local currency opened by the Treasury Department at the Bank o f Central African States (BEAC), in amounts consistent with IDA-GEFbudget support and Government-approved budgets and workplans. The first tranche o f IDA and GEF funds will be deposited upon Board approval. Proceeds of the second and third tranches will be deposited after all respective conditions are met. If, after depositing in the CAA account, the proceeds o f the Grant are used for ineligible purposes as defined in the Development Grant Agreement, the Bank will request the Borrower to either: (a) returnthe amount to the account, or (b)refundthe amount directly to IDA and GEF. 112. Auditing. The deposit account at the Caisse Autonome d 'Amortissement and the Forest and Environment Ministry local currency accounts opened by Treasury at the BEAC will be audited annually by auditors acceptable to the Bank and in line with terms o f reference satisfactory to the Bank. The audit of the deposit account at the C A A will verify that Bank funds were received in the account and disbursed into the Treasury. In keeping with specific recommendations o f the Fiduciary Risk Assessment (Annex 12), audits o f the MWFOF and MINEP account at Treasury will also be conducted to verify that adequate funding was transferred in a timely manner to MINFOF and MINEP for work program implementation and that the use o f funds was inline with administrative and financial management procedures and other applicable national directives. Receipt o f audit reports, including action plans that address identified weahesses, will be required along with reports on the satisfaction o f tranche conditions at the time o f second and third tranche release. 113. For added security, audits o f MINEP's and MINFOF's accounts will be carried out quarterly. These audits will be carried out by a Public Accountant until the Chambre des Comptes i s fully operational. At the end o f the fiscal year, MINEFI's Director for General Affairs will issue an "administrative account" and the Public Accountant will present a revenue and expenditure account. D.Poverty and SocialAspects 114. The FEDPG operation will help a wide array o f beneficiaries including the national economy, local governing bodies, and the Cameroonian population at large. The forest sector operation i s primarily designed to secure the natural resource base and benefit the poor. Results promoted under this operation take place in rural areas where 84 percent of the poor live and where 64 percent o f all inhabitants are poor. While the forest sector i s already and by far the first source o f employment and cash income in these areas, the emphasis that FEDPG places on improving forest management i s expected to result in significant increases inforest-basedrural incomes. 27 and locally endemic species 115. Revenues to Communities and Local Governing Bodies. This operation will consolidate and further increase the revenues accruing to local populations in the form o f a 40 percent share o f area taxes to local governing bodies and 10 percent to local communities. This income will allow local governing bodies to finance social infrastructure, council budgets, rural roads and other local investments, while leveraging further financing from nationally-funded decentralization initiatives like FEICOM and donor- financed rural development schemes like the Cameroon Community Development Program Support Project (PNDP). 116. Benefits to community forest activities. Significant social benefits will stem from improvement and more rigorous implementation o f community forestry frameworks and other regulations aimed at preserving and enhancing local people's modern and traditional rights and entitlements. While recognizing the shortcoming o f the current community forestry programs, the preparation team was satisfied that fundamental instruments are inplace to ensure that social issues are addressed in ways that give voice to and empower rural communities, invite public scrutiny, and enhance accountability. Particularly meaningful social benefits are expected to accrue from the operation's focus on strengthening community rights to trees located outside o f gazetted forests, facilitating accountability inrent-transfers to rural populations, and securing respect for the rights o f local people when determining the boundaries o f gazetted forests and national parks. Particularly strong links have been created between community-based and wildlife management activities, which i s expected to yield economic benefits to the poor while . benefiting the environment. This i s the case for example for Community-Managed HuntingZones (ZICG) inwhich local communities will receive support to enforce their exclusive right to manage wildlife either directly or incollaborationwith external partners o f their choice. 117. Benefits to Indigenous People and Vulnerable Groups. The FEDPG operation will help ensure that laws and regulations defending the rights o f Pygmies and other forest-dependent groups are fully enforced, especially their rights over hunting grounds and other forest resources crucial to their subsistence and cultural survival. The Pygmies have been identified among the specific beneficiaries of the activities promoted by this operation. These indigenous peoples are more dependent on forests than other groups, and huntingand gathering activities generate up to 65 percent o f their livelihood. Formerly full-time hunters and gatherers ranging over large areas of uninterrupted forest, Cameroon's 30,000 Aka, Baka, and Bakola peoples have become increasingly sedentarized into about 300 settlements or `bases' in 33 councils by the expansion o f logging and agriculture. Traditionally more balanced relations between Pygmies-as hunters and suppliers of labor-with other groups have given way to dependency on 28 villages for cash income and government social services. While not attempting to fundamentally alter the interaction between indigenous and other economic actors, the proposed operation will strengthen the Pygmies' customary and modem rights, expand their influence in forest management decision making, and extend the concept o f community forests to those settled along roadsides. E.EconomicandFinancialAspects 118. As IDA and GEF support takes place within the broader framework o f a government-led multi- donor forest and environment sector program (the FESP), its preparation included economic, financial, and incremental cost analyses o f the FESP as a whole. Analyses were conducted from the perspectives of local people, the private sector, the state, and the global community (for global externalities). 119. Costs. A detailed costs analysis o f the FESP has been carried out to appropriately reflect sectoral expenditures into the medium term expenditure framework and outline the nature and amounts of technical and financial contributions by partners. The total cost o f the FESP would be US$154 million8. Of these costs, US$122 million is for investments and US$32 million for recurrent costs over a period of three to four years - about US$lOmillion per year. Estimated physical and price contingencies amount to US$lO million and US$13 million respectively. Foreign exchange content represents 11 percent o f total costs. Program costs were divided into direct, indirect (for activities such as environmental monitoring and information, forest zoning and control, elaboration o f a strategy, regulatory framework and funding mechanism for protected areas) and institution strengthening. Indirect and institutional strengtheningcosts represent more than 60 percent of total cost. For the purpose o f calculating rates o f return, costs for each o f the five policy areas supported under the Program were allocated to productive components, while institution strengthening costs were accounted for inthe overall assessment o f the Program. 120. Economic analysis. The Government Forest and Environment Sector Program i s economically viable, Economic viability i s sensitive to indirect costs, with the Economic Rate o f Return (ERR)ranging from 13 to 18 percent when these costs are taken into account. It i s positively influenced by returns from forest management, which when omitted from the overall economic analysis, reduces the ERR to 8.7-10.7 percent. When hypothetical non-timber benefits are included, the ERR improves from 11-16 to 13-18 percent. Economic viability i s also sensitive to changes in forest utilization costs, and ERR increases from 11-16 to 13-20 percent following a 10 percent reduction in logging costs. 121, Expected benefits. Both commercial and community forest management activities show attractive economic returns. For commercial forestry, improved processing efficiency and increased relative prices of secondary species have a notably strong positive impact on the ERR, which drops to 1-5 percent when both parameters remain constant. Plantations show attractive economic returns on direct costs, and are viable both with respect to direct and indirect costs when carbon sink benefits are accounted for, Over 150 community forests, providing communities with annual incomes in excess o f US$20,000 per year over 25 years can potentially be established under the program supported by this operation. While fuelwood-based economic activities show positive economic returns only in the best case scenario, accounting for unquantified environmental benefits such as watershed protection and non-timber forest products improves the economic viability o f the sub-component, and these activities are financially viable from a community perspective. Finally, from a global perspective, the operation will yield significant environmental benefits by maintaining functioning ecosystems rich with secondary biodiversity and wildlife populations in both protected areas and production forests. The network o f effectively managed protected areas will maintain forest cover in production and community forests, and serve as a source of substantial carbon sequestration and biodiversity. 8US5154 i s the program cost as determined atappraisal, This cost differs from the program cost as shown in the Medium Term ExpenditureFrameworkdue to cost adjustmentsoccurredin the process of AnnualWork Planningprojections. 29 122. Unquantified benefits will be derived from reorganized forest institutions that ensure effective law enforcement, maintain a healthy investment climate and a level playing field, capture forest revenue shares due to the state and local communities, and preserve the environment. These benefits will take the form of (i) overall risk reduction for the sector; (ii) sustainable income and employment generation; (iii) global environmental benefits; access to international funding and certification; (iv) improved confidence of international investors; (v) increased efficiency o f the public administration; and (vi) an enhanced relationship between private and public operators. 123. Additional unquantified benefits will accrue from the effective implementation o f management plans, which will hopefully pushindustrytowards product diversification, research o f new market niches, and higher processingyields. 124. Financial analysis. The analysis shows that the FESP i s financially attractive overall. Implementing forest management in commercial forest concessions i s generally viable. The sensitivity analysis shows that forest management i s highly sensitive to timber processing efficiency and relative prices o f secondary species, which improve significantly `with FEDPG scenario'. Similarly, community- based forest management i s financially attractive for forest communities who harvest, process timber for the local market and collaborate with larger companies for the harvesting and trade o f more valuable timber species which would not find larger return locally. Investments in plantations show positive returns, and even game hunting revenues indicate potential to adequate reward investments. At the national level, the FESP will help secure the natural resource base, which would in turn generate a sustainable stream o f annual fiscal revenues in excess o f US$65 million and incremental tax receipts o f about US$12 million per year following improved recovery and reduction in illegal logging and underreporting. 125, Interm financial sustainability, the overall cost ofthe Government Programequals 1.4percent of GDP in 2001 (US$9.2 billion in constant 1995 prices), 2 percent o f the external debt (US$6.7 billion in constant 1995 prices) and 16 percent o f the external debt service (US$791 million in constant 1995 prices). Once completed, this Programwill increase Government recurrent costs by around US$3 million a year, around US$2 million o f which will be for managing protected areas. These costs could be significantly reduced through donor-assisted trust funds, and park management concessions. While these and other options to reduce running costs will be purposefully explored during the life o f the operation, the approved sector Medium-Term Expenditure Framework makes adequate provisions to meet the increased level o f runningcosts beginning in2008. 126. Incremental cost analysis. In meeting GEF strategic priorities, and by specifically targeting the framework for improved protected area management as well as the capacity o f national institutions and staff, GEF support helps expand the FESP to ensure the creation o f 0.2 million hectares o f newly protected, highly intact mangrove forests in areas known to have the highest number o f species in Cameroon. Furthermore, it will considerably contribute to the effective management o f 1.9 million hectares o f core protected area not including the forest and wildlife resources in the peripheral zones o f the targeted protected areas. Without GEF funds, it i s likely that national forest zoning would be carried out exclusively for timber production, with community forests and protected areas planned and managed independently o f each other. GEF leveraging will help incorporate biodiversity into national forest planning and conservation outcomes in protected area. Finally, GEF support will help the Government regulate and impose fees on recreational huntingthus expanding and improving management o f National Protected Area and Wildlife Fund. F.EnvironmentalAspects 127. Through its focus on sectoral policy, institutional reform, law enforcement, regulation of production forests and environmental monitoring, rehabilitation o f degraded national parks and biodiversity conservation sites, the FEDPGwill have a positive impact on the environment. 30 128. In preparing the proposed operation, it was determined that the FESP is likely to have a significant effect on the country's environment and forests. In particular, the Government conducted comprehensive environmental and social studies which were publicly disclosed inten provincial locations in Cameroon. It also produced an Indigenous Peoples Development Plan (IPDP) which was widely circulated in the international community and specifically discussed in a publication entitled "Implementation of International Commitments on Traditional Forest-Related Knowledge: Indigenous People's Experiences in Central Africa". Presented at the Expert Meeting on Traditional Forest-Related Knowledge in San Jose, Costa Rica in December 2004, the publication cited the Government Indigenous People-related policies and the IPDP and other program features o f the FEDPGas good practice. 129. Environmental and Social Impact. The Government reflected the findings o f its preparatory environmental and social studies into the design o f the FESP. These studies (Annex 6) found that the impacts on the environment were mostly positive. No large-scale or irreversible adverse impacts on the environment were foreseen, nor will any displacements o f people or construction o f large sensitive infrastructure result from the operation. The recommendations issued by the social and environmental studies focused on strengthening ministerial capacity to monitor, evaluate, and mitigate the environmental impacts o f activities taking place in the forest environment. Despite the significant shortcomings in implementation capacity that currently exists, these studies concluded that Cameroon's forest sector policies and legal instruments are adequate to address the environmental concerns that could arise in connection with the FESP. The proposed operation will support the development o f a mitigation plan against potential undesirable impacts, which defines tasks, timing, costs and responsibilities for specific mitigation measures. VI. RISKS, RISKMITIGATIONANDEXIT STRATEGY 130. Risks and Risk Mitigation. The operation carries significant risks associated with political and financial sustainability. For the Bank, there are also fiduciary and reputational risks. The FEDPG integrates comprehensive measures to address or mitigate each risk and i s phased and sequenced to build institutional capacity to address the risks effectively. Conversely, there are equally important political, economic and reputational risks associated with not supporting the operation. The Bank has invested significantly in sector reforms over the past five years in Cameroon. There i s the risk that inaction will result in the reversal o f positive reforms, a halt to progress inpartially reformed institutions, new systems and structures. Additionally, this program will help regulate the green environment sector, prevent abuse by interest groups, harness the forest's contribution to social and economic development, reduce poverty, promote environmental sustainability, and improve governance. The potential downside associated with inaction far outweighs the risks associated with the operation itself. It should be noted that the operation's legal agreement between the Bank and the Government makes satisfactory progress a condition for disbursement o f the second and third tranche, allowing for periodic review o f performance and agreement on remedial action, and will stipulate other standard remedies in case o f significant slippage of the program. 131. Risk that recent reforms may be reversed following the HIPC completion, and that this operation's tranche release measures may be reversed after the release o f the final tranche. OED reviews o f the use o f conditionality in forest operations recognized the risk that governments may reverse policy reforms once disbursement pressures subside. This risk appears relatively modest for this particular operation. Most of the politically sensitive operation-supported reforms endured and were further refined following disbursement o f the SAC111forest tranches. Rather than pushingfor new ambitious reforms, the proposed operation will allow Cameroon to stay the course in a reform process that i s already well underway. As these reforms relate to commitments made in the HIPC and PRSP frameworks, they were characterized by very inclusive public information processes. In designing this operation, the Bank team was aware that given the operation's size and the country's macro-economic context the operation could rely very little on leverage for success, and that instead it had to build upon consensus and Government 31 commitment, These reforms enjoy the President's personal support and have become Cameroon's hallmark in international forestry fora and events. It i s therefore unlikely that the Government will backtrack on the policy package supported by this operation. 132. Risk that unexpected developments may make it dfficult for the Government to make adequate budget allocations for forest sector development duringthe life o f this operation. Fundingo f the proposed operation will take place through the normal Cameroonian budget allocation and expenditure process. As such, successful implementation will require approval o f adequate allocations to the forest sector in the national budget, and timely transfer o f funds to MINFOF and MINEP. The risk that unforeseen developments will render the Government unable or unwilling to approve such allocations i s mitigated by the fact that most o f the national investment resources are generated within the forest sector and that, based on existing legislation, part o f these resources can be automatically apportioned to finance forest programs and submitted as for Parliament's approval as part o f the national budget. The risk o f inadequate Government resources i s further mitigated by the attractiveness o f the financial package available through the second and third tranche releases, which are specifically conditional on the adequacy o f national budget allocations. Finally, the fact that the IDA, the GEF, and DFID have adopted a common disbursement mechanism and identical or complementary benchmarks, and that other Development Partners may do so in the future, should keep this risk within a manageable range. In the very specific case o f delicate conservation areas such as Campo Ma'an and Mbam and Djerem significant non-Government funding sources have been established to supplement and compensate for possible shortfalls innational budget outlays. These include a trust fund administered by FEDEC and funds made available by NGOs such as WWF and WCS which carry out specific fund raising campaigns on behalf o f these conservation areas 133, Risk that Government financial management and procurement capabilities may prove inadequate. The Government's capacity to implement the operation will depend upon the ability o f concerned government agencies to use the new financial management and control system, and the reformed procurement procedures. Assessed in January 2005, fiduciary risks involved in the operation were found to be mediumhigh; the recommended mitigation measures reinforced specific elements o f public financial management and procurement reforms and were endorsed by the Government. The Ministry of Finance and other Government authorities are especially committed to ensure smooth implementation o f the FEDPGbecause this operation has been explicitly selected as a test case for budget support mechanisms to be expanded to other sectors under the planned PRSC operation. Finally, financial management, procurement and other areas o f fiduciary concern are the key elements o f a long term technical assistance that i s already inplace with MINFOF and MINEP (infinancial management) and that will be reinforced through the GTZ-executed, DFID- and CIDA-financed Basket Fund for Technical Assistance to the FESP. The recruitment process for the financial and administrative experts has been completed by the GTZ-IS. The DFID contribution to the Basket Fund has been confirmed and the first installment o f funds has been transferred to the Government inNovember 2005. 134. Risk that institutional changes may undermine smooth program implementation. Rapid changes in the institutional environment, overlapping and conflicting mandates by forest and environment institutions, and resistance to facing new challenges have undermined the effectiveness o f Cameroon's forest and environment programs in the past. To address the risks typical o f a problematic institutional setting, the FEDPG placed institutional restructuring at the center o f the dialogue with Government. During its preparation, seemingly un-reformable institutions such as ONADEF disappeared and the Ministry incharge of forests agreed to shed all its non public service mandates. The responsibilities for environmental program implementation and environmental monitoring, once the territory o f the same Ministry,have been appropriately assigned to two different Ministries. The overlap of responsibilities between MINFOF and MINEP for the management o f protected areas, a potential source o f conflict, was resolved in December 2005 through a Presidential Decree which amended these Ministries' respective mandates. While the sector features a good institutional setting at this time, the risk o f future institutional 32 problems cannot be discarded. To manage this risk, the FEDPG's strategy has been to link disbursements to the achievement o f specific measurable results rather than to the reimbursement o f expenditures by one or another institution. 135. Bank reputational risk related to the controversy over forest operations in the humid tropics. Given the interest that forests and environment generate in civil society, this operation i s likely to attract significant external scrutiny and may entail reputational risk for the World Bank. Such risk i s inherent to the theme (forests) rather than to the content o f the operation. Inthe context o f forestry related work undertaken in the frameworks o f the SAC I11 and the Chad-Cameroon Pipeline, the Bank team has developed significant sector knowledge and created networks that will enable the FEDPG team to deal effectively with requests for information and external criticism. 136. Indeciding to move forward with the presentprogram, the Bank team realizedthat working ina country such as Cameroon environmental issues are bound to pose reputational risks whether or not the Bank i s engaged with a specific forestienvironment operation. The country i s home to world-famous rainforests, unique biodiversity, indigenous populations, and at the same time one o f the largest exporter of processed tropical timber in Africa and a partner in the Chad Cameroon Pipeline. Whenever criticism of the Bank becomes vocal, poorly informed constituencies and critics would quickly question the Bank's capacity to avert or correct environmental and related social problems. Direct involvement in operations like the FEDPGwill greatly enhance the Bank`s own sector knowledge and influence, while anticipating opposition attributable to insufficient public information. 137. A communications strategy has been established by the Government o f Cameroon in collaboration with the Bank's External Development Communications service to address potential expressions o f interest and concern for the public. On the Government side, this strategy i s based on three major axes. The first focuses on the ministerial capacity to communicate key policy messages externally and among the institutional actors involved. The second focuses on public environmental awareness initiatives, and the third on grassroots dissemination o f specific information concerning the rights and obligations o f people living near and within forest areas. On the Bank side, this strategy will involve proactive outreach initiatives aiming at disseminating internationally high quality information about the FEDPG and recent achievements made by Cameroon in forest sector governance and environmental stewardship. It will also involve expanded capacity for program oversight and communication efforts so that all potential internal and external communication enquiries can be dealt with rapidly and effectively. Trust Fund resources have been obtained and used to accompany the launch o f the operation and additional resources will be sought duringimplementation. Such expanded communication efforts will be matchedwith increased allocations o f supervision budget. 138. Exit Strategy. If the above or other unexpected unfavorable circumstances were to prevent the operation from achieving its goal, an exit strategy has been devised. It i s based on the Bank's role as enabler and catalyst behindthe Government's Forest and Environment Sector Program. This Program was launched in June 2004 as a Government program without waiting for Bank approval or support, The FESP i s in fact a shared responsibility o f the Government o f Cameroon and all its development partners, As a result, Bank's exposure will be diminishingovertime as support for the Program i s secured by other sources. The Bank will be able to withdraw, if necessary, without major disruption to the efforts initiated with the operation's support and without leaving a legacy o f inflated recurring costs for the Government. 3 3 ANNEX 2: SUMMARY DESCRIPTIONOF THE FORESTAND ENVIRONMENT SECTOR PROGRAM The Government FESP will adopt a broad sectoral lending approach consisting of five program components: 1. Regulation and information management 2. Productionforests management 3. Protected area, biodiversity & wildlife management 4. Communityforest resources management 5. Institutional strengthening, training & research 1.RegulationandInformationManagement Program component 1entails an estimated cost of US$7.49million and consists o f three subcomponents: Environmental regulations and impact assessment. Law number 96-12 August 5, 1996 endowed the Government o f Cameroon with a comprehensive legal framework for managing the environment. This subcomponent equips the FESP with the standards, regulations, and legal reference required to effectively administer that framework and enforce its provisions. In this capacity it will contribute to the: (i) preparation o f environmental standards, (ii)drafting o f environmental regulations, (iii)development o f training and information resources for law enforcement, (iv) preparation o f a guide and training course on environmentalimpact assessment, (v) conduct o f environmental audits, and (vi) active exploration o f financial resources and fiscal mechanisms to assure sustainedimpact assessment over time. 2. Multi-resources inventories and Mapping. The vegetation map o f Cameroon available today was released over a decade ago and i s outdated. Cartographic and multi-resource inventories are required to inform natural resource management at the country level, particularly in the northern and western zones. Among the outdated or nonexistent information resources the FESP will be required to update or develop i s an operative database covering both timber and non-timber forest products. This resource will be essential to monitoring changes in Cameroon's forest cover and to informing responsive sector and nationalpolicy. 3 . Communications and environmental awareness. The availability o f information and .information resources i s a necessary but not sufficient condition o f successful dissemination. Based on the understanding that effectively disseminated and useful information i s generally demand driven, the Program targets public awareness o f environmental issues, and awareness o f the environment- related information resources that are available (and needed) among those most likely to use them. This purpose will be served by a carefully crafted environmental awareness campaign and communications strategy that comprises the third element o f the information management Program component. 2. ProductionForestManagement The second Program component entails an estimated cost of US$30.68 million and pertains to forest management plans, regulatory enforcement, and sub-sector development and value added within Cameroon's production forests. It will be implemented through five subcomponents: 1. Completion of the Country Zoning plan. Cameroon validated a forest zoning plan in 1995 which provides the basis for dividing the country's forest estate between large and small scale production forests (UFAs and VCs), community managed forests, and protected areas - some o f which are withdrawn entirely from production based on their biological representativeness and diversity. The 1995 zoning exercise's coverage of production forests was however incomplete, 39 and has yet to be extended beyond production forests in the humid south. Since the zoning plan should be completed before any further forest concessions are awarded, the imperative becomes an urgent sectoral priority. And since forest zoning pertains to protected and non-production biodiversity and habitat conservation areas covered by Program component 3 (below), its significance i s not limited to production forests. Zoning o f state forests into production areas, parks, and reserves i s carried out with a provision that these areas remain under continued forest cover. Other areas, assigned to rural use zone, may under certain conditions be converted from forest to other land uses, including agroforestry, agriculture, other economic use or human settlement. 2. Forest Management Plans. In the humidforest productionzone, the FESP will help strengthen all parties' capacity to undertake and oversee implementation o f forest management plans. This subcomponent will work closely with the forest industry and local communities. It will help national institutions and other bodies to ensure effective supervision o f the design and implementation o f forest management plans for production forests. For a management plan to be approved and implemented, the concession has first to be gazetted, which involves a long administrative and public consultation process. About 40 UFAshave been already gazettedby the Administration. The objective of the Program i s to gazette all the 91 UFA concessions within five years. It i s worth clarifying that the project will not finance the design or implementation o f forest management plansper se. This will be the responsibility o f the private sector. The private sector will finance the management plans out o f its own or borrowed funds to satisfy the law that make management plans mandatory for all concessions. Similarly the Program will not finance any activity in forest concessions which fall within the responsibility o f the private sector, 3 , Wood Industry Development Planning. This subcomponent consists in elaborating and starting implementation of an industrialization strategy to ensure sustainable use o f forest products, through diversified processing, increased addition o f value, and reduced waste. It will establish incentives to favor modern and diversified forest industry. 4. Control operations and sanctions. The sustainable management o f forest resources suffered from an absence of control operations and related sanctions. MINEP will reinforce its capacity to monitor and oversee logging activities, a consistent strategy o f control will be established and control missions will be well resourced. Moreover the Ministries o f Forest, Finance and Justice will collaborate closely to effectively follow up contentious cases and recover sanctions. 5. Valorization of Non-Timber Forest Products (NTFP). Very little attention has been given to non- timber forest products until now, although they are the source o f alimentation and medicines of most o f the rural population. The objective o f this sub-component i s to promote NTFP and make demand and supply meet both on the national and the international market. 3. ProtectedArea, Biodiversityand Wildlife Management Component 3 o f the FESP Program entails an estimated cost of US$33.15 million, and consists o f eight interrelated subcomponents: 1. Biodiversity planning & zoning. During the preparation phase o f the FESP, a scientific consultation led to the definition o f an updatednetwork o f protected areas and parks representing over 90 percent o f Cameroon's national biodiversity, and covering nearly 17 percent o f the country's surface. FESP will support the validation and management o f this network. The protected area network will be managed in the context of landscapes and regional zoning plans determining land-use and modalities thereof. Wildlife corridor functions will be established and biodiversity hotspots will be identified within forest concessions and sport hunting zones (ZICs) located in the periphery of protected areas. The establishment o f community huntingzones i s an important element o f this landscape approach. 2. Knowledge & information management. The Program seeks to establish a management information system (MIS) linking socio-economic and biological inventories with management 40 plans. The MIS will periodically inform managers o f the protected areas in order to improve monthly and annual planning cycles. A large number o f national and international partners are actively involved in basic and applied research and this subcomponent aims to promote coordination and complementary activities betweenthem. 3, Participatory protected areas & community wildlife areas management: This subcomponent aims to develop a legal framework that encourages central/local and public/private partnerships and co- management, and that secures a redistribution o f income from protected area and wildlife management to local communities. The Program will further strengthen ongoing efforts to involve local populations in the management o f protected areas, by formally recognizing their roles and stakes in decision making processes, and giving them priority access to NTFPs and wildlife resources inperipheralareas. 4. Design & implementation of protected area management plans. The resources the Government has dedicated to biodiversity conservation over the last 10 years have proven insufficient. This sub-component aims at strengthening Government capacity to manage wildlife resources in national parks and protected areas and to develop and carry out effective wildlife management and anti-poaching strategies. Training, awareness building, and partnership coordination activities will target responsible law enforcement teams working inprotected areas. Management plans will remain the principal tool for protected area management and the Program will devote special attention to their elaboration. In sport hunting zones and community managed hunting zones, MINFOF will ensure compliance with the cahiers de charge agreed upon with both private and community concession holders. 5. Optimization of economic beneJits of protected areas & hunting zones. The existing legal framework has put into place the necessary mechanism to maximize the contribution o f wildlife to local community livelihoods, local and the national economy as a whole. Finance Law provisions stipulate that 10 percent o f lease taxes fiom sports hunting be allocated to local communities, 40 percent to the rural council, and the remaining 50 percent to the national treasury. Existing legislation also enables communities to establish community huntingzones, the exploitation of which shall be carried out for the benefit o f the communities themselves, Where these hunting zones are in the non-permanent forest estate, they can be attributed to local communities (Zones d 'Intire"t Cynigitique a Gestion Communautaire - ZICGC) which may lease them to third parties with requisite experience in the domain. Thus far, the contribution of protected areas to local and national economies has been minimal. Ecotourism, technology transfer, access fees to protected areas, fees from grant o f access to research, etc. are all means through which protected areas can contribute to local and national economies, but none have realized their full potential. Complementary roles and functions between the Ministries o f Environment, Forestry, and Tourism need to be defined and institutionalized at the central level to assure coherence and synergy - but operational planning must focus on the local level, where ecotourism activities take place. 6. Legal and institutional reform of protected area and hunting zones management. The principles o f institutional reform are laid out in Component 5, and stress the programming, monitoring, and evaluation functions o f Government departments. With respect to protected areas and hunting zones, these principles apply to the MINFOF's Directorate responsible for Fauna and Protected Areas (DFAP),whose services require substantial streamlining at both the central and field levels. Toward this purpose, the functions of the present GEF Secretariat o f the National Biodiversity Conservation Program (PCGB) will be integrated into the Environment Ministry.Work will start by strengthening DFAP's capabilities, allocating tasks at the divisional and provincial level, standardizing management tools, and redeploying, recruiting and training staff. Once this phase i s completed consideration will be given to the option o f giving this Directorate greater organizational autonomy, including management o f trust fundresources. 43 7. Sustainable financing of wildlife & protected areas. A number o f funding initiatives are underway. Within the context o f the Chad-Cameroon Pipeline, a small off-shore trust fundnamed FEDEChas been set up specifically to provide long-term (20 year) co-funding for Campo Ma'an and M b a m & Djerem National Parks. Another initiative i s the Cameroon Highlands Conservation Foundation (CAMCOF), which i s in the process o f obtaining additional GEF funds through UNDP. A third initiative is underway to set up a trust fund for the Sangha Tri-National, the first transborder protected area in Central Africa. The FESP foresees a national consultation on funding mechanisms to coordinate these related initiatives. 8. National Biodiversity Strategy and Action Plan update. In 1996 the Government o f Cameroon established, under the auspices o f the MINEF, an Inter-Ministerial Committee to start the elaboration o f a National Biodiversity Strategy and Action Plan (NEISAP). The first draft was produced in November 1998, but was not validated until 2002. While the objectives of the N B S A P remain relevant, more recent developments require the Plan to be updated. These developments include: (i) changes inthe political landscape, (ii) Yaoundt Declaration of 1999 the and subsequent Conference of Ministers for the Central Africa sub-region (COMIFAC), (iii) the HIPC process and the Cameroon Poverty Reduction Strategy Paper, and (iv) the implications o f the FESP. A new Inter-Ministerial Committee should be established to review and update the NBSAP and a national forum should amend and validate the new version. 4. Community ForestResourcesManagement Program component 4 of the FESP entails an estimated cost of US26.44 million, and will be implementedthrough three subcomponents: 1. Capacity buildingfor community forest and natural resource management. The Forest Law and its complementary regulatory texts-in particular the Arrktd conjoint MINEFIS18-promote the community-based management o f natural resources. The technical and managerial capacity of communities to effectively administer forests and game zones, as well as the institutional capacity o f agencies mandated to support community land management and agroforestry, are related priorities. A subcomponent devoted to this purpose will seek to establish linkages with the Community Development Program, and to assist local communities inusingtheir assigned shares o f the FWA tax on concession areas. 2. Reforestation andforest regeneration. The Programwill initially concentrate on support to small- scale tree planting activities by individuals, groups, and communities in northern and western regions o f Cameroon, where silvicultural successes have already been proven. Demonstration plantations will be established in other regions to promote new and appropriate plantation techniques. The newly created ANAFOR will support these private and collectiveplantations, 3. Masterplan for sustainable domestic energy supply. This subcomponent will also focus on northern regions, promoting regulatory amendments related to woodland regeneration and managed fuelwood harvesting, assisting in the implementation o f community master plans to supply fuelwood to urbanmarkets, and creating incentives for local enterprises. 5. InstitutionalStrengthening,Training & Research Component 5 entails an estimated cost of US$87.53 million and i s implemented through four subcomponents : 1. Reorganizing the National Office for the Development of Forests into the National Agency for Forest Development. The reorganization o f ONADEF into the streamlined and more specialized ANAFOR was among the reforms promoted by SAC 1111. It was enacted by two Presidential decrees and a joint Environment and Forest and Finance Ministry Arrktd in June 2002. ANAFOR's mandate pertains to the promotion o f financially viable and environmentally sustainable community and private plantation schemes. The reorganizationitself however proved 42 a slow and difficult process requiring intensive internal negotiation and high-level political backing. This Program subcomponent will help complete ANAFOR's transition and will strengthen the new agency's capacities. 2. Strengthening the Environment Ministry. An institutional review carried out inthe preparation o f the FESP demonstrated weak capacities o f the Ministry at different levels: (a) organizational level, (b) human resource management, (c) material resource management (d) financial resource management; and (e) legal and regulatory instruments. Strengthening through the FEDPG will focus on MINEP's concerns in the field o f the "green environment", particularly in the areas o f policy formulation, oversight, enforcement o f regulations, interfacing with partners and performance monitoring. 3 .Rehabilitating education and research in forestry and environment sector. Cameroonian forest and environment education and training facilities (National Forestry School in Mbalmayo, (ENEF), Garoua Wildlife School (EFG), Dschang Agriculture University, (FASA), Regional Agriculture Center, (CRESA)) offer an appropriate mix o f courses but are weak. The present program sub-component will strengthen these institutions by improving program content, supporting the training and recruitment o f teachers, rehabilitating buildings, acquiring new equipment, and promoting their affiliation with regional and international partners, including scientific institutions. While the FESP will not conduct specific activities in the research sector duringits initial stage, the Institut de Recherche en Agronomiepour le Dkveloppement (IRAD)is planning to integrate forest and environment research and science inCameroon. 4. Capacity building and decentralization. A number o f Government sector agencies are to devolve a substantial part of their responsibilities-particularly productive functions-to the private sector, NGOs, and community organizations. The FESP and FEDPG will help prepare these actors to take up functions and activities relinquishedby public institutions. It will do so through the award o f small contracts for works and services to be provided, information about income generating activities becoming available for which the Government can provide training and technical guidance. 43 ANNEX 3: CODE OF CONDUCT ADOPTEDBY THE FORESTAND ENVIRONMENT SECTOR PROGRAM(FESP) SUPPORTINGPARTNERS The following pages reproduce the signed copy and the Englishh-anslationo f a collaborationagreement signed on January 5,2006 by the representatives o f Canada, Germany, France, the Netherlands, the UnitedKingdom, the European Union, the African Development Bank, the World Bank, FAO,UNDP, WWF, S N V and IUCN.By signing the Code of Conduct these DevelopmentPartners expressed their commitment to usingthe Forest and Environment Sector Program as the framework through which they will harmonize and align their assistance to Camerooninthe areas o fforest and environment. 44 PROGRAMME SECTOREL FORETS ENVIRONNEMENT CODE DE CONDUJTE DES PARTENAIRES 1 11- Principes fondatciirs dirCode dnrls 8Cil ex FSFE ccpendra a la his de$ pro Adherents au Codo do Conduite E- ""."._I .__, ,~ ..... .,*----------*-- "_r-.".r#.m.,._----_-----_-.,, _" -------._ ._."I ___.________^_.. _..* ~~."1-41_" ----I_L_I, FORESTAND ENVIRONMENTSECTORPROGRAM CODE OF CONDUCT Background 1. In 2001, the Government o f Cameroon announced the preparation o f an ambitious Forest and Environment Sector Programme" (FESP) to enhance on-the-field implementation o f its forestry policy and thus bridge the gap between the legal and regulatory framework in force and the reality on the field, which does not make it possible to curb the degradation o f natural resources inCameroon. 2. The majority o f development partners demonstrated their support for the initiative and committed to jointly help the Government o f Cameroon to prepare and implementthe said programme. Thus, in addition to the commitments made by the Government of Cameroon regarding institutional review, community forestry, biodiversity protection, control strategies and decentralised taxation, partners unanimously committed to harmonise their support to FESP. This Code o f Conduct, hereafter designated Code, formalises such commitment. 3 . This Code is based on the resolutions made by the international community inMarch 2005 and contained in the Paris Declaration on Aid Effectiveness, especially ownership, harmonisation, alignment, results and mutual accountability. 4. This Code is also in keeping with the sub-regional dynamics encouraged by COMIFAC, for the promotion o f sustainable management and conservation o f the Central African forest ecosystems. 5. The signatories or ((Partners to this Code recognise that fragmentation o f assistance and lack of )) coordinated support to the Forest and Environment sector over the last ten years has seriously perturbed the efficacy of assistance in the sector. They therefore jointly undertake to harmonise their assistance exclusively within the framework o f the Forest and Environment Sector Programme prepared by the GoC. 6. The partners commit to uphold the following principles. Basicprinciplesof the Code 7. The Partners recognise that their assistance must be in keeping with national forest and environment policies and strategies for which the Forest and Environment Sector Programme constitutes the regulatory frame and the trend chart. 8. The Partners agree that the GoC shall coordinate the support o f Partners and ensure their consistency with other national programmes on poverty alleviation and sustainable use o f natural resources. [Streiigtkeningtiutionid strucfzrrcs: State arid Civil society] 9. The Partners commit to render national institutionalbodies accountable for the implementation of FESP and, as much as possible, not to set up concurrent bodies to manage their assistance. 10 Within the frameworkof FESP,a Environmentmeans the green Environmentand does not include the brownandgrey environments. )) 51 10. Inso doing, the Partners wish to buildthe planning, monitoring-evaluationand administrative and financial management capacities o f national structures in a sustainable manner. The Partners commit to provide their support for capacity building particularly through technical assistance (see para 18). 11. The Partners support the idea o fputtinginplace mechanisms that enable to buildthe capacities o f non-etatic actors which are playing an increasingly important role inthe implementation o f forest resources-related production and conservation activities - timber, non-timber and wildlife products -. 12. The Partners agree that their actions must aim to achieve the objectives jointly identified with the GoC. A results matrix validated during the FESP evaluation mission in May 2004 by the GoC and the Partners, defines for each component the critical objectives to be attained over a period of five years. The matrix will serve as the grid for analysing the progress made during the first five years o f implementation o f FESP. 13. It i s understood that the matrix i s not exhaustive and that a more comprehensive system o f sector monitoring shall supplement it. 14. The Partners commit to eventually provide a reliable indicative list o f commitments representing their assistance to FESP over a given period, so as to ease planning by the GoC. They shall endeavour to base the programming o f their assistance on the planning and programming cycle of the GoC. 15, The partners agree on the need to jointly work towards providing earmarked budgetary support to FESP. However, the adherence of the different Partners to this financial mechanism shall depend on both the improvement made by the GoC inpublic finance management and the internal cycles o f the different Partners. 16. The Partners foresee that the GoC will need technical assistance and expertise to achieve necessary improvements and commit to help fund such needs. 17. The Partners have put in place a joint fundingmechanism referred to as Basket FundD to fund (( the technical assistance and the training required within the framework o f implementation of FESP. The objectives o f the Basket Fundare as follows : . 0 Rapid and effective provision o f technical assistance and training required by MINFOF/MINEP, pursuant to the specifications described in the Work Plans o f the different ministries, for the implementation o f FESP and to attain set common objectives; 0 Build the financial and administrative capacity o f MINFOF in the implementation and management o f the Basket Fundinparticular and FESP ingeneral ; 0 Mobilise external funding for FESP while reducing the cost o f bilateral funding transactions and harmonisingthe procedure for such assistance. 52 During the first two years, the Basket Fund will be jointly managed by the Ministry in charge of forests and the GTZ-IS. A service contract was signed on 9 May 2005 between MINFOF and GTZ- IS. 18. The Partners commit to use the Basket Fund as much as they can to provide technical assistance to FESP. Conditions of implementationof the Code-Partner Coordination [hformution sliuritig - conseii~us bziildiiig] 19. The Partners undertake to systematically share all pertinent informationrelating to the Forest and Environment sector so as to improve the efficacy o f their assistance to the sector through coordinated action. The Consultation Forum for Partners o f MINEF (CCPM) constitutes a choice forum for exchanges via monthly meetings and information sharing on the Internet (mail list). 20. The Partners undertake to, as much as possible within the context o f CCPM, seek consensus on key issues touching on the Forest and Environment sector, which require common positions. The common positions thus adopted shall be forwarded to the relevant authorities and presented as the position o f the partner community vis-a-vis FESP. 21, The Partners commit to institute a limited number o f preconditions /measures in order to allow the GoC have a better understanding o f the expectations o f the different Partners. The results matrix jointly validated during a FESP evaluation mission in M a y 2004 defines the main expectations o f Partners vis-a-vis the GoC over the next five years. 22. The Partners shall seek to adopt a common approach in respect o f environmental impact assessment as well as issues relating to cross-cutting domains such as respect o f the rights of indigenous peoples, gender equality, etc. [Joint hlissions] 23. The Partners commit to set upjoint monitoring and evaluation mechanisms for FESP. They shall organise joint programme-evaluation missions and shall, in general, seek to limit the number of field missions by means o f common intervention synergies. 24. The Partners have acquired specific skills within the framework o f their support to the Forest and Environment sector. They thus commit to take full advantage o f their comparative advantages and to ensure that their support i s complementary inthe implementation o f FESP. 25. As part of the distribution o froles based on their respective comparative advantages, the Partners have decided to identify the leaders of the main sub-components/activities o f FESP. 53 ANNEX 4: THE MULTI-DONOR BASKETFUNDFOR TECHNICAL ASSISTANCE Cameroon's Forest and Environment Sector Program (FESP) i s a national program developed jointly by the Government o f Cameroon, the donor community and NGOs over the last three years. It was adopted in May 2004 as a common sector development framework for government institutions, local governing bodies, communities, the private sector, NGOs, and donors active inthe forest domain. Scope of the BasketFund The technical assistance to be provided during the FESP implementation i s to be financed jointly by interested donors through a pooling arrangement known as the Basket Fund(BF). The BF i s designed to buildsufficient capacity to implement the FESP, and will: 0 Provide funding for quick, targeted and efficient provision of the technical assistance and training envisaged inthe FESP, as well as any equipment directly related to this capacity building. 0 Enhance the financial and administrative capacity o f the Ministries (MINFOF and MTNEP) in charge o f implementingthe FESP. 0 Support capacity building o f the Ministries to enable them to implement, monitor and evaluate the FESPactivities. 0 Enhance donor coordination and minimise transaction costs for the Ministries. 0 Attract it i s hoped additional external funding in support o f the FESP through the establishment and demonstration o f an efficient financing mechanism. ComponentsandFinancing Program Components Training Program Equipmt Total Secured Balance CFAFm and cost for cost for Cost for funding to be technical initial 2 initial 2 year initial 2 through financed assistance year period year projects for FESP period period Environmental management capacity e.g.establishmentof a management system, assessment of managementplans of forest concessions and communalforests. 578.35 433.76 43.38 477.14 74.00 403.14 Sustainablemanagementof productionforests e.g.developmentof forestry sector industrializationplan, uniformlogtrackingsystem, computerization of penalties. 2,352.18 1764.14 176.41 1940.55 40.00 1900.55 Management of wildlife and protectedareas e.g. formulationandadoption of wildlife development& community managementplans, anti-poachingmeasures 968.00 726.00 72.60 798.60 844.00 -45.40 Communitymanagement of forest and wildlife resources e.g. developmentof community forestry action plans, adoption of CF Reviewresults,consultancysupport in tree planting 2917.00 2187.75 218.78 2406.53 463.00 1943.53 Institutional capacity building e.g.trainingon forestry policy, monitoringand evaluationsystemdevelopment,communicationstrategy 6574.00 4930.50 493.0% 5423.55 226.00 5197.55 Total CFAm 13,389.53 10,042.15 1,004.15 11,046.36 1,647.0 9399.36 Total Em 14.079 *Figures are i d c a t w e only (exchangerate 950 CFA/a10.558 1.05684 11.615 1.732 9.883659 FundManagement,ConsultationandDecision-MakingProcesses Decisions on the specific use o f BF resources will be made through the regular Ministerial annual planning process (planning builds from inputs at field level to proposals for each programme component) 54 and guided by the FESP Steering Committee and the BF Management Committees (Management Committee and Management Unit). Initially the Ministry o f Forest and Fauna (MINFOF) will manage the BFjointly with GTZ International Services (GTZ-IS). The BF management contract was signed by MINFOF and GTZ-IS on May 9, 2005. GTZ-IS i s fully accountable for the financial management o f the BF in the first phase through oversight o f the agreed management procedures and processes elaborated in the Manual o f Procedures. Full management responsibility for the BF will be transferred to the MINFOF in a second phase when sufficient capacity has been built. Contributionsto the BasketFund DFIDhas committed &4mto the Basket Fundfrom FY 2005. Canadian CIDA has confirmedits intention to participate inthe BF. French Cooperation has indicated its interest incontributing too, though whilst its main contribution is subject to Cameroon achieving Completion Point in the HIPC process, it envisages providing modest resources in FY 2005. Germany and the Netherlands are also considering supporting the mechanism. 55 ANNEX 5: FORESTAND ENVIRONMENT SECTORPOLICY LETTER" 1.ACHIEVEMENTS 1. Sector Resources and Policy The dense humid forests o f Cameroon cover a surface area o f about 19.598 million hectares (that i s 41.2 percent of the national territory) in the southern part o f the country, which also has forested savannahs and forest galleries covering about 4.3 million hectares. According to the overall assessment o f surface area carried out within the framework o f the National Environment Management Plan o f 1996, dense forests and wooded savannahs cover a surface area o f 21.070 million hectares, some 45 percent of the national territory. However, these forests have undergone and continue to undergo significant changes as a result o f logging, exploitation o f natural resources, and transformation into farmlands and for other uses. In order to ensure the growth and sustainable development o f the forest sector, the Government o f Cameroon has over the last ten years initiated far-reaching reforms touching on the institutional and regulatory frameworks o f the sector. Such reforms were embodied in the creation of the Ministry o f Environment and Forests in 1992, the formulation o f a new Forestry Policy published in 1993, the adoption of a new Forestry Code in 1994 and an Environment Code in 1996. The Ministry of Environment and Forests gave way to the two successor Ministries established by Decree number 2004/320 on 8 December 2004: the Ministry o f Forests and Fauna (MINFOF) and the Ministry of Environment and Protection o f Nature. The new forestry policy i s an important component o f the National Environment Management Plan. It also falls in line with the agricultural policy. The 1994 Law to lay down Forestry, Wildlife and Fisheries Regulations and the 1996 Law to institute the Framework Law relating to the management o f the Environment, establish a policy and strategy framework that centers on the following aspects: Sustainable management o f forests, with the creation of a permanent forest estate and the setting up of Forest Management Units(FMUs)to replace forest permits. Contribution to economic growth and poverty alleviation by ceding part o f the income from tax revenue to councils, creatingjobs and allocating community forests. Participatory management through consultation with the civil society and the private sector, sensitisation of rural populations about their responsibilities, and permanent dialogue with the international community. Conservation of biodiversity through a national network o f protected areas. Building the capacity of the public sector inthe performance of its traditional key functions and the transfer of productive functions to the private sector. Putting in place a legal framework conducive to the development o f the private sector, based on long-term conventions and industrialisation. Harmonisation of the regional management system through a zoning plan. Improvement of governance through increased transparency and systematic dissemination o f information to the public. Besides, this policy i s given greater momentum by government guidelines that lay emphasis on new policy challenges such as poverty alleviation, decentralization and good governance. It i s also consistent with international guidelines on the environment laid out at the Rio Earth Summit in 1992 and Johannesburg Summit o f 2002. An Emergency Action Plan (EM) supplemented these actions in 2000, by laying emphasis especially on the fight against poaching and overall streamlining o f the sector. The Emergency Action Plan itself has been integrated into the Forest and Environment Sector Program (FESP). 11 The present annes presents the English translation of an original in French that was signed by the Government, Copy o f the original follows this translation. 56 2. Cameroon's commitments at regional and international levels Duringthe Central African Heads o f State Summit inMarch 1999, Cameroon reaffirmed its national and sub-regional commitment to ensure sustainable management o f the forest ecosystems o f the Congo Basin. Concerted management o f sub-regional forest resources decided upon by Heads o f State in the Yaounde Declaration of 17 March 1999 thus received the backing o f the international community through resolution No. 54/214 o f the United Nations. The Convergence Plan that resulted thereof and was approved by the Conference o f Ministers incharge o f Forests inCentral Africa (COMIFAC), was adopted at the last Heads o f State Conference o f the Central African Forestry Commission on 5 February 2005 in Brazzaville. This Plan i s a compilation o f the National Specific Programs o f signatory States, which should contribute to the attainment o f convergent objectives that translate into reality the resolutions o f the Yaoundt Declaration o f March 1999. Cameroon's FESP, which i s the Convergence Plan implementation program at national level, will strive to be the national response to COMIFAC programs. Cameroon's commitment to ensure sustainable management o f natural resources at the international level has been translated in the signing o f several regional and international conventions on forest and biodiversity, These conventions include the following: 0 The Agreement to set upthe Lake ChadBasin Commission (1964) 0 The Convention on the Conservation o f Nature and Natural Resources (Algiers, 1968) 0 The Convention on the Protectiono f Cultural and Natural Heritage (Paris, November 1972) 0 The Convention on International Trade in Endangered Species (CITES - Washington, March 1973) 0 The African Timber Organisation (AT0-Bangui, 1974) 0 The Agreement on the Joint Management o f Flora in the Lake Chad Basin (Enugu, December 1977) 0 The InternationalAgreement on Tropical Timber (Vienna, 1983) 0 The Central African CooperationAgreement on Wildlife Conservation (Libreville, April 1983) 0 The Vienna Convention on the Protectiono fthe Ozone Layer (Vienna, March 1985) 0 The Montreal Protocol on the Control o f Chlorofluorocarbons (Montreal, September 1987) 0 The Convention on Climate Change (June, 1992) 0 The Convention on Biodiversity (Paris, October 1994) 3. African Forest L a w Enforcement and Governance (AFLEG) Like most African countries, Cameroon committed to be part o f the initiative launched in 1989 by the G-8 countries to combat illegal exploitation, illicit trade inforest products and corruption inthe forest sector. This initiative aims to stimulate, at the highest political level, the will o f the international community to curb these scourges in order to ensure sustainable management o f our forest resources. This explains why the efforts made by Cameroon to meet this imperative have, over the last ten years, been marked by political, legislative and institutional reforms, and adoption o f basic instruments that should promote conservation and sustainable management o f natural forests. This concerns especially the following: 0 Adoption o f a forest exploitation system that makes use o f development plans aimed at ensuring sustainable management of production forests; 0 Improvement of forest governance by setting up a legal framework conducive to the development o f the private sector, which guarantees transparency in the process o f allocating forest concessions and supervising exploitation activities, the major innovation being the use o f call for tenders and the presence o f independent observers; 0 Adoption o f Principles, Criteria and Indicators (PCI) for sustainable management o f forests in Cameroon inDecember 2004 i s one o f the links inthe certification chain. 57 Progress made in terms o f reforms geared towards the conservation and sustainable management o f forests in Cameroon i s remarkable, and thus deserves to be appraised and evaluated. However, this i s an exacting process that requires the collaboration o f all stakeholders inthe sector. Cameroon i s determined to pursue these reforms. The concern here i s to ensure rational management o f a national heritage o f great importance while mainstreaming future needs. We do not have the right to deprive future generations o f the benefits that we are deriving from the forest today. 4. T h e Sector R e f o r m Plan On the basis of progress made and in order to consolidate the first phase o f the essentially institutional and legislative reform o f the forest sector, a second phase o f reforms was launched with the support o f the Bretton Woods Institutions, who mainstreamed a forest sector component into the Third Structural Adjustment Credit (SAC 111) granted to Cameroon. This component i s based on the following three key objectives o f the forestry policy: 0 Sustainable management o f the resource; 0 Stimulation o f economic growth and contribution to poverty alleviation especially by ceding to councils and communities part o f forestry revenue, job creation in the timber sector and community forests managed by communities themselves and; 0 Development o f a dynamic and efficient private sector. The mainreforms encouraged include the following: Competitive allocation of exploitation permits. Forest exploitation permits (Forest Management Units, Sale of Standing Volume) are allocated by means o f a competitive procedure on the basis o f technical and financial criteria. File selection i s carried out by an interministerial commission that includes an independent observer who contributes to improve transparency inthe permit allocationprocedure. Planning of allocation of exploitation permits. In order to ensure rational management o f its natural resources, the Government o f Cameroon designed a concessions allocation planning strategy (UFAs) in 1999 and provided clarifications concerning the different types o f existing permits. This strategy was updated in April 2004 and envisages the allocation o f all forest concessions by 2006. Such planning constitutes an important instrumentboth for forestry and taxation services as well as forest exploitation companies. Setting up the Forestry Revenue Enhancement Programme (PSRF). Placed under the twin supervision of the Ministries in charge of Forestry and Finance, the PSRF was set up in June 1999 to strengthen the hitherto very weak forestry-tax collection capacity. The PSRF centralises the collection o f forest exploitation-specific taxes and common law taxes for big companies. Since the creation o f the programme, the Ministry of Finance and Economy has recorded a significant increase in forest tax revenue (excluding export taxes): from FCFA 10 billion in 1998/1999, FCFA 29 billion in 2000/2001 to FCFA 40 billion in 2002/2003, at a time when the taxation system i s fully operational and recovery rates reach 90 percent. Forestry taxation reform. An economic and fiscal audit was conducted under the joint responsibility of the Ministries o f Finance and Forestryby an internationally recognised Committee o f Expert Economists. The objective o f the audit was to redefine the framework for sharing the revenue deriving from the exploitation o f forest resources between the Government o f Cameroon, private operators and the population. The final report of that audit which was validated in March 2000, made a number of recommendations which gave rise to major reforms adopted by the National Assembly. Such reforms include: (i) Competitive allocation o f forest exploitation permits; (ii) Establishment o f a deposit system; (iii) Clarification o f Industrial free zones; (iv) New forest products taxation modalities. 58 Some reforms are still not implemented. These include the quota system for timber exports and the setting up of a system for equitable distribution of the share of forest royalties paid to local councils and communities (Equalisation Fund). Definition of the rules relating to forest development plans. Order No. 222MINEF o f 25 May 2001 defines the rules for the preparation, design and monitoring-control o f development plans in forest concessions. It provides a detailed practical guide to all stakeholders involved in the sustainable management o f forest resources. Establishment of a bank deposit system. Forest exploitation permits .are granted to operators after due payment o f a bank deposit that covers all the risks o f non-compliance with fiscal and environmental commitments. This system i s aimed at discouraging speculative practices which are very rife inthe forest sector. Supervision of management plans. Partnership with two internationally recognised environmental NGOs has made it possible to strengthen the ability o f the Ministry o f forestry to supervise management plans and allows for operational monitoring o f exploitation activities in forested areas in Cameroon. The convention signed between the Government and Global Forest Watch - World Resource Institute (GFW), allows for the monitoring o f forest exploitation activities inpermanent and agro-forestal estates by means o f advanced satellite imagery technologies. A map o f the road network within FMUs and Sale o f Standing volumes i s produced each year. A second contract has been signed with Global Witness (GW) which i s expected to participate as independent observer inthe supervisory activities carried out by the Ministry in charge o f Forestry. Such activities range from field missions to the handling o f all litigations. GW ensures that supervision procedures are upheld at every stage and i s responsible for signalling any abnormalities to the Ministryo f Forestry. Promotion of Community forests. Order No. 518/MINEF/CAB o f 21 December 2001 offers local communities the possibility to use their right o f pre-emption over surrounding forests. This right makes it possible for them to suspend any allocation of the forest concerned to a trading company for a period o f two years duringwhich the community may choose to transform it into a community forest. Restructuring ONADEF. Such restructuring i s in conformity with the objective o f redistributing forest sector roles, with government services concentrating on traditional roles (policy formulation, supervision and control) and productive functions being delegated to private operators. Presidential Decrees No. 2002/155 and 20021156 of 18 June 2002 modifiedthe designation, the articles o f association, the mandate and funding modalities of ONADEF. The restructuring o f ONADEF gave birth to the National Forestry Development Agency (ANAFOR) whose mission i s to promote economically profitable and environment-friendly forest plantations both inthe private sector and inthe local communities. 2. THE CHALLENGES TO OVERCOME 1. Harmonisation of institutional capacity and reform objectives There i s a big disparity in terms capacities for forestry and wildlife legislation implementation. Besides, there i s no framework for the harmonisation and coordination necessary for the smooth development o f various support projects. In addition, the support o f the international community i s very scattered and i s translated by a great many uncoordinated projects, ill-appropriated by national institutions and with moderate impacts on the field. Over 60 projects under the supervision o f the Ministries o f Forest and the Environment and over ten under the supervision o f other Government services (mainly the Ministry o f the Plan, Programming and Regional development, the Ministry o f Agriculture and Rural Development and the Ministry o f the Economy and Finance) currently have components that are more or less related to the protection, renewal and valorisation of natural resources. These projects annually take up close to FCFA 10 billion o f external funding in the forest-environment sector alone, to which should be added the national counterpart funds. 59 2. Enhancement of popular participation in the management of forest and wildlife resources In spite of the prescriptions of the current forestry policy that recommends the participation of the population in the conservation and management o f forest resources, such participation remains limited. This is due especially to the unclear definition of the roles of the civil society and the local communities, which do not have adequate skills and organisational capacity needed for proper management o f the redistributedresources, the weak technical management capacity o f NGOs and the great distrust between them and the forestry administration, the difficulties for economic operators to move from the stage o f "logger" to the stage o f management forester. 3. Securing a significant share of Forest Revenues for community development During the period from 2000 to 2004, over FCFA 25 billion was distributed to councils and local governments as their share o f the royalty from the acreage under exploitation for commercial purposes, An audit and other studies were also carried out on the use of almost all o fthe said funds. Inspite o fthese positive developments, much i s still to be done to allow for more transparent and participatory planning of investments and more efficient control o f expenditure. 4. Stepping up the fight against poaching and illegal exploitation of natural resources The ability o f the Ministry of Forestryand Wildlife to carry out controls, follow-up offences and mete out sanctions i s still relatively limited. In spite o f the involvement o f an independent observer in the control activities o f the Ministry of Forestry and Wildlife, performances are still moderate. Only greater organisation o f all the phases o f the control chain by the Ministry o f Forestry and Wildlife may ensure lasting results and make it possible to build on the contributions o f the independent observer, especially by publishingthe record of offences and informing the public about the litigations between the Ministry and forest sector economic operators. 5. Speeding up the mainstreaming of environment-friendly measures in forest production activities Over six years after the entry into force of the Framework law on the management o f the environment in Cameroon, environmental concerns have remained administrative formalities within the context o f forest management operations. It i s therefore necessary to ensure rigorous application o f environmental management plans, especially in some forest management units situated near protected areas where environmental assessments are a key precondition. Besides, it will be necessary to strengthen and step up the operational abilities of the institution in charge of the environment and o f advisory bodies such as the National Advisory Committee on the Environment and Sustainable Development (CNCEEDD). 6. Protected areas - National parks A network o f protected areas has been developed especially over the last fifteen years, thanks to the Biodiversity Conservation and Management Programme in Cameroon (PCGBC). Wildlife protected areas cover 7 211 819 hectares representing 15.1 percent o fnational territory. This surface area is distributed as follows: 10National parks; 10 Wildlife reserves; 1Wildlife Sanctuary; 3 Zoological gardens; 40 Hunting zones; 16 community-based huntingzones which have been placed at the disposal o f village communities. The technical and financial management o f community-based zones i s the responsibilityof the populations who may, if they so desire, seek the technical assistance o f the staff o f the Ministryo fForestry and Wildlife. Besides, a method of assessing efficient management of all national parks has been established. 7. Expansion and Participatory management of protected areas The different measures taken to this effect include the following: a) Economic operators in leased hunting zones are obliged to respect the specifications which stipulate the social projects to be carried out for the benefit o f the surroundingpopulation. 60 b) In addition to such social projects, communities benefit 50 percent o f lease taxes which are annual and per hectare, and shared on a pro-rata basis o f 40 percent to the councils and 10 percent to communities. Cameroon also instituted rules that allow for consultation o f the local populations both at the level o f creation, demarcation and management o f protected areas. c) Consolidation o f protected areas within the national territory and setting up o f cross-border protected areas. The Conventions relating to the Sangha Cameroon (LobCkC National Park), the C.A.R. (Dzanga Sangha National Park) and Congo (Nouabale Ndoki National Park) complexes as well as the Gahanga-Gumti (Nigeria) and the Tchabal Mbabo (Cameroon) complexes have been signed. Agreements between the Dja Wildlife Reserve (Cameroon), MinkCbC (Gabon), Odjala Reserve (Congo) on the one hand, and the Korup (Cameroon) and Cross River (Nigeria) on the other hand are being prepared. d) Fight against poaching, especially through the setting up of a central Anti-Poaching Unit, a National Committee and Provincial Committees to this end. Such committees involve transport companies (CAMRAIL and CAMAIR). These measures are coupled with regional initiatives such as CEFDHAC, COMIFAC, OCFSA, ECOFAC, WWF, CARPE and compliance with standards and international conventions (CITES). 8. Extensionof programmes to arid and mountainous regions As a result of its geographical position, Cameroon is part o f the sudano-sahelian zone threatened by desertification. Forest ecosystems are fragile, often because o f overexploitation by the population for subsistence. Research carried out over the last ten years on species, modes o f settlement and management, makes it possible to propose suitable solutions for reforestation, agro-forestry and management o f rural and urban peripheral zones with a view to fixing the soil, restoring fertility, producing fuel wood and lumber, fodder, food products and financial revenue from the sale o f forest products. Urban periphery and agro-forestry reforestation programs in savannah and forested areas shall be partly implemented (directly or indirectly) by ANAFOR in accordance with the national program for the planting o fprivate and community forests. 3. PROSPECTSAND COMMITMENTS FOR 2005 - 2015 Future prospects centre on solving problems and reviving the sector. They are based on the consolidation o f the reform framework established through SAC I11and the revival o f sector development programmes through the Forest and Environment Sector Programme. 1.Consolidationof the reformframework In spite of the progress that Cameroon has made during the last ten years towards sustainable management o f forest resources and improvement o f governance and transparency, illegal exploitation of resources i s still a disquieting phenomenon that jeopardises all o f the progress already made. This phenomenon can only be entirely eradicated and forest resources sustainably managed if we commit to uphold the SAC I11reform framework and pursue its implementation. The table below i s a recap o f the reforms introduced and highlightsoverall reform implementationindicators. 61 REFORMS REFORMIMPLEMENTATION Competitive allocation of Transparent allocationof forest exploitationpermits (quality of bidding documents) exploitation permits Participationof an independent observer inthe permit allocation committee meetings and forwarding of reports Exclusionof companies convicted of major infringements of forestry legislation andregulations Planning of forest Allocation of forest concessions accordingto the programmeelaborated concessions allocation ForestryRevenue Collection of forest-sectorspecific taxes (PSRF annual report) EnhancementProgramme Collection of fines and damages arising from offences (PSRF annualreport) Effective payment of all bank deposits (PSRF annual report) Setting up a system for fair redistribution of RFA shares (equalisation fund) Forestrytaxation reform Pursuanceof fiscal reform implementation Effective and efficient consultation betweenthe Government (MINEF-MINFB) and the private sector Sustainablemanagement Regular meetingsof the Technical assessment committee of management plans and the Inter- of forest concessions ministerial Committee for the approval of managementplans Number ofconcessionsallocated since two years that have managementplans approvedby the administration Number of final conventions signed Supervision of Regular monitoring of forest exploitation with satellite imagery (road map available eachyear) management plans Participationof an independent observer inMINEF control activities Promotion of community Transparent applicationof the rightof pre-emption for local communities 1 forests Effective start of the RIGC project (with HIPC resources) Restructuringof Execution of ANAFOR working programme in accordance with the guidelines laid down by the ONADEF reform of that institution Combating illegal Charging all establishedoffences; application and collection of penalties exploitation Exclusion of all companies guilty of serious offences from submittingtenders for exploitation permits, and even suspension of valid permitsintheir keeping 2. Better environmentalmonitoringand implementationof internationalconventions and standards The setting up o f the two Ministries should allow for greater visibility and clarificationo f the roles o f the different stakeholders. This should enable us tackle environmentalproblems unequivocally, given that the Permanent Secretariat for the Environment inthe former MINEFwas unable to go beyond the monitoring o f a few conventions. The main mission here which consisted in setting the different standards in all sectors o f activity was not carried out. Even the implementing instruments of the 1996 Framework law on the environment were not drafted. By setting up the Ministry o f the Environment and protection o f Nature, the Government i s thus endowing itself with an ambitious environmental policy that covers all sectors, wards o f f the confusion that has always characterised environmental problems seen by the general public as limited to the Forest and Wildlife sector. The Ministry mainstreams all the sectors concerned so as to handle the cross-cutting nature o f environmental actions. 3. The NationalForestand EnvironmentSector Programme This programme appears as a choice forum for the implementation o f forestry policy during the next decade, Through the Forest and Environment Sector Programme, the Government seeks to secure multifaceted assistance for the effective implementation o f its policy o f sustainable and participatory management o f forest resources, so that they contribute significantly to improve the national economy as well as the living environment and standards o f the populations. Priority areas o f such support include capacity-building of national institutions in terms o f human, material and financial resources to enable them effectively implement the policy on the field. Such strengthening is to be achieved through implementation o f institutional reforms envisaged within the framework o f institutional review, and support o f public and private efforts towards the sustainable management of forest and wildlife resources at the economic, ecological and social levels. 62 The Programme approach adopted for its preparation and implementation will also enable the Government to use FESP as a coordination framework for all actions that contribute to achieving the objectives of the country's forest and wildlife policy. FESP i s thus conceived o f by Government as a national sector development programme open to funding from all donors, the civil society, NGOs and the private sector. Through this programme, the Government seeks to endow itself with a control panel that will enable it pilot, monitor and control this sector with full knowledge o f the situation on the ground. Fundingo f part o f the programme inthe form o fbudgetary support should also make it possible to build the technical and financial capacities o f the administration. The onus o f implementation o f FESP also lies with the three other groups o f stakeholders that are the private sector, the civil society and donors. While the public sector will henceforth seek to concentrate on i t s traditional duties, the private sector will take care o f production functions as a responsible partner concerned about upholding the laws and regulations in force. The civil society will participate in the implementation o f FESP as partner and observer o f compliance with the rules o f the game by all stakeholders. Donors and development partners will participate in the implementation o f FESP by harmonising their approaches and selecting the components they intendto finance and support, depending on their interests and programme cycles. FESP i s thus the framework-programme for the implementation o f the forestry policy that essentially aims to ensure the conservation and sustainable management o f forest ecosystems with a view to meeting the local, national, regional and world needs o f present and future generations over the next ten (10) years, and aims to mobilise the possible contributions o f various stakeholders including donors, NGOs and the civil society. Funding o f the Programme during its first years will be done on the basis o f the results obtained and assessedwith the triggers summarised inthe table appended hereto12. YaoundC, 1March 2005 Minister for the Environment and Protection o fNature Minister for Forestry and Wildlife HELEPierre EGBEACHUO Hillman '2 Translation f r o m a signed original in French. Follows the FEDP policy matrix. This matrix i s the same used for the FEDPG and is presented in Annex 1. 63 REPUBLIQUE DUCAMEROUN REPUBLIC OF CAMEROON Paix-travail-Patrie Peace- Work- Fatherland POLITIQUE SECTORIELLEFORET ET ENVIRONNEMENT VERT 1. LESACOUIS 1.1Ressourceset politiaue sectorielle Les for& denses humides du Cameroun, selon la FA0 (1997) s'ttendent sur une superficie d'environ 19,598 millions d'hectares (soit 41.2 % du territoire national) dans l a partie meridionale qui comprend 6galement des savanes arbortes et des galeries forestibres couvrant environ 4,3 millions d'hectares. Les for& denses et les boisements de savane couvrent une superficie de 21,070 millions d'hectares (soit 45 % du territoire national) suivant 1'Cvaluation globale des superficies effectuke dans le cadre du Plan National de Gestion de 1'Environnement (1996). Toutefois, ces for&ts ont subi et continuent a subir des changernents importants soit par l'exploitation du bois et des ressources naturelles, soit par la transformation en terres agricoles et d'autres amknagements. Afin de placer le secteur forestier camerounais sur une voie de croissance et de developpement durable, le Gouvemement camerounais y a entrepris depuis plus d'une dizaine d'anntes de riformes profondes tant sur le plan institutionnel que rtglementaire. Elles se sont traduites notamment par la creation en 1992 d'un Minist&re en charge de l'environnement et des for& l'elaboration d'une Nouvelle Politique Forestiere publite en 1993, l'adoption d'un nouveau Code Forestier en 1994 et d'un Code de 1'Environnement en 1996, par l a crtation de deux Ministbres, l'un en charge des For& et de la Fame et l'autre en charge de I'Environnement et la Protection de la Nature suivant le DCcret N02004/320du 8 decembre 2004. L a Nouvelle Politique Forestiere se veut une composante importante du Plan National de Gestion de 1'Environnement. Elle vient Cgalement en appui 2i la politique agricole. L a L o i de 1994 portant Rtgime des ForCts, de la Faune et de l a PCche et la L o i de 1996 portant Loi-Cadre relative a la Gestion de consacrent un cadre politique et strattgique qui s'articule autour des axes suivants : - la gestion durable des for&, avec l'dtablissement d'un domaine forestier permanent et la creation des Unites Forestieres d'henagement (UFAs) en - remplacement des licences forestikres ; la contribution B la croissance Bconomique et B la lutte contre la pauvret6 a travers l a retrocession d'une partie des recettes fiscales aux collectivites, la crtation - d'emplois et la miseen place des fori% communautaires ; la gestion participative travers la concertation avec la societe civile et le secteur privt, la responsabilisation des populations rurales et le dialogue permanent avec -- la communaute internationale ; la conservation de la biodiversitk B travers unreseaunational d'aires protigtes ; le renforcement du secteur public sur ses fonctions essentielles et le transfert des - fonctions productives au secteur prive ; la mise en place d'un cadre reglementaire favorable au dtveloppement du secteur - privC ax6 sur des conventions de long terme et 1' industrialisation ; la mise en coherence du systbme d'aminagement du territoire grgce a un plan de - zonage ; l'amtlioration de la gouvernance avec l'augmentation de la transparence et le recours systematique a l'information publique. Cette politique est par ailleurs renforcte par des directives gouvernementales qui mettent l'accent sur de nouveaux enjeux politiques que sont la lutte contre la pauvret6, la decentralisation et la bonne gouvernance. Elle est Cgalement en coherence avec les orientations internationales en matiere environnementale (Sommet de Rio Sommet de Johannesburg - - 1992, 2002). Un plan d`actions d'urgence (PAU) est venu completer ces actions en 2000, en mettant notamment l'accent sur l a lutte contre le braconnage et l'assainissement general du secteur. L e Plan d'actions d'Urgence lui- m6me a Cte integrt dans l e Programme sectoriel ForCt-Environnement (PSFE). 1.2. Les engagements du Cameroun sur le plan rkgional et international Lors du Sommet des chefs d'Etat d'Afrique Centrale en mars 1999, le Cameroun a reaffirm6 ses engagements politiques au niveau national et sous-regional dans le domaine de la gestion durable des tcosystkmes forestiers du Bassin du Congo. L a gestion concertke des ressources forestikres de la sous-region dtcidte par les Chefs d'Etat dans la Declaration de Yaounde du 17 mars 1999, a ainsi requ le soutien de la communautt internationale travers la resolution no54/214 par les Nations Unies. L e Plan de convergence qui en est rCsulte ayant BtC approuve par la Conference des Ministres en charge des for&ts de 1'Afrique Centrale (COMIFAC), a et6 adopt6 B la dernikre conference des Chefs d'Etat de l a Commission des ForEts d'Afiique Centrale le 5 ftvrier 2005 a Brazzaville et reste un document prtsentant la compilation de des programmes sptcifiques nationaux des Etats signataires, programmes qui devront concourir A atteindre les objectifs convergents qui traduisent dans les faits les resolutions mise en ceuvre de ce plande convergence au niveau national, devra s'employer a Ctre la de la Declaration de Yaounde de mars 1999. L e PSFEdu Cameroun, programme de la rtplique nationale des programmes de la COMIFAC. L'engagement du Cameroun pour la gestion durable des ressources naturelles a l'echelle mondiale s'est par ailleurs traduit par la signature de plusieurs conventions a l'kchelle rtgionale et internationale relative la for&t et a la biodiversite. Ces conventions sont : 0 Accord sur la cr6ation de la Commission sur le Bassin du Lac Tchad (1964) ; 0 Convention sur la conservation de la nature et des ressources naturelles (Alger, 1968) ; 0 Convention sur la protection de ]'heritage culture1 et nature1 (Paris, nov 1972); 0 Convention sur le commerce international d'espices menacies d'extinction (CITES - Washington, mars 1973) ; 0 Organisation africaine du bois (OAB Bangui, 1974) ; - 0 Accord sur la regulation conjointe et la flore dans le Bassin du Lac Tchad (Enugu, d6cembre 1977) ; 0 Accord International sur les bois tropicaux (Vienne, 1983) ; 0 Accord de cooperation des pays d'Afrique centrale relatif a la conservation de la faune sauvage (Libreville, avril 1983); 0 Convention de Vienne sur la protection de la couche d'ozone (Vienne, mars 1985) ; 0 Protocole de Montreal sur le contrble des chlorofluorocarbones (Montreal, sept 1987) ; 0 Convention sur les changements climatiques (juin, 1992) ; 0 Convention sur la diversit6 biologique (Paris, octobre 1994) . 1.3 Adication des Egislations forestikres et la gouvernance en Afrique (AFLEG) L e Cameroun A l'instar de la plupart des pays africains avait jug6 utile de s'engager a l'initiative lancee en 1998 par les pays du G-8 soucieux de lutter contre l'exploitation illigale, le commerce illicite des produits forestiers et la corruption dans le secteur forestier. Cette initiative vise a stimuler, au plus haut niveau politique, la volonte internationale de juguler ces fl6aux afin d'assurer une gestion durable de nos ressources forestibres. C'est pourquoi, les efforts dtployts par le Cameroun pour faire face a cett exigence ont Cte marques, au cours des dix dernieres annees, par des reformes d'ordre politique, 16gislatif et institutionnel et la mise en place des instruments de base devant favoriser l a conservation et la gestion durable des for& naturelles. I1s'agit notamment de : - L'adoption d'un systeme d'exploitation forestiere qui se fait B travers des plans d'amdnagement visant la gestion durable des for& de production ; - L'amClioration de la gouvernance forestiere par la mise en place d'un cadre reglementaire favorable au developpement du secteur priv6, et qui se traduit par la transparence dam le processus d'attribution des concessions forestibres et de contrble d'activit6s d'exploitation avec, comme innovation majeure, l'appel a la concurrence et la presence d'observateurs Indipendants ; - L'adoption des Principes, Criteres et Indicateurs (PCI) du Cameroun en decembre 2004, pour une Gestion durable des For& au Cameroun est un des maillons de la certification. Les progrbs enregistris notamment en terme de reformes en direction de la conservation et de la gestion durable des for& au Cameroun sont remarquables et mkritent d'Ctre 6valuCs et apprkciis en consequence. Mais, il s'agit d'un processus de longue haleine faisant appel B la collaboration de tous les intervenants du secteur. L e Cameroun est determine B poursuivre ces reformes. I1 s'agit en fait d'assurer, de manibre rationnelle, la gestion d'un patrimoine national de grande importance en tenant compte des besoins hturs. Nous n'avons pas le droit de priver les generations ktures des bienfaits que nous procure aujourd'hui la for&. 1.4 L e plan de reformessectorielles Sur la base des acquis et en renforcement de la premiere phase de rCformes essentiellement institutionnelles et legislathes du secteur forestier, une seconde phase de rCformes a Cte lancee avec l'appui des Institutions de Bretton Woods, qui ont inttgre dam le troisibme credit d'ajustement structure1 (CAS 111) accord6 au Cameroun, une composante d6diee au secteur forestier. Cette composante se fonde sur trois objectifs essentiels de la politique forestibre: -- la gestion durable de la ressource ; la gCn6ration de la croissance Cconomique et la contribution B la lutte contre la pauvret6 notamment par la r6trocession aux communes et communautes d'une partie des recettes forestibres, par la creation d'emplois dans la filibre-bois et des for& communautaires gCrees par les communautts elles-m&mes et, - le developpement d'un secteur privC dynamique et efficace. Les principales r6formes ainsi promues sont les suivantes : Attribution comuetitive des titres d'exuloitation. Les titres d'exploitation forestikre (Unites Forestikres d'AmCnagement, Ventes de Coupe) sont attribues selon unprocessus de competition sur la base de criteres techniques et financiers. L a selection des dossiers est effectuee par une Commission interministerielle, au sein de laquelle sibge un observateur independant qui contribue a l'amtlioration de la transparence dans l'attribution des titres. Planification de I'attribution des titres d'exuloitation . Dans le cadre d'une gestion rationnelle de ses ressources naturelles, le Gouvemement du Cameroun a dCfini en 1999 une stratkgie de planification d'attribution des concessions (UFAs) et a apportd une clarification quant aux diffkrents types de titres existants. Cette strategic a CtC remise 6 jour en Avril 2004 et privoit une attribution de l'ensemble des concessions d'ici 2006. Cette planification constitue un outil important a la fois pour les Administrations forestikre et fiscale et les sociCt6s d'exploitation forestibre. CrCation du Programme de Sdcurisation des Recettes Forestikres (PSRF) ,L e PSRF, place sous la double tutelle des Ministbres en charge des For& et des Finances, a et6 mis en place en juin 1999 pour ameliorer la capacit6 de recouvrement des taxes forestieres-jusque-16 specifiques a l'exploitation forestibre ainsi que les taxes de droit commun pour les tres faible. L e PSRF centralise le recouvrement des taxes grandes entreprises. Depuis la mise en place de ce Programme, le Ministere des Finances a enregistrt une augmentation substantielle des recettes fiscales forestikres (a l'exclusion des taxes d'exportation) : de 10 milliards de FCFA en 1998/99, 29 milliards de FCFA en 2000/01 a 40 milliards en 2002/2003 au moment o i le ~ systkme de taxation est pleinement en place et les taux de recouvrement atteignant les 90%. RCforme de la fiscalit6 forestiere. Un audit Cconomique et fiscal a CtC men6 sous la responsabilit6 conjointe des Ministbres charges des Finances et des Fordts par un comitC d'experts 6conomistes de renommCe intemationale. Cet audit avait pour objectif de redCfmir un cadre de partage de la rente like A l'exploitation des ressources forestibres entre le Gouvement du Cameroun, les opirateurs privCs et les populations. L e rapport final de cet audit, valid6 en Mars 2000, a fourni un certain nombre de recommandations qui ont donne lieu ?I des reformes majeures adoptCes par I'Assembl6e Nationale, panni lesquelles : (i)attribution par voie competitive des permis d'exploitation, (ii) enplaced'unsystbmedecautionnement, mise (iii)clarification des zones de Points Francs, (iv) nouvelles modalitts de taxation des produits forestiers. Certaines recommandations restent encore en suspens, notamment le systbme de quota a l'exportation des grumes et la mise en place d'un systbme de redistribution equitable de la quote-part de la redevance forestibre accordte aux communes et communautes locales (Fonds de perkquation). Dkfinition des rbdes relatives aux ulans d'aminagement des forbts. L'Arrbtt 222/MINEF, sign6 le 25 Mai 2001, dtfinit les regles d'tlaboration, de miseen place et de suivi-contr6le des plans d'amknagement dans les concessions forestibres. I1 fournit un guide pratique detaillt pour tous les acteurs impliquCs dans la gestion durable de la ressource forestiere. Mise en place d'un svsteme de caution bancaire : les titres d'exploitation sont dtlivres aux opkrateurs apres constitution d'une caution bancaire qui couvre les risques de non respect des engagements fiscaux et environnementaux. Ce systeme a pour objectif de dtcourager les pratiques sptculatives, courantes dans le secteur forestier. Suuervision des ulans d'amtnagement : un partenariat avec deux ONGs environnementales de renommte internationale a permis de renforcer les capacitts du Ministere chargt des ForCts dans le domaine de la supervision des plans d'amtnagement et offie un suivi optrationnel des activitks d'exploitation dans les zones forestieres au Cameroun. L a convention signCe entre le Gouvernement et Global Forest Watch - World Resource Institute (GFW), permet de suivre les activitts d'exploitation forestibre dans le domaine permanent et le domaine agroforestier aux moyens de technologies avanctes d'imagerie satellite. Une carte de la distribution du rtseau routier a l'intkrieur des UFAs et des V C est notamment produite chaque ann6e. Un deuxibme contrat a ttt sign6 avec Global Witness (GW), qui est charge de participer, en tant qu'observateur independant, aux activites de contrale menees par le Ministbre chargt des ForCts, depuis les missions de terrain jusqu'au traitement de tous les cas contentieux. GW s'assure de la conformitt des proctdures de contr6le ti chacune des Ctapes et est chargt de signaler toute anomalie au Ministre chargt des Forbts. Promotion des forCts communautaires : 1'ArrCtt 518MINEFICAl3, sign6 le 2 1dtcembre 2001, instaure la possibilitt pour les communautts locales de faire usage d'un droit de preemption sw les for&ts dont elles sont riveraines. Ce droit de prdemption leur permet de suspendre toute allocation de la for& concemCe A une soci6tC commerciale, et ce pendant une ptriode de deux ans au quelle la communautt peut choisir si elle souhaite l'triger en for& communautaire. Restructuration de I'ONADEF : cette restructuration est conforme aux objectifs de redistribution des fonctions au sein du secteur forestier, avec une concentration des services administratifs sur les tiches rigaliennes (definition des politiques, supervision et contr6le) et une delegation des fonctions productives aux operateurs privks. Les DCcrets presidentiels 2002/155 et 2002/156 du 18 Juin 2002 ont modifie la denomination, les statuts, le mandat et les modalitts de financement de 1'ONADEF. L a restructuration de I'ONADEF donne naissance a 1'Agence Nationale de Developpement Forestier (ANAFOR) dont le mandat est de promouvoir, auprbs du secteur priv6 et des communautes locales, les plantations forestibres Cconomiquement rentables et respectueuses de I'environnement. 2- LESDEFIS A SURMONTER 2.1 Mise en cohbrence de la capacitCinstitutionnelle avec les ambitions des reformes. Un fort decalage existe au niveau des capacitis pour la mise en ceuvre de la legislation forestibre et faunique, en outre on notait I'absence d'un cadre de coherence et de coordination necessaire au developpement harmonieux de divers projets d'appui. De plus, I'appui de la cornmunaute internationale est trbs disperse et se matkrialise par un grand nombre de projets epars, mal appropriis par les institutions nationales et enregistrant des impacts mitigks sur le terrain. Plus de 60 projets sous tutelle des Ministh-es charges des For& et de 1'Environnement et plus d'une dizaine sous tutelle d'autres administrations (principalement le Ministbre de la Planification, de la Programmation du Developpement et de I'Amenagement du Territoire, le Ministbre de I'Agriculture et du Diveloppement Rural et le Ministkre de 1'Economie et des Finances) ont en effet actuellement des composantes plus ou moins likes 9 la protection, au renouvellement et A la valorisation des ressources naturelles. Ces projets absorbent ainsi annuellement pr6s de 10 Milliards FCFA de financements extkrieurs dans le seul secteur forst-environnement ,auxquels ilconvient d'ajouter les fonds de contrepartie nationale. 2.2 Amklioration du niveaude participationdes populations z i la gestion des ressources forestikres et fauniques. MalgrC les prescriptions de la politique forestiBre actuelle qui recommande la participation des populations 9 la conservation et h la gestion des ressources forestibres, cette participation reste faible. Les insuffisances s'expliquent par une definition peu Claire des fonctions de la soci6ttc civile et des communautes locales qui accusent un deficit important en matibre de competences et d'organisation pour une bonne gestion des ressources redistribuees, la faible capacite technique des ONG en matibre de gestion et la forte mefiance qui existe entre elles et l'administration forestibre, les difficultis de passage des operatem economiques du stade de <( bikherons )) B celui d'exploitants amknagistes. 2.3 Rbtrocessiondes RedevancesForestihresAnnuelles pour le cie~.elo~neiiieli t rural communautaire. Au cours de la periode 2000-2004, plus de 25 milliards de FCFA ont et6 distribues aux-communes et aux communautes decentralisees comme quote part de la redevance de superficie des zones soumises a exploitation commerciale. L'utilisation de la presque totalite de ces fonds ont egalement fait I'objet d'audit et d'autres etudes. MalgrC ces evolutions positives, beaucoup reste a fairepour permettre une planification plus transparente et participative des investissements et un contrble de la depense plus efficace. 2.4 Amelioration des performancesen matihrede luttecontre le braconnageet I'exploitation illbeale des ressources naturelles. Les capacitis de contrdle du Ministere charge des For& et de l a Faune restent encore relativement faibles tant au niveau du contrdle que du suivi des contentieux et de l'application des sanctions. Malgre l'association d'un observateur independant aux activitds de contrble du Ministere charge des for&ts et de la Faune, les resultats restent sont mitiges. Seule la mise en place d'une plus forte organisation pour toutes les phases de la chahe de contrdle du Minist2re charge des forgts et de la Faune peut assurer des resultats durables et capitaliser les apports de l'observateur independant notamment par la publication du sommier des infractions et la mise A la connaissance du public des informations relatives aux contentieux qui l'opposent aux optrateurs economiques exergant dans le secteur forestier. 2.5 Acceleration de I'intCgration des mesures environnementales aux activitbs de production foresticre. Plus de six ans aprbs la mise en vigueur de la loi-cadre relative B la gestion de I'environnement au Cameroun, les preoccupations environnementales sont restees des formalites administratives dans le cadre des operations d'amtnagement forestier. I1 est donc necessaire d'assurer une application rigoureuse des plans de gestion environnementale notamment dans certaines unites forestibres d'amenagement a proximite des aires protegees o~ les Cvaluations environnementales constituent un prealable essentiel. Par ailleurs, il faudra renforcer et rendre plus fonctionnelle l'institution en charge de I'environnement, ainsi que les structures consultatives telles que l a Commission Nationale Consultative de 1'Environnement et le Dtveloppement Durable ( CNCEEDD). 2.6. Aires prot6gCes - Parcs nationaux. L e reseau des aires prottgtes a it6 developpe surtout au cours des 15 dernieres annees grbce notamment au programme de conservation et de Gestion de la Biodiversite au Cameroun (PCGBC). Les aires protegees de Faune couvrent 7211819 ha soit 15.1 % du territoire national. Cette superficie est repartie comme suit : 10 Parcs nationaux ; 10 Reserves de Faune ; 01 Smctuaire de Faune ; 03 Jardin Zoologiques ; 40 Zones d'interets CynCgCtiques ; 16 Zones d'interits CynCgCtiques B Gestion Communautaire qui ont C t i mises la disposition des ComrnunautCs villageoises. La gestion technique et financikre des zones a gestion communautaire incombe a ces populations qui peuvent s i elles le ii dtsirent, solliciter l'assistance technique du personnel du Ministere en charge des for& et de la Faune. Par ailleurs, une situation de reference d'efficacite de gestion de tous les parcs nationaux est Btablie. 2.7. Expansion et Gestion participative des aires prot6des : Les differentes mesures entreprises a cet effet : 1) Les operateurs economiques des zones de chasse affermees sont astreints au respect des cahiers de charge qui leur prescrivent des Oeuvres sociales au profit des communautes riveraines. En plus desdites ceuvres sociales, les collectivites bCnCficient de 50% des taxes d'affermage qui sont annuelles et.par hectare au prorata de 40% pour les Communes et 10% pour les Communautes. L e Cameroun s'est dote Cgalement d'une reglementation quipermet aux populations locales d'&tre consultees tant a la creation et la delimitation des aires protegees qu'a la gestion de celles-ci 2) La consolidation des aires protegees d. l'interieur du territoire national et la creation des aires protegtes transfiontalikres. Les conventions des complexes de la Sangha Cameroun ( Parc National Lobeke), RCA (Parc national de Dzanga Sangha) et Congo (Parc National de Nouabale Ndoki) et celles de Gahanga-Gumti (Nigeria) - TchabaI Mbabo (Cameroun) sont deja signees. Celles entre la reserve de la faune du Dja ( Cameroun)- Mink6b6 (Gabon) Reserve d'Odjala (Congo) d'une (Cameroun) - Cross River ( Nigeria ) d'autre part sont en cours de preparation. ---1.F I."! 3-) L a lutte contre le braconnage notamment travers la mise sur pied d'une Unite Centrale de Lutte anti- braconnage, d'un comitC national et des comites provinciaux en charge de cette optration. Ces Comites associent les sociCtCs de transport (CAMRAIL et CAMAIR). 4-) Ces mesures sont couplees aux initiatives rtgionales que sont : CEFDHAC, COMIFAC, OCFSA, ECOFAC, WWF, CARF'E et au respect des normes et conventions internationales (CITES) 2.8. Extension des programmes en faveur des repions arides et des regions de montagnes L e Cameroun de par sa position giographique, fait partie de la zone Soudano- Sahtlienne menacCe par la dtsertification. Les 6cosystbmes forestiers sont fiagiles, souvent du fait de leur surexploitation par les populations pour la subsistance. Les resultats de la recherche au cours de la demiere decennie tant au plan des especes que des modes d'installation et de gestion, permettent de proposer des solutions adapttes en matiere de reboisement, d'agro-foresterie et de gestion des terroirs ruraux et pkriurbains visant a fixer les sols, a restaurer la fertiliti, a produire du bois de chauffe et de service, du fourrage, des produits alimentaires mais 6galement des revenus monttaires par la vente des produits forestiers. Les programmes de reboisement ptriurbain et d'agro-foresterie dans les zones de savane et de forst seront mis en ceuvre en partie (directement ou indirectement) par 1'ANAFOR suivant le programme national des plantations forestieres priv6es et communautaires. 3. LES PERSPECTIVES ETLES ENGAGEMENTSPOURLA PERIODE 2005-2015 Les perspectives d'avenir se focalisent sur la solution des problemes et la relance du secteur. Elles sont fondtes sur la consolidation du cadre de reformes ttablies a travers le CAS111et la relance des programmes de dtveloppement sectonel par le biais duprogramme national ForCtsEnvironnement 3.1. ConsoIidationdu cadre de rbformes Malgr6 les avancees remarquables que l e Cameroun a accomplies au cours de la derniere decennie dans le domaine de la gestion durable des ressources forestieres et de I'amClioration de la gouvernance et de la transparence, l'exploitation illkgale des ressources reste unphtnomene inquibtant et compromettant pour l'ensemble des efforts dtjd rtalises. Ce phtnomene ne pourra Etre totalement tradiqut et les ressources forestieres ne pourront 6tre effectivement gtrtes de faqon durable qu'h la condition que nous nous engagions a maintenir le cadre des rtformes du CAS I11et a persevtrer dans leur mise en oeuvre. L e tableau ci-dessous fait un rkcapitulatif des rtformes introduites par le CAS IIIet signale des indicateurs globam de suivi de mise en ceuvre de ces rtformes. Attribution des titres Attribution transparente des titres d'exploitation forestitre (qualitb des dossiers1 ~ d'exploitation par voie d'appel d'offie) competitive Presence d'un observateurindependantaux Commissionsd'attribution des titres et transmissiondes rapports Exclusiondes sociCtBs responsablesd'infractions majeuresB la ICgislationet reglementation forestitre Planification de Attribution des concessions conformkmentA la planifcation ClaborCe I'attribution des concessionsforestikrea Programme de Recouvrementdes taxes specifiquesau secteur forestier (Rapp. AM. PSRF) Sbcurisation des Recettes Recouvrementdes amendes, dommages et inter& liCs aux infractions (Rapp. roresti6res Ann. PSRF) Dep6teffectif de toutes les cautionsbancaires(Rapp. Ann. PSW) Miseen placed'un systtmederedistributionequitabledes quote-part de la RFA (fonds de perequation) Reformes de la fiscalite Executioncontinue des reformes fiscales foresticre Concertation effective et effjcaceentre les Administrations (MINEF-MNFIB) et le secteur privC Ambnagemeot durable des RCunionsrdgulitres de la Commission d'analyse technique des plans concessionsforestikres d'amenagernent et du Comiti interministkrield'approbation des plans d'amtnagement Proportiondes concessions attribueesdepuis plus de 2 ans ayant unplan 3'amBnagement approuvC par I'Administration Nombrede conventionsdifinitives signCes S i i i i I re:illiti \le I'exploitation forestitre par imageriesatellite(carte dureseau d'amenagement routierdisponiblechaque ann6e) Presence d'un observateur independantdans les activites de contr6le du MINEF Promotion des fori% 4pplication transparentedu droit de preemptionpour les communauteslocales communautaires DemarrageeffecGfdu projet RIGC (sur financement PPTE) Executiondes Dromammesde travail ANAFOR conformement B I'orienration ' I`ON.IDEF illkgale les ptnalites 3xclusionde toutes les sociCt6 responsablesd'infractions graves, des appels i'ofres pour I'obtention de titres d'exploitation, voire suspensiondes titres en :ours de validit6 . - . - 3.2 Meilleur suivi environnementalet application des conventions et normesinternationales : Avec la mise en place des deux ministeres, on devrait avoir une visibilitC plus nette et m e clarification des rbles des diffdrents acteurs. Ce qui devrait nous permettre d'aborder les problbmes environnementaux de manibre sans equivoque car le Secrttariat Permanent a I'Environnement de 1'Ex-MTNEF a CtC incapable d'aller au -dela du suivi de quelques conventions. L'essentiel du travail A faire, la mise en place des differentes normes dans tous les secteurs d'activitks n'a pu Stre rCalisCe mCme les textes d'applications de la loi cadre sur 1'Environnement de 1996 n'ont pu &re BlaborCs. Avec l'avknement du Ministbre de 1'Environnement et de la Protection de la Nature, le Gouvemement se donne des moyens d'une politique environnementale ambitieuse couvrant tous les secteurs et permettant d'tviter la confusion qui a toujours exist6 sur les problbmes environnementaux que le grand public limite a ceux existant dans le secteur For& et Faune et prendre ainsi une hauteur sur l'ensemble des secteurs concern& pour traiter de latransversalit6 des actions environnementales. 3.3 L e Programme National Sectoriel Forbt-Environnernent : Ce Programme se positionne en tant que cadre unique de mise en ceuvre de la politique forestiere au cours de la prochaine decennie ; A travers le Programme Sectoriel ForCt-Environnement, le Gouvemement voudrait obtenir un appui rnultiforme dans la mise en ceuvre effective de sa politique de gestion durable et participative des ressources forestibres, afin de les amener a contribuer de manibre significative a l'amelioration de I'Cconomie nationale, du cadre et du niveau de vie des populations. Dans cet appui attendu, figure en bonne place le renforcement des institutions nationales en moyens humains, mattriels et financiers pour les rendre capables d'extcuter effcacement cette politique sur le terrain. Ce renforcement passe nkcessairement par la mise en place des reformes institutionnelles prCconistes dans le cadre de la revue institutionnelle et le soutien des efforts publics et privts dans la mise en place d'une gestion durable des ressources forestibres et fauniques sur le triple planCconomique, tcologique et social. Avec 1'Approche Programme choisie pour son Claboration et sa mise en ceuvre, le PSFE permettra Cgalement au Gouvernement de mettre en place un cadre cohCrent pour toutes les interventions qui concowent a la rkalisation des objectifs de la politique forestibre et faunique du pays. I1 est ainsi conpu comme un programme national de dCveloppement sectoriel Ctabli par le Gouvernement, mais ouvert au financement de tous les bailleurs de fonds, ainsi qu'aux contributions de la sociCtC civile, des ONG et du secteur priv6. Par ce programme en effet, le Gouvernement voudrait pouvoir disposer enfin d'un tableau de bord qui luipennette d'assurer le pilotage, le suivi et le contrble de ce secteur en toute connaissance de cause. L e financement d'une partie du programme sous forme d'appui budgktaire devrait Bgalement permettre un renforcement des capacitts techniques et financibres au sein de l'administration. Mais la mise en auvre du PSFE incombe egalement aux trois autres groupes d'acteurs qui sont: le secteur privk, la sociktk civile et les bailleurs de fonds. Alors que le secteur public cherchera dksormais ?I se concentrer sur les tgches re'galiennes, le secteur privk s'occupera des fonctions de production en partenaires responsables et respectueux des dispositions le'gales et rkglementaires. L a sociktk civile participera a la mise en oeuvre du PSFE en tant que partenaire et observateur du respect des rbgles du jeu par tous les acteurs. Les bailleurs de fonds et les partenaires au dkveloppement participeront au PSFE harmonisant leurs approches et se positionnant sur les composantes qu'ils entendent financer et accompagner en fonction de leurs inter& et cycles de programmation. L e PSFE est donc l e programme-cadre de mise en euvre de la politique forestibre qui vise fondamentalement la conservation et la gestion durable des 6cosystkmes forestiers en vue de rkpondre aux besoins locaux, nationaux, rkgionaux et mondiaux des gtnirations prksentes et futures sur les dix (10) prochaines annees et vise mobiliser les contributions possibles des differents acteurs (Bailleurs de fonds), y compris celles des ONG et de la socittk civile. L e financement du programme au cours des premibres anntes se fera sur la base des rtsultats obtenus, evaluks par des dkclencheurs rtsumCs dans le tableau ci-aprbs annexk. L e Ministre de I'Environnement ne et de la Protection de la Nature ' . '1,.I./ . .--- P . - C a f , ANNEX6: ENVIRONMENTALAND SOCIALASSESSMENTREPORTSUMMARIES 1. SUMMARY OFENVIRONMENTALAND SOCIAL IMPACTASSESSMENT This study was realized by the Cameroon Ministry o f Environment and Forests, with the support of a multidisciplinary team o f national and international consultants. It comes within the framework o f preparing the Forests Environment Sector Program (FESP). It i s motivated by the double concern to optimize the environmental and social impacts o f the Program during its execution and to ascertain if the program i s generally in line with World Bank environmental and social policies. This report i s based, not only on the contributions o f consultants specialized inimpact assessment, but also on the general work o f sector analysis, o f program formulation, o f dialogue and public consultation including the institutional review o f the forestry sector done by the Ministry with the support o f FESP National Team since it was set up inJanuary 2001. Sector impact study relative to a national program This impact study covers the entire forest and environment sector. It examines the sector policy developed by the Government since 1994 as well as the new FESP program conceived as an institutional support instrument for implementing this policy. It brings out action plan and mitigating measures with a view to reducing the negative impacts and optimizing the positive impacts o f the program. 0 National geographic coverage. The FESP covers the entire national territory, not limitingitself to specific sites. Program activities can therefore be developed anywhere in the ten provinces o f Cameroon. 0 Sector thematic coverage. As a support program for the implementation o f the national policy for the management of forests and environment, FESP by definition covers all activity domains and problems linkedto the sustainable management o f the forestry ecosystems (inthe broad sense), to the interfaces with land use planning, rural development, economic growth, industrial development and poverty reduction, as well as with biodiversity conservation. Program lifespan and incremental planning. FESP i s destined to accompany the implementation o f the Forest Policy over a period of 5 to 10 years. Specific Program activities are not therefore detemined at inception, but rather will be defined annually according to a participatory programming mechanism. 0 Multi-donor involvement. The FESP i s a government program that will be supported by operations, projects and programs of a range of donors interested in the management o f forests in Cameroon. It will provide a framework for coherence and synergy o f international support in the sector, and will ensure that this external support i s well in line with the framework o f the national policy. The present study comes within the framework o f the cycle o f preparing the World Bank support operation, but can serve as reference to other donors or technical or political Cameroon partners. The study has therefore taken into account those particularities inherent in the sector program approach. It consists o f a sector strategic assessment and i s therefore different from a classical impact study o f the "project" type where activities are known with precision before hand and enclosed intime and space. Baseline - the situation at Program inception The third chapter o f the study describes the state o f affairs o f the forests and environment sectors, largely by referring to related recent appraisals by MINEF and its partners. Forestry exploitation is the second economic sector after petrol. N o n timber forest products, wildlife, and biodiversity in general are resources that represent potentially substantial sources o f national income for Cameroon. 83 The ForestryLaw o f 1994, the New Forestry Policy of 1994 and the EnvironmentLaw of 1996 establish a political and strategic framework for the sustainable management o f forests. Completed by PNGE and PAFN, this policy i s coherent with international environmental guidelines (Rio Summit, the Heads o f state's Summit o f Yaounde, 1999) and with the national strategy o f the fight against poverty (PRSP). This policy i s presently implemented thanks especially to a considerable plan o f sector reforms executed through the third structural adjustment credit (SAC 111).A plan o f urgent actions (PAU) was developed to complete these actions by especially putting emphasis on the anti-poaching and on the stabilization o f the sector. The Forest Policy has already exhibited positive results, as well as the country's political will to promote sustainable management o f forests, and the Government's recognition o f their contribution to socioeconomic development. An indicative plan o f land use allocation assigns forest spaces priority to rural development, forest management, or to nature conservation. More transparency, participation o f independent observers in concession allocation commissions (access to resources), in forestry supervisory missions (management o f resources). Direct sharing o f revenue from forestry exploitation with local communities bordering forest concessions, and the regular publication o f the various shares inthe press. Opening up fauna and forestry resources to the community and decentralized management, and equally through contractual relations with the administration. The sharing o f roles between the public and private sectors, with the State, the owner o f forests and representative o f the general interest, which concentrates on its stately functions; and the private sector assuming commercialization and execution functions often through contractual relations with the administration(delegated functions). A reform o f forestry taxation, with the simplification o f the procedures and the amelioration of the recovery capacity. A strengthening o f the stately supervisory function to discourage poaching and illegal cutting of wood with especially the participation o f independent observers and the participation o f the civil society; support o f international NGOsto fight against unlawful acts. The initiation of a partnership between the different users in a given area and complementary resources, aimed at associating sustainable management, the updating o f customary laws and the respect o f the practices o f indigenous peoples. This political commitment, even ifit has to bepermanently maintained and confirmed, no longer seems to be the main constraint in the execution of policies on the field. However, the sector policy i s still laboring to be implemented at the national level due to an increasing discrepancy between the political framework on one hand, and the capacities o f MINEP to ensure the implement this policy on the field, on the other hand. Consequences o f the economic crises o f the 80s and 9Os, which have deprived the government of i t s means, limited the resources o f the staff and contributed to disincentive and to the search for solutions independent o f state officials. Political and administrative bottlenecks due to the slowness o f the services o f MINEF to act as partner o f commercial agents to support them positively; lack o f mediation practices (directly or in mobilizing NGOs and technical bodies) between commercial agents and local populations; insufficiency inthe support to community activities (forests, huntingareas, game ranching). The difficulty to implement policy reforms with the new stakes: new decision centers and new scales of power. The democratic framework i s there but the actors aren't yet ready to assume their rights and duties. 84 0 Insufficient synergy between policies o f different sectors: agriculture - animal breeding, hygiene -health-education, generalinvestmentframework. 0 Stakes and tensions in local societies for access to power and to land ownership with the preponderance o f a new elite o f local leaders, the strengthening o f feudal powers inthe North and the rapid transformationof acephal societies inthe south, makingit difficult to builda partnership based on local democratic practices. The problem o f the indigenous peoples who carry out their activities on very vast areas very difficult to determine. 0 Lack o f appropriation o f support from international cooperation, and lack o f sustainability o f projects, duplication between scattered projects that supports the sector policy in a heterogeneous way. The Forest EnvironmentSector Program FESP i s a national, sector and multi-donor program, which aims at supporting the Government in its implementation in the field o f its policy o f participatory and sustainable management o f forestry and environment resources. This policy and the program that supports it have to contribute to improving the lives of rural populations and to fight against poverty, to ensure the everlastingness o f forestry ecosystems and biodiversity conservation. FESP articulates around five components, with one mainstreamed (institutional capacity building) and four themes: 1, Regulation, follow up and environmental information. 2. Development of production forests in the permanent forestry domain and valorizing forestry products. 3 , Biodiversity conservation and the development o f fauna resources. 4. Community management o f forestry and fauna resources. 5, Institutional capacity building,training and research. FESP puts emphasis on the building o f the capacities o f national institutions responsible for ensuring the sustainable management of forests. It aims at restoring their capacities to implement on the field forestry policy guidelines. It aims at reducing the present gap between policies known to be o f good quality at the international level, and the weak capacity o f national institutions to translate them on the field, and to ensure their supervision. Analysis of Programimpactsand mitigationmeasures The FESP is intended to facilitate the effective implementation of forest and environment sector policy, and to slow the degradation of Cameroon's natural resource base which has persisted and in many instances accelerated since the early 1990s. It seeks to endow responsible ministries and government agencies with the capacity to administer and enforce the policies and regulations that comprise the sector policies. The study tries to identify the positive and negative, social and environmental impacts o f FESP for each o f the five components. By the nature of the program approach developed here to support national policy, impacts are rather expressed interms o f risks than interms o f established facts. Social risks. Despite the positive social impacts o f forest development since the early 1990s in terms of job creation and rural infrastructure, markedly less progress has been evident with respect to access to financial benefits, civil society participation in forest management, or the provision o f social services, These failings represent important missed opportunities which have deprived local communities of the full benefits o f forest development, while the environmental impacts o f that development have continued to erode the forest resource base - both in the rich, humid forests o f the south and the fragile, dry forests of the north. Itinerant exploitation, without contributing to development, has not supported a sustainable development model. In the north, the degradation o f fragile highland forests have had clearly negative impacts on the livelihoods o f population groups that depend on it for wood. 85 These negative impacts o f forest development are very largely attributable to the lack o f institutional capacity to carry out Cameroon's Forest Policy, rather than to the Policy itself. The FESP's strong orientation on capacity building focuses sharply on narrowing the gap between policy and implementation, and as such represents a potentially decisive departure from the cycle o f unsustainable development and exploitation that makes no contribution to development. This cycle shows no sign o f slowing down or reversing itself by its own accord, and the risks o f nonintervention are expressed below in the scenario without an FESP Program. The scenario with the Program realizes quite strong social benefits through the extension o f forestry benefits to civil society, the development o f community forestry, the role o f local communities in supervision and monitoring, and continuedjob creation. Two types of risk are manifested inthe implementationo f the Forest Policy itself: 0 Excessive territorial specialization and limitation local populations' access to forestry resources (food, wood, arable land) during the processes o f forest zoning, o f classification o f UFA and o f parks, (A risk taken into account in the Policy Frameworkfor Access to Resources presented in Annex 4 of the study.) 0 Marginalization o f some indigenous groups (pygmies) by ignoring their cultural specificities, which makes their inclusion inpositive development outcomes much more difficult. (A risk taken into account in the Indigenous Peoples Development Planpresented in Annex 6 of the study). Concerning environmental risks. Cameroon forestry ecosystems have been subject to strong destructive pressures for several decades: deforestation and soil erosion in the north; fragmentation, commercial poaching, and resulting species and biodiversity loss in the south. Here too, these impacts are more attributable to lack of institutional capacity in the last decade than to the Forest Policy itself. And here too, the contrast between the scenario with, and the scenario without a Program i s striking. The FESP has a potentially profound positive impact on the environment, for much the same reason that it has potentially strong social impacts. The introduction and administration o f management plans and control mechanisms promise particularly strong impacts, and substantially mitigate the risks associated with Programimplementation: 0 An increase in the huntingand poaching pressure due to the opening up o f regions otherwise inaccessible and to organizing bush meat channels in which could be inserted illegal products o f poaching. (Mitigation measures include provisions for fauna preoccupations in the development plans of forestry grants, demarcation of new protected areas, and effective enforcement of an anti-poachingprogram.) 0 An overexploitation o f agricultural and pastoral soils, water, fuelwood, PFNL, and other resources, particularly in the northern regions, resulting from an overspecialization o f land uses. (Mitigation measures include employing an integrated landscape approach to land use "- land planning approach to zoning rather than aprimarily delimiting approach toforestry domains.) Extra-sector risks. Extra-sector environmental risks include forest penetration by farmers and pastoralists, miningactivities, and agro-industries (particularly cotton inthe north). Cameroon's three percent annual population growth rate implies significant increases in demand for agricultural products and increased pressure imposed on forests by agriculture. Zoning, local negotiation and the formalization o f land allocations may offset these threats, but these will require a national land management and agricultural intensificationprograms. The FESP at present appears to take little account o f the cross sectoral implications o f policies and sector programs relating to agriculture, animal production, and other sectors. And yet, coordination and negotiation with other sector programs-the PNGP in particular-is likely to become increasingly important as the decentralization process unfolds. Mitigating measures. The study proposes measures aimed at mitigating negative impacts and optimizing positive impacts o f the forestry policy and the support program for its implementation. Given the nature 12 `Ame`nagementdu temioire,' originally translated as `town planning' 86 of the FESP program, measures are o f two kinds: (a) specific recommendations to be integrated in the formulation of FESP from the final phase o f technical preparation-conception o f the components; and (b) proposals to set up a system o f follow up - management o f the impacts o f the program which will be implementedduringthe larger implementation o f the program. The study has led to the following recommendations which have already been reflected in the Program documents prepared by the Government. It i s important that these documents be equally reflected in the formulation o f the support projects o f partners o f the FESP: 1. Adjustments in (1) the technical conception o f the Program away from a more-or-less strictly forestry-related approach to a land use planning approach inareas not yet assigned a zone or land allocation; (ii)the conduct o f preliminary consultations on the classification of UFAs and protected areas (iii) contractual relations with users o f forests and sport hunting zones, (iv) encouragements to implement development plans and to build capacities o f the administration for verifying plans and supervising on the field, (v) the implication and the role o f populations in the management o f natural resources, (vi) the clarification o f the functions o f the administration ,NGOs,technical bodies, private contractors. 2. Steps to help change the mentality o f the different partner groups concerned with a strategy o f training and building capacities contributing to this change o f mentalities, puttingback inplace a framework that encourages performance in administration: system o f assessing and encouraging performance, sanction system, such as foreseen in the institutional review. Engaging the institutionalreform. 3. An original system o fparticipatory follow up-evaluation, with a plan o fmanagement and follow up o f the environmental and social impacts based on quality, with follow up and management of the impacts at the decentralized level parallel to the annual planning process and to follow up - evaluation of the program, with continuous verification (screening) o f activities o f the program all through its implementation. Giving responsibilities to SPE, the perennial institution in charge of environmentalmonitoring. 4. A Plan o f Development for Pygmies (PDPP) and the application o f the procedures o f classifying protected areas and o f UFAsinthe framework o f the Master Plan o f Access to Resources, Analysis of Alternatives Inthe absence o fan FESP the current dynamic o findividual, independently implementedprojects lacking any programmatic relationship with one another i s likely to continue. The projects may indeed yield positive micro-level impacts, but without affect on the capacity o f national institutions and with little potential to reverse national level resource degradation or to secure any significant contribution to national economic development. N o other prospective entrant shows the potential to reduce the gap between Cameroon's sound forest and environment policies and its limited capacity to implement and monitor those policies inthe field. As concerns the World Bank specifically, the alternatives in the without FESP scenario consist of two: cessation o f support, or limiting support to individual sub sectors. In the clear absence o f alternative channels o f sector-wide support to Cameroon's forests and environment, a decision by the Bank to decline supporting the FESP would imply a decision to decline support to these sectors altogether. This would represent an outright repudiation o f the policies that led the Bank to back Cameroon's ambitious program o f reforms in the framework o f SAC 111.Given the achievements o f that reformprogram and the clear indication o f continued Government commitment to the reform process implicit in the Government's request for Bank support to the FESP, such a reversal could only indicate a change in attitude by the Bank itself. Resorting to selective, non-programmatic Bank support to geographically discrete projects would amount to a reversal that i s scarcely less dramatic, and a renunciation (by the principle actor) of the network o f involved partners the Bank was so instrumental in bringing together. Here too, such a reversal could only be construed as a reflection of attitude change within the Bank itself, 87 Plan of follow up and management of social and environmental impacts The plan o f monitoring and management o f social and environmental impacts (PSGI) will be implemented by the Ministry o f Environment and Nature Protection (MINEP). The capacity o f this newly-created Ministry was upgraded in the process o f program preparation, based on an Institutional Review. Analysis of FESPin relation to World Bank safeguards The FESP was reviewed inrelation to the following safeguards: 0 OP/BP 4.01 - Environmental Assessment. The environmental assessment was conducted independently by a team not associated with the FESP, and drew from a number o f constructive public consultations and information sessions. It concluded that through its capacity building component the FESP will be able to ensure adequate monitoring, and mitigation o f the environmental impacts o f forest programs. 0 OP/BP 4.04 - Natural Habitats. The Government Program contains explicit provision for the protection of natural habitats and the conservation o f highvalue conservation forests. N o Program activities bring about a conversion o f natural habitats to other land uses, and the classification o f areas as protected based on the biodiversity located therein represents systematic attention to the preservation o f such areas. The Program i s specifically defensive o f natural habitats, anticipating agricultural, agro-industrial, and other sources of pressure that pose a threat o f expansion into new, previously untouched areas. The erstwhile Ministry o f Forests and Environment translated the results of the institutional review into an institutional development letter, marlung the Government's commitment to cover the recurrent costs related to overseeing protected areas.13 0 OP/BP 4.20 - Indigenous peoples. FESP will actively contribute to the juridical recognition o f customary forms of land and resource use by indigenous peoples, and will ameliorate those applications of the Forest Law that have potentially adverse affects on those peoples. Preventive measures are defined in the Development Plan o f the Pygmies (the summary o f which follows this summary) to ensure that they fully benefit from the opportunities createdby the newpolicies: creation of community forests, pre-emptive law, access to their share of surface charges, employment, protection of users' traditional rights. Moreover, the indigenous peoples will participate inlocal site follow up committees. 0 OP/BP 4.30 - Involuntary Displacement and Access to resources. FESP does not include activities that can provoke involuntary displacements o f populations. A master-plan and local consultation and negotiationprocedures are inplace to prevent and mitigate reductions o f access to resources which could result from land use planning, classification o f permanent forestry domain, and the creation of new protectedareas. 0 OP/BP 4.36 - Forestry. FESP has been conceived as a sector program that covers all the stakes linked to forests and the green environment throughout the national territory o f Cameroon, FESP will moreovernot directly fund forestry exploitation activities, butrather buildthe capacity o fthe administration and the operators to prepare and implement sustainable management plans. FESP will facilitate the development of independent certification. Framework-Plan of Access to Resources A Framework-Plan of Access to Resources is already largely operational and reduces the risks o f access loss, The plan includes specific obligatory procedures for public consultation and the maintenance o f users' rights inall circumstances. Land use i s regulated according to National Plan o f Land Allocation (PNAT) and Operational Technical Units(UTOs). PNAT defines two mainkindsof areas, the Permanent ForestsDomain (DFP) andthe Non 13The Ministry of Forests and Environment was succeeded by separate Environment and Forest Ministries in December 2004 88 Permanent Forests Domain (DFNP). Each domain i s itself cut out into major zone types (forest concessions, wildlife concessions, protected areas, community managed forests and wildlife concessions, council forests), which are each subject to the procedures o f classification. (UTOs) are the territorial units of the project intended to include local populations in a participatory process o f classification which compensates limitations to user rights in some zones with recognition in other zones and financial fallouts. The classification procedures o f zones are defined by the various 1995 decrees o f implementation o f the Forest Law, and are developed inthree phases: 1. Local Information and consultations 2. Preparation o f the classification file and the signature of the decree 3. The demarcation o f land and issuing o f landtitles These procedures have been tested and are already being applied in areas such as the National Parks o f Campo Ma'an and LobCke. The 1994 Forest L a w and its 1995 implementation decrees guarantee the user rights o f local communities during the classification o f a forest. All classification o f the forestry sector therefore secures the customary rights o f the local populations on these spaces and leads to the primacy o f the management choices of the populations concerned on the national domain areas. Any modification to access rights to land and resources results from state-community negotiations. Demarcations can only therefore be validated in agreement with the local populations. The Forest Law stipulates that any classification o f a forestry concession that would lead to the loss o f access to resources i s required to define compensations inpartnership with the populations concerned. The technical specifications ofcontractingcompanies have to integrate compensation agreements. Finally, Order no. 518/MINEF/CAB o f 21 December 2001 on the pre-emptive (first-users) right in the non permanent forestry domain fixes allocation modalities giving priority to local village communities, o f any forest that can be reserved as a community forest. FESP, in the fi-amework o f its component on the management o f production forests, will ensure the execution o f these procedures through the support o f the holding o f inter-ministerial departmental commissions in charge o f zoning and classification, and will ensure the smooth functioning o f already existing compensation mechanisms through institutional support for all the follow up and supervision activities. Inpractice, itturns outthat: 0 The recognition of user rights i s still little participatory and very normative. 0 The extension of community managed zones is still determined by those o f UFA, AP and ZIC and village territory and corridor zones are restrictedto left-over territories. 0 The transition from vast multi-usage village territories to specialized areas requires unrealistic behavior changes that are beyond the adaptive capacities o f effected populations. 0 The classification process entails many difficulties related to its complexity and heaviness, 0 The classification procedures of Permanent Forest Domain are more rapid than those inthe non- permanent forest domain and these results in contentious relations and the potential for conflict. 0 Incomes that inprinciple come from the exploitation o f the conceded zones are rarely assigned to the communities owing to their incapacity to present acceptable projects. The specialization o f areas i s inescapable due to population growth, to the growing scarcity o f some resources and to the appearance of new forms o f forestry exploitation and agro-industry. The Master-Plan for Access to Resources lays out four mitigation measures to assure that the division of areas i s undertaken ina way that concerned stakeholders do not feel excluded: 1. A broad landscape approach that goes beyond the physical boundaries and needs o f forest and wildlife conservation. 2. A supplementary phase o f participatory consultation and validation at the inter-sector, inter- ministerial levels under the form o f a regional and /or divisional workshop. 89 3. Duringthese workshops, FESP support activities shouldbe coordinated with projects and support activities to development in other sectors like agriculture, animal breeding, and in particular the PNDP. 4. Inan ideal planning, classification (and the activities that result from it) should have only taken place subject to the use o f these support activities. Local Consultations The impact study was subject to local consultations throughout its process. About ten consultations were held with local populations in six provinces: East, South West, South, North, Littoral, and Center. Two national workshops were organized and four joint multi-donor missions with the participation o f NGOs were undertaken. The provisional report i s moreover publishedand can be accessed inthe provincial head quarters. A consultation o f the populations will have to be organized after the publication o f the first version of EIE. When it will be finalized it will be made available in the different accessible public places (BM documentation centers, MINFOF, MINEP, local NGO headquarters, provincial delegations o f MINEP). Finally, a regular program of consultation o f local populations on the social and environmental impacts o f FESP i s being elaborated by GoC with the support o f CIFOR. Annex 6 o f the study report summarizes this public consultationeffort duringand after the study. Conclusions The forest and environment sector policy that Cameroon has had inplace since the early 1990srepresent important improvements with respect to the earlier situation and has demonstrated concrete positive effects. However, it i s still struggling to be put in place due to the persistent weakness institutional capacities o f national institutions to implement it. The study shows that most o f the negative impacts identified today in the sector follow not from the forestry policy itself, but from its non-applicationdue to weak institutional capacity. FESP aims at reducing the gap between the policy framework and the execution capacity o f national institutions, to restore the capacity o f MINEF's successor Environment and Forest Ministries to execute, follow up and supervise. Inthis way, the program - if it attains its objective - will have largely positive impacts both at the social and environmental levels. All the same, the study has brought out some environmental and social risks that will accompany the implementation o f this sector policy. The main ones are: 0 At the environmental level: (i) risk of increased poaching activities following the opening up the o f hitherto inaccessible land areas; (ii) risk o f overexploitation o f agricultural and pastoral the territories and other resources (firewood, water, PFNL, etc.), essentially in the northern regions, through the reduction of the surface areas resulting from the specialization o f areas, to zoning and to different classifications (FCt, FC, ZIC, ZICGC, inthe northernregions there will be no UFA). 0 At the social level: (i)the risk o f reducing access to resources through narrow and excessively strict land use directives in forests and to protected areas; (ii) the risk o f conflicts between the concessionaires and the administration on one hand, and some social groups on the other hand if development outlines such as community forests or the distribution o f forest revenue does not take place; (iii)marginalization o f the indigenous Pygmies, the present compensation measures are not adapted to their cultural specificities. Otherwise, it should be noted that extra-sector risks also weigh on the social and environmental performance o f the FESP, such as the country's population growth rate combined with extensive agricultural production systems, or the malfunctioning o f the judicial system. The Program should therefore develop links with other policies and programs outside the forestry sector, and operate in the larger context o f global rural development strategy, the development o f a state o f law, poverty reduction, and private sector development. 90 The following plans are put inplace to accompany the execution o f the program: 0 A Master-Plan of Access to Resources is already largely operational to reduce the risk o f lost of access to resources. It especially includes obligatory procedures o f public consultation and the maintenance o f users' rights in all circumstances. 0 A Development Plan of Pygmies has been prepared to ensure that Pygmiescan fully draw on the opportunities offered by community forests, share charges, employment opportunities and to guarantee the quality o f their mode o f life. 0 The MINEP i s a Government permanent institution. One o f its specific mandates i s to monitor environmental impacts and follow up implementation o f mitigation measures. The MINEP will be strengthened within the framework o f FESP in order to develop the capacity o f environmental monitoring and verification. The study shows that subject to the use o f the three plans, the programproposed i s in conformity with the applicable safeguard policies o f the World Bank: OP/BP 4.01, OP/BP 4.04,0P/BP 4.20, OP/BP 4.30, and OP/BP 4.36. Recommendations formulated to optimize the impacts o f the program are meant to be taken into consideration not only in the National Program prepared by the Government, but also in the national and international partner operations that will support this program. 91 2. SUMMARY OF INDIGENOUSPEOPLESDEVELOPMENTPLAN The Forest and Environment Sector Program (FESP) constitutes an important element o f the GoC's strategy for poverty reduction. The FESP aims at sustainably managing natural resources to improve the living condition o f the people and conserve biodiversity. The FESP consists o f five components: 0 Environmentalmanagement o f forestry activities 0 Management o f the production forests and the valorization o f forestry products 0 Biodiversity conservation and valorization o f wildlife products 0 Community based management o f forest and wildlife resources 0 Reinforcement o f institutions, training and research Given that Bank support to the national FESP will be in the form of a DPL (OP 8.60 applies to the operation) and that this support will not include specific investments, no safeguard policies are triggered, Nevertheless, as part o f due diligence, the preparation team also reviewedthe Government Program inthe light o f Bank safeguards on Indigenous Peoples (OD 4.20), and Involuntary Resettlement (OP/BP 4.12). According to the Operational Directive 4.20 `special action is required, where Bank investments affect indigenouspeoples, tribes, ethnic minorities, or other groups whose social and economic status restricts their capacity to assert their interests and rights in land and other productive resources.' Following the OD 4.20, the main objective o f this Indigenous Peoples Development Plan (IPDP) i s to assure that the FESP will respect the dignity, rights and culture o f the indigenous Baka, Kola and Aka Pygmies in Cameroon and enable situations inwhich `mechanisms [are] devised and maintainedfor participation by indigenous people in decision making throughout project planning, implementation, and evaluation', and to strengthen the institutions through which they can participate in their country's development. OD 4.20 recognizes that measures additional to those which are in place for the majority of the populationmight have to be implemented to enable indigenous peoples to benefit from the Program. This report shows how these goals can be achieved. Legally, the 30,000 individuals gathered in or around 300 settlement in 33 councils who comprise Cameroon's indigenous peoples, are citizens with equal rights to all other citizens inthe country. Yet they lack the de facto political influence, legal status, organizational, technical or economic capacity enjoyed by other groups. The Baka, Kola and Aka peoples, who formerly ranged over broad areas o f uninterrupted forest as full- time hunters and foragers, have increasingly been constricted to principally agricultural `home bases' and outlying areas where some huntingand gathering i s still practiced, though with different technology from the traditional net hunting. A traditional relationship o f interdependence with village agriculturalists-with Baka, Kola and Aka supplying village labor during the hunting off-season, and villagers relying on pygmy production o f meat and forest products from the wild-has given way to a state o f increased dependence on villagers for cash income, work, and a few government-derived social services. Forest related interventions such as logging and biodiversity conservation have added to the marginalization, sedentarisation and impoverishment o f the Baka, Aka and Kola, who are exceptionally dependent on forests - huntingand gathering generates more than 65 percent o f their average livelihood. Such interventions have generally deprived them o f traditional forest utilization rights with little or no compensation. Has the increased dependence on farming, sedentary life for much o f the year, and the desire to access social services transformed indigenous communities into simple citizens o f Cameroon like others - a few ethnic groups among many others? Decidedly not. Not a single Baka, Kola or Aka i s employed by Cameroon's civil service or i s a member of one o f the country's 339 councils. Prior to the implementation of an IPDP in the Campo-Ma'an region, only one o f Cameroon's 13,000 villages had an indigenous leader, Even within the subdivisions, where IP form from 30 to 50 percent o f the population, no leaders 92 are themselves Baka, Kola or Aka. Few possess identity cards enabling them to participate as citizens owing to the prohibitive US$ 25 cost o f obtaining one. Nor do they have birth certificates, which are required for voter registration. Rough estimates o f cash income indicate that IP households typically earn about one third o f the average income of rural households in Cameroon. They have no way to acquire rights to `community forests', `communal hunting zones' or to defend their possession o f the remnants of their `homelands' from outside interests. Fundamentally, their settlements are not recognized `communities,' and therefore they cannot interact legally with government services. While they are the most forest-dependent in Cameroon, they have no legally sanctioned access to the forests that provide more than two-thirds o f their subsistence and income. The FESP proposes mechanisms to improve the living conditions o f local communities through the sustainable management o f forest ecosystems, but in the present circumstance, IP communities are unlikely to be able to--or be enabled to-participate in or benefit from the Program without special provisions on their behalf. FESP implementation moreover entails serious risks for the indigenous Baka, Kola, and Aka Pygmies which likewise require special measures to mitigate: 0 loss of control over land traditionally utilized by them as source o f livelihoods 0 loss of cultural and social identities, which are likewise associated to those lands 0 increased marginalization 0 increased dependence on other groups 0 disintegrate for the decentralized systemo f administration 0 reduced assistance from government services 0 reduced capacity to defend their legalrights The Government approved the 16 activities prescribed by the IPDP which are outlined below, eight of which were already approved by the PNDP. These activities are designed both to increase the benefits and positive impacts o f the FESP, and to mitigate the potential risks listed above. By mutual understanding, only the full implementation o f an IPDP and all its components fulfils the requirements o f the OD 4.20, guarantees that the FESP respects the rights, dignity and culture o f the indigenous people, offers them equal or better opportunities to participate in the benefits and achieves the development objective o f the FESP and `assures that the living conditions o f the rural population are sustainably improved through the sustainable management o f forest ecosystems'. Some o f the recommended activities o f the IPDP o f the FESP were already adapted as Government policy and are marked initalic (PNDP 2003): Establish equal legal opportunities 0 Establishthe necessary capacities to implement an IPDP following the OD 4.20 0 Establishequal legal conditions for all indigenous people (ID-cards) Establish equal legal conditions for all settlements of indigenous people (village) 0 Establishcommunity forests andor communal huntingzones for all IP communities 0 Establishnew forestry regulations, which legalize the IP to utilize their land 0 Establisha national policy on indigenous people. Establish equal technical opportunities 0 Provide the IPwith technical capacities to participate actively innatural resource management. 0 Provide the relevant GoC staff and other stakeholders with technical capacities to cooperate successfully with the IP. 0 Promote researchon the IP and provide space for information on the IP. 93 Establish equalfinancial opportunities 0 Adjust the distribution patterns of the forestry revenue to provide the IPwith the necessary funds to participate activities and decision making processes. Establish equal organizational opportunities 0 Facilitate the representation o f IPin all forest related decision making bodies. 0 Facilitate priority access for IPto forest relatedjob opportunities. 0 Establish a participatorymonitoring and evaluation system for the IPDP. Equal cultural opportunities 0 Sensitize the Baka, Kola and Aka on the risks o f the development process. 0 Assist in capacity building among IP associations to preserve traditional knowledge, culture and livelihoodpatterns. 0 Foster the creation o f forums for communication and exchange between IPSand other ethnical groups and accompany this process o f mutual understanding. The main actors of this IPDP are the MINEP-ledFESP, the sub-department of marginalized populationin MINAS, MINAT, MINEPAT,NGOs working on indigenous peoples issues in Cameroon, associations of the indigenous people, and the Baka, Kola and Aka themselves. At the present level none o f the primary stakeholders i s able to implement an IPDP without further training and the assistance on an international technical advisory body, but all stakeholders are willing to act in accordance with the OD 4.20. To increase the synergy of the IPDPs of sector programs within the FESP and PNDP poverty reduction strategy, the IPDPs will be implemented jointly by independent steering committees at national, provincial and council level assembling all stakeholders. The establishment o f these implementation structures will take time and will develop along with mutual discussions on the IPDP. During this pilot phase (1/2004 - 12/2004) an ad-hoc IPDP committee will start operations. The main focus will be on the establishment o f the institutional framework, the sensitization o f all stakeholders in general and the affected population in particular, the gathering o f baseline data, and the establishment o f community forests and communal huntingzones for all IP settlements. It is assumed that the 16 activities of the FESP IPDP, with a financial volume of US$2 million-which amounts to less than one percent of the total FESP budget-are able to guarantee that the FESP i s executed inaccordance with the OD 4.20 and that the FESP: 0 strengthens traditional systems of governance and embraces the notion o f community dialogue and traditional chiefdoms for all ethnic groups; 0 reduces poverty for all ethnic groups and lowers the degradation o f naturalresources; 0 installs an effective management system of the natural habitats, which offers positive impacts to the entire populationand the biodiversity (pro poor conservation); 0 respects the dignity, rightsand culture o fthe Baka, Kola and Aka; 0 assures that the IPreceive an equal or higher benefit from the FESP than other ethnic groups; and 0 assists the IP to increase their legal, political, societal, economical, cultural and psychological situations. 94 3. SUMMARY OF THE ENVIRONMENTAL AND SOCIALMANAGEMENT PLAN An FESP social and environmental impact assessment was conducted by MINEPMINFOF with the support of a multidisciplinary team o f national and international consultants. The study was motivated by the dual need to maximize the programme's social and environmental impacts during its implementation phase and to compare the programme's general consistency with World Bank social and environmental policies. Inkeeping with its duties, the Ministryof the Environment and Protection ofNature shall be responsible for monitoring the Environmental Management Plan (EMP), including the preparation o f documents required for implementing, monitoring and overseeing the execution o f mitigation measures. The most important of such documents include regulatory instruments and specifications relating to the implementation o f environmental impact assessments in the forest sector. The decree on impact assessments whose approval features among actions to be implemented prior to grant allocation, shall serve as basis for the drafting o f regulatory instruments and specifications on environmental measures applicable in forest zones. Within the context o f FESP, MINEP shall be equipped to perform its duties o f regulating and overseeing environmental standards. With the support of a specialized institution, MINEP shall prepare a manual or other such document to ensure verification o f compliance with environmental standards laid down in the implementing decree o f the environmental law (Law No. 96/12 o f 5 August 1996). Such manual shall be used during the training o f MINEP personnel, including managerial staff transferred to provinces and responsible for implementingthe laws and regulations. The training sessions shall be extended to senior executives o f the Department o f Forestry, the Department o f forests and protected areas (DFAP) and to senior officials o f provinces responsible for supervisingMINFOF activities. Each year, inthe month o f September, MINEP shall draw up an Annual Work Plan (AWP) containing the activities o f the EMP, especially (1) a MINEP job description in relation to the EMP, (ii) a list o f the human and material resources to be used, (iii)environmental management promotion and protection activities, and (iv) a budget covering all MINEP operating and investment expenses. The AWP shall be accompanied by the progress report o f the previous year. There shall be prior deployment o f staff and acquisition o f essential equipment needed for FESP monitoring before the start o f financial contributions from development partners. Under the FEDPG the Government committed to fully implement and finance this EMP whose cost i s estimated at US$2.94 million. Content of the EnvironmentalManagementPlan The EMP concerns measures that can detect, prevent or offset possible negative impacts. Given that certain environment-friendly measures had already been integrated in FESP-supported programmes, the EMP shall above all concern specific institutional capacity-building activities, as well as follow-up and external assessment activities that could not be part o f the programme's major components. Also, given the sector-based nature of FESP, it will be mandatory for each major and selective investment financed within the context of, and outside the programme, to be subjected to specific analyses and impact mitigation measures, as required by Cameroon environmental laws. There are basically two types o f EMPmeasures: a) cross-cutting institutional enhancement measures; and b) component-basedfollow-up and possible impact mitigation measures. Cross-cutting institutional enhancement measures. They are supposed to enable national institutions to identify and handle environmental issues within the framework o f their traditional functions. The aim here i s to increase the response capacity of MINEP and MINFOF services to the constant production and adaptation needs o f the environmental normative, monitoring, oversight and protection framework. Such measures come to complement and lay focus on capacity-building activities already plannedby FESP, by making such activities urgent and o f top priority. They, for instance, will make it possible to strengthen 95 MINEP as soon as FESP i s launched, and ensure that it accompanies the DFAP and Forestry Department (MINFOF) in the assessment, implementation, and control o f the environmental impacts o f FESP activities, as well as in the assessment, implementation and control of the necessary mitigation or compensation measures. Component-basedfollow-up and possible impact mitigation measures. They include measures that were not already integrated in the programme. These are selected attendant measures o f certain components and sub-components o f FESP. The EMP adopted within the context of FESP features inthe table appended hereto. YaoundC Minister o f Environment and Protectiono f Nature 96 REPUBLIQUEDUCAMEROUN REPUBLICOF CAMEROON Paix- Travail- Patrie ----------- Peace- Work- Fatherland MINISTERE DE L'ENVIRONNEMENT ET DE LA MINISTRY OF ENVIRONMENT AND THE PROTECTION DE LA NATURE PROTECTION OF NATURE SECRETARIAT GENERAL ----------- SECRETARIATGENERAL ------------ DIRECTIONDU DEVELOPPEMENTDESPOLITIQUES DIRECTORYF DEVELOPMENT OF ENVIRONNEMENTALES ENMRONMENTALPOLICIES II PLAN DE GESTIONDES IMPACTS ENVIRONNEMENTAUX DUPSFE Introductionet responsabilitedans 1'exCcutiondu Plan. Une ktude des impacts sociaux et environnementaux du PSFE a CtC rCalisCe par le MINEPMINFOF avec l'appui d'une equipe multidisciplinaire de consultants nationaux et internationaux. Elle a ete motivee par le double souci d'optimiser les impacts sociaux et environnementaux du programme au cours de sa mise en oeuvre, et de verifier la conformite du programme par rapport aux politiques sociales et environnementales de la Banque Mondiale en vue de sa participation financi2re. En ligne avec son mandat, le Ministere de 1'Environnement et la Protection de la Nature aura la responsabilitk d'assurer le suivi du Plan de Gestion de I'Environnement (PGE), y compris la prkparation des documents requis pour la mise en aeuvre, le suivi, et le contr6le de l'execution des mesures d'attenuation. Parmi ces documents, les plus importants sont les textes reglementaires et les cahiers des charges relatifs a la mise en Oeuvre des etudes d'impact sur l'environnement dans le secteur for&. L e decret sur les etudes d'impact dont l'approbation figure parrni les actions prealables du Credit, servira de fondement pour la preparation des textes reglementaires et des cahiers des charges relatifs aux mesures environnementales applicables dans les zones forestieres (CCEnv). Dans le cadre du PSFE, le MlNEP sera Cquipe pour repondre A sa mission de regulation et de contr6le des normes environnementales. Avec I'appui d'une institution spkcialisee, le MINEPpreparera unmanuel ou autre document permettant la verification du respect des norrnes environnementales telles que definies dans le ddcret d'application de la loi sur l'environnement (Loi 96/12 du 5 aoot, 1996).Ce manuel sera utilisedans le cadre de la formation de tout le personnel du MINEP, y compris les cadres affect& dans les provinces auxquelles revient I'application des lois et rkglements. Ces sessions de formation seront etendues aux cadres du MINFOF en charge de la supervision des activites relevant de leur competence. Chaque annee, au cours du mois de septembre, le MINEP preparera son Plan de Travail Annuel (PTA) portant sur les activites du PGE, notamment, (i)une description des tiiches du MINEP en relation avec le PGE, (ii)une liste des ressources humaines et materielles iutiliser, (iii)des activites de developpement et promotion de la gestion et de protection de l'environnement, et (iv) un budget couvrant toutes les depenses de fonctionnement et d'investissement du MINEP. Ce PTA sera accompagne durapport d'activites de l'annee precedente. Une premikre affectation de personnel et l'acquisition d'equipements essentiels au suivi du PSFE aura lieu avant le demarrage des contributions financikres des partenaires au developpement. L e present PGE, dont le coat estime est de 2.940.000 Dollars EU, est entikrement finance dans le cadre des ressources nationales, du Credit IDA et du Don GEF mises en place dans le cadre du PSFE. Contenudu Plande Gestionde 1'Environnement. L e PGE porte sur des mesures capables de detecter, prevenir ou compenser des possibles impacts nkgatifs. Etant donne que certaines mesures environnementales ont deja Cte integrees dans les programmes appuyes par le PSFE, le PGE porte surtout sur des activites de renforcement institutionnel specifiques, ainsi que sur des activites de suivi et Bvaluation externe dont la nature est telle que celles-ci ne pouvaient pas faire partie des composantes principales du programme. D'autre part, &ant donne la vocation sectorielle du PSFE, il est inevitable que chaque investissement majeur et ponctuel finance dans le cadre et en dehors de ce programme fasse 98- A l'objet d'etudes et de mesures d'attenuation d'impacts specifiques, tel que requis par la reglementation environnementale Camerounaise. Les mesures du PGE sont principalement de deux types : a) Mesures transversales de renforcement institutionnel ; et b) Mesures de suivi et d'attknuation des impacts possibles par composante. Mesurestransversalesde renforcementinstitutionnel. Elles devraient permettre aux institutions nationales d'identifier et de traiter les questions d'environnement dans le cadre de leurs fonctions habituelles. I1 s'agit la d'accroitre la capacite de r6ponse du MINEP et des services du M W O F aux besoins constants de production et d'adaptation du cadre normatif, de surveillance, de contr6le et de protection de l'environnement. Ces mesures complktent et focalisent les activites de renforcement dkja prevues par le PSFE en leur donnant un caractbe urgent et prioritaire. Elles permettront, par exemple de renforcer le MINEP des le lancement du PSFE et s'assurer qu'il accompagnera l e MINFOF dans I'Cvaluation, la mise en Oeuvre et le contr6le des impacts environnementaux des activites du PSFE ainsi que dans l'kvaluation, la mise en Oeuvre et le contr8le des mesures de r6duction ou de compensation nkcessaire. Mesuresde suivi et d'attdnuationdes impactspossibles par composante. Elles couvrent des mesures quine sont pas deja integrees au programme. I1 s'agit la des mesures ponctuelles d'accompagnement des certaines composantes et sous-composantes du PSFE. Le PGE arrEt6 dans le cadre du PSFE est present6 dans le tableau joint en annexe. Yaounde le 0 6 OCT 2005 Le Ministre de L'Environnement et L a Protection de laNature 0 0 L / 0 c I L I ,* 2 L 00 0 3 - I I I I ANNEX8: FINANCIALAND ECONOMICANALYSIS AND INCREMENTALCOST ANALYSIS15 Introduction Financial and economic and incremental costs analyses have been carried out for the Forest and Environment Sectoral Programme (FESP) o f Cameroon. This summary document presents the results o f both financial and economic analyses, a discussion o f these results, their implications for Programme follow up and, additionally, the incremental cost analysis for the GEF funded aspects o f the overall operation. Cost-benefit analysis (CBA) was used to assess the FESP financial and economic attractiveness even though improvements in natural resources management typically have long-term benefits that, once discounted, have limited impact on the CBA. Cost BenefitAnalysis The costs o f FESP amount to about US$127 million, including $113 million o f investment costs and $14 million recurrent costs. Physical and price contingencies amount to $10 and 13 million respectively. Foreign exchange content represents 11 percent o f total costs. FESP costs were divided according to direct, indirect (costs o f support activities such as environmental monitoring and information, forest zoning and control, elaboration o f a strategy, regulatory framework and fundingmechanism for protected areas) and institutional strengthening (see table below). Indirect and institutional strengthening costs represent more than 60 percent o f total FESP costs. For the purpose o f calculating specific component rates of return, direct and indirect costs were allocated to productive components while institutional strengthening costs were accounted for inthe overall assessment o f FESP. Benefitsand Beneficiaries The incremental benefits o f the operation were defined based on the following assumption. The government will continue to require draft forest and protected area management plans. The institutional strengthening measures proposed by the FESP aim at improving the performance o f the administrationin terms o f establishing the regulatory framework and carrying out effective control. This improved performance has been assumed to be a precondition for the implementation o f natural resources management in forests and protected areas. On the one hand, this pre-condition would not be met through initiatives other than the FESP despite the current government requirement. On the other hand, without proper regulatory framework and control, the management plans o f the forest concessions, community forests and protected areas, although already prepared, would not be implemented on the ground. This assumption enables the FESP to claim the totality o f naturalresources management benefits. The main quantifiable benefits include timber and fuelwood from commercial and community forests as well as plantations, soil erosion prevention, carbon sink potential and the reduction in non-renewable energy consumption and increased fiscal receipts (as a financial benefit to the government). A number o f significant benefits were not quantified due to their nature or lack of data. These benefits include: 0 Immaterial benefits. The establishment o f a regulatory framework for sustainable management o f forests and protected areas will (i)make the implementation o f forest and protected area management possible (see par. below), (ii) reduce risk by securing user rights and allowing for a reliable input supply to the forest and tourism Indus tries; (iii) provide access to certification and international climate change funding mechanisms; (iv) significantly reduce distorting practices (such as illegal logging and poaching as well as forest and protected areas tax evasion) thus ~ 15 Costa and benefits presented in this annex are based on values determined duringpreparationand assessed at program apprasal, Differencesin global cost figures are due to cost adjustment and updatesmade durmgpreparatlonof the MediumTerm Expenditure Frameworkand annualwork plans. 110 encouraging a constructive behavior by all stakeholders in the forest and protected areas sub- sectors; and (v) improved confidence of international investors. 0 Incentive for positive change. Forest management could trigger a more dynamic behavior by the private operators that could set in motion a process o f rationalization and technological change o f both logging and processing that would not take place without the management constraint. This process will be adopted by the more dynamic and responsive operators and will contribute to enhance the overall competitiveness o f the sector. 0 Employment and income generation. Long term income and employment would be maintained inthe wood industrythrough the sustainable use ofthe resources. The rapid depletion ofvaluable species and the lack o f diversification associated with the present unsustainable use o f forests would lead to a dramatic reduction o f the industry turnover in the long run. Additional income and employment would also be generated in the tourism and handicraft industryto the benefit o f local populations through the creation o f a protected areas network. 0 Non-timber benefits such as hunting and fishing, minor forest products, watershed protection (including soil erosion prevention, flood mitigation and water infiltration), recreation, option and existence values, from both forests and protected areas were not quantified due to the lack o f data. The sensitivity analysis has shown that accounting for non-timber benefits in commercial forest management can improve the economic viability o f the FESP. Similar benefits that exist for community forests, and protected areas were also not quantified; and 0 Wood processing benefits were not quantifiedbecause specific activities were not yet identified. This has an impact on the economic viability, as the costs o f wood processing initiatives (elaboration o f a wood processing policy, support increased efficiency o f logging and wood processing and encourage the development o f secondary and tertiary transformation) were accounted for inthe analysis as part of the overall cost o f the FESP. 0 Only part of the benefits from institutional strengthening and the establishment o f legal, regulatory and incentive frameworks were quantified under the form o f increased fiscal receipts, The significant positive impacts associated with the increased efficiency o f the public administration, the improved and less distorted working environment o f the forest sector and the enhancedrelationship between private and public operators could not be quantified, These unaccounted benefits represent significant assets o f the FESP and if quantified and accounted for will lead to a greater impact on the economic viability. Unaccounted benefits should thus be given equivalent weight as quantified benefits in the evaluation o f the FESP economic performance and consequently indecision making. They should also be part o f the rationale o f the FESP. Based on previous considerations, the winners from the FESP include: (i) logging and wood processing f i r m s that would benefit from an extended time horizon on their forest title and timber supply and the reduction o f the overall risk of the wood industry, an increased processing efficiency and improved marketing o f secondary species encouraged by forest management, significant reduction o f illegal activities that would provide level playing field conditions throughout the sector, access to forest product certification, international funding mechanisms for climate change, and improved confidence of international investors; (ii) local communities taking a lead role incommunity forestry that would benefit from increased revenues from community forests as well as increased employment following the appropriation o f logging and processing activities (which i s presently carried out by private operators); (iii)individualandcommunityinvestorsinplantations; (iv)producersandconsumers offuelwood; (v) individuals or local communities managing hunting reserves; (vi) the government that would increase fiscal revenues; (vii) communities living inside and around forest concessions that would enjoy a sustainable supply of non-timber forest products; (viii) workers o f the timber, tourism and protected areas industry that would either keep their jobs or find a new one; (ix) tourists would be able to visit better equipped and biodiversity richer protected areas; and (x) the administration that would be able to work better and more efficiently. Losers would be illegal logging firms and poachers and to some extent small scale chainsawers practicing illegal logging. 111 RESULTS FinancialAnalysis Financial analyses were conducted for commercial logging in forest concessions and community forests, plantations and fuelwood production in community forests. Returns to Government's increased efforts on tax collection from forest and protected area were also assessed. Both direct and indirect stakeholders (workers o f the timber, tourism and protected areas sectors who would gain from the implementation o f FESP), were included inthe analysis. The results o f the financial analysis are presented inthe table below. management Local communities a Game hunting Local communities managing hunting Yearly net benefit: 5- 10million FCFA reserves Yearly net benefit: 10-20 million Private managers o f huntingreserves FCFA Commercial community Forest management entities; forest management Local communities; and 9.7% to 11% Private logging firms Fuelwood community forest Forest management entities; Producer price: +18% management Traders; and Net benefit: -10% Consumers Consumer price: -3% Plantations Private and community investors Without carbon With carbon sink sink Eucalyptus 25% 31% Pine 9% 21% Teak 10% 18% On direct costs On direct + Tax collection Government indirect costs 37% II1% 1 8 Thefinancial impact on local communities living inside and around commercial forest concessions was not assessed due to limited availability of data. Preliminary estimate of yearly financial benefit from community andprivately managed hunting reserves. 0 Based on assumptions on changes in price elasticity. These estimates do not provide indications on the financial viability as they do not accountfor production costs. The results indicate that: 0 Implementing forest management in commercial forest concessions i s generally financially viable. The sensitivity analysis has shown that forest management i s highly sensitive to both timber processing efficiency and relative prices of secondary species. These two parameters are assumed to improve in the `with FESP scenario' following increased efforts on processing and marketing o f wood as a means to overcome the short term impact on timber harvest associated with forest management. Ifthese two parameters were not to show the anticipated improvements, forest management would not be financially viable. It should also be noted that forest management i s seen by private operators as a contract with the government for securing long term usufruct rights on the forest resource. Private operators are prepared to have their financial margins reduced in the short run and are ready to improve their long term processing and marketingperformance in order to overcome the financial impact o f forest management. 112 e Similarly, community forest management i s financially attractive for forest communities that gradually take over logging and processing from private operators (that presently work in partnership with local communities). e Investment in plantations show positive returns especially when high yielding species are considered andor carbon sink benefits are accounted for. 0 Game huntingrevenues seems to suggest that investment inthat activity would be attractive, e Returnsto government efforts for improving tax collection are financially attractive. The impact o f the FESP on government spending (incremental recurrent costs at FESP completion) i s around US$3 million (representing 2% o f FESP total cost). Sixty five percent o f this additional government spending (around US$2 million) i s represented by the recurrent costs o f the protected areas system after program completion. Its funding can be ensured through either donor-funded mechanisms (trust fund) or long-tern concessions o f protected areas to the private investors. These possibilitieswill be explored duringprogram implementation. EconomicAnalysis The economic analysis has been carried out for each of the main productive components including commercial logging in forest concessions and community forests, plantations and fuelwood production in community forests as well as to assess the overall economic viability o f the FESP. The economic attractiveness o f the Program was also tested against the change o f a number o f parameters including processing efficiency, relative prices o f secondary species, forest non-timber benefits, and logging cost.16 The analysis suggests that the FESP is indeedeconomicallyviable, and more specifically: Commercial and community forest management show attractive economic returns; Plantations show attractive economic returns on direct costs (especially when carbon sink benefits are accounted for) and are viable on direct plus indirect costs ifcarbon sink benefits are accounted for; Fuelwood production shows positive economic returns only in the best case scenario. However, accounting for unquantified environmental benefits such as reduction o f GHG from reduced natural gas consumption, watershed protection and non-timber forest products from sustainably managed forests would improve the economic viability o f the sub-component; Economic viability of the FESP i s sensitive to indirect costs with the economic rate o f return (ERR) going from average returns of 18 to 13 percent when these costs are accounted for; Economic viability of the FESP i s positively influenced by returns from forest management (when excluding costs and benefits of that sub-component from the overall economic analysis, the ERR falls to 8.7-10.7 percent); Improved processing efficiency and increased relative prices o f secondary species have a strong positive impact on the economic viability of the FESP. When both parameters are left unchanged as compared to the without FESP scenario, the ERR drops to 1-5%; Economic viability of the Program i s sensitive to non-timber forest benefits. When hypothetical non- timber benefits are included, the ERR improves from 11-16% to 13-18%; and Economic viability of the FESP i s sensitive to reductions in logging costs. ERR increases from 11- 16% to 13-20% following a 10% reduction in logging costs. 16 Estimates from the international literature were used to test the changes in the economic viabiltty of FESP. In general, these potential benefits are quite large. In the case of commercial forestry, these potential benefits represent between 4 and 20 percent of total benefits. 113 The results are presented inthe table below. +lo% 11.5%to 16.4% +20% 12.1%to 17.2% +30% 12.9%to 18% Logging cost reduction(fixed and variable): -5% 12.2%to 17.6% -10% 13.8%to 20% Conclusions and recommendations The results o f the financial and economic analysis provide a strong basis for deciding to implement FESP. Significant non-quantifiable benefits (as discussed under pare 8) were not accounted for in the economic analysis, but are likely to have a significant impact on FESP's economic performance. The FESP economic attractiveness could be further improved by (i)including measures allowing for a reduction o f logging costs such as low impact logging and better use o f forest management plans for fixed cost reduction; (ii) reducing indirect costs o f FESP; and (iii) quantifying and accounting for non-timber and environmental benefits o f forest and protected areas management. The main recommendations are: From an economic standpoint, FESP should be implemented based on the positive indication of the ERR (reflecting the quantified benefits) as well as on the set o f strong arguments associated with the above mentionednon-quantified benefits. Based on a potential constraint associated with the financial absorption capacity o f both the administrationand the forest industry,the indirect costs o fthe FESP should be reduced. Incentives to improve the short-term financial attractiveness o f commercial forest management should be envisaged. These incentive could be (i) a reduction in the area stumpage fee following the certified implementation o f forest management plans; and (ii) establishment o f forest the concessions larger than 200,000 ha (which i s presently the maximum allowed size per single operator) allowing for economies of scale for those operators that implement forest management. An institutional capacity for the evaluation o f the non-timber benefits associated with forest management should be established. 114 0 The distribution and equity impact o f FESP on local communities in forests, industrial districts and protectedareas should be carefully monitored. EconomicViability of FEDPC SensitivityAnalysis sc 1.1 sc 2.1 sc 2.2 Timber from Overallrisk Environmental Forestzoning Commercial commercial& reductionby regulation& (USS2.364 forest community securinguser rights funding (US$ million) management forests as well to forests & 1.054 million) (US$5.707 as plantations; protectedareas; sc 1.2 SC 2.5 Forest control (US$3.106 million) Fuelwood, Sod Secure input supply Environmental million) SC 2.3 Wood erosion inforest & tourism Monitoring processing prevention, industry; (uS$O.l14 sc 5.2 (us162.122 Carbonsink Access to million) Strengtheningof milion) potential from certification& SC 1.3 Ministryof Forest plantations, & &Environment SC 2.4 Non- international Environmental Reductionin (uS$50.130 timber forest climate change Information products non-renewable funding (uS61.642 million) CS61.187 energy mechanisms; J Logging firms J Commercial mdlion) consumption J Local forest sc 5.1 I i Reductionof management distortmgpractices communities sc 5.2 ANAFOR J Commercial SC 4.1 like illegallogging J Privateinvestors community Part of (L'S$1.886 Income from & poaching,which in plantations forestry Strengthenmg mdlion) Community game preserve will improve the J Private& of Ministryof forest management overallworliing community J Fuelwood Environment& management environmentin investors in community Forests SC 3.1 (US$3.416 forests &protected game hunting forestry (USF50.130 Protectedarea million) areas; resen'es J Plantations million) (PA) network SC 4.2 Improved J Government J Private& sc 5.3 established Plantations confidence of (USSO.556 community game Training& (USF9.292 stakeholders & million) huntlng Research million) international management (uss5.593 SC 3.2 sc 4.3 investors; J Tax collection mdion) PA resource Fuelwood Hunting & fishing; sc 5.4 hou4edge production (USS2.178 Minor forest FESAC (USF6.960 million) products; Management million) sc 3.3 K'atershed (uS$4.311 protection million) Populationaccess (US62.942 sc 3.4 (including soil erosion prevention, million) Protectedarea flood mitigation, & SC 3.6 management water infdtration); Institutional (US620.708 Recreation; frameurork million) (uSS1.427 sc 3.5 Option &existence mdlion) Income values SC 3.1 generation Funding from Recreationincome mechanisms protected generated by (uS$0..234 areas (US6 tounsm activities mdlion) 0.141 million) Option & existence SC 3.8 value of protected Biodiversity areas and related strategy species (US$O.llO mdion) 115 GEF INCREMENTAL COST ANALYSIS (i)Baseline Scenario As the present operationrepresents the framework adopted by the international donor community for the forest and environment sector development, the baseline description coincides with the description o f the FESP. The operation seeks to improve the institutional and organization capacity o f MINEP and MINFOF to implement new policies and regulations for forest, wildlife and protected area management and timber industry development in partnership with communities and the private sector. The operation will disburse in tranches on the basis o f agreed indicators and triggers. The operation will adopt a broad sectoral lending approach, and as such, donor contributions to the operation are notional and will be allocated through annual workplans based on the achievement o fprojectedtargets and triggers. Overall the operation will focus upon the following policy areas or components: (1) Regulation and environment infomation management; (2) ProductionForests management; (3) Protected area & wildlife management; (4) Community forest resources management; and (5) Institutional strengthening, training & research (see annex 2 on detailed project description). The protected area and wildlife Management component aims at completing and sustainably managing a network o f protected areas which will represent and conserve at least 90 percent o f Cameroon's biodiversity covering x million ha. This will be done through zoning activities, environmental information management, protected areas participatory community management, and changes inthe legal, institutional and funding mechanisms upon which biodiversity conservation ultimately depends. The operation will also establish connectivity with, and improving management of, biologically important areas that are under production regimes such as production forest, community forests, and wildlife management areas. (ii)Costs The total baseline cost o f the initial phase o f the FESP supported through the present operation amounts to $115.4 million". This represents both secured and planned funding for the FESP. A part o f the FundingSources US%million planned funding amounting to 29.73 million would be met at least in GoC 21.0 part by contributions o f other Development Partners including ACDI, EU 2.0 EU,WWF, WCS, DFID,FEDEC. This fundinggap will be partly offset DFID 15.0 by the GEF intervention. Total secured baseline costs for the FESP CIDA 10.0 duringthe five-year programperiod are estimated at US$ 85.7 million in KfW 6.8 current value and include several sources o f financing such IDA, DFID, IDA 15.0 EU and the German and Canadian bilateral cooperation. All baseline WWF 2.3 donor contributions will be allocated across the operation components on an annual basis, corresponding to the achievement o f projected outputs and triggers. As envisaged, EU and DFID funding will be through budget support as i s proposed for IDA and GEF funding. The Fundinggap 29.1 Government o f Cameroon's contribution to protected areas & wildlife i s Total 117.40 calculated by reallocatingwildlife taxes toward the sector. 17This was the base cost at the time of appraisal, and prior to GEF contribution.This cost differs from the programcost as shownin the MediumTerm ExpenditureFramework due to costadjustments occurredin the process ofAnnual Work Planningprojections. 116 GEFAlternative By building upon this baseline, the proposed alternative will help the government of Cameroon implement and further refine the sector policy and institutional reforms initiated under the Third Structural Adjustment Credit, promote sustainable management o f natural resources, improve sector efficiency, and enhance local and national revenue capture. The alternative operation will do so by strengthening national institutions and civil society, and creating the conditions for local communities and the private sector to invest in the management, conservation and development o f forests and natural resources. Rather than pushing for new reforms, the proposed operation will allow Cameroon to stay on the course ina reformprocess that i s already unfolding. The GEF alternative will increase funds available for the implementation o f the various program components and helping secure adequate attention and resources on behalf o f the conservation and management o f globally significant biodiversity. It will do so inthe following ways: Fostering dialogue among right holders o f protected areas, community forests, production forests, rural lands and operator o f huntingzones. These actors would be approached by the operation as stakeholders o f integrated land management ecosystem units (called UTOs), where biodiversity concernwill be integrated into the overall UT0management plans. Deepening efforts to update strategies and regulations related to wildlife management, hunting, and collection o f revenues to encourage community-based management o f wildlife areas. Leveraging at least as much in-country resources as it disburses by improving wildlife tax collection (huntingconcession and trophy fees) and bringingmore transparency inthe mechanism whereby resources for the Special Wildlife Fund (French acronym FSF) are collected, spent, and usedto attract additionalresources. Putting measurable increases of protected area management effectiveness at the center o f the operation's disbursement mechanism. Ensuringthat protected area management initiatives reach a critical the volume so as to attract sufficient Government and Development Partners' support to cover all protected areas. Inadditionto theWorld BanUGEFthe followingPartnershelp finance the GEFalternative: The French GEF (FFEM-US$1.1) and EU finance the management o f the Faro and Bouba Ndjida National Parks where the last huntingdogs and black rhino o fWest Africa remain. EU and USA, along with other Partners, finance conservation o f Dja, LobCkC, Boumba Bek & Nkiincontiguous biodiversity richareas extending inEquatorialGuinea, Gabon, CAR & Congo (fundingnot consideredinthe GEF baseline or as incremental finance). System Boundary The system boundary o f the GEF alternative is the same as the FESP baseline. Without GEF financing, biodiversity improvement in selected sites would have to be more limited in quality and intensity. GEF would complement existing financing to secure more sustainable conservation o f globally and nationally significant habitats, species and genomes within eight under-funded UTOs, namely (1) Waza with Lac Chad and Logone plains, (2) Korup, Takamanda and Rumpi Hills complex, (3) Bakossi & Mount Kupe complex, (4) Campo Ma'an & Campo-Marine complex, (5) Mbam & Djerem, (6) Ndongoro mangroves, (7) Boumba Bek/Nki complex et (8) BCnouC complex. IncrementalCosts The total cost o f the GEF alternative i s estimated at US$126.53 million. The baseline cost for the operation i s US$ 115.40. Therefore the incremental cost for this operation i s estimated at $ 11.13 million. Of this amount, US$lO.O million GEF assistance has been sought. The remaining incremental cost will met by the FFEM(French GEF US$ 1.1) and other donors (US$0.3). 117 Benefits Long term incremental benefits will include the creation o f an institutional framework that demonstrates Cameroon's enhanced protected area management capabilities and attracts more and more sustainable fundingfor the conservation o fthe nation's protected area network. Shorter term incremental benefits will include the setting up o f conservation services and starting UT0 management routines in selected locations on the ground. Without GEF contribution, the Government would be unable to use its own or borrowed funds for meeting all management requirements o f these UTOs. Selected to be representative o f Cameroon's entire protected area network, the selected UTOs (total area 1,859,300 ha) are among the most important in Cameroon. Inaddition, the GEF's contribution will help create a new 176,000-ha protected area o f highly intact mangrove's forest in an area known to have the highest level o f speciation in Cameroon. The operation embodies a particularly important GEF strategic priority that i s the mainstreaming o f biodiversity in production landscapes. In line with this strategic priority, the FEDPG will help connect forests under different regimes and manage them according to an overall plan that takes biodiversity considerations into account. It i s possible that without GEF support, the planned national forest zoning exercise would focus primarily, if not exclusively, on direct production o f timber and NTFP, without consideration for globally relevant values, and without functional links between production and conservation forests. By working directly with the Government the GEF will be able to leverage good policy decisions, strengthen the capacity and influence the program of national institutions, which i s rarely the case for conservation donors who bypass national institutions and work on NGO-executed area-based project, By meeting the GEF's strategic priorities and targeting the framework for improved protected area management as well as the capacity of the national institution and its staff, FESP embodies some o f the most important lessons learnt through conservation programs duringthe past decades. 118 ANNEX9: PROTECTEDAREA MANAGEMENT EFFECTIVENESS-BASELINE AND TARGET VALUES 1. Progress inthe quality o f managementperformance will be measured ineachprotected area using a parameter known as protected area management effectiveness or PAME. Scores will be assigned using a "PAME Tracking Tool". The tool i s based on 30 indicators whose combined evaluation provides a comprehensive assessment o f management effectiveness. The tracking tool was developed by the World BanWWWF Alliance, consistent with the recommendations o f the World Commission on Protected Areas Management Effectiveness (WPCA), and with GEF's M&E policies requiring to (i) measure results and impacts (ii)provide a basis for decision making; iii)create sources o f accountability; and iv) establish records and document lessons learned. SummaryoftheWCPA PAMEEvaluationFramework Explanation Criteria assessed Where are we now? Significance Threats Context Assessment of importance, threats and policyenvironment ---- Vulnerability Status Nationalcontext Partners Where do we want to be7 Protectedarea legislationandpolicy Planning Assessment of protected areadesign Protectedarea systemdesign Appropriateness andplanning Reservedesign .. Managementplanning What do we need? Inputs Assessment of resourcesneededto Resourcingof agency Resources carryout management Resourcingof site How do we go about 1t7 Processes Assessment of the way inwhich Suitabilityofmanagementprocesses Efficiencyand managementis conducted appropriateness What were the results? outputs Assessment of the implementationof. I I - Results of managementactions managementprogramsand actions, - Services and products Effectiveness delivery ofproductsand services What did we achieve? - Outcomes Assessment of the outcomes andthe Impacts:effects of managementin Effectivenessand extent to whichthey achieved relationto objectives appropriateness objectives 2. Baseline PAME scores for all protected areas have been developed prior to the negotiations, and tranche disbursements will be linked to achieving P A M E target scores that have been pre-agreed. These are shown in the following pages. The review o f progress will be conducted in each protected area conducted by the Government in collaborationwith at least one qualified internationaltechnical partner. 119 - - - n h N N N - - r n N N N - r c. N N N N r n c N c N N - c n N- N c n N e - c n N n c N N Nl - n n N - - c N N - - - N - N - I N N 0 n n N N N N N -- - -- CI - N N N N C N - r --- N N N r N N - 0 2 C 0 N c 0 - - - - C 0 c c C 3 N 3 C C C r 3 0 0 3 C - - C 0 0 c 0 P c N c; c N r n c. c N n c + N I N - I ' I = I N - I - Nl - 1 - I c - I I I I Expected PAME Progress in Focus UTOs 70 60 50 'AME40 30 w Tranches 2 20 10 0 Ndongoro Bakossi Bourba Mbarn Canpo Korup Benoue Waza Kupe Bek&Nki Qerem Ma'an Focus UTOs UT0temoins Table 2. Baseline PAME scores for other Protected Areas I Expected PAME Progress in other UTOs 70- PAME ~- 0 Tranches 3 ~ Qa -ooerce Mengam Bouba Faro M,nt Xi,mt.m- N.ida Can-eroon UT0 123 ANNEX10:MONITORINGEVALUATION AND SYSTEM Objectives and overall features of the system 1. The FEDPG Monitoring and Evaluation system has been designed to: (i) accountability foster and transparency in the management process; (ii)provide the Government and donors common and realistic reference and measurable parameters to measure progress; (iii) record how program progress milestones and conditions for tranche release are administered; (iv) engage stakeholders in information sharing; (v) identify implementation problems and propose corrective measures; and (v) integrate financial planning and execution with physical and geographic information on work program implementation, milestones and tranche release conditions. 2. The starting point for the monitoring and evaluation system i s the policy matrix that details the issues the operation intends to address, the outcomes expected, the milestones o f the Government program, and the parameters chosen for tranche release. This matrix i s common to the Letter o f Sector Development Policy and the present operation. Definitions, baselines, and values o f expected results were worked out during program preparation to facilitate monitoring by the Government and other interested parties. Particular emphasis was placed on indicators of results rather than process indicators. For each condition and milestone featured in the matrix, the operation's M&E has developed appropriate outcome or process indicators and verification instruments as appropriate. 3. To ensure consistency between FEDPG performance and the overall forest and environment sector performance, the monitoring system goes beyond measuring program specific indicators to also include indicators that reflect overall economic, social and environmentalperformances. Progress in some o f the sensitive areas such as preservation o f biodiversity and management o f national parks and reduction of illegal logging will be measured through well defined protocols which leave minimumroom for subjective interpretationand minimize risks o f conflict. 4. Progress in protected area management will be scored according to a "tracking tool" developed by the World BanWWWF Alliance, consistent with the recommendations o f the World Commission on Protected Areas Management Effectiveness. Progress in the fight of illegal logging will be measured in terms o f variations in the length of logging roads located within unallocated forest concessions and national parks, observed in time series o f satellite images interpreted in collaboration between the Government and the Global Forest Watch Program of the World Resources Institute. For both parameters, baselines values, methods and sources to review time series o f relevant parameters are integrated into the program's monitoring system. 5. While various departments o f the Ministries o f Finance, Forests and Environment will be involved in gathering and analyzing program relevant information, monitoring o f overall program implementation will be centralized by the Cooperation Division o f the Ministry o f Forests. This division will consolidate monitoring reports, maintain relations with national and international partners, consolidate annual work programs, and monitor satisfaction o f tranche release conditions. The Environmental Impact Assessment Monitoring Unit o f the Environment Ministry will monitor and report on the implementation o f the environmentalmanagement plan. Ministryprovincial delegations will be the focal points of the Monitoring Unit, and in that capacity they will be in charge o f collecting necessary data at local levels; they will also be in charge o f disseminating reports at the provincial level. External evaluations and audits o f accounts will be undertaken under the auspices o f the Ministry o f Finance and Economy. 6. While the M&E system i s fully integrated into the Cameroonian institutional environment, monitoring indicators have been determined in ways that allow and encourage the involvement of third independent parties in the follow up o f the operation. In addition to monitoring indicators, the M&E system will undertake several thematic studies with a view o f deepening analyses and find solutions to 124 problems identified during program implementation. Given the program's relatively short duration and the time lag necessary to adequately measure the operation's achievements against its development objectives, no formal impact evaluation exercise will be attempted as part o f the present operation. Actors: Managers and Users 7. System managers consist of the different services o f the Cameroonian Government responsible for the Implementation, Monitoring and Evaluation (IME) o f the Program. The principal managers are: .The respective General Secretaries o f the Ministries in charge o f Forests and Environment responsible for strategically coordinating program implementation by ensuring the simultaneous availability o f financial and material resources as well as the assignment o f qualified staff to .national and provincial levels. They will likewise research problems revealed in M&E, develop solutions, and discuss these with the Forest or Environment Minister. The Division de la Coopkrution et des Projets (DCP), linked to the General Secretary, will maintain .relations with national and international partners, coordinating implementation o f the FESP on a daily basis. It will also prepare annual work programs in accordance with the ongoing tranche. The Monitoring Unit, which i s likewise linked to General Secretary, will be in charge o f the FESP monitoring and evaluation system as it applies to centralized and decentralized services. In this .capacity it will collect data for the production o f reports and dashboards and disseminate monitoring products to all partners. The Direction des Affaires Gindrales (DAG) will ensure that the monitoring system i s up-to-date in terms o f financial and accounting information. The DAG will also ensure that an independent .auditing firm, internationally known for its auditing capacities i s recruited after an international biddingprocess. Provincial Delegations will be the focal points o f the Monitoring Unit and in that context, they will .be in charge o f collecting necessary data at local levels; they will also be in charge of diffusing reports on monitoring at the provincial level. All relevant Directorates of the MINFOF and MINEP (Direction des Forits, Direction de la .Transformation et de la Promotion, the Direction de la Faune et des Aires Protkgge`es, among others) -will be incharge o f the overall monitoring o f the component they are responsible for, The Environment Ministry will be in charge o f implementing and monitoring the national environmental policy, controlling the mitigation plan o f environmental impacts, and collecting data related to the mitigation plan. 8. System users include the Ministries of Forests, Environment, Finance, and Planning, which rely on the system's monitoring reports and dashboards to assess program implementation and, when necessary, take measures to improve it. The Committee in charge o f implementing the resolutions o f the 1999 YaoundC Head of States Declaration on Forests, will serve as the steering committee o f the FESP, meeting twice a year to assess Program implementation and propose recommendations to the Government based on monitoringreports. Additional system users include: The General Secretaries o f MINEP and MINFOF Local and international NGOs, Finance and Administration Directorate Private enterprises, The Cooperation and Project Directorate Civil Society, The Monitoring Unit o f the PlanningDirectorate Donors Provincial delegations Data 9. Baseline data have been collected for most parameters used inprogram monitoring. These will be refined by the monitoring team as it i s inplace and used to measure progress. 125 10. Data sources. The data sources (shown in monitoring tables below) will be where the data verifying the status o f indicators will be found. The data source will be both institutions (public administration, private enterprises, NGOs, ect.) and the system o f data collection set up by the national monitoring & evaluation team. The same sources will be used routinely to avoid inconsistencies and misinterpretations. However, it will possible to cross sources. 11. Data collection. Primary and secondary data will be recorded according to specified format by Monitoring Unit assisted by Provincial Delegations. Field missions will be organized in order to collect/verify data. 12. Frequency and schedule o f data collection. The timing o f data collection will be linked to that o f monitoring system outputs: the monthly monitoring dashboard and the quarterly monitoring report. The monitoring dashboard which will consist o f key indicators and main achievements described in a two page document produced by the Monitoring Unit at the end o f each month, based on data collected at least one week before. The quarterly monitoring report (no more than 15 pages) which will be a full monitoring report assessing the progress made duringthe quarter will be producedby the Monitoring Unit at the end o f each quarter. Consequently, the data collection will take place at least two weeks prior the end o f each quarter. Indicators 13. Indicators linked to triggers for tranche release are presented by component intabular form at the end of this annex. During the first months o f Program implementation however, a wider range o f indicators will be defined to better cover all the activities of the FESP and give an in-depth view o f changes inthe Forestry and Environment sector. Documentation 14. A M&E manual will summarize responsibilities, guidelines, procedures and format o f documents that will be used for monitoring and evaluation. 15. Annual Work Plans will be prepared by the Directorate o f Cooperation and Projects (DCP) and will include all the activities to be implemented during the year in accordance with the ongoing tranche. The AWP will be discussed and validated at the beginning o f each year by all the stakeholders involved in the FESP duringa one day workshop. 16. The Monthly Monitoring Dashboard (MMD) will be a two page document prepared by the Monitoring Unit, summarizing the major steps accomplished by the FESP along with key indicators each month. 17. Quarterly Monitoring & Evaluation Reports will be comprehensive documents presenting the achievements o f the operation over a given quarter. No more that 15-page long (including annexes) these reports will be preparedby the MonitoringUnit. Procedures 18. The national monitoring and evaluation team will collect data from various sources including from decentralized monitoring units. The national team will update the system, the MINFOFMINEP website and will produce the MMD.The dashboard will be mailed to all stakeholders including donors. 19. Each quarter, the regional monitoring and evaluation team will collect data from various sources including regional monitoring teams. It will then update the system, the website, and produce the quarterly monitoring report that will include summary tables for each activity as well as financial information. The report will be sent to all stakeholders including donors. 126 20. At the end o f each year, an annual report synthesizing the work done during the 12 past months will be produced and sent to all stakeholders. The report will be assessed at the beginning o f each year duringthe annual workshop. Integration of Progress Monitoring with Financial Management 21. The systems for financial management and progress monitoring will be interfaced to expenditures with execution of activities and achievement of results. The codification system used by the financial management system will be used by the monitoring system as well. Basically, the monitoring systemwill cover all activities with a particular emphasis on expected results: Each expected result will be assigned an indicator. The indicators could be weighted to better reflect the importance o f certain results over others. The system will combine the indicators o f results that will be supposed to trigger the release of tranches. This combination will be expressed inrate o f completion o f conditions related to tranche release as well as milestones related to annual workplans. A rate o f completion o f 100% will be required for tranche release conditions while 75 percent will be sufficient to determine whether or not the program i s on track overall. 22. The monitoring and evaluation system will be a computerized one. Computers and software needed for the functioning o f system will be acquired at the beginning o f the Program through a national bidding process. The software provider will ensure necessary training and maintenance after the installation o f the system. Overall, the systemwill be organized ina modular approach as follows: Central module: compiles the values o f indicators, the deadlines and the financial information received from specific modules; prepares the periodic summary tables and responds to the requests from users. Module 1: monitoring o f the implementation o f activities; activities are broken down into tasks. The total o f tasks equals 100%.The implementation i s measured through the % o f tasks achieved. This module has a particular sub-module focused on the implementation o f institutionalreforms. Module 2: monitoring o f calendars; this module monitors timetable for each activity with a warning system for delays. Module 3: monitoring o f indicators; monitoring o f impacts and performance indicators with specific indicators for reforms activities. Module 4: monitoring o f budget vs. activities; this module i s a bridge between the financial system and the M&E system and allows the monitoring o f actual and planned ratios budget/activities. 23. A GIS software will be linked to the monitoring system to obtain a synthetic view o fthe different activities implemented within the country. The GIS will act as an interface and inthis capacity will act at two levels: (i) at the input level for inputs, it will allow the storage of indicator values; and (ii) the at output level, it will allow the formulation of information requests concerning an activity inspatial terms (and not by its name or code, as i s the case in standard data base interfaces), and the provision o fresults inthe context o fa map. 24. The products o f the system will be (i) a monitoring dashboard with key indicators only (agreed by actors), producedon a monthly basis, and (ii) a full quarterly monitoring report. The illustrations that follow give an overview o f the system organization. 127 30 0 > Y 0 m 3 0 10 j0 I - II/N II I iI II 2 /O //O 3 hl M E aW .-S _________A________ nt - *I II i- I I 3" 3 jo lj I IIII /IIII/ I I ._. 2 3 n I I I 3 3 3 3 /O 0 s '5 s0 c i0 2 I- 8 50 5a 5 k .- 3Yn h .-+- M 3m0 I +- Ee u v E VI .-* 0C E4 .-mu 5 G CL 0 .-75 *x cs SELECTED OVERALL SECTORINDICATORS INDICATORS VERlPICATXONSOURCE TARGETVALUE IInstitutional Ratiobetween funds effectivelytransferredto the Public Treasury books 50% 00 MINFOF/MINEP and funds budgeted(FT/FB) Time elapsedbetween MINFOF andMINEP calls W/Govt joint missionfindings IOdays 0 days for funds and transfer of FESP funds from MINEFI to Public Treasurybooks Timely availabilityof satisfactory hlINFOF audit LO days '0 days reports MINFOFprocurementtransactions onschedule loois!_____. Managementof ________________________________________----------------------------- Number of allocatedFMUs before2002 under 66% forest, allocation of approvedmanagementplans forest concessions Number of companies engagedin forest MINFOF reports / IO reports 4 andillegallogging certification processes Reportsof the Codssion for Yo of forest concessionsallocatedon a competitive the concessionAllocation basis inthe presence of an independentobserver 61% ?? 18% ??*! Ratio betweenthe number of sanctions effectively appliedand the number of decision of sanctions IndependentObserver reports / with regardto illegalexploitation SIGICOF 37%20 Itleast 90% (cases Evolution of the roadnetworkwithin non It court) allocatedUFAs the NationalParksbetween2005 WRI /GRV remotesensingdata and 2008 hiINFOF controlunitreports 357 h 357 km Percentageof forest titles visitedby ajoint and IOreports mission MINFOFiIO each year 70% LOO% ________________________________________--~ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Status of Status of vegetationand forest cover inprotected Comparisonof time series of 2004 data Biodiversity areas and forest concessions(UFAs) satellite images interpretedby the WWGFW Change inpresenceof illegal accessroads in National Parks between2005 and 2008 WRI /GFW remote sensing data Presence of endangered species, especiallyprimates Updatesof existing survey at and elephants maintainedand measuredin selected CampoMa'an and surveys 2004 repor area being conducted in other areas No significant negaitivechange or PAMEmeasured in field positive change Consistentpositivetrends shown in the protected surveysby environmental area management effectivenessthrough the NGOs 2004 scores Tracking Tool. Significantpositive Positivetrends shownin the fight of illegal trade Data on the Ledger of offenses change of endangeredspecies against wildlife and status of prosecution of cases. Surveys of 2005 Data markets.Detailedstudy to by LAGA interpretdata Significant positive change 19 Baselineby the Ministryand target value was futed in Instruction signed by the Minister of finance and Economy onJuly 13, 2005 paragraph 13 p.2 20 Global witness third report, April 2005. page 29 21 Source: Management plan notification signed by the Minister in charge o f forests and Wildlife and projection document on Titles allocation 2004, MINFOF 22 WE3 Office records according to the Private sector presentation made onJune 15,2005 9TTF/IFIA/GFBC Forum 23 Njoya Fochive et al draft report on status o f industry in 2004 (BNPP/W funding), April 2005 139 INDICATORS TARGET VALUE . P__YY.__.._.___._I.-.-.-...-___uy__y__y Taxation and Economic dashboard redistribution of Sustained contribution o f the forestry sector to non Sovernment's decisions revenues oil GDP Total value of forest sector fiscal revenues PSRF / DI USS76 JS$60 millionszs millions Forest sector fiscal data published annually Annual report PSRF / DI report/ year Recovery rate o f forest fees PSRF / DI -80% it least 904'0 Delay in the allocation o f the RFA forest revenues PSRF / Audit by an independent around 2 x s s than 1 month to communes and local communities entity months Percentage o f utilization o f forest revenues by local communities according to a local development plan Audit reports 50% Effective use of bank guarantees in case o f non compliance ____________________------- PSRF / DI 9 Wood Industries A strategy on wood industries i s adopted MINFOF-M I N D I C reports ies Volume & value o f timber processed locally MINFOF reports 837,847 m 3 27pss 434 million) Volume and value o f log exports MINFOF/ Customs reports 157,183 m 3 28(USS 28 million) Percentage o f wood processed locally with a second/third transformation 15% 40% Formal employment in the wood processing 8,1OOz9 11,000 industry National Statistics 2.1GFW, Cameroon Report 2005. 24 Goc/IMF macro economic projection(2001-2015) 25 SourcePSRF and GOC/IMF macroeconomic projection2001-2015 26 Source:Audit report on PSRF,June 2005- HTR (baselinevalue) 27 Source:NjoyaFochivedraft report on BNPP/W!J fund, April 2005 28 Idem 29 Idem 140 ANNEX11:FORESTAND GREENENVIRONMENTSECTORMEDIUMTERM EXPENDITUREFRAMEWORK MTEF Selected Outcomes Management of Production Forests 3.5 million hectares ofproduction forests where implementation of approved management plan has been independently assessed on the ground Management of Protected Areas 8 Selected Protected Areas, with a combined area exceeding 50%of Cameroon's overallprotected area network achieve significant progress in the score of management effectiveness Control of Illegal Logging Illegal Logging under control in all Gazetted Production Forests and Protected Areas: Forest and Green Environment sector medium term expenditure framework I I I I I II Domestic Sources of Finance 18.51 19.54 20.72 18.39 18.94 96.18 141 MEDIUM-TERM EXPENDITURE FRAMEWORK FOREST AND (GREEN) ENVIRONMENT SECTOR PROGRAM (FESP) Environmental Monitoring COmmunication and Environmental Awareness MiNEP Capacity Building COmpletion of the country zoning pian 0.4 2.1 1.1 0.0 0.o 3.6 Forest Management Pian 1.8 1.6 1.5 1.6 Wood Industry Development Planning 0.4 0.2 0.4 I Valorization of Non-Timber Forest Product (NTFP) 0.3 0.2 0.1 0.3 0.0 iil Biodiverdty Pannong and Zoning 0.7 0.2 0.2 0.2 0.1 1.4 Knowledge and inofrmation Management 0.7 0.3 0.3 0.2 0.2 1.6 Palticipatory protected areas &Community Wildlife areas Management 0.6 0.5 0.6 0.5 0.5 2.7 Design and Implementation of PA Manangemetn Plans 2.8 4.9 4.2 3.4 3.1 18.3 Optimization of econmic Benefits of PA and hunting zones 0.2 0.1 0.3 0.3 0.3 1.2 Legal and institutional reformof PA and hunting zones management 0.2 0.1 0.1 0.8 ~ 0.2 0.2 Sustainable Financing of Wiidiife and PA 0.6 0.1 0.1 0.0 0.0 0.9 I\aiona Boaters', Sralea!aneAcion Pan .paale 1 0 1 1 1 2 1 3 1 3 5 9 Community Forest Rerourc~sManapemant 5.1 6.2 6.S 4.1 4.6 I 26.4 1Trans.ena 3 s l s 1 0 .o 0 0 0 0 0 0 0 0 0 1 Capacity Building for Community Forest and Natural Resource Managemen Reforestaton and Forest Regeneration Transition of ONADEF into ANAFOR 0.4 0.0 0.0 0.0 0.o 0.4 Strenghtening the Ministry 12.7 13.5 13.2 11.8 7.9 59.1 Rehabilitating Education and Research in Forestry and Environment sector 2.1 1.6 1.3 0.9 0.3 6.2 Capacey Building and Decentralization 0.9 0.7 0.7 0.3 0.3 2.9 FESP Financing -+- 1.TOTAL EXPENDTTCIRES(EXCLUDINGSALARIES) -a&-- Domestic resources(exc1uding salaries) External resources RESIDUALGAP 142 ANNEX12: FIDUCIARYRISKASSESSMENT3' Summary assessment 1. The public financial management systems o f Cameroon present significant fiduciary risks. There i s political commitment to public finance reform and important progress has been made over recent years in improving public financial management systems. In many cases new systems and regulations have been designed, but these new systems are not yet fully operational. However, concerns remain over some areas o f budgeting, expenditure controls and the lack o f a credible audit institution. These impact risk at the national level, as well as at the forest and environment sector level. Overall, the riskrating for this sector operation i s B to C, or medium to high with C reflecting the risks at the national level and without the proposed budget support and B the risk at the sector level with a positive direction o f change inthe majority o fbenchmarks. Key FiduciaryRisks 2. Recent reviews have highlighted concerns over the overall management of the State finances. These concerns are echoed by the present Fiduciary RiskAssessment (FRA); inparticular: At the budget preparation stage: lack of effective parliamentary involvement, weak links between the annual budget process and the PRSP and medium term forecasts, extra- . budgetary expenditures and failure to reflect debts between the State and state owned enterprises inthe budget. At the budget execution stage: delays in release o f budget allocations, in-year cuts, numerous weaknesses ininternal control (including use o f shortcut arrangements, confusion . between the roles o f the authorising officers and accountants, poor control over staff costs, poor internal audit and poor control over arrears). At the accounting and auditing stage: the accounts are not comprehensive as debt is not recorded on balance sheets nor properly reconciled, the Audit Bench (Chambre de Compte) i s not yet operational and Parliament does not have the capacity to analyse the accounts presented. 3. These risks will impact at the forestry sector level, although, in some cases the situation . within the forestry sector is better than across government more generally. Significant issues specific to the forestry sector are as follows: the transition in 2005 from a single ministry (MINEF) into two new ministries (MINFOF and MINEP), which will pose challenges interms of ensuring clear budget allocations that reflect the allocation o f functions and o f changes to organisational structures, staffing and . management arrangements 31 the introduction of a new computerised financial management system to the field level in 2005. 30The FRA was undertaken in late 2004 and for the most part i s based on progress up to the end o f the year; but more recent agreements over planned actions/ reforms to address identified problems have been reflected. The FRA will be reviewedannually. 31Throughout this annex (and the following table) the two new Ministries are referred to by their old acronym MINEF exceptwhere referringto issues relatedto the Ministerial split 143 the continued operation o f two special funds held in a commercial bank (established in the 1994 forest law). Expenditure through these funds amounted to 3.7% of total MINEF expenditure in 2004, but could potentially be higher. In 2005 additional controls were introduced which bringtheir administration in line with standard control practices for other government accounts. They should be covered by the regular internal audit from 2005 (this will be formally agreed and committed to during the negotiation o f the budget support by the World Bank to the FESP). the need for a suitable financial management system and audit arrangements to cover the forestry parastatal ANAFOR once it becomes operational later this year, and risks associated with the cost o f redundancies stemming from the re-organisation which resulted inANAFOR. Statement onRiskof Corruption 4. At the Countq level, corruption i s still common and the risk o f leakage o f funds from the system i s be relatively high.The specific weaknesses in public financial management described in this FRAilluminate the associated risks of corruptioninpublic financial administrationparticularly inweak internal controls, procurement, lack of internal and external audit and effective institutions o f accountability. The problems inpublic financial management and corruption feature prominently in the PRSP and are also high on the agenda of the new Finance Minister.He appears convinced that unless Cameroon can seriously redress the problems in P F M and reverse its public image on corruption they will fail to attract the needed private investment in Cameroon. The PFM reforms underway for the past few years are systematically addressingproblems of external audit (creating a Audit Bench), internal audit and procurement reform. Recently, the main donors supporting these processes (World Bank, IMF, EU, France, Canada) have agreed to develop a more harmonised approach platform approach inPFMwhich has the strong support o f the Minister o f Finance. 5. Very significant improvements have been noted since 1998 when Cameroon was at the bottom o f the Transparency International index. Cameroon now ranks 129 out o f 146 countries in the Transparency International index. In the more in-depth governance assessment o f World Bank Governance and Corruption diagnostics (GRICS Indicators), Cameroon has improved its performance on the "control o f corruption" from one o f the worst in 1998 (4.4, ie 96% countries score better) to above the average for sub-Saharan Africa (25.1) in2004 (GRICS Indicators, 96-04). However, as as poor working conditions and low civil service salaries prevail, tackling corruption remains a serious challenge. 6. The Government o f Cameroon (GoC) has had a National Governance Programme inplace since 1999, but until recently there has been little evidence o f sanctions being brought against perpetrators o f corruption. However, overhaul o f the programme has been made a condition o f the new IMF Staff Monitored Programme and a HIPC trigger. The second phase o f the NGP has been launched with support o f UNDP. The Government i s stressing that this programme work with NEPAD and benefit from the Africa Peer Review Mechanism. It focuses, inparticular on reforms in administration, justice, decentralisation, institution o f democratic governance, establishment of Commission for Human Rights, reform o f the electoral system and the establishment o f the Chambre de Comptes (Audit Bench). 7. The Government has also committed to prepare legislation to enable the UN convention against corruption to be implemented in 2005 and has signed up to adhere to the Extractive 144 Industries Transparency Initiative. The Government i s committed to publishing the results o f an audit o f the Oil Industry (currently underway) and i s committed to publishing information on government oil revenues as part o f the 2004 Account. The Minister o f Finance has established a steering committee for development and implemetation o f an EITI Action Plan which i s strongly supported by the World Bank and IMF. After the election in December 2004, the new Prime Minister and Minister for Finance have signalled that the GoC i s committed to renewing efforts to address corruption and inefficiency in government services. Recently, the Prime Minister established a high powered National Finance Investigation Agency whose purpose i s to combat financial crime. 8. At forest sector level, major progress has been made over the last 5 years in fighting corruption. Many new systems and transparency measures have been introduced which serve to limit common avenues of systemic Corruption, particularly in resource allocation processes and regulatory functions. They have introduced a competitive and scheduled logging title allocation system involving an independent observer on the Title Allocation Commission; introduced an independent observer for field level forest control activities and established satellite based monitoring for tracking illegal activities inboth protected areas and more widely. A recent external review o f the Independent Observer programme has concluded that there has been a marked decrease in illegal activity on large concessions and decline in institutional corruption inregulatory activities (CIFOR, 2005). The presence o f independent observers in the forest sector has inspired their inclusion and presence in other sectors. The government also introduced a major overhaul o f their revenue collection from forest operations establishing an extensive joint programme between the Ministries o f Finance and Forests. 9. The Forestry Revenue Enhanced Program (FREP) and the reform o f the forest tax system has resulted in large increase in forest revenue: from 6.4 billion CFAF in 1997 (pre reform) to CFAF 32.2 billion in 2002. In addition, the MINEFI introduced publicity measures for disbursement o f forest revenue to local government in order to ensure that the funds be used for local development. While all these measures have reduced opportunities for corruption and introduced innovative systems for control, much remains to be done to address persistent corruption and new forms o f illegal activity. Inparticular attention i s now turningto improving the prosecution rate o f offenders and imposition o f meaningful sanctions (relative impunity i s a significant issue). Independent Observer working with MINEF has developed a case tracking system to support MINEF'spreparationfor prosecutions and to support independent monitoringo f forest crime. 10. Strengthening the capacity o f the Units responsible for control operations and preparation of cases for prosecution i s a key element o f the FESP. The Government has demonstrated leadership in the sub-region in efforts to address forest governance problems: they have played an active role in the Africa Law Enforcement and Governance Ministerial Conference (2003) and follow up, and are among the first countries to express clear interest in entering a Voluntary Partnership Agreement with the EU to ensure trade in legal timber and in improving forest governance under the EUForest Law Enforcement Governance and Trade (FLEGT)initiative. Existence of a Credible Programme of Reform 11, Although there are major problems, the GoC, supported by the IMF, World Bank and other donors, has launched reforms to address them, at the sector level and across Government. Since February 2005, the GoC and donors working on PFM have begun to put in place a single dialogue in an effort to become more harmonized, coherent and long term intheir approach to PFMreform. 145 All the on-going reform efforts are being linkedto a single `platform' and this is now the focus of dialogue with the GoC. Previously the reforms were supported as elements o f different externally supported programmes. Agreements already established to guide the reform processes are monitored through various joint frameworks between Government and the World Bank /IMF: the SAC 111, HIPC and IMF staff monitored program as well as the World Bank program o f support to public financial management (PFM). 12. This FRA has identified some specific problems, particularly with internal controls over expenditure. These issues have also been identified in the joint GOC-donor PFM platform but specific detailed reform measures and their prioritization and sequencing have yet to be agreed.32 That specific reforms in some areas are not yet agreed i s not an indication that the reform program i s not credible, rather that the platform approach being discussed aims to prioritize reforms in the first instance. The evident motivation o f the present government and harmonized approach being taken by the donors involved i s a good indication o f sustainability. 13. World BanWIMF assessments against the HIPC capacity benchmarks for tracking poverty reduction spending show a significant level o f improvement from July 2001 (against 15 benchmarks: two A ratings, eight B ratings and five C ratings) to August 2004 (against 16 benchmarks: four A ratings, nine B ratings and three C ratings). 14. At the forest and environment sector level although reforms have been on-going for several years much remains to be done to put the policies and regulations into practice. The capacity o f government and non-state actors to implement the reforms i s limited and relationships between them i s at times confused or conflictive. There i s strong political support for them and they are high profile, as the GoC sees them as a pilot for this type o f support in other sectors. There i s thus considerable incentive for MINEF, the MINEFI and other Ministries to ensure they succeed. In .. addition to the measures referred to above in relation to corruption, major improvements achieved so far have been: Budget forecasting i s consistent with the PRSP and annual work-plans built from field level needs; Expenditure tracking has been improved by improving budget nomenclature and computerising financial management and control systems. These systems will be extended to the provincial and district level in2005. Application o f the new procurement code and its associated regulations over the past year. Short Term Safeguards 15. The disbursement arrangements for FESP limit, to some degree, the level o f fiduciary risk for externally financed budget support. The budget support will be disbursed in three tranches. Disbursement will be dependent on the achievement o f key outcomes which underpin the success o f FESP. This feature o f programme design should act as an incentive to achieve those reforms which feature as key outcomes and should reduce overall exposure because later tranches will not be disbursed without the agreed progress. 16. As the Audit Bench is not yet operational an annual independent audit will be carried out for the FESP. Arrangements have been agreed and are described in the Finance Ministers 32 Specific measuresare to be agreed during the next Joint World BanWIMF Mission later this year 146 instructions to the Budget Directorate for the FESP. There will also be trimestrial expenditure reviews o f MINEF, involving the MINEFI, the Prime Minister office and donors. The Finance Minister also makes provision for donors to serve as independent observers on the procurement commissions. 17. The Finance Ministers instructions indicate that externally financed budget support for FESP will be earmarked in a special account at the national bank and will not be subject to the usual 10% witholding (as contingency). It i s likely that with the detailed FESP programme allocations and the "tagging" o f external funding, FESP allocations will not be subjected to budgetary cuts or virements. Although some weaknesses are recognised in internal controls that are not yet being addressed by specific reform measures, safeguards to address them were not recommended. It i s believed that the `tagging' o f external FESP support combined with improved financial management and reporting within the MINEF and an external audit will protect against inappropriate spending and virement. 18. Finally, MINEF's capacity to use new financial, procurement and contracting systems should be increased by the multi-donor basket fund which i s being established to provide technical assistance in support o f FESP implementation. Benefits 19. Despite the risks highlighted above, the development benefits o f budget support are expected to be significant. First, importance i s being vested in FESP by MINEFI, as a test for introducing wider public finance management reforms. Thus, if successful, FESP may help pave the way for wider reforms and more flexible ways for donors to provide support both to this sector and more broadly. Second, budget support should enhance ownership o f the reform process by the sector ministers and make them more accountable for results. There are shortcomings in the services provided, but improved public finance management at the sector and national level should improve staff management and increase accountability, creating the appropriate environment for the actions envisaged in FESP. Third, targetted budget support should improve the regular process of budget negotiation, allocation and execution between the MINEF and MINEFI. Management of donor project funds has created a parallel administration, often with staff enjoying significant salary and benefit enhancements. This i s not sustainable. Budget support, with adequate safeguards, provides a better alternative. The targeted budget support may also serve as a catalyst for other donors switching from project to programme support through the state budget. Description of the DetailedFiduciary RiskAssessment 20. The detailed assessment of fiduciary risk is given inthe table below, which (i) summarises the situation and rates fiduciary risk across government which will affect the sector; and then (ii)summarises the situation and rates fiduciary risk withregard to practices and systems used inthe forest and environment sector. The risk rating for FESP reflects the situation within the forest and environment sector, which may be influenced to a significant degree by government-wide issues, Some benchmarks relate to the situation across government, with no scope for variation inthe case o f FESP. Insuch cases only one, overall assessment, i s given. 21. Against each benchmark, risk i s rated as A (low risk), B (medium risk), or C (high risk), L o w risk applies to a situation where systems are sound and there i s basic compliance. Mediumrisk 147 applies to a situation where there are some significant weaknesses in the systems andor significant failings in compliance. Highrisk indicates a higher level o f system weaknesses and/or compliance problems. The rating i s based on an assessment of the current level o f risk and does not take into account improvements (such as new laws or new systems) which have yet to take effect (e.g. are effectively still inthe process o f being implemented). 22. The arrow accompanying the risk rating represents the trajectory o f change. This indicates the expected progress going forward based on actual evidence o f progress. Cases where improvements of the systems have begun, but are not yet complete are reflected in the use of the - trajectory o f change arrows. T Positive progress N o change Negative progress 1 148 5 t 5 B W t t t 5: 2 3 a rr 0 t t F4 t 0 c1 4- t u 3 0 5; r- U ANNEX 13: FINANCIALTRANSFER MECHANISMS The following text presents budget transfers and expenditures procedures used under the FEPDC. The diagrams shown at the end o f the annex takes into account the following principles: 0 The separation o f authorizing officers' (ordonnateur, i.e. Budget Directorate) and accountants' functions (Services o f the Treasury Directorate: Agent ComptabZe Central du Tresor (ACCT), Payeur Gdndral du Trdsor (PGT) and Tresorier-Payeur-Gdndral (TPG). 0 The term `funds' i s exceedingly broad and somewhat imprecise, and should be differentiated between (i) direct budget appropriations at the central level and crddits ddldgues at the local level, and (ii) the treasury necessary to pay for the expenditures. The first i s carried out by the budget directorate, which authorizes the DGAs in line ministries at the central level, and local ministry representatives at the local level. The second i s carried out by ACCT, which among other responsibilities, i s in charge o f providing with treasury the various public accountant at the central level (PGT) as well as the local level (TPG), by transferring treasury to sub-accounts open in the provincial offices of the central bank. The term `fund' has thus been replaced either by `appropriation' or by `treasury.' 0 Expenditures funded by internal resources will also been paid by the public accountants o f the Treasury directorate. The procedures followed under the FEPDC will conform to those now being introduced as the norm for all sectors. They can be described as follows: 0 The budget directorate provides budget appropriations to DAG (central level) and crddits deZdgu6s to S A F (local level) within a two month period necessary to record data according to the finance law and to share appropriations between the various beneficiaries. The timeline requires the budget directorate to hastenthe process, which at present takes at least three months. 0 On the basis o f its appropriations, the DAG and the SAFs commit expenditures. The commitments are monitored by the financial controller regarding the existence o f budget appropriations and the regularity o f expenditures (conformity to rules). 0 After delivery o f goods or completion o f work, the budget directorate at the central level, and its representative at the local level, issue an order to pay. The order i s then sent it to the public accountant (PGT at the central level and TPG at the local level) who, after having applied the required controls, pays the expenditure to the supplier concerned. 0 SAFs and TPGs send information and documentation o f their transactions and expenditures to the central level on a monthly basis - a current area o f weakness that will require progress. 0 At the end of the fiscal year, the DAGshould issue an `administrative account' presenting details o f budget execution and the public accountants a `compte de gestion.' The transactions recorded inboth documents, containing inter alia the expenditures performed inthe framework of FESP, should be compared and adjusted. The compte de gestion should be presented to the Chambre des Comptes to examine. At the national level, the General Account o f the Finance Administration, which gathers information coming from DAG and from the public accountants, will serve as the basis for the budget review law. 0 A posteriori audits should be conducted by the internal inspectors and the Chambre des Comptes. At present the Chambre is not yet operational and internal inspections do not function well. For this reason, quarterly expenditure reviews are strongly recommendedduring the interimuntilan 171 this reason, quarterly expenditure reviews are strongly recommended duringthe interimuntil an effective a posteriori audit system i s in place, as a means o f informing donors o f any misuses o f funds which may take place. 0 Budget appropriations not used during a given fiscal year should be carried over to the following year, without being deducted from the budget o f the new fiscal year. Certain expenditures moreover are by nature multi-annual, and the new organic law annual finance laws will abide by will take this into account. 172 P R O C E D U R E F O R B U D G E T S U P P O R T Publicaccountants Authorizing officers Internalresources Budget appropriations Identifiedand targeted PSFE Treasury Directorate I BUDGET DIRECTORATE Budget sup ""I ................................................................. j Treasury calls and i movements ,............................................................. ....... ; II\ -- procc Note : ACCT :Agent Comptable Central duTrCsor PGT : Paierie GCnCrale duTrCsor (accountant at central level) TPG :TrOsoreries Paieries GCnOrales (accountants at locallevel) CAA : Caisse Autonome d'Amortissement (accountant o f the debt) DGA :Directeur GCnCralAdministratif (MINEFappropriations administrator at the central level) S A F : Services Administratifs et Financiers (ICIINEFappropriations administrator at the local level) 173 ANNEX 14: STATUS OF BANK GROUPOPERATIONS I D A A N D I B R D A C T I V E P R O J E C T S J A N U A R Y 3 0 , 2 0 0 6 Sumsgiven in US dollarsMzllion 'roject ID FY I'urpose IBRD Cancel lJndisb. expect.& actualdisb. Diff.between Or;& IFrmRevised S T A T E M E N T O F I F C ' S H E L D A N D D I S B U R S E D P O R T F O L I O 3 1 D E C E M B E R 2 0 0 5 .__________ Sumsgiven ifi ---__-_-__. .M4?E!oval.- Loan __________. 2006 128 1995 AEF Comp. Avicole 0 32 2002 AEF FME-Gaz 0 00 2000 AEF Hobec 0 44 I0.26 2005 XEF NOSA I11 0 95 I0.95 I1 1996 AEF Notacam 0 82 I I 1999 AEF Saicam 0 00 0.10 1 I 2002 AEF UC-Pharm 0 00 2.28 I 2000 BICEC 0 00 I III 1991/95 CICAM 0 00 2.27 I ~ ~ 2000 COTCO 60 92 I I I 4 60.92 II ~ 1998/2003 Pecten Cameroon 44.00 __________. 1 58.32 19.8 Total Portfolio 108.72 0.90 2.53 2.28 *** ~ ~ ~ ~ I 119.23 I 20.9 -------- ---_.I_____________1i ~ Guarantee Particbation Loans booked bv IFC on behalf of other Institutions) 1.____________________ Total PendingCommitment: II I II I I 174 ANNEX 15: FUNDRELATIONSNOTE Press Release No. 05/236 International Monetary Fund O c t o b e r 24,2005 700 19th Street, NW Washington, D.C. 20431 USA IMFExecutive BoardApproves US$26.8 MillionThree-Year Arrangementfor CameroonUnder the Poverty Reduction and GrowthFacility The Executive Board o f the International Monetary Fund(IMF) today approved a three-year arrangement for Cameroonunder the Poverty Reduction and Growth Facility (PRGF) in an amount equivalent o f SDR 18.57 million (about US$26.8 million) to support the government's program o f economic reform and poverty reduction. The first disbursement under the arrangement will amount to SDR 2.65 million (about US$3.8 million). The Executive Board also approved an additional amount equivalent to SDR 5.70 million (about US$8.2 million) in interimassistance from the IMF under the Heavily IndebtedPoor Countries (HIPC) Initiative to be applied inthe remainder o f 2005 and through most o f 2006.' The last PRGF arrangement with Cameroon was approved in December 2000 (See Press Release No. OOi86) and expired in December 2004 after an extension o f one year. The authorities subsequently requested a staff-moiiilored program (SMP) covering the first half o f 2005 to build a performance track record. Performance under the SMP to date has beenbroadly satisfactory. Following the Executive Board's discussion of the request by Cameroon, Ms. Anne 0. Krueger, First Deputy Managing Director and Acting Chair, stated: "The Cameroonian authorities made progress in improving economic policies in the first half o f 2005 under their 2005 staff-monitoredprogram (SMP). Implementation o f the program resulted in a substantial fiscal adjustment, especially in non-oil revenue, and improved public financial management and reporting. Prudent policies have contributed to solid economic growth, low inflation, and a narrowing external current account deficit. "At the same time, the reform agenda remains unfinished.Progress in structural reforms will need to be strengthened, particularly with respect to improving governance and the business climate, enterprise restructuring, privatization, and fuel price adjustments. There i s also considerable room for further improvements inthe structure o f spending, transparency o f government operations, budgeting, and budget execution procedures. "The government's new medium-term program seeks to consolidate fiscal performance and invigorate structural reforms in order to build a sound basis for enhancing growth and reducing poverty. The reform priorities include strengthening non-oil revenue, increasing public investment in infrastructure, enhancing the transparency o f financial management, restructuring public enterprises, and removing obstacles to private sector activity. Follow-up and monitoring o f the quality o f public spending-including spending of debt-relief resources-full implementation o f the domestic debt repayment plan, and decisive improvements in governance will be important in rebuilding confidence and strengthening private investment. Also, the role o f the Poverty Reduction Strategy Paper i s to be enhanced through more explicit links inthe budget and better coordination o fpriorities with donors. "Successful implementation o f the PRGF-supported program should enable Cameroon to meet the completion point trigger on the continued maintenance o f macroeconomic stability. Cameroon has made progress toward implementing other completion point triggers. The government i s committed to ensuring 175 that the resources releasedby debt relief, bothbefore and after the completion point, are used for poverty- reducing and growth-enhancing expenditure. The mechanisms for appropriation, use, and monitoring o f debt reliefwould needto be improvedincoordination with creditors and donors. The authorities will need to continue on a sustained reform path and follow prudent borrowing policies, including beyond the completion point," Ms. Krueger said. RecentEconomicDevelopment Cameroon's macroeconomic performance through 2004 was solid with real growth registering about 4 percent and inflationremaining low. However, public finances deteriorated, poverty remained widespread and sustained economic growth was hindered by, among other obstacles, inadequate infrastructure, poor governance, low investment, and limited financial intermediation. Inrecent years, the business climate has also been adversely affected by the Treasury's accumulation o f domestic payment arrears and the slow progress inrestructuring loss-making public enterprises. The authorities adopted an ambitious economic program for 2005 to address the obstacles to growth and to improve fiscal management, in line with the main recommendations o f the ex post assessment. They asked the staff to monitor the program. Building on the broadly satisfactory implementation o f the staff monitored program during the first half o f 2005, the authorities have adopted a medium-term economic program to be supported by an arrangement under the Poverty Reduction and Growth Facility, which i s Cameroon's third successive PRGF arrangement. ProgramSummary The Government's medium-termprogram aims to enhance growth and reduce poverty consistent with Cameroon's Poverty Reduction Strategy Paper so as to make progress toward the Millennium Development Goals (MDGs). It seeks to (i) remove impedimentsto private sector activity, including by accelerating the restructuring and privatization o f loss-makingpublic enterprises; (ii) strengthenthe fiscal position and increase investment in physical and human capital; and (iii) safeguard longer-term fiscal sustainability. The program's key macroeconomic objectives are (i) GDP growth in the non-oil economy averaging real at least 4.4 percent a year during 2005-08; (ii) inflation below 3 percent; and (iii) external current an account deficit (excluding official transfers) below 5 percent of GDP by 2008. Although oil production i s expected to decline over the medium term, the authorities expect growth in the non-oil economy to strengthen as the business climate improves. The medium-term fiscal strategy seeks to ensure the availability o f resources to cover core expenditure independent o f the level o f oil revenue (or debt relief). The fiscal strategy also aims to strengthen priority spending while ensuring long-term debt and fiscal sustainability . The authorities will continue to improve public financial management and the effectiveness o f spending. They will focus on improving expenditure quality, efficiency, and control; as well as absorptive capacity. Through their program, the authorities are seeking to meet the conditions for the HIPC Completion Point so as to achieve debt sustainability through debt relief. Overall the net present value o f public external debt i s projected to decline to 153 percent o f exports (before completion point relief) at end-2005, and further to 54 percent at end-2006 after Cameroon receives completion point relief. Cameroon would be eligible for debt relief under the multilateral debt cancellation initiative when it reaches its HIPC completion point. 176 The PRGF is the IMF's concessional facility for low-income countries. PRGF-supported programs are based on country-owned poverty reduction strategies adopted in a participatory process involving civil society and development partners and articulated inthe Poverty Reduction Strategy Paper (PRSPI). This i s intended to ensure that PRGF-supported programs are consistent with a comprehensive framework for macroeconomic, structural, and social policies to foster growth and reduce poverty. PRGF loans carry an annual interest rate of 0.5 percent and are repayable over 10 years with a 5%-year grace period on principal payments. Table 1. Cameroon: Selected EconomicandFinancialIndicators, 2003-08 2003 2004 Projections Est. Est. 2005 2006 2007 2008 (Annual percentage changes; unless otherwise indicated) National income and prices GDP at constantprices 4.1 3.5 2.8 4.2 3.7 4.6 Of which:non-oil GDP 4.9 4.7 3.7 4.1 4.7 5.1 GDP deflator 0.3 2.2 1.7 2.9 0.9 1.6 Consumer prices 0.6 0.3 1.3 1.8 2.0 2.0 Nominal GDP (in billions of CFA francs) 7,917 8,377 8,757 9,395 9,826 10,447 Oil output (inthousands of barrels aday) 98 89 82 88 78 74 External trade Export volume 6.9 1.5 -5.3 6.2 1.3 3.2 Of which:non-oil sector 12.3 5.9 -3.7 4.8 5.0 5.4 Import volume -0.6 9.4 1.0 2.8 3.0 3.2 Average oil export price (US.dollars per barrel) 27.3 34.9 45.3 48.0 43.3 42.0 Real effective exchange rate 2.9 0.4 ... ... ... ... Terms of trade -0.8 -1.3 9.0 4.9 -11.1 -7.2 Money and credit (end of period) Broad money (M2) -0.9 7.3 4.7 9.0 10.9 9.0 Velocity (GDP/averageM2) 5.8 5.8 5.9 6.2 5.8 5.7 Discount rate (end of period; inpercent) 6.0 6.0 ... ... ... (InpercentofGDP, unless otherwise indicated) Gross national savings 15.4 16.2 17.4 19.6 17.9 16.7 Gross domestic investment 17.5 19.2 19.8 20.7 21.2 21.6 Central government operations Total revenue (excl. grants) 16.1 15.1 16.9 17.8 17.1 16.6 Oil revenue 4.1 3.9 4.5 5.5 4.4 3.7 Non-oil revenue 12.0 11.2 12.4 12.3 12.6 12.8 Non-oil revenue(inpercent of non-oil GDP) 12.8 12.0 13.3 13.3 13.4 13.6 Total expenditure 15.4 15.9 15.3 17.0 16.8 17.1 Noninterest total expenditure * 12.4 13.2 12.5 13.4 14.4 14.6 Capital expenditure 1.9 1.8 2.4 3.7 3.8 4.3 Overall fiscal balance (excl. net changes inarrears) Excluding grants 0.7 -0.8 1.6 0.7 0.2 -0.6 Including grants 1.2 -0.7 2.0 1.2 0.3 -0.5 Primary balance 3.4 1.9 3.9 3.4 2.3 1.7 177 Non-oil primary balance(in percent of non-oil GDP) -0.3 -1.5 0.8 0.6 -0.1 -0.3 Externalsector Current accountbalance(includinggrants) -2.1 -3.0 -2.4 -1.2 -3.4 -4.8 NPV of external debt 39.0 35.8 31.1 27.5 24.6 22.1 (Inpercentof exports of goods and services) Externaldebt service(before debt relief) 26.0 23.0 20.2 17.1 15.2 13.6 Externaldebt service(after debt relief) 8.7 7.0 6.7 3.6 4.0 4.2 Sources Cameroonianauthorities,and staff estimatesandprojections 1/ Inpercent o f broadmoneyat the beginningof the period. 2/ Excluding foreign-financedinvestment, restructuringexpenditureand separationgrants 3/ Excludingrestructunngexpenditure 4/ Excluding external grants andprivatizationproceeds lThe staff report on Cameroonis expectedto be made available. 178 ANNEX 16: COUNTRY AT A GLANCE Sub- I POVERTYand SOCIAL Saharan Low- Cameroon Africa income Ievelopment diamond' 2004 Population, mid-year (millions) 16.4 719 2,338 GNI per capita (Atlas method, US$) 800 600 510 Life expectancy GNI (Atlas method, US$ billions) 13.1 432 1,184 Average annual growth, 199804 Population (%) 2.1 2.2 1.8 Laborforce (%) 2.5 1.o 2.1 Most recent estimate (latest year available, 199804) Poverty(% ofpopulation belownationalpoverty line) 40 Urban population (% of totalpopulation) 52 37 31 Life expectancyat birth (years) 48 46 58 Infantmortality (per 1,000live births) 95 101 79 Child malnutrition (% of children under 5) 22 44 Access to improvedwater source Access to an improved water source (% ofpopulation) 63 58 75 I Literacy(% ofpopulation age 15+) 68 65 61 Gross primary enrollment (% of school-agepopulation) 108 95 94 * M Y * Cameroon Male 116 102 101 Low-incomegroup ~ Female 99 88 88 KEY ECONOMIC RATIOS and LONG-TERMTRENDS 1984 1994 2003 2004 Economicratios" GDP (US$ billions) 7.8 7.9 12.5 14.7 Gross capital formation/GDP 25.9 15.3 17.0 17.6 Exportsof goods and servicesiGDP 33.5 22.1 25.5 25.0 Trade Gross domestic savingsiGDP 28.4 17.9 17.1 17.5 Gross national savings/GDP 24.9 11.3 14.5 16.0 T Current account balanceiGDP 1.8 -4.1 -2.5 -1.2 Capital InterestpaymentsiGDP 2.2 2.0 1.4 1.7 savinqs fnrmntinn Total debVGDP 37.2 104.9 75.5 63.7 Total debt service/exports 15.6 21.9 13.9 18.1 1 Presentvalue of debvGDP 40.7 Presentvalue of debvexports 157.4 Indebtedness 1984-94 199404 2003 2004 200408 (average annual growth) i w I_* xiCameroon GDP -2.7 4.6 4.5 4.8 5.3 GDP per capita -5.5 2.3 2.4 2.8 3.5 Low-incomegroup STRUCTUREof the ECONOMY IgB4'Igg4 2004 /Growthof capital and GDP (%) (% of GDP) ^^ Agriculture 238 396 Industry 375 235 442 16 7 12 1 9 9 8 7 E Manufacturing 7 9 Services 388 369 39 1 40 5 Householdfinal consumptionexpenditure 620 72 1 709 71 0 Generalgov't final consumptionexpenditure 9 6 100 12 0 11 5 Importsof goods and services 31 0 195 254 250 (average annualgrowth) 1984-94 Igg4-O4 2003 AgricuIture 0 3 6 5 6 8 Industry -4 3 6 1 7 0 Manufacturing -1 4 7 7 8 7 Services -4 3 1 3 1 8 Householdfinal consumptionexpenditure -2 1 5 6 4 6 Generalgov't final consumptionexpenditure 0 0 7 0 3 7 1 5 4 0 1 Gross capital formation -10 5 7 5 4 1 5 0 - """Exports -O"lmports Importsof goods and services -4 3 9 6 -2 6 4 1 *The diamonds show four key indicators in the Country (In bold) compared with its income-group average Ifdata are missing the diamond w~llbe incomplete 179 Cameroon PRICES and GOVERNMENT FINANCE 1984 I 1994 2003 2004 Inflation ("A) Domestic prices (% change) Consumer prices 11.5 12.7 2.6 0.7 Implicit GDP deflator 13.6 11.0 1.1 2.3 Government finance (% of GDP, includes currentgrants) Current revenue 22.4 10.1 18.8 18.4 Current budget balance 8.5 -5.9 4.3 4.0 1 --"'GDP deflator -CPI I Overall surplusideficit -0.1 -9.2 2.0 1.o TRADE 1984 1994 2003 2004 (US$ millions) [Exportand import levels (US$ mill.) Total exports (fob) 2,150 1,435 2,347 2,811 II? nnn- Oil and refined oil 1,299 604 408 378 Cocoa beans, butter, cake 218 175 476 537 Manufactures 90 204 432 470 Total imports (cif) 1,133 1,018 2,121 2,415 Food 71 189 227 255 Fuel and energy 17 7 54 51 Capitatgoods 362 314 426 430 Export price index (2000=100) 75 73 101 107 98 99 00 01 02 03 04 Import price index (2000=100) 39 74 102 103 I1 Exports W Imports Terms of trade (2000=100) 195 99 98 104 BALANCE of PAYMENTS 1984 1994 2003 2004 (US$ millions) Current account balanceto GDP (%) i Exports of goods and services 2,612 1,737 3,188 3,726 Imports of goods and services 2,418 1,534 3,173 3,686 Resource balance 194 203 14 40 Net income -53 -547 -530 -374 Net current transfers 0 20 199 151 Current account balance 141 -325 -317 -183 Financing items (net) 15 -9 231 258 Changes in net reserves -156 334 86 -76 Memo: Reserves includinggold (US$ millions) 14 114 119 Conversion rate (DEC,local/US$) 409.5 434.3 581.2 528.3 EXTERNAL DEBT and RESOURCE FLOWS 1984 1994 2003 2004 (US$ millions) :ompositionof 2004 debt (US$ mill.) Total debt outstanding and disbursed 2,901 8,255 9,433 9,382 IBRD 205 679 145 117 IDA 222 406 944 1,083 Total debt service 416 382 449 684 IBRD 27 137 45 42 IDA 3 6 13 19 Composition of net resourceflows Official grants 40 333 784 Official creditors 109 310 -46 -144 Private creditors 132 -59 -61 23 Foreigndirect investment (net inflows) 18 -9 215 Portfolio equity (net inflows) 0 0 0 E 6.102 World Bank program Commitments 22 209 3 20 A IBRD - E. Bilateral Disbursements 50 202 71 112 6 . IDA D Other myltilateral . F Private . Principal repayments 11 84 42 45 C IMF . G - Short-terr Net flows 39 118 29 67 interest payments 18 59 16 16 Net transfers 21 59 13 51 Note Inis table was proauceafrom tne ueveiopment tconomics LUBaatabase 180 MAP SECTIOK