Documentof The World Bank FOR OFFICIAL USE ONLY ReportNo: 35389-BF PROJECT APPRAISAL DOCUMENT O N A PROPOSED CREDIT INTHE AMOUNT OF SDR46 MILLION (US$66 MILLION EQUIVALENT) TO BURKINAFASO FOR AN AGRICULTURAL DIVERSIFICATION AND MARKETDEVELOPMENT PROJECT May 23,2006 Environmental and Social Development(AFTS4) Country Department 10 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCYEQUIVALENTS (Exchange Rate Effective April 14,2006) Currency Unit = CFA Franc (CFAF) CFAF541 = US$1 US$1 = SDR0.69 FISCALYEAR January 1 - December31 ABBREVIATIONSAND ACRONYMS AAP Africa Action Plan ADMDP Agricultural Diversification and Market Development Project AFD FrenchDevelopment Agency AGOA African Growth and Opportunity Act AOP Annual Operational Plan APIPAC Association for Private Irrigation and Related Activities Association des Professionnels de 1'IrrigationPrive'eet des Activite's Connexes ASP Agro-silvo-pastoral (agro for agriculture, silvo for silvicuture [a branch of forestry dealing with the development and care of forests], and pastoral for livestock) BMAC BudgetManagement andAccounting Center CAS Country Assistance Strategy CICB Cornite'Inter-professionnel des Ce're'alesdu Burkina (Inter-professional cereals committee) CIDA Canadian InternationalDevelopmentAgency COB Cornite' des Ole'agineuxdu Burkina (Oleaginous committee) CPCE Cornite'sProvinciaux de Concertationet d 'Echanges DIPAC Pilot Private Irrigation Development Project De'veloppernentde 1'IrrigationPrive'eet des Activite'sConnexes DPSF Down Payment Support Fund DTIS Diagnostic Trade Integration Study EU European Union FCFA Currency for the West Africa Monetary Union FEB Federation of Burkina Breeders FODEL Fonds de De'veloppernent de 1'Elevage(Livest0ck DevelopmentFund) GF GuaranteeFacility GNP GrossNationalProduct GoBF Government of Burkina Faso GTZ Deutsche Gesellschaftfur TechnischeZusamrnenarbeit(German Cooperation Agency) IDA InternationalDevelopmentAssociation IEPC Initiative Elevage, Pauvretd, Croissance(Lvestock, Poverty and Growth Initiative) IFAD InternationalFundfor Agricultural Development IFPI InvestmentFundfor Private Initiatives INSD National Institute of Statistics and Demographics M&E Monitoring and evaluation MAWRF Ministry o f Agriculture, Water Resources and Fisheries ME Maison de 1'Entreprisedu Burkina Faso (Entrepreneurs Business Center) NGO Nongovernmentalorganization OIE Organisation Internationale de I 'Elevage (International Livestock Organization) ONAC Office National du Commerce Exte'rieur (National Board of Foreign Trade) PACDE Projet d'Appui a la Competitivite' et au De'veloppementde I 'Entreprise (Support to Competitiveness and Enterprise Development-Project) PADAB Programme d 'Appui au Developpement de I 'Agriculturedu Burkina (Aiculture Development Support Program) PAF Projet d'Appui aux FiliBres Bio-alimentaires (Supply Chains DevelopmentProject) PA/OPC Plan d 'Actionpour les Organisations desproducteurs de coton (Action Plan for the Cotton Producers Organizations) PAPISE Work Plan and InvestmentProgram for the Livestock Sector PCMS Panel Control Monitoring System PCU Project CoordinationUnit PDA Programme de De'veloppementde 1'Agriculture (Agriculture DevelopmentProgram) PF PromotionFund PNDSA National Agricultural Services Development Project (Programme National de De'veloppementdes ServicesAgricoles) PNGT Programme National de Gestion des Terroirs (National LandManagement Program) PO Professional Organization PPIDP Pilot Private Irrigation Development Project PRSP Poverty Reduction Strategy Paper PSC Project SteeringCommittee PST2 Programme Sectoriel des Transports (Transport Sector Program11) RCC Regional Coordination Committee RDS RuralDevelopment Strategy SCPF Supply Chain PromotionFund SDP Strategic development plan SNFAR Strate'gieNationale de FormationAgricole et Rurale (National Strategy for Agricultural and Rural Training) SOBFEL Societe' BurkinabB des Fruits et Le'gumes (Burkinabe company for fruits and vegetables) SSP Specialized Service Providers SME Small and mediumenterprises SPS Sanitary and Phytosanitary Standards SWOT Successes, Weaknesses, Opportunities and Threats UNDP UnitedNations Development Program UNPCB UnionNationale des Producteurs de Cotondu Burkina (National Union of Burkinabe Cotton Producers) USAID UnitedStates Agency for InternationalDevelopment USDA UnitedStates DepartmentofAgriculture vs Veterinarian Services WAEMU West Africa Economic Monetary Union WTO World Trade Organization Vice President: Gobind T. Nankani Country Director: Mats Karlsson 2 Sector Manager: Mary A. Barton-Dock Abdoula e Tour6 BURKINA FASO AgriculturalDiversificationand Market DevelopmentProject CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE ...................................................... 1 1. Country and Sector Issues ....................................................................................... 1 2. Rationale for Bank Involvement.............................................................................. 3 3. Higher-level Objectives to whichthe Project Contributes ...................................... 3 B. PROJECT DESCRIPTION ...................................................................................... 4 1. Lending Instrument.................................................................................................. 4 2. Project Development Objective andKey Indicators ............................................... 4 3. Project Components................................................................................................. 5 4. Lessons Learned andReflected inthe Project Design ............................................ 9 5. Alternatives Considered andReasons for Rejection ............................................. 11 C. IMPLEMENTATION ............................................................................................. 11 1. PartnershipArrangements ..................................................................................... 11 2. Institutional and ImplementationArrangements................................................... 11 3. MonitoringandEvaluation of OutcomesResults ................................................. 12 4. Sustainability ......................................................................................................... 13 5. Critical Risks andPossible Controversial Aspects ................................................ 14 6. Credit Conditions and Covenants.......................................................................... 14 D. APPRAISAL SUMMARY ...................................................................................... 15 1. Economic andFinancial Analyses......................................................................... 15 2. Technical ............................................................................................................... 16 3. Fiduciary ................................................................................................................ 17 4. Social ..................................................................................................................... 18 5. Environment .......................................................................................................... 18 6. SafeguardPolicies ................................................................................................. 20 7. Policy Exceptions andReadiness.......................................................................... 20 iv Annex 1:Country and Sector or Program Background .............................................. 21 Annex 2: Major Related Projects Financed by IDA and/or other Agencies ..............31 Annex 3: Results Framework and Monitoring ............................................................. 33 Annex 4: Detailed Project Description .......................................................................... 38 Annex 5: Project Costs.................................................................................................... 49 Annex 6: Implementation Arrangements ...................................................................... 51 Annex 7: Financial Management and Disbursement Arrangements ......................... 58 Annex 8: Procurement .................................................................................................... 67 Annex 9: Economic and Financial Analysis .................................................................. 75 Annex 10: Safeguard Policy Issues ................................................................................. 80 Annex 11:Project Preparation and Supervision .......................................................... 84 Annex 12: Documents inthe Project File ...................................................................... 85 Annex 13: Statement o f Loans and Credits -IDA & I F C .......................................... 88 Annex 14: Country at-a-Glance .................................................................................... 89 MapNo.34699 V BURKINAFASO AGRICULTURAL DIVERSIFICATION AND MARKET DEVELOPMENT PROJECT PROJECT APPRAISAL DOCUMENT AFRICA AFTS4 Date: May 23,2006 Team Leader: Abdoulaye Tour6 Country Director: Mats Karlsson Sectors: Agricultural marketing andtrade Sector Manager: Mary A. Barton-Dock (40Y0);Agricultural extension and research (3O%);General agriculture, fishing and forestry sector (20%); Agro-industry (10%) Themes: Trade facilitation and market access (P); Ruralmarkets (P); Rural services and infrastructure (S) Project ID: PO81567 Environmental screeningcategory: Partial Assessment LendingInstrument: Specific InvestmentLoan [ ] Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other: Total Bank financing (US$equivalent m.): 66.00 Proposedterms: Standard Credit Grace Period (Years): 10 Years to Maturity: 40 Commitment fee: Standard Service Charge: Standard Financing Plan (US$m) Source Local Foreign Total BORROWERRECIPIENT I 3.50 0.00 3.50 IDA 41.80 24.20 66.00 FINANCIAL INTERMEDIARIES 7.50 0.00 7.50 BENEFICIARIES 7.50 0.00 7.50 TOTAL 60.30 24.20 84.50 Borrower: Government of BurkinaFaso ResponsibleAgency: MinistryofAgriculture, Water ResourcesandFisheries PO Box 7029, Ouagadougou, Burkina Faso Tel: (226) 5033 6508 Fax: (226) 5033 6508 dgpv6jburkinaonline.bf - vi FY 07 08 09 10 11 12 Annual 6.00 15.00 15.00 10.00 12.00 8.00 Cumulative 6.00 21.00 36.00 46.00 58.00 66.00 ~~Does the project depart from the CAS incontent or other significant respects? ~ Ref: PADA.3 []Yes [XINO Does the project require any exceptions from Bank policies?Ref: PAD D.7 [ ]Yes [XINO Have these been approved by Bank management? ]Yes IN0 I s approval for any policy exception sought from the Board? [[ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? Ref: PAD C.5 [ ]Yes [XINO Does the project meet the Regional criteria for readiness for implementation? Ref: PAD D.7 [XIYes [ ] N o Project developmentobjective Ref: PAD B.2, TechnicalAnnex 3 The project development objective is to increase the competitiveness o f selected agricultural subsectors that target national and regional markets, thereby contributing to shared agricultural growth inBurkina-Faso. Project description [one-sentence summary of each component] Ref: PAD B.3.a, Technical Annex 4 The project will include the following three components: 1- Improvement of agro-sylvo-pastoral supply chains performance that will address the weak supply chain organization, strengthenprofessional and commodity associations and increase Burkina agricultural product competitiveness. 2- Development of irrigation and marketing infrastructure to improve productivity, product quality and linkages with markets. 3- Improvement of the business environment, regulatory framework and provision of services to facilitate private initiative and attract private investors. Effectiveness conditions, as negotiated, the Recipient will (a) select and appoint the project coordinator, the financial management specialist, the monitoring and evaluation specialist and the procurement specialist with experience and qualification satisfactory to the Association; (b) adopt the project implementation manual inform and substance satisfactory to the Association; (c) establish a computerized information system for the financial management o f the Project (including software customization, adoption o fthe Project Manual o f Financial, Accounting and Administrative Procedures inform and substance satisfactory to the Association, training and short term assistance) inthe Project Coordination Unit; (d) recruit an external auditor on the basis o f terms o freference, and with experience and qualification satisfactory to the Association; (e) open the Designated Account; (f) prepare annual work plans for 2006 and 2007. vii A. STRATEGIC CONTEXT AND RATIONALE 1. Country and Sector Issues Country Overview and Strategies Located in the middle o f Western Africa, Burkina Faso has a population o f 12.5 million inhabitants with a territory o f 274,000 Km2. It i s one o f the poorest countries in the world, characterized in 2003 by a per capita revenue o f US$350. The economy o f Burkina Faso i s dominated by agriculture, which generates about 40 percent o f the country's total GDP (25 percent from cropping agriculture, 12 percent from livestock, 3 percent from forestry and fisheries together). This sector provides jobs and revenues to about 86 percent o f the population and accounts for 80 percent o f total export earnings. Sustained agricultural growth i s thus central to Burkina Faso's economic and social development. During the 1990s the Government implemented an Agricultural Sector Adjustment Program that led to the liberalization o f trade in agricultural products; the privatization o f agro-industrial enterprises; the reorganization of mentoring and other business development services; the privatization o f almost all public enterprises operating in the production, processing, and commercialization o f agricultural products; and the suppression o f the subsidies on agricultural inputs. The Government o f Burkina Faso (GoBF) adopted the Policy Letter o f decentralized Rural Development in2002. The goal o f this policy letter was to harmonize methods and approaches o f projects and programs targeting rural communities. The Poverty Reduction Strategy Paper (PRSP), completed in 2000 and revised in 2003, emphasizes the important contribution o f agricultural to economic growth and poverty reduction. It proposes to create an environment conducive to private investments (particularly in the areas of production, marketing, and industrial processing), and the development o f small and mediumenterprises (SMEs) inrural areas and poverty pockets, supported by an enabling biophysical environment. To translate the PRSP's objectives into concrete actions, the Government issueda Rural Development Strategy (RDS) in 2003, which targets the sustainable growth o f the rural sector, as the preferred mechanism for ensuring greater food security and promoting genuine rural development. The R D S constitutes the reference framework for all GoBF and most donor interventions inthe rural development area. Growth Opportunities Burkina Faso's economy has achieved significant performance-5.5 percent per year- over the last 10 years, with a strong contribution o f the primary sector (agriculture, livestock, forestry, and fisheries). During1998-2003, the primary sector grew on average by 7.8 percent per year, drivenby goodperformance of cereals, livestock, and cotton. 1 Strong agricultural growth has, however, not yet translated into broad poverty reduction. The proportion of people living below the poverty line in 2003 was still about 46.4 percent (compared to 54.6 percent in 1998), with 94 percent o f poor living inrural areas. Market conditions may constrain growth potential, notably in the area o f cereals, where domestic demand in a typical year i s now satisfied for some types o f cereals, while the potential for exports i s uncertain. For other commodities, future growth potential depends on productivity improvements. Diversification of the production base i s becoming increasingly important to reduce the dependency o n only a few commodities, and thus vulnerability o f the rural economy, and take advantage of new high-growth and higher value added opportunities. Burkina Faso has a potential comparative advantage in several nontraditional cash crops, such as fruits (mango) and vegetables (onions, tomatoes, potatoes and beans) for the coastal and European countries where the demand i s high, particularly demand for organic products. Sesame export to Europe and the Arab countries, and cowpea production for the regional markets, including Nigeria, also have highgrowth potential. Constraintsand Difficulties To take advantage of these potential sources o f growth, Burkina Faso needs to adequately address a series of constraints inorder to increase the competitiveness o f its supply chains and gain better access to markets. Agricultural producers face a series o f economy-wide and value chain-specific constraints that can be grouped into four major categories: (i) inadequate policy and institutional framework (trade policy, market efficiency) and poor services for supporting production and trade (market information, advisory services, finance, etc.); (ii)poor infrastructure and high cost o f public services and utilities (transportation, energy, and water); (iii) limited capacity inthe public and private sector to address the complexity of certain "preferential" regimes - for example in the case of the African Growth and Opportunity Act (AGOA); and (iv) weak producer/professional associations. Many o f the economy-wide constraints (macroeconomic, transport and connectivity infrastructure, trade facilitation) are being addressed under Government's PRSP. The government has already launched several initiatives to support private sector development and export promotion, such as the establishment within the OfJice National du Commerce Exte`rieta (ONAC) of the following units: (i)a "One stop center" (Centre de Guichet Unique) where all the formalities requiredfor exporting can be done; (ii) the Burkina Trade Point to provide export facilitation, thanks to its sizable computerized data base on international markets opportunities and requirements and (iii) Fasonorm which has for mandate to regulate the quality o f products and assist exporters with accessing information on the prevailing norms and standards in importing countries. The findings and recommendations of the on-going DTIS will permit to improve the efficiency of these institutions and of Government's overall trade and export development strategy. 2 Addressing the weak capacities o f most professional associations i s the major challenge to be able to undertake collective action along supply chains. The cotton sector i s the exception, with well-structured producer associations and a relatively efficient mechanism for the joint management o f the value chain by its stakeholders. APIPAC i s another efficient organization that represents operators involved in irrigated agriculture and fi-uits production. Other professionalassociations are emerginginthe livestock (cattle and poultry) sector. However, all these professional associations are either nascent or dysfunctional, and thus unable to implement collective advocacy and economic interventions to support the development o ftheir supply chains. 2. Rationalefor BankInvolvement The GoBF is committed to supporting the development o f the rural sector and has asked the Bank to support the preparationo f a new agricultural project. Based on its experience in other African countries in supporting agricultural market development programs (Senegal, Mali, CBte d'Ivoire, Ghana.. .), the Bank i s well positioned to assist the GoBF in designing and implementing an agricultural market diversification programs. The design o f this new operation will also draw lessons from the long-standing Bank experience inBurkina Faso based on the Pilot Private Irrigation Development Project ("De'veloppement de 1'Irrigation Prive`e et des Activite`s Connexes" - DIPAC) andthe National Agricultural Services Development Projects (PNDSA). To support the development of small-scale private irrigation, DIPAC succeeded in promoting irrigation and post-harvest technologies thanks to the creation o f a professional association ("Association des Professionnels de 1'Irrigation Prive`e et des Activite`s Connexes" - APIPAC). APIPAC played an important intermediation role with the banking sector to facilitate access to credit for investors by establishing financing instruments linked to a guarantee facility managed by commercial Banks. PNDSA contributed to reform extension services, to strengthenresearch capacities and to promote producers associations, including regional agricultural chambers. It also financed the construction o f core market infrastructure with a fruit facility inBobo-Dioulasso and cold storage facilities at Ouagadougou Airport. These projects did not address crucial issues related to linking producers to market, to improving the investment climate and organizing supply chains. By focusing on specific commodity and market-driven supply chains, the proposed Agricultural Diversification and Market Development Project (ADMDP)will fill a critical gap by assisting value-adding business initiatives. 3. Higher-levelObjectivesto whichthe ProjectContributes Project higher-level objectives are in line with the GoBF's Rural Development Strategy to promote sustainable agricultural development, improve food security, and increase rural incomes. The project would contribute to the core objectives o f the Bank's Africa Action Plan interms of identifyingthe drivers o f growth, developing the private sector in Africa, encouraging exports, promoting regional trade integration, expanding irrigated perimeters and supporting sustainable land management. The project i s also aligned with Burkina Faso's priorities as expressedinthe four pillars of the PRSP: i)accelerating shared growth; ii)increasing access to basic social services; iii)expanding income and employment opportunities for the rural poor; and iv) promoting good governance. The Bank's Country Assistance Strategy (CAS), which was discussed by the Board in June 2005, aims to contribute to results across all four pillars of the PRSP. The proposed project i s an integral element of the Bank's strategy, making a particular contribution to the following four CAS results: (1.l) regional integration; (1.2) Expanded and Increased diversified export earnings; (3.2) Increased economic opportunities for women; (3.3) reduced risk and increased revenues for rural households." The project intends to stimulate market-orientedagro-sylvo-pastoral (ASP) supply chains to increase the competitiveness o f products and improve operators' gross and net revenues. By stimulating private-sector-led economic growth, the project will contribute to the objectives of economic and income growth, while stimulating employment inrural areas for non-farm activities along supply chains. At the same time, the strengtheningo f professional organizations will empower private operators and increase their voice in decision-making processes and policy formulation. Stronger grassroots producer organizations and professional commodity associations will contribute to improve governance by fostering more effective and transparent public policies and services at all levels. B. PROJECT DESCRIPTION 1. LendingInstrument The project will be financed by an IDA sector investment credit inthe amount o f US$66 million equivalent. The terms are the standard International Development Association terms, with a 40-year maturity and a 10-year grace period. 2. ProjectDevelopmentObjectiveand KeyIndicators The project development objective is to increase the competitiveness o f selected agricultural sub-sectors that target national, sub-regional and international markets thereby contributing to shared agricultural growth in Burkina Faso. To achieve this objective the program will pursue the three following sub-objectives: (i) support private sector organizations and commodity associations instrengthening their ability to plan and implement a sound strategy for the development o f market-driven agricultural supply chains (ASC); (ii)develop productive and marketing infrastructure to improve productivity, agricultural product quality and linkages with markets; (iii) improve the provision and efficiency o f core support services, including the promotion o f a more conducive institutional, regulatory and financial environment for private investment. The project will result in the following outcomes: (i)a better organization and coordination o f private operators all along the selected supply chain; (ii) professional and inter-professional organizations able to deliver services to their members and help them 4 better respond to market requirements in terms o f product quality and quantity; (iii) an increase in the value o f production and exports o f selected sub-sectors; (iv) a legal/ regulatory framework and a business environment, more attractive to private investors; and (vi) a network o f public and private service providers, prompt and efficient in responding to private operators needs in terms o f training, advisory services, quality controls, etc. Key performanceindicators: The key performance indicators, by the endo fproject, are the following: 0 Burkina agricultural exports for the targeted supply chains (except cotton) on the international market reach 35,000 tons at the end o f the project; 0 Burkina agricultural exports for the targeted supply chains (except cotton) on the sub- regional market reach 20,000 tons at the end of the project; 0 At least 60 percent of producers that benefited from project support have increased their income from targeted supply chains by at least 50 percent. Targetedsupply chains: The most promising sub-sectors, and specific supply chains within them, were selected based on a long selection process involving all private stakeholders and public services, based on a scoring system. Project support will focus on the four following supply chains: Mangoes, Onion, Cattlebeef and Local poultry. In addition, cotton will be supported in close collaboration with a AFD funded project, with a focus on cotton productivity and farming system diversification in cotton producing areas. Cowpeas and sesame will be specifically supported by an IFAD project under preparation. The project will have a national coverage, but will more specifically focus on regions not targeted by other supply chain development projects, such as the GTZ-fundedproject (PDA) in the South-West region and the Danish-funded project (PADAB) inthe East and East-Center regions. 3. ProjectComponents Component 1 Improvement of agro-sylvo-pastoral supply chains performance - (US$39.5 million) (Includingall contributions) Component Objective: The objective o f this component is to improve the performance o f the targeted sub-sectors by improving supply chain coordination, by strengtheningprivate operators' capacities to respond to market opportunities and requirements, and by increasingagricultural product productivity. Issues to be addressed: (i) weak organization and interaction among actors at the the different levels o fthe supply chain; (ii) insufficient range and quality of financial and the business management services; (iii) weaknesses o f professional organizations; and the (iv) the difficulty for producers to access markets and respondto quality requirements. 5 Target Groups: private stakeholders along the targeted supply chains, from producers, small-scale rural agro-processors and traders to exporters, agro-investors and agro- industries. Sub-component 1.1 - Capacity building for professional and agricultural trade organization (US$7.0 million): This sub-component will contribute to improve coordination and performance o f the targeted sub-sectors by bringing together key stakeholders to identify and lift key constraints to supply chains development. The main programmatic vehicle for the development o f sub-sectors will be the supply chain strategic development plan (SDP). Project support will consist o f capacity building and technical assistance to stakeholders to help them carry out a comprehensive diagnostic o f the supply chain, elaborate SDPs and annual operational plans (AOP), build efficient professional organizations and set-up M&E systems. Assistance will be provided by strategic partners with relevant international experience insupply chain development. For the cotton sub-sector, the national cotton producer organization (UNPCB) and the three ginning factories have recently created their inter-professional association to undertake collective action and identify mechanism to manage commodity price risk. Within the actions plan elaborated by the cotton inter-profession, the project will finance activities for producer organizations' capacity building, small-scale storage facilities for professional organizations (POs), as well as activities related to cotton productivity increase and farming system diversification. The French Development Agency (AFD) will finance activities relatedto research on soil fertility, POs financial management and technical advice to producers. A Diagnostic Trade Integration Study (DTIS) is under preparation for Burkina Faso. The project will build on the findings o f the DTIS to adjust its intervention and the content o f the SDP and the AOP. The sub-component will support the organization of stakeholders' workshop to disseminate and discuss the finding o f the DTIS and include the main recommendations into the SDP. Sub-component 1.2 - Investmentsfor supply chain development (US$32.5 million): This sub-component will provide funds for investmentsrequiredto improve supply chain performance. First, it will finance the implementation o f the different annual operation plans (AOPs) elaborated inthe framework o f the sub-component 1.1and validated by the project steering committee. It will also finance investment operations undertaken by individual operators or professional associations inthe selected supply chains, and which are consistent with the relevant supply chain SDP and the AOPs. To this end, the project will support the establishment o f a supply chain promotion fund that will provide matching grants to finance micro-projects proposed by smallholders and small-scale processors for specific categories o f investments, such as: adaptive research for technology generation and test, capacity building activities, market studies, logistic tests, small-scale equipment and infrastructure, technology tests and dissemination, technical advisory services, food safety and quality expertise, etc. The supply chain promotion fund will be managed by a 6 commercial bank. Operational mechanisms will be detailed inthe Project Implementation Manual. This sub-component will also facilitate access to credit to private investors, small-scale rural entrepreneurs and smallholders. It will liaise with commercial banks and the micro- finance institutions to help them test innovative financing instruments(leasing, inventory credit, etc.) and to mobilize existing instruments, such as the successful guarantee facility established under the Pilot Private Irrigation Project. Component2 Developmentof irrigationand marketinginfrastructure - (US$33.7 million)(includingall contributions) Component Objective: The objective o f this component is to contribute to agricultural productivity increase, product quality improvement, and agricultural diversification while strengtheningproducers' linkages to markets. Issues Addressed: (i) low productivity in the targeted supply chains; (ii) lack o f the the productive and marketing infrastructures. Target Groups: all stakeholders involved in the targeted supply chains that may be interested inthe construction o fproductive and marketing infrastructures. Sub-component 2.1 -Irrigation infrastructure (US$26.7 million): The project will support the development o f two types o f irrigation approaches: (i) development, on a the pilot basis, o f large-scale irrigation schemes for the production o f high-value crops by private investors. Implementation modalities will rely on private operators that will be recruited to ensure, under the supervision o f the Ministry o f Agriculture, Water Resources and Fisheries (MAWRF), the overall coordination o f the process and (ii) the development o f small-scale private irrigation for producer associations and individual investors. The approach will build upon the experience o f the now closed Pilot Private Irrigation Promotion Project and o f the Small Scale Village Irrigation Program for the dissemination o f innovative technologies. Operators will be selected to strengthen existing networks o f artisans for the manufacturing and maintenance o f technologies for pumping, transporting and storing water. They will help investors access technical advice, credit and other innovative financing instruments. Sub-component 2.2 - Marketing infrastructure (US$7.0 million): Burkina Faso is under-equippedto compete effectively on the fresh product export markets that require adapted and efficient logistics and post-harvest treatments, particularly cold chains, and strict compliance with the more and more stringent consumer requirements in terms o f standards, quality and safety. Project interventions inthis area will thus consist of: (i)up- grading or rehabilitating existing commercial infrastructure; (ii) building new facilities, already identified as required and vital to compete on the international markets; and (iii) buildingmedium-scale infrastructure that will be identified underproject implementation in the framework of the elaboration of the Strategic Development Plan (SDP) by the targeted supply chain. By providing adequate support in terms o f technical assistance, 7 institutional strengthening and capacity building, the project will ensure that these infrastructures are properly managed and operated as efficiently and professionally as possible by private operators. Component 3 - Improvement of the business environment, regulatory framework and provision of advisory services (US$11.3 million) (including all contributions) Component Objective: This component aims at improving the business environment to make it more attractive to local and international private investors, by creating an enabling legal and regulatory framework more conducive to private investments and by strengtheningcapacities o f public and private service providers requiredfor supply chain development. Issues Addressed: (i) regulatory and financial constraints to private investments; legal, (ii) andqualitycontrol,and(iii) publicandprivateserviceproviders. norms weak Target Groups: core public services within the Ministry o f Livestock, the Ministry o f Agriculture, Water Resources and Fisheries, the Ministry o f Environment and the MinistryofTrade, as well as private service providers. Sub-component 3.1 Improvement of Regulatory, Legal, and Financial Framework - (US$1.3 million): The current overall policyhnstitutional framework provides an acceptable starting base for project implementation. Supply chain organization that will be carried out under component 1will contribute to identify key constraints to be tackled. The project itself would only address constraints directly affecting selected sub-sectors and more broadly agricultural exports. The project's M&E mechanisms would however helptracking constraints inthe policy and institutional environment and bringingthem to the attentiono fpolicy-maker. This project will support the revisionand adaptation ofkey legal and regulatory texts in accordance with existing regulations related to production, agro-processing and exports. New legal and regulatory texts could be elaborated on specific emerging issues, such as the legal framework for inter-professional and commodity trade organizations' activities. The project will ensure a broad dissemination o f information to operators through various channels such as the Regional Agricultural Chambers and the Chamber o f Commerce. Sub-component 3.2 Capacity building for service providers (US4.7 million): This - sub-component will be two-fold by: (i) building capacities of private service providers, including technical advisory providers for smallholders, accounting and management advisers for professional associations, local firms for micro-project preparation and feasibility study at the grassroots level, networks o f private input suppliers and artisans for equipment manufacturing and maintenance; and (ii) strengthening the capacities o f core public services to deliver proper support to supply chain development and ensure a close and reliable monitoring and evaluation o f the agricultural sector and sub-sectors. The definition o fmeasures to betaken, and monitoring and enforcement methods, will be carried out in close collaboration with the private sector. This process will result in the definition o f an action plan for strengthening the service provider environment, whose 8 implementation will be supported by the project and other programs. Project funding will be conditioned by the elaboration o f performance-based contracts between service providers and their clients. Finally, the project will support the creation or the strengthening o f sector and sub-sectors M&E systems withinthe Ministryof Agriculture, Water Resources and Fisheries, Ministry o f Livestock and Ministry of Trade. These systems will be responsible for collecting data in the various sub-sectors, for analyzing results, and for disseminating information to all stakeholders on supply chain performance and market development. Sub-component 3.3 Project Coordinationand Management (US$5.3 million):This - sub-component will support the establishment and operation o f a small team o f specialists (the I'PCU'I) located within the Ministry o f Agriculture, Fisheries and Water Resources. Implementation o f activities will be directly undertaken by project beneficiaries, including: i)private actors, with the support o f specialized operators and many service providers; and, ii)the relevant public services involved in the project. The project coverage will be nation-wide. Therefore, the PCU will coordinate interventions and the preparation o f annual work plans and budgets, oversee financial management and procurement aspects and ensure the overall monitoring and evaluation o f project activities and impact. Three local offices will be established at the decentralized level to ensure closer coordination o f field activities and a proper and more efficient coverage o f the regions covered by project interventions. Within the PCU, a M&E unit will be set up for establishing and maintaining a database o f outgrowers and service providers, o f subprojects financed under Supply Chain Promotion Fund, and for updating key performance indicators. The M&E unit will elaborate and edit periodic reports, organize periodic surveys, and conduct economic, social, and environmental impact evaluations, among other studies. The project will finance the PCU staff and operating costs, technical assistance related to the recruitment o f service providers at national and regional levels, capacity building for project staff including focal points within implementing agencies, and audits. The project will also finance equipment (computers, vehicles) and goods (software, digitized maps). 4. LessonsLearnedand Reflectedinthe ProjectDesign The design ofthe project draws lessons from other IDA financed projects implementedin Burkina Faso and in other countries, as well as on experiences from projects and programs financed by the GoBF and other donors. The major lessons include: Holistic approachto competitiveness:Focusing exclusively on specific constraints, upstream at the production level or downstream on marketing aspects, has proved unsuccessful. As demonstrated in other countries, the project should look at supply chains as a whole, paying attention to all aspects from production to commercialization, to tackle key constraints and bottlenecks all along the supply chains. Market-oriented supply chain development: Previous experiences, where agricultural production was supported without considering market potential and requirements, resulted in over- or underproduction, while discouraging producers. 9 Project interventions will thus be governed by market considerations and requirements. 0 Private sector-led interventions: Supply chain development must be private sector led, with public interventions aimed at helping the private sector overcome critical constraints and market failures. Private operators, including professional and producers' organizations, must play the leading role in developing supply chains by collaborating to identify key constraints and elaborate operational solutions to lift them. Establishing dialogue and building partnership among private operators along supply chains will be at the core o fthe project implementation strategy. 0 Equitable distribution of value added: Agricultural supply chains are often driven by large private operators who may exert excessive power on the other actors o f the chain. The project would promote innovative contractual arrangements among supply chain operators, while ensuringthat they are balanced and that the value added along the supply chain i s shared by all. It will pay particular attention to producers, most the time the weakest actors in supply chains, by strengthening their capacities to address key constraints at their level and to engage infair and balanced partnershipwith other stakeholders (increasing their bargaining power). 0 Ensure results-based monitoring and evaluation. Past IDA financed projects in Burkina Faso failed to establish functional monitoring and evaluation (M&E) systems. The project will build upon the PNGT experience to establish sound M&E systems, based on relevant performance and outcome indicators designed to track progress and allow adjustments. 0 Commercial infrastructure must be transferred to and operated by the private sector. The financing on public funds o f key commercial infrastructure can be justified as a way to lift a major constraint to the development of performing agricultural supply chains, including small farmers who otherwise would not have access to more lucrative marketing channels. The critical aspects inthese investments i s to conciliate the necessity to have these facilities operated as efficiently and professionally as possible and the public role dimension o f the infrastructure as a vector o f innovation and development for the entire supply chain. Experience has shown that these facilities require private sector management and that their ownership should be transferred over the medium to long term to credible professional organizations. This model has beenimplementedsuccessfully - or i s inthe process o f beingimplemented- inseveral countries such as Senegal and Ghana. However, this is a complex process that takes time and requires adequate support interms o f technical assistance, institutional reinforcement and capacity building. 0 Support a supply chain promotion agency - Experiences in CBte d'Ivoire and in Senegal have shown that the creation o f an autonomous entity to support supply chain development is a key factor o f success. Such entities empower private actors in designing and implementing relevant interventions, although financial sustainability remains a challenge. 10 5. Alternatives Consideredand Reasons for Rejection The integration o f ADMDP activities under PNGT2 has been considered and rejected because o f differences in the respective objectives o f the two projects. PNGT2 supports community investments through collective social action. ADMDP supports the development o f vertical supply chains through donor/government-supported capacity buildingandthe promotion ofprivate investment. It was envisioned to address irrigation as an issue to be resolved within selected value/supply chains and not as a component. However, the idea was rejected infavor o f a stand-alone sub-component that will support the implementation o f the Government national irrigation development strategy. The project will support irrigation, but only to the extent it is identifiedas critical by operators within given supply chains, and in line with the correspondingASP action plan. C. IMPLEMENTATION 1. PartnershipArrangements Support to the project i s IDA'Scontribution to the Government's broader program for agricultural diversification and marketing stipulated in the Rural Development Strategy. IFAD, for cowpeas and sesame chains, and the French Development Agency (AFD), for the cotton sub-sector, are supporting the program with parallel financing. Inaddition, the project will develop synergies with similar projects, such as PADAB (Denmark), PAF (CIDA) and PDA (GTZ). It will develop collaboration with other IDA financed projects and other projects in preparation (PST2, for rural roads, PNGT2 for community development and decentralization, the Regional Biosafety project for agricultural biotechnology, the Support to Competitiveness and Enterprise Development Project for private sector capacity building and the Diagnostic Trade Integration Study (DTIS) for competitiveness). Donor coordination will be enhanced though the "Cadre de concertation des partenaires au dk~eloppement'~ up by the Government to coordinate set donor interventions in the rural/agricultural sector and to support harmonization and alignment in line with the "Global Donor Platform for Rural Development". As part o f this process, it was agreed during project preparation that supply chain supporting projects would harmonize their approaches on key issues such as M&E systems and micro-project financing rules, and that joint supervisions will be organized. 2. Institutionaland ImplementationArrangements The Ministry of Agriculture, Water Resources and Fisheries (MAWRF) will have institutional responsibility for the project, and will be accountable for the project's proper execution and supervision. A Project Steering Committee (PSC) will be established at the national level for the overall project coordination, approval of work programs and budgets, outcome monitoring and evaluation, conflict resolution, etc. To ensure private- public partnership, private sector will account for two-thirds o f PSC members. Regional Coordination Committees (RCC) will be set up in each o f the regions covered by the 11 project to ensure that local private stakeholders (producers, processors and traders) and local authorities (local Governments, decentralized ministries bodies) are fully participating in project implementation. The RCCs would meet twice a year to discuss orientations and activities, to review implementation progress in the region and to enhance harmonization and alignment o f donors intervention inthe region. At nationallevel,a projectcoordinationunit(PCU) attached to the General Secretariat withinthe Ministry of Agriculture will coordinate the overall management of the project as many institutions and operators will be involved inproject implementation. The PCU mandate include the preparation o f annual work plans and budgets, the financial management and procurement, the general supervision o f the implementation o f project activities, the monitoring and evaluation of project outcome and output implementation progress. The PCU will be headed by a national Project Coordinator, with sound experience in agribusiness, who will be assisted by a technical director (Private sector development specialist) and a technical team (professional organizations, supply chain development and training specialists), as well as an administrative unit (financial management, procurement, M&E specialists). For field coordination, the PCU will be assisted by three decentralized local offices at the regional level. Each o f these offices will cover two or three regions and will include a coordinator experienced in project implementation and supervision, a financial/procurement specialist and a marketing specialist. The local offices will serve as secretariat for the regional coordination committees and for the micro-project approval committees. A project implementation manual will be prepared before project effectiveness to detail implementation mechanisms and procedures. It will include: (i)description, organization and functioning of project coordination and management bodies; (ii) eligibility criteria and procedures for project support; (iii) implementation modalities for each component and activity; (iv) M&E arrangements and procedures, and (v) social and environmental mitigation planimplementation arrangements. Annex 6 provides further details regarding project institutional and implementation arrangements specific to each components and sub-components. 3. MonitoringandEvaluationof Outcomes/Results The project will finance the design and implementation o f a participatory monitoring and evaluation system: 0 foster accountability and transparency inthe management process; set mutually agreed, realistic and clear results for this operation; 0 engage stakeholders by sharing information on progress made, lessons learned and improvements; 0 measure the gaps between actual and targeted indicator values, thereby identifying problems; and 0 propose corrective measures and alternative solutions. 12 The implementingagencies will be strengthened to monitor and evaluate their activities. APIPAC and UNPCB have already an M&E unit. The project will support the set up o f an M&E unit (provision o f an M&E specialist and equipment) to the cattle/beef professional association. The M&E systems o f the ministries o f Agriculture and Livestock will be strengthenedto collect, manage and disseminate data related to overall sector information in relation with private sector M&E systems. The PCU will run an internal M&E system and disseminate M&E outputs (reports and dashboards) related to project activities including micro-projects financed under the promotion fund. To monitor progress and impact indicators, the project will establish a baseline data at its start-up and hire a specialized institution, which will do an impact analysis at midterm and at the end o f the project. The project will build upon the PNGT M&E experience known as a best practice. Details o f methods and procedures for monitoring and evaluatingprogress and impact indicators are included inthe M&E guidelines. 4. Sustainability The project has been designed for long-term sustainability beyond closure, as implementation will rely on private operators and interventions will be geared to attract private investors andpromote professional and inter-professional organizations. Regarding access to credit, the project will help the GoBF ina series o f measures aimed at boosting public confidence in the banking system in rural areas and improving the lending environment, including the consolidation o f a Guarantee Fund. The project will work with financing institutions to identify and establish long-tern financing mechanisms. The regulatory and legal framework will be reviewed and strengthened, if necessary, to improve the overall investment climate. Regional Agricultural Chambers will be strengthenedand giventhe means to support and organize professional, trade, and producer associations inthe long run.The strengthening of research, extension, and training institutes and private providers will also serve the sustainability objective. Training programs and technological innovations are likely to result in long-term benefits after the completion o f the project. Cost-benefit analyses will be conducted and the findings made available to banks and financial institutions and to other potential users o f the technology. These activities are aimed at increasing the efficiency and profitability of small-scale private sector rural businesses. The establishment by the endo fthe project o f an agency/foundation for the promotion o f supply chains will also enhance the likelihood of sustainability. Finally, effective establishment and upgrading o f selected value/supply chains so that they can be more efficient, effective, profitable, and viable, will benefit their long-term sustainability . 13 5. Critical Risksand Possible ControversialAspects Risks Risk-mitigation Measures RiskRating with Mitigation T o project developmentobjec ive Downturns ininternational Support diversification o f products and markets M commodity prices to ensure that exporters and producers do not become overly vulnerable to the fluctuation of one commoditv. Natural disasters including Promote sound designo f infrastructure at the M agricultural pests, climatic production and processing levels to mitigate the variation, drought, sanitary effects o f natural disasters. and phytosanitary crises Advance funding to address avian flu; M collaboration with Africa Emergency Locust Project To componentresults Component 1: Changes indemand in Diversifyproducts andmarkets, promote S targeted markets (Europe) or flexible technology and support quality increased competition from enhancement to international standards comnetitors Component 2: L o w participation o fthe Ensurebroad dissemination of information to N private sector in potential private investors, support capacity infrastructure management buildingo f anricultural associations Component 3: GoBFreluctant to adopt Encourage public-private partnership and M requiredmodifications to the empower private stakeholders to strongly legal and regulatory participate inpolicy dialogue framework Overall Rating M 6. Credit Conditionsand Covenants Effectiveness conditions 0 The Recipient has selected and appointed the project coordinator, the financial management specialist, the monitoring and evaluation specialist and the procurement specialist with experience and qualification satisfactory to the Association. 0 The Recipient has adopted the project implementation manual inform and substance satisfactory to the Association. 14 0 The Recipient has established a computerized information system for the financial management o f the Project (including software customization, adoption o f the Project Manual o f Financial, Accounting and Administrative Procedures in form and substance satisfactory to the Association, training and short term assistance) in the Project Coordination Unit, ina manner satisfactory to the Association. 0 The Recipient has recruitedan external auditor on the basis o fterms o freference, and with experience and qualification satisfactory to the Association. 0 The Recipient has opened the Designated Account. 0 The Recipient has prepared annual work plans for 2006 and 2007, in form and substance satisfactory to the Association. D. APPRAISAL SUMMARY 1. Economicand FinancialAnalyses An illustrative Cost Benefit Analysis was carried out for component 1.2 which supports Investments for supply chain development and component 2 which supports irrigation and market development infrastructure. The analysis was based on three models o f commodity supply chains development as shown in table 1. For component 1.1 (assistance to capacity building) and component 3 (assistance to enabling environment) cost benefit analyses were not conducted due to the difficulty to measure and to quantify the project direct benefits. Since investments are carried out according to the project concept based on demand driven approach, the sites and the scope o f activities are not known beforehand. The analysis i s therefore illustrative and will be reviewed during project implementation to ensure that the project supports only financially and economically viable operations Table 1:Returnsto producers' investment I Improved capacity for Irrigationand agricultural practices MODEL1 1 Onion (0.25 ha) I Mango (0.25ha) I Cowpea (0.5 ha) ERR 66% 43% 257% NPV (at 10%) 1544,120 635,740 531,760 MODEL 3 Onion (0,5 ha) UEB (4 cows) Cowpea Financial analysis IRR 45% 38% 86% NPV (at 10%) 1231,020 1083,340 190,590 Economic analysis ERR 66% 90% 212% NPV (at 10%) 1544,120 2047,280 293,280 15 Table 1 indicates high economic rate o f returns ranging from 45 percent to 212 percent depending on the crops in the farms models which are consistent with the Government intervention. The sensitivity analysis (Annex 9) shows that the models are more sensitive to yields than prices and costs, which can justify the intervention o f the Government to introduce improved agricultural practices and innovative irrigationtechniques. Table 2 indicates present value o f flows at 10% o f the project for activities which benefits measured inmonetary terms. Table 2: Project Economic and Financial (NPV inCFAF) Economic Financial ERR NPV IRR NPV Basecase 23% 88 893 25 102 342 Switchingvalue (at 10%) 26% 27 069 28 32 069 The economic analysis o f the project shows high economic rate of return o f 23 percent for all hypothesis (see Annex 9). This high rate could be explained by the yields increase due to the improvement o f irrigation scheme and the availability o f market facilities provided by the project. The sensitivity analysis i s based on estimated switching values (a change in the value o f key factors that lowers the ERR to 12 percent, taken as the long- term opportunity cost o f the capital inBurkina Faso). 2. Technical The technical approaches o f the project take into account experiences accumulated in preparing and implementing similar components in Burkina Faso and in the sub-region mainly in Mali, Senegal, CBte d'Ivoire and Niger. The approaches have been widely discussed with Government and stakeholders and have been designedto meet their needs. Building up supply chains: The contracting o f specialized operators with international experience to support the building up o f supply chains was proven to be a key factor o f success in neighboring countries, in particular with the firm GEOMAR in C6te d'Ivoire and Senegal. In Burkina, the same approach was used under the DIPAC to set up a successful association for the development o f small irrigation (APIPAC). The project will also support capacity building o f both private and public stakeholders' and promote a continuous dialogue and partnership betweenthem during implementation. Most o f past project favored support to only one o f the actors and mainly the public sector and results were mitigated. Component one will therefore strengthen private sector capacity to drive the strategic and operational planning of the selected supply chain development while component three will strengthen the capacity o f public services to create an enabling environment for supply chain development. Recent projects such as DIPAC and PNDSA have successively implemented matching grant mechanism to finance producers and processors demand. Implementation o f the sub component "Investment for supply chain development" will provide a supply chain promotion fund that will take into account the lessons learned. 16 The Burkina Ministry o f Agriculture, with FA0 and World Bank assistance, has just finalized a new irrigation development strategy, which draws lessons from past failures of large scale irrigation investments and o f state-managed irrigation schemes. This new strategy emphasizes the role o f small scale irrigation undertaken on a private basis by small scale rural entrepreneurs and smallholders. It built upon a 5-year pilot project implemented by the GoBF and co-funded by IDA. This pilot operation has been successful, as documented in the Implementation Completion Report, in testing the provision o f small scale irrigation equipment, technical advice and post-harvest technologies to producers for the promotion o f the fruit and vegetable supply chain. The Government prepared with Bank support a national strategy for irrigation development and organized a round table to present the strategy to donors. The project will support Government irrigation development strategy. It will therefore contribute to reduce the country vulnerability to climatic risks, improve agricultural productivity and secure agricultural production. The IDA financed agricultural market projects in Mali and Senegal provided valuable experience in how to deal with market infrastructure that are necessary to develop commercial agriculture and particularly export to international markets. The implementation o f the sub component market infrastructure will be contracted out to specialized service providers. Their building will be subject to an agreement with Government on the transfer o ftheir management to specialized operators. 3. Fiduciary A Project coordination unit has beenset up for the preparationof the project. The PCU is attached to the General Secretary within the Ministry o f Agriculture. The Unit i s staffed with a coordinator, a supply chain specialist, a procurement specialist and an accountant. It is currently managing the PPF and will continue operating after Board approval and untilthe PCU for implementation is fully staffed. Duringappraisal, the Government and the Bank agreed that the preparation Unitperformed satisfactorily andthat the incumbent staff will be confirmed for the implementationo f the project. Financial management:The objectives o f ADMDP's financial management system are: (i) ensure that funds areusedonly for their intendedpurposes inanefficient and to economical way while implementing agreed activities; (ii) to enable the preparation o f financial reports that show costs budgeted and incurred for the current period and the total budget and cost o f the ADMDP to date ; (iii) enable ADMDP Management to to monitor the efficient implementation o f management; and (iv) to safeguard the project assets and resources. A FM mission assessed the capacity o f the ADMDP and found that PCU and SCPF are not yet created and the required FM system it i s not yet in place. To this end, it was agreed that key fiduciary staff will be recruited and the computerized financial system will be developed and installed inside the Administrative and Financial Unit o f PCU to support implementation of this new operation. This arrangement will ensure immediate capacity to carry out the FM tasks. A capacity building action plan will be undertaken 17 with PCU to allow it to be able to carry adequately requiredtasks. An Internal Controller will be recruited for making the implementation systems operational and review the interim un-audited financial reports. All funds will be subject to annual audits by private auditors, as well as periodic reviews by national Public Control Institutions. Procurement: During project implementation, procurement will be done by the PCU, professional organizations and micro-project promoters. The PCU will be directly in charge o f major studies, large and complex procurements and/or pooled procurement across professional organizations etc. Professional core organizations such as UNPCB, APIPAC and CICB will be in charge o f procurement o f simple items. However, even done at organizations level, all project's procurement process will be under the overall responsibility o f the PCU's procurement specialist who will have a mentoring, coaching and support role. Promoters will handle procurement process for need included in their agreed micro- project. Inorder to support the promoter during micro-project implementation (including on procurement aspects) the recruitment o f regional (8 regions are concerned) service providers (NGOs and/or firms) i s foreseen. The recruitment o f regional service providers will be done for each region before agreement of the first micro-project o f the concerned region. As the PCU for implementation was not yet set up, it was not possible to conduct a formal procurement capacity assessment during preparation. However, procurement activities conducted under the preparationUnitwere successfully completed. It was agreed during appraisal to recruit a procurement specialist (PS) for project implementation with a strong knowledge and solid experience in both IDA and GoBF procedures before effectiveness. 4. Social Consultations with key stakeholders withinthe public sector, the private sector, and civil society were conducted throughout project preparation. The investment climate assessment process systematically involved the private sector as well as professional associations in the various sub-sectors. In sub-sectors and supply chains planned for support under this project, key actors were involved in the definition o f the scope o f activities and they will remain engaged during implementation, supervision and evaluation stages o f the project. Youth and women, in particular, are expected to benefit from this project because they are heavily involved inmost o f the activities and processes along the supply chain 5. Environment The Agricultural Diversification and Market Development Project (ADMDP) is a Category B project. Hence, the environmental and social impacts o f the project, for the most part, are expected to be adverse, but minimal, site specific and manageable to an accepted level. There are three Bank Safeguard policies applicable to the project. These 18 include: Environmental Assessment (OP 4.0 1); Involuntary Resettlement (OF 4.12) and Pest Management (OP 4.09). Duringthe appraisal mission, the range, scale, locations and number o f sub-projects, as part of A D M D P initiatives were unknown. The difficulty o f defining what the real environmental and social impacts of envisioned sub-projects are and determining which mitigation measures should be put in place, required the development o f an Environmental and Social Management Framework (ESMF) and a Resettlement Policy Framework (RPF), a social safeguard instrument used to addressing potential land acquisition or loss o f economic activity issues on the part o f individuals or group o f individuals inproject interventionzones. Inaddition, it was determined, based on project envisioned activities leading, in particular, to diversification and intensification o f agriculture, that the Pest Management Policy i s triggered. The triggering o f this policy i s also predicated on the likely incidence o f water borne diseases, on neighboring communities, resulting from irrigation schemes that will be developed under the project. All project safeguard instruments have beenprepared, in full compliance with Bank and national safeguard policies, by local consultants, following a broad consultation framework, involving all relevant stakeholder groups, both public and private, in the various sub-sectors and supply-chains and other interested parties. The ESMF formulated standards methods and procedures specifying how unidentified future subprojects whose location, number and scale are unknown will systematically address environmental and social issues in the screening and categorization, location, design, implementation, operational phases and maintenance o f the subproject lifecycle. It includes: (i) systematization o f environmental and social impact assessment for all identified sub-projects before investment; (ii)procedures for conducting sub-project specific EIAs, be they Limited Environmental Impact Assessment (LEIA) or Full Environmental Impact Assessment (FEIA) as applicable; (iii) Capacity strengthening and awareness raising campaigns targeted at relevant stakeholder groups for better implementation and monitoring o fproject safeguard measures; and (iv) establishment and implementation of an intersect consultation framework for the environmental control and monitoring. The RPF looked into the policy, legal and regulatory mechanisms on how to address cases o f land acquisition, loss o f economic activities, on the part o f affected people, as a result o f project activities. It also provides a coherent framework, eligibility criteria and asset valuation methods for compensation and/or resettlement o f affected people, as well as grievance mechanisms o f affected persons, in case o f unsatisfactory arrangements. Together, these safeguard instruments, are considered both as a planning tool and a means for a harmonious integration o f the project in its bio-physical and social environment and as a way to maximize positive effects on the same environment. The pest management plan (PMP), on the other hand, addressed the concerns relating to the risks associated with potential increases in the use o f pesticides for agricultural production, intensification and diversification, increases in disease vector populations which would arise from irrigation schemes and made propositions to strengthen national 19 capacities to implement mitigation measures to minimize the risks. The PMP also identifies national agencies and other partners that could effectively collaborate in, as well as the institutionalarrangementsfor implementing the plan. The ESMF and RPF include institutional arrangements, outlining role and responsibilities for the various stakeholder groups involved, for screening, review and approval of sub- projects, as well as implementation and monitoring of their mitigation measures. The PMP also includes clear institutional arrangements to implement and monitor the plan. All three instrumentswere submittedto ASPEN, the regional SafeguardUnit,and cleared for disclosure in-country and at Bank Infoshop, prior to appraisal. 6. Safeguard Policies Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.01) [XI [I Natural Habitats (OP/BP 4.04) [I [XI PestManagement (OP 4.09) [XI [I Cultural Property (OPN 11.03, being revisedas OP 4.11) 11 [XI InvoluntaryResettlement (OP/BP 4.12) [XI [I Indigenous Peoples (OD 4.20, being revisedas OP 4.10) [XI Forests (OP/BP 4.36) [[I I [XI Safety o f Dams (OP/BP 4.37) [I [XI Projects inDisputedAreas (OP/BP/GP 7.60)* [I [XI Projects on International Waterways (OP/BP/GP 7.50) [I [XI *By supporting the proposed project, the Bank does not intend to prejudice the final determination o f the parties' claims on the disputed areas. 7. Policy Exceptionsand Readiness N o policy andreadiness exceptions are requested for this project. 20 Annex 1: Country and Sector o r Program Background BURKINA FASO: Agricultural Diversification and MarketDevelopmentProject Located in the middle of Western Africa, Burkina Faso has a population o f 12.5 million with a territory o f 274,000 km2.It is one of the poorest countries in the world, characterized in 2003 by per capita revenue of US$350. The country remains strongly dependent on external support, which represents more than 10 percent o f the gross national product (GNP), and provides 80 percent o f financing dedicated to the Public Investment Program. The economy of Burkina Faso is dominated by agriculture. In fact, the agricultural sector generates about 40 percent of GNP (25 percent from plant agriculture, 12 percent from livestock, and 3 percent from forestry and fisheries). This sector provides jobs and revenues to about 86 percent o f the population and represents 80 percent o f export earnings. Poverty. Developments in respect of poverty in Burkina Faso since the devaluation are still the subject o f conflicting analyses. According to official statistics, and despite sound macroeconomic performance during 1994-2003, including an annual per capita growth rate o f about 2 percent on average, monetary poverty inBurkina Faso does not appear to have diminished significantly over the past decade. Indeed, the findings o f the population and health surveys conducted by the National Institute of Statistics and Demographics (INSD) in 1994, 1998, and 2003 appear to show some "resilience," that is, a slight increase in the incidence o f poverty, which rose successively from 44.5 percent (1994) to 45.3 percent (1998) to 46.4 percent (2003). A study conducted more recently in the context of preparing the World Bank's "Burkina Faso, Reducing Poverty through Sustained and Equitable Growth, Poverty Assessment" (World Bank, July 2004) showed that these statistics are not comparable in their present form, because the INSD appears to have used different methods for measuring poverty incidence in each survey. After making the adjustments required to ensure the comparability o f results, the authors concluded that the incidence of poverty had in fact dropped by about 8 percentage points-from 54.6 percent in 1998 to 46.4 percent in 2003 (see Table 1). However, owing to the major differences in the survey techniques, particularly with regard to periodicity, reprocessing data proved impossible, and the poverty rate for 1994 could not be reevaluated. Nevertheless, the authors o f that study suggest a prevalence o f close to 60 percent for 1994, based on the trends observed in comparable countries. At the same time, and based on the same survey data, another study was conducted by Grimm and Gunter on growth and poverty in Burkina Faso.' This study concluded, after reprocessing the data, that poverty had in fact increased significantly (by 6 percentage points) between 1994 and 1998 (rising to 61.8 percent), and then dropped o f f even more dramatically by 14.6 points between 1998 and 2003 (to 47.2 percent). M.GrimmandI. "Operationalizing Pro-Poor Growth:A Country Case Study onBurkinaFaso," Gunter, October 2004. 21 Table 1:Burkina Faso Changes inPoverty Rate - (percentage o f populationbelow the poverty line) 1994 1998 2003 World Bank Poverty Assessment National 54.6 46.4 Households producingtraded 53.1 47.1 agricultural goods Households producing no traded 61.8 55.3 agricultural goods Grimm/Gunterstudy National 55.8 61.8 47.2 Cotton-producing households 62.1 58.2 46.8 Households producing non-cotton 64.1 71.6 57.2 agricultural goods Source: World Bank Poverty Assessment; and Grimmand Gunter (2004). Despite these estimation problems, both studies conclude that there was a decline in poverty during 1998-2003, which is also consistent with the increase in average incomes and more specifically with growth in the agricultural sector. For example, according to the World Bank's Poverty Assessment, the sharp decline in the incidence o f poverty between 1998 and 2003 (around 8 percentage points) can be attributed to the decline in rural sector poverty (8.6 points), while the poverty incidence in urban areas showed little change (3 points). Both reports conclude that the poverty rate is much lower in urban areas (20 percent) than in rural areas (53 percent). However, despite the noticeable improvement in poverty incidence, the country remains one o f the poorest inthe world. PotentialSources of Growth and Prospects for Agricultural Market Development. Inthe medium-term, cotton and livestock, as well as cereals (mostly for the domestic market) will continue to provide the main engines o f agricultural growth and their sustained development should be one o f the main focus o f Government's agricultural policy. The domestic market will remain the main engine o f growth. Although the domestic demand for cereals will at best grow at the same rate as the population*, the urban market is expanding fast, driven by income growth and a change in product mix toward higher value (livestock products, fruits and vegetables) and more processed commodities. This market i s also becoming more demanding and i s a good stepping stone for producers to meet the more exacting requirements o f international markets. The international market for cotton will be able to absorb the projected increase in production by Burkina Faso over the next ten years, and the domestic and regional market for livestock products appear promising, as populations and income levels rise. At the same time, it is critical that Burkina Faso diversify its production base, to reduce its vulnerability to international price fluctuations and take advantage of new opportunities for high value products for which the country has a comparative advantage. Burkinahas achievedself-sufficiency in `normal' years and is now regularly producing some surpluses for export to the subregion, but these markets are uncertainand subjectedto a significant amount o f co- variance. 22 Issues and Challenges for Agriculture Sector Competitiveness. To take advantage o f these potential sources of growth and thus have a greater impact on poverty reduction, Burkina Faso needs to adequately address a series of constraints inthe agro-sylvo-pastoral sectors. At the organizational level, the situation varies from one sector to another, but most subsectors and supply chains are not well structured, and do not benefit from professional, trade, or industry organizations. Some organizations, such as the Association for Private Irrigation and Related Activities (APIPAC) for the fruits and vegetables subsector, the ComitC Inter-professionel des CCrCales du Burkina (CICB) for the cereal subsector, and the UnionNationale des Producteurs de Cotton du Burkina (UNPCB) for the cotton subsector, do work reasonably well. But the Comite des OlCagineux du Burkina (COB) for the oleaginous sector suffers from several functional difficulties. Most organizations depend on subsidies obtained from development projects. Without a serious strengthening o f organizational capacity, they will not be able to carry out the advocacy, coordination, representational, or business development services needed to foster value and supply-chain growth. Regarding exports, handling and transaction costs (collection, grading, post-harvest treatment, loading, transport, and distribution) are too high, and the sellers have very limited capacity to explore sub-regional markets. In addition, exchange conditions (especially illicit fees) lower margins and the profitability o f export operations. The differences o f commercial traditions, languages, and insecurity also hamper the development o f exchanges with Anglophone countries. The difference of monetary zones is another difficulty. Overall, the lack o f professionalism, the lack o f capacities of anticipation, adaptation, and marketing, and the lack of commercial information, constitute a major handicap. The lack o f productive technologies adapted to the local situation, the lack o f information and advisory services, and the difficult access to financial services represent the main issues faced by agro-processors, along with high production costs. These factors cause a lack o f competitiveness and poor quality o f products. Sales are also hampered by (i) the insufficiency o f warehouse and cold storage facilities; (ii)the poor level o f commercial training; (iii) the absence o f market standards; (iv) the poor transport facilities and (v) poor knowledge o f markets. To varying degrees, producers within agro-sylvo-pastoral sectors all face similar constraints and difficulties, particularly: (i)land insecurity and unfair access to production factors; (ii)climatic issues; (iii)illiteracy and the lack o f professional training; (iv) weakness o f information diffusion; (v) difficulties in accessing credit; (vi) unsatisfactory management o f water and the fertility o f soils; (vii) availability and the costs o f inputs and (viii) difficult control o f locust infestation. Operators in the beef and poultry sectors face specific issues: (i) a poor zoo-sanitary situation; (ii) limited genetic potential o f local species; (iii)scarcity o f fodder and poor nutritional value; (iv) difficulty in obtaining food and veterinary and other inputs; (v) poor technical mentoring and (vi) cattle theft. As far as the public sector is concerned, a series o f difficulties also hampered its efficiency, including: weak capacity of public service entities to modernize their intervention strategy and to focus on the development of market-driven valuehpply chains; limited ability to work with the private sector, poor quality o f statistics and low access to information, limited relationship between research system priorities and actions and producer needs, weak dissemination o f existing technologies, poor quality control and regulation o f products, and weaknesses in the management o f public facilities used by private operators. Access to finance and land security constitute two central issues that are not adequately addressed by public services. 23 Building Strategic Frameworkfor Agricultural Competitiveness. Accordingly, to tackle the poverty issue, the Government o f Burkina Faso (GoBF) has adopted two central strategic documents: the Poverty Reduction Strategy Paper (PRSP) and the Rural Development Strategy (RW. The PRSP, completed in 2000 and revised in 2003, stipulates that the Government's goal is to boost the agricultural sector's contribution to growth by creating, on one hand, an economic climate more conducive to private investment (particularly in the areas o f production, marketing, and industrial processing) and to the development o f small and medium enterprises in rural areas and poverty pockets and, on the other hand, a biophysical environment conducive to faster growth. To translate the PRSP's objectives into concrete activities, the Government issued in 2003 a Rural Development Strategy (RDS), which targets the sustainable growth o f the rural sector as the preferred mechanism for ensuring greater food security and promoting genuine rural development. The R D S constitutes the reference framework for all GoBF and most donor interventions inthe rural development area. The analysis o f Specific Value Chains and their Success, Weakness, Opportunity and Threats (SWOT) is described in Appendix 2 followed by an extensive description o f the various supply chains. 24 Appendix 1 OrganizedPrivate Stakeholder Organizationswithin Supply Chains Supply Production Processing Commercialization Professional Chains Organizations Cowpea Start of Privateoperators BukinabC Oilseeds srganizations Council Sesame 2,754 industry-based SOCOPA Wholesaler Coveredby the CIC srganizations xganizations ASIECRU, AIEPO Fruits and About 1,400 POs: Drier unities, SOBFEL, vegetables APIPAC confectionary SOPROFA, APIPAC (irrigation) COOPAKE, UMFB, CDS Bananas supply chain UFMA Association of SOBFEL UCOBAM, exporters: ANPHV, URCABO APEFEL, APEX ~ Shea nut Severalwomen's 200 associations Exportersof nuts and Table supply chain cooperatives o f shea butter butter production Poultry Few producer Association of Collector Absence of organizations roasters Wholesalers professional Roasters organizations Beef 3,800 POs Slaughterhouses Provincial association CNCiRA 100 associationso f Butchers o f sellers and Table supply chain Pos butchersUNACEB, livestock meat UNABAEV, UNABOC, ATVO Cotton 8,000 POs, UNPCB SOFITEX, FASO SOFITEX, FASO Cotton supply chain Cotton, Cotton, SOCOMA, management SOCOMA, committee (State- FISAH, SICITEC, SOFITEX-UNPCB) SOFIB, JOSSIRA Ginning entities Cereal 6,036 POs recorded Agro industries: Private operators CIC and regional (sorghum, regional CETRAPAi committees millet, corn) organizations: SODEPAL/ UPPM, UGCPA, SIMAO CRRA, FENOP, BRAKINA ADK Small-scale production enterprises 25 Appendix 2 Successes, Weaknesses, Opportunitiesand Threats (SWOT) Analysis, by Sectors STRENGTHS WEAKSESSES Highcosts of inputs and lack of equipment Stagnationof yields since 198511986 Dependenceon export prices UNPCB is the weakest partner inthe cottontrade Stable macroeconomic environment Extension of cultivated area FRUITSAND VEGETABLES ties respecting export contracts Existence ofprofessional organizations Poor respectof the technical itinerary OPPORTUNITIES THREAT s Increase of the Europeandemand Low maintenanceo f infrastructures and equipment Increase o fthe demand for organic and driedproducts Strong competitionof subregional countries Existence of certified (Bio and EUREPGAP) orchards Inappropriate policies with regard to aerial transport Strong nationalpolicy to develophorticulture Presenceof the white fly STRENGTHS WEAKXESSES Increase production Poor technical knowledge Slaughterhouses being renovated Lack of \\arehouses and cold facilities e 15 to 16 billion CFAF per )'ear in terms of gross income Poor control of norms Existenceo f aregional market Degradation of slaughtering conditions Demand from Egypt Unfavorable fiscal environment POULTRY n 100roaster units 26 SESAME Lack of data on prices, production, quantities exported Diversified uses (agro-food, cosmetics) Poor productivity Easy to grow-accessible by poor households Commercial quality Existence of several processing enterprises (SOPRADEX, SOCOPA) Competition from Asian countries Salmonella contaminationundermines product quality I I I STRENGTHS WEAKNESSES Increase in production Unstead},production capacir), Existenceof a professional organization Poor productivir). Represents 10% of GNP Poor production, processing, and commercialization Represents88% of 3.5 million ha exploited each year b}, 900.000 Weak organization of marketing poor households OPPORTUWTIES THREATS STRESGTHS WEAKSESSES Gro\\n by 70?b of producers Lack of adequate technologies Accsssibilit), to poor households Poor use of agricultural inputs Increase of production in recent )ears Weak organization of marketing Weak organization of actors Language and current!' barriers OPPORTUNTIES THREATS 27 Appendix 3 Supply ChainsBrief Description Cotton. The cotton sector in Burkina Faso encompasses about 200,000 producers, and i s a major source of income for about 17 percent o f the population. Cotton production increased sharply during the last five years, from 276,000 tons in 2000/01 to over 560,000 tons in 2004/05. The government has prepared, with all stakeholders, a strategy for supporting the continued expansion o f production and exports, focusing on (i) improving productivity both on-farm and in downstream activities, and (ii) establishing efficient mechanisms for the management o f the "value chain" in a concerted and equitable fashion by all stakeholders. Recent developments include the privatization o f the sector with the opening o f SOFITEX3 share capital to producer organization, and the transfer o f some o f SOFITEX'S assets to two private ginning companies. The Government i s also supporting the newly-created cotton trade organization ("Interprofession") and the introduction at the research level o f genetically modified cotton varieties, which presents a good opportunity to boost productivity and improve competitiveness. However, cotton production impact on growth and poverty reduction i s constrained by several issues including extreme global price volatility, the overvaluation of the Euro and the loss o f market share to synthetic fibers, the long-term declining trend of the international price and the low productivity o f the sector due to poor soil fertility, weak capacity of farmer organizations to play significant role inthe reform process. Livestock i s a critically important sub-sector inBurkina Faso. Burkina Faso i s the second highest exporter of livestock products -essentially live cattle but also sheep and poultry- behindMali on the regional market (WAEMU). Exports have stagnated since 2000, and there has been an actual decline in live animal exports since the beginning o f the crisis in CBte d'Ivoire. The export o f meat, chilled or frozen, i s being hampered by inadequate preservation facilities and competition from other producing countries. Livestock-related activities provide incomes (partially or totally) for 86 percent o f the population. Smallholders are producing about 95 percent o f total meat production, 95 percent o f total milk production, and 60 percent oftotal eggproduction. Growingurbanization and rising per capita income, with a target o f 4 percent annual growth, have ledto stronger domestic demand, coming on top o f export demand. Supply has not coped well with this rising demand. Closing the supply gap will require increased productivity per hectare in extensive systems or per animal in intensive systems, through improved nutrition, breeding, and animal disease control. An over issues the food safety aspects for both domestic and export markets (sub-regional, regional, and, in the longer-term, international). Better compliance with the sanitary and phytosanitary requirementso f the World Trade Organization, which are based on Livestock International Organization (OIE) (live animals) and Codex Alimentarius (animal products) guidelines and standards, will be crucial to sub-sectoral growth. The Government's specific strategy for the livestock sector i s described inthe Work Plan and InvestmentProgram for the Livestock Sector (PAPISE) - a national framework for livestock action plan and investment programs prepared by the Ministry on Animal Resources in2000 - and inthe revisedfull PRSP. Under the Livestock, Poverty, and Growth Initiative (IEPC), which spans 2002- Burkina Faso'smaincotton processingcompany. 28 2004, the government has developed a sector strategy for livestock, with support from the World Bank and the Food and Agriculture Organization. The IEPC seeks to modernize the sector and intensify transformation efforts to "increase its contribution to national poverty reduction and growth objectives." In this context, the government has recently made sizable investmentsto modernize and expand the slaughterhouses in Ouagadougou and Bobo-Dioulasso (CSLP Report, 2003) and these investments should help boosting meat production and exports Poultry. In Burkina Faso, the poultry sub-sector consists o f a "modern" and a "traditional" domain, both o f which are dominated by two species o f animals, chicken (76 percent) and guinea fowl (19 percent). Recent surveys place the total yearly income o f both rural and urban traditional poultry production at over 10 billion FCFA, with the urban share estimated at less than 10 percent. Traditional poultry production i s sold on the internal market, mostly urban (several thousand chickens are sold daily in Ouagadougou4), and on the regional market (Benin, CBte d'Ivoire, Togo) where traditional poultry products from Burkina Faso are much appreciated (including thepoulet bicyclette, a Burkina label). Traditional poultry farming i s part o f the livelihood strategies o f almost all agro-pastoral households, and to a lesser extent o f pastoral households. Poultry commodity chains include actors that fit into a three-tiered typology consisting o f producers, traders, and processors. Poultry product collectors gather their merchandise at the village level and from rural marketplaces and transport it to areas where consumption i s concentrated, and to exporters. Processors are mainly those involved in roasting and/or grilling poultry products. Butchering takes place on the spot on-farm or on demand from clients in marketplaces under inappropriate hygienic conditions, with inadequate infrastructure leading to substantial losses - which also occur during transportation and processing. Except for the purely commercial operations, poultry commodity chains are little organized, due mostly to the fact that, for rural households, traditional poultry farming remains largely a secondary activity. Significant progress has been made recently regarding the prophylaxis for poultry through several projects and the support o f NGOs that have been training voluntary village veterinarians. However, the recent outbreak o f avian flu in West Africa and in Burkina Faso i s a real threat for the development o f the poultry sector. Fruits and vegetables. Burkina Faso has a comparative advantage for producing and exporting a number o f non-traditional crops such as fruits (mango) and vegetables (onions, tomatoes, potatoes and beans) for the coastal and European countries where the demand i s high, as well as sesame for export to Europe and the Arabic countries or cowpeas for the sub regional markets including Nigeria. Although these crops represent only a small share o f the current value o f agricultural production and exports, their markets offer substantial potential for growth and they are usually labor intensive, thus offering significant employment creation and income opportunities. The fmits and vegetable sector was once considered extremely promising for Burkina Faso where agro- climatic conditions are particularly favorable to production. Burkina Faso had succeeded in penetrating the global market, including Europe, particularly for green beans. However, the recent performance o f this sub-sector has been disappointing. Production HubertBoirard and others, "Mission d'appui a l'identification des interventions du PDA," February 2004. 29 and exports have declined. While competitor countries such as Kenya, Senegal or Morocco modernized their production methods and organized themselves for undertaking the necessary collective actions, Burkina Faso has so far been unable to increase productivity for remaining competitive, adapt its production to meet the changing preferences o f European consumers or to meet the increasingly stringent quality/safety standards required by markets in developed countries. A recent study conducted by the German Agency for Technical Cooperation (GTZ) on the export possibilities for fruits and vegetables from Burkina Faso recommended that the country focus more on the export o f processed products, such as dry or frozen fruits and vegetables, which would be less adversely affected by the country's landlocked position. Sesame. Sesame is traditionally cultivated all over the country, with the highest concentrations in the Mouhoun belt, which contributes to approximately 65 percent o f total national production. Other important producing regions are the East, the Hauts- Bassins, Cascades, and the Centre-North. Planted in rain-fed areas, sesame does not require much water (250 millimetersto 600 millimeters are enough), and is considered an "easy" crop. Yet both area planted and yields achieved per hectare remain low (around 300 kg to 400 kg). This i s due to, among other things, unreliable external markets. Current levels o f total annual sesame production range from 10,000 to 15,000 metric tons in an average year, with huge differences from one year to the next. The sector strategy notes and Action Plans on the oilseed subsector by the Ministries o f Agriculture and o f Commerce (JITAP Project, ONAC, 2003) served as the documentary base for this review. The oilseed subsector appears to be facing major constraints, specifically: (a) the low level o f professionalization o f the operators and the export networks, (b) the predominance o f the informal sector inthe processing o f oil seeds, and (c) problems with product standards and sanitary conditions (CASEM 2005). Cowpea. The cowpea commodity chain has grown substantially since the 1990s, due mostly to urban and external consumption and demand. Coastal West African countries especially are chronically short o f cowpea (mainly but not limited to CBte d'Ivoire, Ghana, and Nigeria), with Nigeria accounting for about half o f the total regional demand. So there i s good export potential. Inthe mediumterm, demand for cowpea i s expected to lead to production increases o f between 8,000 and 10,000 metric tons per year in rural areas. Having been explicitly identified in the Strategic Operational Plan (Plan Stratkgique Ope`rationnel,PSO) o f the Strategic Outlook Paper (Document d'orientation Stratkgique, DOS) for the agricultural sector since 1999, cowpea production could in certainparts o f the country play a major role inrural poverty reduction. In order to attain a production level o f 600,000 metric tons per year by 2010, the Government has set a target o f 7 percent annual growth in output. There exist no local organizations that specifically include actors inthe traditional (mixed farming systems) cowpea commodity chains. A proxy indicator o f the degree o f specialized expertise o f the different actors i s the way in which cowpea storage and preservation activities are handled. Cleaning and phytosanitary techniques are practiced systematically and are well known throughout the country but make use o f a wide range o f products o f sometimes unreliable quality. Post- storage losses are experienced chiefly by traders but are not frequent at the household level. 30 Annex 2: Major RelatedProjects Financedby IDA and/or other Agencies BURKINA FASO: AgriculturalDiversificationand Market DevelopmentProject Second National Agricultural Services Development Pro-iect (PNDSA 2): With a budget of 25 billion FCFA, the PNDSA 2 was financed by IDA (90 percent) and the Government of Burkina Faso (10 percent). Started in October 1998, the project closed in December 2004. PNDSA 2 focused on the following components: (i) agricultural and pastoral the extension; (ii)animal health and the promotion o f livestock; (iii)technological and agricultural research; (iv) support to the professionalizing farmers' organizations and (v) financing o f local initiatives. Active in the whole country, the PNDSA 2 based its approach on the "training and visit" system. The project introduced innovative actions by testing advisory services based on the demand and financing o f economic micro-projects. With regard to research, the PNDSA 2 enabled the strengthening o f human and logistic capacities o f services and tested collaborative research. The project also enabled the establishment o f some infrastructures to support the commercialization o f products. Nonetheless, the PNDSA 2 was rated as Moderately Unsatisfactory by the World Bank Operations Evaluation Department. Pilot Private IrrigationDevelopment Pro-iect (DIPAC): The DIPAC was financed by IDA for more than 3 billion FCFA. DIPAC started in 1999 and closed in 2004. The project focused on the following areas, among others: management o f watersheds, promotion o f technologies and techniques for small-scale irrigation, and facilitating operators' access to financing. The project also worked on aspects related to the strengthening o f organizational framework for private irrigators, and on the strengthening o f their managerial and technical capacities. DIPAC hugely contributed to the restart and success of the program promoting small-scale local irrigation inprogress inthe country. Proiet de Fixation des Jeunes dans leurs Terroirs: The objective o f this project was to reduce rural exodus o f youths by increasing their revenues inrural areas. It worked on the facilitation o f financing for micro-projects initiated by youths and on relations with supply chains judged profitable. The project was financed by the United Nations Development Program (UNDP) and was implemented during2000-2004. It also included components to improve the technical and organizational capacities o f youths and connected them with micro-finance institutions. Projet d'Appui aux FiliBres Bio-alimentaires (PAF): The PAF works on four supply chains: beef, milk, shea butter and plantain. The approach i s centered on the organization of dialogue, advisory services, and the development o f programs and financial products. The strengthening o f competitiveness i s an important objective o f the project, and the increase o f actors' revenues i s one o f its main expected results. The project started in 1999. 31 Supuort to Competitiveness and Enterprise Development Proiect (Projet d'Appui 6 la Compe'titivite' et au De'veloppement de 1'Entreprise - PACDE): This IDA financed project has two major components including a matching grant fund located inthe Maison de 1'Entreprise du Burkina Faso (ME). This fund supports capacity building for a broad range o f the private sector. The Agricultural Diversification and Market Development Project will build synergies with the ME for private capacity building. The ADMDP will support targeted supply chain actor organizations, and the agency/foundation for agro- sylvo-pastoral (ASP) supply chain promotion will be supported to become a member o f the ME, and ensure that commercial operators of the ASP supply chains will be informed o f the services available inthe ME, and ensure that they will benefit from these services andthe services offered by the ASP Promotion Fund. 32 Annex 3: Results Framework and Monitoring BURKINA FASO: Agricultural Diversification and Market DevelopmentProject Results Framework Project Project Outcome Indicators Use of Project Outcome Development Information Objective Increase the 0 By project closure, Burkina Assess project impact on competitiveness of agricultural exports (cotton Burkina agricultural selected agricultural excluded) for the targeted competitiveness sub-sectors that supply chains reach35,000 target national, sub- tons on international regional and markets international markets 0 By project closure, Burkina a Assessprojectimpacton thereby contributing agricultural exports(cotton Burkina agricultural to shared agricultural excluded) for the targeted competitiveness growth inBurkina supply chains reach20,000 Faso. tons on sub-regional markets 0 Bythe endofproject, at 3 Ensurefairdistributionof least 60% of producersthat value-added along supply benefitedfrom project chains and assess project support have increased their strategy toward income from targeted supply smallholders chains by at least 50% Intermediate Result Indicators Use of Intermediate Results Outcome Monitoring Component1-Imprc tement of agro-sylvo-pastoralsui ldy chain performance Private stakeholders 0 1.1- By the end o fproject, at a Assess project impact on are more competitive least two inter-professional supply chain organization and able to respond would have been created and to market demands lead the preparation o f AOP interms o fquality for the development o f and quantity. supply-chains 0 1.2-By the end o fproject, at 3 Assess project relevance in least 2500 micro-projects supporting small-scale would have beenfinanced private investors and and successfully smallholder producers implemented 33 Intermediate Result Indicators Use of Intermediate Results Outcome Monitoring ~Component 2 -Devel pment of irrigation and marketir: infrastructure I Irrigation and 2.1.1 By the end o fproject, 3 Assessprojectprogressin marketing 5,000 ha of landwould have promoting private infrastructures are in beenirrigated irrigation and increasing place and efficiently 0 2.1.2- By the end o f agricultural productivity managed by private projects, at least 1000 ha operators. would have beenequipped with small-scale irrigation equipments. 0 2.2- 100% o f marketing 3 Ensureadequateprivate infrastructures developed by management and operation the project are managedby o f marketing specialized private operators 1 infrastructures Intermediate Result Indicators Use of Intermediate Results Outcome Monitoring Component 3 -Improvement of the businessenvironment, regulatoryframework and urovision of advisory wices The business 0 3.1- By the end o f project, at 3 Ensureproject environment has least five constraints, interventions address key improved with identifiedby supply chain constraints to private diversified and private operators, would investmentand seek to efficient public and have beenremovedthanks to attract international private private service the adoptionand investors providers. disseminationof legal and regulatory measures 0 3.2.1- An action planto a Assessprojecteffortsto improve capacities o f public support public-private and private service providers partnership for supply has been elaborated and chain development implementedthrough 3 Assessprojectimpacton performance-based M&Ecapacities within contractual arrangements supply chains and sector 0 3.2.2- M&Eresults are Ministries disseminated to private operators at least twice a year by the Ministries of Agriculture, Livestock and Commerce 34 P n -4 s IA N 3 2 + 3 n s s 3 3 d in E: 30 n i 3 n 0 m 3 d 2 n N ~ 3 n - 0 0 d 0 3 0 i in 0 d 2 3 3 s s 0 d m m 0 m 0 00 3 g 3 3 0 m n E: 0r-4 3 r-4 s s rn rn i r-4 0 3 0 h 0 8a, 9 $aE v) 2 8n aE: x2P; Y I c-4 N 3 4: c vr 3 0 0 Annex 4: DetailedProjectDescription BURKINA FASO: Agricultural Diversificationand Market DevelopmentProject Development Objective: The project development objective i s to increase the competitiveness o f selected agricultural sub-sectors that target national, sub-regional and international markets thereby contributing to shared agricultural growth in Burkina Faso. To achieve this objective the program will pursue the three following sub-objectives: (i) support private sector organizations and commodity associations instrengtheningtheir ability to plan and implement a sound strategy for the development of market-driven agricultural supply chains (ASC); (ii)develop productive and marketing infrastructure to improve productivity, agricultural product quality and linkages with markets; and (iii)improve the provision and efficiency of core support services, including the promotion o f a more conducive institutional, regulatory and financial environment for private investment. The project will result in the following outcomes: (i)a better organization and coordination of private operators all along the selected supply chain; (ii) professional and inter-professional organizations able to deliver services to their members and help them better respond to market requirements in terms o f product quality and quantity; (iii) an increase in the value o f production and exports o f selected sub-sectors; (iv) a legal/ regulatory framework and a business investment environment, more attractive to private investors and (v) a network o f public and private service providers, prompt and efficient inresponding to private operators needs in terms of training, advisory services, quality controls, etc. Key performanceindicators: The keyperformance indicators, bythe end o fproject, are the following: 0 Burkina agricultural exports for the targeted supply chains (except cotton) on the international market reach 35,000 tons at the end o fthe project; 0 Burkina agricultural exports for the targeted supply chains (except cotton) on the sub- regional marketreach 20,000 tons at the end o f the project; 0 At least 60% o f producers that benefitedproject support have increased their income from targeted supply chains by at least 50%. Targeted supply chains: The most promising sub-sectors, and specific supply chains within them, were selected based on a long selection process involving all private stakeholders and public services, based on a scoring system. The following five criteria guided the process: (i) existingand potential markets; (ii)scope and coverage in terms o f beneficiaries and area; (iii) potential increase of production and productivity; (iv) potential to process the production and get marketable high-value byproducts and (v) socioeconomic impact. 38 Project support will focus on the four following supply chains: mangoes; onions; cattlebeef; and local poultry. Inaddition: 0 Cotton will be supported inclose collaboration with a AFD fundedproject, with a focus on cotton productivity and farming system diversification in cotton producing areas; 0 Cowpeas and sesame will be specifically supported by an IFAD project under preparation. The development o f the fruits and vegetables sub-sector and its associated supply chains (onions and mangoes) would be linked to the development o f irrigation. During project implementation, other supply chains, potentially profitable or with emerging markets, in the fruits and vegetables sub-sector could be identifiedand benefitfrom project support. The project will have a national coverage, but will more specifically focus on regions not targeted by other supply chain development projects, such as the.GTZ-funded project (PDA) inthe South-West region and the Danish-funded project (PADAB) inthe East and East-Center regions. Project Strategic Approach Project designhas beenguidedby the following principles: 0 Market-oriented supply chain development: Interventions to support the private sector and the development o f commercial agriculture are likely to be successful if they are based on the identification and assessment o f market opportunities and comparative advantage and worked backwards to the production level. The selection of supply-chains to be supported by the project will be based on market potentialities. 0 Private sector-led interventions: Supply chain development must be private sector led, with public interventions aimed at helping the private sector overcome critical constraints and market failures. The approach needs to be bottom-up and interventions must be driven by economically viable projects promoted by private sector and professional organizations. Private operators, including professional and producers' organizations, must play the leading role in developing supply chains by collaborating to identify key constraints and elaborate operational solutions to lift them. Establishing dialogue and building partnership among private operators along supply chains will be at the core ofthe project implementation strategy. 0 Public-private partnership: Public services will not be directly engaged in supply chain operations, but they will have to provide a range of key services for supply chain development, in terms of regulation and control. The establishment of a constant dialogue betweenprivate operators and public services will help identify key legal and regulatory constraints to improve the business environment, attack strategic investors and offer efficient services to private operators. 39 Holistic approach of competitiveness: As demonstrated in other countries, the project should look at supply chains as a whole, paying attention to all aspects from production to commercialization, to tackle key constraints and bottlenecks all along the supply chains. Quick impact: The project would aim at achieving a quick impact on growth. Although adopting an inclusive approach, the project would thus give a specific focus to promising commodities/sub-sectors that are already reasonably organized, building on existing professional associations and private operators that are already linked to markets and open to collective action for adjusting to the increasingly demanding quality and safety requirements o f urban and export markets. Equitable distribution of value added: Agricultural supply chains are often driven by large private operators who may exert excessive power on the other actors o f the chain. The project would promote innovative contractual arrangements among supply chain operators (such as contract farming, etc.), while ensuring that they are balanced and that the value added along the supply chain i s shared by all. It will pay particular attention to producers, most the time the weakest actors in supply chains, by strengtheningtheir capacities to address key constraints at their level and to engage in fair and balanced partnership with other stakeholders (increasing their bargaining power). Project Components The proposed project will include three components to be implementedover six years and will be dividedinthe three following components: 1. Improvement of agro-sylvo-pastoral supply chains performance that will address the weak supply chain organization, strengthenprofessional and commodity associations and increase Burkina agricultural product competitiveness; 2. Development of irrigation and marketing infrastructure to improve productivity, product quality and linkages with markets; 3. Improvement of the business environment, regulatory framework and provision of services to facilitate private initiative and attract private investors. 40 Component 1 Improvement of Agro-sylvo-pastoral supply chains performance - (US$28.0 million) (IDA financing) Component Objective: The objective o f this component is to improve the performance o f the targeted sub-sectors by improving supply chain coordination, by strengtheningprivate operators' capacities to respond to market opportunities and requirements, and by increasing agricultural product productivity. Issues to be addressed: Although the selected ASP sub-sectors are the main pillars o f Burkina Faso's economy, the competitiveness o f these sub-sectors has been hampered by (a) the weak organization and interaction among actors at the different levels o f the supply chains, (b) the insufficient range and quality o f financial and business management services o f commercial operators, and their difficulty inaccessing credit, (c) the weaknesses o f trade and industry organizations, and (d) the difficulty for producers to access markets and respond to market demand interms o f quality and quantity. Target Groups: Activities under this component will primarily focus on private stakeholders along the targeted supply chains, from producers, small-scale rural agro- processors and traders to exporters, agro-investors and agro-industries. Project interventions will buildupon existing private institutions such as producer organizations, professional associations and commodity and trade organizations. Sub-component 1.1 - Capacity building for professional and agricultural trade organization (US$7.0 million): This sub-component will contribute to improve coordination and performance o f the targeted sub-sectors by bringing together key stakeholders to identify and lift key constraints to supply chains development. The main programmatic vehicle for the development o f sub-sectors will be the supply chain strategic development plan (SDP). Project support will consist o f capacity building and technical assistance to stakeholders to help them: (a) carry out a comprehensive diagnostic o f the supply chain, identify the strengths and weaknesses and the bottlenecks hampering supply chain competitiveness; (b) elaborate SDPs that clearly states actions to be undertaken, distribution of responsibilities among partners, implementation modalities and cost estimates; (c) prepare annual operational plans (AOP) based on their SDP and that will be financed under a supply chain promotion fund (see sub-component 2); (d) build efficient professional organizations that deliver requiredservices to their members; (e) set-up M&E systems to monitor supply chain performances and assess impact at the different level, especially on smallholder incomes; and, (f) organize annual regional and national workshops to assess progress inthe implementation o f the SDP. For the four selected supply chains (cattlebeef, mangoes, onion, poultry), the project will build upon existing professional organizations, but first it will undertake in-depth institutional diagnoses to clarify the role and current performances o f the different stakeholders. It will then promote collaboration and coordination along supply chains for the elaboration o f strategic development plan and annual operationplans. Implementation modalities (see details in annex 6) will include the recruitment o f strategic partners, with relevant international experience insupply chain development. Under performance-based 41 contracts, they will provide momentum and coordination for the institutional buildingo f the selected supply chains. They will facilitate supply chain organization, as well as SDPs' elaboration and implementation. The proposed SDPs may include large- or medium-scale infrastructure whose realization will be taken into account in the framework o f the marketing infrastructure component. The project will also support the development o f market information systems, by building upon existing systems, such as "Trade Point," managed by the National Board o f Foreign Trade (Ofice National du Commerce Exte`rieur), the livestock information system operated by a local NGO, or the information system on cereal markets operated by the Ministryof Agriculture. Strengths and weaknesses of these information systems will be assessed and capacity-building activities will be undertaken to increase their performances and to create a sound network o f market information systems that disseminates strategic information to operators on a regular basis (marketing intelligence). Inaddition to the above commodities, there are multitudes of interesting diversification crops that, although making only a small contribution to agricultural GDP, can make a significant contribution to project objectives. During project implementation, other supply chains, potentially profitable or because o f emergingof markets, especially inthe fruits and vegetables sub-sector, could be identified. They may benefit from project support based on private operator demand and specific eligibility criteria and instruments. For the cotton sub-sector, the national cotton producer organization (UNPCB) and the three ginning factories have recently created their inter-professional association to undertake collective action and identify mechanism to manage commodity price risk. For years, this sector has been relatively well organized and UNPCB has become a credible and efficient professional organization. An action plan for the development o f the cotton sector has been prepared and adopted by stakeholders. Within this actions plan, the project will finance activities for producer organizations' capacity building (training, information sharing and knowledge management), small-scale storage facilities for POs, as well as activities related to cotton productivity increase and farming system diversification. Support to cotton POs will include specific activities to raise producer awareness and participation to decision making processes regarding GMOs and biosafety regulation. The French Development Agency (AFD) will finance activities related to research on soil fertility improvement, POs financial management, technical and management advice to producers, price risk management actions. A Diagnostic Trade Integration Study (DTIS): is under preparation for Burkina Faso. It seeks to: (a) identify the constraints the country faces in integrating into the global economy; (b) develop a cohesive program that outlines the actions requiredfor removing these obstacles and making trade an integral component o f the national development strategy; and (c) identify technical assistance needs and coordinate donor support. The DTIS report will be issued by the start-up o f project activities. The project will build on the findings of the DTIS to adjust its intervention and the content o f the SDP and the AOP. The sub component will support the organization o f stakeholders' workshop to 42 disseminate and discuss the finding o f the DTIS and include the main recommendations into the SDP. Finally, this sub-component would support the creation o f a private agency or foundation for the promotion o f Burkinabk supply chains and provide services to private actors. This agency could be set-up as an autonomous institution with an independent board o f directors representing the main stakeholders and a funding mechanism. A sustainable financing mechanism will be developed before the end o f the project to ensure financial sustainability through cost recovery. Feasibility studies are currently carried out to provide further analysis on needs and pre-requisites for the establishment o f this agency. Consultations with private operators have already started and fwther discussion will be undertaken under project implementation. Sub-component 1.2 - Investments for supply chain development (US$21.0 million): This sub-component will provide funds for investmentsrequiredto improve supply chain performance. First, it will finance the implementation o f the different annual operation plans (AOPs) elaborated inthe framework o f the sub-component 1.1and validated by the project steering committee. It will also finance investment operations undertaken by individual operators or professional associations inthe selected supply chains, and which are consistent with the relevant supply chain SDP and the AOPs. To this end, the project will support the establishment o f a supply chain promotion fund that will provide matching grants to finance micro-projects proposed by smallholders and small-scale processors for specific categories o f investments, such as: adaptive research for technology generation and test, capacity building activities, market studies, logistic tests, small-scale equipment and infrastructure, technology tests and dissemination, technical advisory services, food safety and quality expertise, etc. The supply chain promotion fund will be managed by a commercial bank. Operationalmechanisms will be detailed inthe Project Implementation Manual. This sub-component will also facilitate access to credit to private investors, small-scale rural entrepreneursand smallholders. It will liaise with commercial banks and the micro- finance institutions to help them test innovative financing instruments(leasing, inventory credit, etc.) and to mobilize existing instruments, such as the guarantee facility successfully established underthe Pilot Private Irrigation Project. For the selected supply chains, potential investmentsmay include the followings: 0 Fruitsand vegetable: studies onmarketing opportunities and strategy to conquer EU markets and to diversify toward North Africa and Middle East countries markets, commercial and marketing specialists, logistic tests, exhibitions, varieties trials and development, post-harvest operations (processing and packaging), creation o f a national exchange and regional wholesale markets, Bwkina label for organic products; establishment o f contractual arrangements with buyers from coastal countries. 43 0 Cattle/beef and poultry: market studies, opportunities for a Burkina label, production and dissemination o f best-practices guides, creation or improvement o f local standards (ex: sale kiosk for poultry roasters), contractual arrangements with buyersincoastal countries. Component2 Developmentof irrigationandmarketinginfrastructure - (US$26.7 million) (IDA financing) Component Objective: The objective o f this component i s to contribute to agricultural productivity increase, product quality improvement, and agricultural diversification while strengtheningproducers' linkages to markets. Issues Addressed: The component will address: (i) low productivity in the targeted the supply chains; (ii)the lack of productive and marketing infrastructures; (iii)the implementation o f private-led management and operation modalities for commercial infrastructures. Target Groups: The target group includes all stakeholders involved inthe targeted supply chains that may be interested in the construction o f productive and marketing infrastructures. Sub-component2.1 Irrigationinfrastructure(US$20.7 million): - The project will support the development o ftwo types o f irrigation approaches: (i) The development, on a pilot basis, o f large-scale irrigation schemes (1,000 to 1,500 ha - "Valle`e du Sourou" ou "Bagre"') with the promotion o f private investments for the production o f high-value crops by private investors (on plot allocations o f 10 to 50 ha). Implementation modalities for large-scale irrigation schemes will rely on private operators that will be recruited to ensure, under the supervision o fthe Ministry o f Agriculture, the overall coordination o f the process. (ii) The development of small-scale irrigation for producer associations and individual investors, including the creation or the rehabilitation o f irrigation schemes and the dissemination o f innovative technologies. The approach will build upon the experience o f the now closed Pilot Private Irrigation Promotion Project and o f the Small Scale Village Irrigation Program. Operators, such as APIPAC or Centre Albert Schweitzer, will be selected to: (i) conduct tests and demonstrations o f equipment for pumping, transporting and storing water; (ii) strengthen and expand existing networks o f artisans for the manufacturing and maintenance o f small equipment; (iii) provide technical advice to investors for the acquisition o f equipment adapted to their investment project (in terms o f water availability, types o f production, financial and technical situation); (iv) facilitate access to credit and to innovative financing instruments (leasing for instance); 44 and, (v) facilitate access to technical advice service providers for the proper valorization o f investment. Sub-component2.2 MarketingInfrastructure(US$6.0 million): - The financing on public funds o f key commercial infrastructure (logistical platforms, exports terminals, pack-houses, cold storage facilities, etc.) i s justified as a way to lift a major constraint to the development o f performing agricultural supply chains. Burkina Faso i s under-equippedto compete effectively on the fresh product export markets that require adapted and efficient logistics and post-harvest treatments, particularly cold chains, and strict compliance with the more and more stringent consumer requirements in terms o f standards, quality and safety. Project interventions in this area will thus consist of: (i)up-grading or rehabilitating existing commercial infrastructure; (ii)building new facilities, already identified as required and vital to compete on the international markets; and, (iii) building medium- scale infrastructure that will be identifiedunder project implementation inthe framework o fthe elaboration o fPSDby the targeted supply chain. The construction or upgrading o f feeder roads will be excluded from the ADMDP since it i s already included inthe PST2 project currently under implementation. However, within the PSD elaboration process, supply chain stakeholders are expected to identify priority roads to be rehabilitated or feeder roads to be constructed by PST2. The project will contribute to the buildingo fthe following infrastructure: Fruits and Vegetables sub-sector: The project will finance limited additional investments for up grading the fruit terminal inBobo-Dioulasso and the cold storage facilities at Ouagadougou airport. Management and operation modalities will be assessed and revised as required. New investments will be supported for the installation o f handling equipment and storage facilities at Bobo-Dioulasso airport, pilot agro-processing units andpackaging and logistical platforms inproduction areas. Cattle/beef and poultry: The project will help the Ouagadougou slaughterhouse meet international standard requirements and will support the rehabilitation o f cold storage facilities at Ouagadougou airport (for meat and poultry export). It will contribute to the construction o f a new slaughterhouse inBobo-Dioulasso, four small- scale poultry slaughterhouses in Ouagadougou and Bobo-Dioulasso, and vaccination parks inproduction areas. The project will ensure that all these infrastructure are properly managed and operated by the private sector. The critical aspects inthese investmentsis to conciliate the necessity to have these facilities operated as efficiently and professionally as possible and the public role dimension o f the infrastructure as a vector o f innovation and development for the entire supply chain, including small farmers who otherwise would not have access to more lucrative marketing channels. Experience has shown that these facilities require 45 private sector management and that their ownership should be transferred over the medium to long term to credible professional organizations. This model has been implemented successfully - or is in the process of being implemented - in several countries o f sub-Saharan Africa such as Senegal and Ghana. However, this i s a complex process to be initiated and carried out with industry stakeholders and farmers organizations. It takes time and adequate support will be provided in terms o f technical assistance, institutional strengtheningand capacity building. Component 3 - Improvement of the business environment, regulatory framework and provisionof services (US$11.3 million) (IDA financing) Component Objective: This component aims at improving the business environment to make it more attractive to local and international private investors, by creating an enabling legal and regulatory framework more conducive to private investments and by strengtheningcapacities o f public and private service providers requiredfor supply chain development. Issues Addressed: The component will address the following issues: (i) regulatory legal, and financial constraints to private investments; (ii) and quality control, and (iii) norms weak public and private service providers. Target Groups: The target group includes core public services within the Ministry o f Livestock, the Ministry o f Agriculture, the Ministry o f Environment and the Ministry o f Trade, as well as private service providers. Sub-component 3.1 Improvement of Regulatory, Legal, and Financial Framework - (US$1.3 million): The current overall policy/institutional framework provide an acceptable starting base for project implementation. Supply chain organization that will be carried out under component 1 will contribute to identify key constraints to be tackled. The project itself would only address constraints directly affecting selected sub-sectors and more broadly agricultural exports (specific constraints in the policy and regulatory framework and weaknesses o f relevant public services, such as ONAC and FASONORM). The other, more "cross-cutting" constraints would be addressed under other government's programs, based on the analysis and recommendations o f the on-going DTIS. The project's monitoring and evaluation mechanism would however help tracking constraints in the policy and institutional environment and bringing them to the attention o f policy-maker. This project will support the revision and adaptation o f key legal and regulatory texts in accordance with existing regulations related to production, agro-processing and exports within the West Africa Economic Monetary Union(WAEMU) trading environment, and with respect to the European Union regulations of the African Growth and Opportunity Act (AGOA) trade preference arrangement, and World Trade Organization agreements. New legal and regulatory texts could be elaborated on specific emerging issues, such as the legal framework for inter-professional and commodity trade organizations' activities. 46 The project will ensure a broad dissemination o f information to operators through various channels such as the Regional Agricultural Chambers and the Chamber o f Commerce. The project will support the Ministry o fAgriculture, incollaborationwith the Ministryof Finance, to begin and lead a dialogue with financial institutions and input providers to identify and test a set of financial tools providing the opportunity for long-term capital and favoring the development o f agricultural supply chains, including leasing mechanisms for processing and agricultural equipment, and reduction o f agricultural interest rates. Since the PNGT i s currently addressing the issue o f land tenure, and a task force involving key stakeholders i s working on the preparation o f a national rural land tenure policy, the project will support: (a) the organization o fworkshops to strengthenthe capacity o f producer organizations to participate in the policy dialogue and ensure that their concerns are taken into account; and (b) the dissemination o f the new land policy law (after adoption by the Government) through the organization o f workshops, broadcasting on rural radio stations, and the diffusion o f pamphlets in local languages to producers. Sub-component 3.2 - Capacity building for service providers (US$4.7 million): This sub-component will be two-fold by: (i)building capacities o f private service providers, including technical advisory providers for smallholders, accounting and management advisers for professional associations, local firms for micro-project preparation and feasibility study at the grassroots level, networks o f private input suppliers and artisans for equipment manufacturing and maintenance; (ii) strengthening the capacities of core public services to deliver proper support to supply chain development (veterinary, sanitary and phyto-sanitary controls, policy regulation, regulation enforcement, sector coordination) and ensure a close and reliable monitoring and evaluation o fthe agricultural sector and sub-sectors. Public services missions interms o f regulation and controls are particularly crucial given the fact that access to regional and international markets i s submitted to very strict regulations with regard to the quality o f inputs (seeds, fertilizers, pesticides) and products. At the start o f the project, consultation with private operators will contribute to identify specific issues and constraints (public missions that are not fulfilled, supporting services that are required, etc.). The definition o f measures to be taken, and monitoring and enforcement methods, will be carried out in close collaboration with the private sector. This process will result in the definition o f an action plan for strengthening the service provider environment. Implementation o f this action planwill be supported by the project and other programs. Project support to private and public services will consist o f training, studies and expertise, as well as equipment to ensure efficient functioning of services. Project funding will be conditioned to the elaboration of performance-based contracts between service providers and their clients. 47 As far as cotton and development of genetically modified crops are concerned, the project will pay particular attention to the implementationo f a biosafety regulatory framework in order to ensure safe field trials and commercial release, if proven safe, o f transgenic seeds. A West Africa Regional Biosafety Project i s under preparation to help the eight WAEMU countries set up and enforce biosafety regulatory framework. However, implementation o f this regional project will not start before 2007 and Burkina Faso has already been testing transgenic cotton for three years with private sponsors. Project support will thus bridge the gap by answering urgent needs for: (i)strengthening the National Biosafety Agency, which i s the legal authority incharge o f biosafety regulation inBurkina (and the first inthe sub-region); and, (ii) up a regional observatory to setting monitor impacts o f transgenic cotton introduction on environment, food and feed safety, as well as to carry out socio-economic analysis o f agricultural biotechnology. Finally, the project will support the creation or the strengtheningo f sector and sub-sectors monitoring and evaluation systems within the Ministries o f Agriculture, Livestock and Trade. These systems will be responsible for collecting data in the various sub-sectors, for compiling and analyzing results, and for periodically disseminating information to all stakeholders on agricultural supply chain performance and market development. In addition, the project will help the Ministry o f Environment ensure the following missions: monitoring of project environmental impacts, implementation o f the pest management plan and other mitigation measures with respects to environmental safeguards. Sub-component3.3 ProjectCoordinationand Management (US5.3 million): - This sub-component will support the establishment and operation of a small team o f specialists (the "PCU") located within the Ministry o f Agriculture, Fisheries and Water Resources. Implementation o f activities will be directly undertaken by project beneficiaries, including: i)private actors, with the support o f specialized operators and many service providers; and, ii)the relevant public services involved in the project. The project coverage will be nation-wide. Therefore, the PCU will coordinate interventions and the preparation o f annual work plans and budgets, oversee financial management and procurement aspects and ensure the overall monitoring and evaluation o f project activities and impact. Three local offices will be established at the decentralized level to ensure closer coordination o f field activities and a proper and more efficient coverage o f the regions covered by project interventions. Within the PCU, a M&E unit will be set up for establishing and maintaining a database o f outgrowers and service providers, o f subprojects financed under Supply Chain Promotion Fund, and for updating key performance indicators. The M&E unit will elaborate and edit periodic reports, organize periodic surveys, and conduct economic, social, and environmental impact evaluations, among other studies. The project will finance the PCU staff and operating costs, technical assistance related to the recruitment o f service providers at national and regional levels, capacity building for project staff including focal points within implementing agencies, and audits. The project will also finance equipment (computers, vehicles) and goods (software, digitized maps). 48 Annex 5: Project Costs BURKINAFASO: Agricultural Diversificationand MarketDevelopmentProject Project Cost by Component Indicative Component IDA IDAI andlor Activity Total I costs Total Cost Financing total costs (US$M ) (%) (US$M) ("/I 1.Improvementof agro-sylvo- 39.5 46.7% 28.0 70.9% pastoral supply chains performance 1.1 Capacitybuildingfor professional 7.0 8.3% 7.0 100.0% organizations& agriculturaltrade associations 1.2 Investmentfor supply chain 32.5 38.5% 21.0 64.6% development 2. Development of irrigation 33.7 39.9% 26.7 79.2% and marketing infrastructure 2.1 IrrigationInfrastructure 26.7 31.6% 20.7 77.5% 2.2 MarketingInfrastructure 7.O 8.3% 6.0 85.7% 3. Improving of the business 11.3 13.4% 11.3 100.0% environment, regulatory framework and provision of advisory services 3.1 Improvementofthe regulatory, legal 1.3 1.5% 1.3 100.0% and financial framework 3.2 Capacitybuildingfor service 4.7 5.4% 4.7 100.0% providers 3.3 Projectmanagement andmonitoring 5.3 6.3% 5.3 100.0% & Evaluation Total Project Costs' 84.5 100.0% 66.0 78.1Yo 1 . includingPPF refinancingand contingencies 49 Project Cost by % Y O Component and/or Local Foreign Total Foreign Total Activity (US$M) (US$M)) (US$M) exchange base costs 1.Improvementof agro- 28.9 8.1 37.0 22% 47% sylvo-pastoral supply chains performance 1.1 Capacity building for 5.0 1.6 6.6 24% 8YO professional organizations & agricultural trade associations 1.2 Investmentfor supply chain 23.8 6.5 30.3 22% 38% development 2. Development of 20.3 11.2 31.5 36% 40% irrigation and marketing infrastructure 2.1 Irrigation Infrastructure 16.2 8.6 24.8 34% 31% 2.2 Marketing Infrastructure 4.0 2.7 6.7 40% 8YO 3. Improving of the 7.5 3.2 10.7 30% 14% business environment, regulatory framework and provision of advisory services 3.1 Improvement o fthe 1.2 0.0 1.2 0% 2Yo regulatory, legal and financial framework 3.2 Capacity building for service 2.6 1.8 4.4 42% 6% providers 3.3 Project management and 3.7 1.2 4.9 26% 6% monitoring & Evaluation Total BaselineCosts 56.7 22.5 79.2 28% 100% Physical Contingencies - - Price Contingencies 3.6 1.7 5.3 7yo Total Project Costs' 60.3 24.2 84.5 29% 107% including PPF refinancing 50 Annex 6: ImplementationArrangements BURKINA FASO:AgriculturalDiversificationandMarket DevelopmentProject PartnershipArrangements Support to the project represents IDA'S contribution to the Government's broader program for agricultural diversification and marketing as stipulated in the Rural Development Strategy paper. IFAD andthe French Development Agency (AFD) are supporting the program through a contribution to the project with parallel financing. Danish, Canadian and German cooperation agencies are also supporting the program through their on-going projects. USAIDAJSDA is supporting biotechnology and the cotton sector. The project will develop synergies with all the donors interveningin supply chain development. Donor coordination will be enhanced through a permanent dialogue in the framework o f the "cadre de concertation des partenaires au de`veloppement'', a mechanism set up by the government to coordinate major donor interventions in the rural/agricultural sector. This initiative i s in line with the "Global Donor Platform for Rural Development" (GDPRD) initiative to support harmonizationand alignment o f donor supported activities in Africa. During the project preparation phase, the Bank agreed with other donors to start harmonization on key issues including M&E systems, micro-project financing rules andjoint supervision missions. The project will develop a collaborative framework with the following Bank projects and programs: (a) PST2, for rural roads, (b) PNGT2, for community infrastructure and the link with local governments, (c) Regional Biosafety Project, for agricultural biotechnology, (e) PACDE, for capacity building o f commercial enterprises, and (e) DTIS, for agricultural sector competitiveness. The project will support the General Secretaries o f the Ministry o f Agriculture, Water Resources and Fisheries to organize regular meetings between ADMDP and other projects financed by the Bank to discuss collaboration issues and define operational collaboration mechanisms. They will organize at least onejoint field mission a year. InstitutionalandImplementationArrangements The Ministry o f Agriculture, Water Resources and Fisheries (MAWRF) will have institutional responsibility for the project and will be accountable for the project's implementationand supervision. ProjectCoordinationBodies A Project Steering Committee (PSC) will be established at the national level to ensure project oversight. Effective private-public partnership will be supported through its composition: two-thirds o f members will be private sector and civil society representatives, including the Chamber o f Commerce, the Chamber o f Agriculture, a 51 representative o f the financial institutions, and seven representatives o f each o f the supply chain organizations. The donors would be invited to attend the meetings o f the PSC to enhance coordination, harmonization and alignment between ADMDP and donor activities. The PSC mandate will include approval o f the project's annual consolidated work program and budgets, monitoring o f project progress, and conflict resolution, when they arise. The PSC will organize two annual meetings. Regional Coordination Committees (RCCs): They will be set up in each o f the regions covered by the project as sub-committeee o f the "Comite Regional de Coordination des Politiques Sectorielles Agricoles (CRCFSA)'' that was recently established to coordinate donor interventions in rural areas. The RCCs will ensure that local private stakeholders (producers, processors and traders) and local authorities (local governments and decentralized ministries) are filly participating inthe project implementation. The RCCs will meet twice a year to: i)discuss the orientation and activities to be included in the annual operational plan and the project annual work program, ii)review project implementation progress in the region and main issues, iii)enhance harmonization and alignment o f donor intervention inthe region and, iv) provide adequate recommendations to the PCU and the National Steering Committee. ProjectManagementBodies Project management at the national level: A Project Coordination Unit (PCU) attached to the General Secretariat within the MAWRF will coordinate the overall management o f the project as many structures will be involved in project implementation, including several private sector organizations, as well as three Ministries (Livestock, MAWRF and Trade). The PCU mandate includes the preparation o f consolidated annual work plans and budgets based on submissions from the implementation partners, the financial management and procurement, the general supervision o f the implementation o f project activities, the monitoring and evaluation o f project outcome, and output implementation progress. The PCU will be headed by a National Project Coordinator with demonstrated broad management experience in agribusiness, acceptable to IDA. He/she will be assisted by a technical director (private sector development specialist) and a technical team composed o f a professional organizations specialist, a value/supply chain development specialist; a training specialist; an administrative and financial management specialist, a procurement specialist, an M&E specialist and an accountant. All staff will be competitively recruited on the basis o fthe terms o f reference (TOR) acceptable to IDA. Project management at the regional level: Three decentralized project coordination local offices will be established to coordinate project activities inthe field. Each o f these local offices will cover two or three regions in relation to the agro-ecological delimitation o f the country. They will supervise overall project implementation in its intervention zone, act as the secretariat for the regional coordination and micro-project approval committees, recruit local service providers, and ensure data collection and management. Each local office will be composed o f a coordinator with project implementation and supervision experience, a financial/procurement specialist, and a supply chaidmarketing specialist. 52 ProjectImplementationManual(PIM) A PIM will be prepared before project effectiveness to detail project implementation mechanisms and procedures. It will include: i)description, organization, and functioning o f project coordination and management bodies, ii)eligibility criteria and procedures for project support, iii)implementation modalities for each component and activity, iv) M&E arrangements and procedures and v) implementation arrangements for the social and environmental mitigation plan. ProjectImplementationArrangement Component1:Improvementof agro-sylvo-pastoralsupply chain performance Subcomponent 1.1 - Capacit-v building -for professional organizations and awicultural trade associations Specialized operators with relevant international experience in supply chain development will be contracted out by the PCU at the start o f the project under performance-based contracts. They will support capacity building o f the existing organization and will help create agricultural trade organizations for the selected supply chains (fruits and vegetables, cattle/beef and poultry). The operators will arrange for an organizational and functional audit of the existing organizations, support the supply chain stakeholders to prepare a strategic action plan and annual action plans. For the cotton sub-sector, UNPCB will be fully responsible for implementingits strategic development and annual operation plans co-financed by IDA and the Frenchcooperation, based on contractual arrangements with the PCU. Subcomponent 1.2-Investments-for supplv chain development The local office will set up a database o f service providers at regional and provincial level. The local office will contract the service providers (NGO, consultant firms) to: i) disseminate information on project intervention, eligible activities and founding mechanisms, and; ii)help potential beneficiaries to formulate their demand. The selection and approval of eligible micro-projects are detailed below in the "Micro-projects selection and approval process" section. A convention will be established between the PCU and a financial institution represented country-wide for the management o f the promotion fund. The micro-projects approved at the local office level will be directly financed by the decentralized financial institutionbranches. Component2 Developmentof irrigationand marketinginfrastructure - Subcomponent2.1 - Irrigation infrastructure Specialized operators will be selected through a competitive bidding process to coordinate and supervise implementation o f this component. They will contract service providers for studies and support to beneficiaries for the preparation o f irrigation micro- project proposals. Approved proposals will be financed through a matching grant according to the procedures defined inthe National Irrigation Strategy. Beneficiaries will 53 be fully responsible for the hiring o f firms to do the work. The irrigation management unit of the Ministry of Agriculture will be responsible for the monitoring and evaluation o fthe component. Subcomponent 2.2 -Marketing infrastructures The PCU will contract specialized operators through a competitive bidding process to implement the construction of core infrastructures. Work will start subject to the definition o f management mechanisms by the government, and the selection o f a specialized private operator, incharge o fthe management o fthese infrastructures. Component 3 - Improvement of the business environment, regulatory framework and provision of advisory services Subcomponent 3.1 and Subcomponent 3.2 International or local consultants will be contracted out for studies and workshops organized by supply chain organizations and relevant ministries. At the start of the project, consultation with private operators will contribute to the identification o f specific issues and constraints hampering supply chain development related to regulations, laws and public missions. Some o f these issues have already been identified during project preparation. This process will result in the definition o f an action plan aimed at strengtheningthe service provider environment. Implementation of this action plan will be done through result-based performance contracting between the project and core public and private service providers. The local office will directly contract the decentralized line ministry agencies and provide them with the corresponding financing needed for implementation. Micro-projects selection and approval process Micro-projects approval committees: Three micro-projects approval committees will be set up at the local level to review and approve micro-project proposals. The committees will be composed of representatives of the supply chain organizations, local chambers o f agriculture, local chambers o f commerce, technical services o f the MAWRF and Ministry o f Livestock. Details o f the selection process and criteria as well as eligible activities will be included inthe PIM. Micro-Droiect eligibility criteria Eligibility criteria andprocedures for micro-projects financed through the promotion fund would state that: No proposed micro-project shall be eligible for financing under the project unless the micro-projects approval committee has determined, on the basis of an appraisal, that the proposedmicro-project satisfies the eligibility criteria as detailed inthe PIM, which shall include, inter alia, the following: 54 (i)The proposed micro-project shall be initiated by individuals or groups (women, youths, producers, agro-processors, traders, etc.) which meet the eligibility criteria specifiedinthe PIM; (ii) proposed micro-project shall be for, but not limitedto, activities as The detailed inthe P I M and inthe annual operational action plan; (iii)The proposed micro-project shall be technically, economically and financially profitable; (iv)Animpact and environmental assessmenthave beencarried out and mitigation measures identified, and; (v) The beneficiary has demonstrated its capacity to mobilize its contribution. Monitoring and evaluation of outcome/results The project will finance the design and implementationo f a participatory monitoring and evaluation system: 0 foster accountability and transparency inthe management process; 0 set mutually agreed, realistic and clear results for this operation; 0 engage stakeholders by sharing information on progress made, lessons learned and improvements; 0 measure the gaps between actual and targeted indicator values, thereby identifying problems, and; 0 Propose corrective measures and alternative solutions. The M&E system will be run by the PCU located within the Ministry o f Agriculture, Fisheries and Water Resources. The PCU will disseminate M&E outputs (M&E reports and dashboards) to all the stakeholders involved in the project, particularly i)the beneficiaries, ii)the Ministry o f Agriculture, Fisheries and Water Resources, iii)the Ministry of Livestock, and iv) the donors. A mechanism to involve implementing agencies as managers o f the system will be implemented in order to increase ownership and the use o f M&E outputs. To that regard, implementing agencies will be strengthened to monitor and evaluate their activities. Data collected and processed by implementing agencies will be transmitted to the PCU, which will consolidate them and produce M&E reports and dashboards. APIPAC and UNPCB have already an M&E unit. The project will support the set up of an M&E unit (provision of an M&E specialist and equipment) for the cattlebeef professional association. The M&E systems o f the ministries o f Agriculture and Livestock will be strengthened to collect and manage and disseminate data related to overall sector information inrelation with private sector M&E systems. Interms of data, because it is hardly possible to establish targets or to measure progress without knowing what the situation i s like at the beginning o f the project, baseline data will be established before the project starts. They will reflect, as near as possible, the value o f each indicator at the outset and they will be the values against which changes will bemeasuredthroughout the project implementation. 55 At the same time, data sources will be established. Data sources 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.. .) and the system o f data collection set up by the national M&E team. The same source will be used routinely to avoid inconsistencies and misinterpretations. However, it will be possible to cross reference sources. The method of data collection will be presented extensively in the monitoring implementation manual. Nevertheless, the method will be mainly based on forms to gather primary and secondary data needed to feed the system. The responsibility for the timely acquisition of data from their source will be assigned to the project implementation unit. The reliability o f data will depend on the organization set for the collection. Fieldmissions will be organized inorder to collect/verify data. The frequency and the schedule of data collection will be linked to the frequency o f production o f system outputs; the monitoring dashboard; and the quarterly monitoring report. The monitoring dashboard, which will be made o f key indicators and main achievements presented in a short document, will be produced at the end o f each month. Consequently, data collection will take place at least a week prior to the end o f each month. The quarterly monitoring report, which will be a comprehensive monitoring report assessing the progress made during the quarter will be produced at the end o f each quarter, meaning that data collection will take place at least two weeks prior the end of each quarter. To monitor progress and impact indicators, the project will build upon the M&E experience o f the National Land Management Program (PNGT), known as a best practice, by hiring an independent bureau to conduct assessment studies at regular frequencies. The first study will be conducted before the beginningo f the project and will establish a baseline situation for each impact indicator. Details o f methods and procedures for monitoring and evaluating progress and impact indicators are included in the M&E manual. 56 AgriculturalDiversificationandMarketDevelopmentProject ImplementationArrangements ~~ MINISTRYOF AGRICULTURE, WATER RESOURCES AND FISHERIES (MAWRF) I I STEERINGCOMMITTEE I PRIVATE AND PUBLIC SECTORREPRESENTATIVES I PROJECTCOORDINATION I 47 Local Office (South) Local Office(West) II Regionalcoordination Regionalcoordination Regionalcoordination committees committees committees 57 Annex 7: FinancialManagementandDisbursementArrangements BURKINA FASO:AgriculturalDiversificationand MarketDevelopmentProject Country Issues. A CFAA (Country Financial Accountability Assessment) was carried out for Burkina Faso in October 2001, and finalized inJune 2002. The following concerns were highlighted: 0 a serious staffing problem in the public and private sectors accounting services, linked to a dramatic drop inthe quantity and quality o f staff, 0 delay and irregularity in the audit o f the public entities' annual accounts because o f weak capacity o f the Public Sector Control Institutions, 0 a liquidity problem at the Public Treasury, which negatively impacts improved implementation o f the budget; 0 weak non financial assets management: absence o f non financial assets accounting and o f annual physical inventories; 0 an absence o f an integrated computerized public circuit o f revenues. GoBF has clearly made great strides in improving financial management through the Public Financial Management Reform Program (PRGB), which sets out a methodology to carry the process forward. These initiatives are strongly supported by the donor community. For instance, IDA processed the provision in the current fiscal year (FY06) o f an IDF Grant (Institutional Development Fund) to strengthen the capacity o f the Public Sector Control Institutions. Another example i s the Administration Capacity BuildingProject (PRCA), partially financed by the Bank. The Burkina Faso 2004 CPPR (Country Portfolio Performance Review) report highlights weaknesses in the accurate and timely reporting o f financial information in terms o f producing financial monitoring reports (FMRs) and annual financial reports by the majority o f projects financed by the Bank. The situation o f compliance by IDA financed projects in Burkina Faso indicates no overdue audit reports as of today. At present, the overall country riskrating is moderate inBurkina Faso despite some areas o f concern. The situation described above would have some influence on the implementation o f Agricultural Diversification and Market Development Project (ADMDP). Strengths and ChallengesWeaknesses The major weaknesses are the following: 0 At the present time, the Project Coordination Unit (PCU) and the 3 local offices which are requiredto be effective BMACs (Budget Management and Accounting Centers) are not yet created. So the financial management system required by the implementation o f ADMDP i s not inplace yet. 0 The Directions Administratives et Financieres o f the MAWRF and o f the Ministry o f Livestock which will provide public services to facilitate the implementation o f A D M D P are encountering difficulties such as lack of staff with the right mix o f skills and absence o f sufficient experience in project/program Financial Management.. 0 An external auditor appointed by AFD (Agence Frangaise de Ddveloppement) has issued a disclaimer on the UNPCB's 2004 accounts and has found major internal control weaknesses. 58 FM capacity needs to be strengthened on the basis of the financial audit recommendations. However UNPCB is maintaining a basic FMsystem. These weaknesses are being addressed as part o f the financial management strengtheningaction plan. The opportunities identifiedare two fold: 0 The FM capacity o f the CIC-B and o f APIPAC is good and, to satisfy the implementation needs o f new operations, APIPAC foresee the recruitment o f an accountant; 0 A basic FMsystem is maintaining bythe Project preparation Team for managingthe PPF:; an accountant is keeping books and implementing procedures disclosed by the PPF annexes on accounting and special account, (disbursement); ImplementingEntities Overall institutional responsibility for the ADMDP will be undertaken by the MAWRF, which will execute its mandate by supervising the Steering Committee o f ADMDP. The Project Steering Committee (PSC) will be responsible for oversight and strategic coordination o f ADMDP by the supervising Project Coordination Unit (PCU). The PCU will be composed o f a General Directorate, a Technical Unit, an M&E Unit and an Administrative and Financial Unit. The Technical Unit will be responsible for the operational coordination for ADMDP's implementation. Administrative and Financial Unit will be responsible for overall administrative and financial management o f ADMDP and will be required to make operational the fully integrated financial management and accounting system, using appropriate software as well as a detailed manual o f financial procedures and chart o f accounts including the format, content and periodicity o f the various financial statements to be produced. It will also be required to coach and assist the Senior Accountants o f the local offices intheir financial management duties (simple cash budget and monthly financial reporting etc.) and from which it will receive the financial information to consolidate. Specialized Contractors and various Service Providers in public and private areas will facilitate the daily work o f the ImplementingOrganizations.. Flowsof Funds IDA will transfer funds from ADMDP' s Credit account to the DesignatedSegregated Account to be opened at BCEAO (West Africa Central Bank) in Ouagadougou. Fist, initial advance will be made in the Designated Segregated Account which will, then, receive Credit proceeds on the basis o f the initial advance reconstitutions generated by SOE submissions. As deposit account, its debit cash transactions will be ordered respectively by the Project Coordinator and the Administrative and Financial Management Specialist. The initial advance is set-up to finance eligible expenditures for the project. Direct payments will be made to various suppliers, private sector professional organizations, specialized contractors and service providers. Initial advance will be made in the 30 days account o f each local office and will be reconstituted by funds from the Designated Account. These 30 days accounts will be used to finance activities carried out by the decentralized ministry agencies and to make payments to service providers. 59 DesignatedSegregatedAccount 1 Credit Account 1 I I '-.-.-. Private 1 Service Professional Organizations .I.-. and Suppliers I Local Office 30 Local Ofiicec.30 Local Office 30 1 DecentralizedMinistry Agencies & Service Providers 1 ~~~~~ Legend : Advance Reconstitution by SOE inthe Designated Account Monthly reconstitution inthe 30 days account of the local offices Direct Payments Advances for Punctual Activities Staffing and Training The fiduciary staff to be placed under the supervision o f the Project Coordinator o f the ADMDP will be composed of an Administrative and Financial, one Accountant, a Procurement Specialist and support staff. To perform FM duties, each local office will be staffed with a senior accountant. An accountant is now handling the PPF and is managing related special account on the basis of Bank's disbursementprocedures. It is expected that this accountant would be the one for the PCU. An Administrative and Financial Management Specialist with experience and qualifications satisfactory to the Association will be recruited. H e will work under the supervision of the National Project Coordinator. H e will have the responsibility to collect and control invoices, maintain the books, enter data in the accounting software, manage project's bank accounts, keep the books of accounts and prepare the financial reports as well as the withdrawal and direct payments applications. 60 A training program will be drawn up every year. Training is mainly conducted through the Bank's local or sub-regional training institutions (CESAG and ISADE in Dakar). Before ADMDP's effectiveness, the PCU will recruit consultants (the same persons who will have developed the FM and Procurement manuals and will have installed the accounting software) to conduct procurement and financial management training for the whole fiduciary staff. AccountingPolicies and Procedures At the present time, the project accounting policies and procedures as required by ADMDP are not yet in place at the PCU and the 3 local offices as these entities are not yet created. However, an accountant i s now handling the PPF and is managing related special account on the basis o f IDA'Sdisbursement procedures. It is expectedthat this accountant would be the one for the PCU. For this reason, the risk associated to the accounting policies and procedures i s rated moderate for these two entities. A Consultant will be appointed to develop charts o f account to be included in a FM manual and to customize software. The FM manual will provide all the required details on accounting and financial procedures. It will set out inparticular: (i) institutional arrangements the and the relationship between all the parties o f the project (ii)the planning and budgeting arrangements; (iii)the treasury procedures; and (iv) the procurement procedures, reporting formats and arrangements. These arrangements are conditions o f credit effectiveness. The PCU through its administrative and financial management unit will have the overall responsibility o f the project financial management system. They will maintain the project's consolidated budget and accounts. The project funds will be handled through a computerized and integrated financial management. The computerized financial management system should be multi-currency and will include the following modules which should be integrated: general accounting, cost accounting, monitoring and evaluation, assets management, preparation o f withdrawal applications and tracking o f disbursements by donors, reports generating, including quarterly interim un-audited financial reports and annual financial statements. FAD transactions will be handled in a separate data-base and its specific financial statements will be consolidated for reporting purpose. A fully functioning multi-projects financial management system satisfactory to IDA i s considered as a condition o f effectiveness. The PCU will apply the existing private accounting system in Burkina (SYSCOA). Accounting Software: a sound computerized information system will be established at the PCU. This system will be updated in such a way as to furnish all o f the following data: interim un- audited financial reports, annual financial statements, withdrawal applications, bank reconciliations and all financial reports. The books o f accounts will also be maintained electronically inthis software. Other Internal ControlArrangements It is expected that internal control mechanisms will be built inthe FMmanual for ADMDP. The FM manual setting up a harmonized framework will be used as an internal control tool for the PCU. ExternalAudit The Designated Account and its sub accounts, the accounts o f PCU and the 3 local offices as well as internal control system of ADMDP will be subject to an annual audit by a reputed auditing firm based on terms o f reference appropriate for the pertinent scope to be approved by IDA. An independent qualified external auditor would be appointed on terms o f references (ToRs) acceptable to IDA. The PPF will be audited by the auditor appointed and the ToRs will be updated accordingly. However the auditor will provide a separate report with a single opinion on the audited PPF financial statements incompliance with IFAC Standards on Auditing, and will be required to include the accuracy and the relevance o f expenditures made under the SOE 61 procedures and the extent to which these can be relied upon as a basis for the disbursements. In addition to the audit reports, the external auditors will be expected to prepare a Management Letter giving observations, comments, and providing recommendations for improvements in accounting records, systems, controls and compliance with financial covenants in the financing IDA agreement. The audit scope will betailoredto the project's specific risks, inaccordance with IDA requirements and agreed upon with the counterpart. The PCU will also be required to produce, no later than June 30 o f the following fiscal year, audited annual financial statements. The selection o f the auditor i s a condition o f effectiveness. Reporting and monitoring The PCU would have to prepare each quarter consolidated interim un-audited financial reports duringthe Program implementation. The reporting format and procedures will be documented in the FM manual. As described in the FMR Guidelines issued by the Bank, the various reporting formats corresponding to the project's features will be described in Annex A: > financial reports: (i)sources and uses o f funds by funding source and (ii) o f funds uses > by activities o fthe project; physical progress (output monitoring) report; P procurement monitoringreport. This will be done as part o f the financial management strengthening action plan and will represent a negotiation condition for the format. The quarterly financial management reports and annual financial reports will cover all activities financed through PAFASP regardless the source of funding. The quarterly reports will cover financial management, procurement and physical progress monitoring. The annual financial statements will be subject to external audit as described above. The first interimun-audited financial reports shall be furnished to IDA not later than 45 days after the end o f the first calendar quarter after the Credit effectiveness date, and shall cover the period from the incurrence o f the first expenditure under the PPFs through the end o f such first calendar quarter; thereafter, each interim un-audited financial reports shall be furnished to IDA not later than 45 days after each subsequent calendar quarter, and shall cover such calendar quarter. The financial management indicators for the project are the following: (i)part o f the budget disbursed every quarter at the level o f each BMAC (PCU and the 3 local offices) and each Private Implementing Organization; (ii) nature o f the opinion from the external Auditor on the annual financial statements; (iii)number o f internal control major weaknesses identified by the external Auditor at the level of each type of BMAC; (iii) o f the annual budget expended at part the level of each type o f BMAC (PCU and the 3 local offices) and for which goods and services are delivered. Information Systems A financial management software will be installed at the PCU and will be used for IDA and IFADfinancings, but will needto be customized. The terms o f reference (ToRs) for the selection of the Consultant that will make provisions for developing the manual (production, development of charts o f accounts, training and assistance) and for customizing the software. The ToRs should specify that the financial management system should be capable o f producing the necessary financial management reports specified in the reporting and monitoring section. The manual will disclose controls and procedures for flow o f funds, financial information, accountability between the main B M A C (PCU) and the sub BMACs (the 3 local offices). The physical monitoring will be linkedto the disbursement of funds and also to the procurement activities: this computerized arrangement will enable the PCU to produce respectively the interimun-audited financial reports required by IDA and the reliable interim un-audited financial reports which will be subject to 62 reviews carried out by the Internal Controller. This type of reports will also be used as a working tool by the PCU. Disbursement Arrangements The project will use the SOE-based disbursement method based on Designated Account replenishment and direct payment.This methodwill be used for an eighteen-monthperiod, during which time the project will produce quarterly FMRs. It is expected that after 18 months, the project will shift to the report-baseddisbursementmethod. DesignatedSegregatedAccount The PIU will open a designated account in BCEAO. The total allocation of the Designated Account will be US$4 million, equal to the average of four months of expenditures. One sub- account will be openedunder each local office. Upon credit effectiveness, the borrower will request IDA to deposit in this account an advance representing50 percent o fthe authorizedallocation, or US$2 million. The balance ofthe advance may be depositedwhen total expendituresplus special commitments are equalto an amount to be determined during the negotiations. The Designated Account will be used for all expenditures equivalent to less than 20 percent of the authorized allocation, and requests for reimbursement will be submittedmonthly. Reimbursementsdepositedby IDA into this DesignatedAccount will be made againstthese requests supportedby appropriatedocumentation. Use of Statementsof Expenditures (SOEs) Disbursements for all expenditures will be made by IDA against full documentation, with the following exceptions: (a) contracts for works in an amount not exceeding US$250,000; (b) contracts for goods in an amount not exceedingUS$200,000; (c) contracts for consulting firms in an amount not exceedingUS$lOO,OOO; (d) contracts for individual consultants in an amount not exceeding US$50,000. These will be reimbursed on the basis of SOEs. All supporting documentation for SOEs will be retained at the PCU and must be made available for review by periodic World Bank review missionsand externalauditors. Disbursementsby category The following table sets out the expenditurecategoriesto be financed out of the Credit proceeds The allocations for each expenditure category are the following: 63 Allocationof IDA CreditProceeds Amount o fthe Credit Allocated % o f (Expressed in Expenditures Categorv/ Proiect Component USD Equivalent) to be financed (1) Works 23,000,000 100% (2) Vehicles, equipment and goods 1,200,000 100% (3) Grant for micro-projects 14,000,000 100% (4) Consultants services and studies 9,000,000 100% (5) Training and information 8,000,000 100% (6) Operating cost 4,000,000 100% (7) Refundingo f Project 1,800,000 Preparation Advance(s) (8) Unallocated 5,000,000 TOTAL ________ 66,O 00,000 NB:All expenditures are financed 100% taxes included. ActionPlan Actions Responsibilities Due date Conditionality Recruitment o f requiredfiduciary MAWRF effectiveness Staff recruited staff for PCU and for local offices Development of the computerized MAWRF and effectiveness Software FMsystem(FMManual, software, Consultant customized, customization, relatedtraining and manual available short term assistance). and training completed Appointment o f an External Auditor MAWRF effectiveness Signed contract available Approval o f 2006 and 2007 Annual MAWRF effectiveness Final document Work Plan and opening o f issued DesignatedAccount at BCEAO 64 SupervisionPlan Since the PCU and SCPF as BMACs of ADMDP are not yet in place, the overall fiduciary risk for the project i s substantial. The mitigation factor is representedby the effective creation o f these BMACs responsible for the overall financial management. This means that much responsibility will be placed o n the PCU and the 3 local offices. As a result, the performance o f these BMACs i s a key factor to ensure compliance with fiduciary requirements. ADMDP's supervision should be performed twice a year, ensuring that the PCU and the three local offices are performing as expected. The supervision o f ADMDP should focus on the financial management key indicators as mentioned in the paragraph on reporting and monitoring. A particular attention should be paid to the sub-BMAC (the three local offices), in order to evaluate how they are managing and accounting for program resources. Giventhe above, ADMDP will requireintensive financial management supervision which should be budgeted for. Supervision missions should be done at least every six months with the first mission occurring within three months after financing effectiveness. But prior to that, a clear understanding must be reached with the MAWRF on its work plan and approach. The quality o f the audit (internal and external) also is to be monitored closely to ensure that it covers all relevant aspects and provide enough confidence on the appropriate use o f funds by recipients. Financial management supervision will be carried out by the Bank's Financial Management Specialist (FMS) upon the Task Team Leaders' request. The FMS will also: . Conduct an FMsupervision before effectivenesddisbursement; Review the financial component o f the periodic monitoring reports; and, Reviewthe Audit Reports and Management Letters from the external auditors and follow-up on material accountability issues by engaging with the TTLs, client, and/or auditors. Fiduciary Risks Entityrisk: The rating is substantial since the PCU and the three local offices are not yet created and the overall financial management system i s not yet in place. It i s difficult therefore to predict the performance o f the PCU and the local offices during ADMDP's implementation as well as to ensure that the work will be o f highquality. ProjectRisks Insummary, the key financial managementrelatedrisksthat the PCUandthe three local offices may face, and the manner inwhich it should be addressed are described below: Typeof Risk I Rating I Risk Mitigating Measures InherentRisk 1. Corruption (Funds may not be M The team o f appropriately qualified and usedinan efficient and experienced staff reduces this risk. economical way and exclusively Strong internal control procedures through the for purposes intended) and poor Proc. & Financial Mgt.Manual inplace. governance. Periodic financial monitoring reporting subjected to Internal Controller and Bank's reviews External audit performed annually. I I I 65 2. Liquidity problem noted at the M Existence of Public Finance management reforms, 1 Public Treasury, which impacts which implementationand monitoring are a better implementationof the budget (Government financing may not be available to ADMDP on time) 3. Delay and irregularity inthe M Bank's supervision missions carried out on regular audit of the public entities basis. accounts because of a weak External audit performed annually capacity o fthe Public Sector Control Institutions (internal and external controls) Overallinherentrisk ControlRisk accountant handling the PPF may be the one for the dit firms'capacity is acceptable in H=High S = Substantial M=Moderate N=Lowhegligible 66 Annex 8: Procurement BURKINA FASO: AgriculturalDiversificationand MarketDevelopmentProject General Background-ProcurementReform The procurement system in Burkina Faso has beenunder reform for the past five years, based on a Country Procurement Assessment Report (CPAR) conducted in 2000 by the Bank. Inlight o f the CPAR 2000's recommendations,the Government initiated a number of reforms, including enacting a procurement act through decree 2003- 269/PRES/PM/MFB (dated 27 May 2003), effective since July 9,2003. In2005, a newCPARbased on aparticipative process and including all stakeholders was launchedin order to: (i)measure progress made in a the past five years, (ii) analyze the current procurement environment, (iii) the 2003 national procurement law inview assess of: (a) transparency, efficiency and competition principles required for International Standards, and (b) the harmonization process (among sub-regions countries) initiated by the West African Economic and Monetary Union (WAEMU). The 2005 CPAR has been finalized and the Action Plan was adopted by the Council o f Ministers in March 2006. The 2003 National Procurement Act evaluated in light of the OECD Benchmark Indicators system has been found unsatisfactory (there i s a strong need to improve the institutional framework) even if major progress has been made. Based on the progress made since 2000 (from 31 percent to 55 percent o f requirements for International Standard), the system has been found acceptable for National Competitive Bidding process. It has been agreed that the implementation o f the action plan includedinCPAR 2005 would helpto achieve 76 percent in2010. The Government has issued a set of Standard Bidding Documents. These documents were submittedto IDA for review and comments. Use of BankGuidelines Works, goods and consultant assignment financed under the Agricultural Diversification and Market Development Project (ADMDP) will be procured in accordance with the appropriate IDA Guidelines: Procurement for IBRD Loans and IDA Credits dated May 2004 and Guidelines for the Selection o f Consultants by the World Bank Borrowers publishedinMay 2004. To this effect, Bank's standardbiddingdocuments for works and goods, and standard request for proposals for consultants as well as all standard evaluation forms will be used throughout the project implementation. National Competitive Bidding(NCB) advertised locally and minor assignments, will be carried out inaccordance with BwkinaFaso procurement laws andregulationsjudged acceptable by IDA for national competition. While waiting for IDA'Sagreement on a revised National 67 Standard Bidding Document, IDA'S Standard Bidding documents will be used with necessary adaptations. Advertisement Following Board Approval o f the project, a General Procurement Notice (GPN) will be published in the UN Development Business (UNDB) online, Development Gateway's dgMarket Online, and in a national newspaper o f wide circulation, to advertise for major consulting assignments (above US$200.000 equivalent) and ICB for which specific contracts are expected. Specific Procurement Notices (SPN) for goods and works to be procured under ICB, N C B and for consultant services will be published in a national newspaper o f wide circulation and may (mandatory for ICB and consulting services above US$200.000 equivalent) also be advertised in the UNDB and Development Gateway's dgMarket in order to get the broadest interest possible from eligible bidders. Request for EO1for other consulting services (below US$200,000) will be advertised ina national newspaper o f wide circulation. At least two weeks will be allowed for submission o f expression o f interest. ProcurementMethods Procurement of Works: Civil works that will be financed under the project include: restoration o f fruit terminal in Bobo-Dioulasso, construction and/or rehabilitation o f slaughterhouses, construction and/or rehabilitation o f cold storage unit and warehouse. Civil works contracts costing more than US$250,000 equivalent per contract will be procured through International Competitive Bidding (ICB). Domestic Preference will be applicable to local contractors biddingfor contracts through ICB. Civil works costing less than US$250,000 equivalent will be procured through National Competitive Bidding (NCB). Civil works costing less that US$40,000 equivalent per contract will be procured through shopping on the basis o f simplified bidding documents by soliciting quotations from not less than three qualified domestic contractors (preferably more) in order to obtain at least three comparable offers. The invitation shall include a detailed description of the works, including basic specifications, the required completion date, a standard form of agreement acceptable to the Bank, and relevant drawings, where applicable. Inall cases the award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to complete the contract successfully. Procurement of Goods: Goods procured under the project will include: equipment for quality control of ASP product, pumps and others irrigation equipments, vehicles, computers, office furniture, etc. Procurement o f goods will be bulkedwhere feasible into big packages valued and procuredthrough suitable methods. (a) Goods estimated to cost US$200,000 equivalent or more would be procured through International competitive bidding(ICB). 68 (b) Goods estimated to cost less than US$200,000 and more than US$40,000 would be procuredthrough national competitive bidding(NCB). (c) Goods estimated to cost US$40,000 equivalent or less per contract may be procured through Shopping procedures. Contract will be awarded on the basis o f written solicitation issued to at least three qualified suppliers, following evaluation o f bids received in writing from such qualified suppliers. The award would be made to the supplier with the lowest price quotation for the required goods, provided it has the experience and resources to execute the contract successfully. Preference for domestically manufactured goods will apply inaccordance with the World Bank Guidelines. Consulting Services: Consultant services financed by IDA would be for the following types o f activities: revision and or adaptation o f legal existing key text related to production, trade and exports in accordance with regional (WAEMU) texts and others International (AGOA) requirement; market development studies, contract farming studies, market information system, financial and technical audits, financial and administrative manual etc. These consulting services will be procured with the most appropriate following procurement method allow by the Bank Guidelines and included in the Procurement plan approved by IDA : (a) Quality and Cost Based Selection (QCBS); (b) Least Cost Selection (LCS) for financial audit; (c) selection based on the Consultant's Qualification (CQ) for the selection o f firm for contract estimated to cost less than US$lOO,OOO; (d) Single Source (SS) Selection shall be used with agreement o f IDA.All terms of reference will be subject to IDA prior review. Consultant services to support the preparation and implementation o f Professional Organizations (PO) training program will be needed during project implementation. In this perspective, a partnership betweenthe World Bank Institute(WBI) and a consortium of the main training institutions led by a regional training engineering institute EIER- ETSHER was established in June 2005, during project preparation. This partnership aimed at assessing, in a participatory manner, PO training needs (first step) and developing training program and new curricula by the training institutions to respond to these needs (second step). The outcomes o f the first step were fully successful. In order to fully take advantage o f this partnership and build on this successful first step and given that the second step i s a continuation o f the first step, keepingthe same consultants to finalize the process will be more efficient. Hence, consultant services for the training program, estimated to cost less than US$200,000 will be procured through a sole-source selection with EIER-ETSHERinaccordance with paragraphs 3.10 and 3.15 o f Guidelines and with the prior review o f IDA. Short-lists for contracts estimated at or less than US$lOO,OOO equivalent may be comprised entirely o f national consultants (in accordance with the provisions o f paragraph 2.7 of the Consultant Guidelines), provided that a sufficient number o f qualified firms are available. However, if foreign firms have expressed interest, they would not be excluded from consideration. 69 Consultant services meeting the requirements o f section V o f the consultant guidelines will be selected under the provisions for the Selection of Individual Consultants through the comparison o fthe curriculumvitae of at least 3 qualified individuals. The use o f civil servants as individual consultant or as a team member o f Consultants firms will strictly follow the provisions o f Article 1.9 to 1.11 o f the Consultants' Guidelines. Procurement for items included in micro-projects: Micro-projects financed under component 1 would comprise a broad spectrum o f activities to be undertaken with direct participation and financial contribution of the promoter. It i s not possible to determine the exact mix o f goods, small works, and services to be procured under these activities due to their demand-driven nature. Fundingfor these activities would be inthe form o fmatching grants. Therefore, the types of activities to be financed under micro-projects and their procurement details would depend on the needs identified by the stakeholder promoter. The contract would be procured following simplified procurement procedures as described inthe agreed project implementationmanual (PIM). The manual to be used by the project will be based on the Bank Guidelines for Simplified Procurement and Disbursementfor Community-Based Investments(February 1998). Training, trade fairs, workshops, study tours, and conferences: All training, trade fairs and workshops under the Project will be conducted on the basis o f programs, which should be approved by IDA on a semester basis, and which shall, inter alias, identify: (a) the objective o f training, fair and workshops envisaged; (b) the personnel to be trained; (c) the institutions which will conduct the training or organized the fair; (d) the duration o f the proposed training or fair and (e) an estimate o fthe cost. Operating costs: Operating costs that will be financed by the project will be procured using the project's financial and administrative procedures manual that will be approved by IDA. For efficiency purposes, purchase o f office supplies and furniture will be done on the basis of 6 or 12 months need and procured competitively. For services (car maintenance, computers maintenance etc.) to be financed through operating costs, the project will proceed by service contracting for a definedperiod. Procurement arrangements and assessment of the agency's capacity to implement procurement: It has been agreed during preparation, after due consultation with the Government, that a Project Coordination Unit (PCU) will be created to coordinate activities under the Agricultural Diversification and Market Development Project (ADMDP). During implementation, procurement will be done by the following entities: PCU, professional organizations and micro-project promoters. The PCU will be directly in charge of consultant selection, large and complex procurement and/or pooled procurement across professional organizations, etc... Professional core organizations such as UNPCB, APIPAC and CICB will be in charge o f procurement o f simple items. Each organization will fully conduct the following process included in an agreed action plan: (i) workshopsandtraining(regardlessofestimation)and(ii) procurementforsmall all all 70 purchases estimated to cost less than US$40,000. However, even done at organizations level, the project's procurement process will be under the overall responsibility o f the PCU procurement specialist who will have a mentoring, training and support role. The PCU overall responsibility will include mentoring and training but also ensuring quality of procurement process through prior and/or post review for process conducted by professional organizations. This arrangement will remain at least for the two first years o f implementation. After this term, the situation will be assessed and more responsibility could be transferred to professional organizations that have substantially improved their procurement capacity. Promoters will handle the procurement process for the needs included in their agreed micro-project. In order to support the promoter during micro-project implementation (including on procurement aspects) a recruitment o f regional (8 regions are concerned) service providers (NGOs and/or firms) i s foreseen. The recruitment o f RSP will be done for each region before agreement of the first micro-project o fthe concerned region. As the PCU for implementation was not yet set up, it was not possible to conduct a formal procurement capacity assessment during preparation. However, the procurement specialist under the preparation Unit performed satisfactorily and will remain in his position after Board approval and until the PCU for implementation i s fully staffed. It was agreed during appraisal to recruit a procurement specialist (PS) for project implementation with a strong knowledge and solid experience in both IDA and GoBF procedures before effectiveness. The procurement specialist will have the following responsibilities: (i)to assist professional organizations to prepare their respective procurement plan; (ii)to consolidate a procurement plan for the entire project; (iii) to process all procurement at PCU level; (iv) to build required capacity where needed by training professional Organization staff in the procurement process for their respective program especially during the first years o f the project; (v) to conduct a first session o f procurement training to the benefit o f professional organization before effectiveness; (vi) to maintain an inventory o f all interested bidders; (vii) to monitor and update the procurement plan; (viii) to consolidate all project procurement information and (ix) to monitor contracts implementation. Based on procurement environment and the fact that the PCU i s a newly created entity that can not be referred to as an institution, the procurement risk has been assessed as high. After the first year o f implementation, this situation will be revisitedby IDA and could be modified dependingon the procurement performance o f the project. Procurement Plan: A general procurement plan for the entire duration o f the project implementation and a detailed procurement plan containing all procurement to be carried out for at least the 18 first months have been drafted and finalized by the borrower and submitted to IDA before negotiations. The procurement plan includes relevant information on all items and services to be procured, estimated costs, selection method, timing, review status (prior or post) etc... As a management tools, the procurement plan will be updated on annual basis or as required (to reflect implementation needs) in 71 agreement with IDA. The procurement plan will be available in the project's database (and on the Bank external website). During project implementation, all procurement will be carried out in accordance with the formally agreed procurement plan (original and formally updated). Financialand AdministrativeManual (FAM) for procurement: The recruitment of a consultant to prepare the Financial and Administrative Manual i s planned under PPF financing. The Financial and Administrative Manual will include in its procurement section the following steps: (i)procedures for planning, calling for bids, selecting contractors, consultants, and vendors, awarding contracts; (ii)internal organization for control of procurement action; (iii) operational guidelines etc. The FAM will be prepared and submittedto IDA'Sreview and finalized before effectiveness. Frequency of Procurement Supervision: In addition to the prior review to be carried out annually from IDA offices, it has been recommended during preparation that two supervision missions per year take place to address procurement issues. 72 Attachment 1 Details of the Procurement Arrangement involving internationalcompetition (for the first 18 months of project) 1.Goods andWorks andnonconsultingservices (a) List o f contract packages which will be procured following I C B and Direct contracting: Contract Description (b) International Competitive Bidding (ICB) contracts estimated to cost above US$250,000.00 for works and US$200,000.000 for Goods per contract, first N C B (National Competitive Bidding) contract for works and goods and all Direct contracting will be subject to prior reviewby IDA . 73 2. ConsultingServices (a) List of Consulting Assignmentswith short-list o f international firms 1 2 3 4 Ref. Descriptionof Assignment Estimated Method No. cost Selection (us$ooo) I Specialized operator for fruits and vegetables 392.10 QCBS Prior September supply chain (for the first three years) 2006 2 Specialized operator for cattle/meat supply chain 392.10 QCBS Prior September (for the first three years) 2006 3 Specialized operator for poultry supply chain (for 392.10 QCBS Prior September the first three years) 2006 $ Studies for works for large scheme irrigation 204.24 QCBS Prior February (SiteNo. 1) 2007 5 Studies for works for large scheme irrigation 102.12 QCBS Prior November (Site No. 2) 2007 6 Consultant for preparation of training programs 196.7 Direct Prior Januarv 2007 for supply chains stakeholders contrac- ting 7 Technical assistance for commercial farmers in 158.30 QCBS Prior January 2007 large irrigation schemes (for the first two years o f the project) 8 Specialized operator for fruits and vegetables 392.1C QCBS Prior supply chain (for the last three years) IJanuary2009 I 9 Specialized operator for cattle/meat supply chain 392.1C QCBS January 2009 (for the last three years) 10 Specialized operator for poultry supply chain (for 392.1C QCBS the last three years) 11 Technical assistance for commercial farmers in 158.3( QCBS Prior January 2009 large irrigation schemes (for the last two years o f the project) QCBS :Quality and Cost Based Selection (b) Consultancy services estimated to cost above US$lOO.OOO for firm and US$50.000 for individual per contract and Single Source selection o f consultants for assignments regardless o f contract amount, will be subject to prior reviewby the Bank. (c) Short lists composed entirely o f national consultants: Short lists o f consultants for services estimated to cost less than US$lOO.OOO equivalent per contract, may be composed entirely o f national consultants inaccordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 74 Annex 9: Economicand FinancialAnalysis BURKINA FASO:Agricultural Diversificationand Market DevelopmentProject The project will be implementedin8 o fthe 13 regions: Hauts-Bassins, Cascades, Center- West, Boucle du Mouhoum, Sahel, North, Center North and South West. The remaining Regions are already covered by a Danish agricultural sector development project and several other donors. The project will provide financial, economic and social welfare to the beneficiaries in those regions and to the national economy. Due to the difficulty to measure and quantify the direct benefits o f the sub-component 1.1 and component 3 both focusing respectively on capacity building and enabling environment, no cost benefit analyses were planed for both components. Only real/direct measurable benefits were taken into account under sub-component 1.2 and component 2. However, since investmentsare to be demand-driven and based on a participatory approach, the type and size of the schemes are not known beforehand. Hence, the analysis will be illustrative; it will be reviewed as project implementation goes on and as requests come in to ensure that micro-projects selected and funded are financially and economically viable. Although illustrative, the analysis conforms as closely as possible to real conditions as it considers three models currently used inthe agricultural system inthe regions o f project implementation. Benefits expected from sub-component 1.1 (US$7million) and component 3 Improvement of the Business Environment, Regulatory Framework and Provision of Advisory Services (US$11million): Sub-component 1.1 aims at improving the agro- sylvo-pastoral supply chain performance trough capacity building for professional organizations. This i s technical assistance whose impact i s difficult to measure although it will greatly contribute to increase production quality and quantity and market development at the benefit o f all stakeholders including the overall economy. Since the expected incremental production, export and cost reduction will depend on the efficient combined effects o f all project's components, it i s difficult to assess the direct benefits from sub-component. Analysis undertaken should be considered from a cost effectiveness point o f view. The cost effectiveness o f the component will be ensured by (i) the principle o f cost sharing for the activity o f the component; (ii) the eligibility criteria, which include a minimum rate o f return and the acceptance o f the beneficiaries to participate in the costs, and (iii)a systematic outsourcing to the private sector (service providers) recruited on a competitive basis, for the supply o f services under the component. Component 3 will contribute to improve the investment climate thereby increase investmentby attracting private investors be national or international inthe rural sector. It will also contribute to build capacity for service providers, public as well as private actors. The expected outcomes are the increasing o f products on the domestic and international market generating incremental income not only for the project but the national community. 75 Benefit expected from Sub-component 1.2: Investment for supply chain development (US$21 million) and component 2: Development of Irrigation and Marketing Infrastructure(US$36million). The objective o f these components is to support the development of: i)productivity and quality o f agricultural products; and ii)basic production and marketing infrastructure that contribute to increased competitiveness of supply chains by the improvement o f productivity and quality o f agricultural products. The analysis will be based on farm models with: (i) the introduction of irrigationtechnology inwhich experience acquiredby Burkina through DIPAC to produce onions, fruits and vegetables for the local markets as well as regional market; (ii) combing o f irrigation and upland and cattle; and iii)the the upgrading o f facilities to help meet sanitary and phyto-sanitary standards and support o f construction o f core marketing infrastructure to foster access to the international market for product such as mango and greenbeans. Key assumptions The analysis is based on three usual farm models in most o f the regions of project implementation: Model 1 (0.25 ha o f onion+ 0.25 ha o f mango+ 0.25 ha o f cowpea); Model 2 (0.5 ha of onion+OSh o f mango+ 1 ha o f sesame); Model 3 : (0.5ha o f onion +4 cows + 1 ha of cowpea. About 30% o f 240.000 producers will adopt the innovative technologies in irrigation, soil fertility, post-harvest lost, integrated pest management; About 1000 professional organizations will be reinforced in different areas- farmers organization; processors and post-harvest, marketing infrastructure and equipment maintenance etc; about 1000 women will be trained inthe areas o f food processing, better environment practices, food quality control etc. The analysis is based on current market prices for the financial analysis. Economic price has been estimated from wholesale or FOB prices after deduction o f intermediary costs. Since in Burkina, taxes on inputs and subsidies are quasi-inexistent economic and financial analysis are very similar. However the financial analysis will be runtaking into account the matching grant without which dissemination and adoption o f new technology will be difficult in the context of Burkina Faso with strained economic condition with difficulties to access to credit in general and long term investment credit in particular. The matching grant targets small farmers and will cover 60 % o fthe infrastructure cost. Based on these assumptions, the investments would provide with matching grant, a financial rate o f return from 59% to 212%. Without matching grant the financial internal o f return ranges from 30% to 86%. It i s worth noting that the economic profitability o f the project, as indicated in table 1, is far better than the financial profitability without matching grant. This proves that project i s better valued at the national community level. 76 Table 1: Returns on Producers'investments Model 1 Table 1: Returns on Producers'investments Model2 77 Table 1: Returns on Producers'investments Model 3 Global ProjectEconomicanalysisof the program Project activities will lead to increased benefits and reduced costs as followed. Interms of benefits, the project component 1 will help stakeholders to build capacity, increased knowledge, improved organizations and as a result improved production and farmers' incomes. Through component 2, the project will contribute to improve adoption o f production and procession technology and improved quality leading to excellent prospect for national, regional and international markets which inturn will increase product value. Project component no 3, trough improvement o f business environment, regulatory and provision of advisory services will greatly contribute to competitiveness by reducing costs and increased value. Analysis based on agricultural and livestock products which are widely acknowledged to have a competitive advantage on the international and regional markets and could be easily sold on the national market as well. A wide range o f products has been selected with irrigated product such onion for regional and domestic markets; cereal (cowpea and maize) for domestic market; mango and sesame for international market, particularly Europe and the Middle-East markets. Cattle and poultry have easy access to regional market such as CBte d'Ivoire and Nigeria. Livestock products such as leathers and skin can be exported on the international market ifthey meet the quality standard. Expected benefits have been quantified on the basis on conservative assumptions on the program outcomes and are indicated inTable 2. 78 Table 2: Project Economic and Financial (NPV inCFAF) Economic I Finnnrinl -1 I ~~ PDD I L L U \ NPV IRR NPV Base case 23% 88 893 25 102 342 Switching value (at 10%) 26% 27 069 28 32 069 The economic analysis o f the project shows high economic rate o f return for all hypothesis (This high rate could be explained by the yields increased due to the improvement o f irrigation scheme and the availability o f market facilities provided by the project. The sensitivity analysis i s based on estimated switching values (a change inthe value o f key factors that lowers the ERRto 12percent, taken as the long -term opportunity cost o f the capital inBurkina Faso). Table 3 indicates the rates o freturnfor differenthypotheses. For the models as a whole, economic benefits are less sensitive to an increase inthe cost o f investmentsthat would occur at the beginningat the 15-year lifespan o f the scheme Table 3: Sensitivity analysis `""""""`""`""I ERR(%) Base 25 10%o f cost increase 22 I 20% o f cost increase I 20 I 50% o f cost increase 20% o f benefit decrease 50% o f benefit decrease 79 Annex 10: Safeguard Policy Issues BURKINA FASO: Agricultural Diversificationand Market DevelopmentProject Project Development Objectives The project development objective is to increase the competitiveness o f selected agricultural sub-sectors that target national, sub-regional and international markets thereby contributing to shared agricultural growth inBurkina Faso. To achieve this objective the program would: (i)support private professional organizations and commodity associations (capacity building, supply chain business plans elaboration and implementation, etc.); (ii)develop productive and marketing infrastructure; and, (iii)improve the investment climate and the provision o f services required for supply chain development (policy and regulatory framework, core public services, private advisory providers, etc.). Environmental and Social Considerations Consultations with key stakeholders within the public sector, the private sector, and civil society were conducted throughout project preparation. The investment climate assessment process systematically involved the private sector as well as professional associations in the various sub-sectors. In sub-sectors and supply chains planned for support under this project, key actors were involved in the definition o f the scope o f activities and they will remain engaged during implementation, supervision and evaluation stages o f the project. Youth and women, inparticular, are expected to benefit from this project because they are heavily involved inmost o f the activities and processes along the supply chain. From an environmental and social safeguard point o f view, the Burkina Faso-Agricultural Diversification and Market Development Project (ADMDP) i s a Category B project. That is, the environmental and social impacts o f the project, for the most part, are expected to be adverse, but minimal, site specific and manageable to an accepted level. There are three Bank Safeguard policies applicable to the project. These include: Environmental Assessment (OP 4.01); Involuntary Resettlement (OP 4.12) and Pest Management (OP 4.09). At the time o f the appraisal mission, the range, scale, locations and number o f sub- projects, as part o f ADMD initiatives were unknown. The difficulty inherent in defining what the real environmental and social impacts o f envisioned sub-projects are and determiningwhat mitigation measures should be put in place, requires the development of an Environmental and Social Management Framework (ESMF) and a Resettlement Policy Framework (RPF), a social safeguard instrument usedto addressing potential land acquisition or loss o f economic activity issues on the part o f individuals or group o f individuals inproject intervention zones. Inaddition, it was determined, based on project envisioned activities leading, in particular, to diversification and intensification o f 80 agriculture, that the Pest Management Policy i s triggered. The triggeringo f this policy i s also predicated on the likely incidence o f water borne diseases, on neighboring communities, resulting from irrigation schemes that will be developed under the project. Based on that consideration, a Pest Management Plan (PMP) was also elaborated inthe context o f project preparation. All project safeguard instrumentshave beenprepared, in full compliance with Bank and national safeguard policies, by local consultants, following a broad consultation framework, involving all relevant stakeholder groups, both public and private, in the various sub-sectors and supply-chains and other interested parties. POTENTIAL IMPACTS The project impacts includebut are not limitedto the following: Environment 0 Soil erosion, loss o fbiodiversity both fauna and flora due to rehabilitation/ construction-related activities; 0 Noise and dust pollution resultingfrom construction; 0 Pesticide/inorganic fertilizer residues resulting from intensification o f horticulture; 0 Pastoral land degradation resulting from overgrazing by cattle; 0 Contamination and pollution resulting from highconcentrationo f cattle; 0 Sedimentation o f streams, water bodies inthe vicinity o f construction sites; 0 Stagnant water inborrow pit as a cause for water borne diseases; 0 Destruction o f pollinators o f crop plants leading to poor crop yields; 0 Improper waste management; 0 Elimination o f the natural enemies o f crop pests and consequent alteration o f biological pest control methods; 0 Development o f pest resistance to pesticides, encouraging further increases in and reliance on chemical pesticides use; 0 Contamination o fthe soil and water bodies, 0 Unacceptable levels o f pesticides residues in harvested produce and inthe food chain and 0 Loss o f bio-diversity inthe environment, particularly o f aquatic nontarget species. Social andHealth 0 Loss o f land and/or other assets leadingto loss of shelter, property, loss o f economic activities, access to resources etc; 0 Pesticides poisoning o f farmers and deleterious effects on human health. The ESMF formulated standards methods and procedures specifying how unidentified future subprojects, whose location, number and scale are unknown will systematically address environmental and social issues in the screening and categorization, sitting, design, implementation, operational phases and maintenance o f the subproject lifecycle. It includes: (i) systematization of environmental and social impact assessment for all identified sub-projects before investment; (ii)procedures for conducting sub-project 81 specific EIAs, be they Limited Environmental Impact Assessment (LEIA) or Full Environmental Impact Assessment (FEIA) as applicable; (iii) Capacity strengthening and awareness raising campaigns targeted at relevant stakeholder groups for better implementation and monitoring o fproject safeguard measures; and (iv) establishment and implementation o f an intersect consultation framework for the environmental control and monitoring. The RPF looked into the policy, legal and regulatory mechanisms on how to address cases o f land acquisition, loss o f economic activities, on the part o f affected people, as a result o f project activities. It also provides a coherent framework, eligibility criteria and asset valuation methods for compensation and/or resettlement o f affected people, as well as grievance mechanisms o f affected persons, incase o f unsatisfactory arrangements. Together, these safeguard instruments, are considered both as a planning tool and a means for a harmonious integration o f the project in its bio-physical and social environment and as a way to maximize positive effects on the same environment. The proposed PMP, on the other hand, addressed the concerns relating to the risks associated with potential increases in the use o f pesticides for agricultural production, intensification and diversification, increases in disease vector populations which would arise from irrigation schemes and made propositions to strengthen national capacities to implement mitigation measures to minimize the risks. The PMP also identifies national agencies and other partners that could effectively collaborate in, as well as the institutional arrangements for implementing the plan. The ESMF and RPF include institutional arrangements, outlining the roles and responsibilities for the various stakeholder groups involved, for screening, review and approval o f sub-projects, as well as implementation and monitoring o f their mitigation measures. The PMP also includes clear institutional arrangements to implement and monitor the plan. In view o f the limited institutional capacity to addressing project safeguard aspects adequately, the three safeguard instruments, together, include provisions to strengtheningthe capacity of the various institutions and actors involved, as well as promoting coordinationand synergy among the various sectors inattending to the potential environmental and social impacts. All three instruments were submitted to ASPEN, the regional Safeguard Unit, and cleared for disclosure in-country and at Bank Infoshop, prior to appraisal. PUBLIC CONSULTATION AND DISCLOSURE As indicated above, the preparationo fthe project safeguard instrumentsfollowed a broad consultation framework with all potential stakeholders. This participatory approach will be carried onthroughout implementation, supervisionand evaluation o fthe project. Prior to disclosure in-country and at Bank Infoshop, a stakeholder workshop, chaired by Ministryof Environment, was organizedby the project preparation committee, involving relevant project stakeholder groups inpublic agencies, such as Direction des Evaluations d'ImpactsEnvironnementales et Sociales inthe Ministryo f Environment; representatives of professional organizations o f the different sub-sectors and supply chain, farming organizations; civil society; and NGOs. This approach was utilized with the intention o f 82 presenting the results o f the studies, fostering ownership and seeking input from these stakeholders in order to improve quality and soundness o f the o f the instrument. Recommendations from both ASPEN and stakeholders' workshop have been reflected in the final safeguard reports, prior to disclosure. These recommendations and relevant provisions from the three sets o f safeguard instruments will be reflected in Project Implementation Manual (PIM). MONITORINGSUPERVISIONOFSAFEGUARDSPERFORMANCE AND Successful implementation o f the project safeguard requirements and performance measurement will require regular monitoring and evaluation o f activities undertaken by the project to comply with national and Bank safeguard policies. This will also help ensure that implementation o f project safeguard measures are systematically carried out all through project lifespan. To do so, the following indicators need to be measured, as part o f the project global monitoring plan: 0 Numbero fsub-projects screenedon environmental and social safeguard grounds; 0 Number of subproject needing specific ESIAS; 0 Numbero fESIAs conducted; 0 Number of sub-projects with costed Environment Management Plans (EMPs) andorResettlement Action Plans (RAPS); NumberofEMPs and/or RAPs implementedaccording to schedule; 0 Number/Frequency of Safeguard supervisionundertaken; 0 Numbertraining programs carriedout for safeguard capacity strengthening; and 0 Numberof Institutions/organizations trained. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP/GP 4.01) [XI 11 NaturalHabitats(OPBP 4.04) [I [XI Pest Management(OP 4.09) [XI [I Cultural Property (OPN 11.03, beingrevisedas OP 4.11) [I [XI Involuntary Resettlement (OPBP 4.12) [XI [I IndigenousPeoples (OD 4.20, beingrevisedas OP 4.10) [I [XI Forests (OPBP 4.36) [I [XI Safety o f Dams (OPBP 4.37) [I [XI ProjectsinDisputedAreas (OPBP/GP 7.60)* [I [XI Projectson InternationalWaterways (OPBP/GP 7.50) [I [XI * By supporting theproposedproject, the Bank does not intend to prejudice thefinal determination of theparties' claims on the disputed areas 83 Annex 11:ProjectPreparationand Supervision BURKINA FASO: AgriculturalDiversificationand MarketDevelopmentProject Planned Actual PCNreview 0346/2004 03/11/2004 Initial PID to PIC 03/23/2004 04/06/2004 Initial ISDS to PIC 03/23/2004 04/05/2004 Appraisal 03/27/2006 03/27/2006 Negotiations 04/24/2006 04/24/2006 Board approval 06/20/2006 Planned date of effectiveness 09/30/2006 Planned date of mid-termreview 09/30/2009 Planned closinp: date 09/30/20 12 Key institutionresponsible for preparation ofthe project: Ministry of Agriculture, Water Resources and Fisheries Bank staff and consultantswho worked on the project included: Name Title Unit Abdoulaye Tour6 Sr. Agricultural Specialist, TTL AFTS4 Daniel Moreau Sr. Agriculturist (initial TTL) AFTS4 Olivier Durand Agribusiness Specialist AFTS4 IbrahimNtbi6 Sr. Ag. Extension Specialist AFTS4 Jean Paul Chausse Lead specialist AFTSl Christophe Ravry Supply chain developmentspecialist AFTS4 Virginie Vaselopulos Program Assistant AFTS4 GwladysKinda Program Assistant AFMBF Helene Bertaud Sr. Counsel LEGAF Wolfgang Chadab Finance Officer LOAG2 William Dakpo Procurement Specialist AFTPC MamadouYaro Sr. Financial Management Specialist AFTFM Ouattara Oumar Financial Management Specialist AFTS4 Nadege Leboucq Livestock specialist AFTS4 AmadouKonarC Consultant (Safeguards Specialist) ASPEN Soumaila Amadou Irrigation specialist FAO-CP Marc Mons Livestock specialist FAO-CP Nguala Luzietoso Market development specialist FAO-CP Bank funds expendedto date on project preparation (As of April 21,2006) 1. Bank resources: US$390,000 2. FA0 US$123,300 4. Total: US$513,324 84 Annex 12: Documentsinthe ProjectFile BURKINA FASO: AgriculturalDiversificationandMarket DevelopmentProject Documentsproducedinthe contextof the ADMDP 1. Ciblage des filibres et de la zone d'intervention du PAFASP, rapport d'etude, septembre 2005 2. Pland'actions pour le developpement du secteur de la transformation des produits agro-sylvo-pastoraux au Burkina Faso, Aoat 2005 3. Aide memoire de la missiond'appui a la preparation, Banque Mondiale, Juillet 2004 4. Aide mimoire de la missionde prC evaluation, BanqueMondiale, Juin 2005 5. Analyse des Plans d'action sur les filieres, rapport d'etude, mai2005 6. Analyse des systemes d'information sur les marches existants au Burkina Faso, rapport du groupe de travail, Avril2005 7. Rapport d'etude sur 1'Btat des lieux des programmes et projets majeurs intervenant sur les FilieresAgro-Syvo-Pastorales, Avril2005 8. Inventaire des acteurs des filibres agro-sylvo-pastorales et de leurs rBles respectifs, rapport du groupe de travail, mars 2005 9. Analyse des experiences duPNDSA 11, DIPAC ET CEFOC, rapport du groupe de travail, Janvier 2005 10. Project Concept Note, Banque Mondiale, mars 2004 Strategic documents 11. Pland'actions et Programme d'Investissementsdu secteur Elevage (PAPISE) version revisee, MRA-Janvier 2005 12. StratCgie de Developpement Rural a l'horizon 2015, MAHRH, Janvier 2004 13. Lettre de Politique de Developpement RuralDurable Decembre 2002 14. Initiative Elevage Pauvrete Croissance (IEPC) Ministbre des ressources Animales Mai 2004 85 15. Pland'actions pour le financement du Monde Rural(PA-FMR), SPKPSA- MAHRH,CPSA- MAHRH,Mai2004 16. Pland'action pour le developpement de la filiere fmits et legumes SP/CPSA- MAHRH,CabinetJUDICOME/JEXCO ;Septembre2004 17. Cadre Strategiquede Lutte Contre la PauvreteRevise (CSLP), Ministere de 1'Economie et duDeveloppement, Septembre 2003 18. StrategiesNationales et ProgrammesPrioritaires de Developpement et de gestion des Ressources Halieutiques, SPKPSA- MAHRH,Mai 2003 19. Pland'action pour le developpement de la filiere niCbC SP/CPSA- MAHRH, Mai 2003 20. Pland'action pour le developpement de la filiere oleagineux SP/CPSA- MAHRH, AoCit 2003 21. Pland'action cCrCales (mil, sorgho, mays) SP/CPSA- MAHRH, Mars 2002 Other documents 22. Diagnostic de la filiere Mangue au Burkina, SP-CPSA-MAHFW, AGRER, Aofit 2005 23. Diagnostic de la filikre Haricot vert auBurkinaFaso, SP-CPSA-MAHRH, AGRER ;AoCit 2005 24. Evaluation des contraintes likes a la relance de la filiere KaritC auBurkina ONUDI, rapport d'etude, Juin 2005. 25. Rapport d'achkvement duprojet de Developpementde 1'Irrigation PrivCe et des Activites Connexes (DIPAC) Avril2005 26. Etudeportant sur la mise enplace dudispositif de suivi-evaluation de lamise en ceuvre de a Strategic de Developpement Rural a l'horizon 2015 ;SP/CPSA- MAHRH,Avril2005 27. Rapport d'achkvement du SecondProjet National de Developpement des Services Agricoles (PNDSAII) FCvrier 2005 28. Agence de Evaluation externe de l'experience des comites provinciaux de concertation et d'echanges (CPCE) dans les neufprovinces pilotes, PNDSAII, CIEPAC, Decembre2004 86 29. Audit et refonte institutionnelle duministerede l'agriculture, de l'hydraulique et des ressowces, MAHRH, Ddcembre 2004 30. M i s e en place d'une mutuellede garantie pour 1'APIPAC ;etude de faisabilite, Novembre 2004 31. Deuxikmeenquete nationale sur les effectifs du Cheptel, Institutnational de la Demographie, novembre2004 32. Etudesur lapossibilitt d'exportation des fruits et legumes duBurkinaFaso vers 1'UE et 1'Allemagne, Septembre 2004 33. Missiond'appui a la mise en place d'une strategie de formation agricole Pierre DEBOUVRY, rapport, Septembre 2004 34. Etudesur la competitivite des filieres agricoles dans l'espace UEMOA (Elaboration d'un argumentaire de choix des filieres), UEMOA, Commission DDRE, benoPtFaivreDupaigre andothers. AoGt 2004 . 35. Programme de renforcement de la competitivite de la filiire oignon ;Association Professionnelle des MaraPchers duYatenga ;AoGt 2004 36. Concurrence, investissement et compktitivite : Contraintes et recommandations, FIAS,juin2004 37. Politique nationale de developpementdurable de l'agriculture irriguee (Strategie, plan d'action, plan d'investissement a l'horizon 2015), Avril2004 38. Rapport d'etude sur la strategie d'autofinancement du CIR-B et les instruments d'appui aux acteurs de la filiere riz, CIR-B Decembre 2003 39. Inventaire des fonds de diveloppement a la disposition des populations rurales du Burkina Faso, GTZ, Septembre 2003. 40. Exportations, Croissance et lutte contre la pauvreteau Burkina Faso, Centre d'Analyse des politiques Economiques et sociales (CAPES) Avril2003 41. Promotion du commerce agro-pastorale (APCAP), Etudede faisabilite MAHRH/ PNDSAII, GEOMAR, Septembre2002 42. M i s e en ceuvre des mesures specifiques pour la facilitation du commerce dans la filiere fmits et legumes Rapport d'etude, Avril2001 43. Etudesur le financement des filikres agricoles dans les pays membresde 1'UEMOA ;SOFRECO, janvier 2000 87 Annex 13: Statementof Loans and Credits-IDA & IFC BURKINA FASO: AgriculturalDiversificationand Market DevelopmentProject Statementof IDA Credits Difference Between Expected and Actual Supewision Rating Disbursements .i Project ID Project Name Develo ment Ob.ec:ives Im lementation Tess Fiscal Year IDA GRANT Undisb. Orig. F n Rev'd PO35673 BF-Com Eased Rur Dev (FYOi) S S 2001 66 70 1349 653 -665 PO00306 BF-Ouaga Water Suply (FYOi) S S 2001 70 00 4071 2022 PO00309 EF-Basic Edu Sec SIL (FYO2) MS MS 2002 32 60 1972 1252 PO52400 EF-GEF Nat Res Mgmt PrtnrshpAPL (FYO2) S S 2002 750 226 035 PO71433 BF-HIV/AIDS Disaster ResponseAPL (FYO2) S S 2002 27 00 347 -447 -793 PO71443 BF-Compet a Enterpnse Dev (FY03) S S 2003 30 70 2716 1037 PO76159 BF-Dev Learning Center LIL (FY03) MU MU 2003 2 30 061 010 -007 P074030 BF-Transp Sec SIM (FY03) U U 2003 92 10 8260 4408 PO70871 BF-GEF Sahel Lowland ECOSyS Mgmt (FY04) S S 2004 450 372 054 P085230 BF-STATCAP SIL (FY04) MS MS 2004 10 00 779 321 PO78596 BF-Admin CE (FY05) S S 2005 7 00 605 190 PO69126 BF-Power Sec Dev (FY05) S S 2005 63 58 4829 3799 P093987 BF-Health SeCtorSup &AIDS (FY06) 47 70 47 70 EF-WA Locust (Regional = 8 4) 3 00 2 50 Total 452.68 12.00 306.07 133.34 -14.65 Statementof IFC's HeldandDisbursedPortfolio (InUSDollarsMillions) Held Disbursed FYApproval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1998 AEF STCBF 0.13 0 0 0 0.13 0 0 0 2005 Hotel Independan 2.38 0 0 0 1.19 0 0 0 Total Portfolio: 2.51 0 0 0 1.32 0 0 0 88 Annex 14: Country at-a-Glance 4/7/06 Sub- POVERTY and SOCIAL Burkina Saharan Low- Faso Africa income Development diamond' 2004 Population,mid-year(millions) 12.3 719 2,338 GNI per capita (Atlas method, US$) 380 600 510 Life expectancy GNI (Atlas method, US$ billions) 4.7 432 1,184 Average annual growth, 1998-04 Population(%) 2.3 2.2 1 8 Laborforce (%) 1.8 1.o 2 1 GNI Gross Most recent estimate (latest year available, 1998-04) per primary capita enrollment Poverty(% ofpopulabon belownationalpovertyline) 45 Urban population(% of fofalpopulabon) 18 37 31 Life expectancy at birth(years) 43 46 58 Infant mortality(per 1,000 live births) 107 101 79 Child mainutnbon(% of children under 5) 38 44 Access to improved water source Access to an improved water source(% of population) 51 58 75 Literacy(% ofpopulabon age 15+) 26 65 61 - Gross pnmary enrollment (% of school-agepopulation) 46 95 94 Burkina Faso Male 53 102 101 ... Low-income arow Female 39 88 88 KEY ECONOMIC RATIOS and LONG-TERMTRENDS 1984 1994 2003 2004 Economic ratios" GDP (US$ billions) 1 3 2 2 4 3 5 2 Gross capital formation/GDP 204 170 18 4 Exportsof goods and services/GDP 12 4 11 5 8 9 9 6 Trade Gross domestic savingsIGDP -2 0 9 0 4 1 7 3 Gross national savings/GDP 18 8 7 5 9 8 T Current account balance/GDP -1 6 -100 -9 0 Interest payments/GDP 0 7 0 8 Domestic CapitaI Total debtlGDP 31 7 51 1 41 6 35 8 savings formation Total debt service/exports 8 0 122 154 13 0 Presentvalue of debtlGDP Presentvalue of debtlexports 1984-94 1994-04 2003 2004 2004-08 (average annualgrowth) GDP 8 0 5 5 5 9 Burkina Faso GDP per capita 5 9 3 6 - indebtedness 4 8 6 1 2 4 3 6 Lowincome omtin Exportsof goods and services 2 0 5 7 5 9 148 11 4 STRUCTURE of the ECONOMY i: 1984 1994 2003 2004 Growthof capital and GDP (Oh) II (% of GDP) I Agriculture 32.9 31.1 40.2 37.8 2o T Industry 21.9 19.3 19.0 20.1 10 Manufacturing Services 45.2 49.6 40.8 42.2 -10 Householdfinal consumptionexpenditure 87.3 76.1 83.7 80.7 -301 General gov't final consumptionexpenditure 14.7 14.9 12.1 11.9 imports of goods and services 30.3 22.9 21.7 20.8 -GCF -GDP 1984-94 1994-04 2003 (average annualgrowth) -Growthof exports and imports (%) Agriculture 4.7 6.1 11.0 -2.9 6o Industry 4.1 5.9 7.5 9.6 40 Manufacturing 2.7 .. 20 Services 5.3 5.4 6.7 7.5 0 Householdfinal consumptionexpenditure 3.5 7.4 9.5 2.3 -20 Generalgov't final consumptionexpenditure 2.6 7.3 -1.6 7.5 4 Gross capital formation 0.1 4.9 2.6 12.2 exports -Imports Importsof goods and services 1.6 -1.0 -4.4 -0.2 Note:2004 data are preliminaryestimates. *The diamondsshow four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 89 Burkina Faso PRICES and GOVERNMENT FINANCE 1904 1994 2003 2004 Domestic prices inflation (Oh) I (% change) Consumer prices 4.1 24.8 2.0 -0.4 Implicit GDP deflator 25.5 1.4 3.3 Government finance (% of GDP, includes current grants) Current revenue 9.9 13.0 14.9 14.4 Current budget balance -0.9 1.9 4.5 3.9 - GDP deflator ' O ' C P I Overall surplus/deficit -5.8 -5.4 -6.8 I TRADE 1984 1994 2003 2004 I Export (US$ millions) and import levels (US$ mill.) Total exports (fob) 191 321 434 17""- I-I cotton 58 207 301 600 Livestock products 61 43 53 500 Manufactures 400 Total imports (cif) 0 562 663 300 Food 0 84 100 MO Fuel and energy 0 134 171 100 Capital goods 0 222 246 0 00 01 02 03 04 Export price index (2000=100) 98 98 105 58 95 Import price index (2000=100) 84 104 110 Exports Imports Terms of trade (2000=100) 116 94 96 BALANCE of PAYMENTS 1984 1994 2003 2004 (US$ millions) Current account balance to GDP (Oh) Exportsof goods and services 179 248 381 504 0 Importsof goods and services 397 495 959 1,094 2 Resource balance -218 -247 -578 -590 4 Net income N/A -14 -1 -9 5 Net current transfers 95 227 148 136 8 Current account balance N/A -35 -431 -463 -10 -12 Financing items (net) 153 468 661 -14 Changes in net reserves N/A -119 -37 -198 Memo: Reserves including gold (US$ millions) 238 390 611 Conversion rate (DEC,local/US$) 437.0 534.6 580.1 527.6 EXTERNAL DEBT and RESOURCE FLOWS 1984 1994 2003 2004 (US$ millions) Composition of ZOO3 debt (US$mill.) Total debt outstandingand disbursed 410 1,129 1,789 1,844 iBRD 0 0 0 0 IDA 124 518 760 Total debt service 22 44 0 0 IBRD 0 0 0 IDA 1 6 15 Compositionof net resourceflows Official grants 81 212 283 158 Official creditors 41 80 91 Private creditors 0 0 Foreigndirect investment(net inflows) 2% 0 Portfolio equity (net inflows) 0 0 0 0 World Bank program Commitments 7 91 160 A IBRD E Bilateral Disbursements 13 79 74 15 B IDA D Other multilateral - F Pnvate Principal repayments 0 3 10 C IMF --- G Short-term --- Net flows 13 76 65 Interestpayments 1 3 5 Net transfers 12 73 59 DevelopmentEconomics 4/7/06 90 4° W 2° W 0° 2° E This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on OUDALANOUDALAN the part of The World Bank M A L I Group, any judgment on the legal status of any territory, or any endorsement or a c c e p t a n c e o f s u c h BURKINA FASO Gorom Gorom boundaries. SOUM SOUM Gorom Gorom N I G E R LOROUM LOROUM Djibo Djibo Dori Dori To 14° N To Mopti a SÉNO SÉNO Niamey YATENGA TENGA n g Titao itao Niger t e a Ouahigouya Ouahigouya BAM BAM SANMATENGASANMATENGA Sebba Sebba Y Kongoussi Kongoussi YAGHA AGHA To To Dosso San SOUROU SOUROU GourcyGourcy ZONDOMA ZONDOMA GNAGNA GNAGNA KOSSI KOSSI Tougan ougan KayaKaya AGNETNE Sirba To Yako ako Ségou MANAMENTENGAN KOURE- KOURE- Bogandé Bogandé KOMONDJARI KOMONDJARI Nouna Nouna Toma oma PASSORÉ ASSORÉ NAYALA NA ALA WÉOGO OUBRITENGA WÉOGO OUBRITENGA Boussé Boussé Boulsa Boulsa Gayéri Gayéri Ziniaré Ziniaré Goroubi Dédougou Dédougou OUAGADOUGOUOUAGADOUGOU GANZOURGOU GANZOURGOU BANWA BANW MOUHOUN MOUHOUN RéoRéo Koudougou Koudougou KADIOGO KADIOGO a Solenzo Solenzo r m BOULKIEMDÉ BOULKIEMDÉ Fada Fada G o u N'Gourma N'Gourma Diapaga Diapaga 12° N SANGUIÉ SANGUIÉ TAPOA APOA 12° N BAZÉGA BAZÉGA VoltaBlanche Zorgo Zorgo Koupéla Koupéla Kombissiri Kombissiri KOURITENGAKOURITENGA GOURMA GOURMA Noire Volta Boromo Boromo Tenkodogo nkodogo ZIRO ZIRO Rouge Manga Manga BOULGOUBOULGOU KOULPÉLOGO KOULPÉLOGO KÉNÉDOUGOU KÉNÉDOUGOU Volta BALÉ BALÉ SapouySapouy Houndé Houndé Ouargaye Ouargaye KOMPIENGA KOMPIENGA HOUET HOUET TUI TUI ZOUNDWÉOGOZOUNDWÉOGO NAOURINAOURI Pama Pama Dano Dano SISSILI SISSILI Bobo- Bobo- LéoLéo Po Po B E N I N BougounioT Orodara Orodara Dioulasso Dioulasso IOBA IOBA Diébougou Diébougou To To Téna Kourou Téna Kourou To TOGOTOGO 2° E Djougou Parakou (747 m) (747 m) Sindou Sindou BOUGOURIBA BOUGOURIBA Sokidé Banfora Banfora BURKINA FASO LÉRABA LÉRABA PONI PONI To KOMOÉ KOMOÉ Gaoua Gaoua Tamale AGRICULTURAL DIVERSIFICATION é AND MARKET DEVELOPMENT PROJECT 10° N Komo Volta G H A N A No INTERVENTION ZONES OF THE ADMDP NOUMBIEL NOUMBIEL ire PROVINCIAL CAPITALS Batié Batié To NATIONAL CAPITAL Bole ZONE NOT COVERED RIVERS ZONE 1 C Ô T E D ' I V O I R E 0 20 40 60 80 100 Kilometers MAIN ROADS ZONE 2 IBRD APRIL RAILROADS To 0 20 40 60 80 Miles ZONE 3 34699 Bouaké To PROVINCIAL BOUNDARIES 2006 Koutouba 4° W 2° W 0° INTERNATIONAL BOUNDARIES