Report No. PID9187 Project Name Cameroon- Forest & Environment Sector Development Program (PSFE) Region Africa Sector Forestry Project ID CMPE70656 Borrower(s) GOV'T OF CAMEROON Implementing Agency Address TBD Environment Category A Date PID Prepared February 26, 2002 Projected Appraisal Date June, 2002 Projected Board Date December 2002 1. Country and Sector Background Cameroon spans a territory of 475,000 km2 for 15 millions inhabitants. Since the end of the 1986-93 depression, Cameroon's economy has continued to recover slowly but steadily with moderate annual growth of 4.5% in real GDP and low inflation of 2% per year. Per capita annual income is 610 USD. After satisfactory completion of the three-year ESAF program, Cameroon has recently agreed a new three-year PRGF with IMF. It is also satisfactorily implementing IDA's Third Structural Adjustment Credit (SAC III). However, since the start of the recovery in 1994, per capita GDP has only reached two-thirds of its pre-depression level, and most social indicators have not improved. Poverty and corruption are still widespread. HIV/AIDS presents a serious new threat to Cameroon development. In October 2000 Cameroon was approved to the HIPC Initiative's Decision Point, and it is currently preparing a Final Poverty Reduction Strategy Paper (PRSP) with forest and environment as key-components.Two separate realities co-exist in the Cameroon Forest & Environment sector. The first one is the 1994 Forest Law, its regulations, and domestic and international assistance plans and programs. The other one is the day-to-day reality: the forestry patrimony continues to degrade; forest regulations remain inapplicable or not applied; the relationship between the state, the private sector and civil society remains confused. Despite recent improvements, forest sector contribution to overall GDP remain below potential. At the heart of these difficulties are insufficient political commitment to the 1994 law, and inadequate institutional capacity. Policy initiatives have been ignored by public institutions and by private sector, and the credibility of government has been undermined. Incentives to enforce the Forest Law are not in place: low civil servants salaries and lack of enabling working conditions create opportunities for corruption. The Third Structural Adjustment Credit (SAC III) was approved in 1998 with a forestry component aimed at creating necessary conditions for accelerating implementation of the 1994 forest policy. In March 1999, President Paul Biya convened the Central African Heads of the State Summit for Forest Conservation and Management, and restored the country's political commitment to reform the sector. All director-level positions were reassigned. An Emergency Action Plan was designed by the Ministry of Forests under the European donors impulse. It integrates most of the SAC III measures and International Community's concerns. This Action Plan was adopted by the Prime Minister in November 1999 and it is closely monitored by all stakeholders. The GEF-Biodiversity Program has been extended for two years until June 2002. Implementation of SAC III measures has so far been satisfactory. Government, donors (European Commission, France, DFID, Canada, etc), NGO's community and private sector are fully engaged in the change process. Recent changes are promising but fragile. They are unlikely to be sustained unless government and non-governmental institutions are empowered to oversight implementation of regulations. Cameroon can establish acceptable governance and management practices in the forest & environment sector but the country will not be able to succeed alone. 2. Objectives This operation will aim to support Cameroon in developping a coherent national "program approach" and will help provide a stable multi-donors long-term support to the forests & environment sector. The national program's main objective is to strengthen public and private sector efforts to achieve socio-economically and ecologically sustainable management of national forest and wildlife resources. The program does not require major remodeling of existing policies. It involves institutional reforms and focus on field-implementation of the existing legal and regulatory framework. It aims at strenghtening intersectoral linkages with poverty reduction and governance. It has strong synergy with the current SAC III, with the IMF's PRGF Program and with the HIPIC-Initiative. 3. Rationale for Bank's Involvement For the past 10 years, the Bank has led the forest policy reform process and has established a fruitful dialogue with key players in the area of forestry. While this process has at times risen criticism and resistance, the Bank is now regarded as a trusted partner, an honest broker by the Govt., the private sector, the Donor- and NGO-communities. The Bank is uniquely positioned to generate further confidence and long-term support by other donors which would otherwise be skeptical and would continue disengaging from the sector. Other donors are ready to ensure that their projects are consistent with the operational framework that the project will help create. It increasingly apparent that only the Bank has sufficient weight and convening power to promote a coherent "program approach" and help provide a stable multi-donor long-term support to the forests sector in Cameroon. Finally, given the economic importance of Cameroon's international timber production and trade, a risk exists that vested interests might influence the Government as well as individual donors towards opportunistic and self interested positions. In this regard, the Bank's decision making and project approval process is uniquely equipped to help guarantee balance among different points of view and representation of a wide variety of constituencies and economic and environmental interests. 4. Description This operation supports design and implementation of Cameroon's national investment program, which includes the following components to be supported through a broad sectoral lending approach :Institutional reformThe government intends to implement and further refine the sectoral - 2 - policy and institutional reforms initiated over the past ten years to improve sustainability of forest management and industrialization, and enhance local and national revenue capture. Institutional capacity building will include national land use planning and forest control system improvement. Various sector agencies are expected to devolve a considerable share of their responsibilities to the private sector. The forest & environment departments will be assisted to evolve into more efficient agencies providing services upon request. At the same time, the program will foster involvement of the private sector, non-governmental organizations and community-based organizations, to improve sectoral governance and performance.Improved forest and wildlife resources management(a) Improved management of production forests. In the rainforest production zone, the program will help strengthen all parties capacity to undertake and oversee implementation of forest management plans. This component will work closely with the logging sector through the CEO-Initiative and will promote private sector involvement in biodiversity conservation within production forests. It will also help enhance the linkages between community-based forest management activities, community empowerment and accountability to local governing bodies. The national program aims at improving incentives for the development of community forests in non-permanent forest estate.(b) Improved management of savanna lands. The program aims at : (i) creating capacity of agencies mandated for working with communities in rural land management and agro-forestry, as well as the technical capacity of local communities, district level decentralized units and local governing bodies; (ii) creating community managed masterplans to supply fuelwood to city markets by amending the regulatory framework for harvesting woodfuels and creating incentives for the establishment of local enterprises; and (iii) promoting private sector capacity in wildlife-related economic activities such as ecotourism and game ranching.Biodiversity conservation and protected areas managementThe program will: (i) strengthen the public services capacity to protect biodiversity in protected areas and to coordinate national and international partners contribution to biodiversity conservation; (ii) promote private sector capacity in wildlife-related economic activities such as safari and ecotourism; and (iii) improve national and international NGO's capacity to cooperate with public services and local population for the elaboration and implementation of management plans for protected areas and buffer zones.Participation in Global Environmental InitiativesCameroon intends to respond the challenges and to get the benefits from an active involvement in the implementation of international mechanisms related to the biodiversity, desertification and climate change conventions. This component will help design a credible strategy for financing conservation programs in partnership with the international community and initiate pilot activities to generate sustainable revenues from environmental tradable services other than logging. 5. Financing Total ( US$m) IDA 30 Financing Gap 30 Total Project Cost 60 6. Implementation The Ministry of Environment and Forests will be the lead government agency. A sectoral institutional audit is ongoing as part of the program's -3 - design effort. Implementation arrangements will be based on a clear division of tasks between private and public sector. Structured venues and public information mechanisms will be created for the government to exchange views with the private sector, local governing bodies, civil society and the development partners community. Private sector, NGOs and local communities are involved as key partners of program design participatory effort. A national team was created in January 2001 to lead the national consultative process, to outline program components operational arrangements, to ensure consistency of new investments with ongoing initiatives and projects, and to promote the adoption of the proposed program approach by national institutions and donors. 7. Sustainability At the national level, the long term sustainability of the forestry institutions will be the responsibility of government. As part of the institutional reform, special effort will be made to ensure that forest-related public agencies have budgets and capacity consistent with their mandate and sector priorities, that recurrent costs are minimized and that funding from national and international sources is sustainable. Government's commitment in terms of sustaining policy reforms as well as staffing and counterpart funding will be crucial. Sustainability at the local level will be sought by proposing options that make financial and social sense at the local community and local enterprise level. 8. Lessons learned from past operations in the country/sector A recently completed (Dec. 99) analysis of Bank experience in Cameroon in the forest and agricultural sectors indicates that while the Bank has been able to promote positive policy changes leading to establishing a transparent, equitable, and sustainable management system for forest resources, this reform process had little impact because the government lacked the commitment and capacity to carry out reforms. The Bank failed to devise an implementation strategy compatible with the political and socioeconomic changes taking place in Cameroon and to provide the support that is necessary to implement new policies. OED found that the Bank needed to change approach and act as an honest broker while making a long-term commitment to sustain implementation of forest sector reforms. In more general terms, the same lesson was learnt through the analysis of the overall World Bank forest portfolio during the period 1991-1999. The project also integrates the lessons that were learnt during the implementation of the ongoing GEF Environment project for Cameroon. These lessons point at the necessity to create links between externally supported conservation efforts, institutional strengthening and community involvement. They also point at the need to address the long-term financing challenges of initiatives of a global environment nature and increase Cameroon international credibility as to its long-term commitment to environment.In a forest-rich country sustainable governance improements in forestry are both more difficult to achieve, and perharps of greater significance than those in most other sectors bacause forestry permeates the many aspects of the economic and political system. Prior to the reform program, corrupt procedures and lack of clarity were not confined to the dealings between the larger foreign logging companies and the Authorities. More pernicious, and more difficult to deal with, was the fact that awarding of forestry concessions to Cameroon nationals was an integral part of the patronage and political reward systems. This fostered economically and fiscally sub-optimal exploitation, uncontrolled and -4 - uncompensated destruction of the forest resource, and widespread rent seeking. What has been achieved in countering this situation is a model which could beneficially be applied in other countries and sectors.A soft and constructive tone is essential to make progress. Conflict management techniques are necessary to building confidence and avoid situation of blockage. Escalating the forest dialogue to the highest level of Government and discussing at that level the links between the political and economic power can be extremely helpful even thought it can at times be risky. 9. Program of Targeted Intervention (PTI) N 10. Environment Aspects (including any public consultation) Issues : Through its focus on institutional reform, forest industry reorganization incentives, rehabilitation of degraded ecosystems and protection of untouched biodiversity conservation sites, the program is expected to have a strong positive impact on the environment. No voluntary or involuntary resettlement is planned under the program. The program's aim is rather to effectively engage rural residents where they currently live in more sustainable forest resources management. 11. Contact Point: Task Manager Giuseppe Topa The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: 202-473-4532 Fax: 202-473-5147 12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. This PID was processed by the InfoShop during the week ending March 8, 2002. -5-