Document of The World Bank FOR OFFICIAL USE ONLY Report No: PAD2898 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$40.0 MILLION TO JAMAICA FOR THE SECOND RURAL ECONOMIC DEVELOPMENT INITIATIVE (REDI II) PROJECT October 24, 2019 Agriculture and Food Global Practice Latin America and Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective: July 1, 2019) Currency Unit = Jamaican dollar(J$) J$1 = US$0.00763 US$1 = J$130.99 FISCAL YEAR April 1 - March 31 Regional Vice President: J. Humberto Lopez (Acting) Country Director: Tahseen Sayed Khan Regional Director: Anna Wellenstein Practice Manager: Preeti S. Ahuja Task Team Leader: Garry Charlier ABBREVIATIONS AND ACRONYMS CBC Community-Based Contracting CDB Caribbean Development Bank CERC Contingency Emergency Response Component CPS Country Partnership Strategy CTE Community Tourism Enterprise DA Designated Account DCFS Department of Cooperatives and Friendly Societies DVRP Disaster Vulnerability Reduction Project EAC Enterprise Assessment Committee EIRR Economic Internal Rate of Return EAC Enterprise Assessment Committee ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan EX-ACT Ex-Ante Carbon-balance Tool FAO Food and Agricultural Organization of the United Nations FCGP Foundations for Competitiveness and Growth Project GDP Gross Domestic Product GHG Greenhouse Gas GOJ Government of Jamaica IBRD International Bank for Reconstruction and Development ICDP Integrated Community Development Project ICR Implementation Completion and Results Report IDB Inter-American Development Bank IFR Interim Financial Report IRR Internal Rate of Return JAS Jamaica Agricultural Society JBF Jamaican Business Fund JMD Jamaican Dollar JSIF Jamaica Social Investment Fund JTB Jamaica Tourist Board MICAF Ministry of Industry, Commerce, Agriculture and Fisheries MIS Management and Information System MOFPS Ministry of Finance and the Public Service MOT Ministry of Tourism MOU Memorandum of Understanding MSMEs Micro, Small, and Medium Enterprises M&E Monitoring and Evaluation NGO Non-governmental Organization NPV Net Present Value PDO Project Development Objective PIOJ Planning Institute of Jamaica PMT Project Management Team PO Producer Organization POM Project Operational Manual PPSD Project Procurement Strategy for Development PTE Private Tourism Enterprise RADA Rural Agricultural Development Authority REDI Rural Economic Development Initiative RPF Resettlement Policy Framework SMEs Small and Medium Enterprises SORT Systematic Operations Risk-rating Tool SRC Social Review Committee TORs Terms of Reference TPDCo Tourism Product Development Company TRC Technical Review Committee VAE Value Added Enterprise VLD Voluntary Land Donation WBG World Bank Group TABLE OF CONTENTS DATASHEET ............................................................................................................................ I I. STRATEGIC CONTEXT ...................................................................................................... 1 A. Country Context ................................................................................................................. 1 B. Sector and Institutional Context ........................................................................................ 2 C. Relevance to Higher Level Objectives ................................................................................ 4 II. PROJECT DESCRIPTION.................................................................................................... 4 A. PDO ..................................................................................................................................... 4 B. Project Components ........................................................................................................... 5 C. Project Beneficiaries ........................................................................................................... 8 D. Results Chain ...................................................................................................................... 9 E. Rationale for Bank Involvement and Role of Partners .................................................... 10 F. Lessons Learned and Reflected in the Project Design ..................................................... 10 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 11 A. Institutional and Implementation Arrangements ........................................................... 11 B. Results Monitoring and Evaluation Arrangements ......................................................... 12 C. Sustainability .................................................................................................................... 12 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 13 A. Technical and Economic & Financial Analysis ................................................................. 13 B. Fiduciary ............................................................................................................................ 14 - Financial Management ....................................................................................................... 14 - Procurement ....................................................................................................................... 14 C. Safeguards......................................................................................................................... 15 - Environmental Safeguards ................................................................................................. 15 - Social Safeguards ................................................................................................................ 15 - Other Social Considerations ............................................................................................... 16 - Grievance Redress .............................................................................................................. 17 V. KEY RISKS ..................................................................................................................... 18 Overall Risk Rating and Explanation of Key Risks................................................................ 18 VI. RESULTS FRAMEWORK AND MONITORING ..................................................................... 19 ANNEXES ............................................................................................................................. 27 ANNEX 1: DETAILED PROJECT DESCRIPTION ......................................................................... 27 ANNEX 2: IMPLEMENTATION ARRANGEMENTS .................................................................... 36 ANNEX 3: IMPLEMENTATION SUPPORT PLAN ...................................................................... 47 ANNEX 4: ECONOMIC AND FINANCIAL ANALYSIS ................................................................. 49 ANNEX 5: GREENHOUSE GAS ACCOUNTING FOR RURAL DEVELOPMENT PROJECTS............... 54 ANNEX 6: GENDER ANALYSIS AND ACTION PLAN ................................................................. 59 MAP .................................................................................................................................... 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) DATASHEET BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name Jamaica Second Rural Economic Development Initiative (REDI II) Project Project ID Financing Instrument Environmental Assessment Category Investment Project P166279 B-Partial Assessment Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [✓] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s) [ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) Expected Approval Date Expected Closing Date 14-Nov-2019 30-Sep-2025 Bank/IFC Collaboration No Proposed Development Objective(s) To enhance access to markets and to climate resilient approaches for targeted beneficiaries. Components Component Name Cost (US$, millions) Climate Resilient Agriculture and Community Tourism Investments for Rural 28.00 Enterprises The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Institutional Strengthening and Capacity Building for Public Entities 8.00 Project Management, Monitoring and Evaluation 6.00 Contingent Emergency Response 0.00 Organizations Borrower: Jamaica Implementing Agency: Jamaica Social Investment Fund (JSIF) Ministry of Finance and Public Sector PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 42.00 Total Financing 42.00 of which IBRD/IDA 40.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 40.00 Non-World Bank Group Financing Counterpart Funding 2.00 Local Beneficiaries 2.00 Expected Disbursements (in US$, Millions) WB Fiscal Year 2020 2021 2022 2023 2024 2025 2026 Annual 1.00 3.00 5.00 7.00 10.00 11.00 3.00 Cumulative 1.00 4.00 9.00 16.00 26.00 37.00 40.00 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Agriculture and Food Finance, Competitiveness and Innovation Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks Gender Tag Does the project plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of Yes country gaps identified through SCD and CPF b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or Yes men's empowerment c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ Moderate 2. Macroeconomic ⚫ Moderate 3. Sector Strategies and Policies ⚫ Moderate 4. Technical Design of Project or Program ⚫ Moderate 5. Institutional Capacity for Implementation and Sustainability ⚫ Moderate 6. Fiduciary ⚫ Moderate 7. Environment and Social ⚫ Moderate 8. Stakeholders ⚫ Moderate 9. Other ⚫ Substantial 10. Overall ⚫ Moderate The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 ✔ Performance Standards for Private Sector Activities OP/BP 4.03 ✔ Natural Habitats OP/BP 4.04 ✔ Forests OP/BP 4.36 ✔ Pest Management OP 4.09 ✔ Physical Cultural Resources OP/BP 4.11 ✔ Indigenous Peoples OP/BP 4.10 ✔ Involuntary Resettlement OP/BP 4.12 ✔ Safety of Dams OP/BP 4.37 ✔ Projects on International Waterways OP/BP 7.50 ✔ Projects in Disputed Areas OP/BP 7.60 ✔ Legal Covenants Sections and Description Schedule 2, Section I, B, 1: The Borrower shall maintain, throughout Project implementation, the Inter-Ministerial Project Steering Committee with composition, functions and responsibilities acceptable to the Bank as set forth in the Project Operational Manual, including, inter alia, responsibility to ensure that the Project is in line with national development priorities. Sections and Description Schedule 2, Section I, B, 2: The Borrower shall cause the Project Implementing Entity to maintain throughout Project implementation, its Social Review Committee, with composition, functions and responsibilities acceptable to the Bank as set forth in the Project Operational Manual, including, inter alia, responsibility to assess and select Rural Enterprise Sub-projects for further development. The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Sections and Description Schedule 2, Section I, B, 3: Prior to the selection of any Sub-project, the Borrower shall cause the Project Implementing Entity to establish and maintain throughout Project implementation, an assessment committee (“Enterprise Assessment Committee”), with composition, functions and responsibilities acceptable to the Bank, as set forth in the Project Operational Manual, including, inter alia, responsibility to assess the financial and business feasibility of Rural Enterprise Sub-projects. Conditions Type Description Effectiveness Article 5.01: The Subsidiary Agreement has been executed on behalf of the Borrower and the Project Implementing Entity and is in effect in a manner acceptable to the Bank. Type Description Disbursement Schedule 2, Section III, B, 1, a: No withdrawal shall be made for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed $2,000,000 may be made for payments made prior to this date but up to 12 months prior to the Signature Date, for Eligible Expenditures under Category (1). Type Description Disbursement Schedule 2, Section III, B, 1, b: No withdrawal shall be made under Category (2), for Emergency Expenditures under Part 4 of the Project, unless and until the Bank is satisfied, and notified the Borrower of its satisfaction, that all of the CERC Conditions have been met. The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) I. STRATEGIC CONTEXT A. Country Context 1. The Jamaican economy has historically been characterized by low growth and high public debt. Jamaica is a middle-income island state with a population of approximately 2.9 million (of which 55.3 percent is urban). According to World Bank data, real gross domestic product (GDP) per capita grew at an average of only 0.6 percent per year between 1990 and 2018, which is relatively low compared to the average annual rate of 1.3 percent for the Latin America and Caribbean Region (excluding high-income countries), and 3.1 percent for middle-income countries worldwide. 2. Fiscal and structural reforms launched in 2013 are contributing to improvements in economic performance. Through fiscal restraint, higher tax revenue, and well-timed liability management operations, Jamaica has succeeded in reducing the debt-to-GDP ratio from over 140 percent in 2014 to a projected 98.7 percent in 2019. GDP growth has accelerated modestly since the reforms started, rising to 1.9 percent in 2018 from 0.5 percent in 2013.1 Strong performance in construction, food processing, utilities, and tradable services helped to support economic growth and create jobs, while key countervailing challenges included high crime levels, constrained access to finance, cumbersome business regulations, and high energy costs. The economy remains vulnerable to external shocks. The informal sector remains large in relative terms, accounting for 43 percent of official GDP, according to a 2014 study by the International Labour Organization. 3. Jamaica has witnessed a modest reduction in poverty over the past five years. The national incidence of poverty has dropped to 17.1 percent in 2016 from 24.6 percent in 2013 as growth resumed. However, poverty reduction has not been continuous, and a 4 percentage-point increase in the poverty rate between 2014 and 2015 underscores the population’s vulnerability to short-term shocks. Poverty in rural areas was 20.5 percent in 2016 (8.6 and 4.5 percentage points higher than in the Kingston Metropolitan Area and other urban towns respectively). Female headed households and children (ages 0– 14) are overrepresented among the poor, with poverty rates in 2017 of 14.9 and 17.1 percent, respectively. If Jamaica is to achieve the development goal expressed in the Vision 2030 plan of the Government, rural development needs to keep pace with urban development. The Government of Jamaica (GOJ) views the tourism and agri-food sectors as holding significant potential for rural growth. 4. Given its geographical location, Jamaica is highly vulnerable to climate change and serious environmental threats. The country has suffered notable economic losses from the impacts of climate change. Between 2004 and 2008, five major storms caused damage and losses estimated at US$1.2 billion. Evidence suggests that severe weather events (droughts, extreme precipitations, floods, and hurricanes) are likely to increase and that hurricanes will increase in intensity and frequency.2 These events already affect the coastal ecosystem, fishing infrastructure, the competitiveness of the agri-food sector, tourism, and the financial sector. Vulnerability to the rising sea level is pronounced in Jamaica, given the potential for tropical storm and hurricane surges to affect coastal development and displace the population. 1 According to data from the Government of Jamaica (Planning Institute of Jamaica) 2 Ivan, Dennis, and Emily (2004-2005); Dean (2007); Sandy (2012); tropical storms Gustav (2008) and Nicole (2010); and droughts (2005-2014). Page 1 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) B. Sector and Institutional Context Agricultural Sector 5. The agricultural sector makes important contributions to Jamaica’s economic development and is recognized as a priority in the GOJ’s mid-term plans. The agricultural sector accounts for 8.0 percent of Jamaica’s GDP and employs 18.7 percent of the active population (of which 44.7 percent lives in rural areas). Agriculture and agro-processing in Jamaica feature a few subsectors with relatively tight value chains and high-quality standards serving export markets and the tourism industry, along with domestic production subsectors serving local parish markets and supermarkets. Agri-food products represent 20 percent of total merchandise export earnings and 16 percent of the total merchandise import bill.3 Jamaica is a net importer of livestock commodities (dairy and meat products). Traditional export crops (sugar, bananas, coffee, and citrus) are in decline. “Non-traditional” exports showing strong growth and market potential include agricultural products such as preserved fruits (such as ackee) and sauces, condiments, and mixed seasonings (such as jerk sauces). Other subsectors with strong market potential are crustaceans, cheese products, and nutraceuticals.4 6. The small-scale agricultural and food sector exhibits significant potential for growth, but there are significant challenges to address. The growth potential of small-scale agriculture is ample for serving domestic markets, but it needs to become more competitive with respect to imports by increasing land and labor productivity, the quality and reliability of distribution systems, and climate resiliency. Small farmers and micro and small agribusinesses tend to be at a comparative disadvantage in accessing higher- value markets due to lack of market information, inefficient production practices, outdated technologies, lack of value addition, diseconomies of scale, and high logistics costs. Limited access to financing is among the key challenges to agricultural competitiveness and to the micro, small, and medium enterprises (MSMEs) in the agri-food sector. Weak connectivity in rural areas also limits marketing opportunities and access to attractive new markets. 7. The agriculture and food sector is exposed to frequent weather shocks and high levels of climatic variability, exacerbated by climate change. Climate change has unleashed a series of trends—rising temperatures, worsening rainfall variability and droughts, and increasing frequency and intensity of extreme weather—that are making soil and crop management more difficult, especially in coastal areas threatened by declining soil fertility and the loss of land. Crops will need to withstand a more extreme and diverse set of natural and environmental challenges, including worsening pest and disease threats. Weather trends may add to the vulnerability of livestock facilities and place additional stress on animals. Tourism Sector 8. Tourism is also a critical driver of the Jamaican economy, accounting for 9.3 percent of GDP in 2016.5 The tourism sector in Jamaica is considered mature, but international arrivals are still growing rapidly, more than elsewhere in the region. International tourist arrivals6 increased at an average annual rate of 3.2 percent from 2008 to 2017 (with an increase of 7.8 percent from 2016 to 2017), to reach 2.4 million international arrivals. International arrivals in the Caribbean increased at just 1.7 percent during 3 Jamaica’s major export earnings come from bauxite/alumina; the main non-merchandise sources of foreign currency are tourism and remittances. 4 Nutraceuticals are products derived from food sources that are purported to provide health benefits in addition to their basic nutritional value. For example, nutraceutical products may claim to prevent chronic disease, improve health, delay aging and increase life expectancy, or support the structure or function of the body. 5 World Travel & Tourism Council (2017), “Travel & Tourism: Economic Impact 2017 Jamaica.” 6 Termed “stopovers” in Jamaica. Page 2 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) the same time. The number of cruise visitors has also grown faster in Jamaica than in the rest of the region (5.5 percent compared to 1.3 percent for other parts of the Caribbean). A goal of Jamaica’s tourism strategy7 is to significantly reduce the amount of foreign exchange losses that results from the large amount of imports used in the sector. Jamaica retains about 30 percent of every dollar spent by tourists, while the target set by the Ministry of Tourism (MOT) is 50 percent. Efforts are being made to link resorts with small-scale agricultural production. For example, Sandals Resorts reports that 90 percent of produce purchased in Jamaica annually is produced locally by a network of around 180 farmers.8 9. Jamaica’s tourism market has traditionally focused on the “sun, sea, and sand” concept, but the industry is pursuing diversification. In response to changes in the global tourism marketplace, GOJ and the private sector are seeking to provide a more diverse visitor experience through new product offerings targeted to a wider range of visitors. The MOT intends to move toward a more inclusive tourism model to spread the benefits of tourism, provide more entrepreneurship opportunities, and deepen economic linkages in rural areas. This policy is laid out in the National Community Tourism Policy and Strategy, which was funded under the previous Rural Economic Development Initiative (REDI) project. 10. Many challenges to the further development of community tourism in rural areas were tested with community tourism enterprises (CTEs) under the first Jamaica Rural Economic Development Initiative (REDI) project. The main barriers identified by CTEs include: (a) excessive licensing standards—for example, small non-governmental organizations (NGOs) and CTEs found it too complex to manage fire safety, and environmental regulations (conceived for larger facilities); (b) insufficient capacity and resources for expanding community tourism operations; (c) poor marketing support and inadequate connections to the tourism supply chain, operators, and hotels; and (d) poor infrastructure, which increases the cost of supplying CTEs and doing business, and reduces the number of visitors as tour operators are reluctant to visit CTEs. 11. Climate resilience is also important for the tourism sector. Caribbean Islands like Jamaica are on the front lines when it comes to experiencing the impact of climate change. More severe storms and hurricanes, rising sea levels, droughts, and heat waves can degrade tourism assets such as coral reefs, shorelines, freshwater supply, and ecosystems, and they in turn can damage tourism infrastructure and destination communities, with great potential losses to GDP and employment. Changing weather conditions and milder winters in various parts of the world may also affect tourist demand, underscoring the need for “sun, sea, and sand” destinations to diversify their offerings. Countries need climate-resilient tourism sectors, infrastructure, and communities to withstand these impacts. Building on Recent Experiences 12. Results of REDI I created a strong foundation for the proposed REDI II project. Implemented between January 2010 and July 2017, REDI I aimed at: (a) stimulating rural economic growth through the small-scale agricultural sector, particularly in the domestic market, to displace costly imports and make agriculture more competitive; and (b) creating rural economic opportunities by promoting CTEs designed to respond to the challenges of changing market dynamics, limited access to affordable capital and financing, human resource constraints, limited access to business development services, and weak organizational capacity. Directly and indirectly, REDI I benefitted an estimated 19,808 micro and small- 7 The Master Plan for Sustainable Tourism Development and the National Development Plan – Vision 2030 are the main guides determining Jamaica’s tourism strategy. 8 See the Jamaica Observer (2017) http://www.jamaicaobserver.com/business-report/sandals-consumes-whopping-5-million-pounds-of-local-farm- produce-yearly-buy-local-first-before-looking-overseas-stewart-instructs-resorts_136430. Page 3 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) scale rural producers as well as tourism product and service providers. Among them, 22 percent were youths (individuals younger than 30) and 51 percent were women. Additionally, training and capacity building were provided to staff of the Rural Agricultural Development Authority (RADA) and Tourism Product Development Company (TPDCo). Besides improving market access for targeted micro and small- scale rural enterprises, REDI I successfully furthered the inclusion of women and youth by targeting these groups in the selection of sub-project proposals or applications and preparation of business plans.9 In addition, lessons from implementing the Jamaica Business Fund (JBF) component of the Foundations for Competitiveness and Growth Project (FCGP) have been incorporated into the design of REDI II. C. Relevance to Higher Level Objectives 13. The proposed REDI II project is consistent with Pillar 2 (“Enabling environment for private sector- led growth”) of the World Bank Group’s (WBG) 2014-17 Country Partnership Strategy (CPS) (Report No. 85158-JM) discussed on April 29, 2014 and the Performance and Learning Review (PLR) (Report No. 112663-JM) issued on June 23, 2017. The WBG supports the country’s long-term development plan, “Vision 2030 Jamaica,” which calls for sustainable growth, prosperity, and social cohesion. The extension to the CPS allows for the consolidation of results and provision of uninterrupted support to Jamaica within the current IBRD envelop. It remains consistent with the WBG’s twin goals of reducing poverty and enhancing shared prosperity. 14. More specifically, REDI II will support Objective 2.a (“Enhanced Business Environment and Entrepreneurship”) of CPS Pillar 2 by: (a) providing financial and technical support to small-scale agricultural and community tourism enterprises; (b) assisting in the development of critical market- oriented and climate-resilient small-scale infrastructure, marketing, and management; (c) increasing access to technical and climate-smart innovation and business support services; and (d) providing technical and environmental skills development, including disaster mitigation and recovery training. 15. The project is also aligned with the 2002 Sustainable Tourism Master Plan for Jamaica, which highlights the importance of moving to a more inclusive and environmentally sustainable growth strategy that will support small, locally based market entrants drawing on the country’s natural, historic, and cultural assets. The tourism strategy also points to the importance of reinforcing linkages with the local agriculture and food sector and agricultural specialty product suppliers as part of the more inclusive strategy for growth. 16. REDI II seeks to maximize its climate co-benefits and thus contribute to the Climate Change Policy Framework, adopted by Jamaica in 2015 to support the Vision 2030 in mainstreaming climate change into sectoral and financial planning and to build the capacity of sectoral institutions to develop and implement their own climate change adaptation and mitigation plans (see Annex 1 for details). II. PROJECT DESCRIPTION A. PDO 17. The Project Development Objective is: to enhance access to markets and to climate-resilient approaches for targeted beneficiaries. 18. Climate-resilient approaches are to be viewed as climate-smart approaches that include assets, technologies, and practices to strengthen productivity, adaptation, and mitigation against climate change. 9 Among the rural enterprise participants in REDI I, 51 percent were women (170 percent of target). Page 4 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Targeted beneficiaries are rural enterprises (micro, small and medium-size or MSMEs) linked to the agricultural and community tourism sectors, as well as relevant public sector institutions and partner entities. 19. The results of the project will be measured through the following set of outcome indicators: • Percentage of participating rural enterprises that have accessed new markets. • Percentage of participating rural enterprises operating on or above the projections (gross sales value) of their corresponding business plans. • Number of targeted beneficiaries reached with climate-resilient approaches supported by the project (of which number of rural enterprises and public institutions). B. Project Components 20. Enhancement to the REDI I approaches. Building on the experience and results of REDI I, the new project will focus on strengthening value chains10 and the development of tourism clusters, with an emphasis on the linkages between producers/service providers and buyers, to improve economies of scale for small agricultural and tourism enterprises and to mainstream climate resilience. 21. Component 1. Climate Resilient Agricultural and Community Tourism Investments for Rural Enterprises (Total US$28.0 million, IBRD US$26.0 million and Beneficiary Contribution US$2.0 million). The objective of this component is to promote the development of agricultural/community tourism enterprises that are better integrated in productive partnerships or “alliances" and operate more competitively in selected value chains, with more reliable linkages with buyers and markets and increased capacity to manage climate risks. 22. Through matching grants, Component 1 will finance consulting and non-consulting services, goods, works, and operating costs for demand-driven, competitively selected agriculture/fisheries or community tourism sub-projects presented and implemented by participating rural enterprises to increase their production and to capture and/or increase their market share and level of profits. Financed activities will support the promotion, identification, design, feasibility, and implementation of competitive and climate- resilient investment sub-projects for business investments and ventures established by beneficiary enterprises (small farmer/fisher associations—that is, cooperatives, friendly or benevolent societies, or any formal form of legally established association—agribusinesses, community tourism operators, and related entrepreneurs and handicraft artisans). 23. Sub-projects in the agricultural sector can take numerous forms, including: the introduction of new crop varieties adapted to expected higher temperatures and resistant to drought; counter-seasonal production methods and technologies such as greenhouses; the use of integrated pest management; mechanisms for soil management and increasing soil fertility; the introduction of more efficient irrigation and water harvesting methods and alternative (small-scale) sources of energy, such as solar panels; the development of integrated landscape models comprising livestock, crops, and forestry; improvements in stock breeding and management; new capacity for reducing post-harvest losses and improving food quality; and small group marketing infrastructure such as cold storage facilities, sheds, packing facilities, and sanitary facilities, among others. In the community tourism sector, sub-projects could include the 10A value chain is defined as the interlinked value-adding activities that favor competitive advantage. A typical value chain includes: (a) procurement and input logistics; (b) operations that may include, in the case of this project, farming and agricultural research, and basic tourism infrastructure such as eco-trails; (c) training and other human resource development activities; (d) transportation of outputs and any investment in infrastructure to decrease costs or improve quality of the outputs (such as cold storage); and (e) corporate activities, including marketing and sales. Page 5 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) development of new or expansion of existing tourism experiences (eco-hiking trails, waterfalls, mineral baths, culinary expertise, and gastronomic events) and associated equipment for internet access, landscaping, trail development, signage, rehabilitation or safety enhancement of public attractions; construction of simple handicraft markets; equipment for the production, preparation, or packaging of agricultural specialty products, handicrafts, and novelty items (such as basketry, pottery, beauty products, condiments); or gastro-tourism activities and promotion. 24. Rural enterprises will prepare and submit proposals for investment sub-projects, which will be selected for matching grant funding through a competitive evaluation based on previously established criteria, to include (among others) market demand, product quality, technical and financial feasibility, environmental and social sustainability, approaches to enhance climate resiliency, potential for local impact, and the level of participation by women and young people. Matching grants to fund sub-project investments are not to exceed US$500,00011 each (including all collaborating enterprises receiving grants within that sub-project partnership) or an average of US$15,000 per individual beneficiary. The cash contribution from beneficiaries will be 5–60 percent of total sub-project costs, depending on the type of beneficiary and the size of the matching grant, in line with specific details provided in the Project Operational Manual (POM)12. Grants must be used in accordance with the provisions of the approved business plan, recorded in a Sub-project Agreement to be signed between the beneficiaries and the Jamaica Social Investment Fund (JSIF), which will establish how the proceeds must be used. It is estimated that a total of 90 investment sub-projects will be supported through this component, directly benefitting around 200 rural enterprises. Around 9,000 individual members of these rural enterprises will benefit directly from these investments (of which 40 percent will be women and 30 percent youths). 25. Component 2. Institutional Strengthening and Capacity Building for Public Entities (IBRD US$8.0 million). This component aims to strengthen the capacity of relevant public sector institutions—the Ministry of Industry, Commerce, Agriculture, and Fisheries (MICAF), MOT, and JSIF—and associated entities (Rural Agricultural Development Authority (RADA), Tourism Product Development Company (TPDCo), and others) to provide the public infrastructure and quality services needed to promote inclusive rural development (based on the agriculture and tourism nexus) and to ensure the sustainability of the rural enterprises and productive partnerships supported by the project. This component has two subcomponents. 26. Subcomponent 2.1—Public Infrastructure Investments (IBRD US$6.0 million). This subcomponent will finance civil works, goods, and consulting services for the priority public infrastructure investments (to develop new or rehabilitate existing infrastructure) required to improve the efficiency and climate resilience of targeted agri-food and tourism value chains. These investments may include key public or private goods that are currently missing due to market failures or are beyond the capacity of individual sub-projects to provide under Component 1, but that are closely linked to enhancing their success and viability. 27. Examples of such investments for the agriculture sector are: facilities and equipment at the regional or national level (including in ports or airports) for storage, packing, cold chain supply; fresh produce clearing hubs and grading and distribution facilities; agricultural research and development facilities; seed/seedling production and certification facilities; hatcheries; storage banks for high-quality genetic material (germplasm and semen); and expansion or upgrading of hydro-meteorological networks, among 11 Including specialized technical assistance required for the implementation of the business plan. 12 The REDI II Project Operational Manual (POM) dated August 2019 (including its CERC Annex) has been adopted by JSIF. Page 6 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) others. In the tourism sector, investments may include: extending/enhancing connections to energy networks or developing alternative energy sources; extending/improving local roads;13 construction of public bathrooms; collection and out-of-view disposal of solid waste; construction of simple handicraft markets; equipment for satellite-based internet access, and so forth. All of these investments will be made either on land owned by the government or on private land that has been voluntarily donated, to avoid economic/physical involuntary resettlement impacts. 28. Public investment sub-projects will be proposed by a relevant public-sector agency or institution participating under REDI II in socio-economic development of the agricultural, fisheries, or tourism sectors; the agency or institutions will retain ownership and be responsible for the quality, management, operation, and maintenance of the facilities and equipment. The POM details the process for developing, revising, approving, and financing public investment sub-projects, including the pre-established criteria for eligibility and prioritization; the basic sub-project requirements; sub-project justification; and feasibility analysis. The amount of grant financing for such investments will be limited to a maximum of US$1.5 million, but the average amount is expected to be significantly lower. It is estimated that at least 4 public infrastructure investments will be financed under this component and benefiting around 10,000 direct individual beneficiaries. They will be climate resilient, especially along shorelines and other vulnerable areas. Where warranted, public-private partnership arrangements will be sought for the operation and maintenance of these investments to ensure their sustainability. 29. Subcomponent 2.2: Technical Assistance and Capacity Building (IBRD US$2.0 million). This subcomponent will finance technical assistance (consultant and non-consultant services, goods, training, workshops, and study tours) to strengthen the capacity of relevant national organizations and other partner entities responsible for assisting the agricultural and community tourism enterprises. Activities to be supported include specific policy and regulatory reviews and assessments; strengthening the agricultural and tourism research and extension support services with regard to the implementation, monitoring, and evaluation of climate-smart technologies/practices in agriculture; product development and marketing strategies; market and competitiveness analysis; support to develop a platform to foster tourism and agribusiness linkages and new, more efficient models of integration; streamlining tourism licensing processes for CTEs; and approaches to improve targeting of women and youth beneficiaries, drawing on local knowledge of appropriate gender-sensitive practices and lessons from REDI I. The JSIF will invite organizations such as RADA, TPDCo, the Jamaica Agricultural Society (JAS), the Department of Cooperatives & Friendly Societies (DCFS), Chambers of Commerce, and others to submit proposals for technical assistance and capacity building. It is estimated that Subcomponent 2.2 will support at least 10 public institutions and partner entities; at least 650 of their staff members (of whom 40 percent female and 30 percent youths) will benefit directly from training provided by the project. 30. Component 3. Project Management, Monitoring, and Evaluation (Total: IBRD US$6.0 million). This component will finance incremental costs associated with the coordination, administration, supervision, and monitoring and evaluation (M&E) of project implementation by JSIF and the technical Project Management Team (PMT) that JSIF will establish for REDI II. Costs to be financed include technical expertise (agriculture, tourism, business development, M&E, and so on), salaries of other contractual staff of JSIF supporting the project, staff training, annual audit, vehicles, office equipment, and other operating costs. This component will also ensure that effective safeguard, fiduciary, and M&E arrangements are in place 13No major road construction is considered under this component, only limited rehabilitation and improvement of short complements to local roads to improve connections with markets or tourism sites. Page 7 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) during implementation. 31. Component 4. Contingent Emergency Response (US$0). This component will allow loan proceeds to be reallocated from other components to support emergency recovery and reconstruction following an eligible crisis or emergency at the national or subnational level. Specifically, given the design of the proposed project, this Contingent Emergency Response Component (CERC) is expected to be operationalized through a reallocation from Component 1 to provide emergency recovery and reconstruction support. To ensure that there is capacity to implement this component, the POM includes a CERC annex applicable to eligible disasters detailing fiduciary, safeguard, monitoring, reporting, and any other implementation arrangements necessary. C. Project Beneficiaries 32. The proposed project targets micro, small, and medium farmers/fishers and tourism service providers who are (or are willing to become) members of collective agricultural/fisheries and community tourism enterprises,14 as well as other agents identified as essential partners for the success of the business plans developed in consultation with identified buyers. The project will operate at a national scale, and its geographic focus is the rural space (including peri-urban areas) across the island. 33. The project expects to support around 200 Rural Enterprises (from across the country), defined as legally constituted agribusinesses, associations, or cooperatives (including friendly or benevolent societies, or any formal form of legally established association) formed by micro and small farmers and fishers who supply agro-based products and services, and tourism producers (including artisans making handicrafts) and service providers who meet the eligibility criteria. The project will support around 90 sub-projects targeting approximately 20,000 individual beneficiaries—of which an estimated 40 percent will be women and 30 percent youths—benefiting directly from the project’s productive activities. At the same time, the project is expected to benefit a total of 50,000 individual (directly and indirectly) through revenue- generating sub-projects; critical market-oriented infrastructure; and training/capacity building for staff of above-mentioned participating public-sector institutions and partner entities. The inclusion of youths and women will be promoted. 14In accordance with the Economic & Social Survey of Jamaica (ESSJ) 2016: (a) micro-enterprises have annual sales of J$10 million or less and 5 or fewer fulltime employees, and (b) small and medium enterprises have annual sales of J$10–50 million and 5–20 employees. The MICAF Entrepreneurship Policy (2017) defines MSMEs as having: (a) total annual sales/turnover of less than J$425 million (about US$3.4 million) and (b) fewer than 50 employees. Page 8 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) D. Results Chain Country Sectoral constraints Activities Outputs Outcomes (PDO) Long-term challenges impacts - Large number of Component 1: Agricultural and fragmented suppliers of To enhance access to markets and to More prosperous, Community Tourism Investments Rural/tourism enterprises: - Low primary products climate-resilient approaches for targeted inclusive, and for Rural Enterprises - Initiating business plans economic - Limited organizational - Raise community awareness beneficiaries climate-resilient growth capacity of Rural - Participating in approved - Participating rural enterprises rural economy - Build organizational and business plans - High debt enterprises/MSMEs technical capacity of MSMEs accessing new markets burden - Lack of knowledge and - Taking part in capacity - Participating rural enterprises - Identify market opportunities - High trade know-how in business development activities operating on or above projections of - Elaboration of business imbalances skills and marketing ability plans/sub-projects inserted in key (climate resilience and market business plan - High foreign - Weak market linkages value chains and tourism schemes access) - Targeted beneficiaries reached with exchange - Limited ability to respond - Provide matching grants/co- - Increasing gross value of climate-resilient approaches burden to dynamic market financing to select Rural sales and generating jobs -High demands Enterprises/MSMEs with clear income opportunities vulnerability to - Low-quality products market access climate change - Low access to adequate CRITICAL ASSUMPTIONS: - Identify and adopt climate- - Rural producers (including women/youths) are interested in getting and weather financial services and resilient technologies organized and forming partnerships with other enterprises/agents in events capital - Operating public sub-project proposals for agriculture and community tourism -High youth - Low capacity to manage infrastructure investments - Rural enterprises can meet counterpart funding requirements, tapping unemployment climate change and Component 2: Institutional supported into commercial financial intermediaries weather risks Strengthening and Capacity - Completed analytical - Rural enterprises are willing to participate in value chains to respond to Building of Public Entities assessments or studies for the dynamic market demands -Poor rural infrastructure - Identify/finance critical climate - agricultural or tourism sectors - There is concrete market demand for products from supported rural - Infrastructure and resilient, market-oriented, small- enterprises, formalized in marketing agreements production losses due to scale, public infrastructure needs - Participants from public - Beneficiary enterprises show managerial capacity and adopt adequate extreme weather events - Build capacity of key public sector, non-governmental technologies - Limited public-sector sector service providers organizations, and other - There is effective coordination and collaboration between public capacity to provide - Provide technical and managerial relevant partner entities agencies for efficient implementation, and there is continued political effective services support services trained will to implement the project - Limited access to - Enhance financial management - The right technologies/inputs are available to adopt for improving new/modern technology and technologies for climate productivity and mitigating vulnerability to climate change - Inadequate regulatory resilience -The number of jobs directly created in rural areas increases as rural framework for - Review policy constraints enterprises become more successful rural/tourism relevant for rural - The legal and regulatory framework continues to improve, providing development and for enterprises/MSMEs support to capital investment and business development expanding private capital - Analytical assessment of - Macro-economic policies and the fiscal situation improve investment regulatory and procedural issues for promotion of business innovation and development Page 9 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) E. Rationale for Bank Involvement and Role of Partners 34. The World Bank is well positioned to assist the GOJ in promoting inclusive and sustainable rural growth. Building on the success of past projects (including the recent successfully completed first phase of REDI), the GOJ has requested the Bank to support a second phase that will continue to promote rural economic development and income generation by increasing farmers’ access to markets and developing rural tourism in a more environmentally sustainable and climate-resilient fashion. The proposed project will complement the ongoing FCGP, which is strengthening the business environment for private sector investment in Jamaica, building capacity in SMEs, and building linkages that include agribusiness. 35. The Bank also has considerable experience, in Latin America and globally, with projects to enhance rural income, especially projects targeted at the small farmer and community tourism sectors. Examples include the Colombia Productive Partnership Support Project I & II, Bolivia Rural Alliances Project I & II, Peru Sierra Rural Development Project, Honduras Rural Competitiveness Project, Tanzania Resilient Natural Resources Management for Tourism and Growth, and Macedonia Local and Regional Competitiveness Project. 36. Coordination efforts initiated during the project preparation phase with relevant partners such as the Inter-American Development Bank (IDB) and the Caribbean Development Bank (CDB) will continue during implementation to avoid duplication and to explore opportunities for synergies and complementarity. F. Lessons Learned and Reflected in the Project Design 37. Market opportunities must be the guiding principle. Experience with REDI I and internationally shows that improvements in market access for smallholders should be driven by clearly identified market opportunities, not by the satisfaction of community “needs” or “demands,” which all too often have unclear commercial prospects and thus questionable financial sustainability. The design of REDI II internalizes lessons from the ongoing Bank-financed FCGP/JBF in Jamaica, which has successfully improved farmers’ capacity by focusing on the commercial viability of sub-projects and on helping producers meet product specifications agreed with larger buyers. REDI II will provide co-financing to improve production systems to deliver what markets demand, based on prior agreements with specific buyers. For this reason, market guidance and the direct participation of potential buyers are key eligibility criteria for financing productive sub-projects under REDI II. 38. Business training and assistance to beneficiaries are key ingredients for success. Building capacities for business management among project beneficiaries—particularly among women and young people, who often have less experience and understanding of institutions and markets—is a key element for organizational consolidation and growth. The proposed project will address this need at three levels. First, it will provide general training and awareness-raising to potential beneficiaries. Second, it will help interested producer organizations to put together business initiatives, negotiate with business partners, and gradually learn by doing. Third, it will provide continued and customized assistance and training to participating organizations throughout implementation. Customization needs to consider the gender and age of beneficiaries. 39. For successful value chain sub-projects, build competitiveness clusters with shared risk and benefits. Experience with REDI I and internationally suggests that the following factors lead to success in selected sub-projects: (a) the sub-project creates extensive partnerships among players, under a common Page 10 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) territorial/cluster approach; (b) it focuses on markets with high growth potential; and (c) it provides a way for the different actors of a value chain to share both the risks and associated revenues through closer relationships and more formal ties. 40. Support technology and innovation to adapt to changing markets and a changing climate. International and regional experiences underscore the importance of enabling producers to respond to changing markets by supporting effective adoption of new technologies and enhanced access to market intelligence, as well as the adoption of climate-smart technologies and practices to increase agricultural productivity and climate resilience. 41. Availability of specialized technical assistance is an important determinant of the sustainability of sub-projects. In multiple projects in the Latin America and Caribbean region, the initial proposals of many value chains required many types of technical support that often were not available.15 A narrower focus during later calls for proposals made the sub-projects proposed by producer groups more attractive to buyers and improved the likelihood that producers would gain access to better markets. In addition, specialization led to economies of scale and allowed for better learning across sub-projects. It is paramount to strengthen research and development to expand and modernize the technological packages available, as well as to ensure continuous extension services (public or private) to support their adoption. III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 42. Institutional and implementation arrangements performance of REDI I. Under REDI I, JSIF was the lead implementing agency, working in coordination with the lead technical agencies—MICAF, MOT, and their respective agencies RADA and TPDCo. The main weakness identified in these arrangements was the lack of effective inter-institutional coordination and proactive involvement of all participating parties early in the life of the project, which generated significant startup delays. This challenge was addressed midway through REDI I by enhancing the coordination mechanisms between the Planning Institute of Jamaica (PIOJ), MICAF, MOT, RADA, and TPDCo, and by setting up operational working groups that led to the successful completion of the project after a one-year extension. A critical aspect of successful implementation is effective communication, including a broad-based information and dissemination campaign in the early stage of implementation to reach out to potential beneficiaries, elicit a good response to calls for proposals, and build the sub-project pipeline in a timely fashion. An additional lesson is that the tourism industry’s complex regulatory and licensing arrangements slowed project execution. Efforts to address these issues have been considered in the arrangements described below. 43. Implementing agency for REDI II. Building on and addressing the above-mentioned lessons, JSIF will be the lead implementing agency for REDI II and work in close coordination and under the technical leadership of MICAF, MOT, and their respective agencies RADA and TPDCo. JSIF will have overall responsibility for the coordination and management of project implementation. Established in 1996 as a limited liability company to reduce poverty and help create an environment for sustainable development, JSIF has recognized executing capacity for projects spanning multiple sectors, including rural development, and institutional capacity related to procurement, financial management, safeguards, and M&E. JSIF will establish a Project Management Team (PMT) that will be responsible for overall technical implementation and will coordinate with all relevant national institutions on component implementation. The 15Experience in the venture capital/private equity industry supports this “expertise first, deals later” thinking. See, for example, Joachim Heel and Conor Kehoe (2005), “Why Some Private Equity Firms Do Better than Others,” McKinsey Quarterly 2005(1). Page 11 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) implementation period of REDI II is expected to be six years. 44. Project oversight. An Inter-Ministerial Project Steering Committee will be responsible for ensuring that the project is in line with national development priorities. The Steering Committee will be chaired by Planning Institute of Jamaica (PIOJ), with membership to include representatives from MICAF, MOT, and other relevant agencies, such as the Office of the Prime Minister, RADA, TPDCo, JSIF, and the Ministry of Finance and the Public Service (MOFPS). The Steering Committee will meet at least quarterly during the first year of implementation and at least semi-annually thereafter to review the project’s work plan, budget, and implementation. The terms of reference (TORs) for the Steering Committee are included in the POM. 45. Technical partners for implementation. MICAF will be a lead technical partner to JSIF and will, through its operation agency RADA, provide field extension services for the promotion, development, and implementation of the agricultural sub-projects in collaboration with the specialist contracted by the PMT. 46. MOT will be a lead technical partner for JSIF and will, through its agency TPDCo, conduct product development assessment for proposed rural tourism sub-projects to determine marketability, compliance with standards, and provide support services for implementing investments in collaboration with the PMT specialists. The Jamaica Tourist Board (JTB) will license CTEs that have met the required standards and undertake global marketing responsibility for the Jamaica Community Experiences brand under which licensed CTEs will be eligible to participate. 47. Beneficiary rural enterprises. Rural enterprises refer to groups of people with common economic interests who have formed a legally recognized organization (such as a cooperative, friendly or benevolent society, MSMEs, or other legally accepted form of association in Jamaica) to collectively carry out business activities. Participants to these groups include farmers, fishers, agribusinesses, processors, aggregators, handicraft makers, and tourism sector producers and service providers. Rural enterprises will be eligible for sub-project financing. B. Results Monitoring and Evaluation Arrangements 48. JSIF, through its Monitoring and Evaluation Unit, will be responsible for M&E under REDI II. To carry out this responsibility, JSIF will recruit a M&E Specialist for REDI II to be supported by its M&E Unit. The M&E system put in place for REDI I as part of the JSIF Management Information System (MIS) will be updated and enhanced to: (a) track indicators included in the Results Framework; (b) collect and analyze key project data to provide periodic progress reports, as well as to detect and alert all parties of current or potential issues that could limit or constrain implementation performance or restrict the achievement of intended results; and (c) carry out independent intermediate and end-of-project evaluations of results against baseline. Learning from the REDI I experience, a critical enhancement of the M&E system for REDI II will be its capacity to collect, systematize, and analyze information on rural enterprises investment sub- projects. At the end of the sub-project disbursement cycle, JSIF and grant recipients will carry out a final evaluation of the sub-project design and implementation to document lessons learned for future sub- projects. The JSIF M&E Unit is presently supervised by a Project Manager Social Development/M&E and staffed by two M&E Officers. C. Sustainability 49. Technical and environmental sustainability. The sub-project investments under the proposed project are designed to make infrastructure and productive processes more resilient to the impacts of adverse natural events and climate change. The use of best practices for engineering studies and designs, Page 12 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) adherence to modern norms and codes, and the provision of close supervision at the sub-project sites will ensure a high-quality result. For the tourism sub-projects, other sustainability measures could potentially include the pursuit of sustainability certification such as Green Globe and Blue Flag. 50. Financial sustainability. During the technical evaluation phase of the sub-project proposals, special attention will be paid to ensure that market demand is clearly identified. The assessment committees will comprise private sector actors who clearly understand and can judge the financial viability of proposed sub-projects. 51. Institutional and social sustainability. The project’s support of the participatory process at every level (government institutions, private sector, communities, and beneficiaries) should also enhance sustainability by ensuring strong ownership by all stakeholders. Component 2.2 is intended to enhance the capacity of the national entities to generate appropriate technologies and practices (or adapt imported technologies) and to continue assisting rural enterprises and other partners to ensure the sustainability of the rural enterprises. IV. PROJECT APPRAISAL SUMMARY A. Technical and Economic & Financial Analysis 52. Technical quality of sub-projects. The technical quality of investment sub-projects will be ensured by: (a) assisting applicants during the preparation of business plans or implementation plans and requiring that business plans be financially, environmentally, and socially sustainable and climate-resilient before being considered for selection; (b) including training and technical assistance needs as part of the business or implementation plans; and (c) having an M&E system in place that will allow feedback into future calls for proposals and sub-project applications. Public sector capital transfers to co-finance private ventures of organized small-scale rural producers and service providers, coupled with the provision of technical assistance and business development support, are justified to overcome the market failures that have prevented this segment of the rural economy from successfully integrating into dynamic and more profitable markets. 53. Estimated benefits and costs of the project. The project is expected to yield benefits in the following areas: (a) net benefits from agriculture and community tourism business plans (Component 1); (b) benefits from public infrastructure investments (Component 2, Subcomponent 2.1) and staff training within various public and private institutions (Subcomponent 2.2); and (c) social and environmental benefits (such as climate co-benefits) derived from the project interventions. The economic and financial analysis considers the net benefits related to the agriculture and community tourism business plans as the main source of benefits, including their climate co-benefits. The calculation of benefits is based on a set of agriculture and community tourism business models that are considered to represent most of the business plans that REDI II is likely to finance. The project costs include total estimated costs of implementation, financed by the loan proceeds (for all components) and the cash counterpart contributions from beneficiaries. The project costs will not include in-kind contributions. 54. Economic viability and sensitivity analysis. The project’s economic analysis indicators were estimated for a base case, a higher carbon price, and a lower carbon price to estimate economic benefits from reducing GHGs. Without considering the economic benefits generated by the net reduction in GHG emissions, the economic internal rate of return (EIRR) was estimated at 15.3 percent, with a net present value (NPV) at around US$5.8 million. Under the higher carbon price scenario, the EIRR for the entire project is 18.8 percent and the NPV is approximately US$11 million. Under the lower carbon price scenario, Page 13 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) the EIRR was 17 percent and the NPV was approximately US$8.4 million. The robustness of these indicators was confirmed with a sensitivity analysis that resulted in a switching value of cost increments of 22 percent (base scenario), 44 percent (higher carbon price) and 31 percent (lower carbon price), for reductions in economic benefits of 18 percent (under the base scenario), 31 percent (higher carbon price), and 25 percent (lower carbon price). These indicators strongly suggest that the project is an economically worthwhile investment. 55. A financial analysis was also performed for the representative agriculture and community tourism business plans to be financed by the project (see Annex 4). All modeled investments proved financially feasible on their own account, suggesting that project beneficiaries would have sufficient financial incentives to engage in project-supported investments and continue to apply or adopt the improved technologies and practices that would be promoted by REDI II. B. Fiduciary - Financial Management 56. Overall financial management (FM) responsibility for the project will be undertaken by JSIF, which has significant experience in implementing donor-funded projects, including World Bank–financed projects. Aside from implementing REDI I, JSIF is currently implementing the World Bank–financed Integrated Community Development Project (ICDP) and Disaster Vulnerability Reduction Project (DVRP). A FM assessment of JSIF was conducted in accordance with OP/BP 10.00 and the Financial Management Practice Manual issued by the Financial Management Sector Board on March 1, 2010. It was concluded that JSIF has adequate FM systems in place that should provide with reasonable assurance, accurate and timely financial information on the status of the funds as required by the World Bank. 57. The Finance Department within JSIF is staffed with experienced professionals who have the capacity to adequately execute the financial management responsibilities of the project. The overall FM responsibility will be guided by the financial procedures manual in conjunction with the community-based contract manual of the Finance Department within JSIF. Amidst previous concerns raised regarding the allocation of shared overhead costs, JSIF has since developed a methodology to allocate overhead costs amongst projects within its portfolio. This will be included in the financial procedures manual. 58. JSIF already has an established accounting system interfaced with a contract management system developed in-house, “Fund Manager,” used for managing sub-projects or contracts. While these systems are adequate for implementing the project, they are being reviewed by JSIF for continued enhancements. 59. JSIF will provide un-audited financial reports to the World Bank covering each calendar quarter which will be due within 45 days of the end of the reporting period. Annual audited financial statements will also be required within six months of the end of the government’s financial year. All transactions will be reported to the World Bank on a cash basis. - Procurement 60. Procurement under the project will be primarily carried out by JSIF. The procurement for some agriculture or tourism sub-projects may be carried out by the selected beneficiary enterprises. The ability of JSIF to implement and manage procurement and contracts was assessed in June 2018. An important aspect of REDI II project is that many procurement activities will be clearly defined only after the project starts implementation, given that at least 75 percent of project funds will be directed to demand-driven sub-projects. Most sub-project contracts are expected to be of small value and will be procured nationally. Page 14 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) JSIF is subject to substantial oversight from different bodies. JSIF will adopt the World Bank Standard Procurement Documents for all their tenders to reduce the risk of ambiguity. The risk is rated as Moderate. C. Safeguards - Environmental Safeguards 61. The project is rated as a Category B based on its environmental risk profile. The environmental risk rating for REDI II is Moderate. The project triggers the following Operational Policies: OP/BP 4.01 (Environmental Assessment), OP/BO 4.04 (Natural Habitats), OP 4.09 (Pest Management), OP/BP 4.36 (Forests), and OP/BP 4.12 (Involuntary Resettlement). 62. Component 1 will finance rural agricultural and tourism sub-projects that support revenue- generating activities. Component 2, through Subcomponent 2.1, will support critical public infrastructure by rehabilitating buildings, upgrading storage facilities, installing equipment, and carrying out general works on public infrastructure—mostly small-scale activities that will result in some small-scale construction. To manage the potential environmental and social risks associated with these activities, an Environmental and Social Management Framework (ESMF) was prepared and disclosed to the public both in-country on JSIF’s website and at the World Bank’s external website on November 12, 2018 and November 15, 2018 respectively. The document describes potential impacts and mitigation measures and outlines a screening mechanism to categorize each sub-project according to its risk profile. Environmental and Social Management Plans (ESMPs) would be prepared and publicly disclosed for higher-risk sub- projects prior to their implementation. Minor works will not need an ESMP. The GOJ will develop a list of activities to be financed under Component 2 and will reach an agreement with the World Bank specifying which activities require an ESMP prior to implementation. An Integrated Pest Management Plan was also prepared, given that several agricultural sub-projects are likely to be supported. The plan, which outlines an approach that minimizes the use of pesticides where possible, has been reviewed by the Bank and a revised version acceptable to the Bank was disclosed to the public both in-country on JSIF’s website and at the World Bank’s external website on November 12, 2018 and November 14, 2018 respectively. 63. The Implementation Completion and Results Report (ICR) for REDI I found that compliance with environmental safeguards progressed from satisfactory to highly satisfactory throughout implementation and remained highly satisfactory at closing. Environmental risks were managed appropriately, and capacity for environmental management was high at JSIF because it applied an ISO 14001-certified management system. Country-wide improvements in pest management practices were introduced through training in integrated pest management and food safety practices, and through the application of an innovative on- site pesticide disposal technique (charcoal pits). For these reasons, environmental risks are expected to be managed appropriately by JSIF throughout REDI II. - Social Safeguards 64. The social risk rating for REDI II is Moderate. The REDI II sub-projects are expected to have significant positive social impacts, with relatively minor and localized negative impacts that can be mitigated through the application of safeguard instruments developed in accordance with national and World Bank safeguard polices. The project will build on the achievements of REDI I and will occur in largely rural agricultural and tourism landscapes throughout the country. 65. The demand-driven rural agricultural and community tourism sub-projects financed under Component 1 will be small in scale and scope and are likely to have only short-term, highly localized, non- cumulative impacts that are easily mitigated through standard measures. Component 2 finances small- Page 15 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) scale public investments improving the efficiency of priority value chains for selected products and building capacity of related public- agencies. Most impacts related to Component 2 will therefore be minor, short- term, highly localized, and also easily mitigated through standard measures. 66. Social safeguard policies triggered by the proposed project. Subcomponent 2.1 triggers OP/BP 4.12 (Involuntary Resettlement), since public infrastructure sub-projects under this subcomponent may involve land acquisition for construction. OP/BP 4.10 (Indigenous Peoples) is not triggered, as Jamaica has no groups with the characteristics described in OP 4.10 (para 4). The safeguard instruments prepared for any sub-projects will address the requirements of any applicable policies. 67. Prior to appraisal, the Borrower prepared a Resettlement Policy Framework (RPF) outlining potential negative impacts and measures to mitigate them. The RPF includes guidelines on Voluntary Land Donation. No imports of labor or labor impacts are expected. The RPF lays out guidance on the principles and requirements for undertaking involuntary resettlement, including: (a) identifying the direct economic and social impacts that could result from the involuntary appropriation of land and/or restriction to legally designated parks; (b) eligibility for benefits; (c) compensation and resettlement instruments and measures required to mitigate potential impacts, outlining the roles and responsibilities of key actors; and (d) budget and costs for mitigation. The RPF will guide the preparation of site-specific Abbreviated Resettlement Action Plans. The RPF was disclosed to the public both in-country on JSIF’s website and at the World Bank’s external website on on November 12, 2018 and November 20, 2018 respectively. 68. Voluntary land donation. Some activities may be undertaken on land donated voluntarily by the state (through a lease and nominal peppercorn rent) or through private individual(s). The Borrower will ensure that World Bank guidelines on voluntary land donation (VLD) and global best practice are followed, including the stipulation that VLD must apply directly to project beneficiaries to ensure that any negative impacts are mitigated. The protocols and guidelines to be applied to VLD will be included in the ESMF. 69. Institutional capacity. JSIF, the implementing agency, has social safeguard staff who are conversant with the safeguard polices of the World Bank and other development agencies. JSIF has experience in undertaking involuntary resettlement and relocation, including under the ongoing Bank-financed DVRP. 70. The ICR for REDI I finds that the project generated substantial direct and indirect social benefits. The participation of women and young people in sub-projects exceeded the targets. Women adopted improved agricultural technology promoted by REDI I and led some sub-projects. Project beneficiaries reported economic benefits that contributed to their children’s education and described feelings of ownership and pride associated with using “modern”’ technology. In some communities, evidence shows that cooperation between project beneficiaries and other community members led to the replication and expansion of new agricultural practices. - Other Social Considerations 71. Gender and youth. Even though Jamaica has achieved significant progress towards gender equality, women in rural areas face three main problems: low organizational capacity in their producer groups, low agricultural productivity, and limited access to markets. Approximately 8 percent of the active female workforce is classified as “Skilled Agricultural and Fishery Workers,”16 against 26 percent of employed males. Women have significantly smaller farms on average than their male counterparts.17 Most female 16 See the FAO Gender and Land Rights database at http://www.fao.org/gender-landrights-database/country-profiles/countries- list/general-introduction/en/?country_iso3=JAM. 17 FAO Gender and Land Rights database. Page 16 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) farmers work small holdings to produce crops for cash or subsistence and principally engage in producing food for domestic consumption. Cooperatives formed by small-scale producers and women’s farming groups both face organizational constraints that limit their efficiency, productivity, and sustainability. The cooperatives lack a grassroots base, and within these, women’s investments, contributions, and risks are not shared equally. Women lack skills to run and grow their agribusinesses. As a result, these groups and cooperatives are weak and unsustainable. To address these gaps, REDI II will focus on building organizational capacity and increasing women’s productivity and access to markets.18 Jamaica’s Vision 2030 Plan and National Gender Policy emphasize that the GOJ will adopt a gender perspective in all national policies and programs and strive to correct and mitigate gender imbalances. For details on gender gaps, actions planned under REDI II to address them, and gender M&E, see Annex 6. 72. Youth in Jamaica are one of the most vulnerable segments of the population. While total unemployment in October 2016 was 12.9 percent, unemployment for young people aged 14-24 was significantly higher, at 41 percent for young women and 26 percent for young men. In 2014, it was estimated that more than two-thirds of youth aged 18-20 in the poorest 40 percent of households were neither in school nor working, rendering them especially vulnerable to risky and violent behavior. 73. Citizen engagement. The communication and outreach strategy for REDI II to be fully-developed within the first three months after project effectiveness will be the main tool for citizen engagement. The strategy will emphasize outreach to key stakeholders in the tourism sector as well as continued outreach to those in the agricultural sector, many of whom are already familiar with the project approach and focus through REDI I. Since the demand-driven approach of REDI II requires the submission of proposals, JSIF will work closely with relevant government institutions to encourage women and youth to apply as well as to ensure wide sensitization of the project. - Grievance Redress 74. JSIF has an established multi-level feedback and Grievance Redress Mechanism (GRM). Complaints can be submitted directly to the sub-regional JSIF officers assigned to sub-projects. They can also be submitted to its management by telephone, in writing, or online. All complaints are logged and tracked through resolution. The GRM system is now an online database. In addition, the mechanism has taken into consideration the lessons arising from the implementation of REDI I. 75. Communities and individuals who believe that they are adversely affected by a World Bank– supported project may submit complaints to existing project-level grievance redress mechanisms or the World Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed to address project-related concerns. Project-affected communities and individuals may submit their complaint to the World Bank’s independent Inspection Panel, which determines whether harm occurred, or could occur, as a result of World Bank non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. 18 The baseline will be constructed at the beginning of the project. Page 17 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) V. KEY RISKS Overall Risk Rating and Explanation of Key Risks 76. The overall risk rating for the project is Moderate. The main source of risk identified is discussed next. 77. Risks related to climate change and extreme weather events identified in the ‘Other’ risk category of the Systematic Operations Risk-rating Tool (SORT) are Substantial. Climate and disaster risk screening indicates that the sectors targeted by REDI II are vulnerable to the negative impacts of natural disasters and climate change. Drought, the rising sea level, storm surges, and intense winds are critical risks, particularly for crop and livestock systems. The project cannot fully address future risks, but it seeks to mitigate them by supporting climate-resilient investments, infrastructure, and institutions. Additionally, the design of the project with inclusion of a CERC component will support the reallocation of resources to support emergency recovery and reconstruction following the occurrence of an eligible crisis at the national level. . Page 18 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) VI. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: Jamaica Second Rural Economic Development Initiative (REDI II) Project Project Development Objective(s) To enhance access to markets and to climate resilient approaches for targeted beneficiaries. Project Development Objective Indicators RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 A. Enhance access to markets 1. Percentage of participating rural enterprises that have 0.00 0.00 5.00 20.00 50.00 70.00 100.00 accessed new markets (Percentage) 2. Percentage of participating rural enterprises operating on or 0.00 0.00 30.00 65.00 70.00 75.00 80.00 above the projections (gross sales value) of their business plan (Percentage) B. Enhance access to climate resilient approaches 3. Number of targeted 0.00 3.00 30.00 90.00 160.00 210.00 210.00 beneficiaries reached with Page 19 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) RESULT_FRAME_T BL_ PD O Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 project-supported climate resilient approaches (Number) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 1. Climate Resilient Agriculture and Community Tourism Investments for Rural Enterprises 1. Number of business plans 0.00 20.00 50.00 72.00 90.00 90.00 initiated (Number) 2. Number of rural enterprises participating in approved business plans (of which (a) with partnership 0.00 0.00 25.00 83.00 151.00 200.00 200.00 agreements and (b) agriculture-tourism partnerships) (Number) (a) with partnership agreement (Percentage) 0.00 0.00 100.00 100.00 100.00 100.00 100.00 (b) with partnership agreement involving 0.00 0.00 20.00 20.00 25.00 25.00 25.00 agriculture and tourism (Percentage) 3. Percentage of project- supported enterprises that mobilize additional 0.00 0.00 5.00 10.00 15.00 20.00 20.00 financing from private Page 20 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 sector (Percentage) 4. Number of direct jobs created by the project (of 0.00 0.00 600.00 1,800.00 3,300.00 4,300.00 4,300.00 which women and youth) (Number) Women (Percentage) 0.00 0.00 30.00 40.00 40.00 40.00 40.00 Youth (Percentage) 0.00 0.00 20.00 30.00 30.00 30.00 30.00 5. Number of participants from rural enterprises taking part in capacity development activities (of 0.00 500.00 2,000.00 5,000.00 7,000.00 9,000.00 9,000.00 which climate resilient approaches and market access) (Number) Participants to Climate Resilient Approches 0.00 30.00 40.00 40.00 100.00 100.00 100.00 training (Percentage) Participants to market access training 0.00 0.00 30.00 40.00 80.00 100.00 100.00 (Percentage) 2. Capacity Building for Public Entities - Subcomponent 2.1: Public Infrastructure Investments 6. Number of operating public infrastructure investments supported by 0.00 0.00 0.00 1.00 2.00 3.00 4.00 the project (Number) 2. Capacity Building for Public Entities - Subcomponent 2.2: Technical Assistance, Capacity Building 7. Number of completed analytical assessments or studies for the agriculture 0.00 0.00 2.00 2.00 4.00 4.00 6.00 or tourism sector. (Number) Page 21 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) RESULT_FRAME_T BL_ IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 8. Number of participants from public sector and other relevant partner entities trained by the 0.00 50.00 120.00 250.00 360.00 500.00 650.00 project (of which female and youth) (Number) Female (Percentage) 0.00 30.00 40.00 40.00 40.00 40.00 40.00 Youth (Percentage) 0.00 20.00 30.00 30.00 30.00 30.00 30.00 IO Table SPACE UL Table SPACE Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Cumulative percentage of rural enterprises supported by REDI II that access new 1. Percentage of participating rural markets. New markets Annual Reports JSIF enterprises that have accessed new include (but are not limited markets to) new market segments, expansion of existing market segments, etc. Percentage of cumulative 2. Percentage of participating rural number of project- enterprises operating on or above the Annual Reports JSIF supported rural enterprises projections (gross sales value) of their operating on or above the business plan projections (gross sales Page 22 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) value) in their business plan. Cumulative number of targeted beneficiaries (rural enterprises, public institutions, partner entities) with access to project-promoted climate 3. Number of targeted beneficiaries resilient approaches by Annual Reports JSIF reached with project-supported climate type of resilient approaches beneficiaries.Climate resilience approaches supported comprise eligible typologies of assets, technologies, practices and services listed in the POM. ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Cumulative number of business plans with Quarterly Reports JSIF 1. Number of business plans initiated preparation initiated with project support. Number of rural enterprises 2. Number of rural enterprises taking part in business plans participating in approved business plans Quarterly Reports JSIF with partnership agreements. (of which (a) with partnership agreements Partnership agreement is a and (b) agriculture-tourism partnerships) formal or informal agreement Page 23 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) between buyers, sellers, service providers, and/or other types of stakeholders, specifying the conditions of potential commercial relations. Percentage of rural (a) with partnership agreement enterprises with partnership agreements. Percentage of enterprises with (b) with partnership agreement partnership agreements Quarterly Reports JSIF involving agriculture and tourism promoting linkages between agriculture and tourism. Percentage of cumulative number of enterprises taking part in project-supported 3. Percentage of project-supported business plans that mobilize Quarterly Reports JSIF enterprises that mobilize additional additional financing from financing from private sector private sector sources to improve their planned investments. 4. Number of direct jobs created by the Cumulative number of direct Quarterly Reports JSIF project (of which women and youth) jobs created by the project. Percentage of direct jobs Quarterly Reports JSIF Women created by the project benefiting women. Percentage of direct jobs Quarterly Reports JSIF Youth created by the project benefiting youth. 5. Number of participants from rural Cumulative number of Quarterly Reports JSIF enterprises taking part in capacity participants from rural development activities (of which climate enterprises taking part in Page 24 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) resilient approaches and market access) capacity development activities (climate resilient approaches and market access) Percentage of individuals trained to improve their knowledge and capacities to implement measures of Participants to Climate Resilient climate resilience approaches Quarterly Reports JSIF Approches training promoted by REDI II. These individuals are members of project-support rural enterprises under Component 1. Percentage of individuals who trained to improve their knowledge and capacities to implement enhanced market Quarterly Reports JSIF Participants to market access training access measures promoted by REDI II. These individuals are members of rural enterprises supported under Component 1. Cumulative number of operating public infrastructure investments supported with 6. Number of operating public project funding under sub- Quarterly Reports JSIF infrastructure investments supported by component 2.1. Operating the project infrastructure means that it is providing goods and/or services as planned for in the ex-ante feasibility study Page 25 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) (technical, financial and economic). Cumulative number of 7. Number of completed analytical completed studies or reviews Quarterly Reports JSIF assessments or studies for the agriculture in the agriculture and tourism or tourism sector. sectors with project support. Cumulative number of personnel from national public organizations, relevant 8. Number of participants from public public sector’s agencies and sector and other relevant partner entities partner entities trained under trained by the project (of which female Component 2. Gender and youth) disaggregation: male and female. Age disaggregation: less than 30 years old is considered youth Percentage of female Quarterly Reports JSIF Female participants. Percentage of youth Quarterly Reports JSIF Youth participants. Less than 30 years old is considered youth. ME IO Table SPACE Page 26 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) ANNEXES ANNEX 1: DETAILED PROJECT DESCRIPTION 1. Project Development Objective. The PDO is “to enhance access to markets and to climate resilient approaches for targeted beneficiaries.” 2. Climate-resilient approaches are to be viewed as climate-smart approaches that include assets, technologies, and practices to strengthen productivity, adaptation, and mitigation against climate change. Targeted beneficiaries are rural enterprises19 (micro, small, and medium-sized enterprises/MSMEs) linked to the agricultural and community tourism sectors as well as relevant public-sector institutions and partner entities. 3. Building on the results of REDI I, the PDO for REDI II will be achieved by linking the rural enterprises of agricultural producers and tourism product and service providers to markets and facilitating access to climate-resilient approaches by: (a) providing financial and technical support to small-scale agricultural and rural tourism enterprises; (b) improving agricultural and rural tourism marketing; (c) assisting in the development of critical market-oriented small-scale infrastructure, marketing, and management; (d) increasing access to technical innovation and business support services; (e) enhancing financial management of rural enterprises to increase their access to financial services; (f) providing technical and environmental skills development, including training related to climate resilience, disaster mitigation, and disaster recovery; and (g) building up the capacity of national organizations, such as RADA and TPDCo, that can help to sustain and later initiate similar rural enterprises. Measures that build on REDI I to enhance the effectiveness of REDI II include: (a) expanding tested approaches to foster rural growth; (b) pursuing further opportunities to benefit from the linkages between tourism and agriculture; (c) increasing access to new technologies to improve productivity and the adoption of climate-smart technologies in agriculture; (d) improving basic infrastructure and agro-logistics at regional levels to enhance market access for rural producers and service providers, incorporating critical climate-resilience specifications and methodologies to increase sustainability; and (e) renewing the focus on ensuring the participation of and benefits for women and youths. 4. Project Area. The project will operate at a national scale, and its geographic focus is the rural space (including peri-urban areas) across the island. 5. Project Beneficiaries. Targeted beneficiaries are rural enterprises (micro, small and medium-size or MSMEs) linked to the agricultural and community tourism sectors, as well as relevant public sector institutions and partner entities. The project expects to support around 200 rural enterprises (from across the country), defined as legally constituted agribusinesses, small producer associations or cooperatives (including friendly or benevolent societies, MSMEs, or any formal form of legally established association) formed by micro and small farmers and fishers engaged in supplying agro-based products and services, and tourism producers (including artisans making handicrafts) and service providers, that meet the eligibility criteria. The project will support investments and capacity building interventions targeting approximately 20,000 individual beneficiaries benefiting directly from the project’s productive activities (of which women will be an estimated 40 percent and youth 30 percent). At the same time, the project is expected to reach a total number of 50,000 beneficiaries (directly and indirectly), not only through revenue-generating sub- 19“Rural enterprises” refers to groups of people with common economic interests (farmers, fishers, agro-processors, tour guides, handicraft makers, and others) who have formed a legally recognized organization to carry out business activities. Page 27 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) projects and from critical market-oriented infrastructure, marketing, and management but also through training and capacity-building activities for staff (around 660) of around 10 participating public-sector institutions. The inclusion of young people and women will be promoted. Project Components 6. Component 1. Climate Resilient Agricultural and Community Tourism Investments for Rural Enterprises (Total US$28.0 million, IBRD US$26.0 million and Beneficiary Contribution US$2.0 million). The objective of this component is to promote the development of agricultural/community tourism enterprises that are better integrated in productive partnerships or “alliances" and operate more competitively in selected value chains, with more reliable linkages with buyers and markets and increased capacity to manage climate risks. 7. This component will finance consulting and non-consulting services, goods, works, and operating costs (through matching grants) for demand-driven and competitively selected agriculture/fisheries or community tourism sub-projects presented and implemented by participating rural enterprises to increase their production and to capture and/or increase their market share and level of profits. Financed activities will support the promotion, identification, design, feasibility, and implementation of competitive and climate-resilient investment sub-projects for business investments and ventures established by beneficiary rural enterprises. 8. Approach. The approach will be to promote collective action, with the aim of gaining economies of scale, enhancing bargaining power, facilitating knowledge sharing, and reducing costs of production and service delivery. In agriculture, the project will promote collective action by supporting the formation and/or consolidation of POs and establishing partnerships with buyers (aggregators, processors, retailers, and so on). In tourism, the promotion of collective action will involve identifying and forming market-based clusters. A tourism cluster will consist of one or more community tourism enterprises located within a five- mile radius of one another. Clusters will be identified based on points of touristic interest, market demand, product quality, and location less than 90 minutes of driving time from a resort area. 9. Project financing through matching grants will be provided to eligible agricultural POs and value added enterprises (VAEs) and tourism CTEs and private tourism enterprises (PTEs) to support the implementation of their sub-projects. Sub-projects could include eligible works, goods, and services required by different enterprises participating in the sub-project to achieve measurable targets in terms of product/service specifications (such as quality, quantity, and delivery conditions) agreed with their respective prospective buyer or customers, within the framework of a joint business plan. Each VAE will be required to enter into an agreement with the final buyer, as well as with its supplying PO. In tourism, the CTE or PTE will be required to enter into a Memorandum of Understanding (MOU) with the community for the operation and to be included in a joint cluster plan (in other words, isolated micro-enterprises will not be supported). Joint business plans and cluster plans will include: (a) a marketing agreement specifying the good or service to be supplied, in terms of quality, quantity, and delivery specifications, as well as the price determination mechanism and payment conditions; (b) a detailed description of the roles and contributions of the parties to the agreement, including those of the REDI II project and potentially other public or private institutions; (c) a detailed account of activities and relevant inputs required to achieve agreed product specifications, including managerial/administrative support for the suppliers that will be financed by the sub-project; and (d) the technical, financial, and safeguard (social and environmental) analyses required to establish feasibility and ensure sustainability. Page 28 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) 10. Examples of agriculture and community tourism investment sub-projects. Agriculture sub-projects may include: the introduction of new crop varieties adapted to expected higher temperatures and resistant to drought; counter-seasonal production methods and technologies such as greenhouses; the use of integrated pest management; mechanisms for soil management and increasing soil fertility; the introduction of more efficient irrigation and water harvesting methods and alternative (small-scale) sources of energy, such as solar panels; the development of integrated landscape models comprising livestock, crops, and forestry; improvements in stock breeding and management; new capacity for reducing post-harvest losses and increasing food quality; and small group marketing infrastructure such as cold storage facilities, sheds, packing facilities, and sanitary facilities, among others. In the community tourism sector, sub-projects could include the development of new or expansion of existing tourism experiences (eco-hiking trails, waterfalls, mineral baths, culinary expertise, and gastronomic events) and associated equipment for internet access, landscaping, trail development, signage, rehabilitation or safety enhancement of public attractions; construction of simple handicraft markets; equipment for the production, preparation, or packaging of agricultural specialty products, handicrafts, and novelty items (such as basketry, pottery, beauty products, condiments); or gastro-tourism activities and promotion. 11. Calls for sub-project proposals and evaluation and prioritization criteria. Potential sub-projects will be identified on a demand-driven basis through public calls for proposals. Calls for proposals could be broadly open or could be tailored to target a key geographic area; a particular value chain, product, or service; or a particular type of beneficiary (youths, women), among other targets. Proposals may be received and considered outside the period established for a given call for proposals, but only on an exceptional basis and only for a proposal meeting the criteria of a previously issued call for proposals. They will also be analyzed following the same criteria and subject to the same rigorous assessment as any other proposal. All sub-project investment proposals prepared and submitted by beneficiary rural enterprises will be selected for project support through a competitive appraisal process based on previously established criteria detailed in the POM, which include (among other factors) market demand, product quality, technical and financial feasibility, environmental and social sustainability, approaches to enhance climate resiliency, potential for local impact, and the level of participation by women and young people. 12. Investment support activities. These activities include all “pre-investment” activities carried out prior to sub-project implementation to facilitate the identification of business opportunities, support the preparation of joint business plans to take advantage of those opportunities, and to improve the likelihood that a sub-project will be financed by the project. With that aim, the project will finance consulting services, training, and incremental operating costs to produce, among others: (a) agriculture and tourism sector studies (including analyses of value chains, products, or market demand for promising products and services) and licensing improvements; (b) identification, shortlisting, and assessment of tourism clusters; (c) assessment, organizational strengthening, and business development capacity building for POs and enterprises; (d) communication and dissemination activities to raise awareness of the project and its scope, including public calls for proposals; (e) business networking events such as business roundtables, study tours, and workshops to promote closer market relations between eligible buyers and sellers, and other relevant stakeholders such as financial institutions and other relevant service providers; and (f) development of business plans. 13. Sub-project financing. The project will co-finance sub-projects through matching grants. The amount of the matching grant will be in line with the minimum cash co-financing requirements specified in the POM. Both matching grants and beneficiary counterpart contributions must be used in accordance with the joint business plan and cluster plans, as specified by the provisions of a signed Sub-project Agreement Page 29 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) between the grant beneficiaries (the particular POs, VAEs, CTEs, or PTEs involved) and JSIF, clearly stating how the proceeds will be used for works, goods, and services in the context of the approved sub-project exclusively and in accordance with an agreed Sub-project Procurement Plan and implementation schedule. Investment matching grants are not to exceed US$500,00020 each (including all types of collaborating enterprises receiving grants within that partnership), or an average of US$15,000 per individual beneficiary. Cash contributions from beneficiaries will range from 5 percent to 60 percent of total sub-project costs, depending on the type of beneficiary and the size of the matching grant, as detailed in the POM. It is estimated that a total of 90 investment sub-projects will be supported through this component, directly benefitting around 200 rural enterprises. Around 9,000 individual members of these rural enterprises will benefit directly from these investments (of which 40 percent will be women and 30 percent youths). 14. Sub-project cycle. The steps (Figure A1.1, next page) in implementing Component 1 include: (a) Investment/buyer attraction and promotion. Promotion plans, and activities will be carried out by JSIF to inform potential buyers about the project, its scope, and how they can participate. (b) Call for proposals. The project will carry out at least four public calls for proposals, during which sellers and buyers will submit their sub-project proposals. The calls will be accompanied by a communication campaign to mobilize suppliers and buyers, as well as field information and training workshops that take the different needs and capacities of different target groups into account. (c) Appraisal of proposals. Sub-project proposals will be evaluated against criteria detailed in the POM, which include: (i) attractiveness of the product; (ii) adequacy of the buyer; (iii) adequacy of the producer’s resource endowment; (iv) commitment by rural enterprises to meet co-financing requirements; and (v) compliance with safeguard requirements. (d) Formulation of business plans. Beneficiaries whose proposals are approved will receive technical assistance for formulating their joint business plan. (e) Evaluation of business plans. The social, environmental/climate resilience, technical, and financial evaluation of business plans will be conducted internally by JSIF. Depending on the nature of the proposed business, JSIF will invite external specialists to participate in the evaluation. Safeguard evaluation and guidance with respect to mitigating measures, if required, will be carried out by JSIF. (f) Implementation. Sub-projects will be implemented by beneficiary suppliers (POs or VAEs). Buyers will implement agreed measures separately. JSIF will provide implementation support and close monitoring during the investment phase and for at least one year of sub-project operations. (g) Evaluation. Each sub-project will be evaluated to measure its level of achievement and contribution to expected REDI II results. An impact evaluation will be conducted on a sample of alliances. 15. Component 2. Institutional Strengthening and Capacity Building for Public Entities (IBRD US$8.0 million). This component aims to strengthen the capacity of relevant public-sector institutions (MICAF, MOT, and JSIF) and associated entities (including RADA and TPDCo,) to provide the public infrastructure and quality services needed to: (a) promote inclusive rural development (based on the agriculture and tourism nexus); and (b) ensure the sustainability of the rural enterprises and productive partnerships supported by REDI II. This component consists of two subcomponents. 16. Subcomponent 2.1—Public Infrastructure Investments (IBRD US$6.0 million). This subcomponent 20 Including specialized technical assistance required for the implementation of the business plan Page 30 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) will finance civil works, goods, and consulting services for priority investments in public infrastructure (new or rehabilitated) needed for improving the efficiency and climate resilience of targeted agriculture and food and tourism value chains. These investments may supply key public or private goods that are currently missing due to market failures or are beyond the capacity of individual sub-projects to provide under Component 1, but that are closely linked to sub-project success and viability. Page 31 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Figure A1.1: The REDI II sub-project cycle 1b. Call for Proposals and 1a. Promotion On-going Application 2. Registration and Eligibility Screening - Receipt of proposals - Registration of proposals - Screening against eligibility criteria 3. Sub-project Application Review and No Yes Priority Ranking Incomplete and Did submitted proposals meet eligibility criteria? - Complete verification and appraisal inappropriate of sub-project proposals applications will be - Scoring proposals against priority rejected and returned criteria Yes No 4. Sub-project Preparation - Highest-ranking proposals will be submitted for preparation of business and implementation plans Proposals that are not accepted will be returned with comments, and applicants may reapply if desired Rejected sub- 5. Sub-project Approval projects will be - Social Review Committee (SRC) evaluates and selects projects returned to for further development applicants with No - Enterprise Assessment Committee (EAC) reviews the financial comments, and they and business feasibility of the submissions; reviewers can include may reapply if individuals from business, tourism, and agriculture as relevant desired - If a sub-project has a works and/or equipment component, it is submitted for Technical Review Committee (TRC) approval - Selected projects are processed through the JSIF Management and Board Approval process Yes 6. Sub-project Implementation - JSIF determines whether Community- Based Contracting (CBC) or JSIF procurement and/or implementation - Project Information meeting - Contracts for procurement of goods, works and services or Financing agreement completed for CBC - Implementation of all aspects of sub- project over 8–12 months 7. Sub-project Monitoring and Evaluation Page 32 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) 17. Examples of public infrastructure Investments. Public infrastructure investments may include: (a) ¨last mile¨ investments at the regional or national level to improve access to key services such as electricity, internet, water (for example, small rural water-supply systems such as cisterns), drainage, and others; (b) restoration of facilities for safety enhancements to public attractions (parks and natural reserves, caves, and other sites that are public touristic attractions, and so on); (c) investments aimed at reducing and/or eliminating bottlenecks in the flow of products to market and visitors to attractions (small bridges, all- weather crossings, minor access road rehabilitation or improvement, for example); (d) investments to improve coverage or quality of public services considered to be essential for providing the enabling conditions for successful implementation of sub-projects under Component 1 (such as agricultural research and extension, training, seed/seedling production and certification); (e) public investments in infrastructure related to climate change adaptation (irrigation rehabilitation, expansion, or improvement, and establishment of renewable sources of energy, among others) that will enhance resilience and reduce emission intensities; (f) investments within the framework of public-private partnerships for the provision of key private services that the private sector is not supplying due to market failures (such as regional collection, processing, packing, or distribution centers, cold/cool storage facilities, nurseries or hatcheries); (g) direction signage and public information tourism billboards; and (h) restoration of vegetative cover in water catchment areas. Increasing climate change resilience and mitigation will be a cross-cutting theme at all stages of these public infrastructure investments, from identification to implementation and operation and maintenance. 18. Identification and implementation of public infrastructure sub-projects. Public investment sub- projects will be proposed by a relevant public-sector agency or institution participating under REDI II in the socio-economic development of the agricultural, fisheries, or tourism sector, and which will retain ownership and be responsible for the quality, management, operation and maintenance of the investments. These sub-projects will be identified in several ways: (a) through pre-investment activities or as part of the preparation and assessment of proposals under Component 1, where key constraints and limitations on the efficient performance of sub-projects may require a solution beyond the capacity of individual rural enterprises; (b) by value chain studies that identify major bottlenecks or other analytical work to be implemented under Subcomponent 2.2; or (c) a proposal by a public institution based on its own work and analysis. The responsible institution will be required to present a full feasibility study, to be reviewed and approved by JSIF, together with a Procurement Plan, an Implementation Plan and time schedule, and an Operation and Management Plan to ensure adequate use and maintenance of the investments. To the extent possible, the operation and management of the investment is expected to be done through a public-private partnership with a specialized firm (for example through a concession agreement). Further details on the eligibility criteria, basic requirements, and analysis to be carried out for revision, selection, approval, and financing of public investment sub-projects are incorporated in the POM. The amount of grant financing for such investments will be limited to a maximum of US$1.5 million, but the average amount is expected to be significantly lower. It is estimated that at least 4 public infrastructure investments will be financed under this component. They will be climate resilient, especially along shorelines and other vulnerable areas. 19. Subcomponent 2.2: Technical Assistance and Capacity Building (IBRD US$2.0 million). This subcomponent will finance technical assistance (consultant and non-consultant services, goods, training, workshops, and study tours) to strengthen the capacity of relevant national organizations and other relevant partner entities responsible for assisting the agricultural and community tourism enterprises. More broadly, this subcomponent will also finance technical assistance for strengthening the overall Page 33 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) enabling environment needed for the sustained development of rural enterprises with potential competitive advantages, locally and internationally. Activities to be supported include specific policy and regulatory reviews and assessments; efforts to strengthen the capacity of agricultural and tourism research and extension support services to implement, monitor, and evaluate climate-smart technologies and practices in agriculture; product development and marketing strategies; market studies and competitiveness analyses; support to develop a platform to foster tourism and agribusiness linkages and new, more efficient models of integration; streamlining tourism licensing processes for community-based businesses; and approaches for improving targeting of women and youth beneficiaries, drawing on local knowledge of appropriate gender-sensitive practices and lessons from REDI I. 20. Identification and Implementation of technical assistance and capacity-building programs. JSIF will invite proposals for technical assistance and capacity building from organizations such as RADA, TPDCo, JAS, DCFS, Chambers of Commerce, JSIF itself, and others. Technical assistance and capacity building will include approaches targeted at women and youth, based on local knowledge of appropriate gender- sensitive practices and lessons from REDI I. JSIF with the support of the Enterprise Assessment Committee will evaluate proposals for technical assistance and capacity building and include the selected program in a yearly capacity-building plan to be approved by the Steering Committee. JSIF will be responsible for procuring and contracting third-party vendors to provide the services required by these programs. Each program will be monitored and evaluated by JSIF and the results entered into the JSIF central monitoring database and reported in the regular bi-annual progress reports. 21. It is estimated that this subcomponent will support at least 10 public institutions and partner entities, with at least 650 of their staff (of which 40 percent will be women and 30 percent youths) benefiting directly from training provided by the project. 22. Component 3. Project Management, Monitoring and Evaluation (Total: IBRD US$6.0 million). This component will finance incremental costs associated with the coordination, administration, supervision, monitoring, and evaluation of project implementation by JSIF and the technical PMT that JSIF will establish for REDI II. Costs to be financed include technical expertise (agriculture, tourism, business development, M&E, and so on), salaries of other contractual staff of JSIF supporting the project, staff training, annual audit, vehicles, office equipment, and other operating costs. This component will also ensure that effective arrangements for safeguards, fiduciary management, and M&E are in place during implementation. The outputs of this component are the efficient and effective implementation, monitoring, and evaluation of project execution. 23. Component 4. Contingent Emergency Response (US$0). This component allows loan proceeds to be reallocated from other components to provide emergency recovery and reconstruction support following an eligible crisis or emergency at the national or subnational level. Given the design of the project, the CERC is expected to be operationalized through a reallocation from Component 1 to provide support for emergency recovery and reconstruction. To ensure that there is capacity to implement this component, the POM includes a CERC annex applicable to eligible disasters, detailing fiduciary, safeguard, monitoring, reporting, and any other necessary implementation arrangements. 24. REDI II seeks to maximize its climate co-benefits and thus contribute to the Climate Change Policy Framework, adopted by Jamaica in 2015 to support the Vision 2030 in mainstreaming climate change into sectoral and financial planning and to build the capacity of sectoral institutions to develop and implement their own climate change adaptation and mitigation plans. Since the investment sub-projects under Page 34 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Component 1 of REDI II will be demand-driven and cannot be specified in advance, a precise assessment of expected climate co-benefits cannot be done. Even so, the project will actively promote and support: (a) intensive efforts to raise awareness of the importance of adaptation and resilience to climate change and climate variability, and to integrate measures and activities supporting increased adaptation and resilience into the sub-projects for investments in agriculture and community tourism; (b) adoption of innovations and realization of investments likely to increase the mitigation of greenhouse gas (GHG) emissions and sequestration of carbon; and (c) the review of regulatory reforms and institutional strengthening measures needed to improve productivity and sustainability of the agriculture and tourism sectors, and capacities of the public sector extension services to disseminate new technologies to increase the overall resilience in the sectors (Component 2). 25. A net carbon balance appraisal of REDI II estimated potential climate change mitigation benefits. The ex-ante carbon-balance tool (EX-ACT) was used to quantify the net carbon balance with regard to tCO2e (tons of carbon dioxide emission) resulting from GHGs emitted or sequestered during the project implementation period and a capitalization period (20 years total) compared to the without-project scenario. The project leads to estimated annual climate change mitigation benefits of 5,876 tCO 2e, compared to a business-as-usual baseline scenario—equivalent to an annual reduction in GHG emissions of 3.6 tCO2e per hectare. After 20 years, GHG mitigation benefits will amount to a reduction of 117,516 tCO2e. In addition to the achievement of the PDO, the project also provides intermediate GHG emission reductions as a co-benefit of its implementation. 26. The project has been screened for climate and disaster risks. Potential impacts and risks of current and future climate and geographical hazards are assessed as moderate for the sectors on which the proposed project will focus. Proposed interventions are expected to slow the pace of these impacts. The implementation of investment sub-projects (Component 1) will increase resilience by reducing dependency on rainfall and will protect plants from higher temperatures. Infrastructure improvements (Component 2) will seek to increase resilience to extreme weather events, while technical assistance/institutional strengthening efforts (Component 2) will strengthen the generation and adoption of technologies that enhance resilience to climate change. Page 35 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) ANNEX 2: IMPLEMENTATION ARRANGEMENTS Project Institutional and Implementation Arrangements 1. The Jamaica Social Investment Fund (JSIF) will implement the REDI II Project on behalf of the GOJ. An Inter-Ministerial Project Steering Committee will provide project oversight. There will be active and close collaboration with the main government agencies responsible for agriculture and tourism, including MICAF, MOT, RADA, and TPDCo. The project implementation period is six years. 2. Implementing Agency. A limited liability company incorporated under the Companies Act of Jamaica, JSIF was established in 1996 as a component of the government’s National Poverty Eradication Program. JSIF falls under the auspices of the Office of the Prime Minister and implements small-scale community development projects funded primarily by international funding agencies and the government in rural and urban areas. In implementing these projects, JSIF makes use of a holistic development approach that integrates infrastructure development, human and social capacity building, and environmental stewardship. In more than two decades of operation, JSIF has implemented multiple projects funded by loans from the World Bank, including DVRP, ICDP, and (more recently) REDI I. In implementing these projects, the collaboration of JSIF with various government agencies, communities, NGOs, and the private sector has helped to ensure success and allowed for greater sustainability, especially in the maintenance of projects, as each project group receives maintenance training. The institutional strengthening measures undertaken with JSIF were pivotal in enabling it to become the only public entity in the Caribbean to achieve ISO 14001 certification for environmental management systems. This certification, achieved in January 2009, indicates that environmental processes at JSIF are consistent with international standards and are fully mainstreamed into JSIF operations. 3. The approach for implementing REDI I emphasized growth rather than social welfare alone, and thus it focused on economic development, expanding access to markets, and creating jobs and income- generating opportunities in rural Jamaica. This approach required some adjustments to the institutional mindset and traditional way of conducting business. Early in the life of REDI I, the lack of effective inter- institutional coordination and proactive involvement of all participating technical parties (MICAF, MOT, RADA, TPDCo) generated excessive startup delays. Midway through the project, enhanced coordination mechanisms and working groups were adopted for PIOJ, MICAF, MOT, JSIF, RADA and TPDCo to address these challenges, and ultimately the project was successfully completed after a one-year extension. An important lesson is that a critical element of success is an effective, broad-based communication and information dissemination campaign in the early stage of implementation to reach potential beneficiaries and prompt a good response to calls for proposals that builds the sub-project pipeline from the start. 4. In summary, GOJ has several compelling reasons for selecting JSIF to be the implementing agency for REDI II. JSIF has a history of successfully implementing projects that use creative development strategies; fostering collaborative and supportive partnerships with communities, governmental and non- governmental agencies; maintaining strong procurement and FM capacity; and potential for building on the positive experience and lessons learned with REDI I. Figure A2.1 depicts the implementation framework for REDI II, including the institutional framework and the JSIF/PMT organigram. Page 36 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Figure A2.1: Project implementation framework for REDI II A—Institutional framework for REDI II Strategic Policy and Inter-Ministerial Project Steering Committee Programmatic Guidance (PIOJ, MOT, MICAF, JSIF, MOFPS, Office of the Prime Minister, RADA, TPDCo) and Monitoring Project Implementers Jamaica Social Investment Fund Main Implementing Ministry of Agriculture Ministry of Tourism and related Partners and related agencies, agencies, e.g., TPDCo, JTB, e.g. RADA Tourism Enhancement Fund (TEF) B—JSIF/PMT organigram for REDI II JSIF General Manager Technical Services Department Other Technical support (taken from Project Manager JSIF pool as needed to assist in project development and implementation) Project Assistant Agriculture and Tourism Business Development Engineer Monitoring and Short-term Specialists Specialist Evaluation Analyst Consultants Project Officers Ministry of Agriculture–RADA to provide technical Ministry of Tourism–TPDCo, TEF, and JTB to services on the ground to projects as per their provide technical services on the ground as per organizational mandate their organizational mandate 5. JSIF will establish an internal Project Management Team (PMT) that will be responsible for overall implementation and will coordinate with all actors involved in the project’s execution. JSIF will be responsible for FM, procurement, and compliance with safeguards. The PMT will be responsible for key aspects of the sub-project cycle, including; promotion, communication, selection, preparation, Page 37 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) procurement for sub-projects in certain cases, local stakeholder coordination, M&E, capacity building, and sub-project implementation supervision. These activities can either be contracted or undertaken directly by the PMT. The PMT will also coordinate with relevant national institutions for the implementation of the project. The composition of the PMT will include the following key technical staff and expertise: a Project Manager, along with specialists in tourism, agriculture, agribusiness/business development and marketing, and communication. The PMT will contract consultants and local organizations and/or institutions to carry out the fieldwork for most activities. The POM includes TORs for the PMT and its staff. The PMT will use in- house JSIF social and technical officers (such as the Environment Officer) as needed. 6. Project Oversight. An Inter-Ministerial Project Steering Committee will be responsible for ensuring that the project is in line with national development priorities. The Committee will be chaired by PIOJ, and its membership is to include representatives from MICAF, MOT, and other relevant agencies (the Office of the Prime Minister, RADA, TPDCo, JSIF, and MOFPS. The Committee will meet at least quarterly during the first year of implementation and at least semi-annually thereafter to review the project work plan, budget, and implementation. The TORs for the Steering Committee are included in the POM. The Steering Committee will have two subcommittees (one for tourism and one for agriculture) to provide technical guidance as required. 7. Technical Partners for Implementation. MICAF will be a lead technical partner to JSIF and, through its operations agency, RADA, will provide field extension services for the promotion, development, and implementation of the agricultural sub-projects in collaboration with the specialist contracted by the PMT. 8. Another lead technical partner for JSIF is MOT, which, through its agency TPDCo, will conduct product development assessments for proposed rural tourism sub-projects to determine marketability and compliance with standards, and will provide support services for implementing sub-project investments in collaboration with the PMT specialists. The JTB will license CTEs that meet the required standards and undertake global marketing responsibility for the Jamaica Community Experiences brand, under which licensed CTEs will be eligible to participate. 9. Beneficiary Rural Enterprises. Rural enterprises refer to groups of people with common economic interests (such as farmers, fishers, agribusinesses, processors, aggregators, handicraft makers, and tourism sector producers and services providers) who have formed a legally recognized organization (cooperative, friendly or benevolent society, or other legally accepted formal form of association in Jamaica) to collectively carry out business activities. Rural enterprises will be eligible for sub-project financing. 10. Eligible business initiatives in the agricultural sector could be integrating two types of partnerships between enterprises: (a) partnership between a legally recognized PO and well-established processors, aggregators, or buyers; and (b) the establishment or enhancement of an established VAE for a collection and/or distribution center, packing plant, agro-processing facility, cold storage facility, and similar enterprise, provided it has formal backward linkages to a PO and formal forward linkages to a final buyer. For tourism sub-projects, the eligibility requirements are to comprise CTEs that are owned and managed by community groups or NGOs, and PTEs located in and/or benefiting rural communities through their activities and supply chain. 11. In accordance with criteria defined and recorded in the POM, these enterprises may be subject to a capacity assessment and, if awarded a matching grant in cash (under the terms of Sub-project Agreements signed with JSIF), they will be responsible for proper accounting and reporting of their expenses, as well as procurement of items included in the sub-project (all under the guidance and supervision of JSIF). Page 38 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Result Monitoring and Evaluation 12. Project implementation will be guided by the Results Framework and monitoring. JSIF will be responsible for M&E of REDI II. An overall M&E system has been prepared and will be incorporated into the Management Information System (MIS) of JSIF, which will form the basis for tracking key implementation progress indicators. Attention has been paid to establishing realistic and useful indicators that can be regularly collected and maintained in the MIS21. 13. Monitoring. The JSIF M&E Unit is responsible for monitoring the project’s M&E framework. The JSIF M&E Unit is presently supervised by a Project Manager Social Development/M&E and staffed by two M&E Officers and will be complemented with a M&E Specialist to be recruited under REDI II. More specifically, the M&E Unit with the support of the REDI II M&E Specialist will be responsible for: (a) maintaining the overall M&E framework, including implementation procedures, tools, data flow chart, and budget; (b) strengthening the monitoring system to ensure sound output, process, and outcome monitoring; (c) validating data by a random sampling, recording, and aggregating process; and (d) promoting and encouraging the demand for M&E. 14. The M&E unit will maintain the MIS, producing reliable information in a timely manner. The system uses the Electronic Fund Manager platform. This database includes the basic physical and financial records, the details of inputs and services provided to beneficiaries or clients (for example, funding and training), and data obtained from surveys and other recording mechanisms designed specifically to collect information from the sub-projects. 15. The PMT will monitor each sub-project through sub-project documentation, reporting, and field visits. The sub-project preparation studies will provide baseline information on the proposed business, objectives, and measurable monitoring indicators. The business plan functions as the implementation plan. The PMT staff will prepare bi-monthly reports on the implementation of sub-projects, indicating the milestones achieved (according to plan) and the difficulties encountered. Where possible, the reports will also indicate the degree to which measurable targets have been achieved. The report will also specify any issues requiring attention from the PMT. A critical enhancement of the M&E system, based on learning from REDI I, is that it will collect, systematize, and analyze information on the investment sub-projects of MSMEs. To this end, complementary tools such as FAO’s RuralInvest toolkit22 will be integrated into the M&E system. 16. At the central JSIF level, PMT specialists will review the data in the field reports and enter it into JSIF’s central monitoring database. The PMT will issue reports every six months on the overall status of the sub- projects for review by JSIF management and the World Bank. These reports will provide inputs for the JSIF and World Bank monitoring system (Implementation Status Reports). The first report will cover the period between effectiveness and the first June or December following that date. JSIF will monitor the implementation of contractual agreements, including procurement and FM, through the Rural Enterprise Consultant and PMT officers. 21 Building on the lessons learned from the previous REDI operation, the Result Framework includes a new set of indicators that are not directly comparable to the previous ones due to: i) the new approach focusing on business alliances integrating adoption of climate resilience investments and practices; and ii) the demand-driven approach using call for proposal that does not allow to estimate how many early beneficiaries under REDI will be selected under the new operation. 22 RuralInvest is a free multilingual methodology and toolkit developed by Food and Agriculture Organization (FAO) of the United Nations to teach people how to identify, design, and evaluate sustainable agricultural and rural investment projects and business plans. Since its creation, the toolkit and its accompanying software has been distributed to numerous users throughout the globe. Page 39 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) 17. Mid-term review. The REDI II Project Manager/M&E Unit will coordinate with an external consultant to execute an external, independent Mid-Term Evaluation at the end of the third year of implementation. The Mid-Term Evaluation will determine how much progress is being made toward the achievement of outcomes, and if the expected outcomes are not being achieved, point to the adjustments in project activities and operations required to improve implementation. The evaluation will focus on the relevance, effectiveness, efficiency, and timeliness of project implementation. Findings of this evaluation will inform implementation during the final half of the project implementation period. 18. Final Evaluation. A similar evaluation will take place toward the end of the final year of funding. This final external independent evaluation will focus on the same issues as the Mid-Term Evaluation, but in addition it will examine impact and sustainability of results and provide recommendations for follow-up interventions. The Final Evaluation will be an input into preparation of the Borrower’s Completion Report and the Bank’s Implementation Completion and Results Report (ICR). Financial Management 19. Overall FM responsibility for the project lies with the Finance Department of JSIF. As noted, JSIF has significant experience in implementing projects funded by donor agencies, including the World Bank (REDI I), and is implementing two other World Bank–financed projects (ICDP and DVRP). A FM assessment of JSIF conducted in accordance with OP/BP 10.00 and the Financial Management Practice Manual (issued by the Financial Management Sector Board on March 1, 2010) concluded that JSIF has adequate FM systems in place to provide, with reasonable assurance, accurate and timely financial information on the status of the funds as required by the World Bank. 20. Risk Assessment. JSIF continuously works on improving its overall FM arrangements, and during the implementation of REDI I, it worked assiduously to address several challenges and FM capacity concerns. Given the capacity limitations of sub-projects and grant beneficiaries, and the multiple inherent risks associated with community development and infrastructure activities, the FM risk is assessed as Substantial. Staffing. The Finance Department within JSIF, which will handle the FM aspects of the project, is staffed with experienced professionals and headed by a General Manager of Finance with over 20 years of relevant experience. The Finance Manager, who reports directly to the General Manager of Finance, is supported by two Senior Financial Analysts and a Financial Analyst, who are also supported by three Clerks (Figure A2.2). Responsibility for FM under REDI II will be specifically assigned to a Senior Analyst, who will have the immediate responsibility of ensuring adequate FM arrangements are maintained. Page 40 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Figure A2.2: Financial management team for REDI II 21. Budgeting. A budget for the entire life of the project (master budget) will be prepared by JSIF in consultation with the World Bank. Annual budgets will be extracted from this master budget, which will follow the GOJ budgetary approval process and procedures. Once annual budgets are approved by MOFPS, the budget will be included in the GOJ’s estimates of revenue and expenditures and reflected under the JSIF budget allocation. The budget for the life of the project will be revisited periodically and updated as needed to reflect implementation progress. Quarterly variance analysis (actual versus budgeted expenditures) will also be prepared and provided as part of the quarterly progress reports. 22. Disbursements and Flow of Funds. The following disbursement methods will be available under the project: Advance, Reimbursement, and Direct Payment; Advance will be the primary method. Figure A2.3 depicts the arrangements for the flow of loan funds. Advances will be disbursed by the World Bank to a segregated Designated Account (DA), opened at the Central Bank of Jamaica and maintained by MOFPS. The DA will be used to facilitate the transfer of funds to the segregated local currency operating bank account and may also be used to finance expenditures in US dollars. The local currency operating account will be opened at the National Commercial Bank (NCB) to finance eligible local currency expenditures. 23. Advances will be based on a six-month cash forecast and subsequently on quarterly Interim Financial Reports (IFRs), which will report on expenditures in relation to the previous advance received. The minimum application size for Direct Payments and Reimbursements can be found in the project Disbursement Letter. The overall disbursement arrangements will follow standard disbursement policies and procedures established in the Disbursement Guidelines for Investment Project Financing dated February 2017, and in the Disbursement Letter of the project. Page 41 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Figure A2.3: Arrangements for the flow of Loan funds, REDI II World Bank US$ Designated Account BoJ, MOFPS US$ Payments for All JMD Operating Account Project Components NCB, JSIF JMD Payments Goods, Works, and Services for Components 2-4 and Component 1 Sub-projects 24. Matching Grants Disbursement. Funds will be disbursed to the bank account of the Community-Based Contracting (CBC) or Non-CBC beneficiaries in accordance with the individual contractual agreements, and the eligible expenditure verification process as established in CBC manual and the contractual agreements. For each tranche of funds advanced to a beneficiary, supporting documentation substantiating the eligibility of expenditures must be provided to JSIF before the release of the following tranche. These expenditures will be accounted and reported to the Bank upon the verification of such documentations. 25. Accounting and Internal Controls. Project transactions will be accounted for using the accrual basis of accounting but reported on using the cash basis of accounting. JSIF already has an accounting software (Accpac), which will be used to record, maintain, and report on project transactions. A separate entity for REDI II will be created within Accpac, with a chart of accounts designed to capture transactions by activity, sub-component, component, and category. Accpac is interfaced with a contract management system developed in-house, “Fund Manager,” and online banking platforms (NCB and Sagicor Jamaica). While these systems are adequate for implementing the project, they are being reviewed by JSIF for continued enhancements. The project’s FM processes and procedures will be intertwined with the FM procedures of JSIF, which are guided by the financial procedures manual. Given previous concerns regarding the allocation of shared overhead costs, JSIF has prepared a methodology for allocating shared overhead costs amongst projects in its portfolio. This methodology will apply to REDI II once it becomes effective. Project- specific FM procedures, such as those required for sub-projects under Component 1, along with criteria for selecting beneficiaries, are included in the POM and the CBC manual. 26. Internal Audit. The internal control of JSIF is further anchored by an internal audit department, headed by an Audit Manager who is a qualified and experienced Chartered Accountant. The department prepares annual risk-based audit plans, which are reviewed and approved by the Audit Committee. The Audit Manager reports directly to the Board of the JSIF, which maintains an Audit Committee for oversight and improving financial discipline. The department will incorporate REDI II in its annual audit plans, and once audits are executed, the findings will be shared with the World Bank upon request. 27. Reporting. Unaudited IFRs are required quarterly and must be submitted to the Bank within 45 days of the end of each calendar quarter. Annual external audits will be conducted by the Auditor General’s Page 42 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Department of Jamaica, in accordance with an audit TOR cleared by the World Bank. The audited financial statements and the Management Letter will be submitted to the World Bank no later than six months after March 31 of each year. Procurement 28. Procurement will be carried out in accordance with the “World Bank Procurement Regulations for Borrowers under Investment Project Financing” (November 2017) (“Procurement Regulations”). In accordance with paragraph 5.9 of the Procurement Regulations, the World Bank Systematic Tracking and Exchanges in Procurement system will be used to prepare, clear, and update Procurement Plans and monitor all procurement transactions for the project. A Project Procurement Strategy for Development (PPSD), prepared by JSIF, describes how procurement in this operation will support the PDO and deliver value for money using a risk-based approach. The PPSD provides adequate supporting market analysis for the selection methods detailed in the Procurement Plan. Mandatory Procurement Prior Review Thresholds detailed in Annex I of the World Bank Procurement Procedures are applied. All procurement procedures, including roles and responsibilities of different participating entities and units, are defined in the POM. 29. National competition may apply. The GOJ approved a new Procurement Act, dated 2015, and respective Regulations (2018). When this new legal framework becomes effective, the Bank will assess whether national procurement procedures will apply and what conditions should apply. The World Bank is also assessing the Government of Jamaica Electronic Procurement System (GOJEP), and pending the conclusion of this review, it may be possible to adopt GOJEP under the project. 30. Project Procurement Strategy for Development and Procurement Plan. Of the total US$42 million project cost, US$33 million will finance demand-driven activities. Except for a general idea of the activities that will be financed under each component, it is not possible to define the contracts before the project is underway. The Procurement Plan for the first 18 months has been prepared by JSIF in accordance with the results of the PPSD. As identified in the PPSD, some contracts will require special procurement arrangements which include participation by government entities or government-funded institutions (such as universities or other educational facilities) to provide, at discretionary rates, unique services for which limited or no private sector alternatives exist. Some specialized and creative services that will be required specifically to support the tourism sector, relating to the delivery of training and certification in the creative industries—handicraft items for production and sale (among others, pottery), as well as specific cultural services (among others, drumming)—will likely be delivered through the training institute for the creative arts. Other specialized international agencies will provide technical assistance or advisory and technical services in their areas of expertise. Table A2.1 at the end of this section presents a summary of the PPSD, including the recommended procurement approach for higher-value/risk contracts. 31. Demand-driven, decentralized procurement. Part of the project will be implemented through decentralized procurement by the beneficiaries, which is estimated to represent 10 percent of the allocation for Component 1. This procurement will be implemented in accordance with the POM as supplemented with the CBC Manual. 32. World Bank Standard Procurement Documents. Standard Procurement Documents shall be used in the procurement for all competitive tenders. 33. Operating costs. Operating costs refer to reasonable recurrent expenditures that would not have been incurred by the implementing agency in the absence of the project. The project will finance operating costs, such as office supplies, communication and advertising costs, computers and equipment Page 43 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) maintenance, and travel and per diems for local and international staff and project implementation support personnel. The GOJ administrative procurement procedures have been reviewed and may be applied for operating costs. 34. Training. The project will also finance costs of training courses, travel and per diem of trainers and trainees, and rental of facilities. The project envisions that specialized training and certification will be required from the country’s national institution which provides both basic literacy and numeracy training along with the Human Employment and Resource Training Trust, National Training Agency (HEART Trust/NTA), which is the nation’s primary training institution focused on skills training and certification. It is the only institution which provides the National Vocational Qualifications of Jamaica certification. These certificates of competence are given to HEART Trust/NTA trainees and other industry workers after a series of performance-based assessments. The GOJ administrative procurement procedures have been reviewed and may be applied for training-related expenditures. 35. Procurement capacity assessment. An assessment of JSIF to implement and manage procurement and contracts was carried out in June 2018. JSIF has long been familiar with World Bank procurement policies and procedures. JSIF is subject to substantial oversight from different bodies. JSIF will adopt the World Bank Standard Procurement Documents in the procurement for all their tenders. For centralized procurement, external approvals by the National Contracts Commission (NCC) and Cabinet are required, and therefore procurement processes must plan to allow sufficient time to obtain these approvals. 36. Supervision arrangements. In addition to prior review supervision by the World Bank office, the capacity assessment recommends annual supervision missions to visit the field to carry out post review of 1:10 procurement actions. 37. Summary of PPSD. The PPSD is summarized in Table A2.1. Given the demand-driven nature of the project, US$31 million of activities can be defined only after the project begins implementation. Because it is not possible to define the exact list of activities for this larger part of the project, the procurement activities listed in Table A2.1 for the initial 18 months of implementation are indicative only and will be updated as calls for proposals for sub-projects are launched. Table A2.1: Summary of REDI II Project Procurement Strategy for Development Type Description Estimated Average Bank Procurement Selection Evaluatio cost (US$) risk oversight approach/ method n method competition CS Engineering services to design and supervise the 60,000 1.4 Post National Open CQS N/A renovation of agro-processing facilities G Provision of photovoltaic system for post-harvest 34,000 1.4 Post National Open RFQ LEB facility G Supply of equipment for agro-processing facilities 120,000 1.4 Post National Open RFB LEB (e.g., pulper finisher, hammer mill, dryer) G Supply of lumber, mesh, plastic, locking profiles, and 300,000 1.4 Post National Open RFB LEB fittings for greenhouse construction G Supply of agricultural inputs (e.g., fertilizer, seedlings 300,000 1.4 Post National Open RFB LEB soil) G Supply of harvesting crates, testing equipment 100,000 1.4 Post National Open RFB LEB G Supply of drip irrigation kits and fittings, drums, pipes 240,000 1.4 Post National Open RFB LEB CS Service provider to deliver training in greenhouse 4,800 1.4 Post National Open INDV N/A technology G Hoses and fittings, drums, and so on 360,000 1.4 Post National Open RFB LEB S Service providers for design and printing of 30,000 1.0 Post National Open RFQ LEB promotional materials Page 44 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) CW Greenhouse construction 300,000 2.6 Post National Open RFB LEB G Supply of drip irrigation systems 220,000 2.6 Post National Open RFB LEB CW Construction of cold storage/post-harvest facilities 500,000 2.6 Post National Open RFB LEB CW Construction of agro-processing incubators 330,000 2.6 Post National Open RFB LEB CW Construction of fish ponds/hatcheries 250,000 3.2 Post National Open RFB LEB G Supply of aquaculture/mariculture equipment and 100,000 2.8 Post National Open RFB LEB other inputs CS Training and capacity building, maritime, safety 10,000 2.4 Post Direct INDV N/A CW Construction of facilities for small ruminants 210,000 3.2 Post National Open RFB LEB G Supply of small ruminant equipment and other inputs 300,000 3 Post National Open RFB LEB CS Training and capacity building in small ruminant 15,000 2.2 Post National Open INDV N/A production G Supply of ginger planting material 300,000 3.8 Post National Open RFB LEB S Commercialization of Irish potato production 300,000 3.8 Post National Open RFB LEB CS Business development services 5,076,923 2.4 Post International Open QCBS MAP S Product packaging and labelling 15,000 2 Post National Open RFQ LEB S Market linkages (agriculture) 10,000 1.8 Post National Open RFQ LEB CS Youth/graduate corps for enterprise mentorship 1,819,231 2.4 Post National Open INDV N/A CS Enterprise specific training and capacity building 709,500 2 Post International Open QCBS MAP CW Construction of tourism infrastructure 310,000 2.6 Post National Open RFB LEB CS Craft development technical assistance 400,000 3 Post Direct Direct N/A CS Tourism marketing 300,000 3 Post National Open CQS N/A G Energy efficient/renewable energy solutions 600,000 2.4 Post National Open RFB LEB CW Linkages hub/clearinghouse 2,000,000 2.8 Post National Open RFB LEB CW Refurbishment of airport fumigation facility 1,025,000 3.8 Post National Open RFB LEB CW Road construction/rehabilitation 1,000,000 1.6 Post National Open RFB LEB CW Large agro-processing facility 2,710,000 2.6 Post National Open RFB LEB CS App development 600,000 4.2 Post International Open QCBS MAP CS Tourism and agricultural market studies, value chain 475,000 1.2 Post International Open QCBS MAP analyses, and baseline studies G MICAF Gene Bank: Identification, sourcing, mapping 175,000 3.4 Post National Open RFB LEB G MICAF Gene Bank: Equipment 500,000 3.2 Post National Open RFB LEB S Testing-food, soil, water, and so on 160,000 2.8 Post National Open RFB LEB S Study tours, conferences, training, capacity building— 200,000 1 Post National RFB LEB JSIF Open CS Technical assistance for MICAF and agencies 1,900,000 2.4 Post International Open QCBS MAP CS Technical assistance for MOT and agencies 1,480,000 2.4 Post International Open QCBS MAP CQS: Consultant Qualification Selection; RFQ: Request For Quotation, RFB: Request for Bid, INDV: Individual Consultant; and QCBS: Quality and Cost Based Selection Environmental and Social (including safeguards) 38. Project location and salient physical characteristics relevant to the safeguard analysis. The project will build on the achievements of RED I and will occur in largely rural agricultural and tourism landscapes throughout the country. Even though the project will be national in scope, details on specific locations of sub-projects are unknown at this time, and sub-projects will be demand-driven. Physical investments made under REDI I in the tourism sector included the construction of public bathrooms, collection and out-of-view disposal of solid waste, construction of simple handicraft markets, equipment for satellite- based internet access, landscaping, trail development, signage, and rehabilitation of or safety enhancements to public attractions such as hiking trails, waterfalls, and mineral baths. Investments also included the construction of 183 greenhouses (increasing the number of greenhouses in Jamaica by 50 percent and the area under protected agriculture by 40 percent), installation of drip irrigation in 14 Page 45 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) communities (> 600 acres), three ginger shade houses, and the construction and equipping of seven agro- processing incubators in partnership with RADA across Jamaica. 39. Policies that apply. The main environmental policies triggered are OP/BP 4.01 (Environmental Assessment), OP/BP 4.04 (Natural Habitats), OP 4.09 (Pest Management), and OP/BP 4.36 (Forests). Accordingly, an ESMF has been prepared and disclosed to the public as indicated previously. The ICR for REDI I finds that the project recorded substantial direct and indirect social benefits. Participation of women and youths in sub-projects exceeded set targets. Women adopted improved agricultural technology promoted by REDI and led some sub-projects. Project beneficiaries have reported that economic benefits contributed to their children’s education, and a feeling of ownership and pride associated with the use of “modern” technology. In some communities, there is evidence that cooperation between project beneficiaries and other community members has led to replication and expansion of new agricultural practices. 40. Borrower’s Institutional Capacity for Safeguard Policies. JSIF, the implementing agency for REDI II, is a limited liability company incorporated under the Companies Act of Jamaica and established in 1996 as a component of the government’s National Poverty Eradication Program. The fund has been operational for over 21 years and has implemented multiple projects with World Bank financing. 41. JSIF will establish internally a PMT that will be responsible for overall implementation and will coordinate with all the actors involved in the project’s execution. JSIF will be responsible for FM, procurement, and compliance with safeguards. JSIF managed the recently closed REDI I, and the ICR notes that its management of safeguards was highly satisfactory. Page 46 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) ANNEX 3: IMPLEMENTATION SUPPORT PLAN Strategy and Approach for Implementation Support 1. The strategy and approach for implementation support by the World Bank reflects the nature of the project, its risk profile, and the experience and lessons from REDI I. Given that REDI II aims to consolidate, enhance, and scale up REDI I interventions throughout the country, ensuring effective, efficient, and timely implementation will present significant challenges. The World Bank implementation support strategy seeks to be as effective as possible in preventing startup delays, addressing issues in a timely manner (as they arise), and closely tracking progress toward results and outcomes. The strategy is indicative and flexible and will be revised and adjusted based on emerging challenges and conditions on the ground. Implementation support will focus on key areas that include technical, fiduciary (financial and procurement), safeguard, and M&E. Regular implementation support missions and field visits will be carried out semi-annually or as needed to help promote satisfactory performance. Implementation Support Plan and Resource Requirements 2. Task team leadership and overall technical aspects will be managed from the World Bank office in Washington, DC, in close collaboration with the Country Office in Kingston, Jamaica. Implementation support for project FM will be carried out from the Kingston office. Table A3.1 presents the Implementation Support Plan. International and national consultants will be hired to provide advisory services and implementation support in specialized aspects of project activities, including climate-smart agricultural innovations, water resource management, and business development for smallholders. Formal supervision and field visits will be carried out semi-annually or as needed to help promote satisfactory implementation. Table A3.1: Implementation Support Plan for REDI II Time Focus Skills needed Resource estimate Partner role First 6 Provide support to strengthen the sub- Agricultural, tourism, World Bank (WB) and FAO provides an months project cycle, call for proposals, irrigation, social, and Food and Agriculture agricultural ensuring communication and outreach, environmental Organization (FAO) economist and effective participation of beneficiaries specialists Cooperative agribusiness and stakeholders (Component 1) Programme (CP) specialist Strengthen JSIF/PMT and capacities of Agribusiness, WB implementing agencies tourism, FM, procurement, safeguards specialists Support the JSIF/PMT to build the M&E M&E specialist WB + Hiring of FAO provides an system, including hiring consultancy consultancy services M&E specialist for the baseline survey for baseline survey 6-12 Intense support for implementation of Fiduciary, irrigation, WB + FAO-CP FAO provides an months the first call for proposals, social, and irrigation specialist procurement of consultancy (studies) environmental for training and works specialists 12-24 Field survey to assess quality and initial All the task team WB + FAO-CP FAO provides an months impacts of the first pipeline of sub- irrigation specialist projects (Component 1) and capacity and support from an building agricultural economist Revision of sub-project cycle, technical All the task team WB + FAO-CP FAO provides an Page 47 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) design according to results of irrigation specialist assessment and support from an agricultural economist 24-48 Project supervision through 2 or 3 All the task team WB + FAO-CP FAO provides an months implementation support missions irrigation specialist Mid-Term Evaluation and Intermediate All the task team WB + FAO-CP FAO provides Impact Evaluation and consultancy irrigation and M&E services for Mid-Term specialists Evaluation 48-60 Preparation of the last set of sub- All the task team WB + FAO-CP FAO provides an months projects (one year before closing) M&E specialist 3. Skill mix required. The skills required and the inputs from the task team have been evaluated for the whole project and are shown in Table A3.2. Table A3.2: Skill mix required for REDI II Staffing Estimated staff-weeks for the 5 years Number of trips Staff-weeks (field) Staff-weeks (office) Task Team Leader 20 60 15 Agribusiness Specialist 20 30 20 Agricultural Economist 20 30 20 Irrigation Specialist 20 30 20 Community Tourism Specialist 15 30 15 Environmental Specialist 15 30 15 Safeguards Specialist 15 30 15 Social Development Expert 15 30 15 Financial Management Specialist 15 60 15 Procurement Specialist 15 60 15 Monitoring and Evaluation Specialist 5 15 5 Total 175 405 170 Page 48 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) ANNEX 4: ECONOMIC AND FINANCIAL ANALYSIS I. Introduction 1. The economic and financial analysis of REDI II is an ex-ante evaluation of the project’s future performance, undertaken to assess the economic soundness of proposed interventions and the likely impact on the targeted beneficiaries. The analysis considers the estimated incremental benefits and costs of project-related investments to society as a whole. Crop and activity budgets were prepared to assess the financial impact from the point of view of the beneficiaries and to provide the basis for the economic assessment. 2. The analysis is based on a selection of likely investments and economic activities that will be supported under Component 1 through matching grants. The sample includes diverse types of business models for agricultural enterprises, such as greenhouse technology and drip irrigation to produce vegetables, open field drip irrigation, and pig rearing, as well as business models for community-based tourism enterprises, such as projects promoting adventure trails, mountain hiking, and cultural experiences. It was possible to update/verify these models with field visits. The size of the matching grant is set at a maximum of US$500,000, and the full pattern of activities to be financed is not yet known. While relevant, the investments under Component 2 could not be included in the analysis, as specific models were not available at the time of project appraisal. 3. Co-benefits of these interventions, including important climate co-benefits, will be the mitigation and avoidance of GHG emissions; carbon sequestration through afforestation and reforestation; more efficient and effective use of resources; reduced produce losses; conservation of biodiversity; increased and enhanced provision of ecosystem services; improved sustainable livelihoods for local communities; and improved climate resilience. The REDI II carbon balance (GHG emission reduction potential of the project) is detailed in Annex 5. This analysis is in line with the financial models and general assumptions used for this economic and financial analysis. The economic value of the net CO2eq emissions reduced through project interventions is valued at shadow prices and included in the economic analysis, based on the latest World Bank guidelines. II. Project’s Expected Development Impact 4. Total cost of the intervention would be around US$42 million (with an IBRD loan in the amount of US$40 million). Additional production and its value have been estimated using representative crop budgets, processing units, and community-based tourism-related activities. 5. Benefits expected from the project in the agricultural sector include increased production, improved productivity, increased marketed production, increased processed capacity of primary agriculture products, reduced post-harvest losses, higher quality and prices, and others. In the community tourism sector, the main expected benefits are improved quality of goods and services, leading to an increased number of visitors, larger sales, and higher revenues. 6. Increased output, income, and employment in the targeted zones will result in increased demand for goods and services, which is expected to generate additional income and employment effects and increase government tax revenues. As the project is supporting high-potential areas in the production of major food and commercial crops, the increased output from the targeted areas will increase national production, and thereby contribute to growth in overall GDP and national food security. In addition, a possible reduction in imports would result in foreign exchange savings. Consumers should also benefit from reduced consumer Page 49 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) prices and improved availability of locally produced food commodities of better quality. Given the unmet growing domestic demand for food commodities targeted by the project, it can be assumed that REDI II will more than offset any potential negative effects of reduced producer and retail prices. 7. The major institutional benefits expected from the project are: (a) agriculture and community tourism enterprises are effectively functioning and linked to markets; (b) public institutions, together with local communities, are managing and maintaining the infrastructure provided; and (c) participating public institutions become stronger. The social benefits and climate co-benefits expected from the project result from its focus on reducing rural poverty, creating jobs, and enhancing climate resilience. The project will provide additional sources of income for poor rural households, serve to diversify rural incomes and improve environmental sustainability, and thereby contribute to reduced exposure and vulnerability. III. Financial Analysis Assumptions and Results 8. The main objective of the financial analysis is to examine the financial viability of the main crops and economic activities to be supported under the project. The analysis assesses their potential for increased profitability because of project interventions and whether: (a) productive activities supported by the proposed REDI II would offer sufficient financial incentives for the targeted rural enterprises to participate and (b) cash incomes generated by these activities would be adequate for the rural entrepreneurs to repay their additional investments. 9. The analysis compares the situation without the project to the likely situation with the project. Without the project, it is expected that rural enterprises would continue with their current low-input, low- output production systems and business models, and that they would be subject to increasing pressures in the context of climate change. Twelve representative agriculture and community tourism business models were selected for the economic and financial ex ante analysis of REDI II. The models present a realistic mix of potential activities to be financed under REDI II and are based on the M&E and ICR data and results of REDI I. Table A4.1 shows the main features of the selected business plans. Table A4.1: Agriculture and community tourism investment sub-projects selected as models for the financial analysis of REDI II Beneficiaries New New Technology Subproject Sector Legal entity Location (Parish) Classification Total male female activity Pre Post St Mary Multipurpose Cooperative Cold Chain Agriculture Cooperative society Annotto Bay, St Mary Marketing and Cold Storage 70 25 45 NO   Corn Piece, Hayes, Rapid Growth Cooperative pig rearing Agriculture Cooperative society Clarendon Pig rearing and food traceability 15 9 6 YES C  Flower Hill Producers Cooperative Society Cassava Bammy (cassava) processing Agriculture Cooperative society Flower Hill, St James agroprocessing,food safety and Cockpit Country Adventure Team. 49 22 27 NO   Southern Trewlany Environmental Agency - Nature Safety and security improvement, Tourism and attractions Tourism NGO Albert Town, Trelawny marketing and capacity building. 34 20 14 NO   Bethel town, Sorrell Value Chain Improvement - Juice Bethel Town, Juice processing Equipping, processing Agriculture Cooperative society Westmoreland Marketing and Capacity Building 45 22 23 YES C  Hannover Bee Farmers' Cooperative Society: honey Honey production, Equipping, bottling facility Agriculture Cooperative society Lucea, Hannover Training and Bottling Facility 40 22 18 YES C  Holy Spirit Foundation, St Elizabeth Meat Processors Agriculture Ltd liability company Maggoty, St Elizabeth Sausage processing and marketign 57 23 34 NO   Jamaica Cocoa Farmers Association - cocoa solar drying Little Spring Garden, and processing Agriculture Cooperative society Portland Cocoa drying facility 80 60 20 NO C  Noranda JBI Greenhouse cluster - vegetable Nine Miles, St Ann production Agriculture Benevolent Society Parish Greenhouse vegetable production 60 30 30 YES C  Treasure Beach Women' Group Benevolent Society: Treasure Beach, St Arts and craft Tourism Benevolent Society Elizabeth Art and craft 30 0 30 NO C  Linton Park Solidarity Movement Agriculture Cooperative society Linton Park P.A. St. Ann Goat Farming 15 8 7 YES C  Rastafari Indigenous Village: promotion of cultural heritage toursim Tourism Ltd liability company Portobello, St James Cultural Heritage Toursim 22 14 8 NO C  Page 50 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) 10. Financial prices are market-determined for crop production and off-farm activities. Market prices are based on data obtained from field visits, discussions with officers in the concerned districts, and official statistics. Prices used in the analysis are in constant 2017. The agricultural sector is subsidized but based on a review of agricultural sector support and taxation in Jamaica, the subsectors targeted by REDI II activities do not benefit from major distorting support. No other major direct input or output subsidies affect these representative cases, and tariffs were not considered in the analysis, partly due to the volatile nature of tariffs on some agricultural products. 11. The estimated parameters include incremental annual revenues, net benefits/income, NPV of benefit flows (at a 10 percent annual discount rate), and internal rate of return (IRR). Table A4.2 summarizes levels of investment and estimates for the financial analysis of sub-projects. 12. In general, the supply of labor is not a major constraint to the development of farm and non-farm activities in the project area, as there is sufficient local unskilled labor. The available family labor can largely meet the on-farm and off-farm requirements and future increase in demand. The cost of farm labor is set at the going market rural wages rate of about JMD2,000–3,000 per day, which is determined by the forces of supply and demand. The value of JMD2,500 per day was retained for the analysis. Table A4.2: Summary of financial results for representative sub-projects, REDI II B/C Switching values Subproject Sector IRR ratio cost revenue St Mary Multipurpose Cooperative Cold Chain Agriculture 15.47% 1.88 88% -47% Rapid Growth Cooperative pig rearing Agriculture 12.27% 1.20 20% -17% Flower Hill Producers Cooperative Society Cassava processing Agriculture 12.68% 1.20 20% -17% Southern Trewlany Environmental Agency - Nature Tourism and attractions Tourism 11.36% 1.62 62% -38% Bethel town, Sorrell Value Chain Improvement - Juice processing Agriculture 14.78% 1.34 34% -25% Hannover Bee Farmers' Cooperative Society: honey bottling facility Agriculture 125.48% 4.37 337% -77% Holy Spirit Foundation, St Elizabeth Meat Processors Agriculture 14.02% 1.04 4% -3% Jamaica Cocoa Farmers Association - cocoa solar drying and processing Agriculture 15.99% 1.21 21% -17% Noranda JBI Greenhouse cluster - vegetable production Agriculture 10.92% 1.53 53% -34% Treasure Beach Women' Group Benevolent Society: Arts and craft Tourism 23.22% 1.22 22% -18% Linton Park Solidarity Movement Agriculture 10.47% 1.20 20% -17% Rastafari Indigenous Village: promotion of cultural heritage toursim Tourism 29.12% 2.60 160% -62% 13. The financial analysis shows that all of the sub-projects are viable, with IRRs ranging from 11 percent to 125 percent and positive NPVs. Activities in the agricultural/agribusiness and tourism sectors appear to have a competitive base, although the experience under REDI I indicates that tourism activities evolve more slowly because they depend on tour operators to bring tourists to the rural community offerings. Both sectors are quite resilient to increases in costs and/or reductions in revenue before they become unprofitable. 14. The financial analysis of processing and marketing activities foresees positive returns and cash flows. These results emphasize how the use of matching grants to encourage producers to adopt new technologies gives producers additional financial space, particularly during the first years when they are working their way further along the technology adoption learning curve. Page 51 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) IV. Economic Analysis Assumptions and Results 15. This analysis uses a cash flow model over a 20-year period that includes all investment and operational costs of the business plans supported under REDI II, as well as the incremental net revenues derived from the financial models. The base case scenario makes assumptions about patterns of investment operations and foresees some switches during project implementation. Based on the results of REDI I, the analysis also assumes a preliminary failure rate of 10 percent among the activities supported under REDI II. 16. Following the World Bank Environmental Strategy and Climate Change Action Plan, additional scenarios have been estimated that include a “high price” and “low price” valuation of potential reductions in net GHG emissions.23 The GHG appraisal of REDI II used the ex-ante carbon-balance tool (EX-ACT), which quantifies the net carbon balance with regard to tCO2e resulting from GHGs emitted or sequestered during the project implementation and capitalization period (20 years) compared to the without-project scenario. The project leads to estimated annual climate change mitigation benefits of 5,876 tCO2e compared to a business-as-usual baseline scenario. These benefits are equivalent to an annual reduction in GHG emissions per hectare of 3.6 tCO2e. After 20 years, GHG mitigation benefits amounting to a reduction of 117,516 tCO2e will be generated. In addition to the achievement of the PDO, the project also provides intermediate GHG emission reductions as a co-benefit of implementation. 17. The economic cost of REDI II was calculated using a preliminary estimation of investment and maintenance costs. Total project investments have been estimated at US$40 million over six years of implementation. The estimated investment costs are US$26 million for Component 1, US$8 million for Component 2, and US$6 million for Component 3. The yearly costs after project closure are estimated at 20 percent of the cost of Component 3 in its final year. 18. For the economic analysis, all the costs (excluding taxes) have been included. Financial costs were converted to economic costs using a conversion factor that varies for the different activities. The exchange rate USD/JMD is set at 130 for the analysis. The opportunity cost of labor (economic price) is US$5 per day, which is the lowest price for unskilled rural labor in rural Jamaica. The opportunity cost of capital is 10 percent. The overall program economic cash flow and corresponding economic internal rate of return (EIRR) were calculated by aggregating the net incremental benefits obtained by beneficiaries both as a result of additional production (yield increase) and processing. Note that the economic analysis is based on direct costs and benefits. Social and indirect benefits will not be given a dollar value in this analysis. (Such benefits include, for example, the creation of employment, enhanced competition in input markets, enhanced national food security, import substitution, foreign currency earnings, emergence of farmers’ organizations, and so on.) 19. Given the above assumptions, the EIRR for the base case scenario is 15.1 percent, and the NPV is US$5.4 million at the 10 percent discount rate (Table A4.3). These results indicate that, based on an opportunity cost of capital of 10 percent, the proposed REDI II project shows a satisfactory EIRR and NPV, and is justified on economic grounds. The EIRR for the scenario including potential reductions in GHGs under REDI II, valued at “high prices” for carbon, is 18.4 percent, with an NPV of US$10.5 million (10 percent discount rate). If the GHG emission reduction potential is valued at “low prices,” then the EIRR is 16.8 percent and the NPV is US$8.0 million. 20. The sensitivity analysis confirms that the EIRR and NPV are robust. Based on the assumptions 23 Guidance note on the shadow price of carbon in economic analysis. World Bank, September 2017. Page 52 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) described above, REDI II can be justified on economic grounds. It should be kept in mind that not all potential economic benefits have been included in the analysis, and that the likely multiplier effects described above have not been quantified. Therefore, it is safe to assume that the estimated economic benefits are on the low side of the potential economic returns that can be expected. 21. It is anticipated that in the medium to long term REDI II will have a substantial positive fiscal impact, mainly due to (a) increased output, income, and employment, resulting in increased tax revenues, and (b) multiplier effects due to increased economic activities in the targeted area, resulting in increased demand for goods and services, which is expected to generate additional income and employment effects. Furthermore, given that Jamaica is currently a net importer of major staple food crops, the increased production of major staple crops is expected to result in substantial foreign exchange earnings/savings by reducing imports. Table A4.3: Economic internal rate of return and sensitivity analysis for REDI II under a base case scenario and two scenarios for GHG emission reduction potential (valued at high shadow prices and low shadow prices for carbon) Project Project Delay in Base case Benefits Costs benefits scenario -30% -20% -10% +10% +20% +10% +20% 1 year 2 year 15.1% 8.8% 11.0% 13.1% 17.0% 18.9% 13.3% 11.7% 12.4% 10.4% Total costs Total benefits Switching values 25% -33% Project Project Delay in Scenario with Benefits Costs benefits GHG high price -30% -20% -10% +10% +20% +10% +20% 1 year 2 year 18.4% 11.3% 13.8% 16.1% 20.6% 22.8% 16.3% 14.6% 15.0% 12.5% Total costs Total benefits Switching values 35% -54% Project Project Delay in Scenario with Benefits Costs benefits GHG low price -30% -20% -10% +10% +20% +10% +20% 1 year 2 year 16.8% 10.0% 11.2% 14.6% 18.8% 20.8% 14.8% 11.7% 13.7% 11.4% Total costs Total benefits Switching values 30% -43% Page 53 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) ANNEX 5: GREENHOUSE GAS ACCOUNTING FOR RURAL DEVELOPMENT PROJECTS Background and Methodology 1. In its 2012 Environment Strategy, the World Bank adopted a corporate mandate to conduct GHG emissions accounting for investment lending. The quantification of GHG emissions is an important step in managing and ultimately reducing those emissions and is becoming a common practice for many international financial institutions. The World Bank adopted the Ex-Ante Carbon-balance Tool (EX-ACT), developed by FAO in 2010, to assess the impact of agricultural and rural development investment lending on GHG emissions and carbon sequestration. EX-ACT allows the ex-ante assessment of a project’s net carbon-balance, defined as the net balance of CO2 equivalent GHGs that would be emitted or sequestered because of project implementation, compared to a without-project scenario. EX-ACT estimates the carbon stock changes (emissions or sinks), expressed in equivalent tons of CO2 per hectare and year. The analysis described here used the EX-ACT tool to assess the GHG impacts associated with the activities contemplated under the proposed REDI II project. Application of EX-ACT 2. Project boundaries. The project will offer demand-driven support to strengthen rural enterprises as well as public institutions in Jamaica. The GHG analysis is based on: (a) models representing likely investments in businesses to be implemented by rural enterprises through sub-projects under Component 1; and (b) models for the public infrastructure investments that could be supported through interventions under Component 2, Subcomponent 2.1. 3. The business models applied to the GHG analysis of Component 1 activities are the same as those used for the economic and financial analysis described in Annex 4. Based on the experience with REDI I, with information on the country, sectoral context, and scope of REDI II, the project anticipates financing about 90 business plans. For the GHG analysis (as with the economic and financial analysis), it is assumed that the project will finance 63 business plans in the agricultural sector (70 percent of the total number of business plans likely to be financed by the project) and 27 business plans in the community tourism sector. Following these assumptions, the project will support about 200 rural enterprises (88 enterprises in the agricultural sector and 112 in the community tourism sector). Nevertheless, as Component 1 is demand- driven, the exact proportion of participating agricultural and community tourism business plans and enterprises cannot be known before the project commences. 4. It is also important to highlight that land is a very scarce resource in Jamaica, and land tenure issues persist in most rural areas. Rural enterprises in Jamaica do not necessarily have vast areas for production; the area at their disposal varies depending on the sector, type of enterprise, and activity. As in REDI I, it is expected that in REDI II the productive areas engaged for project activities will be limited, and so will the tenancy arrangements: most POs and some CTEs lease their land. In response to these constraints, rural enterprises are willing to increase the efficiency of the land they commit to sub-projects, preferring to invest in technologies such as greenhouses and collective interventions (on land leased from cooperatives or commercial partners) to add value to their current production. The intention of REDI II is to maximize the climate co-benefits of investments. REDI II will give preference to sub-project investments that reduce GHG emissions and at the same time increase beneficiaries’ climate resilience. The business plans will integrate climate co-benefits. 5. Component 2 will finance key public infrastructure investments as well as technical assistance and Page 54 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) capacity-building proposals from public institutions. These investments aim at improving the efficiency and effectiveness of operations in priority selected value chains, ultimately improving access to markets and climate resilience among beneficiaries directly and indirectly targeted by the project. 6. Under Subcomponent 2.1, REDI II anticipates financing about four public investments along the following lines (the precise investments will be decided based on detailed evaluations): (a) a platform to promote linkages for tourism, agriculture, and between the two sectors; (b) rural roads to improve connectivity to markets; (c) a large agro-processing facility; and (d) infrastructure for fisheries/aquaculture. These investments will comply with JSIF and World Bank guidelines. The POM integrates criteria on climate co-benefits for the formulation, evaluation, selection, and implementation of public infrastructure investments. Relevant examples of climate co-benefits derived from public infrastructure investments would be afforestation/reforestation activities (not only to compensate GHG emission but to ensure the sustainable provision of strategic ecosystem services for targeted regions, value chains, and so on), or the application of clean development technologies and practices for a greener economy. Following these assumptions, the public infrastructure investments will likely have a net GHG mitigation contribution. 7. In brief, the GHG accounting considers the following general tendencies of project interventions with implications for GHG fluxes: (a) afforestation/reforestation of forest areas and restoration of highly vulnerable areas; (b) the transition from a business-as-usual system to a climate-resilient system by participating rural enterprises based on their business plans; and (c) increased efficiency of input utilization and energy consumption due to the application of technologies and practices that contribute to GHG mitigation. The technical capacities and enabling environment to attain the projected climate co-benefits are considered in the technical assistance activities under Components 1 and 2. 8. Data sources. The main sources of data for the analysis include information generated in the economic and financial analysis (Annex 4) as well as technical inputs prepared mainly by JSIF, MICAF, RADA, MOT, and PIOJ. These inputs provide a detailed assessment of the technical packages for crops, agroforestry, forest restoration, and livestock production systems that will be supported by the project. 9. Basic assumptions. Jamaica has a tropical climate and moist regime; the dominant soil type is volcanic. The timeframe for implementing the project is 6 years and the capitalization phase is 14 years, so the period of analysis is set for 20 years. Dynamics of evolution are assumed to be linear for most of the variables. Default “Tier 1” coefficients for the EX-ACT estimation were used. The construction of “without- project” and “with-project” trajectories is based on average technical references taken from the final evaluation of REDI I (completed in January 2018) as well as experts’ opinions (to verify the fitness of technical assumptions). 10. Annual and perennial crops production. The technical packages proposed for both annual and perennial systems incorporate “improved agricultural technologies and practices” that contribute to GHG mitigation while building climate resilience. 11. The basic framework for GHG accounting for improved agricultural technologies and practices for annual crop production in EX-ACT includes a comparison of the use of improved agronomic practices, nutrient management, no-till and residue retention, manure application, and water management in climate-resilient and business-as-usual systems (Table A5.1). The improved agricultural technologies and practices will be used on an estimated area of at least 155 hectares of annual crops. This area might seem limited compared to the areas typically seen in this kind of analysis, but it is important to note that it includes the production of high-value crops in greenhouses. Page 55 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Table A5.1: Management options for annual crops under REDI II System Management option Improved agronomic Nutrient No-till and residue Water management Manure application practices management retention Climate-resilient systems Yes Yes Yes Yes Yes Business-as-usual systems No Yes No No No 12. The EX-ACT tool also considers improved perennial systems (such as agro-forestry, orchards, tree crops, live fences), but the fundamental element in the GHG calculations is the type of residue/biomass management. In the case of perennials, REDI II will support an estimated area of 1,257 hectares, which mainly corresponds to plantations of cacao, coffee, and similar tree crops. This estimate also includes a reasonable proportion of land use change in which set aside, degraded, and other land is converted to perennial crops in agricultural investments and to other uses in community tourism investments. The project also considers other technologies and practices in the context of climate-smart agriculture and sustainable landscape management approaches. 13. Livestock. The project will support pig and goat production by introducing improved breeds and feed, while promoting management practices that contribute to climate change mitigation and adaptation, such as improved manure management, increased tree coverage, and use of live fences. The estimated grassland area covered by the project is 53 hectares. Table A5.2 summarizes the interventions and numbers of animals. Table A5.2: Improved livestock and manure management practices under REDI II Livestock type Head number (mean per year) Technical mitigation option (%) Start Without With Feeding practices* Specific agents* Breeding* project project Start Without With Start Without With Start Without With Pigs (market) 3,024 4,536 6,210 * Feeding practices, e.g.: more concentrates, adding certain oils or oilseeds to the diet, improving pasture quality. Specific agents: specific agents and dietary additives to reduce CH4 emissions (Ionophores, vaccines, bST). Breeding: increasing productivity through breeding and better Goats 2,100 2,273 3,605 management practices (reduction in the number of replacement heifers) 14. Land use change. The evolution of land use with and without the project is summarized in Table A5.3. Table A5.3: Evolution of land use (hectares), with and without REDI II Land use category Initial state Without project With project Forest/plantation 0 0 169 Annual 151 141 155 Agriculture Perennial 1,157 1,257 1,221 Rice 0 0 0 Grassland 53 53 53 Degraded 191 0 0 Other lands Other 68 0 0 Wetlands 0 0 0 Total area (ha) 1,620 1,620 1,620 15. Inputs. The main inputs considered in this GHG analysis are agricultural inputs, energy consumption, and infrastructure. 16. Agricultural inputs. The available technical guidelines for crop production include the use of improved Page 56 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) seed, fertilizer, and pest control management. The amounts (tons per year) of fertilizers (other N-fertilizers, phosphorus, and potassium), herbicides, insecticides, and fungicides were calculated based on data from JSIF, MICAF, and RADA. The analysis used data per hectare for a number of annual and perennial crops. The average amounts of inputs (in tons per year) for annuals and perennials were multiplied by the projected area (in every category). The project provides technical support to make more efficient use of inputs and apply alternative methods to reduce the need for agrochemicals (for example, the production and use of compost). As mentioned, climate-smart agriculture offers several highly effective and applicable practices related to input use. 17. Energy consumption. The estimates of energy consumption for all sub-project investments take into account the increased scale of production supported through project interventions. They also take into account the proposed improvements in using renewable energy technologies, and investments in infrastructure, machinery, and equipment to use resources (soil, water, labor, and so on) more efficiently and reduce losses along the value chain. 18. Productive infrastructure. Under Component 1, the project supports the construction and/or improvement of irrigation systems. The total area of annual crops covered by the project (mainly in greenhouses) will include drip irrigation systems. The project will also provide efficiency improvements to irrigation systems (mainly surface systems) for some areas planted to perennials. Under Component 1 the project will also support construction of agricultural buildings (metal and concrete) as well as buildings used for offices, shops, and training/gathering centers. Under Component 2, as indicated, the analysis assumes that public infrastructure investments imply GHG emissions, but concrete measures will be implemented to achieve a net reduction of GHG emissions from these investments. Results 19. Net carbon balance. Table A5.4 summarizes the main results of the GHG analysis. Compared to the without-project scenario, REDI II leads to estimated annual climate change mitigation benefits of 5,876 tCO2e, which is equivalent to annually reduced GHG emissions per hectare of 3.6 tCO2e. After 20 years, GHG mitigation benefits amounting to a reduction of 117,516 tCO2e will be generated. In addition to achievement of the PDO, the project also provides intermediate GHG emission reductions as a co-benefit of project implementation. 20. Carbon sources and sinks. The main carbon source as expected come from livestock, in addition to inputs and infrastructure. The sequestration benefits come principally from afforestation/restoration of degraded areas, followed by the transition from set aside, degraded, and other lands to perennials (agro- forestry, orchards, gardens, tree crops, and so on) and the improved management of agro-forestry, livestock, and crop systems. 21. Sensitivity analysis. The uncertainty, as calculated by EX-ACT, is 40.5 percent. This analysis was run using mostly Tier 1 coefficients, which in some cases may provide over or underestimated values. It is a relevant source of uncertainty in the estimation of GHG emission/sequestration scenarios for the REDI II Project. Page 57 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) Table A5.4: Results of the ex-ante GHG analysis (tCO2-eq) for REDI II Components of the Gross fluxes Share per GHG of the balance Result per year project Without With Balance All GHG in tCO2eq Without With Balance All GHG in tCO2eq CO2 N2O CH4 Positive = source / negative = sink Biomass Soil Other Land use changes Deforestation 0 0 0 0 0 0 0 0 0 0 Afforestation 0 -101,167 -101,167 -76,413 -24,754 0 0 0 -5,058 -5,058 Other LUC -691 -6,825 -6,135 168 -6,303 0 0 -35 -341 -307 Agriculture Annual -1,251 -6,690 -5,438 0 -4,856 -19 -563 -63 -334 -272 Perennial 2,079 -33,402 -35,482 -15,762 -1,192 -9,656 -8,872 104 -1,670 -1,774 Grassland and livestock Grassland 3,131 -463 -3,594 0 -3,473 -63 -58 157 -23 -180 Livestock 24,092 34,320 10,228 5,874 4,355 1,205 1,716 511 Inputs and 19,426 43,498 24,072 23,013 1,059 0 971 2,175 1,204 Investments Total 46,786 -70,729 -117,516 -92,007 -40,578 23,013 -2,805 -5,139 2,339 -3,536 -5,876 Per hectare 29 -44 -73 -42.6 -25.0 14.2 -1.7 -3.2 Per hectare per 1.4 -2.2 -3.6 -2.1 -1.3 0.7 -0.1 -0.2 1.4 -2.2 -3.6 year Page 58 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) ANNEX 6: GENDER ANALYSIS AND ACTION PLAN ENHANCING WOMEN’S FARMER’S PRODUCTIVITY AND ACCESS TO MARKETS A. Analysis of the Situation 1. Women in Jamaica have made impressive strides in the social and economic spheres, closing and in some cases reversing gender gaps in certain areas. Yet gaps persist in the agricultural sector with regard to participation and realization of profits and sales for women’s groups. This disparity is reflected in results of the 2015 Economic and Social Survey of Jamaica (ESSJ), which reports a national labor force participation rate of 63.1 percent, with participation at 70.3 percent for men and 56.3 percent for women. B. Theories of Cause 2. The project has identified two main problems it will address: (i) the low organizational capacity and (ii) low productivity and limited access to markets of women’s groups. 3. Low organizational capacity of women’s groups. Cooperatives of small-scale producers and women’s farming groups face organizational constraints that limit their efficiency, productivity, and sustainability. The small farmer cooperatives lack a grassroots base; women’s investments, contributions and risks within their cooperatives are not shared equally. Women lack skills to run and grow their agribusinesses. As a result, the groups/cooperatives are unsustainable and weak. 4. Women’s low productivity and limited access to markets. Women in rural Jamaica have grown up in social environments that encourage unequal gender relations. They are exposed to beliefs and practices that value them in their reproductive role (childbearing) but less in their economic productive role, and gender roles are perpetuated that do not benefit women as independent individuals who can profit from their own business activities. As a result, women are not aware of their potential to strengthen their cooperatives to improve their productivity, or of their potential to become skilled agricultural workers and not only “farmers’ wives.” 5. In these circumstances, women find it challenging to make their businesses profitable and to expand them to increase production instead of limiting production to what the family can consume. The results are: (a) the low percentage of skilled agricultural workers who are female; (b) women make low profits from their agribusinesses; (c) women have a low position in the value chain; and (d) women receive low returns from their production. C. Theories of Change (proposed Interventions) 6. The project will address the problems of low organizational capacity, productivity, and access to markets in several ways.24 7. To build organizational capacity among women, the project will take five specific actions. First, pre- investment activities will provide support to form groups, understand group dynamics, and learn about the benefits of working collectively to increase production volumes and sales capacity. Second, women will be supported to form common interest groups along selected value chains. Third, during implementation, women with high leadership potential will be selected and trained to be coaches who can lead efforts to organize and act as resource persons to transfer skills. Fourth, targeted assessments, organizational strengthening, and business development will be supported to strengthen women’s organizations. Finally, 24Component 1. Climate Resilient Agriculture and Community Tourism Investments for Rural Enterprises (Total US$ 28.0 million, IBRD US$26.0 million). The main output of Component 1 will be the funding and implementation of investment initiatives, and training. Page 59 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) the project will also support peer mentorship and exchange visits to demonstrate success and what is possible through better organization. 8. To increase women’s productivity and access to markets, the project will take three specific actions. First, it will focus on pre-investment activities, by providing technical support for women to develop sound business proposals for growing their agribusinesses and acquiring the soft skills that can empower them to embrace risk and use their new knowledge. Second, the project will register organizations. It will educate women about the benefits of registering their enterprises and assist them to register their businesses and cooperatives and/or become members in cooperatives. Third, during implementation the project will provide targeted training, mentoring, and workshops for women on business planning, marketing, digital skills, and financial literacy to help women gain an appreciation of how to make a profit from their agriculture and tourism-related services and products. 9. These interventions, their immediate goals, and their outcomes are summarized in the theory of change presented in Table A6.1. Table A6.1: Theory of change (solutions) to enhance women farmers’ organization, productivity, and market access under REDI II I II III Intervention Intermediate goal of this Goal/outcome of this intervention intervention Problem 1: Low organizational capacity among women Strengthen the capacity of grassroots organizations •Women’s organizations become •Sustainable (lasting) structurally strong because cooperatives. women’s individual capacities to •Well-functioning organize are strengthened cooperatives. Problem 2: Low productivity and access to markets among women Improve the number and performance of women’s •There is improved productivity, •An increased percentage of farmer groups and/or business enterprises in value addition, and access to women classified as skilled agriculture and agribusiness through the provision of a markets. agricultural workers. package of services specifically targeting women in: •Women farmers’ business •An increase in the average •Forming a business. capacities are enhanced, and size of women’s farms. •Business planning preparation. market linkages facilitated. •An increase in the number of •Organizational strengthening, including identifying •Women farmers’ advocacy and women make a profit out of and accessing markets to increase profits and sales. lobbying capacities are increased. growing their agribusinesses. •Women agri-preneurs are •Women are able to create Provide technical advice to women so they are able to empowered to access finance. fundable business plans. identify the most profitable value chain for them. •Women farmers are organized to •Women have enhanced their work collectively. skills as entrepreneurs. Provide training in cropping techniques and different •Women have been helped to •Women have gained technical kinds of technical advice on how to make the most of move up in the value chain. skills to identify business their production. opportunities along the value chain. Page 60 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) 10. The outcomes of these interventions will be measured by the indicators shown in Table A6.2. Table A6.2: Indicators for outcomes of interventions to enhance women’s organizations/businesses, productivity, and market access under REDI II Indicators, Problem 1: Low organizational capacity among women 1 Climate-resilient agriculture and a) Number of business plans initiated (Number) community tourism investment b) Number of rural enterprises participating in approved business plans (of financing which percentage with partnership agreements and agriculture-tourism partnerships) (Number) •With partnership agreement (Percentage) •With partnership agreement involving agriculture and tourism (Percentage) 2 Incremental gross value of sales a) Number of direct jobs created by the project (of which women and youth) (nominal value in millions of (Number) Jamaican dollars) generated by •Women (Percentage) (Percentage) participating rural enterprises •Youth (Percentage) (Percentage) (Amount US$) b) Number of participants from rural enterprises taking part in capacity development activities (of which climate-resilient approaches and market access) (Number) c) Percentage of participants in market access training (Percentage) Indicators, Problem 2: Low productivity and access to markets among women 3 Enhance access to markets Percentage of participating rural enterprises that have accessed new markets. Pre- investment support through business and financial management training and support to be provided to all participating women’s groups. Target 20 women’s groups, at least in early stages of business development (proposal writing, registration of business, development of business plan). 4 Enhance access to markets Percentage of participating rural enterprises operating at or above projections of their corresponding business plan. Page 61 of 62 The World Bank Second Rural Economic Development Initiative (REDI II) Project (P166279) MAP Page 62 of 62