Document of The World Bank FOROFFICIALUSEONLY ReportNo: 47634-ZR PROJECTAPPRAISAL DOCUMENT ON A PROPOSED INTERNATIONALDEVELOPMENT ASSOCIATION GRANT INTHEAMOUNT OFSDR42.3 MILLION (US$64.0 MILLION EQUIVALENT) AND A GRANT FROMTHE GLOBAL ENVIRONMENTFACILITY TRUST FUND INTHEAMOUNT OFUS$6.0MILLION TO THE GOVERNMENT OF THE DEMOCRATIC REPUBLIC OF CONGO FORA FORESTAND NATURE CONSERVATION PROJECT March03,2009 EnvironmentalandNatural ResourcesManagement SustainableDevelopmentDepartment RegionalIntegration Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bankauthorization. CURRENCY EQUIVALENTS (Exchange Rate EffectiveFebruary 12,2009) Currency Unit = U S Dollar SDR1 = US$1.5112 US$1 = SDR0.6617 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS APF: AfricanParksFoundation APL: Adaptable Program Loan AWF: African Wildlife Foundation CARPE: Central AfricanProgram for the Environment CAS: Country Assistance Strategy CBD: Convention on Biological Diversity CBFP: Congo BasinForest Partnership ccs: Community Conservation Strategy CFAA: Country Financial Accountability Assessment CI: Conservation International CIDOPY: Centred'Information et Documentation PygmCes (Pygmies Documentation and Information Center) CIFOR: Center for International Forest Research CoCoCongo: Coalitionpour la Conservation au Congo (Coalitionfor Conservation in Congo) CoCoSi: ComitC pour la Coordination duSite (Committeefor Site Coordination) COMIFAC: Commission des Ministres des Forets d'Afrique Centrale (Central Africa Commissionfor Forests Ministers) CONCED: Convergencepour la Conservation et le DCveloppement(Conservation and Development Convergence) CPAR: Country Procurement Assessment Review CPPR: Country Portfolio PerformanceReview cu: Coordinating Unitof MECNT DDRRR: Programme de DCsarmement,Demobilisation, Rapatriement, Reinstallation et Reinsertion (Programfor Disarmament, Demobilization, Deportation, reinstatement and Reintegration) DEP: Direction des Etudeset Planification (Directorate of Studies and Planning) DFGF: DianFossey GorillaFoundation DGF: Direction de la Gestion Forestikre (Directorate of Forest Management) DPM: Direct Payments Method DRC: Democratic Republic of Congo DSG: Directorate of General Services .. 11 DSRP: DRC Poverty Reduction Strategy FOR OFFICIAL USE ONLY EC: EuropeanCommission ECOACTION: EntrepriseCommunautairepour une Action Allocentrique (Community Companyfor Allocentrique Action) ECOFAC: Programmepour la Conservationdes For& de 1'AfriqueCentrale (Central Afiica Forests Consewation Program) ERAIFT: Ecole Regionale d'Aminagement et de Gestion IntCgreedes For& Tropicales (Regional schoolfor Installation and Integrated Tropicalforests Management ESIA: Economic and Social Impact Assessment ESMP: Environmental and Social ManagementPlan EU: EuropeanUnion FAO: Food andAgriculture Organization ofthe UnitedNations FCNP: Forest and Nature ConservationProject FFI: Fauna and Flora International FLEG: Forest Law Enforcement and Governance FZS: Frankfurt Zoological Society GDP: Gross domestic product GEEC: Groupe d'6tudes Environnementalesdu Congo (Environmental Study Group) GEF: Global Environment Facility GEO: Global Environmental Objective GIs: Geographic information system GRASP: GreatApes Survival Project Partnership GTZ: GermanTechnical Cooperation HIMO: Haute Intensitede Main-d'oeuvre (HighLabor Intensity) HIPC: Heavily IndebtedPoor Countries IBRD: InternationalBank for Reconstructionand Development ICB: InternationalCompetitive Bidding ICCN: InstitutCongolaispour laConservationde laNature (Congolese Institutefor Nature Conservation) IDA: InternationalDevelopmentAssociation IFMS: IntegratedFinancial Management System IFR: InterimFinancialReports IJZBC: Institutdes JardinsZoologiques et BotaniquesduCongo (Institute of the Zoological and Botanical gardens of Congo) IMF: InternationalMonetary Fund IPDF: IndigenousPeopleDevelopment Framework IPDP: IndigenousPeoplesDevelopment Plan IRR: Internal rate of return ISR: Implementation Status Report IUCN: InternationalUnionfor the ConservationofNature KfW: GermanBank for Development M&E: Monitoringand Evaluation MDG: MillenniumDevelopmentGoals MDTF: Multi-donor Trust Fund This document has a restricted distribution and may be used by recipients only in the performance o f their official duties.Its contents may notbe otherwise disclosed without World Bank authorization. MECNT: Ministry of Environment, Nature Conservation and Tourism METT: Monitoringand Evaluation Tracking Tool MIKE: Monitoringof IllegalKilling of Elephants MOD: Maitrise d'ouvrage delCguke (delegated management contract) MONUC: Missiondes Nations Unies au Congo (UnitedNations Mission in Congo) NCB: NationalCompetitive Bidding NGO: Nongovernmental organization NPV: Net present value NSNC: National Strategy for Nature Conservation OSFAC: Observatoire Satellital des Forets d'Afrique Centrale (CentralAfiica Forests observatory Satellite) PDO: Project Development Objective PER: Public Expenditure Review PF: Process Framework PFM: Public Financial Management PFS: Project Financial Statements PIDP: Programme d'Intkgration et de Dtveloppement du PeuplePygmCe (Integration and Development of the Pygmy People Program) PIU: Project ImplementationUnit PNFoCo: ProgrammeNational ForCt et Conservation (National Forest and Conservation Program) PNG: Parc Nationalde Garamba(NationalPark of Garamba) PNV: Parc Nationalde Virunga (National Park of Virunga) PRGF: Poverty Reduction and Growth Facility PRSP: Poverty Reduction Strategy Paper QCBS: Quality and Cost Based Selection RAPAC: RCseaudes Ares ProtCgCesd'Afrique Centrale (CentralAfrican Network of Protected Areas) RAP: Resettlement Action Plan REDD: ReducingEmissions from Deforestation inDeveloping Countries RPF: Resettlement Policy Framework sc: SteeringCommittee SEA: Strategic Environmental Assessment SEIA: Socio-Environmental Impact Assessment SEMP: Social andEnvironmentalManagement Plan SIDA: SwedenInternational Development Agency SIGEF: Systbme d'information de gestion forestibre (Integrated Forest Data Management System) SOE: Statementof Expenditure SPIAF: Service permanent d'inventaire et d'amknagement forestibre (Permanent service of forest inventory and installation) iv SPSE: Systhme de planification et de suivi Cvaluation (Follow-up Evaluation and Planning System) sss: Single Source Selection SYGIAP: Systkme de Gestion d'Information sur les Aires protCgees (Management Information Systemsfor ProtectedAreas) UK: UnitedKingdom UNDP: United Nations Development Program USAID: United States Agency for International Development wcs: Wildlife Conservation Society WHS: World Heritage Site WRI: World Resources Institute WWF: World Wildlife Fund ZSL: Zoological Society o f London Vice President: Obiageli K.Ezekwezili Country Director: Marie Franqoise Marie-Nelly Sector Director: Inger Andersen Sector Manager: Marjory-Anne Bromhead Task Team Leader: Giuseppe Topa V DEMOCRATICREPUBLIC OF CONGO ForestandNatureConservationProject Contents Page I STRATEGICCONTEXTANDRATIONALE . .................................................................. 1 A. Country and sector issues .................................................................................................... 1 B . Rationale for Bank involvement.......................................................................................... 3 I1. PROJECTDESCRIPTION .............................................................................................. 8 A. Lendinginstrument., ........................................................................................................... -8 B . Project development objective and key indicators .............................................................. 8 C . Project Description .............................................................................................................. 9 D. Lessons learned and reflected inthe project design .......................................................... 16 E. Alternatives considered and reasons for rejection ............................................................. 17 I11. IMPLEMENTATION ..................................................................................................... 18 A. Partnership arrangements (not applicable) ........................................................................ 18 B Institutional andimplementationarrangements ................................................................ . 18 C. Monitoring and evaluation o f outcomeshesults ................................................................ 21 D. Sustainability ..................................................................................................................... 22 E . Critical risks andpossible controversial aspects ............................................................... 23 F . Grantconditions and covenants......................................................................................... 25 I V . APPRAISAL SUMMARY .............................................................................................. 26 A . Economic and financial analyses....................................................................................... 26 B . Technical ........................................................................................................................... 27 C . Fiduciary ............................................................................................................................ 29 D . Social ................................................................................................................................. 30 E . Environment ...................................................................................................................... 31 F. Policy Exceptions and Readiness ...................................................................................... 34 Annex 1: Country andSector Background ............................................................................... 36 Annex 2: Major RelatedProjectsFinanced'bythe Bankand/or other Agencies ..................42 Annex 3: ResultsFrameworkandMonitoring ......................................................................... 46 vi Annex 4: DetailedProjectDescription ...................................................................................... 60 Annex 5: ProjectCosts ................................................................................................................ 76 Annex 6: ImplementationArrangements .................................................................................. 77 Annex 7: FinancialManagementandDisbursementArrangements ..................................... 81 Annex 8: ProcurementArrangements ....................................................................................... 89 Annex 9: EconomicandFinancialAnalysis .............................................................................. 97 Annex 10: SafeguardPolicyIssues ........................................................................................... 104 Annex 11: GEFAnalyses ......................................................................................................... 113 Annex 12: GovernanceandAnti-Corruption ......................................................................... 135 Annex 13: ProjectPreparationand Supervision .................................................................... 141 Annex 14: Documentsinthe ProjectFile ................................................................................ 142 Annex 15: Statementof Loansand Credits ............................................................................. 143 Annex 16: Countryat a Glance ................................................................................................ 144 Annex 17: Maps Box 1:OutcomeandFollow up of InspectionPanelInvestigationNo 2008/188/AFR ....................................................................................................................................6 146 . Box2: The NationalForestand ConservationProgram(PNFoCo) ......................................... 7 vii CONGO, DEMOCRATIC REPUBLIC OF FOREST AND NATURECONSERVATION PROJECT PROJECT APPRAISAL DOCUMENT AFRICA AFTEN Date: March3,2009 Team Leader: Giuseppe Topa Country Director: Marie FrancoiseMarie- Sectors: Forestry (60%); General agriculture, Nelly fishing and forestry sector (40%) Sector ManagerAIirector: Marjory-Anne Themes: Other environment and natural Bromhead resources management (P);Biodiversity Project ID: P100620 (S);Environmental policies and institutions Environmental Assessment: FullAssessment (S);Indigenous peoples (S) Lending Instrument: Specific Investment Loan Global SupplementalID: P111621 Team Leader: Giuseppe Topa Lending Instrument: Specific Investment Loan Sectors: Forestry (80%); General agriculture, Focal Area: B-Biodiversity fishing and forestry sector (20%) Environmental Assessment: FullAssessment Themes: Biodiversity (P);Environmental SupplementFully Blended?: Yes policies and institutions (S);Land administration andmanagement (S);Rural policies andinstitutions (S);Other rural development (S) ProjectFinancingData [ ]Loan [ ]Credit [XI Grant [ ] Guarantee [ 3 Other: For Loans/Credits/Others: Total Bank financing (US$m.): 70.00 ProDosedterms: IDA Grant 41.0 23.0 64.0 Total: 45.8. 24.2 70.0 Borrower:Governmentof the DemocraticRepublicof Congo Responsible Agency: Ministry of Forest,Nature Conservationand Tourism ... V l l l Project implementation period: Start March26,2009 End: June 30,2015 Expected effectiveness date: June 25, 2009 Expected closing date: June 30, 2015 Does the project depart from the CAS incontent or other significant respects? Ref: PAD I.C. []Yes [XINO Does the project require any exceptions from Bankpolicies? [ ]Yes [XINO Ref: PAD IV;G. Have these beenapproved by Bank management? [[]Yes [XINO ]Yes [IN0 I s approval for any policy exception sought from the Board? Does the project include any criticalrisks rated "substantial" or "high"? Ref: PAD III.E. [XIYes [ ]No Does the project meet the Regional criteria for readinessfor implementation? Ref: PAD IKG. [XIYes [ ]No Project development objective Ref: PAD II.C., TechnicalAnnex 3 The objective of the Project is to increasethe capacity ofthe Ministryof Environment, Nature Conservation and Tourism (MECNT) and the CongoleseNature Conservation Institute (ICCN), and increasecollaboration among government institutions, civil society, and other stakeholders inorder to manageforests sustainablyand equitably for multipleuses inPilot Provinces. Global Environment objective Ref: PAD II.C., TechnicalAnnex 3 Same as IDA'S Project description [one-sentence summary of each component] Ref: PAD II.D., Technical Annex 4 The Project consists ofthe following parts: Institutional strengthening;of MECNT: This componentwill: (a) improve the institutional capacity of MECNT's and Provincial Ministries; (b) strengthenMECNT's forest management technical capacity; (c) carry out an institutional reform withinMECNT; and (d) support project implementation. ix Community participation inforest management.This componentwill: (a) increaselocal community and civil society participation inforest management; (b) Support increaseduse of environmental services; and (c) assist with implementation the project's environmental and social documents (ESD) and safeguardplans. Managementof protected areas and support to ICCN. This component will: (a) provide Institutional Strengtheningfor ICCN; and (b) help rehabilitate the Maiko National Park. Which safeguardpolicies are triggered, ifany? Re$ PAD I V ;F., TechnicalAnnex 10 1) Environmental Assessment (OP/BP 4.01); 2) Natural Habitats (OP/BP 4.04); 3) Physical Cultural Resources (OP/BP 4.11); 4) Involuntary Resettlement (OP/BP 4.12); 5) Indigenous Peoples (OP/BP 4.10); 6) Forests (OP/BP 4.36). Significant, non-standardconditions, if any,:NONE Re$ PAD III.F. Board presentation: NONE Grant effectiveness: (a) The Recipient has established the CU pursuant to an arrQte, in form and substance satisfactory to the Association; (b) The Recipient has (i)recruited within CU the following staff with qualification and experience satisfactory to the Association: one procurement specialist, one accountant andone communicationspecialist; and(ii) adoptedthe ProjectImplementationManual; (c) The GEF Grant Agreement has beenexecuted and deliveredand all conditions precedent to its effectiveness or to the right of the Recipient to make withdrawals under it (other thanthe effectiveness ofthisAgreement) have beenfulfilled; and (d) The Recipient has established the Procurement Board with functions and staffing and other resources acceptableto the Association Covenants applicable to project implementation: Not later than four months after the Effective Date, the Recipient shall: (a) recruit (i)a socio- environmental specialist, (ii)a monitoring and evaluation specialist and (iii) of the two accountants all with qualifications, experience, one andterms of reference satisfactory to the Association; (b) install a computerized financial management and accounting software satisfactory to the Association and train its users; (c) employ the external independent auditors acceptableto the Association, and (d) recruit an internal auditor with qualifications, experience, and terms of reference satisfactory to the Association. Not later than one year after the Effective Date, the Recipient shall, (a) establishand staffwithin MENCT a division incharge of community forestry, X (b) employ consultants with qualifications, experience and TORSacceptable to the Association, to undertake external monitoring o f the contracts ,and (c) establish and staff within MECNT a unit in charge o f environmental services; all under conditions satisfactory to the Association. Withdrawal conditions related to Buildingo f MECNT HO inKinshasa Disbursements for the design, construction, and construction supervision will be made after the government has provided: (i) evidence satisfactory to the Association that the funding for the total cost of the construction of a building for MENCT in Kinshasa, including any amounts in excess of $ 4,000,000, has been secured; (ii)evidenceofavalidtitleoverthelandfortheconstructionofabuildingforMENCTin Kinshasa, as well as a legal opinion, satisfactory to the Association, on the same; and (iii)an ESIA on such construction, including, as the case may be, a Safeguard Plan, satisfactory to the Association incompliance with the ESD. Withdrawal Conditions relatedto HumanResources Plan (staff retirement') 1. The Recipient shall, no later than six months after the Effective Date, recruit: (a) the Retirement Technical Advisor, (b) the Retirement Financial Intermediary, and (c) the Retirement Payments Auditors. 2. Recipient shall, no later than twelve months after the Effective Date, furnishto the Association for its reviewand approvalthe Human ResourcesPlan. 3. The Recipient shall: (a) no later than eighteen months after the Effective Date, issue the RetirementPayments through the Retirement Financial Intermediary; (b) no later than two month thereafter, have an audit of payments made carried out by the Retirement Payments Auditors under terms and conditions satisfactory to the Association and furnish to the Association the results of that audit, together with any measures required to ensure the achievement of the objectives of the Human Resources Plan; and (c) following an exchange of views with the Association thereon, take all such measures as shall have been agreed with the Association to ensure the achievement of such objectives. xi I. STRATEGICCONTEXTANDRATIONALE A. Countryand sector issues 1. Peace and a democratically elected government offer hope that DRC's natural resources can be managed to benefit the state, its people, and its global neighbors. The opportunity is enormous. DRC has the third largest population and second largest land area (equivalent to Western Europe) of all countries in sub-SaharanAfrica. DRC's forests are the second largest bloc of tropical forest in the world (145 million hectares, or approximately 62 percent of national territory). 2. These forests are a strategic resource for many reasons. They are critical to the livelihood of about 40 million Congolese, providing food, medicine, domestic energy, building materials, and cash. They play a vital role in regulating the global environment. They harbor much unique biodiversity: DRC ranks fifth among nations for its plant and animal diversity, and it has five natural World Heritage Sites, more than the rest of Africa combined. If they are conserved and managed well, DRC's forests could provide many national and global benefits inperpetuity. 3. Equally daunting are the challenges. Decades of authoritarian rule and economic mismanagement, succeeded by four armed conflicts between 1996 and 2001, killed an estimated five million people and drove the economy and infrastructure into the ground. Today, peaceful districts coexist next to districts where violence and urgent humanitarian needs remain. The political environment i s complex and fluid.' What happens in DRC has serious ramifications. Seven of DRC's nine neighbors have experienced major conflicts in the last two decades. DRC's Economy 4. Following the emergence of a durable peace process in 2001, substantial progress has been made in overcoming the legacy of mismanagement and conflict, and in establishing effective institutions of government. The December 2006 elections markedan important moment in Congolese history when the government, parliament and local authorities assumed power through a democratic process, with intensive support from the international community. With a new cabinet appointed inFebruary 2007, the post-election period has provided a new opportunity to pushforward muchneededreforms. An important dividend of the peace processand subsequent political consolidation has been the return to a degree of economic stability. As a result, economic growth turnedpositive in2002 and has remainedabove 5 percent since. In2008 economic growth reached about 8%. These efforts have been rewarded by strong private sector investment flows, particularly in the mining sector, which is also highly energy-dependent. 5. Since September 2008, DRC's economic prospects have sharply deteriorated as a consequence of the changing international environment resulting from the financial crisis 'For more information about the country context see the Country Assistance Strategyfor the DRCfor the Period FY06FY1I,Vol. 1, November 2007. 1 which abruptly impacted the mining sector. In addition, the country had to face a security and humanitariancrisis inthe North Kimprovince following the resurgence o f the conflict inlate August 2008. The recently approved IDA-funded $100 million Emergency Project to mitigate the impact o f the financial crisis i s seen as a response to an immediate crisis and sustain economic activities until the government's policy responses (see section E on critical risks) can take effect and thus is complementary to other sectoral and regional operations financed by the Bank and other donors, including those in the forest and nature conservation sectors. Moving ahead with the forest reform agenda, rehabilitating dysfunctional forest and conservation institutions, introducing good governance in the management o f natural resources and supporting forest communities in planning and implementing development initiatives continue to be high priorities for the government program and the PRSP. Abundant natural resource wealth and continued vulnerability 6. Persistent poverty stands in stark contrast to the country's natural resource wealth. DRC forests are among the world's most coveted and important. They include half of Africa's rainforests (86 million hectares), as well as dry forests (45 million hectares), swamp forests (9 million hectares), and mountain forests (5 million hectares). The country has fertile soils, ample rainfall, and immense water resources. Its enormous mineral wealth includes copper, cobalt, coltan, diamonds, gold, zinc, other base metals, and oil. 7. While annual deforestation rates have remained relatively low, at 0.27 percent for several years, deforestation can be locally very high and i s generally associated to clearing land for agriculture, population growth and migration, poverty, and conflict. During the war, entire villages sought refuge in the forest (which sustained them at the expense of increasingly scarce wildlife) or in urban areas and refugee camps (which depleted the surrounding forests for fuel, building material, and cropland). In all instances, reducing deforestation calls for action outside the forest sector including innovation to improve agricultural productivity and alternative sources o f income. 8. Bushmeat consumption i s higher in DRC than in any neighboring countries (three times as much extraction per square kilometer2). While making a fundamental contribution to the income and protein intake o f the poor, bushmeat trade is the most serious threat to biodiversity after landconversion. The war left large swaths o f forest practically depleted o f wildlife, resulting inenvironmental losses and malnutrition inaffected areas. 9. Most logging is carried out by artisanal companies which supply the local and regional markets. Industrial timber exports from DRC are modest, less than 15% the exports o f Gabon or Cameroon which have only a fraction o f DRC's forest resources. Yet, the stage was set long ago for Congo's forests to be plundered as soon as peace and rebuilt infrastructure per~nitted.~Even before the war began, speculative interests controlled the Wilkie and Carpenter, Bushmeathuntinginthe Congo Basin, 1999 For a detailed study of DRC's forest sector, see Forests in Post-Conflict Democratic Republic of Congo:Analysis of a Priority Agenda, Center for InternationalForest Researchand World Bank,2007. 2 vast majority o f DRC rainforests. By the time the war ended, an area twice the size o f the United Kingdom (more than 43 million hectares) was under 285 logging contracts. Few o f these contracts had been awarded transparently or competitively; none o f them was designed to benefit anyone except the contract holder-not the government, and certainly not local and indigenous people, who were neither consulted about nor expected to receive benefits from logging operations. In some locations, logging permits, mining concessions, national parks and farmland occupy the same forest space, which often spurs conflict and mismanagement. Government Strategy and the wayforward 10. The new Government seeks to develop and institutionalize a vision o f DRC's forests as an enduringprovider o f multiple goods and services rather than as an arena for the rapid extraction o f timber. Its strategy i s based on: i)addressing the legacy o f past mismanagement by cancelling logging contracts that were obtained or managed illegally; ii) using participatory forest zoning to apportion forests to conservation, sustainable production o f forest-based goods and services, community management and other purposes; iii)expanding national parks and supplying forest-based environmental services to emerging global markets; iv) ensuring that timber production i s organized around sound social and environmental sustainable principles; v) introducing transparency and participation o f civil society, rural people and indigenous communities into all aspects o f forest conservation and management. 11. The political will demonstrated by the Government for this undertaking has generated wide international interest and generous pledges o f donor support, around which the Government has designed a comprehensive national sector development program called PNFoCo (fiom its French name Programme National For& et Conservation - see para 19 below). Challenges remain, nonetheless, immense: management models adapted to the special circumstances o f the DRC are still to be tested; national institutions need to be reconstructed from the ground up; and trust and collaboration among the State administration, the private sector and rural and indigenous communities needs to be established. While there is ground for optimism, expectation must remain realistic. Improvements can only be achieved incrementally and in modest steps both functionally and geographically. B. Rationalefor Bankinvolvement 12. The rationale for Bank involvement is provided by the 2002 World Bank Forest Policy and Strategy4, by the significant Bank engagement in supporting DRC policy reforms, and by the strong Government demand for further collaboration. WorldBank engagement in the forest sector in DRC The 2002 ForestPolicy and Strategy calls for the Bank to engage to (i) harness the DRC forests' potential for reducing poverty, (ii) integrateforests in sustainable development, and (iii) protect vital local and global environmental resources. 3 13, As it first engagedinDRC at the end of the conflict, the Bank's immediate concern was to help develop a legal and institutional framework that reflected DRC's determination to manage its national forests ina more sustainable, equitable and participatory way. 14. In 2002, the government approved a new Forest Code which, for the first time, presenteda holistic view of forest resources. The Code emphasized forests' multiple social, economic, and environmental values; recognized the rights of traditional forest users (including indigenous people); envisaged doubling the size of DRC's protected areas and trading environmental services inthe emerging global market. 15. Along with the new Forest Code, the government launched a forest reform agenda that included: (i) cancellation of 25.5 million hectares of patently illegal logging contracts; (ii)alegalreview(assistedbyathirdparty)oftheremainingloggingcontracts; (iii) a moratorium on all new logging contracts; (iv) a new forest tax system that discourages speculation and directs 40 percent of the revenue from area taxes to forest communities and local governing bodies; (iv) the conversion of old logging contracts into new long-term sustainable management concessioncontracts that require the concessionaireto fulfill strict social and environmental obligations; (v) participatory forest zoning to build consensus on which forest areas should be biodiversity reserves, production forests, rural community forests, or converted to other uses; (vi) promotion of non-extractive uses of forests and innovative financing for the production and trade of global environmental services; (vii) the rehabilitation of national parks and protected areas, which would expand to 15 percent of national territory; (vii) the control of commercial forest activities through newtechnologies and independent observers; and (viii) the integration of participatory approaches, public dissemination of information, and communication at all levels to disseminate the new policy directions and garner support from civil society. 16. Although the World Bank has not yet financed any investments in the forest sector in DRC, it has assisted the reform process through policy lending, studies, public information, and consultations. The Bank included forests as a priority theme in its country dialogue, helped enhance the credibility of the government's reform agenda, and sped up the formation of a coalition of external development partners, who inturn strengthenedthe hand of the institutions in government and civil society that spearheaded the reform. Starting in 2003, the Bank offered many opportunities for national and international constituencies to learn about DRC's forest reform agenda, including sessions in Kinshasa (November 2004) and Brussels (February2007). 17. The significant body of research-eight studies on forest sector issues completed between 2003 and 2005-and important policy work conducted jointly by the Bank, government and civil society culminated in a strategy paper, Forests in Post-Conflict Democratic Republic of Congo: Analysis of a Priority Agenda. Published by the Center for International Forest Research (CIFOR), the report was' coauthored by Bank staff and 13 other research, and national and international nongovernmental organizations. This paper presents the analytical basis for the Bank's overall support to DRC's forest sector and for the present project. 4 18. The new policies were important, but DRC lacked resources to implement them. The Bank realized from the start capacity building was a vital complement to its policy advice, but it felt it could not finance forest operations until the Inspection Panel InvestigationNo. 2008/188/AFR started in2005 was completed. The Government's strong request for the Bank's (and other Donors's support )in the forest sector 19. It should be noted that since the end o f the war, ODA to DRC focused mostly on demobilizing and reintegrating armed groups into civil society, rehabilitating infrastructure, health, and education, and that only nominal resources were assigned to the field o f natural resources. The Government request for investments in the forest and nature conservation sectors grew stronger and stronger after 2005 when the Government was able to mobilize a significant number o f donors for the design o f the PNFoCo, a national program which would serve as a common framework for all nationally and donor-assisted interventions in the sector. The PNFoCo, i s intended to: (i)create the institutional capacity required to implement new forest policies; (ii)ensure that the forests' social, economic, and environmental functions are preserved in the long term; (iii) that forests contribute ensure meaningfully to the livelihoods o f rural and forest people and improve their socioeconomic welfare; and (iv) expand the network o f protected areas to gradually cover 15 percent of national landarea. 5 Box 1: Outcomeand Follow up of InspectionPanelInvestigationNo. 2008/188/AFR An Inspection Panel investigation was requested in2005 by Pygmy communities who felt they were being harmedby forest reforms supported by the World Bank under the Emergency Recovery Support Project and the Transitional Support Economic Recovery Operation. More specifically, these communities claimed that forest sector reforms were taking place without adequate consultation and that they would lead to violations of the Pygmies' rights to occupy manage and use their ancestral lands according to their traditional practices. The work of the Inspection Panel ended on January 10, 2008, when the Board concluded that the Bank had failed to comply with its policies on Environmental Assessment and Indigenous Peoples, and approved an Action Plan designed jointly by the Afiica Region and the Inspection Panel. This Action Plan emphasized that the Bank should remain engaged in the DRC forest sector, continue monitoring a moratorium on future logging concessions, support the legal review on remaining logging contracts, integrate forest-dependent communities more widely into the Bank's activities in DRC, and support critical activities such as capacity building, participatory zoning, customaryrights, law enforcementand independent monitoring inforthcoming forest-relatedoperations. The Management Report's Action Plan inspired the design of this project, which will secure continued implementation of relevant actions as well as monitoring progress over an extended period of time. All measures recommendedinthe Action Plan have progressed well since January 2008. Below are short updates of selected actions taken in the aftermath of the Action Plan. The Legal Review was completed on Januaw 19. 2009 after 37 months of work by a national Technical Working Group, (TWG) assistedby a Consultant(World Resources Institute/Agreco) with the dual role oftechnical assistant and Independent Observer. The TWG analyzed requests to convert 156 logging permits, totaling 22.4 million hectares into long-term forest concession contracts. After reviewing the recommendations of the Interministerial Committee (IC) and the outcome of the many appeals filed, the Minister announced that only 65 out of 156 logging contracts would be eligible for conversion into long-term concessions. Companies holding eligible contracts were invited to negotiate social and environmental responsibility agreements with local and indigenous populations. Assuming that negotiations will be successful for all companies and that all companies will prepare sustainable forest management plans in a timely fashion, the area devoted for long term timber production would now be 9.7 million hectares, a dramatic decline from the 43.5 million hectaresprior to the 2002 forest reform and the 22.4 million hectares prior to the Legal Review. Maintenance of the moratorium. No cases of breachof the moratorium were observed by the Bank during the period between January 2008 and January 2009. On October 6, 2008 the Minister MECNT reaffirmed the Government's commitment to maintaining the moratorium. Adoution of regulations to imulement the forest code. Of the forty-two regulations deemed necessary to implement the 2002 ForestCode, twenty-five have beenpublished and nine are under various stages of development. Ofthe remaining eight, four require additional studies, one was found outside the field of competence of the MECNT, and three depend on future policy developments. The MECNT has also prepared a new Framework Law on Nature Conservation and a new Environmental Law. Adoption of both is expected to take place at the next parliamentary session inMarch2009. Enhancing local communities and indigenous ueoule 's partic@ation in deliberations. Out of 21 permanent members of the Legal Review's IC, two represented indigenous people. In addition, the IC included one representative of local and Pygmy populationsfor each forest title being considered. A total of 153 representativeswere chosenby the communities with the aid of a national NGO, of whom 133 (116 fiom the local populations and 17 fiom the indigenous peoples) were able to come to Kinshasa. Taking a broader view of forest indigenous people With Bank support, the Government decided to focus on a longer term efforts that would address indigenouspeople issues ina more systematic and institutionally sustainable way. To this end, on June 27-28, 2008, it organized a consultation with Pygmy-led NGOs, donors and international observers to start listing key areas of interest and concerns of indigenous people. The following were identified among others: i)citizenship and registration; ii)access to health services, education, potablewater and sanitation; iii) access to land, agriculture and livestock; iv) environmental protection and forest zoning; v) Pygmy leadership capacity; vi) improvement of housing and quality of life; and vii) sensitization of the public authorities (nationally, regionally and locally) to Pygmy-related issues. These topics will be further analyzedina study currently being preparedby the Bank and reflected infuture Bank-fmancedinterventions. 6 20. The present project is the cornerstone of the World Bank's forest and nature conservation assistance to DRC. It represents the International Development Association (IDA) and Global Environment Facility (GEF) contributions to PNFoCo, andgrounds other Bank-financed interventions such as the Multi Donor Trust Fund for Forest Governance (financed by the Belgium, the European Union, France, Germany, Luxembourg and the Netherlands) a GEF project for the protection o f National Parks, and projects for carbon storage and deforestation offsets to be traded in the emerging global market. The project's mode of implementation, institutional arrangements, and coordination mechanisms have been shaped to match those of the broader, national, multidonor PNFoCo program, while focusing on the most urgent sectoral needs and specific geographical locations, and setting the stage for interventions financed by other partners. The project also complements and works in synergy with other Donors' projects and programs that support the PNFoCo, particularly those financed or soon to be financed by the EU, the USA, the UK, Germany, Belgium, France, Norway, Sweden, Germany, the African Development Bank, GEF/UNDP and UNEP as well as with efforts financed through voluntary contribution to national and international NGOs (see annex 2). Box 2: The National Forest and ConservationProgram (PNFoCo) The NationalForest and ConservationProgram(PNFoCo) is the overall forest sector program for DRC, covering the entire country and dealing with all facets of forests as well as wildlife conservationand management.The Program's logframe is designedto contribute to the objectives set forth inDRC's-Poverty Reduction Strategy Paper. It has six components: (I) Institutional strengthening ofthe Ministry ofEnvironment, Nature Conservation, and Tourism (MECNT) and the Congolese Institute for Nature Conservation (ICCN) to rehabilitate infrastructure, equip central and field offices, and train and equip staff so that they may fulfill their institutional policy, program, law enforcement, and sector oversight functions. (2) Horizontal support for new participatory land managementapproaches, facilitated through forest zoning, and for a legal review of forest concessioncontracts. (3) Nature conservation to rehabilitate protected areas, improve the effectiveness with which they are managed, and gradually expandthe protected areanetwork to cover 15 % of DRC's land area. (4) Control and management of production forests to ensure that management meets rigorous social and environmental standards and is done ina fiscally responsiblemanner. (5) Rural and communityforestry to test and implement community forestry schemes, ensure that local and indigenous community rights are preserved and enhanced, and ensure that communities benefit from economic activities taking place intheir traditional territories. (6) An environment component to strengthen the environmental oversight of MECNT, complete and implement the new Environment Law and other environmental legislation, monitor the impact of PNFoCo, and study alternative forest management models linked to carbon sequestration (such as the Clean Development Mechanismor avoided deforestation). Donor and nongovernmental organizations participated in preparing PNFoCo, which has an estimated overall cost of US$250-million between 2009and 2016. The program has already received pledges of support from various donors (Annex 1). 7 Higher-levelobjectivesto whichthe projectcontributes 21, Consistent with the current Country Assistance Strategy (CAS)', the proposed project will contribute to improving governance, accelerating shared growth, and expanding basic infrastructure for rural populations and vulnerable groups living in remote forest areas. The project will contribute to pillar 1,2 and 5 of the 2006: respectively on Promoting Good Governance, Consolidating Macroeconomic Stability and Economic Growth, and Promoting Community Dynamics. It will do so by strengthening processes and capacity to manage natural resources equitably, transparently and sustainably with the participation and to the benefit of rural and indigenous populations as well the state and the global community. 22. DRC's Poverty Reduction and Growth Strategy Paper Strategy (DSRP) of 2006 also stresses the importance of fostering environmental sustainability by maintaining forest cover and ensuring sound management of protected areas. The document emphasizes that poverty, amplified by conflict, is a strong driver of environmental degradation, and that forests are an important provider of food, energy, and other sources of income for the large majority of Congolese. To alleviate poverty and achieve livelihood security over the long term, natural resourcesmust be managed sustainably andtheir depletion avoided. 11. PROJECTDESCRIPTION A. Lendinginstrument 23. The lending instrument will be a Sector Investment Loan financed through an IDA grant of US$ 64.0 million and a GEF grant of US$6.0 million. IDA funds will finance component 1 and component 2. GEF resources will finance component 3 and, along with IDA, will contribute. to funding component 2 with regard to environmental services and innovative financing for nature conservation efforts. The Government has indicated its commitment to continue its support for the program which i s estimated to be approximate US$15.0millioninthe form ofsalaries, utilities, andother in-kindcontributions. B. Projectdevelopmentobjectiveand key indicators 24. The objective of the Project is to increase the capacity of the Ministry of Environment, Nature Conservation and Tourism (MECNT) and the Congolese Nature Conservation Institute (ICCN), and increase collaboration among government institutions, civil society, and other stakeholders inorder to manage forests sustainably and equitably for multiple uses in Pilot Provinces. The project's scope and size have been deliberately The three pillars ofthe CAS are: (i) promotinggood governanceand consolidatingpeace (Bank support will focus on naturalresource management, public fmancial management,andpublic administrationreform); (ii) supporting sustainedand sharedeconomic growththrough infrastructurerehabilitationand expansion and private sector developmentto foster economic diversification;and (iii) improvingimplementationof poverty alleviationprograms, with emphasison health, education, HIV/AIDS, and underservedcommunities, including indigenous and rural communities. 8 circumscribed. The project covers three mainpilot provinces and the Maiko National Park and limited areas in other provinces that are crucial to carry out forest control and governance activities. The project's scope i s limitedto capacity building, collaboration and community participation initiatives essential to implementation o f the forest priority agenda. The immensity o f DRC and the needs o f its forest and environment sector require longer-term engagement by the Government and its developmentpartners. 25. The core o f the project i s to help national institutions establish an effective presence and restore regulatory functions on the ground, establish strong collaboration with local communities and other partners, and build the capabilities needed to manage forests equitably and sustainably. Strong training elements are embedded in all components. The PDO overall indicators will include: i)number, types and areas covered by various types o f forest landmanagement plans6agreedupon by the MECNT and other stakeholders (adopted and under implementation); and ii)stable trend in abundance o f key bio-indicator species within and outside protectedareas inproject landscapes. 26. Intermediate outcomes will include the following, among others7 i)Increased institutional capacity to monitor and regulate forest use; improved MECNT's capacity to collaborate effectively with development partners, stakeholders and service providers; improved populations' knowledge of their statutory rights and increased participation in landuse decisions; andreduced threats to biodiversity inMaiko National Park. C. Project Description 27. The project will help Government and non-Government institutions to manage forest lands sustainably and according to shared principles and in compliance with prevailing regulations. At the same time the project will test community-based approaches for managing forests holistically inways that benefit forest and indigenous populations, the local and national economy, and the global environment. Capacity building will be strengthened at the head offices o f MECNT and the Congolese Institute for Nature Conservation (ICCN) in Kinshasa, while field operations and management approaches will be piloted in 3 provinces (Bandundu, Equateur, and Orientale), 12 districts, and 53 sub districts (territoires) and at the Maiko National Park. Support will also extend to limited additional areas, agreed upon with the IDA in other provinces, to carry out forest control operations and governance enhancement. The population o f the selected districts and sub- districts i s estimated at 20 million. Annex 1 summarizes key socioeconomic and forestry data for the project area. While helping re-start central-level management and oversight functions, the project includes a strong emphasis on the field, where offices will be rebuilt, equipment and training provided, institutional routines re-established, and participatory community development initiatives implemented. 28. The project provinces, districts, and sub districts encompass the highest concentration o f forests in DRC as well as the widest possible range o f issues and 6Timber concessions, community forests, protectedareas, conservation concessions, community hunting zones and others. 'For the full list ofindicators, see Annex 3. 9 challenges related to (i)forest degradation and deforestation, (ii)the management of production and conservation forests, and (iii)the participation of rural and indigenous communities in resource management decisions and benefit sharing. The project areas harbor the vast majority of logging contracts that have been reviewed and offer opportunities to resolve subsequent conflicts betweenprivate companies, the state, and local communities. The project areas also host a wide range of forest and wildlife management projects, community participation efforts, and participatory zoning initiatives, which the project will help to improve and consolidate for scaling up to the national level. The selected districts also afford the minimum security conditions needed for project operation and oversight. 29. The project does not include the dry andmountainous forests of northeasternCongo or the forests of southern Congo. Its scope is limited to supporting selected management functions of the MECNT at the central level and at the level of three provinces and selected districts and sub-districts where the Project will finance capacity building and community- based development activities. The different and still very important challenges that the dry andmountainous forests present will be addressedby other PNFoCo donors. 30. The project takes place at a time of fundamental changes in the management and business models of the timber industry. The legal review has resultedin a very significant reduction of areas under logging contracts, a moratorium on new forest concession i s in place and radically new regulations demand that forest companies manage timber production in ways that are more socially, environmentally and fiscally responsible. Project-supported activities will intersect with industrial forestry only to help the government regulate this sector adequately and transparently. The project will not finance industrial timber production, but rather help the Government regulate this activity and enforce the obligation that each forest concession should have a sustainable management plan. To this end the project will help the MECNT to develop skills and protocols to ascertain the quality of the management plans and their compliance with legal and other technical regulatory prescriptions. The project will not however finance the preparation of the management plansthemselves, which is a complex and costly operation and which will be entirely undertakenby forest companies. 31. The proiect consists ofthree components: Component 1: Institutional strengthening of MECNT. Component 2: Community participation inforest management. Component 3: Managementofprotected areas and strengtheningo f ICCN. COMPONENT 1: INSTITUTIONAL STRENGTHENINGOF MECNT(US$37.2 million) 32. Component 1 aims at restoring essential institutional functions in MECNT at the central level as well as in Equateur, Bandundu, and Orientale Provinces. The main beneficiaries will be government, forest institutions and local governments. This component i s expected to re-establish institutional capacity at the central and above all at the decentralized field level where 12 district offices and 53 sub-district offices will be 10 basically re-constructed, re-equipped and their staff trained. Support will also extend to limited additional areas, agreed upon with the IDA in other provinces, to carry out forest control operations and governance enhancement. 33. About 1,400 staff will benefit from training modules embedded inthe various sub- components of this component 1. Of them, 950 staff will benefit from in-service training, while about 450 will have to travel to receive training inother locations inthe country, the sub-region or abroad. Additional specialized training will be provided to staff selected for specialized tasks and management systems. This type of training will be among of the services to be provided through relevant delegated management contracts and will be integrated into these contracts (more details on training inAnnex 4). Subcomponent1.1:Infrastructure, Equipment, and Managerial Functions (US$18.9 million) 34. Improving institutional capacity of MECNT's and Provincial Ministries', through: (a) reinforcing MECNT's general administrative functions, such as financial management, human resources, and monitoring and evaluation, at the central level and in MECNT's Coordination Agencies inthe Pilot Provinces; (b) restoring MECNT's essential forestry and conservation administrative functions in Pilot Provinces; (c) designing and implementing training programs in forest management and environmental protection; (d) carrying out studies for the implementation of the decentralization policy in the forestry and nature conservation sector and strengthening forestry and conservation management capacities within Provincial Ministries in Pilot Provinces, and strengthening coordination with MECNT; (e) building strategic planning capacity within the minister's cabinet and the general secretary of MECNT in charge of forestry and nature conservation; (0 creating a division in charge of community forestry within MECNT and designing legal texts, a methodology and tools for the implementation of participatory community forestry management and the promotion thereof; and (g) construction of offices for MECNT in Kinshasa. 35. Most of the elements of this subcomponent will be implementedthrough delegated management contracts, which will include works, training; technical expertise; and the supply of information technology, office equipment, and transport equipment such as vehicles, motorcycles, bicycles, and small boats (see Table 6.2, Annex 6, for the delegated management contracts inthe project). Subcomponent 1.2: Establishment of Specialized Forest Management Systems (US% 8.1 million) 36. This subcomponent will strengthen MECNT's forest management technical capacity, through: (a) establishing an integrated forest management information system, including a geospatial information management system, a forest accounting and fiscal and para-fiscal data system and a log tracking system; (b) in creasing the capacity to evaluate and oversee forest management plans; and (c) strengthening forest regulation .implementationcapacities, including mechanisms to support data collection, administrative process, field visits, public certificationand cost recovery, 11 37. These three activities will be implementedthrough delegated management contracts that will include: (i) consultants to help develop and use new systems, prepare management plan evaluation norms, (ii) information and office equipment; (iii) workshops on validation and dissemination of norms and procedures; (iv) training o f technical teams; and (v) publication o f the results o f the validation and monitoring o f forest management plans and public consultation processes. Subcomponent1.3: Institutional Readinessand Transformation (US$5.0 million) 38. This sub-component will help carry out an institutional reform within MECNT, through the preparation and implementation o f a HumanResources Plan and an institutional reorganization o f MECNT to implement MECNT's new institutional framework and the financing and verification of Retirement Payments. A new organizational structure, newjob descriptions, staff retirement and new hiring for the central and field level offices has been approvedby the Government inFeburaury 2009. 39. Under the reorganization plan, the Ministry is expected to reduce the number o f registered civil servants from 4,881 to 3,620, and upgrade the skills o f its poorly trained and aging workforce. To achieve this, the Ministry has indentified 2,261 (637 staff from the Kinshasa office, and 1,624 from the field) for mandatory retirement. These staff have long exceeded the legal requirement of 55 years o f age or 30 years o f service but could not retire earlier because the Government lacked the resources to pay the benefits they had accrued over the years as well as other benefits established under the law. Part o f the retired staff will bereplaced by 1000 younger andbetter trained staff. 40. Th'e project's contribution to the retirement package would be US$5.0 million including payments to the workers plus transaction and auditing costs. DIFD will contribute US$l.O million, and additional funding will be sought by the Government, as necessary. About US$13.0 million has been approved by the Government as part o f the 2009 Budget for overdue staff retirement throughout the civil service, part o f which might be used to contribute to MECNT's effort. 41. IDA'Scontribution to this operation will be released once a satisfactory plan is submitted to IDA containing the number o f retirees, the eligibility criteria, the payments to be made, the outcome o f discussions with the Unions, and the plan for the hiring o f approximately 1,000 new employees. The project-supported mechanism for verification and payout will include: i)dissemination o f information to the retirees about the retirement package and procedure; ii)verification of the eligibility o f retirees; iii)installation o f a computerized tracking system; printing the checks; iv) making the payments to the retirees through a commercial bank; v) internal monitoring o f the procedure; vi) independent Audit of the procedure. Subcomponent 1.4: Support toProject Management (US$5.2 million) 12 42. This subcomponent will help carry out fiduciary and procurement activities, technical and financial audits and monitoring and evaluation activities. It will finance the costs that the Coordination Unit (CU) of MECNT incurs inimplementing the project. These consist primarily of office consumables, transportation, utilities, communications, and training of CU staff. Consultants will be engaged to provide technical assistance in procurement, financial management, communications, social and environmental safeguards, monitoring and evaluation (M&E), and other areas as needed. The C U will be integrated within the MECNT as part of the project's capacity building plan, and the Government will pay the salaries of civil servant appointedto the CU. COMPONENT 2: COMMUNITY PARTICIPATIONINFOREST MANAGEMENT (US$ 20.8 million,includingGEF US$ 1.9 million) 43. This component will be implemented in four "landscapes" located in the three project provinces: (i) Tumba, (ii) Lac Maringa-Lopori-Wamba, (iii) Salonga, and (iv) Ituri (see map, Annex 16). Each landscape i s heavily forested and inhabited by a range of ethnic groups of Bantu origin as well as by Pygmy minorities (roughly estimated at less than 5 percent of the total population; a census of the Pygmy populations inthe project area will be conducted as part of this component). The 4 selected landscapes are a subset of 12 priority landscapes selected across Central Africa in the framework of the Congo Basin Forest Partnership and have benefited from the support of the Central African Program for the Environment' (CARPE) since 2004. This component will focus on land management and socioeconomic development initiatives determined and/or implemented in collaboration with local communities. Subcomponent2.1: Participation of Local Communitiesand Civil Society (US$ 5.5 million) 44. This subcomponent will help increase local community and civil society participation in forest management, through: preparation of participatory zoning of forest areas, includingthe clarification of their use, sensitization of local communities and use of conflict management mechanisms; local consultations on the management of forests for various environmentally sustainable uses; and organizing consultative fora among all stakeholdersto improve transparency, managementand protection of forest resources. 45. This subcomponent will be implemented through delegated management contracts covering: (i)participatory forest zoning and forest use plans for the landscapes in the project area; (ii) consultation with local communities for their effective participation inthe preparation and implementation of the forest management plans; and (iii)consultative forums and public awarenessabout the Forest Code. Subcomponent2.2: DevelopmentActivitiesfor Forest Communities(US$11.8 million, includingGEF US$ 1.9 million) This program, financedby the U.S. Agency for InternationalDevelopment (USAID), is a regional effort across ninecountries(Equatorial Guinea, Sao TomePrhcipe, Cameroon, Gabon, Republic of Congo, DRC, Central Afiican Republic, Rwanda, and Burundi). 13 46. This subcomponent will support: increased use o f environmental services and community development initiatives and diversification o f economic activities. Increased use o f environmental services will be supported through the establishment of an environmental services unit (USE) within MECNT; the identification of sources of financing for environmental services available to the Recipient; and the design and implementation of development activities in connection with environmental service. The USE o f MECNT will be strengthened and enabled to work with communities to identify environment deals, and launch pilot initiatives such as conservation concession, afforestation under the Clean Development Mechanism, and others schemes identified at the June 2008 Chatham House workshops on "Alternative Models and Finance Mechanisms for Sustainable Forest Use inDRC." 47. Assistance to local communities is by far the most important element o f the subcomponent. Support will be provided to forest-dependent and indigenous communities directly, to plan and implement demand-driven development initiatives that directly benefit them. Community support activities under this component will be implemented through four delegated management contracts (one for each landscape) with Wildlife Conservation Society (WCS), the World Wildlife Fund (WWF for two landscapes), and the African Wildlife Foundation (AWF), issued and supervised by the MECNT and paid by MECNT with project resources. These NGOs will mobilize and lead small consortia o f NGOs with appropriate expertise and local knowledge. The delegated management contracts (MOD) contracts will be performance-based, will support knowledge transfer through training and capacity building and will include capacity development performance indicators an exit strategy whenever these parameters are applicable. Subcomponent2.3: Social, Environmental, and Cultural Safeguard Activities (US$3.5 million) 48. This subcomponent will assist with the implementation o f the measures included in the project's environmental and social studies and safeguard plans. Given the community- driven nature o f most o f the Project's activities and the fact that these activities will be planned on a year-to-year basis, it is not possible to determine at this time instances that may trigger the Bank safeguards. For this reason, the present Project is equipped with five safeguard frameworks' that provide implementation requirements and procedures to be followed to respond to concrete cases that may occur duringproject implementation. 49. The project shall finance the following main items: (i) training o f the MECNT staff and C U team members on environmental and social safeguards, including safeguard implementation and monitoring (ii)sensitization and education o f community leaders, managers and staff o f partner organization on environmental and social safeguards implementation and monitoring, (iii)specific environmental and social studies required under other components o f the Project, (iv) technical assistance to the MECNT and C U on environmental and social management o f the Project, and (v) implementation o f measures 9i)theEnvironmentalandSocialManagementFramework(ESMF),ii)theResettlementPolicyFramework(RPF), iii)theProcessFramework(PF);iv)theIndigenousPeoplePolicyFramework(IPPF);andv)thePhysicalCultural Resources Framework (PCRF). 14 requiredunder the ESMF, RPF, PF, IPPF and CRMF through an unallocated amount of financial resources., and (vi) community-based environmental and social activities. COMPONENT 3: MANAGEMENT OF PROTECTED AREAS AND STRENGTHENING OF ICCN(US$ 4.1 millionGEF) This componentwill strengthenthe Congolese Institute for Nature Conservation (ICCN) and will helprehabilitatethe MaikoNational Park. Subcomponent3.1: InstitutionalStrengtheningof ICCN(US$ 1.0 millionGEF) 50. This subcomponent will increase ICCN's capacity through: assistanceto improving its infrastructure and management capacity; collection and processing of data; and for the update, publication, dissemination and implementationof the Conservation Law and public education and awareness initiatives. 51. Specific activities under this subcomponent will include among others: (i) dissemination of the new Nature Conservation Law and preparation of implementation decrees; (ii),enhancement of the SyGIAP (Protected Area Information Management System), staff training, analysis and entry into SyGIAP of data from 11 priority conservation sites not covered by UNESCO. A delegated management contract will be entered into with a firm or consortium through competition. Subcomponent3.2: Rehabilitationof Maiko NationalPark(US$3.1 millionGEF) 52. This component will help rehabilitate the Maiko NationalPark through: enhancing park management capacity; developing and improving its infrastructure; upgrading office, communications, and field equipment; design and implementation of specific community development projects to benefit communities in buffer zones, and providing assistance to communities established within the Maiko National Park in order to allow for their voluntary resettlement, 53. The Maiko NationalPark (10,000 sq km)was createdin 1974.While scoring second among DRC's eight priority biodiversity reserves (see Annex 11)' it received minimal attention so far. It has no infrastructure and only 40% of its area can be patrolled. Maiko is the only major park of the DRC without a reliable external funding for rehabilitation and management. 54. The project will help conduct surveys to assess the biodiversity value and the socio economic situation of people living in the park, discourage poaching, create access and service routes to allow surveillance and animal observation and control activities in the park. The component will emphasize participation and will support marking of park boundaries by communities members themselves as part of improving park infrastructure. This component will also help foster the dialogue with current occupants of the park and possibly lead to their voluntary resettlement to more hospitable locations outside the park, identifiedparticipatorily with localadministrative and customary chiefs. 15 55. This subcomponent will be financed through a GEF grant. Technical implementation o f these activities will be managed by ICCN (see Annex 6, Implementation Arrangements). A delegated management contract (MOD) will be agreed with an experienced NGO or consortium o f NGOs with a proven record on both conservation and community development. D. Lessonslearnedand reflectedinthe projectdesign 56. The present project builds upon the Bank experience in the forest environment sector as well as upon its operational experience in DRC and other challenging environments 57. Move to more cross-sectoraland spatially oriented approaches and strengthen staff skills. In line with the findings and recommendations o f IEG's 2008 Evaluation o f Environmental Sustainability, the project takes a broad view o f the human and natural environment. The Project emphasizes participatory zoning and enables the constructive interaction of communities among themselves and with other partners. And while focusing on forest conservation and management, its investments at the local level deal with increasing agriculture productivity and raising living standards to help forest dwellers to reduce their dependence on forest lands for their subsistence. The cross-sectoral dimension of the project will also be reflected in the expertise provided by the project and the composition o f the Bank team charge with supervision. 58. Givetop priority to buildingcapacity. Consideringthe institutional weaknesses in this post-conflict period and the paucity of public resources, capacity building is a key feature across all project components. Both MECNT and ICCN have clear mandates and long-range development programs they are capable o f implementing with the help o f external support. Their effectiveness will increase as their institutional capacity improves. 59. Actively involve the communities in planning and implementing the project. Ownership by local communities and local associations is essential for the project to succeed. Policy reforms and innovative programs dealing with natural resources management and local livelihoods need to be accompanied by a proactive communications and outreach program, so that they are well understood by the stakeholders and get their full support. To that end, the project will help MECNT and ICCN maintain a dialogue with local and traditional authorities, NGOs and other civil society organizations, parliament, and government agencies other ministries about forest and conservation policies and strategies. Direct lines of communication should be established with local communities, including indigenous people living near the parks who should participate in designing and implementing project supported initiatives. 60. Pay greater attentionto the environmentaland social safeguardsfor indigenous people, forests, and protected areas. A recent review o f the Bank's Inspection Panel found that in some instances measures taken to mitigate the impact o f the rehabilitation o f roads on indigenous people, forests, and sensitive cultural habitats were taken too late. 16 Careful planning and follow-up by the Bank are needed to avoid conflicts between development and conservation that cannot be sufficiently remedied later and to ensure that all social groups benefit from the project inan appropriate manner. 61. Mainstream the implementation arrangements while addressing governance and fiduciary issues. Since the World Bank's reengagement with DRC, the implementation of Bank-assisted projects has been entrusted generally to project implementation units (PIU) that are largely independent of sectoral line ministries. Experience has shown that this practice does not guarantee a satisfactory fiduciary management. Moreover, implementation through stand-alone PIUs resulted in very little capacity building in the line ministries and sector agencies. This project will follow the recent agreement between the Government o f DRC and the World Bank to place responsibility for project implementation on the sector institutions zind provide them with training, technical assistance, and control for procurement and financial management. While makingthis transformation, the experience with governance and other fiduciary issues that have been gained inDRC will be taken into consideration, and measures will be introduced to improve governance, such as those included in the Governance and Anticorruption Measures adopted by the Government under the present project (see Annex 12). Financial management and procurement expertise charged with the observance o f internationally accepted standards andprocedures will be hiredunder the project. 62. Make the project design simple and flexible. To obtain tangible results in a short time, the project should be limited to a few high-priority components as it is not possible to satisfy the large spectrum o f needs all at once. A simple, flexible project design is called for, givenDRC's post-conflict andreunification context, as well as the fact that World Bank assistanceto the forest sector inDRC is at an early stage. 63. Use Delegated Management Contracts to accelerate implementation and facilitate capacity building. Provision o f works, goods, services as well as training and managing programs geared to a given objective or institutions will be included in relatively large delegatedmanagement contracts (contracts de Maitrise d'Ouvrage Delegud, or MOD). These contracts (see Annex 8, Procurement Arrangements) will enable MECNT and ICCN to entrust the execution o f complex tasks to a lead contractor or to a consortium of qualified firms and/or NGOs. E. Alternatives considered and reasons for rejection 64. A national-scale project with additional activities in the forest sector. This project was originally conceived as a response to the entire range of institutional ' rehabilitation and investment needs, and its coverage was to be national. Support was to be provided to all traditional forest subsectors, including research, industry, and inventories. Coverage was subsequently limited to 3 o f 11 provinces and to essential regulatory, law enforcement, and community support functions in the pilot provinces. This alternative was considered more likely to achieve immediate and tangible results on the ground while creating the institutional capacity and experience uponwhich a more comprehensive project could be based and implemented. 17 65. Adaptable Program Loan (APL). One way to support a comprehensive program would have been to use an APL, albeit as a grant, by selecting from the program high- priority activities for an initial project, to be followed by others ina predetermined sequence of phases. The first phase could have consisted o f institutional strengthening and some pilot operations, with the addition o f activities in a second phase and a geographic expansion in the third phase. It was decided, however, that an APL was unsuitable for DRC's forest sector at this time, for the following reasons: (i) the program could not be determined in sufficient detail to adequately describe the project's scope in subsequent phases and to define the triggers for moving from one phase to another; (ii) DRC's forest institutions are lacking in so many respects that it i s highly difficult to predict what their needs will be four or five years from now; and (iii)several external assistance programs are still being designed, and future gaps inassistanceare not predictable at this stage. 66. Capacity buildingfor the entire range of functions under MECNT. Inaddition to forests, wildlife, and the green environment, MECNT i s responsible for water, urban and green environment, and tourism. As such, the MECNT initially intended to use the project to cover all areas o f its concern. However this option was dismissed because supporting all o f MECNT function would have added complexity and decreased the chances o f success for the project . 111. IMPLEMENTATION A. Partnershiparrangements(not applicable) B. Institutionaland implementationarrangements 67. The Ministry o f Environment, Nature Conservation and Tourism (MECNT) will have the overall responsibility for implementing the project rather than having it executed by a specialized implementation unit outside the Ministry. This arrangement is inline with current government policy and the CAS and reflects the lessons learned described earlier. 68. Specific design features have been introduced to address the implementation challenges experienced in other Bank projects, the institutional weakness o f MECNT at the central and field level, and the lack o f management systems, communication facilities, and oversight capabilities. These features o f the project include: (i) supporting a relatively small number o f staff with managerial skills and relevant authority through technical assistance; (ii)packaging inputs into a manageable number of delegated management contracts, including all o f the elements that are key to the success o f a given component or subcomponent (such as training; technical expertise; and the supply of information technology, office equipment, communications equipment, and so on.). 69. A Steering Committee (SC) created in June 2008 will provide strategic guidance and oversight for this project and consists o f 18 members composed o f the Ministries in charge o f Planning, Budget, Finance, Agriculture, Forests and the Environment, as well as 18 representatives of ICCN, civil society, the private sector, and the donor community. The SC will approve annual work plans for the project, monitor progress, and recommend any adjustments to the project that may become necessary. The SC will also oversee implementation of the Multidonor Trust Fundfor forest governance. 70. According to its mandate, the MECNT is responsible for overall policy implementation and oversight in the fields of forests, forests, nature conservation and environment. It is organized into two General Secretariats, the first for forests, nature conservation and environment, and the second incharge of Tourism. Only the first one will be concerned with the present project. The ICCN will be also involved in project implementation. 71. MECNT's statutory functions cover policy and program formulation and implementation, as well as law enforcement and oversight in all forest lands, except in national parks where implementation responsibility rests with ICCN. This is a public enterprise exclusively dedicated to the management of national parks and other state owned conservation areas. In these areas MECNT has no operational presence or decisional authority. While ICCN is placed under the authority of the MECNT, it enjoys significant financial and managerial independence.All decisions are made by the Board of Directors. ICCNBoard decisions are systematically copied to the Minister MECNT Minister who has eight days to expresshis views. 72. MECNT is currently being restructured. It will have 12 technical departments, organized along technical functions, with a Department Head for each. The administrative head of the Ministry is the General Secretary, who will be the officer responsible for the project on behalf of the Minister. MECNT will procure and sign contracts, supervise the contract execution, andmake contractual payments. 73. The day-to-day implementation ofthe project will be carried out by a Coordination Unit (CU) inMECNT, which will be staffed partly with civil servants of the Ministryand ICCNand partly with consultants, the latter being recruited through national or international competition depending on the task. The CU will prepare implementation plans, procure the necessary contracts, manage the contracts, account for the project funds, advise, monitor andreport on project implementation. A CU is already operational and is implementing the Project Preparation Facility for this project. A MinisterialArrete will establish an expanded CU as a condition of effectiveness. The staffing of the CU will be strengthened, to include ICCN representation and will consist at a minimum of a coordinator, a forest specialist, a financial management specialist, two accountants, two procurement specialists, a monitoringand evaluation specialist, a social and environmental safeguards specialist, and a communications specialist and internal auditor. The CU will be assisted by senior consultants in financial management, procurement, social and environmental safeguards, and M&E, as appropriate. Based on the contributions from MECNT, ICCN and delegated managementcontractors, the CU will prepareannual work plansto be approved by IDA and thenadoptedby SC. Annual work planswill include (i) description of activities; (ii) budget, (iii) description of social and environmental measures carried out insupport or mitigationof project activities. 19 74. The technical aspects of implementing Components 1 and 2 will be managed in collaboration with the relevant Directorates o f MECNT which are concerned with forests and nature conservation. Their work will consist mainly o f preparing implementation plans, terms o f reference for consulting contracts (with firms or NGOs), technical specifications, and needs assessments; participating inthe evaluation ofproposals; technical supervision of contract execution; M&E; and delivery o f the project outputs (list o f key Directorates and the specific outputs, see Annex 4.) These agencies generally have the capacity to perform these functions at the central level. In parallel, they will benefit from the project's substantial capacity-building activities. 75. ICCN will participate inthe technical aspects o f project implementation, particularly the contract for the rehabilitation o f Maiko national park, financed by GEF. It will also benefit from capacity buildingthrough GEF financing.. The Financial Directorate o f ICCN i s being strengthened with assistance from a GEF-financed World Bank project ("Rehabilitation o f DRC's National Parks Network") and i s receiving technical assistance in financial management and procurement from the German Bank for Development (KfW). 76. Most project activities will be implemented through 12 delegated management contracts. Seven o f these contracts will be with firms or NGOs to be recruited through competition, and the rest will be on a single-source basis with leading international NGOs that already operate in the field in collaboration with local NGOs (see Annex 8). Four o f these NGOs were chosen competitively in 2006 in the framework o f the USAID-financed CARPE program, a national program o f community development and resource management. The delegated management contracts will build on the work that these NGOs are already doing in their designated areas. The project will benefit from their experience and will minimize the duplication o f effort and interventions with the same populations. The NGOs that are chosen on a single-source basis will contribute administrative costs from their ownresources. 77. The payment o f accrued benefits and other legal allowances due to retiringstaff will be facilitated by consultants recruited by MECNT. The consultant will ensure that all retirees are duly identified and informed, that eligibility criteria are met and that a computerized tracking system is in place to monitor the operation. Payments will be made through a commercial bank: Procedures and all relevant financial documents will be audited along with other expenses incurred by the project. 78. Responsibilityfor financialmanagementand procurementrests with the CU of MECNT, which at present does not have the required institutional capacity for these project-related functions. The new procurement capacity being established inthe C U will be supplemented through technical assistance and oversight over major procurement decisions. As a condition o f project effectiveness, the Government will create a Procurement Board" for the project, with part of its membership from outside MECNT, to review all major loThe ProcurementBoard shouldbe established by ministerialdecree. It should include memberswith diverse affiliations, for example: MECNT, ICCN, The Ministry of Financeand/or Ministry of Planning, aproject implementing agency (e.g. BCECO), and civil society (Chamber of Commerce, NGO association, etc.). 20 procurement decisionsthat are proposedby CU. Its functions will be specified inthe Project Implementation Manual. C. Monitoring and evaluation of outcomeshesults 79. The monitoring system has been designed to maximize the synergy with other data monitoring efforts and makes it possible to assess progress by observing changes in parameters accessible from outside the project structure. To this end, the system will build upon biodiversity, and socioeconomic baselines established by all agencies having worked inthe project area and establish strong links with the WRI DRC Forest Atlas, the CARPE monitoring system and other efforts such as those supported by WWF and IUCN (International Union for the Conservation of Nature). Collaboration with these organizations will be framed through memoranda of understanding or other suitable formal agreements. By helping MECNT access, analyze, and store information, images and data, the project will help build long-term monitoring capacity inthe ministry and strengthenits currently tenuous links with the social and environmental monitoring efforts o f foreign assistance organizations (more inAnnex 3). 80. Incollaboration with the CU, project indicators will be compiled and analyzed by the Direction des Etudes et Planification (DEP) in MECNT. The DEP will build upon and create connections among socio- economic and ecological data made available through various development and scientific efforts that are taking place in the country and the project area. Indicators related to capacity building will be integrated into an overall planning, monitoring and evaluation system (SPSE) maintained by the DEP. Specialized forest management and forest product tracking systems, as well as data related to participatory zoning will be maintained and made available through the Forest Inventory and ManagementService (SPIAF) ofthe MECNT. 81. Most baselines for tracking progress have been produced within current development efforts that the project will build upon, collaborate with, or finance directly. These baselines are presented in Annex 3. New, original baselines for parameters such as sources of income or rural and indigenous peoples' knowledge of the Forest Code will be obtained through new, project-funded baseline studies. These studies will be conducted in the first year andrepeatedsampling will be doneover the life ofthe project. 82. The set of project indicators will serve a dual purpose. They will give project managers information useful for adaptive management, and they will give policy makers clear benchmarks for evaluating the project's effectiveness. Output and process indicators will include among others: (i)statistics on office rehabilitation, equipment, and staff training at central and field offices; (ii)remote-sensing-based statistics on deforestation, illegal logging, and land-use changes; (iii)statistics on water sanitation, feeder roads, and other small participatory infrastructure projects implemented with project financing; (iv) trends inthe abundance ofkey bioindicator species; (v) number and area coveredby various types of forest land management plans" plans agreed upon by MECNT and other l1 concessions,communityforests,protectedareas,conservationconcessions,communityhuntingzones, Timber and others. 21 stakeholders; and (vi) statistics on industry's compliance with environmental, social, and fiscal obligations (details inAnnex 3). 83. These data will be synthesizedby a team of two to three people assigned to the CU by MECNT, DGF, and DEP and supported by a technical assistant financed under the project. All reporting will then be synthesized into semiannual and annual project reports. (see Annex 3). D. Sustainability 84. Political Sustainability: High Recipient commitment. The President, the transitional and the democratically elected governments, as well as the members of the successive Parliaments have shown unwavering commitment to the reform agenda this project supports. Between 2002 and 2008 they have agreed to and presided over a wide- range of radical measures including cancelling 25.5 million hectares of illegal logging contracts; organizing a transparent legal review of all remaining contracts; developing and approving a new Forest Code; producing a soon-to-be-approved Law on the Environment; creating national and local level consultative commissions on forests with civil society participation; inviting international independent observersto help monitor land-usechanges and detect illegal logging; and deciding to double the size of protected areas inthe future. The Government provided strong leadership in designing the PNFoCo, the program the present Project supports, to transform its vision into action and make it a flagship for securingbuy-innationally as well as political support and funding.. 85. Institutional sustainability: Long term strengthening of MECNT and ICCN. By investing more that half of resources to buildcapacity at the central and decentralized level, helping restructure forest institutions and supporting training at all levels, the Project creates a foundation for sustainability and continued action to manage forests and protect wildlife. Given that the policy and strategic framework for MECNT and ICCN is largely inplace, it i s expectedthat at the end of the project these institutions will be more effective at directing the use of forest resourcesina sustainablemanner. 86. Social Sustainability: Increased community participation. Participation and transparency inthe decision-making process will be systematically used to enhance project sustainability. All project-supported interventions involving accessing and using forest areas will be subject to discussion with local communities, which will participate in different ways in their implementation and benefit sharing. In the long term, government decentralization will create greater administrative and financial involvement with communities, which in turn will contribute to their increased participation in sustainable economic development. 87. Fiscal sustainability. The project will increase MECNT recurrent costs by an estimated US$ 2.3 million per year (including building maintenance and vehicle and equipment replacement), which will continue after the project. This incremental cost is however more than offset by the increase in long-term fiscal revenues, which is estimated 22 between US$ 7.6 million and US$8.8 million by the end o f the project. O f this amount, US$2.6 million -would go to the Province and 15% to the sub-district where the income was generated. 88. Indue course, innovativeecosystem services mechanisms may become anadditional source o f fiscal sustainability. IfDRC successfully implements a readiness program, REDD financing may become a significant source to offset the costs o f maintaining large conservation areas that could be opened to more profitable though less sustainable short- term opportunities. E. Criticalrisks and possiblecontroversialaspects 89. The project carries a number o f risks (see table, next page). Measures to mitigate these risks have been agreed upon, and these risks will be monitored as the project i s implemented.The overall risk rating o fthe project without the mitigating measures is high, mainly because (i)local conditions in the remote area where the project will operate are extremely too poor in terms o f infrastructure and locally available skills; ii)MECNT and ICCN capacity may grow at a pace that i s not sufficiently fast to implement the project in a timely manner and (iii)the project's achievements may not be sustainable beyond its duration. Description of risk Risk Mitigation measures Rating rating residual I.Countryrisks Political instability may returnto Continued multidonor support for the peaceprogram and S DRC, weakeningthe commitment macroeconomicstability; substantialsupport for to reformthe forest sector and institutional strengtheningof MECNT through the project hinderingoroiect imolementation. and other donor contributions. Deterioration ofthe security The three provinces of project concentrationare free from M situation inthe Bandundu, conflict. The sections ofNorthKivuand Maniema that Equateur and Orientale provinces host part ofthe Maiko park are also free of conflict at this where most ofthe project area is time. Only 3.6% ofproject funds are expectedto be spent located, or at Maiko National inMaiko. The project's Maikoprogramcould be park, portions of which extendto relocatedto anotherprotectedarea ifsecurity were to Maniema and NordKivu. worsen. Macroeconomic instability may The Governmenthas formulated a "Letter of M returnto DRC, weakeningthe Development Policy for Mitigatingthe Impact ofthe commitment to reformandthe International Financial Crisis" inwhich it commits to capacity to implement policies. three fiscal policy objectives: (i) macro-economic stability; (ii) regular servicing ofthe international debt; and (iii) ensuringthe continuity of social services, including educationand access to water and electricity. The Bank will continueto work closely with the IMF to monitor macroeconomicdevelopmentsand identifypolicy options inatimely manner. This will be particularly important inthe context ofthe PRGFnegotiations and possiblebudget support that the World Bank may provide to support the agreedpolicies.). 11. Sector governance, policies,and institutions Logging interestsmay prevent the I M I Assurances have been obtainedfrom the governmentthat I M 23 the presentmoratoriumonnew concessionswill be some components. maintaineduntilnew regulations are instituted.A large coalitionof developmentpartners (donors, environmental andhumanrightsgroups, other civil society organizations, andbuyer groups) monitors the legitimacyof industrial logginginDRC and stands ready to mobilize againstthe reemergenceofvested interests. Implementingthe decentralization H The project includesprovisionfor MECNTto'identifjand S policy may generate conflict share tasks with the Provinciallevel, strengthenprovincial betweenthe forest administration ofices and foster collaborationwith MECNT. and regionalgovernmentsand hamper implementationof some DroiectcomDonents. H Externalassistance, third party oversight, and S collaborationwith qualifiedinternationalNGOs havebeen set up to help MECNT implementactivitiesthat are susceptibleto corruptionor otherwise connectedwiththe needfor good governance. H The projectwill expand and improve on existingefforts S and approaches. Itwill work with NGOsthat demonstratedto be able to functionunder these conditions. The mix of community-supported activitiesin the projectwill bebasedon demand and adjustedbasedon results. communities may be too poor or unorganizedto respondthe opportunities and some project components may suffer delays. IMECNT may have insufficient H Nearlyhalfofprojectfunds are devotedto capacity M capacity to implementthe project building. With projectsupport, the Ministry will create inatimely manner,especially andtrain anew "Community ForestryDivision." Inthe with respect to activitiesthat meantime, activities involving participationand involveparticipatoryplanningand collaborationwith localcommunities will be collaborationwith local and subcontractedto NGO networks ledby experienced indigenouspopulations. internationalNGOs. The financialmanagementofthe H Projectspecificfinancial managementweaknesses were M analyzedduringpreparationand correctivemeasures were recommended. A financial managementteam paidby the project will be inplace at all time during implementation. The project's achievementsmay H A number of donors are committedto providing long-term M not be sustainablebeyondits assistance.The projectheavilyemphasizes capacity duration building. Ifsuccessful, REDDmay providea sustainable source ofrevenuefor the forest sector. IV. OverallRisk H S Note: Risk is ratedon a four-point scale ( igh, Sui antial, Moderate, Low) accordingto the likelihoodo f occurrence and magnitude of potentialadverse impact. 24 F. Grant conditionsandcovenants 90. Conditionsof effectiveness: (iii) The Recipient has established the C U pursuant to an arrete, in form and substance satisfactory to the Association; (iv) The Recipient has (i) recruited within C U the following staff with qualification and experience satisfactory to the Association: one procurement specialist, one accountant and one communication specialist; and (ii)adopted the Project Implementation Manual; (v) The GEF Grant Agreement has been executed and delivered and all conditions precedent to its effectiveness or to the right o f the Recipient to make withdrawals under it (other thanthe effectiveness o fthis Agreement) have been fulfilled; and (vi) The Recipient has established the Procurement Board with functions and staffing and other resources acceptable to the Association Datedcovenants: Not later than four months after the effectiveness the Recipient shall: (d) recruit (i)a socio- environmental specialist and (ii) monitoring and evaluation a specialist, all with qualifications, experience, and terms o f reference satisfactory to the Association; (e) recruit or appoint a second accountant to maintain separate records for the MDTF; (0 install a computerized financial management and accounting software satisfactory to the Association andtrained its users; (g) employ the external independent auditors; and (h) recruit an internal auditor with qualifications, experience, and terms of reference satisfactory to the Association Not later than one year after the Effective Date, the Recipient shall: (a) establish and staff within MENCT a division incharge of community forestry, (b) employ consultants with qualifications, experience and TORS acceptable to the Association, to undertake external monitoring o fthe contracts ,and (c) establish and staff within MECNT a unit in charge o f environmental services; all under conditions satisfactory to the Association. 91. Other ConditionsnotedinFinancing Agreement New OfficesinKinshasa Disbursements for the design, construction, and construction supervision will be made after the government has provided: 25 1. Evidence satisfactory to the Association that the funding for the total cost o f the construction o f a buildingfor MENCT inKinshasa, including any amounts inexcess o f $ 4,000,000, has been secured; 2. Evidence o f a valid title over the landfor the construction o f a building for MENCT in Kinshasa, as well as a legal opinion, satisfactory to the Association, on the same; and 3. An ESIA on such construction, including, as the case may be, a Safeguard Plan, satisfactory to the Association incompliance with the ESD. HumanResourcesPlan(retirementof eligiblestaff) 1. The Recipient shall, no later than six months after the Effective Date, recruit: (a) the Retirement Technical Advisor, (b) the Retirement Financial Intermediary, and (c) the Retirement Payments Auditors. 2. Recipient shall, no later than twelve months after the Effective Date, furnish to the Association for its review and approval the HumanResources Plan. 3. The Recipient shall: (a) no later than eighteen months after the Effective Date, issue the Retirement Payments through the Retirement Financial Intermediary; (b) no later than two month thereafter, have an audit o f payments made carried out by the Retirement Payments Auditors under terms and conditions satisfactory to the Association and furnish to the Association the results o f that audit, together with any measures requiredto ensure the achievement o f the objectives o f the Human Resources Plan; and (c) following an exchange o f views with the Association thereon, take all such measures as shall have been agreed with the Association to ensure the achievement of such objectives. IV. APPRAISAL SUMMARY A. Economicandfinancialanalyses 92. The project will bring about a range o f environmental, economic, social and institutional benefits, some o f them more easily quantified than others. Institutional capacity buildingprovides the enabling environment for more sustainable forest management, improved governance and transparency, increased benefits from forests to flow to communities and the government. 93. Social benefits include likely reductions in conflict among land users from more transparent, participatory land use management practices, greater trust between citizens and government from clearer regulations and participation o f civil society in decision-making. Economic benefits include an increased level o f economic activity due to better defined parameters for forest management and sustainable forest management plans, and from higher and more dependable contribution made by logging companies to local development. 94. Environmental benefits include reduced deforestation, more sustainable wildlife offtakes, protection of endangered species, and an enabling environment for realization o f a range of 26 environmental services from forests. Institutional benefits include a greater capacity o f forest users to interact with regulatory institutions, and increased institutional capability, transparency and accountability. 95. The economic and financial analysis focused on two areas; (i) direct economic the benefits to local communities from community forestkommunity development activities under component 2 (but enabled by the capacity buildingo f component 1); and (ii) fiscal impact o f the improved tax recovery and distribution o f revenues to local communities as well as the treasury as a result o f the capacity building under component 1. While the project will pursue all avenues to create income through marketing o f environmental services, uncertainties about values and markets discouraged an economic analysis of these schemes. A perspective on the benefits that may be expected i s provided, however, inAnnex 9. 96. Direct benefits to local communities would include support to local infrastructure, enterprise and crop production initiatives which would support community participation in natural resource management. Based on information from ongoing initiatives inthe project area, these activities would yield an IRR o f 17%. Benefits are relatively robust to delays but less so to reductions inyields or sales values. 97. Fiscal benefits o f the project would come largely from increased collection o f tax revenues from sustainably managed forests. The current level o f these revenues i s estimated at US$2 million. Onthe assumption that the areaunder concession management will remain at the level established by the legal review, that no further allocations are made during the project life, and that fiscal recovery rates will gradually grow up to50% by year 4 and 75% by the end o f the project, the overall level o f fiscal revenues is estimated to grow at about US$ 7.6 million. These increased revenues are substantially greater than the annual incremental operating costs o f the project, which are estimated at about US$2.6 million annually at the endo f the project. B. Technical 98. The activities the Project will finance have been designed by an extended team of Government staff, Bank and FA0 specialists, and National and InternationalNGOs specializing in forest, wildlife and related social and environmental issues. From a policy and strategic perspective, project design i s based on the findings and orientations described ina study entitled "Forests in Post-Conflict Democratic Republic o f Congo: Analysis o f a Priority Agenda," which the Bank prepared in collaboration with 12 external partners, and an update o f the forest policy agenda presented by the Minister o f Forests Nature Conservation and Tourism in October 2008 (see Annex 1). 99. The community participation and nature conservation components reflect Bank experience12 that environment and forest projects should take a broad and integrated view o f human and natural environments. These two components do so by trying to balance competing uses by different users within a shared space while maintaining ecosystem functions and improving the welfare o f rural and forest communities. This approach (known as a landscape '' IEG2008 Evaluationof EnvironmentalSustainability 27 approach) emphasizes participatory forest zoning and planning, communication, and the dialogue among all stakeholders. 100. To enhance feasibility, the Project will help the Government establish collaborative arrangements that build upon the experience o f the NGO consortia created in the framework o f the CARPE program. Project support will allow increasing the level o f local investments and broadening to socio-economic development, a model o f assistance which was initially felt as placing a strong, perhaps excessive emphasis on the protection o f biodiversity values and too little on community development. 101. Froma legal and regulatory perspective, the Project can count on an adequate body o f legislation and on the Government's commitment to quickly issue key remaining legal and regulatory instruments. The 2002 Forest Code which was long inapplicable due to lack o f most regulations. O f the forty-two regulations deemed necessary to implement the 2002 Forest Code, twenty-five have been published and nine are under various stages o f development. O f the remaining eight, four require additional studies, one was found outside the field o f competence o f the MECNT, and three depend on future policy developments. The MECNT has also prepared a new Framework Law on Nature Conservation and a new Environmental Law. Adoption o f both i s expected to take place at the next parliamentarysession inMarch2009. 102. Froman institutionalperspective,the project buildsupon a comprehensive institutional analysis carried out with Bank financing and French Technical Assistance, and opted for selectivity in identifying the priority themes for Project support: essential financial, administrative and technical functions at the center and inthe field, improved infrastructure and equipment upgrades, law enforcement, and community support. The specifics o f capacity buildingwere further discussed with Government, Donors and other partners inKinshasa and in the field. Several man-months o f field visits to districts and sub-districts enabled the Project team to shape and cost realistic modules for training, infrastructure rehabilitation and equipment, adapting themto the specific challenges observed on the ground. 103. While the Project has adopted a pragmatichealistic approach to capacity building, several challenges remain outside the scope o f the project and the control o f the institutions involved in its implementation. These include, for example, the inadequacy of communication infrastructure, and the weakness of administrative and technical administrations which interact with the MECNT institutions on the ground. While these challenges are important, waiting for their solution before starting the project would only result in prolonging the vacuum in the management o f forest andwildlife resources. 104. To compensate for institutional weaknesses, and using the present circumstances as an opportunity to forge new partnerships, the Project will help MECNT and ICCN to formalize collaboration and assign work to a number o f qualified professional organizations while maintaining overall responsibility for implementation. 28 C. Fiduciary Financialmanagement 105. Financial management arrangements for the project have been designed in consideration o f DRC's weak public financial management (PFM) system. The arrangements aim to facilitate disbursements and ensure effective use o f project resources and finds while using the country's own systems to the extent possible. To this end, overall coordination o f the project's financial management aspects will be under the responsibility o f the C U of MECNT. The principal objective o f the project's financial management system will be to support the project in the use o f resources to ensure economy, efficiency, and effectiveness indelivering the results required to achieve project objectives. The financial management system must be capable o f producing timely, understandable, relevant, and reliable financial information that enables the project's management to plan, implement, monitor, and assess the project's progress toward its objectives. 106. Under the PFM reforms currently underway, IDA provides support to strengthen the national PFM system. Although remedial measures are being designed and put in place-for example, computerized public expenditure procedures and a simplified double-entry accounting system-the reform is being implemented quite slowly, and tangible results may not be apparent for years. 107. DRC's financial management systems were considered for this project, but the highrisks and slow implementation o f the PFM reform discouraged this course o f action. Consequently, the project will set up ring-fenced financial management arrangements to meet the Bank's fiduciary requirements with regard to accounting, reporting, disbursement, and auditing. For synergy and simplicity,these arrangements are the same as those o fthe ongoing project financed by the Multidonor Trust Fund for Forest Governance implemented by MECNT. The following common features will be used for both o f these Bank-financed projects: single computerized accounting system, common manual o f procedures, one financial manager to supervise the financial management unit (with dedicated accountants and supporting assistants for each project), and common auditing arrangements to be performed by the same private auditors. Each o fthe two projects would nevertheless have its own set of books and Designated Account. 108. Quarterly Interim Financial Report (IFR) will be submitted to IDA by the C U within 45 days following the end o f each quarter. Every year, the C U will prepare the Project Financial Statements (PFS) and have them audited by an external auditor acceptable to IDA. The audit reports, including the audited PFS, the audit opinion, and the management letter will be submitted to IDA within six months after the end o f each fiscal year, say by June 30. 109. The amount o f project financing i s US$ 70.0 million, cofinanced by IDA for US$ 64.0 million and by GEF for US$ 6.0 million. One designated account will be opened inUS dollars in a commercial bank acceptable to IDA and managed by the CU. Initially, transaction-based disbursement will apply for the IDA and GEF grants, but a report-based method could be adopted 18 months after effectiveness, once the specified conditions are met. An initial deposit equivalent to forecasts of the first four months o f expenditure will be deposited inthe designated 29 account by IDA upon project effectiveness. Detailed financial management arrangements, including the status o f conditions o f effectiveness and dated covenants, are presented inAnnex 7. Procurement 110. Most o f the medium and small contracts in the project will be procured by consultants (NGOs or firms) as part o f their execution o f delegated management contracts (Maitrise d'ouvrage dklkguke, MOD), following the Bank's Procurement Guidelines and procedures. The consultants for five o f the twelve contracts will be NGOs selected on a single-source basis (SSS), while the other seven will be selected through competition, either among NGOs or among consulting firms(see Table 6.2 and Annex 8). The NGOs and firms selected through SSS are o f an international character and are already carrying out similar work - in association with local NGOs - in assigned areas o f the country under the USAID-assisted CARPE program. Project's MOD contracts will be designed in ways that help create long term capacity in national institutions, local NGOs and local communities. To this end, they will be performance-based and time bound, they will include a capacity building dimension and related capacity building performance indicators and will provide for an exit strategy. 111. Procurement will be done by the C U o f MECNT, which will be staffed with one senior procurement specialist and one procurement specialist. Short-time technical assistance will also be provided in areas where the two procurement specialists require support. The senior procurement specialist will lead the procurement processing, will provide on the job training to other procurement staff (including any other officers assigned by the Ministry), and will set up an internationally acceptable procurement system inthe CU. An independentprocurement board will be created to review major procurement decisions. These arrangements are in line with the provisions proposed by the procurement code, which is currently in Parliament. At present the C U i s only staffed with a procurement officer and does not have the capacity for doing the procurement work on the project. The procurement risk is therefore rated as high(see Annex 8). D. Social 112. The rural population o f the sub districts covered by the project totals about 20 million, of whom 3 million live within the landscapes where the project's pilot activities will concentrate. The main ethnic group is the Bantu.The Pygmies represent a small percentage o f the population but are an important target group of this project. Their number is not exactly known: a census o f the Pygmy populations living in the project area will be conducted as part o f the project. Key sources o f living are agriculture, fishing, hunting, gathering, and employment in the forest industry. DSRP studies covering the area show local cash incomes varying between US$ 150 and US$ 350 per household per year. Other observations and indicators underscore the status o f ' extreme poverty o f the project area: Less than 5 percent o f houses have tin roofs, there are less than2 bicycles for every 10 families, there is no access to safe water, primary school enrolment for girls i s around 45 percent, and life expectancy i s around 50 years. 113. Protracted lack o f public investments, violence by armed groups, poor law enforcement and poor public oversight have affected local population deeply and shaped their expectations o f the project. As shown by the social assessment, local populations fear losing access to land, 30 wildlife logging and mining, and the presence o f armed groups. They fear being left behind by externally driven economic development efforts and excluded from decisions inmatters that are key to their livelihoods. They wish to play a greater role in the process of decision making, to achieve greater harmony between agriculture, forestry, and nature conservation, to preserve their traditional rights in the presence o f industry, to have access to improved social services, infrastructure, and economic opportunities. 114. The present project integrates features and mitigation measures that respond to the specific concerns and priorities voiced by various stakeholders during the public consultations held as part o f the preparation o f the SEA and related safeguard framework documents. The project will make rehabilitated institutions and new mechanisms available to allow communities inthe selected sub-districts to: (i) their sources of livelihood, (ii) protect preserve their cultural heritage, (iii) consolidate their traditional rights and enjoy additional rights sanctioned inthe new forest policy and the 2002 Forest Code, (iv) expand their participation in decision making, and (v) improve their social and economic conditions. 115. The project i s expected to result in significant direct and indirect social benefits. Equally important, as demonstrated in the various studies undertaken to help prepare the suite o f environmental and social safeguard-related documents mentioned above, the project will help prevent conflict among forest users (different communities and ethnic groups, forest communities and forest/mining industry), and avoid further marginalization of forest communities, both o f which appear likely inthe without-project scenario. 116. Despite the features specifically designed to address social issues, the project will be nevertheless unable to overcome the broader challenges faced by the rural population o f DRC and which can only be addressed in the long term and through investments and development efforts inmultiple social and economic sectors. 117. The project will contribute financial resources to help the government carry out the retirement o f a part o f about 2,261 staff that are well past their retirement age. In doing so, the project will ensure that the amounts paid to retirees include the amounts due to them according to prevailing laws and regulations. 118. Finally, social issues may arise from the fact that some forests and protected areas may, now or in the future, harbor people displaced by war and armed groups. Their displacement is beyond the scope o f this project. Solving this type o f issue require a strong political commitment. While the presence o f these groups in some areas o f intervention o f the Project might reduce its efficiency and reduce its expected impact, the Project shall not require nor support their involuntary resettlement without due care and implementation o f the provisions o f the Resettlement Policy Framework and/or the Indigenous Peoples Policy Framework as appropriate. E. Environment 119. The project has been designed to have a positive effect on the environment. Basedon the findings o f the Strategic Environmental Assessment (SEA), five framework documents have 31 been prepared i)the Environmental and Social Management Framework (ESMF), ii)the Resettlement Policy Framework (RPF), iii)the Process Framework (PF); iv) the Indigenous People Policy Framework (IPPF); and v) the Physical Cultural ResourcesFramework (PCRF). In addition, the MECNT has developed and adopted through a lengthy participatory process supported by donors involved in forest conservation and environmental protection in DRC "Interim Guidelines for Forest Zoning" (IGFZ) which are fully consistent with the World Bank Safeguard Policies including OP 4.01, OP 4.04, OP 4.10, OP 4.11, OP 4.12 and OP 4.36. This IGFZ was disclosed incountry and at the Bank's Infoshop. Any funding of forest zoning activity shall be subject to all applicable safeguards and the IGFZ.The safeguard-relateddocumentation was reviewed and found in compliance with the Bank' safeguard policies and guidelines. By implementing mitigation measures provided for under these five frameworks, the Project will help reduce the pace of environmental degradation that was found to be likely in the without- project scenario describedinthe SEA. 120. More broadly, the project will help the government build capacity and begin addressing some of the fundamental challenges leading to deforestation: It will do so by: (i)using participatory land use planning, sensitizing communities, and creating incentives to avert resource degradation; ii)enabling MECNT and ICCN to play their regulatory roles and collaborate effectively with other actors in defense of the natural environment; and (iii) implementing a rigorous policy of regulation of the forest industry development that includes cancellation of illegal logging contracts, mandatory management regulations, and measures that prevent rapidand unregulated expansionof logging. 121. Furthermore, the project will incorporate environmental features recommended by the SEA which go beyond mitigating potential adverse effects and which are expected to enhance the social and natural environment in the project areas. These features include the following, among others: 0 Inclusion as part of the Project of a strong component of agriculture intensification and alternatives to shifting cultivation, which several studies and the SEA found to be the primary causes of deforestation. Weaving social and environmental safeguard measures into all contracts financed by the project and building environmental monitoring capacity at the MECNT at both central and level. Reevaluating the relevance of the protected area network, and making information available based upon which new protected areas can be proposed in the context of the participatory forest landuse planning. 122. Infrastructure development supported by the project will be limited to rehabilitating feeder roads, safe water facilities, and other small-scale social infrastructure, whose impact on the environment is expected to be minimal but will be, nevertheless, addressed in accordance with the provision of the ESMF. Possible construction of a new building in Kinshasa will be subjected to the rules, processes, guidelines and procedures defined in the ESMF and RPF and submitted to World Bank prior review and clearance as appropriate. All relevant activities planned during the lifetime of the project will be subjected to the ESMF, RPF and IPPF requirements as well. Environmental management clauses consistent with the ESMF 32 requirements will be part o f all contracts for works and services financed under the project and implemented and monitored by the Project's Coordination Unit. Small-scale and micro-project community projects shall be screened against guidelines which will be part o f the Project Implementation Manual. Project Annual Work-plans preparedby the C U will specify safeguard- related measures associated with proposed activities and will be submitted to IDA for review. . 123. Despite these and other measures taken to ensure a positive environmental impact, the project remains subject to uncertainties relatedto the extreme weakness o f national institutions at the beginning o f the project, the commitment o f local authorities and staff in charge o f implementation o f the new and more progressive forest policy, the constantly changing political landscape, fragility o f the peace process, andpoverty- and conflict -related resource degradation. Safeguard policies 124. The project's safeguard-related documents were disclosed in country and in the Bank InfoShop. Versions in a local language spoken by both the local and indigenous peoples groups and communities have been finalized and were made public before appraisal. Consultation was conducted inlanguages spoken by the various stakeholders and groups duringpreparation o f the safeguard-related documentation. In compliance with OP 4.0 1 requirement, a broad and transparent process o f public information and consultation was followed during the project preparationphase. 125. OP/BP 4.04 on natural habitats clarified that the project will proactively engage in preserving known critical natural habitats, help identify and preserve new critical natural habitats through participatory zoning in accordance with the IGFZ and all applicable safeguard instruments. The project will help protect critical natural habitats and other legally protected natural habitats, and enforce forest management policies that help protect natural habitats in general. It will ensure that no logging concession be awarded inthese habitats and areas. 126. The application o f OP/BP 4.11 on Physical Cultural Resources (PCR) allowed the team to clarify with the Government and other partners that historic, archaeological values as well as sites with religious significance, including sacred groves, must be surveyed and protected. The PCR outlines chance find procedures and provide a framework for the development o f cultural resources management plan which contains the prescriptions which must be followed if the project activities were to come across physical cultural resources in the course o f implementation. 127. The application o f OP/BP 4.12 on involuntary resettlement helped clarify that no specific cases o f involuntary resettlement are anticipated inthe framework o f the project. It also clarified that cases o f involuntary resettlement (economic rather than physical) are nevertheless conceivable as part o f the implementation o f government policies .on the management o f protected areas and, to a lesser extent, forest concessions. Applications o f this OP 4.12 made it possible to design and discuss with all stakeholders a Resettlement Policy Framework and a Process Framework which will be applied in all instances where resettlement i s considered a possibility. 33 128. OPBP 4.10 on indigenous people was triggered because o f the presence o f indigenous peoples groups and communities in the project area. It made it possible to assess potential adverse impacts and introduce into the project design measures that enhance the participation o f the Pygmies, protect their interests, and enhance their status. An Indigenous People Policy Framework (IPPF) was prepared and made public independent o f the Environmental and Social Management Framework. Indigenous People Development Plans will be prepared in accordance with the IPPF and implementedwherever the project will operate inareas where the presence o f Pygmies is identified. 129. OP/BP 4.36 on forests made it possible to clarify that the project will only support activities that benefit the forest. The project will help ensure that an adequate network o f protected areas representing all most important forest biodiversity values i s established. It will help regulate and avoid rapid and uncontrolled expansion o f logging and implement regulations that make sustainable management plans mandatory in protection and production forests. The project will not finance harvesting or other activities leading to the destruction of natural forests or substitution o f natural forests with exotic tree species. 130. The five Frameworks: i)the Environmental and Social Management Framework (ESMF), ii)the Resettlement Policy Framework (RPF), iii)the Process Framework (PF); iv) the Indigenous People Policy Framework (IPPF); and v) the Physical Cultural Resources Framework (PCRF) have been reviewed and cleared by the Bank, and disclosed in-country and at the InfoShop inDecember 2008. Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OPBP 4.01) XI [I Natural Habitats (OPBP 4.04) [ XI [I Pest Management (OP 4.09) [x 1 [I [x 1 Physical Cultural Resources(OPBP 4.11) [I Involuntary Resettlement (OPBP 4.12) [ XI [I IndigenousPeoples(OPBP 4.10) [ XI [I Forests(OPBP 4.36) XI [I Safety of Dams (OPBP 4.37) 11 [XI ProjectsinDisputed Areas (OPBP 7.60)' [I [X I Projectson International Waterways (OPBP 7.50) [XI F. Policy ExceptionsandReadiness Readiness 131. Most o f the forest policy and legislative instruments needed for the attainment of the project objectives are inplace: the Forest Code and the majority o f regulations have beenissued, the legal review has been completed andthe legal status of all the logging concessions has been assessed, the ban on new logging concessions is enforced, guidelines for participatory forest zoning have been issued and safeguard duties have been fulfilled by the Government. A coherent development program in the sector has been developed and serves as a guide for assistance by the donor community. The institutional prerequisites have also been established, including a far reaching reform plan o f MECNT, the creation o f the Steering Committee and the Project * By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties' claims on the disputed areas 34 Coordination Unit (CU - a ministerial arete will nevertheless be issued to firm up the composition o f the C U this i s a condition for effectiveness). A needs assessment o f the capacity building in MECNT has been carried out, which forms the basis for the institutional strengthening component. A more detailed needs assessment for the three provincial ministries o f the environment than the currently available information remains to be prepared, a task that will be part o fthe delegated management contract for this sub-component. 132. Some o f the key staff in the C U has already been engaged, while the recruitment o f a senior procurement specialist, accountant, and communications specialist is under way. Meetings have beenheld with NGOs active inthe sector to gain from their experience and to inform them about the project and the procedures o f the Bank and about the nature o f the delegated management contracts for which some o f them will be selected. Overall, the commitment o f the Government is high, with recognition that the forests in the country are a precious resource for the livelihood o f the population in and around them as well as for national development, which mustbe managed ina sustainable mannerto safeguard their existence for future generations. 35 Annex 1: Country andSector Background Democratic Republic of Congo FORESTAND NATURECONSERVATIONPROJECT The ForestsofDRC 1. The forests of DRC cover about 145 million hectaresor 62 % of the total area of the country and play an important role in its cultural and ecological heritage. DRC lays claim to about half of the Guinean-Congolian forest, the second largest tropical forest in the world. DRC's forests are diverse, and dense tropical forest covers about 37 % of the land, savanna forest about 19 %, wetlands forest 4 %, and mountain forest 2%. 2. It is likelythat every person inDRC, urbanor rural, is touched bythis enormous forest resources. The forest provides protein, from game such as the duikers that roam the forest floor to the fish and reptiles that breed in mangroves and gallery forests along the Congo river basin. It is estimated that over one million tons of bushmeat are consumed annually. Flora from the forest is used as medicine and in spiritual and cultural practices. Woody plants are used for buildingmaterials and energy, where eighty percent of domestic energy is derivedfrom wood and charcoal. 3. For some groups, the forest plays a particularly important role in their daily economic, social, and cultural lives. The three forested provinces - Bandundu, Equateur, and Orientale - are home to almost 25 million people, 20 million of whom live inthe targeted sub districts, and the forest landscapes targeted by the project for development activities are home to 3 million people. Seminomadic populations have tightly integrated their consumptive and income needswith forest ecosystems, and the forest serves as an anchor for social and cultural practices and spiritual beliefs. DRC i s host to a mosaic of Indigenous peoples and though no reliable census figures about this part of the population exist, a recent population survey by the National League o f Pygmies (LINAPYCO) puts the figure at 450,000 to 600,000, much more than previous estimates. Seminomadic people are believed to live and hunt in 47 of the 144 Sub- Districts of the country. 4. In addition to the cultural and economic importance of forest resources, DRC lays claim to an incredible ecological legacy. Megafauna such as the bongo, forest elephant, chimpanzee, and gorilla make it home, as well as the endemic Bonobo and Okapi. Congolese biodiversity i s startling, with new species of orchid, reptiles, and fish being classified annually. Efforts to preserve DRC's ecological heritage have led to a national network o f protected areas consisting o f 7 national parks and 57 nature and hunting reserves. Together these constitute 8 percent of the area of the country, 20 million hectares, though management i s often weak or nonexistent. The global importance of the natural biodiversity of the DRC was recognized internationally with the designation of five World Heritage Sites, which is more than all the rest of Africa combined: Virunga, Garamba, Salonga, Kahuzi-Biega National Parks, and the Okapi Reserve. 5. By 2002 the majority of the rainforest forest in DRC was covered under 285 logging contracts totaling 43.5 million hectares. These concessions were basically speculative, were given out without consultation with the local population, without regard to other forest uses (such as land under cultivation and villages), and without a fair amount of revenue to the government. This situation risked to deprive local communities from both traditional use rights and economic benefits in the long term, and degrade the environment which providedfor their livelihood. 36 6. During decades of war the institutions charged with managing the forests virtually disappeared and are now being painstakingly restored. Until they are fully functional to discharge their responsibilities, the danger of forest degradation remains high. Deforestation and forest degradation in DRC continue to be driven by small-scale farming. The national average deforestation rate has remained relatively low (0.27% per year)13 in recent years, particularly in the forest rich regions, but it can escalate rapidly as political stability and improved transport will open the door to markets, investments and migration. Deforestation has occurred and is projected to continue to occur primarily inheavier populated areas inthe dry forest and mountain forest zone, drivenby population pressure and expansion of slash and bum subsistence agriculture. Therefore, alternatives and solutions to deforestation must be sought not only within but also and perhaps primarily outside the forest sector, by helping the country's large rural populationto increaseits productivity and find alternative sources of income. Policy Context 7. In2002, the government approved a new Forest Code which for the first time presenteda holistic view o f forest resources emphasizing its multiple social, economic and environmental values, recognized the rights of traditional forest users (including indigenous people), and envisaged a doubling of the country's protected areas and trading environmentalservices inthe emerging global market. 8. Along with the new forest code, the Government announced a forest r e f o A agenda which includes: (i) cancellation o f 25.5 million hectares of patently illegal logging contracts; (ii) legal review a (assisted by a third party) of the remaining logging contracts; (iii)a moratorium on all new logging contracts; (iv) a new forest tax system that discourages speculation and directs 40 percent of the revenue from area taxes to forest communities and local governing bodies; (v) the conversion of old logging contracts into new concession contracts that require the concessionaire to fulfill strict social and environmental obligations; (vi) participatory forest zoning to build consensus on which forest areas should be biodiversity reserves, production forests, rural community forests, or converted to other uses; (vii) promotion of non-extractive uses o f forests and innovative financing for the production and trade of global environmental services; (viii) the rehabilitation of national parks and protected areas, which would expand to 15 percent of national territory; (ix) the control of commercial forest activities through new technologies and independent observers; and (xi) the integration of participatory approaches, public dissemination of information, and communication at all levels to inform civil society and garner support. 9. The clearest and most reliable presentation of current government policy and operational orientations was provided by the MECNT Minister in a widely disseminated statement he delivered on October 6, 2008, when he announced the results of the Legal Review. These orientations were presented in 14points, as follows: Cancel noncompliant contracts immediately after the appeal stage. Sign new concession contracts with compliant companies, provided that they receive approval from local andor pygmy populations for the social and environmental responsibility contract (cahier des charges), which i s an essential component of the new concession contract. Sign the regulation specifically defining how noncompliant concessions will be cancelled on the ground. Support and monitor the processthrough which local and indigenous communities negotiate social and environmental responsibility contracts with the forest industry. Maintain the moratorium on new forestry concessions set forth inPresidential Decree 054 16. l3 "ReducingC02EmissionsFromDeforestationAndDegradationInTheDemocraticRepublicOfCongo:AFirst Source: Look". NadineLaporteet AI., 2007 37 Establisheffective control o f forest operations withthe support of internationalthirdparties. Transfer 40 percent of area tax revenues to the provinces and territories (sub districts) where commercial forest operations take place. Secure the preparation and implementation of sustainable forest management plans for all forest concessions. Implement participatory, multipurposeforest zoning inclose consultation with local populations. Support small, family-based enterprises in forest areas. 0 Expandrehabilitation activities inprotected areas. Implement institutional reform inthe Ministry of Environment Forests, Nature Conservation and Tourism including reorganization of the institutions under its responsibility: the Congolese Institute for Nature Conservation (ICCN), the Kinshasa Botanical Garden, and the Zoo. Scale up efforts to disseminate the Forest Code and foster the adoption of regulations not yet adopted. Start the national multidonor program for Forest and Nature Conservation (Programme National For& et Conservation, PNFoCo). Current ExternalSupport 10. Since the end of the war, development assistance provided to DRC has focused on demobilizing and reintegratingarmed groups into civil society, rehabilitating infrastructure, health, and education, with modest resources for building capacity in areas such as natural resources management. More recently, under government leadership, a significant number of donors have helped design the National Forest and Conservation Program (Programme National For& et Conservation, PNFoCo). PNFoCo i s a comprehensive program to: (i) create the institutional capacity required to implement new forest policies; (ii)ensurethattheforests' social,economic, andenvironmentalfunctionsarepreservedinthelongterm; (iii)ensurethatforestscontributemeaningfullytothelivelihoodsofruralandforestpeopleandimprove their socioeconomic welfare; and (iv) expandthe network of protected areasto 15 percent ofnational land area. 11. Despite their newly found prominence domestically among urban populations and internationally in environmental circles, forests and wildlife continue to be exposed to the risk of misappropriation and destruction due to lack of implementation of the new policies. Staff o f forest institutions remains isolated from Provincial and central level offices, unequipped and unaccountable and often unpaid. Appropriation o f the new forest policies by all stakeholders and institutional capacity (both with public administrations and civil society) for implementation are an absolute necessity to place DRC's forests on a sustainable footing. 12. A large number of Donors are keen on assisting DRC in the field of forests (see Annex 2). The emphasis is duly placed on creating minimum conditions for principled access to and use o f forest resources-in other words, for access and use that benefits local populations, respects both modern and traditional rights of forest dwellers and indigenous people, benefits the environment locally and globally, and forestalls the large-scale misappropriation or misuse of forests as a community, national, and global asset. These efforts cannot yield immediate results unless they are integrated into a broader and longer- term agenda aimed at counteracting poverty, insecurity, and civil conflict, which are the major drivers of forest degradation in DRC. Inthis sense, sustainable forest management and improved wellbeing o f forest populations cannot be achieved in isolation from a number o f more general development aims, including widespread peace and civil security, better infrastructure and communications, a strengthened democracy, and wider community participation. 38 Project area and approach used 13. The project will work with forest communities located inthree provinces, 12 districts and 53 sub- districts. Benefitiing communities will be located in four areas called landscapes (Lac Tumba, Maringa- Lopori-Wamba, Salonga, Ituri and Maiko), which integrate various land uses and showcase the interaction between natural environment and the human dimension. The project will build u on the experience of the "Landscape Approach" to local and sub-regional planning and development p4. The Landscape approach recognizes the integrated nature of ecological and social systems and supports different land uses at a scale that respects these feedbacks. Areas designated as a landscapeare typically very large, anywhere from 4 to 11million hectares, and includehigh-priority ecosystems. 14. The goal of a landscape approach is to balance and manage competing and collaborative uses within a shared space while improving or at least maintaining ecosystem functions and population welfare. To do this, landscape planning emphasizes communication and the participation of forest stakeholders in assigning and managing land uses. A consortium of interests, typically managed by an international NGO, brings together local NGOs, local community organizations, traditional authorities, MECNT representatives, and representatives from commercial operations to enable dialogue regarding the planning and implementationof activities within the landscape. 15. With funding from donors such as the World Bank and USAID/CARPE, conservation and development activities are planned within the landscape. Activities span from more traditional conservation activities in and around protected areas to community development activities, such as training in organizational management and budgeting to allow community organizations to apply for small grants, numeracy or literacy campaigns, agricultural supplies, or small infrastructure improvement. 16. The four DRC forest latldscapes to be targeted by the project cover about 28 million hectares. They represent DRC's unique ecological and cultural heritage, from the swamp forests of Lac Tumba in the west to the storied Ituriforest in the east. These landscapes are home to at about 3 million people. The forest plays a special role inthe lives of semi nomadic populations, providing for nearly all of their consumptive needs while also generating income and anchoring cultural and spiritual belief. It is unknown how many semi nomadic people live and hunt in the four DRC landscapes, though strong relationships with NGOs inthe Ituri forest have allowed an estimate there of around 30,000 people. The table inthe following page shows the areas of concentration ofthe Project. InstitutionalContext 17. Much like other public institutions in DRC, institutions managing forest and conservation interests were abandoned without a budgetary allocation and left to fend for themselves. MECNT employees tend to be older (the average age is 50 years, and more than 26% of employees are above retirement age), and poorly educated (less than 15% of employees total15 have educational training beyond secondary school). Salaries are often paid late, and no office equipment or means o f transport are provided. Numerous agents under temporary contracts (new units) may not receive a salary at all pending formal admission to the civil service and inclusion inthe payroll. This saps the offices and employees of MECNT of dynamism, encourages a resistance to change, weakens their motivation, and affects the quality of their work. l4The landscapes inwhich the projectwill work are among the 12 priority landscapes definedinthe Congo Basin Forest Partnership across the Congo Basin. Within the DRC, there are 6 landscapes, including: Lac Tele- Lac Tumba; Salonga; MaringaLoporiWamba; Maiko -Tayna -KahuziBiega; Ituri;and Virungas. 15Under statutes or under contracts (new units) 39 18. MECNT's current workforce consists of 4,88 1 regular employees and 4,08 1 contractors and new recruits (not yet in the payroll). 2,292 work at the central level and 6,670 inprovinces, districts and sub- districts.2,261 of the regular staff are eligible for retirement (having exceeded both retirement age or 30 years of service). 1,265 o f them work in provinces and lower territorial levels. In collaboration with the Ministry of Public Administration and the ad-hoc Working Group that was set up under the auspices of the President to facilitate the fair and smooth retirement of eligible public servants, MECNT has requested funding for the retirement of the 2,261 employees (637 from the Kinshasa and 1,624 from field locations) and the recruitment of 1,000 new employees. Table: Project Sub districts (Territoires) overlappingwith project landscapes Source: Servicepermanent d'inventaireet d 'arne'nagementforestiPre (SPIAF) I 19. The Ministry o f Forests, Nature Conservation and Tourism has started a process of profound institutional reform involving a reduction in the total number of Directorates from 23 to 12, the creation of a new Division of Community Forestry, mandatory retirementof overage staff, new recruitments and improved synergy with ICCN. The restructured Ministry intends to give priority attention to rebuilding 40 capacity in the field and at HQand emphasize the following thematic areas: administration and financial management, human resources management, planning, monitoring and donor coordination, forest management systems and control functions, impact assessment, community forestry, wildlife and national park management (through ICCN). MECNT offices at the province, district and sub-district level will receive particular attention inthis effort. 20. Administrative management systems (financial management, human resources, and planning, monitoring, and evaluation) are manual, often in-operational, hardly transparent or effective. Files are poorly protected and are often incomplete, causing numerous irregularities to continue. One notices equally the overlap of responsibilities and a lack of collaboration betweenthe different components o f the Ministry. The absence of means for travel at the provincial level results in ineffective monitoring of industrial forest operations because controls need to use the transportation facilities offered by Industry and take place at times and locations convenient to industry. Without immediate and significant support, the new, more sophisticate forest regime will only make current institutional weaknesses more acute and apparent. 41 Annex 2: M a j o r Related Projects Financed by the Bank and/or other Agencies16 Democratic Republicof Congo FORESTAND NATURE CONSERVATIONPROJECT PROJECT GEOGRAPHICAL and THEMATIC FOCUS PERIOD and TOTAL USD (I Euro=1.5 USD) Total, All Donors -361million USD Total includes ongoing projects and commitments communicated by the Govt andor concerned donor. Timeframe of upcomingprojects often hard to anticipate IDAIGEF-4 MECNT central level, Maiko National Park, and three pilot provinces : 70 million USD Forest andNature Bandundu,Equateur, and Orientale 2009 -2013 Conservation Project Institutional Capacity Building: infrastructure,equipment, managerial (PFCN) 1 functions, training, forest managementand control, projectcoordination 1 Participatory Management ofForest Resources :zoning, consultations, environmentalservices, developmentanddiversification of socioeconomic activities 1 Participatory Management of Protected Areas :Institutional support to ICCN, rehabilitationof Maiko Park Multi-Donor Trust National level 7 million USD Fund 1 Institutional Reform: Goodgovernance andimplementationofDRC Forest 2008-2009 Code Belgium,France,EU, Germany,Luxemburg, Netherlands, UK CARBON FINANCE Bateke Plateau Part Iimplemented2007 - 4 million USD Ibi Batik6 CarbonSink 1 Carbon Sink: Sequester C02through fast growing forest plantationson grass Plantation savannahs covering7,500 haover five years 2012 ~~~~ REDD National level 0.2 million USD PREPARATION 1 Institutional Capacity Building: Preparation of an R-Plan 2008 -2009 REDD National and Site level 3.4 million USD IMPLEMENTATION 1 Carbon Sink: Implementationof activitiesspecifiedinR-Plan in negotiationstart after REDDpreparationphase REDDSCALE UP National and Site level TBD 1 Carbon Sink: Replicationof activitiespursuedin implementationphase and additionof new, promisingCarbon sequestrationactivities GEF-3 National level and two parks: Garamba NationalPark andMikeno Sector of 7 million USD Rehabilitation of National VirungasNationalPark 2009-2013 Park network in DRC 1 Institutional Capacity Building: Supportto ICCNand identificationof new protectedareas at the national level 1 Participatory Management of Protected Areas: Rehabilitationof two nationalparksandtheir peripheries AFRICAN Equateur and Eastern Provinces and four forest landscapes: Maringa- -80 million USD DEVELOPMENT Lopori-Wamba,Maiko-Tayna-Kahuzi-Biega, Lac TCIC-Lac Tumba and 2009-2015 BANK Virunga Preservation of Congo 1 Institutional Support: targetingCOMIFAC and its partners BasinEcosystems Rural Community Development 16 Giventhe protractedperiodof conflict DRC went through, relevantprojectsare all ongoingor planned 42 I Program (PPEBC) I ..Conservation and Management ofBiodiversity AFRICAN Nationallevel -20 million USD DEVELOPMENT DRCshare ofRegional Program: specificsto be determined 2009 -2015 BANK BELGIUM Nationallevel and in pilot sites: Lubumbashi, Lissala-Bumba, et Luki 2.55 millionUSD FA0 GCP/DRC/O33/BEL ..Institutional Reform: Support to the creationof adivision of community 2009-2012 Project to Develop and forestry, definition of nationalapproachto communityforestry ImplementCommunity Forestry in DRC Participatory management ofForest Resources: Managementof pilot communityforests . BELGIUM Regional Ecole RCgionaled'Am6nagementet de GestionIntCgrCedes - 0.15 millionUSD Supportto ERAIFT via For& Tropicales(ERAIFT) 2009 UNESCO Institutional Support : Technicaltraining andeducation BELGIUM Regional EcoleRCgionale d'AmCnagementet de Gestion IntCgrCedes - ,066 millionUSD Direct Supportto ERAIFT - Scholarships For& Tropicales(ERAIFT) 2009 2010 - Institutional Support : Scholarships . BELGIUM Regional BiosphereReserves: LukiandYangami Reserves (DRC), - 1.125million USD Practical Model of Dimonika Reserve(ROC) 2009 -2012 Sustainable Natural Management ofForest Resources: Developamodelof sustainable Resource Management development to serve as an operationalguide for different sites via WWF BELGIUM Muanda and Thsela (Bas-Congo) 0.45 million USD Supportfor Sustainable Capacity Building: Improveorganizationalplanning, develop ecotourism 2009-2010 Development skills, communityreforestation, improvedagriculturaltechniques BELGIUM Nationallevel 0.375 million USD FLEGT Initiative . Capacity Building: Technicalassistance to study the implementationof a 2009 -2010 forest informationsystem, promotionofgood governanceandfighting corruption,defining a log-trackingsystem EUROPEAN UNION BatCk6 Plateau 2.0 million USD Support to developmentof . Carbon Services Project :Agroforestryplantations.Not agrant or loan 2009-2015 communityforests Bank acts as financial intermediator. EUROPEAN UNION Goma 2.7 million USD Fuelwoodproject ..Carbon Project : FuelwoodPlantations 2009-20015 ~ EUROPEAN UNION Regionallevel (CentralAfrica) and Salonga NationalPark 7.5 million USD ECOFAC ProtectedArea Rehabilitation and Management : Infrastructure(buildings, 2007 -2010 roads), personnel, equipment, training, institutionalreform, preparationof management plan, socioeconomicdevelopmentfor populationssurrounding Park EUROPEAN UNION Nationallevel 6 million USD Support to reform ICCN `. Institutional Reform: Support to ICCN central andfield functions 2009-20015 andIJZBC EUROPEAN UNION EcoleRCgionaled'Am6nagementet de Gestion IntCgrCedes Forets 0.9 million USD Supportto ERAIFT Tropicales(ERAIFT) 2009-2012 InstitutionalSupport : Building rehabilitationandtechnicaltraining EUROPEAN UNION Garamba Park 7.5 million USD Support to management .ProtectedArea Management: Partnership betweenICCNandnon- 2007-2010 of GarambaPark governmental organizations (NGO), infrastructure,surveys and scientific research, guardtraining, anti-poaching EUROPEAN UNION Virunga Park and Salonga Park 1.8 million USD Supportto management Protected Area Management: infrastructure(buildings), guardtraining, anti- 2005 -2008 of Virungaand Salonga poaching, revenuegeneratingactivities Parks 43 EUROPEANUNION Virunga Park -20 millionUSD Great VirungaProject 8Cross-border Collaboration: Supportto trinationalcollaborationwith 2009-2014 RwandaandUganda 1 Protected Area Management: Follow up on rehabilitationactivitiesinitiated by the first project, apply and implementinstitutionalreforms, recruitment andtraining of personnel, tourismdevelopment EUROPEANUNION Regional (Central Africa) and National levels 3.5 million USD Support to developmentof 8 Capacity building of small and medium sized enterprises associated with 2007 -2009 small and medium-sized Non-Timber Forest Products (NTFP): Informationcollection, identification enterprises (via FAO) ofNTFP andtargetedgroups, Technicalandbusiness managementtraining, market information EUROPEANUNION National level 0.8 million USD Support to Monitoring of 1Forest Resources Management: Supportto MIKE inDRC, Phase I1 2006 2009 - the Illegal Killing of Elephants (MIKE) FRANCE Regional (Central Africa -RIFFEAC) and National levels 0.2 million USD Development of a training 1 Institutional Capacity Building: Technicalassistance inthe definition and 2008-2009 program in environment implementationof anationalforest and environment training andeducation andforestry strategy, workshops, training of forestpersonnel FRANCE National level 1.5 million USD MECNT Capacity 1 Institutional Capacity Building: Technicalassistanceandcounselto the 2008 -2011 Building Minister GEF PNUD - All protectedareas managed by ICCN, with specialemphasison two parks 6.3 million USD ProtectedArea in Katanga: UpembaNP andKundelunguNP 2004-2008 Management and ICCN 1 Management of Protected Areas: Supportto protectedareamanagement area management GERMANY National level and two parks: Kahuzi BiegaNationalPark(PNKB) and 4.5 million USDfrom (GTZ/KFW) OkapiFaunal Reserve(RFO) GTZ, with potentialfor an Biodiversity and Forest 1 Institutional Capacity Building: Supportto ICCN, developmentofforest additional4.5 million, Program (PBF) . institutionsandpolicy, technicalassistance inforest certification 2008 -2010 Protected Area Management: Implementationo f nationalconservation law inprotectedareas 16.5 million USDfrom KFW to be implemented 2008-2010 UNESCO-UNF Virunga National Park 0.45 million USD VirungaProject 1 Protected Area Management: Paidprimes in Virunga Park (2006), 2006-2009 relocationandboundary marking, protectionof mountaingorillas, control of Major Donor: Belgium illegal logging UNESCO-UNF World Heritage Sites (WHS) in DRC 3.1million USD WorldHeritage 1 Protected Area Management: Strengtheninternationalpartnerships,build 2007-2009 Partnershipfor DRC managementcapacityinWHS, develop monitoringsystem andemergency Major Donor: Belgium actionplansfor W H S UNITEDKINGDOM National level 8 million USD CongoBasinForest Fund 1 Institutional Capacity Building: Supportto MECNT coordinationwith 2008 -2010 (FFBC) - Preparation provincial level andMECNT restructuring;Training program Funds 8 Participatory Management of Forest Resources: Communityforest management UNITEDSTATES Five forest landscapes:Maringa-Lopori-Wamba;Lac Tumba ;Salonga- 60 million USD (USAID) Lukenie- Sankuru;Ituri-Epulu, -Aru ;Maiko-Tayna-Kahuzi-Bienga 2006-2011 Central Africa Regional 1 Participatory Management of Forest Resources: Macrozoningo f forest Program on the landscapes, communitydevelopment, protectiodconservationof natural Environment(CAME) resourcesandbiodiversity SWEDEN(SIDA) Virunga Park -1million USD 44 WWF in Virunga . ParticipatoryManagement of ProtectedAreas: Communityconservation 2007 - 2010 andenvironmentaleducationactivities inandaroundVirunga Park NON- Nationaland site levels, often in protectedareas -6.1millionUSD ......... GOVERNMENTAL Core funding from NGO privatesources comes from the following 2006 - 2011 ORGANIZATIONS organizations: Corefinding International GorillaConservationProgram (IGCP, consortiumof WWF, contributions FFI, andAWF) Wildlife ConservationSociety (WCS) African Parks Foundation Zoological Society of Milwaukee (ZSM) Diane Fosse GorillaFund International ConservationInternational GilinanInternational Conservation Milwaukee University Lukuru Wildlife RF \ Frankjiurt Zoological Society 45 Annex 3: Results Framework and Monitoring Democratic Republic of Congo FORESTAND NATURE CONSERVATIONPROJECT ResultsFramework PDO Pruject outcome indicators use of project outcome intornlation--- - PDO 1.1: To increase the capacity I1.1 Areas coveredby various types of - I Measuresthe newly__-. institutional acquired ofMECNT and ICCNand forest land management plans" agreed capacity and adoption of multiple use collaboration among government uponbythe MECNT and other participatory forest management models institutions, civil society and other stakeholders(adopted and under stakeholdersinorder to manage implementation) inthe three provinces forests sustainably and equitably 1.2 Stable trend inabundance ofkey - Measureseffectiveness of environmental for multiple uses inselected pilot bio-indicator species within and outside managementof these areas and provides a areas inthree provinces of DRC.I7 protected areas inproject landscapes proxy for environmental sustainability I I Intermediate outcomes tnterniediate outcome indicator Useof intermediate outcome monitoring Component 1: InstitutionalStrengthening of MECNT IO 1.1: Increasedinstitutional 1.11 Forestfees andtaxes collected by - Measuresimprovement ingovernance capacityto monitor and regulate DGRAD as % oftotal billed by MECNT capacity and institutional collaboration on forest use. at national level Project activities. 1.12 Kilometers of illegal industrial - MeasuresMECNT's effectivenessin logging tracks outside legal logging enforcing the DRC Forest Code relating concessions inpilot provinces to industrial concessions and artisanal 1.13 Numberof logging infractions - logging. revealedby IndependentObserversin pilot provinces 1.14 Percentageof logginginfractions - discoveredthat are prosecutedinpilot provinces IO 1.2: MECNT's capacity to 1.21- Number of field supervision MeasuresMECNT capacity to manage collaborate effectively with reportsmadeby Provincial and District filed operations and collaboration with development partners, stakeholders MECNT teams inpilot provinces contractors and stakeholdersat the field and service providers is improved 1.22 Number ofreportsmade by - level MECNT teams on the work of contractors and NGOs inpilot provinces Component 2: Community Partic ation in Forest Management IO 2.1: Forestpopulations know 2.11 - Area of additional forest areas Verify that landuse decisions are made in and exercise their statutory rights zonedusing aparticipatory approachin aparticipatory manner, andthat and participate in land use pilot provinces socioeconomicprinciples are included in decisions land managementulans 17Bandundu, Equateurand Orientale, in additionto which the Maiko National Parkextends to the provinces of ManiemaandNorth Kivu. l8 concessions,communityforests,protectedareas,conservationconcessions,communityhuntingzonesandothers. Timber 46 2.12 Percentageof forest users in - Measureshow effectively stakeholders sample areas, including indigenous are enabledto make fair and informed communities, aware oftheir legal and decisions on how natural resources will customary rights and obligations under be used the forest code I O 2.2: Livingconditions for 2.21 Percentageof householdsin - Measures the project contribution to forest communities have improved targetedforest communities reporting poverty alleviation and sustainable inpilot areas additional sources ofregular income economic diversification. 2.22 Number of water sanitation, feeder - Measuresproject responsivenessto roads, and other small participatory communities' priority needs and level of infrastructure projects implementedwith community participation project financing 2.23 No. ofhouseholdsutilizing small - participatory infrastructureprojects implementedwith project financing 2.24 No. of indigenouspopulation`s - Indicates extent to which indigenous householdsbenefitting from Project- population intargeted areas benefits from financed initiatives project financed, includingsmall scale infrastructure projects 2.31 -No. ofpeopletrained insafeguard Indicatesextendto which the project is relatedmeasures adequatelyaddressingenvironmental and IO 2.3: Potentialnegativesocial 2.32 -No. of responsesdevelopedto social risks as per safeguardinstruments and environmental impactsare mitigate impacts mitigated 2.33 -No. of annualevaluations by qualified assessors on quality of responses Component 3: Management of Pr ected Areas and strengthening of ICCN IO3.1: Strengthenedcapacityof 3.11 Protectedareas management - Provides an independentquantitative ICCNto conserve globally effectiveness score for Maiko NP (WWF assessment of progress, or lack thereof, important biodiversity inthe field Toolkit) and triggers attention from implementing agency I O 3.2 : Reductionofthreats to 3.21 -Reducedratio of violations of Provides a quantitative assessment ofthe biodiversity inMaiko National Maiko park regulations (Le. poachers trend of illegal activities threatening Park arrested, fire arms seized, traps found, biodiversity inMaikoNP inresponseto endangered species confiscated) to overall managementeffectivenessinthe number of patrols conducted Dark. Arrangements for results monitoring Objectives and overall features of the system 1. Theproject Monitoring, and Evaluation System design reflects the post-conflict context o f the DRC and goals that include: i)improved transparency inthe allocation o f the forest estate; ii)improved transparency in the industrial forest sector iii)clarity o f benchmarks with which to evaluate progress in project implementation; iv) improved information sharing with stakeholders inDRC's forest resources; v) building synergies on nation and region-wide data collection and management; vi) a platform that allows for adaptive management for project implementation. 2. Theproject Results Framework matrix aims to concisely and efficiently represent the project. The suite o f project indicators serve the dual purposes o f affording project managers information useful for adaptive management as well as giving policy-makers clear benchmarks from which to evaluate project effectiveness. Each project subcomponent is linked to an indicator, and results indicators were chosen 47 when possible. Output and process indicators are integral to tracking project implementation in the DRC context, particularly for those relatedto livelihoods and the well-being o f forest communities. 3. The project Results Framework includes indicators that reflect overall economic, social and environmental performance. Progress in sensitive areas such as preservation o f biodiversity, management of national parks, and reduction o f illegal logging will be measured through well defined protocols that leave minimum room for subjective interpretation and minimize risks of conflict. Indicators relying on ministerial data have been designed so as to reduce ambiguity and facilitate collection. Only two baselines (regarding the knowledge of rights under the forest code and additional income sources) are to be established duringthe first year o fprogram implementation. 4. Progress in protected area management will be scored according to a "tracking tool" developed by the World BanWWWF Alliance, consistent with the recommendations of the World Commission on Protected Areas Management Effectiveness. Illegal logging tracking will measure variations in the length of logging roads located within unallocated forest concessions and national parks, as observed in time series of satellite images interpreted in collaboration between the Government and the Global Forest Watch Program of the World Resources Institute. For both parameters, baselines values, methods and sourcesto review time series o f relevant parametersare integrated into the program's monitoring system. 5. Data for project indicators originates from both international NGOs implementing project activities and branches within the Ministrytargeted for capacity building.All project data collection and compilation will be managed by the CU, a working group created within the Ministry dedicated to the forest sector and charged with the management o f the IDA'Sproject preparation funds (PPF). 6. Collaboration contracts with international NGOs already operating on the ground will include automatic indicator data collection in their project management semi-annual reporting tools. The distribution of the project Annual Report will allow third independent parties to participate in project monitoring, and indicators such as the number of logging infractions or the number of field reports from MECNT site visits, were selected to encourage their participation. Whenever possible, project reporting tools will be integrated with the existing reporting tools of other donors, such as USAID. Synergieswith parallel Bank programs in the DRC, such as the MDTF, will be exploited in shared monitoring and evaluation tools. Actors: Managers and Users 7. System Managers: Management of project Implementation, Monitoring, and Evaluation (M&E) will be centered in the CU. The C U will include an internationally recruited Monitoring and Evaluation Expert, supported by one nationally recruited specialist. The CU will work with the DEP relevant technical departments to evaluate the technical content o f workplans proposed by MOD contractors and review progress reports to adequate information is collected to feed into the project's monitoring system. The chart inthe following page depicts these arrangements 8. DEP itself is a target of project capacity building initiatives to be used for training, equipment, and site visits. The CU will share results and their reports with DEP to build on efforts to standardize and harmonize planning and evaluation within the Ministry. Sharing project indicator data collection with DEP will allow project indicators to be integrated into DEP's SystBme de planzjkation et de suivi e`valuation(SPSE). A liaison in DGF will reinforce the CU's capacity to evaluate the technical aspects of NGO workplans and provide feedback to them and other contractors, as well as supply information related from the forest management information system (SIGEF). 48 I MECNTMinister I I- t I TL!Eal Coordination Unit Assistanc b I I ,I 1 ............................................................. I 1 ................................................................ I 1 I 1................................................................................. : t DGRAD DEP DGF SPIAF PA NGOs ICCN THIRD PARTY iSpatialandIan Taxdata WWF, WCS, AWF Biodiversity Land use and zoning Ruralhousehold Forest Zoning andProtected MONITOR use data W R I data, field logging and rural data, biodiversity Management Area data,biodiversity Law Enforcement reports householddata data ProcessData data, patroland and PA data violationdata ................................................. : .............................................................. ............. ...................................................................... G ................................................................................................................................ COMPONENT 3 COMPONENT2 Other important system managersthat will furnishdata include: a. Direction Ge'ne'raldes RecettesAdministratives et Domaniales (DGRAD) of MECNT b. Institut Congolaispour la Conservation de la Nature (ICCN), which will provide technical informationvia their Syst2me de gestion de I'information sur les airesprote'ge'es(SyGIAP) C. International NGOs: For example, World Resources Institute (WRI), World Wildlife Fund for Nature (WWF), Wildlife Conservation Society (WCS), African Wildlife Foundation ( A m ) d. Provincialoffices, which will act as project focal pointsand collect data at local levels as well as disseminate monitoringreports at the provincial level. e. The Direction des services ge'ne'raux (DSG) will ensure that the monitoring system is up-to- date in terms of financial and accountinginformation as well as recruit via an international bidding process an independent auditing firm, internationally known for its auditing capacities. f. TheDirection ducontrdleforestier (DCI) g. The Direction de De'veloppementDurable (DDD) 49 10. System Users will include MECNT, as well as the Ministry of Finance and the Ministry of Planning. These ministries will utilize project reports to assess program implementation and implement adaptive management. Additional systemusers include: MinistryofFinance Donors MinistryofPlanning Congo BasinForestPartnership's Provincial delegations State of the Forest Report Local and internationalNGOs Observatoiredes Forits d'Afiique Centrale Privateenterprises (OFAC) Civil Society Data 11. Baseline Data: Where available, baseline data has been collected for the project. The abundance of indicator species is based on the 2009 baseline established for the State of the Forest Report, which is anticipated to be published in 2009". Baselines for knowledge of forest rights and income in targeted rural areas will be established in the first year of the program with the help of the monitoring and evaluationexpertise. 12. Data Sources: The monitoring tables, below, indicate where the data for each indicator will be found. The same sources will be usedroutinely to avoid inconsistenciesand misinterpretations. 13. Data Collection: Primary and secondary data will be recorded according to their specified formats at the central and provincial levels. Where possible, this data will be cross-referencedannually with a data gathering homologue, either within the Ministry or an external agency, to ensure accuracy. Periodic field visits will also verify the accuracy of collecteddata. 14. Data Collection Frequency: project's M&E system outputs are designed to share information, ensure maintenance of the system, and allow for adaptive management of the project. Outputs from the M&E system includequarterly reportsfrom within MECNT, semi-annualreportsfrom internationalNGO projects, and an Annual Report distributed to other donors. Internal monitoring arrangements include short quarterly reports (no more than 15 pages) to record and aggregate those data for which collection must be made monthly. A semi-annual reportwill provide a fuller picture ofthe programand give a status update on indicator data and project implementation progress and challenges for NGOs and contractors. Finally, an annual report will be preparedthat includes information on all Results Framework indicators and will be distributed to other Congolese Ministries, donors, international NGOs, and other interested stakeholders. Documentation 15. Detailed M&E procedures including, task assignments, reporting methods and format of M$E documents will be included as an annex to the project's implementation manual which will be prepared by project effectiveness. 16. Annual Workplans will be consolidated by the CU and submitted to the Bank for prior review andto the SteeringCommitteefor approval. The review of MOD contractswill be part of this process. 19State ofForestReport-Publishedunder the auspicesof the CongoBasinForestPartnership 50 17. Semi-AnnualM&E Reports: A semi-annual report will mimic that of the quarterly reports except that it will provide a filler picture of the program by giving a status update on indicator data and task implementationprogress from implementingcontractors. They will also offer an opportunity for dialogue between implementing partners and the CU regarding challenges encountered during project implementation. 18. Annual M&E Reports: The annual report from implementing partners will include indicator information collected since the semi-annual report, as well as the status of their implementation activities at the end of the year. Partners will be asked to compare and justify their progress with the implementation benchmarks they identified in their work-plans. Successes will be highlighted, and partners will have an opportunity to provide suggestions, comments, or concerns to the CU regarding financial management, M&Earrangements, implementationchallenges, changes inbenchmarks, etc. 19. Annual Project Report: An annual report will be prepared from a compilation o f data received in the quarterly, semi-annual, and annual reports received by the CU from implementingcontractors. This that includes information on all Results Framework indicators and will be distributedto other Congolese Ministries,donors, internationalNGOs, and other interested stakeholders. DEP will compile information from all agencies operating on the ground to produce the Annual Project Report. Successful completion and distribution of the Annual Project Report may also be linkedto disbursement of project funds. 20. Of the above reports, the Bank will receive mandatorily the semiannual progress reports. Other reports are necessaryfor smooth project operation. Procedures 21. The CU's monitoring and evaluation team will collect data from various sources including decentralized monitoring units, different branches of MECNT, and contractors operating on the ground. The CU M&E Expert and Specialists will update and maintainthe M&E system and produce reports and respond to ad hoc information requests throughout the year. 20. Each quarter, the regional monitoring and evaluation team will collect data and update the system to produce the quarterly monitoring report that will include summary tables for each activity as well as financial information. Similarly, mid-year, the semi-annual report will be submitted by collaborating contractors with less frequent data collection. At the end of the year, contractors will send in an Annual M&EReport with indicatordata and implementationactivity status. 21. At the end of each year, the Annual Project Report synthesizing the work done by implementing partners during the 12 past months will be produced and sent to all stakeholders. The Annual Project Report will include information on all project indicators, their baselines, their benchmarks, and their status at the end of the year. The Annual Project Report will also provide information for the C U in making strategic decisions for the managing project implementationthe following year. Integration ofProcessMonitoring with FinancialManagement 23. The monitoring and evaluation system will be computerized, and equipment and training required for the implementation of the project M&E will be linked with the capacity building activities budgeted under Component 1. Overall, the system will be organized in a modular approach as follows: . Central module: Headed by the M&E Expert in CU, this module is in charge o f compiling indicator data for the project Results Framework and enforcing the deadlines from specific 51 . modules. This module will also prepares project M&E Reports and respondsto the requests from users. Implementation Module: This module manages project implementation,and responsibilities will be shouldered primarily by the M&E team of the CU. A working group including representatives from main contractors and NGOs, will be formed to encourage dialogue regarding implementationand prevent blockage on procurement, disbursement, or activity implementation.MOD contractors will present contract work-plans including the goals for the year, brokendown by activity. Activities described in the project descriptionare broken down intotasks to be achievedover the 12monthperiod. At the end of the year, the total for . each task equals loo%, and implementationprogress measured through the % i s of tasks achieved. Administrative Module: Headed by an M&E Specialist, this module will be a system of reminders andwarnings of M&E calendar deadlines, as specifiedinthe M&E Manual.It will . also manage the system of filing and receiptof reportingfrom the disparate stakeholders in DRC, Data Collection Module: This unit monitorsindicator datafor quality control, broadertrends, and adaptive management of the project implementation.Reports from site visits to verify project implementationand indicator data will provide a double-check on reportingreceived . by the UC. The Data CollectionModulewill be linkedto the Administrative Module,as well as capacity buildinginitiativesthat improveGIS traininginthe Ministry. Financial Module: This module links satisfactory completion of annual reports and annual work plans, and in some cases to the disbursement of project funds. It bridges the financial and M&E systems and allows the monitoring of actual and planned ratios of budget to activity. 24. A geo-referenceddatabasewill be usedto housethe M&E system andthus allow for user queries as well as feed into efforts to visualize the status of DRC's forest estate. Inthis way it will contributeto efforts at greater integrationof data with geographicalreferences, provide a naturalplatformfor training and capacity buildingunder Component 1, and empower the Ministry to create maps depictingthe status ofprojectactivities.The systemwill result ina full, spatially-referenced, quarterlymonitoringreport. 52 6 5, 2 3 2 3 -0 -0 8a 8 8 8n B. L I c a 0 10 0 i N z N N rd S s --r v, 0 5 E: N v, 5 0 0 0 0 I di c3 z z c3 Q) 42 0 a rl 8 W 8n B bn 8 El Q) x E 2 Q g x > B e e cd E =I 4 4 In In 0 0 0 In 0 (u e7 10 12 41 0 El 0 \o El 0 0 0 8 0 a 8 a -5 . r 8n 5u B 5Y B 3 .e Y c) 0 i i 0 0 IC) I Annex 4: Detailed Project Description Democratic Republic o f Congo FORESTAND NATURE CONSERVATIONPROJECT 1. The total cost o f the project is estimated at US$70 million24over an implementation period of five years. The geographic coverage of the project is the head offices of the Ministry of Environment, Nature Conservation and Tourism (MECNT) and the Congolese Institute for Nature Conservation (ICCN) in Kinshasa as well as parts of the three Provinces of Bandundu, Equateur, and O~ientale.~~this is the As first operation in DRC of its kind, the scope i s severely limited by the available resources, and the implementation and operating capacity of the institutions concerned. Once a better institutional capacity has beenestablished and positive results have become apparent, the assistanceprogram can be scaledup. 2. The project is divided into three components: Component 1: Institutional strengthening of MECNT Component 2: Community participation in forest management Component 3: Management of Protected Areas and Strengthening o f ICCN COMPONENT 1: INSTITUTIONAL STRENGTHENING OF MECNT (US$37.2 million)26 3. The capacity building activities will take place in the Ministry of Environment, Nature Conservation and Tourism (MECNT) at the central level in Kinshasa and in the three pilot provinces of Bandundu, Equateur, and Orientale.27Some support will also be provided to the Congolese Institute for Nature Conservation (ICCN) through Component 3 (see below). The general decay of public institutions and the lack o f incentives for civil servants call for institutional support as a key element of the project. This component aims at a rapid restoration of employee motivation and the capacity to plan, manage, and control the administrative and technical functions of MECNT's central and local offices. 4. Priorities for Capacity Building at Headquarters. The Directorates and other units of MECNT to be strengthened by the project were selected for the need to improve their capacity for planning, monitoring, and controlling the management of forest resources. Only the essential services inthe chosen unitswill berestoredthrough the project. The principal unitsof MECNT to be reinforced and the targeted activities are as follows: 9 Directorate of GeneralServices (DSG):financial management (budgets andexpenditures) bythe Financial Division and human resources management by the Administrative Division; 9 Directorate of ResearchandPlanning (DEP):projectplanning, monitoring, andevaluation; 9 Directorate of Forest Management (DGF): forest information management and support and development of community forestry (the future Division of Community Forestry: DFC); 9 Directorate of ForestEnforcement(DCI) :central brigade offorestry control; > The -future Directorate of Inventory and Forest Management Plans (DIAF): validation and enforcement o f management plans and management of geospatial information; 9 Field offices of MECNT in the 3 Provinces: monitoring and enforcement of forest resource management norms on the ground; 24 Composed of US62.2 baseline cost plus physical and price contingencies, and environmental framework unallocated US7.8 million (see Annex 5) financedthrougha US$64.0Million IDA grant and a6 million GEF grant. 25 In addition, the Maiko National Parkextends to the provinces of Maniemaand North Kivu. *'See 26 The cost estimates in the text are base costs, i.e.without physicaland pricecontingencies footnote 26. 60 P Environmental Ministries in the 3 Provinces: logisticsoffield activities; and P fi) Cabinet and (ii) Office of the General Secretarv: planning, strategy, coordination, and supervision of forest and environmental policy. 5. Priorities o f Capacity Building in the Pilot Provinces. The project will reinforce the capacity of the provincial coordinationteams and offices inthose Districts and Territories inthe three pilot Provinces that have a dense forest cover. This includes 12 o f a total of 13 Districts and 53 of the 68 Territories, corresponding to more than 75% of the area of the three provinces (see the table in Annex 1). These territories are a priority for forest activities (more than 20% forest cover) inthe three Provinces. Ineffect, they capture most of the actual or potential area of production forests (industrial concessions, artisanal permits), along with conservation zones (parks, reserves, etc) and community development areas (non- timber forest products, village forested territories, etc). As this project is the first operation of its kind in DRC, the capacity building will be limited to these areas. Support will also extend to limited additional areas, agreed upon with the IDA in other provinces, to carry out forest control operations and governance enhancement, Subcomponent 1.1: Infrastructure,Equipment,and ManagerialFunctions(US$ 18.9 million) 6. The subcomponent consists of improving the operational capacity o f MECNT's forest and conservation units, including: a. Reinforcement of key administrative functions; b. Refresher courses inforest and environmentalmanagement c. Rehabilitation of premises, logistics and operational capacity field offices; d. Logistical Support to the three Provincial Ministries and support to the decentralization process; e. Capacity Building inthe Cabinet andthe Office of the General Secretary of MECNT; f. Creationof a Divisionof Community Forestry; g. Construction of offices for MECNT inKinshasa; and h. operating Costs for Subcomponent 1.1. a. Reinforcementof AdministrativeFunctions(US$2.3 million) 7. MECNT does not have sufficient capacity at both the central and provincial levels to implement new forest policies on the ground or to organize regular missions to enforce forest regulations, repressing infractions, and gathering and transmitting statistical forest data. The institutional strengtheningwill assist inthe implementationofthe institutional reform of MECNT, which is basedon a review that was carried out in 2007. Three scenarios of reform were proposed, and the Ministry chose the scenario dubbed "reinforced status quo," with important modifications, mainly to create a Division o f Community Forestry inthe Directorate ofForest Management andto reduce the total number of Directorates from 21to 12(see the InstitutionalContext inAnnex 1). 8. The reinforcement of administrative functions will aim at restoringthe effective operation of the following functions at the central level o f MECNT: financial management (receipts, expenses), human resources, planning, monitoring and evaluation. For financial management, the project will support DSG in modernizing the system of management of annual credits of MECNT (improving the channeling of public expenses, procurement, monitoring of accountings and financial reporting), modernizing the information systems (database), and facilitating the implantation of the system in the pilot provinces. Regarding human resources management, the project will assist DSG with: (i)inventory/survey of the competencies of MECNT's human resources; (ii) creating a new organizational framework for MECNT; (iii)projectingstaffreductionsdueto retirement andcalculatingrecruitmentneeds(seethe Institutional Context in Annex 1); and (iv) developing a performance-based system o f evaluation. These activities will 61 focus on the three pilot provinces. In the area o f planning, monitoring and evaluation, the capacity building will put in place the tools for the preparation o f activity plans and their monitoring and evaluation, the consolidation o f annual work plans for the Ministry, and the implementation o f a system o f monitoring and evaluation o f the project. This will also be oriented towards the three pilot Provinces. 9. The project will finance: (i)technical assistance to create the performance-based management system, preparingthe necessary tools (regulatory text, software, etc), training the staff o f the Directorates at the central level and three provincial coordination teams, and supervising system implementation; (ii) supply o f computer equipment, office furniture, and logistical means (vehicles and motor cycles) (iii) technical studies; and (iv) operating costs as required. b. RefreshercoursesinForestryand environmentalManagement(US$3.1 million) 10. The aims o f the training program are: (i)The development o f training courses adapted to the continued education needs o f the beneficiaries (types and number o f internships, their quality, and the number o f beneficiaries); (ii)the acquisition o f basic and sufficient knowledge and experience by beneficiaries allowing them to understand, follow, and verify the implementation o f the new rules o f management o f forest resources and the environment; and (iii)improvement in the effectiveness o f employees and managers in their respective tasks and in MECNT globally for the better sustainable management o f forest resources and the protectiono fthe environment. 11. The strengthening o f the human resources capacity o f MECNT in the management o f forest resources and the environment i s needed partly to restore the functioning o f the Ministry to an adequate level and partly to adapt to the current demands. This should include not only the recruitment o f new recently trained employees, but also a retraining o f relevant employees to a level where they can respond to the new policies, and employ current strategies and techniques in the immediate timeframe. The training program will continue the current policy o f focusing primarily on an update o f the overall knowledge o f MECNT managers and employees at the central and provincial levels in the policies and strategies o f forest resource management and conservation. Additional training will be provided under the project inthe context o f sector specific activities (see below). 12. The continuing education program o f the project will consist of: (i)1-month long refresher courses for managers; (ii) training o f trainers to facilitate the continued on-site education o f the provincial teams; (iii) on-site education for field employees; (iv) professional training o f 15 weeks at the University o f Kisangani in sustainable forestry management (ADF) for the high-level employees involved in the sustainable management o f forest resources; (v) exchanges o f experience between the coordination teams, Districts, and Territories in the three pilot provinces; (vi) travel study and overseas seminars for high- level employees; and (vii) short specialized overseas training. Care will be taken in personnel management to consider the completion o f courses in the decision for job promotions. The detailed education program will be defined in the first year with the support o f a short-term consultant on training, taking into consideration the existing education programs, the restructuring exercise o f the Ministry, and the evolution o f the Ministry's requirements. c. Rehabilitationof premises,logistics and operationalcapacity infield offices (US$7.1 million) 13. The aim o f this activity i s greater effectiveness o f the field offices (coordination teams) in: (i) the administrative functions, such as issuing directives, permits, certificates, and attestations; (ii) responsibilities linked to surveillance, enforcement, and control; (iii) monitoring o f forest management plans in forest concessions and community forests; and (iv) cataloguing and monitoring o f forest resources and the environment. 14. The intended role o f the provincial offices is to oversee the monitoring o f forest management, which they are unable to do effectively at present. The project will include capacity building o fthe offices o f the three pilot Provinces as well as in their 12 forested Districts, 53 Sub districts (Territoires), and 13 62 control posts. This will include: (i)rehabilitation of office space; (ii)provision o f office equipment adapted to local conditions (furniture, office and communications equipment), (iii)resources for field work (transport equipment, measuring instruments, uniforms, camping supplies, etc); and (iv) operational support for monitoring and enforcement missions into the forest. d. Logistical Support to the Three Provincial Ministries and support to the decentralization process(US$0.9 million) 15. The project will support the Governmetn decentralization policy by facilitating the definition of roles o f and collaboration between central and provincial governments and by financing actions gearedto the decentralization process. The aim is to foster greater effectiveness and independence ofthe provincial ministries, allowing themto execute their tasks in synergy with MECNT's provincial coordinationteams. The project will reinforce the capacity of the three provincial environmental ministries by providing a basic list of equipment for each Province (office furniture and equipment, and vehicles for mission travel to the sites). e. Capacity Buildingin the Cabinet and the Office of the General Secretary of MECNT (US$0.9 million) 16. The aim is the increased capacity of the Ministry to strategically plan, coordinate, and supervise the implementation of forest and environmental policy in DRC. This project sub-component will also helpthe Ministry initiate collaboration with Provincial Governments inthe pilot provinces. The first step inthis direction will consist of a study reviewing of the Ministry's administrative and technical functions and identifyingtasks that could be shared with or performedby Provincial Governments. The second step would consist oftesting collaborativemechanism which could be subsequently scaled up. 17. The part of the project includes capacity building of the Cabinet and the Office of the General Secretary of MECNT through the following: (i)participation in international meetings; (ii)information, office, and travel equipment; (iii)technical studies; and (iv) operational costs. f. Creationof aDivisionof CommunityForestry(US$0.7 million) 18. The main aim o f this activity is: (i) create a new, functional Division of Community Forestry; to (ii)national definitions of the methodology for participation, technical tools, and legislation for developing community forestry in DRC and their use in the field; and (iii)the promotion, planning, coordination, and monitoring o f community forestry activities inDRC. 19. Considering the growing importance accorded to community forestry, MECNT envisages the creation o f a Division of Community Forestry (DFC) inthe DGF. The concept of community forestry i s new inDRC, with only a few recent initiatives for community forestry currently ongoing. The project will support the DFC, once created, to plan, coordinate, initiate, and follow up on the activities inthis domain. To permit the DFC to be operational, the project will support: (i)specialized domestic training and international study trips; (ii)information, office, and travel equipment; (iii)studies and consultations to define the approach and tools (database, field activities, legislative framework) necessary for the development o f community forestry inDRC; and (iv) operational costs (travel and consumables). Studies and site visits by the DFC financed by the project will respondto the needs of the pilot provinces. g. Contributionto Constructionof Offices for MECNT inKinshasa(US$4.0 million) 20. MECNT is currently housed in several buildings in different parts of Kinshasa. The majority of these buildings are rented and dilapidated. Their owners are demanding from Government the return of their buildings, and the Government has agreed to this in principle and has informed the Ministry accordingly. MECNT intends to resolve this problem in a mutually satisfactory manner by constructing a suitable office building on vacant land in the city belonging to the Government. A feasibility study 63 identified two alternative sites. The project would finance US$4.0 million of this construction. Ifthe total cost of design, construction, and construction supervision were to exceed this amount, the IDA contribution would be made only with the condition of disbursement that funds for the remainder of the costs have been secured from other donors or the government and submission of documentation showing the Government's landrights, acceptableto the Bank. 21. The relocation o f the Directorates and other services to a suitable, well-equipped building is expected to improve MECNT's effectiveness while creating favorable conditions for better collaboration between the different entities, a more efficient use of office space and equipment, and greater motivation of the staffthrough a better work environment. ExpectedOutputsor Outcomes from Subcomponent 1.1: (9 Improved Financial Management: (i) better matrix of expenditures and annual budgets and An improved functioning of MECNT's forest and conservation sectors, resulting from better transparency of operations; and (ii) rational utilization of project funds tightly linked with the their objectives and regular monitoringoftheir financial accounting; (ii) Improved Human Resources Management:(i)Simpler organizational framework andjob descriptions; (ii)a recruitment plan and the deployment of new employees; (iii) a plan for continued education; (iv) a simple and transparent system of employee evaluation, accompanied by guidelines in terms of sanction/bonus levels; (v) a system o f career plans for each category of employee; and (vi) input into,the university and technical education curriculum o f future employees; (iii) Improved Planning, Monitoring, and Evaluation: Effective planning and monitoring of MECNT forest and conservation activities both in terms of technical information (monitoring of the quantity and quality of realizations) and financial information (monitoring of the effective use of resources), as well as operational information (possibility of adaptive management). Subcomponent 1.2: Establishment of Specialized ForestManagementSystems(US$8.1 million) 22. The subcomponent aims to put in place the needed tools for effective forest management, validating and monitoring forest management plans, and increasing capacity to evaluate and oversee implementation on the ground. The areas of support consist of: a. Creationo f an Integrated Forest Management Information System; b. Validation and Monitoring o fManagement Plans; and c. Better Control of Implementation of Forest Regulations on the ground a. Creationof a New Sector Specific Data ManagementSystems(UW3.2 million) 23. Inthe absence of an integrated system for managingforest resource information, it is difficult for MECNT to make informed decisions, elaborate policies, and manage the forest sector. To remedy this situation, MECNT will develop an integrated system for the management of forest resources,: (i)a geospatial information management system (SyGIS), including an interactive forestry atlas updated regularly to allow monitoring, especially o f forest title limits and logging roads; and (ii)a forest management information system (SIGEF) based on a sub-system of forest accounting, which collects financial data linked to the forest sector, and a sub-system of physical log tracking, which physically validates data collected on the ground as well as the enforcement of regulations. 24. To achieve this, the project will support: (i)a team of international and national experts specialized in conceiving, experimenting, and deploying the two systems on the ground; (ii)information seminars and workshops; (iii)provision of office equipment, furniture, and logistics; and (iv) operational 64 costs. DGF will have the technical responsibility for work. To benefit from the experience gained inthe development of mappingtools and forest information in DRC and inthe sub-region of Central Africa and to ensure a unified approach, it has been agreed that a single source contract will be entered into with WRI for continuing their work in this field through a delegated management contract (MOD), to which WRI will contribute administrative costs from its own resources. b. Validationand Monitoringof ManagementPlans (US$2.0 million) 25. The main aim of this activity is: (i)the participatory preparation, adoption, publication, and dissemination of the norms and procedures of revising and monitoring forest management plans with the primary stakeholders in the forest sector; (ii) education of public servants charged with validating and the monitoring forest management plans; (iii)the timely review of forest management plans submitted by companies based on criteria that are clear and transparent; (iv) the creation of a system o f effective monitoring of the management plans; (v) an evaluation of the status of forest management plans and periodic presentation in a public and transparent fashion; and (vi) the creation o f a mechanism for public consultation in forest management issues. 26. Conforming to the forest code, several management plans and technical annexes have been or are inthe process of beingprepared by industrial forest companies. These documents are awaiting review by the forest administration, some with long delays due to the lack of capacity o f SPIAF. 27. To create the human and physical capacity in MECNT, and in particular SPIAF, for the timely validation and monitoring of management plans, the project will support: (i)technical assistance for preparing the norms and for the supervision of the technical framework; (ii)logistical, information, and office equipment; (iii) workshops on validation and dissemination of norms and procedures; (iv) training o f technical teams; (v) publication of results of the validation and monitoring o f forest management plans and public consultations; and (vi) operational costs. The technical responsibilities of this work fall on SPIAF. Due to the experience of WWF in forest management in DRC and its ongoing work in the preparation and dissemination o f norms and guides for management plans, a singe source contract will be entered into with WWF inthe form of a delegated management contract (MOD) to coordinate the project activities inthis domain. c. BetterForestRegulationEnforcement(US$2.9 million) 28. The aim is as follows: (i)creation of an functioning system of forest law enforcement which operates in full autonomy; (ii)development of an administrative process and effective field operations, and public certification for quality control; (iii)increase of sector receipts to the state from a more effective and equitable recovery of taxes; (iv) a growing proportion of wood products in Congolese forest concessions is legally recognized at the provincial, national, and international levels (reduction of illegal logging); and (v) makingthe forest enforcement system eventually self-financing. 29. Weak resources and the absence of a national strategy for managing forests and the animal population make enforcement almost nonexistent in DRC. One result i s the illegal exploitation of wood, with an important loss of revenue for both the State and local populations, one that will be defined in concert with all public, private, and civil society actors inthe forest sector. The capacity o f the institutions incharge of forests will be strengthenedso that they will be able implement a system of enforcing forest regulations. 30. The project will support: (i)the collection of data on operators, forest exploitation titles, and artisanal industrial production; (ii)physical verification (mobile brigades) and documentation (titles of securedtransport) of the transport of forest products on the principal road axes; (iii) organization of audits and biannual verification of the legality o f production and the product chain o f the principal operators (procedures to be developed); (iv) training and deployment of enforcement staff in the three pilot provincial coordination teams and the central brigade (DCI); (v) creation and maintenance o f a secure 65 system of electronic data permittinganalysisandthe reconcilingof datawith data collectedon monitoring visits (in synergy with SyGIF and SIGEF); (vi) information transmission about abnormal accounts or summary statistics to the relevant services; and (vii) analysis and status updates of the international tropical wood market and exportprices.The technicalresponsibilityofthis work falls under the direction ofthe DCI.This supportwill be donethroughdelegatedcontractmanagement(MOD) with a firm that has experience in the sub-region of Central Africa as well as working with the General Society of Surveillance (SGS). Subcomponent 1.3: InstitutionalReadinessand Transformation(US$5.0 million) 3 1. The subcomponent will support institutional transformation and readiness by financing an institutionalreorganization.Based on an institutionalanalysis and a human resources development plan prepared in collaborationwith the World Bank and France, the Ministry of Environmenthas compileda comprehensiveproposalto reducethe number of Directorates from 23 to 12, redefinethejob descriptions for all HQand field staff, hnd the retirementof old eligible staff and the recruitmentof new staff. This proposal has been approvedby the Government's Economic and FinancialCommission, and is expected to becomeeffective soon, The reorganizationwill transform the Ministry into a leaner andmore efficient institution. Staff numbers are expected to change from 4,881 registered civil servants, to 3,620 staff. 2,261 staffhavingexceededthe retirementage and 30 years of service will retire, and 1000new staffwill be recruited. 32. The arrangements for this mandatory staff retirement and the new recruitmentwere proposedby the Retirement Inter-ministerialWorking Group, including representatives of the Presidency, and the Ministriesin charge of the Civil Service (Fonctionpublique), Budget, and Finance. The staffto beretired has been identified: 637 will be from the Kinshasa office of the Ministry and 1,624 from up-country locations. The project will contributeUS$5 million to this operation which will receive complementary fundingfrom DFIDand possiblythe EU. 33, The project-supportedprocedure for verification and payout will include: i)dissemination of informationto the retireesaboutthe retirementpackage and procedure; ii)verification ofthe eligibility of retirees; iii)installationof a computerizedtrackingsystem; printingthe checks; iv) makingthe payments to the retirees through a commercialbank; v) internal monitoringofthe procedure; vi) independentAudit of the procedure. 34. The financing of the retirementpackage has been designed to comply to the following principles amongothers: a. The expenditureswould be productive.Manyyears ofturmoil and lack of government resourcesto regularly pay even the meager salary of the aged staff of the Ministry has resulted in low motivation and low ability to perform.The fewer, newly recruited, younger and better qualified staff that will be recruited are likely to respond much better to the environment of peace, dynamism, substantialdonor support, and a commitmentto reformthat hasemerged. b. The impact on the fiscal sustainabilitv of DRC would be positive. The Ministry of Environment estimatesa saving in salary of US$2.18million per year from the retirementof [2,26 11employees, while the annual salary of 1,000 new recruits would add $1-24million, a net saving of US$0.94 million.Not includedinthis calculationare the monthlypensionpaymentsdue to the retirees. c. Satisfactory oversight arrangements, including fiduciary oversight, will be put in place as a condition of disbursement for this sub-component. Part of the requirement is that a Retirement Technical Advisor, a Retirement Financial Intermediary to affect the payments (a commercial bank), and a Retirement Auditor will be appointed, satisfactory to the Bank. The internal monitoringofthe procedure by the Governmentwill be followedby an independentaudit. 66 35. Whereas the financing of overdue retirement of eligible staff does not technically fall under the specific requirements o f OP 6.00 in connection with the financing o f severance pay, relevant recommendations set forth in OPCS guidelines were followed and Regional Management has neverthelessbeeninformed of all aspects ofthis operation. Subcomponent 1.4: Supporting the CoordinationUnit to FacilitateProjectImplementation(US$ 5.2 million) 36. The project will reinforce the capacity of a Coordination Unit (CU) inMECNT. Created in 2003 to lead the preparation of the national forest program and subsequently charged with managing the present project's PPF, the CU will be strengthened to facilitate the implementation of the project (final staffing will be established in a Ministerial Arret6 to adopted as an effectiveness condition).. Support to the CU will include: (i)long-term international and/or national technical assistance on financial management, procurement, external audits, and monitoring and evaluation, as well as short term consulting assignments in select areas of specialization; (ii)meetings and workshops for consultation, sensitization, and validation of project activities, including the functioning of the Steering Committee; (iii)supply of office, information technology, and vehicles; and (iv) operating costs of the CU. A consultant on social and environmental safeguards will be recruited to develop an environmental and social work plan and monitor the implementation of the EISE. The supply of equipment for the C U will be grouped under the delegated management contract (MOD) for equipment under Subcomponent 1.1: Infrastructure, Equipment, and ManagerialFunctions. ExpectedOutputs or Outcomesfrom Component 1 (i) theadministrativefunctioningofMECNTandrelatedinstitutions,byendofproject: For a) A leaner, better organized forest institution, with more effective and better trained staff; b) A functioning management system for expenses and annual budgets is operational. The office of the General Secretary is fulfilling its assignedfunctions; c) A functioning system of performance evaluation for human resources management is operational inDSG; d) Projects are submitted to regular audits by DSG; e) A functioning systemto plan, monitor, and evaluate h4ECNT activities is operational inDEP; f ) MECNT employees and managers have benefited from training and have the basic skills neededto fulfill their roles; g) The field offices inthe three pilot Provinces are fully operational and can regularly undertake visits to production sites; h) The provincial ministriesofthe three pilot Provinces have the minimumequipment neededto filltheirrole incooperationwiththeProvincialMECNTteams; i) Thecapacity ofthe Cabinetandtheoffice ofthe GeneralSecretaryto implementactivities has been improved; j) TheDivisionofCommunityForestry isoperational; and k) MECNT is lodged for the long term in office buildings in Kinshasa that are functional and adaptedto its needs. (ii) thetechnicalfunctionsofforestrymanagement,byendofproject: For a) The latest information on all attributed and valid forest titles, protected areas and exploitative activity (logging roads) i s available inan interactiveforestry atlas; b) Data on current activities within forest concessions are available from an operational forest financial management system; c) Exploited forest products are tracked through a functioning system of traceability; d) Management plans and technical annexes prepared by forest companies are analyzed and validated based on clear and transparent criteria, as required by the forestry code; and 67 e) A reduction inillegal exploitation is observed inthe three pilot provincial liaisons through the enforcement of the forest code (certification). COMPONENT 2: COMMUNITY PARTICIPATION IN FOREST MANAGEMENT (US$20.8 million,includingGEF US$1.9 million)) 37. Component 2 aims to protect forest resources and to fight poverty through initiatives that are created and/or implementedin collaboration with rural and forest communities, which will be the direct beneficiaries. The component will be implementedin the three pilot Provinces and in collaboration with NGOsworking inthe target zones selectedfor the project. Subcomponent 2.1: Participationof LocalCommunities and Civil Society(US$5.5 million) 38. The subcomponent aims to improve the participation of local populations in the management of forest resources.The activities will consist of: a. Participatory zoning o f forested areas; b. Consultationwith local populations; and c. Consultative Forums. a. ParticipatoryZoning of ForestedAreas (US$2.6 million) 39. The main aim is to put in place: (i)a participatory definition of land use inthe different forested areas which is agreed to and recognized by all local actors; (ii)the sensitization o f local communities regarding the priority tasks and activities, including their rights and obligations inherent in the different use zones ofthe land use plan; and (iii)a mechanism to prevent and resolve landconflicts. 40. Forested land in the three targeted provinces occupies a total of approximately 86 million hectares, which is available for multiple uses, including forest conservation, timber production (permanent production forests), community use (community forestry), other productive activities (agricultural, mineral, or petroleum production, etc), and development (infrastructure). At present no coherent and consistent land use plan exists. To reduce the risk of the unsustainable exploitation of natural resources during a push for economic growth in post-conflict DRC, a land use plan needs to be urgently created. Recently some planning initiatives have taken place at a pilot scale in targeted zones, principally with the support of USAIDKARPE in the forest landscape units (see Annex 2) and FA0 in the territories of Lissala and Bumba. The project will put greater emphasis on the participatory nature of the multiple-usezoning process. Incomplement with other activities, the project will support SPIAF over three years to create a land use plan for the forested zones lying outside the forest landscapes in the three pilot Provinces, which amount to 47 million ha. Inaddition the project will assist inthe coordination and compilation of data inthe three pilot provinces in and outside the forest landscapes. 41. For this purpose the project will support: (i)technical assistance (creation o f a database, methodological support, training, transfer of technology, and supervision of technicians); (ii)consultative meetings, restitution workshops, and validation at the local, provincial, and national levels; (iii) studies, analyses, and projections; (iv) supply of logistic (vehicles and motorbikes), information technology, and office equipment; and (v) operating costs as required. This work will be the responsibility o f SPIAF and will be carried out through delegated contract management (MOD) with a competitively selected consultant. b. Consultationwith LocalPopulations(US$2.0 million) 42. The project will foster the effective participation of local populations in the preparation and monitoring of forest management plans and concession rates inconverted concessions through supporting informed and equitable consultations between the affected parties. The consultations are expected to serve 68 as a preventative mechanism, to prevent conflicts while reinforcing the negotiating capacity of local communities. 43. Until recently, local populations have hardly ever been involved in the administrative management of forest resources. In effect, the allocation of forest concession took place between the potential company and the government without consultations. While the concession rates (cahiers de charges) are negotiated between timber companies and the holders o f customary rights, this does not associatethe affected community and has ledto numerous conflicts and at times to a reconsideration of an agreement. To improve the situation, the Forest Code of 2002 requires timber companies to involve local populations inthe preparation of forest managementplans. 44. The project will support: (i) technical assistance (international experts, local NGOs); (ii) training and printedinformation materials to reinforce the representative structures of local communities and their capacity to defend their interests; (iii)local community participation in consultative meetings; (iv) information campaigns and sensitization; (v) studies (promulgation of contracts, socioeconomic evaluations, monitoring of concession rates, tools for dissemination, training modules, etc); and (vi) other community initiatives. The ministerial branch responsible for these activities is the DGF/DFC supported by SPIAF. An international NGO specialized in the supervision o f community work and working in collaborationwith local NGOs will be engagedthrough a delegated management contract (MOD). 69 c. ConsultativeForums(US$ 1.0 million) 45. The main aim is to create greater transparency and better synchronized management of forest resources among all stakeholders participating in the National and Provincial Consultation Councils and the National Forum on Forests. This will permit all stakeholders to inform themselves (including about the provisionsofthe Forest Code) andvoice their concerns. 46. The project will provide incentives for the cooperation between differentpublic, private and civil society actors in the forest sector through: (a) a National Consultation Council; (b) Provincial Consultation Councils in the three pilot Provinces; and (c) a National Forum on Forests, open to all interested parties. These forums will be linked with discussions on the policies and programs of the forestry sector, and will facilitate information exchange, research, and the creation of a consensus. The project will also support information campaigns to disseminate the Forestry Code across the country through workshops, the printed media, radio, television, printing and dissemination of information materials, and translation into local languages. 47. Specifically, the project will support the secretariats o f the councils and forums with logistical means and operating costs for the participation of local and indigenous communities, along with NGOs which are specialized in the organization of sensitization campaigns. These activities come under the responsibility of the General Secretary of the Ministry and will be included inthe delegated management contract (MOD) for the strengthening of administrative functions. Subcomponent 2.2: Development Activities for Forest Communities (US$ 11.8 million, including GEFUS$1.9 million) 48. This subcomponent will support the creation o f community initiatives that are linked to environmental services and development, as well as the diversification of economic activities in forested zones. It will consist of: a. Fundsfor Environmental Services; and b. Diversification Economic Activities inForestedZones. a. Use ofFunds for EnvironmentalServices (US$4.0 million,includingGEFUS$1.9 million) 49. The aim is: (i)the creation of an operational Environmental Services Unit (USE); (ii) identification of various sources of financing available to the DRC for environmental services; and (iii) identification and implementation of community projects linkedto environmental services. 50. The growing importance of environmental protection at the global level has resulted in a large number of funds and market-based mechanisms (including the voluntary carbon market) to promote environmental services initiatives. The BioCarbon Fund o f the World Bank i s an example, which is already supporting the Ibi Bateke fuelwood plantation project in DRC. The Forest Carbon Partnership reduce emissions from deforestation and degradation (REDD). Community projects - such as Facility is another initiative, which aims to pilot some carbon credit transactions in pilot activities that reforestation, agro-forestry, protection o f natural forests, sustainable management of fuel wood, and conservation contracts or concessions - are often eligible to benefit from these funds and market-based mechanisms. The Directorate o f Sustainable Development (DDD) o f the Ministry is charged with identifying these funding sources and facilitating access to them. The project will support the identification and use of these new funding mechanisms on a pilot scale, including possible reforestation and REDDpilot activities for carbon credits. 51. The ultimate objective of this component is to allow communities to benefit from the trade o f environmental services which are generated locally and which may be traded in the marked to 70 environmental services worldwide. Several steps are needed to make this possible. The project will support these steps and work communities to place environmental services in the global market. The project will support: (i)the creation of a USE in the DDD, which will be charged with creating and monitoring documentation (short-term consultants, creating a database, training, study trips, workshops, etc); (ii)studies to identify activities eligible to benefit from environmental funds (identification, local consultations, economic evaluation, legal advice, external monitoring and evaluation, research on co- financing, eligibility criteria, policies, etc); (ii) studies on an appropriate implementation framework for REDD at the national level, including a mechanism to coordinate sub-national activities and (iii) implementationo f pilot projects, including projects aimed at reducing emissions from deforestation and degradation (REDD) which could benefit from the voluntary carbon market. The technical responsibility of this activity will be with DDD.The work will be carried out through a delegated management contract (MOD) with an NGO specialized inthis field and, ifpossible, already operating on the ground. b. Diversificationof EconomicActivities inForestedZones (US$7.8 million) 52. The aim is: (i)implementation of small grants projects by communities; (ii)improvement of the livelihood of rural population, in particular indigenous groups; (iii)technology transfer of improved agricultural and forestry practices and reduced negative impact on natural resources, particularly forest resources; and (iv) diversification of economic activity intargeted villages. 53. Rural economic activities inforested zones are basedon agriculture and the exploitation of timber and non-timber forest products and often use inefficient traditional techniques that can be wasteful of natural resources. In order to reduce the pressure on forest resources and improve the livelihoods of local populations, the project will put in place a fund to give small grants for micro-projects in community development and the diversification of economic activity in forest zones. Special attention will be placed on indigenous, vulnerable, or marginalizedgroups. 54. The Project will support: (i)consultations and feasibility studies for designing the approach, criteria for selection and implementation of the small grants (manuals, training, etc); (ii)selection o f eligible micro-projects, and (iii) equipment and operational costs of media teams to help populations to formulate their applications and later to implement the micro-projects. The responsibility for implementingthese activity lies with DGF (DFC). Several delegated management contracts (MOD) will be enteredinto with NGOs already under contract with USAID/CARPE to implement related activities in the forest landscapes of Lac Tumba, Maringa Lopori Wamba, Ituri Epulu Aru, and Salonga Lukenie Sankuru. Subcomponent2.3: Social, Environmental,and Cultural Safeguard Activities(US$3.5 million) 55. While the project has been designed to promote social and environmental objectives, one cannot exclude that the implementation o f some of its activities may entail involuntary displacement, limitation of access to natural and cultural resources, threats to the environment or other undesirable effects which by their nature trigger bank safeguards. Given the community-driven nature of most of its activities and the fact that planning of activities will be carried out on a year to year basis, it is not possible to know at this time precise instanceswhich will trigger the various safeguards. 56. For this reason, the present project is equipped with five framework documents i)the Environmental and Social Management Framework (ESMF), ii)the Resettlement Policy Framework (RPF), iii)the Process Framework (PF); iv) the Indigenous People Policy Framework (IPPF); and v) the Physical Cultural Resources Framework (PCRF) which provide guidance on how to deal with safeguard issues which may arise during implementation. 57. The project has also set aside US$ 2.5 million to finance the ESMP and an unallocated US$3.5 Million to finance the preparation and implementation of the activities envisaged under each safeguard policy were these happen to be triggered. In case few or no project activities were to trigger the 71 resettlement or other measures envisaged under the safeguard policy, the US$ 3.5 Million would be used to finance community-based activities of the type envisaged under the project's component 2. 58. Under this component, the project shall finance items such as: (i)training of the MECNT staff and CU team members on environmental and social safeguards, including safeguard implementation and enforcement (ii)sensitization and education of community leaders, managers and staff of partner organization on environmental and social safeguards implementation and monitoring, (iii)specific environmental and social studies requiredunder other components of the Project, (iv) technical assistance to the MECNT and C U on environmental and social management o f the Project, and (v) implementation of measures required under the ESMF, RPF, PF, IPPF and CRMF through an unallocated amount of financial resources., and (vi) community-based environmentaland social activities. ExpectedOutputs or Outcomesfrom Component2: 55. For the participation of local communities and civil society, by end o f project: (i) A land use plan for the three pilot provinces is available and accepted by the different stakeholders inthe forest sector (government, private sector, and forest communities); (ii) Local populations are fully engaged in the creation of management.plans and cahiers de charge prepared by forest companies working in neighboring forest concessions and are knowledgeable of their rightsand responsibilities; (iii) The stakeholders inthe forest sector are represented and actively participate in the elaboration of the policies and programs o f development o f the forest sector (councils of consultation, national forum on forests, etc); and (iv) Forest sector stakeholders (government, civil society, forest populations, and forest companies) are well informed o fthe Forest Code. 56. For the development of forest communities: (i) Existence o f community projects linked to environmental services (number and type o f projects, sources of financing, etc); and (ii) Existence o f small community development and diversification of income projects (number and type of projects, and revenues generated). COMPONENT 3: MANAGEMENT OF PROTECTED AREAS AND STRENGTHENING OF ICCN(US$4.1 millionGEF) 57. This component will strengthenthe administrative functions o fthe Congolese Institute for Nature Conservation (ICCN) and will aid inthe rehabilitation o f Maiko National Park. The Maiko National Park (10,000 sq km) scores second among DRC's eight priority biodiversity reserves (see Annex 11). Nonetheless, the Park received minimum attentions in the past and has insufficient national staff. Until 2003, Maiko had only one ICCN warden and a small team o f untrained and under-equipped guards. Over the past ten years only 40% of its area could be patrolled, and only minimal and intermittent external support was directed to the Park. Despite its high conservation value, Maiko continues to be the only major park of the DRC without a sufficient and reliable source o f funding to secure rehabilitation and management. The Project's support to Maiko will be critical to closing an important gap in the ICCN's conservation strategy and work program. 58. The population densityof the region surrounding the Maiko National Park is among the lowest of eastern DRC; however, as is the case for a number of other National Parks in DRC, the presence o f a variety o f small, armed groups is reported within the Maiko. The most significant of these are the permanent settlements established around Silisa inthe central zone o fthe Park by Simba rebels inthe late 1 9 6 0 ' ~the current population of which is variously estimated at between 600 and 3,000 inhabitants. ~ 72 These figures have yet to be formally confirmed, however, given the difficulty of access to the interior o f the Park. The livelihoods of the groups within the Park are largely based on subsistence hunting and artisanal mining, with no access to health, education or other services. As part o f the on-going conflict resolution dialogue with the Provincial Government, the inhabitants of the Simba settlements are involved in negotiations aimed at providing support for improved living conditions in areas outside the Maiko National Park. Subcomponent 3.1: InstitutionalStrengtheningof ICCN(US$ 1.0 millionGEF) 59. The results that are expected from this subcomponent are: (i)improved administrative and financial management of ICCN headquartersand at its key conservation sites; (ii) availability o f data that have been validated through ground surveys in key protected areas; and (iii) preparation, publication, and dissemination o f the Conservation Law. 60. The capacity building support that has been provided recently to ICCN through various externally-assisted projects has not yet resulted in sufficient capacity to effectively implement a national conservation policy and manage and monitor its protected areas. To improve the situation, the project will provide targeted capacity building and institutional strengthening to ICCN, including restoration o f the basic infrastructure of its provincial offices. Specific activities under this subcomponent will be (i) public consultations and briefing sessions on the Conservation Law and the participation o f ICCN employees in international meetings; (ii) preparation o f the Conservation Law; (iii)training for central employees and at priority conservation sites in the administrative management o f SyGIAP, (iv) additional equipment to reinforce the operational capacity at the central level and render SyGIAP more effective; (v) technical assistance in financial management (complementing KFW assistance), (vi) improvement of the existing system o f SyGIAP in the areas of concept development, data collection, data entry, dissemination of information, training; and (vii) operating costs for furnishing SyGIAP data to the 11 priority sites not covered by UNESCO. These responsibilities will be overseen by ICCN. A delegated management contract will be entered into with a firm or consortiumthrough competition. Subcomponent 3.2: Rehabilitationof Maiko NationalPark(US$3.1 millionGEF) 61. Despite the richness o f its flora and fauna, the Maiko National Park has been virtually abandoned in the past. Surveillance teams are few and under-equipped, and the infrastructure necessaryto monitor wildlife, conduct research and host tourists is practically nonexistent. Given its global biological importance and its priority for the conservation and biodiversity agenda o f the DRC, the project will provide support to rehabilitate the infrastructure and strengthen the management o f the Maiko National Park, as well as for community development initiatives aimed at providing livelihood alternatives to activities that threaten the conservation o f biodiversity within Park. 62. This component will include: (a) enhancing park management capacity; (b) developing and improving its infrastructure; (c) upgrading office, communications, and field equipment; (d) design and implementation of specific community development projects to benefit communities in buffer zones, and (e) providing assistanceto communities established within the Maiko National Park in order to allow for their voluntary resettlement Responsibility for implementation of these activities will lie with ICCN(see Annex 6, Implementation Arrangements). The component will emphasize participation and will support marking of park boundaries in collaboration with communities and by community members themselves. A delegated management contract (MOD) will be agreed with an NGO already active in Maiko National Park. 63. Through this component it is expected that Maiko National Park will be better managed and protected through improvements inthe human and logistical capacity o f park managers, scientific studies, the participation of neighboring populations in the management o f the park, and socioeconomic development initiatives for local populations. 73 Expected Outputsor Outcomes from Component 3 (i) The administrativeand financial management of ICCN and key sites are improved; (ii) Data on the 16 priority conservation sites are regularly updated and readily available at both the centrallevel and onthe groundthrough SyGIAP; (iii) The ConservationLaw is adoptedand largely disseminated; and (iv) Maiko National Park is effectively protected (number of guards trained and equipped and seizures and infractions noted) and managed (infrastructure, and scientific studies realized) with the participation of the local population (community development initiatives implemented). (v) Stabletrend inabundance of key bio-indicator species Training offeredthrough all project components 64. Training will be offered in all project components and by a wide array of sources: forest schools, training consultants, and training units in charge of discrete components of larger MOD contracts. The training program supported by the Project will consist of a variety of training modules and refresher courses. They can be divided into: i)training in specific management systems, ii)courses aimed at creatingbasic forest and nature conservationskills. Training;in specializedmanagement systems 65. Training in administration, financial management, personnel management, GIs, log tracking systems, and comparable specialized training will be provided in the framework with support of temporary technical assistants. To this end, all contracts related to the establishment of specialized management system will include a significant stafftraining component. Training inbasic forest andnature conservationskills 66. Additional training courses will focus on restoring core technical skills among the bulk of the staff of MECNT inthe Projectarea. These courses will includethe following: General forestry and environment one-month refresher courses. These will benefit MECNT's directors and upper-level managers at the central and provincial level (for the three selected provinces). These courses will focus on general forest and environmental management, new legal and regulatory instruments, monitoring, and law enforcement Training of trainers. These courses will concern selected engineer level staff who will be in charge of providing on site training to forest staff at the province and district levels. . In-service training for forest guards and other field staff. This is one of the core training modulesoffered. It is expectedto reach950 field staff and provide hands-on,practical knowledge on production, conservationand community forestry, behavioralcodes, and law enforcement. Sustainable Forest Management Education at the University of Kisangani. Managers and selected staff at the provincial level will benefit from this one-yearcourse. Work exchange programs between staff from provincial coordination, district, and sub-district levels inpilot provinces. Study tours and seminars overseas. These will be reserved for senior managers at the central and provincial level. Training linked to promotions. This training will have maximum duration of one year, will focus on subjects still relatively undeveloped inMECNT, and will allow good performersto take new responsibility and advancetheir career. Short-term, specialized trainingoverseas, of average durationof one month. 74 75 Annex 5: ProjectCosts I Localcost 1Foreign cost I Total cost 1 Component,subcomponent,and activity (US$) (US%) I (US$) 1.1Infrastructure, equipment, and managerial functions Reinforcement of administrative functions at the central level 1.628.500 714.500 2.343.000 I 1 I , Training in forest management and environmental protection 2,737,500 395,000 3,132,500 Restoring the functions ofthe field offices inthe 3 Provinces 4,2 15,000 2.,872,400 7,087,400 Logistical support to the three Provincial Ministries; 54,800 721,200 776,000 Capacity building inthe Cabinet and the Office of the General Secretary 346,500 5 18,500 865,000 of MECNT Creation of a Division o f Community Forestry 392,500 285,500 678,000 Contribution to the construction of offices for MECNT in Kinshasa 3,000,000 1,000,000 4,000,000 I Total Subcomponent 1.1 I 12,374,800 I 6,507,100 I 18,881,900 I 1.2. Establishmentof specializedforest managementsystems Creation of new sector specific datamanagementsystems I 1,584,900 I 1,607,600 I 3,192,500 Validation and monitoring of managementplans 1,647,000 362,000 2,009,000 Better forest regulation enforcement 955,200 1,953,000 2,908,200 Total Subcomponent 1.2 4,187,100 3,922,600 8,109,700 1.3 Institutional readiness and transformation 5,000,000 0 5,000,000 1.4 Support to Project Management 1,2 13,500 3,972,500 5,186,000 TOTAL COMPONENT 1 22,775,400 14,402,200 37,177,600 2. COMMUNITY PARTICIPATION INFOREST MANAGEMENT I 2.1 Participation of localcommunities and civil society I I I I Participatory zoning of forested areas ~~~~ 1,780,700 770,600 235 1,300 Consultation with local populations 895,100 1,066,000 1,961,100 Consultative forums 1,020,000 0 1,020,000 Total Subcomponent2.1 3,695,800 1,836,600 5,532,400 2.2 Developmentactivities for forest communities Use of funds for environmental services 3,165,500 849,500 4,015,000 Diversification o f economic activities inforested zones 7,670,000 148,000 7,818,000 Total Subcomponent2.2 10,835,500 997,500 11,833,000 2.3. Social, Environmental, and Cultural Safeguard Activities 1,750,000 1,750,000 3,500,000 TOTAL COMPONENT 2 16,281,300 4,584,100 20,865,400 I 3. MANAGEMENT OF PROTECTED AREAS 3.1 Institutional strengtheningof ICCN 207,000 8 14,000 1,02 1,000 3.2 Rehabilitation of Maiko NationalPark 2,637,000 474,400 3,111,400 TOTAL COMPONENT 3 2,844,000 1,288,400 4,132,400 TOTAL BASELINE COST 41.900.700 20.274.700 62.175.400 I , , I , , Contingencies, Env. Management Plan Environmental & Social Management Plan 1,250,000 1,250,000 2,500,000 Physical and price contingencies 2,662,300 2,662,300 5,324,600 Total IDA & GEF COST 45,813,000 24,187,000 70,000,000 Government Contribution (in-kind) inkind Inkind inkind TOTAL PROJECT COST I 45,813,000 I 24,187,000 I 70,000,000 Identifiabletaxes and duties are US$3.S million, andthe total project cost, net oftaxes, is US$66.5 million. 76 Annex 6: ImplementationArrangements Democratic Republic o f Congo IDA-GEFFORESTAND NATURE CONSERVATIONPROJECT 1. A Steering Committee, chaired by the General Secretary of MECNT, will provide strategic direction and oversight. It has been in existence since June 2008 and consists o f key members o f the Ministries, ICCNand other institutions involved inthe forest sector. 2. The overall responsibilitv for pro-iect implementation rests with MECNT. including the part financed by GEF. The implementation arrangements are lodged in the Ministry rather than in a specialized implementation unit outside the Ministry, as has been the practice with World-Bank assisted projects in DRC in the past. The mainstreamed implementation arrangements are in line with the current policy of the Government, as agreed to in the CAS. MECNT will be the Employer (Client) for all contracts, including those for Component 3 financed by GEF, under the signature o f the Minister or his designated representative. The contracts will be managed by MECNT, with technical supervision provided by the respective technical agency in MECNT and ICCN. Because of their extremely weak conditions, the local (provincial and district) units o f the Ministry will not be given any fiduciary responsibility for the project, but will participate in the technical supervision of contract implementation. MECNT, ICCN, the field offices of MECNT and the local governments in the three pilot provinces will receive institutional strengthening through the project to enable them to be increasingly active in the discharge of their duties. . 3. The CoordinationUnit(CU) of MECNT will coordinate the implementationofthe present project and the Bank-financed MDTF. The CU consists of four civil servants from MECNT in key positions, namely a Coordinator, Director of Finance and Administration, procurement officer and forest management specialist. They are supported by full-time consultants on (i)operations and administration and (ii)financial management. The recruitment o f a senior procurement specialist i s ongoing, as well as the recruitment of an accountant and a communications officer. The recruitment of a procurement specialist, accountant, and communications officer will be a condition of effectiveness. A social and environmental safeguards and an M&E specialist and a second accountant will be recruited within four months o f project effectiveness. The qualifications of these staff members should be satisfactory to the Bank. 4. Based on the contributions from MECNT, ICCN and delegated management contractors, the CU will prepare annual work plans to be approved by IDA and then adopted by SC. Annual work plans will include (i)description of activities; (ii)budget, (iii)description o f social and environmental measures carried out in support or mitigation of project activities. 5. The technical aspects of project implementation will be carriedout by the respective Directorates o f MECNT (see the list in Annex 4, Detailed Project Description) and by ICCN. This work will consist mainly o f preparation of TORSfor consulting contracts (with firms or NGOs), technical specifications, needs assessments, participation in the evaluation of proposals, technical supervision o f contract execution, and the delivery of the outputs under the project (for the specific outputs see Annex 4). The Directorates generally have the requiredcapacity to do this work at the central level, and in parallel they will benefitfrom the substantial capacity buildingcomponent o fthe project. 6. ICCN will be represented in the SC and CU, and will participate in the technical aspects of project implementation, particularly the contract for the rehabilitation of Maiko national park, financed by GEF. It will also benefit from capacity building through GEF financing.. The Financial Directorate of 77 ICCN is beingstrengthenedwith assistance from a GEF-financedWorld Bank project ("Rehabilitation of DRC's National Parks Network") and is receiving technical assistance in financial management and procurement fromthe GermanBank for Development(KfW). 7. The strategy of the project designtakes the limitedcapacity of the implementinginstitutionsand the country situationinto account, thus mitigatingthe risks involved(see SectionE, CriticalRisks).These features are: 9 Limitingthescopeoftheprojectto afew subjectsandareas ofinterventions, 9 Avoiding the creation of ad-hoc institutions, which are supposed to be temporary, but tend to become long-term"enclaves," 9 Preference for interventions that will show tangible results on the ground within the project period, 9 Reducingas muchas possiblethe amount oftransactions needed, especiallyfor the procurement andmanagementofcontracts (see the nextparagraph). 8. An additional feature of the project design is building on existing efforts of NGOs and other institutionsin the country for the implementationof a number of project activities, benefitingfrom their experience and presence in defined areas and avoiding duplication and multiple interventions with the same populations.NGOs will be contracted, usually consistingof a consortiumof an international NGO and several local ones, which have been chosen competitively in 2006 by a group of donors led by USAID for a nationalprogram o f communitydevelopment and resource management.The NGOs will be engaged through delegated management contracts (Muitrise d'ouvruge de`le`gue`e,MOD) - some on a single source basis, others competitively (see Table 6.2) for additionalactivities within the scope of the project,to whichthey will contributepartofthe administrativecosts from their own resources.For further details see Annex 8. 9. The financial management and procurement functions will be carried out by the CU. All payments will be made by the CU, which will also do all accounting of project funds and all financial reporting(see Annex 7, FinancialManagementand Disbursement Arrangements). Procurement decisions above a threshold that will be specified in the Project ImplementationManual will be reviewed by an independentProcurementCommission(for details see Annex 8). 78 Table 6.2: Contentand implementationarrangementsof delegatedmanagementcontracts Note: Delegatedmanagement contracts(Maitrised'ouvragedklkguke, MOD) contain a set of project activities that the consultant is responsible for and which are procured following the Guidelines and proceduresofthe Bank and the provisions ofthe Project Implementation Manual. For these servicesthe consultantreceivesa lump sumpayment that is specified inthe contract. A consultant can be a fm,anNGO, a consortium of f m s , or a consortium of NGOs. (US$ 4.5 mill.) Consultantselection: competitive(among f m s ) . District, and Sub-district); Consultant selection: competitive (am0 Participatory forest zoning; forest use plans for the landscapes inthe project area; data collection within and surroundingthe landscapes For the zoning, the consultantwill help harmonizetechnical approachto zoning and plans. by Central African Regional Environment (CAME), as Consultantselection: competitive 7. Carbonfind: micro-projects for the capturing and ITechnical collaboration : Directiondu 79 conservation o f carbon through the carbon fund; Idkveloppement durable (DDD) dissemination o f information, selection of community micro- consultant selection: competitive(among projects, and identification o f financing sources for the NGOs) carbon fund; creation o f an environmental service unit for the carbon fund (US$4 mill., o f which 1.9 mill. GEF financing) 8 - 11. Development of local communities and participative Technical collaboration : DGF (DFC) forest management: community micro-projectsfor the Consultant selection: 4 contracts (for the development and diversification o f economic activities in landscapeso f Tumba, Lopori Maringa Wamba, forest zones, such as for agriculture, local small forest Ituri,and Salonga LukBniSankuru); single enterprises, small rural infrastructure works, and integration source selection o fNGOs which are already o f indigenous people ineconomic life. The activities consist operating intheir designated landscapes, as mainly o fthose identified inthe comprehensive management selected competitively for the CARPE program plans that have been developed for the differentzones; (AWF, WCS, 2 contracts with WWF). dissemination o f information, assistance with project formulation, selection o f micro-proiects, assistancewith imnlementation. and follow-un iIJ!% ........ .-.-__---..I ----- --r ,---7.8-million) . . ..---..-.. I I Subcomponent3.2, Rehabilitation ofMaiko NationalPark 12.Participatory management o fM a k oNationalPark, partly Implementation :ICCN involving micro-projects (US$3.1 million- GEF financing) Consultant selection: competitiveamong NGOs which are already operating in Maiko National 80 Annex 7: FinancialManagementandDisbursementArrangements DemocraticRepublicof Congo FORESTAND NATURE CONSERVATIONPROJECT Executivesummary 1. The financial management assessment is conducted in line with the Financial Management Practice Manual issued by the F M Board on 3 November 2005. The objective of the assessment is to determine whether the implementing entities haveacceptable financial management arrangements, which will ensure: (i)the funds are used only for the intendedpurposes in an efficient and economical way, (ii) the preparation of accurate, reliable and timely periodic financial reports, and (iii)safeguardthe entities' assets. 2. The financial management arrangements for the project have been designed with consideration for the country's weak PFM system. The arrangements aim to facilitate disbursements and to ensure effective use of.projectresources and funds while using the country's own systems to the extent possible. To this end, overall coordination of the project's financial management aspects will be under the responsibility of the Coordination Unit of MECNT. The principal objective of the project's financial management system will be to support the project inthe use of resources to ensure economy, efficiency, and effectiveness in delivering the results required to achieve project objectives. The financial management system must be capable of producing timely, understandable,relevant, and reliable financial information that enables the project's management to plan, implement, monitor, and assess the project's overall progress toward its objectives. 3. Under the PFM reforms currently underway, IDA provides support to strengthen the country PFM system. However, while remedial measures are being designed and put in place such as the installation of a computerized public expenditure procedures and a simplified double entry accounting system, the implementationof the reform is very slow and it may takes years before we can see tangible results. 4. Using the country's financial management systems has been considered but rejected given the high risks and low implementationof remedial action under the PFM reform program. Consequentlythe proposed Forest and Nature ConservationProject will set up ring-fencedF M arrangements to meet Bank fiduciary requirements with regard to accounting, reporting, disbursement and auditing. These F M arrangements will buildon the ongoingMDTF-financed project implementedwithin MECNT for the sake of synergy and simplification. In this view, the following common features will be used for both Bank- financed projects: single computerized accounting system, common manual of procedures, a unique financial manager to supervise the F M unit with dedicatedaccountants and supportingassistants for each project andcommonauditing arrangements to be performedby the same private auditors. 5. Quarterly Interim Financial Report (IFR) will be submitted to IDA by the CU within 45 days following the end of each quarter. Every year CU will prepare the Project Financial Statements (PFS) and have them audited by the externalauditors acceptable to`IDA. The audits reports including (i) the audited PFS, (ii) the audit opinion and (iii) management letter will be submittedto IDA within 6 months after the the end of each fiscal year, say by June 30. 6. The amount of the project financing is US$ 70.00 million, co-financed by IDA for US$ 64.0 millions and US$ 6.0 millions by GEF. One designated account will be opened in U S Dollars in a commercial bank acceptable to IDA and managed by the CU. Transaction-based disbursement method 81 will apply at the beginning for IDA and GEF grant and could shift to report-based method once the specified conditions are met 18 months after effectiveness. Initial deposit equivalent to 4-month expenditures forecast will be deposited inthe DA by IDA upon project effectiveness. SummaryofProjectDescription 7. The objective o f the Project i s to increase the capacity o f MECNT and ICCN and increase collaboration among government institutions, civil society, and other stakeholders in order to manage forests sustainably and equitably for multiple uses in Pilot Provinces. The project has the following three components (i)Institutional strengthening o f MECNT, (ii)Community participation in forest management, and (iii) Management o f protected areas and strengthening o f ICCN.. InherentRiskAnalysis 8. Country issues: The CFAA, PER and the PEFA report outlined the following PFM weaknesses at central and decentralized government levels as well as in line ministries: (i)poor budget formulation and execution, financial reporting, and oversight systems, (ii)weak linkage between agreed policies, budget planning and execution; (iii)inadequate tracking and reporting system and a formal accounting system within the ministries; (iv) the lack o f transparency and predictability in public resource management at central government and public enterprise levels; and (v) insufficiently qualified FM staff in general. Besides, the economy, governance and the new era and hope brought by recent general elections remain fragile with the resumption of war in the eastern part o f the country. Last but not least DRC is still a conflict-affected country despite the peace accord signed in 2007. As a result, the country inherent risk is deemed highthough a PFM Reform program i s being implemented by the government to mitigate these risks. 9. Entity level: It has been agreed that the project will be anchored at the Ministry o f Environment, Nature and Conservation and Tourism (MECNT). Similarly to the government PFM system described above, this MECNT own procedures may not be appropriate to rely on for the proposed project. These may cause delays in the day-to-day management o f the project in addition to a lack o f transparency. Hence entity risk i s also deemed high. Therefore a ring-fenced CU within the ministry will be used to implement the Project. 10. Project level: A Coordination Unit (CU) was already created within the ministry to run other Bank-financed projects in the forestry sector. For the sake o f synergy and simplification, it is agreed to use the same CU to run the proposed project. Still the practical arrangements o f this CU are yet to be materialized. Therefore the project inherent risk is substantial. To mitigate these risks, clear coordination and monitoring mechanisms would be agreed between the different stakeholders, i.e. Steering Committee, ministryo f finances, line ministries, the mainbeneficiaries and also the CU. 11. Reason for not using country systems: the option o f usingthe country PFM systems has been considered but rejected because o f the inherent risks discussed above and the little progress in implementing the P F M reform program to mitigate these risks. Furthermore recent experiences in using partially some national procedures and institutions are not yet conclusive enough. Still partial use o f country PFMsystems may be used whenever circumstances permit duringthe project implementation. 12. Corruption: Though there is no documented evidence, the perceptions o f corruption risks at country level are very high. For most o f the indicators used for this category, D R C has low scores in published surveys. Overall, transparency and accountability need to be enhanced in most public operations. Consequently the ring-fenced project supported by the FMarrangements described below will help mitigate these corruption risks. 82 13. Weaknesses: The main weakness is the lack o f qualified FM staff that could be assigned by the ministry to runthis project. The lack of familiarity with World Bank procedures is also a major weakness which would need to be overcome by recruiting highly qualified staff with excellent exposure to IDA fiduciary procedures. 14. Strengths: Two Bank-financed projects (the present one and the MDTF for Forest Governance will be implemented by the same ministry and by the same CU. This arrangement will ensure synergy between the two operations. For this reason, it has been decided that the same C U and the same FM systems be used for both projects. This will include a common computerized accounting system, manual of procedures and staffing as much as possible. ControlRiskAnalysis 15. Staffing: The CU being established for the MDTF-financed project will be used to perform the F M responsibilities of the proposed project. Practically, the financial manager under recruitment for the MDTF-financed project will also supervise the management o f this project. At full project development, he will be supported by two accountants and one administrative assistant dedicated to this project. Additional accountant may be appointed in due course when the need arise once the funding increases. Appropriate training will be provided to these staff in World Bank financial management and disbursementoperations when the project implementationcommences. 16. Budgeting: For the purpose of this project, it is expected that the budget of the MECNT will include the estimated IDA and other donors' resources. The C U will prepare an annual work plan and budget for implementing project activities taking into account the project's objectives. Annual work plans and the budgets will be consolidated into a single document by the FM Unit of the MECNT CU, which will be submitted to the Bank for Review and then to the Steering Committee for approval, and no later than December 30 of the year. The different steps of budget preparation, revision, adoption, execution and monitoring will be documented in the manual of procedures. The budget will be closely monitored and execution reports reflectedineach quarterly interimfinancial report. 17. Accounting: The C U is installing a computerized accounting system under the MDTF-financed project. This multi-project financial software will be customized to manage separately the proposed project by establishing its own accounting plan, ledgers, journal vouchers, fixed asset register and a contracts register. The CU financial staff will have the overall responsibility o f bookkeeping and maintenance of the accounting system. The national accounting policies will apply for this project similarly to other Bank-financed projects inDRC. The accounting policies and the format of these books of accounts and accounting codes will be detailed inthe manual of procedures. 18. Internal control and internal auditing: Adequate segregation of duties within the project's internal organization and procedures will provide strong internal controls to ensure appropriate checks and balance. These internal controls will comprise the whole systems o f control, financial or otherwise, established by management in order to (a) carry out the project activities in an orderly and efficient manner, (b) ensure adherence to policies and procedures and (c) safeguard the assets of the project and secure as far as possible the completeness and accuracy of the financial and other records. Thus, the main focus of the internal control is placed on the following: (i)Segregation of duties, (ii)Physical control of assets, (iii)Authorization and approval, (iv) Clear channels o f command, (v) Arithmetic and accounting accuracy, (vi) Integrity and performance of staff at all levels, and (vii) Supervision. The project implementation manual (PIM) will provide all details interms o f segregation of duty. 83 19. As the inspectiondepartment of the MECNT is not yet very effective, an internal auditor will be recruitedto supportthe project.He will be supportedby one internalauditor - inspector -to be seconded by the ministry. The internal auditors will review the statement of expenditures (SOE) and conduct any in-depthverification to ensure the eligibility of any transaction as part of his mandate to pre-screen all transactions beforeauthorizingpayment. 20. Financial reporting: The CU will record andreport on projecttransactions andthen submit to the World Bank an InterimFinancialMonitoringReports (IFRs) not later than 45 days after the end of each quarter. At a minimum, the financial reports must include the following tables with appropriate comments: 0 Sources andUses of Funds 0 Uses ofFundsby ProjectActivity/Component 0 Specialaccount activity statement 21. The format of this IFR is already available on as template on the financial software, Tompro, purchasedfor the project.The CUmay needto adjust the formatto the project's structure, i.e components andbudgetedactivities. 22. Auditing: The movements ofthe DesignatedAccount shouldbe reflectedinthe ProjectFinancial Statements separately. Becauseofthe weak capacity ofthe Cour des Comptes, it is agreedthat the Project FinancialStatementswill be auditedon annualbasis by independentauditors acceptableto IDA according to the InternationalStandards on Auditing. Annual audit reports comprisedof the financial statements, a single audit opinionand a management letter will need to be submitted to IDA not later than &months after the end of each fiscal year. The Cour des Comptes will also retain its right to investigate and ensure oversight of the Project in accordance with DRC financial laws and regulations.At the time of writing this report,there is no overdue auditreporton DRCportfolio. 23. Ultimately it is expected that the external auditors under recruitment for the MDTF-financed project will be retainedto audit the proposedproject as well. The durationof the audit contract shall not exceedthree FY. The detailed contractingarrangements includingterms of reference will be agreedupon not later than four monthsafter projecteffectiveness. 24. The first audit report of the project will includethe review of the use of the funds of the PPF periodsand shall be submittedto the World Bank by June 30,20 10. FundsFlows and DisbursementArrangements 25. Flow of funds: A pooledDesignatedAccount(DA) inUSDwill be opened ina commercialbank in Kinshasa acceptable to IDA and directly managed by the CU under the responsibility of the Project coordinatorand the financialmanager. The DA will pool funds received from IDA and GEF grants. The DA will be replenishedby the World Bank on the basis of WithdrawalApplicationsupportedby relevant government - Bandundu, Equateur and Orientale - the fiduciary functions will be centralized by the documents. Though the beneficiaries will be the government forest institutions and provincial local unique CUMECNT basedinKinshasa.A secondprojectaccount may be opened andmanagedby the CU for the government contributions expectedunder Subcomponent 1.1and in accordance with the terms of suchfundingyet to bedetermined. Below is the diagramofflow offunds. 84 kJ IDA+GEF Subcomponent 1.1 Designatedaccount in Project account inUSD USD Projecttransactions paidto local supplierskonsultantsandto foreign suppliers/consultants 26. Local taxes: IDA and GEF grants will be disbursed in accordancewith the Project categories of expenditures, as shown in the FinancingAgreement. Financingof each category of expenditure will be authorizedat 100percent inclusiveoftaxes as perthe current Country FinancingParametersapprovedfor DRC, 27. Disbursement methods: Given the country context and the lack of familiarity with the Bank fiduciary procedures, the report-based disbursement may not be applicable by default at the beginning. Thus the transaction-baseddisbursement methodwill apply at the beginning.Therefore an initial deposit equivalent to 4 month forecast will be released upon effectiveness and replenished regularly through monthly Withdrawal. After 18 months, the report-basedmethodcouldbe used ifthe project:(a) sustains satisfactory financial management rating during the project's supervision; (b) submits InterimFinancial Reports consistently with the agreed form and content within 45 days of the end of each quarterly reportingperiod, and(c) submits all expectedAudit Reportsbythe due date. 28. The minimumvalue for Reimbursement, DirectPayment and Special Commitments will be 20% of the DesignatedAccount ceiling. Modalitiesfor paymentof MOD Contractorsand other consultants 29. Each MOD contract will include a detailed descriptionof the modalities for payment. All MOD will include: (a) a lump sum amount for services provided by the contractor, and to be paid based on invoices submitted according to an agreed delivery schedule; and (b) an amount for works, goods and services paid by the MOD contractor to other suppliers, which will be paid as expenditures are incurred. To meet these expenditures the MOD contractor will receive an initial advance. Subsequent payments will be made basedon reports supportedwith full documentationwhichthe CUcan use inturn to request replenishment from IDA. 30. Other consultantswill bepaidbasedon submission of invoices. 85 Disbursementarrangements for RPayments 3 1. Disbursement arrangements to finance the retirement of eligible MECNT are as follows: (a) later that six monthsafter effectiveness, the Recipientshall recruit: (a) the Retirement TechnicalAdvisor, (b) the Retirement FinancialIntermediary,and (c) the Retirement Payments Auditors. No later than 12 months after effectiveness, the Recipientshall, furnishto the Associationfor its review and approval the Human Resources Plan. No later than eighteen months after effectiveness, the Recipient shall: issue the RetirementPaymentsthroughthe Retirement FinancialIntermediary.No later thantwo monththereafter, have an audit of payments made carried out by the Retirement Payments Auditors under terms and conditionssatisfactory to the Associationand furnishto the Associationthe results of that audit, together with any measuresrequiredto ensure the achievement ofthe objectives ofthe HumanResourcesPlan. ReportingonUse of Grant Proceeds: 32. The supporting documentation for reporting eligible expenditures paid from the designated account should be a summary report of the Statements of Expenditure(SOEs) and records evidencing eligible expenditures for payments against contracts valued above US$ 100,000 for goods, US$ 100,000 for work, US$200,000 for consulting firms and US$ 50,000 for individualconsultants. The supporting documentationfor requestsfor direct payment should be records evidencingeligible expenditures (copies of receipt, supplier's invoices, etc)". to be consistent with the negotiatedDisbursementLetter. 33. The projectwill submit bank statement andreconciliationof the designated account together with the withdrawalapplicationon a monthlybasis. All supporting documentationfor SOEs will be retainedat the CUandmustbe madeavailablefor reviewby periodicWorldBank reviewmissionsandauditors. Conclusion 34. A summary of the above FM risk analysis and mitigating measures is tabulated in the attached appendices. The overall financial managementrisk is considered high at this point intime. The residual risk would be moderate providedthe mitigationmeasures are implemented satisfactorilyand in a timely manner accordingto the actionplanagreedupon. ActionPlan Key actions Responsible body Completion 1. Recruitmentof a projectaccountant. cu Priorto effectiveness 2. Installthe accountingsoftware, finalize andthe adopt the cu Within four monthsof manualofproceduresthentrainthe users effectiveness 3. (ii)Recruitor appoint a secondaccountantdedicatedto the cu Within four monthsof MDTF effectiveness 4. 3, Recruitan external independentauditors; and an cu Within four monthsof internalauditor effectiveness 5. OpenDA in a commercialbankandcommunicatethe cu After grant signingand accountnumbersandsignatoriesto IDA beforedisbursement commence 6. Recruit: (a) a Retirement TechnicalAdvisor, (b) a cu Withinsix monthsof RetirementFinancialIntermediary,and (c) a Effectiveness RetirementPaymentsAuditor . 86 SupervisionPlan 35. The fiduciary functions of this project are centralized and managed by the CU anchored within the MECNT. Inaccordancewith the risk-based approach, FMsupervision will vary according to the level need be. On the basis of the current FM risk level, it is expected that three supervision missions will be of risk and will aim to ensure that the funds are used for the intended purpose and provide support when carried out duringthe first FY to support the project implementationthen shift to semi-annual supervision when appropriate. These supervisions efforts will comprise IFR reviews, on-site reviews and will be complemented by continued assistance to be provided bythe Bank team based in Kinshasa. RiskAssessment andMitigationTable Risk Riskrating/ Risk mitigating measures Effectiveness Remarks residualrisk incorporated into projectdesign conditions IInherent e m ) risk I __ u II Countrylevel H INone N A PFM reformprogram is beingimplementedand may mitigatethe country risks only Entity level H Ring-fencedCU is set up within N II inthe longrun. See PCNfollowing December MECNT to managethe World Bank I2007 mission. - financed activities Projectlevel S/L Adequate FMarrangementsbuilt on N the ongoing MDTF-financedproject are agreed uponandbeing implemented. Controlrisk m Budgeting: HA4 Prepareand adopt adetailedbudget for N The commonmanualof Annual Budgetyet each year then monitor its execution procedureswill detailthe to beprepared closely budgetingprocedures. and adopted Accounting: S/M Finalizethe installationand N This activity is under progress Accounting customization ofthe accounting system is yet to be software. set UD Accounting: Appoint one accountant Y Recruitment has been Accounting launchedalready system is yet to be set up Internalcontrol: HIM A single manualofprocedureswill be N The specific ofthis project Internal controls sharedby the MDTF and the present will be reflectedinthe areyet to be project commonmanualof developedand procedures. adheredto Fundsflow: S/M (i) DA opened incommercial bank N Grants may not be underthe managementofthe CU; diverted or not (ii) Disbursement for Subcomponent usedfor the 1.1will be made only once Gvt R secures the hnding o f this activity. Funds Flow S/M Arrangements for payments include (a) N Payments the RetirementTechnical Advisor, (b) intendedfor the RetirementFinancialIntermediary, retirin workers (c) the RetirementPaymentsAuditors . 87 conditions may bepaid to "ghost retirees" Financial reDorting: software will help generate accurate Delay in and reliable IFRand PFS on time. submitting Adequatetraining and assistance will reliable reports providedto users. Auditing: S / M IIbe Privateauditors will berecruited N Delay in within four months after effectiveness. submitting They will also serve the MDTF. acceptable audit reports CorruDtion Hh4 The ring-fencedCU andthe above FM N Risks of corruptionwill be arrangementswill help mitigateany reasonably tackledfrom risk ofcorruptionand fraud. Audit technicalperspectivethrough TOR makeprovisionsfor IAS240 the fiduciary arrangementsbut relatingthe obligationto report frauds may not be effective incase of and corruptions. collusionor political 1_1 Overall risks IIcorruption. The FMoveral1,riskis High - but couldbe moderate providedthe actionplan is :antial, M-Moderate,L-Low implemented satisfactorily. Note: H-High, S-SUI 88 Annex 8: ProcurementArrangements DemocraticRepublicof Congo FOREST AND NATURE CONSERVATION PROJECT A. General 1. The procurementof all contracts inthe project, fundedby IDA and GEF, will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised October 2006; the "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, revised October 2006; and the provisions stipulated in the Legal Agreement. The items under different expenditure categoriesare described ingeneralbelow. For each contractto be financed by IDA or GEF, the differentprocurementmethods or consultantselection methods, the need for prequalification, estimated costs, prior review requirements, and the time frame are agreed upon betweenthe Recipient and the Bank inthe ProcurementPlan. 2. The World Bank's standardbidding documents (SBDs) will be used for all contracts involving international competition, including International Competitive Bidding (ICB) for works, goods and non-consultantservices and Quality and Cost Based Selection(QCBS) for consulting firms. Untilsuch time that a national procurement system has been developed and its use for Bank-financed projects approved by the Bank, the SBDs will also be used for contracts involving national competition, includingNCB, with suitable modifications, as specified in the Project Implementation Manual (PIM). The preparationof a PJM, satisfactoryto the Bank, is a condition of effectiveness. 3. Invitations to bid for NCB will be advertised in a national newspaper and on the web site of MECNT. Invitations to bid for ICB will, in addition, be advertisedas Specific ProcurementNotices in UN Development Business online and dg Market, in accordance with para. 2.8 of the Procurement Guidelines. Expressions of interest will be invited for all consulting contracts procured through competition among firms by advertising in a national newspaper and on the website of MECNT. In additian, consulting contracts with an estimated cost of more than US$200,000 will be advertised in UNDBanddg Market, inaccordance with para. 2.5 ofthe ConsultantGuidelines. 4. Responsibility for procurement will be entirely with the MECNT which may use expertise from a specialized procurement agency based on a clearly defined contract or a memorandum of understanding. Assistance from the specialized agency would cease with the signature of procured contracts whose implementation will be monitored entirely by MECNT and ICCN. These arrangements would be reviewed at midterm review. Pendingthe creation of a Procurement Board as part of the national procurementreform, a five member inter-ministerial commission (Finance, Budget and MECNT) will give an externalopinion on most important procurementtransactions financedunder the project. B.ProcurementMethodsand Prior Review 5. Procurement of works. Contracts for works that are funded by IDA under Component 1 include the rehabilitation and/or construction of office buildings for MECNT in Kinshasa at a total estimated cost of US$8 million, out of which IDA would finance US$4 million for the building plus and other donors - as yet to be identified - for the financing of the remaining US$4.0 million for the about US$900,000 for technical design and work supervision.The agreement betweenthe Government works is a condition of disbursement for the construction of the office building. An estimated US$2 million of rehabilitation work is part of a Delegated Management Contract (Mattrise d'Ouvruge 89 De'le'gue'e,MOD) under Component 1for the local offices of MECNT and the local governments inthe three pilot provinces. Small works contracts estimated to total US$600,000 will be part of the MOD contract for the rehabilitation of the MaikoNational Park, financed by GEF under Component 3. 6. Contracts for works with an estimated cost of US$3 million and above will be procured through ICB, while NCB may be used for all contracts estimated to cost less than US$3 million. Small works of less than US$lOO,OOO may be awarded through Shopping, involving the comparison of quotations from at least three contractors, in accordance with para. 3.5 of the Procurement Guidelines and the Guidance on Shopping, available on the World Bank's external web site. Direct Contracting may be used only in exceptional circumstances and with the prior agreement of the Bank, in accordancewith para. 3.6 of the Procurement Guidelines, except for very small works procured as part of M O D contracts, each costing less than US$lO,OOO, which will follow procedures described in the PlM. 7. Procurementof goods. Goods that are funded by IDA and GEF for a total estimated cost of US$3.5 millionwill be procuredas part ofthe MOD contracts according to World Bank Procurement Guidelines and procedures. MOD contracts present the advantage o f (i)significantly reducing the number of contracts to be procured and managed by the implementing agency; (ii)continuing the successful practice of contracting NGO consortia, rather than multiple operators, for carrying out combined community support and forest technical work; (iii)assuring a common approach to the implementation o f policies and programs in this field; and (iv) reducing the likelihood that several institutions and contractors will compete for the attention and confidence of the same local groups, which would create confusion and mistrust. 8. M O D contract may include (i) vehicles, motorcycles, and bicycles, (ii)information, office and communications equipment, (iii)small boats, and (iv) other equipment, including scientific and technical apparatus. The list of items will be specified in the agreed procurement plan for each M O D contract. Small amounts of additional goods may be procureddirectly by MECNT. 9. ICB will be used for all goods contracts estimated to cost US$500,000 and above, while NCB may be used for all contracts estimated to cost less than US$500,000. Contracts of less than US$lOO,OOO may be awarded through Shopping, involving the comparison o f quotations from at least three qualified suppliers, in accordance with para. 3.5 of the Procurement Guidelines and the Guidance on Shopping. Direct Contracting may be used only in exceptional circumstances and with the prior agreement of the Bank, in accordance with para. 3.6 of the Procurement Guidelines, except for very small goods orders procured as part of MOD contracts, each costing less than US$lO,OOO, which will follow procedures described inthe PIM. 10. 12 M O D contracts will be issued under the project. All these contracts will be designed in ways that help create long term capacity in national institutions, local NGOs and local communities. To this end, they will be performance-based and time bound, will include a capacity building dimension and capacity buildingperformance indicators and provide for an exit strategy. 11. Community Participation in Procurement. The implementation of 5 MOD contracts (see Consultant Services below) under Components 2 and 3 will involve giving small grants through sub- projects (micro-projects) to communities for project-related activities in accordance with para. 3.17 of the Procurement Guidelines.The grants will be based on a written agreement between the NGO and community representatives, with a clear statement of the outputs to be achieved. The sub-projects will be selected by the M O D consultant in accordance with the provisions contained in the Project ImplementationManual, which will also specify the maximum allowable cost per sub-projects. 90 12. Procurement of non-consulting services. Non-consulting services will include training and workshops, for which the same procedures as for goods will apply. 13. Procurement of consulting services. Most of the project activities that are funded in by IDA and GEF will be implemented through 12 delegated management contracts (MOD) with a total ' estimated value of US$43.2 million, out of which GEF will finance US$ 6 million and the NGOs that will be selectedfor 10 ofthe contracts about US$2.6 million. Seven of the contracts are proposed to be procured through Quality and Cost Based Selection (QCBS) and 5 through Single Source Selection (SSS) of international NGOs that are in a partnership with local NGOs. The international NGOs proposed for SSS had been chosen competitively in 2006 by a group of donors led by USAID for CARPE, a national program of community development and resource management. The MOD contracts procured through SSS will build on the work that these NGOs are already doing in their designated areas or field of expertise. The project will thus benefit from their experience, and the duplication o f efforts and multiple interventions with the same populations will be reduced to a minimum. The NGOs will contribute some administrative costs from their own resources, making them at the same time a contractor and an effectively partners inthe implementationo fthe project. 14. Only NGOs which have performed satisfactorily on other contracts will be chosen. A preliminary assessment of the procurement capacity o f the 5 NGOs2' that are proposed for SSS of MOD contracts has been carried out by the Senior Procurement Specialist on the team at the time of appraisal. They were found to have the capacity to follow sound procurement procedures as required by their ongoing contracts, mainly with USAID, but are lacking in knowledge about the procurement Guidelines and procedures of the World Bank. As to NGOs chosen competively from a short list to implement MOD contracts, they must submit proposal that demonstrate that they will acquire the necessary knowledge o f Bank procedure and or indicate that they will supplement their staff with additional staff knowledgeable in Bank procedures, as needed. 15. All the MOD contracts, whether procuredthrough QCBS or SSS, will be based on the Bank's standard documents for a lump-sum form of contract and will specify that the consultant will follow the Bank's Procurement and Consultant Guidelines and procedures, as well as the provisions of the PIM, in the implementation of the pass-through portion of the contract (Montant dklkguk)).Similar provisions will be inserted into the contracts for FM and the safeguards. It should be noted that the MOD contracts with SSS o f NGOs finance the expansion of some ongoing activities of the NGO within the scope of the contract as well as additional activities that are linkedto the ongoing work o f the NGO inits chosenfield. 16. Consultants will be selectedthrough QCBS for the design and supervision of the construction of office buildingfor MECNT in Kinshasa, for monitoring and evaluation, and for external auditing. The evaluation criteria for the auditor will be in accordance with para. 3.20 o f the Consultant Guidelines. Consulting services estimated to cost US$200,000 or more per contract are subject to prior review by the Bank. Consulting contracts estimated to cost below US$200,000 may be procured through Consultant Qualifications (CQS), in accordance with paras. 3.7 and 3.8 o f the Consultant Guidelines. Short lists of consultants for services estimated to cost less than US$200,000 per contract may be composed entirely of qualified national consultants in accordancewith the provisions o f paras. 2.6 to 2.8 of the Consultant Guidelines. The eligibility requirements for the appointment of Government-owned entities and Government officials are specified in para. 1.11 o f the Consultant Guidelines.All Single Source Selection of consultants (including NGOs) requires the prior approval of 28 The 5 MOD contracts proposedfor SSS involve 4 NGOs, with someNGOSproposedfor more than one contracts (see Table 6.2). They are WWF, AWF, WCS, and WRI. 91 the Bank and shall be done in accordancewith paragraphs 3.9 to 3.12 ofthe Consultant Guidelines.All Terms of Reference for contracts with firms or NGOs are subject to prior review by the Bank. 17. Individual consultants (IC) will be appointed to provide training, programming and operational support, and quality assurance in the fields of procurement, accounting, communications, social and environmental safeguards, monitoring and evaluation and internal auditing. These consultants are in addition to the individual consultants on (i)operations and administration and (ii) financial management, who have already been recruited into the C U under the project preparation facility. Several short-term consultants will also be recruited for the verification and disbursement of the benefits to the retirees of MECNT under Sub-component 1.3. The individual consultants will be selected in accordance with the provisions o f pares. 5.1 to 5.3 o f the Consultant Guidelines. For the assignments - such as procurement, financial management, and legal matters - are subject to prior selection of consultants through competitive procedures, only large contracts and those for special review by the Bank. These contracts will be identified in the procurement plan. The procedures are further specified in the PIh4. Individual consultants may also be chosen through Single Source Selection on an exceptional basis and with the prior approval of the Bank, in accordance with paragraph 5.4 of the Consultant Guidelines. 18. Operatingcosts. The project will finance operating costs associated with the implementation of the project, including office expenses, seminars and workshops, travel costs, and travel allowances to staff involved in project implementation. The procurement of these goods and services will follow the proceduresthat have beenadopted by the Government for this purpose. Table 8.1. Thresholds for Procurement Methods and Prior Review Expenditure Threshold for Procurement Category Method (US$) Method Contracts Subject to Prior Review, US$ Works >=3 mill. ICB All <3 mill. NCB First2 contracts procuredby every MOD <100,000 Shopping None Direct Contracting 10,000 and above; proceduresfor below 10,000 are specified inthe PIM ICB All consulting <500,000 NCB First2 contracts procuredby every MOD services <100,000 Shopping None Direct Contracting 10,000 and above; procedures for below 10,000 are specified inthe PIM Community Proceduresspecified Proceduresspecifiedinthe PIM Participationin inthe PIM Procurement Consultant >=200,000 QCBS All services from <200,000 CQS None f m s & NGOS Single Source All All terms ofreference Individual IC As specifiedinthe procurementplan consultants C. Assessment of the Agencies' Procurement Capacity 19. The procurement capacity of the implementingagency, MECNT, was assessed by the Senior Procurement Specialist stationed at the World Bank Office in Kinshasa, on December 19, 2008. The 92 assessment found that the procurement capacity in MECNT, including the Project Coordinating Unit, was inadequateand recommended strengthening through specialized technical assistanceand training. 20. The risk factors for procurement performance include those posed by the country context and those due to the low procurement capacity of MECNT. Regardingthe country context, the last Country Procurement Assessment Review (CPAR) published in 2004 and the experience o f other World Bank assistedprojects indicate that procurement on the project is likely to involve the followingrisks: a. A weak governance environment, insufficient accountability, and an overall lack of transparency in conducting procurement processes entail a significant risk of corruption, collusion and fraud. b. The administrative system as it operates in practice creates opportunities for informal interference in the procurement process by senior officials and politicians, which may result in waste, mismanagement, nepotism, corruption, collusion, and fraud. c. Government officials who are involved in procurement through tender committees may not be familiar with procurement procedures. d. For certain kinds o f goods and works, only a few companies are interested in providing them under the current country conditions, especially in the eastern part of the country, where goods may be in short supply or available only at an exorbitant price. 21. The main recommendations of the 2004 CPAR were to (i)prepare and approve a public procurement code, (ii)do a survey o f the existing capacity on procurement, (iii)make a needs assessment of the institutional and human capacity requirements for public procurement inthe country, and (iv) prepare a plan o f action for the procurement reform. All these recommendations have been implemented, except for the enactment of the National Procurement Code. 22. The procurement reform in DRC began soon after the 2004 CPAR with assistance from the Bank, including the drafting of an Act on the Public Procurement Code. Progress with the formulation and approval of the Act has been slow, mainly due to instability and the elections o f 2007. Recent events however can be taken as an indication that the Government and Parliament are committed to moving the reform forward The Act was approved by the Council of Ministers on December 19, 2008, and the Prime Minster has subsequently submitted it to Parliament with a request for urgent treatment. 23. The overall project risk for procurement is high. D.ProcurementRiskMitigation 24. The institutional arrangements for the implementationofthe grant have taken into account the needto strengthen MECNT's capacity inprocurement and other fiduciary areas. 25. In accordance with the provisions of the draft Procurement Code, a Procurement Unit will be created in the Coordination Unit (CU) of MECNT, consisting initially of a Coordinator (part-time), a procurement officer - both o f them civil servants of MECNT who have already been posted inthe C U - and a senior procurement specialist, the latter to be appointed as a condition of project effectiveness. The procurement capacity will be supplemented as neededby short-term consultants infields that will be determined once the procurement specialist is in place. After the Procurement Code has been adopted and is satisfactory to the Bank, the exceptions to the national procurement procedures that apply to the project will be specified inan amendment to the PIM. Inthe meantime, and inanticipation of the provisions that are proposed in the procurement code, all contracts above a ceiling to be 93 specifiedinthe PIM - which will not be higher than the thresholdfor prior review by the Bank - will be vetted by an independent procurement board, with part of its members from outside MECNT. The appointmentofthe ProcurementBoard is a condition of project effectiveness. 26. Inaddition, the following measurehavebeenagreed onto mitigate the procurementrisk: a. A procurementtraining program will be developedto address the various needs of staff of MECNT and ICCN, including intensive training of procurement officers on the job and at training institutes in Africa as well as an overview of procurement fundamentals for decision makers in MECNT and ICCN and technical staff involved in project implementation.The training will include a sensitizationof how to identify and deal with indicationsof fraud and corruption. b. An important part of the tasks to be performedby the senior procurementspecialist will bethe onthejob training ofthe procurementofficers inthe CU. He will also contributeto the updating of the procurementpart of the PIM and will be instrumental in setting up a viable procurement and record keeping procedure in CU. The long-term aim of this technical assistance is to create a procurement unit in CU which will be the focal point for procurementin MECNT once the Procurement Code has become effective. c. A project launchworkshop will be conductedfor the staff of MECNT and other entities involved inproject implementation-within 2 months of effectiveness. d. The CU will create a publicly accessible procurement web site, to include the national procurement procedures, opportunities for participation by the private sector, sample forms, guidance on the preparationof proposalsand bids, announcements of the award of contracts, and the procedure for handling complaints - within 6 months of project effectiveness. e. MECNT will create a data base of suppliers of goods, civil works contractors, and consultants (firms and individuals). The database will include information on past performanceand the current prices of goods -within one year of effectiveness. f. The PIM will specify the institutional responsibilities for procurement, the procurement methodsto be used inthe project, a step by step guide to carry out procurement, standard and sample documentsto be used, and the nature of the review of procurementdecisions. The adoptionof a satisfactoryPIM is a condition of project effectiveness. g. The PIM will contain sample documents for procedures other than the standard ones prescribedby the Bank, including requests for quotations, evaluationform for quotations, contracts with individual consultants, letters requesting the Bank's no objection, notification letters, etc. h. For procurement involving competition on the national level (NCB, Shopping, etc.) MECNT will sanction contractors and consultants in cases of corruption, collusion, nepotismand/or fraud- after due process accordingto the country's laws-that may lead to a cancellation of contract, disqualification from future competitions for a specified period or permanently, and possiblyprosecution. E. ProcurementPlanand FrequencyofProcurementSupervision 27. The Recipient developed a procurementplan for project implementation, covering the first 18 months of the project, which provides the basis for the procurement methods. This plan has been agreed on betweenthe Recipient and the Bank during project negotiations and will be publishedat the web site of MECNT and the Bank's external website once the project has been approvedby the Board. 94 The ProcurementPlan will be updated, with the prior approval of the Bank, annually or as requiredto reflect the project implementationneeds and improvementsin institutional capacity. 28. The technical supervision of the implementationof the contracts under the project, particularly the MOD contracts, will be the responsibility of the Coordination Unit (CU) with the support of the technicalunitsof MECNT that are concernedwith the subject matter ofthe specific consultingcontract and ICCN. The role of the CU and the technical units are describedinAnnex 6, with special reference to Table 6.2. As the secretariatfor the Client specified inthe contracts, the CU will also be responsible for the prior review of contracts procuredby the consultantsunder MOD contracts, with the support of the respectivetechnical units. 29. In addition to the prior review of procurementdecisions by the Bank and supervision missions at least once a year, the results of the capacity assessment of the MECNT call for quarterly post procurementreviews in the first year and annual technical audits, both by an independent monitoring agent. The frequency of subsequent post reviews will be determined annually on the basis of past procurementperformance. The frequency and nature of supervision of contract implementation by the Bank will be based in part on the information contained inthe status reports of the CU, the technical audits of the independentmonitoring consultant, and the no objection requests for contracts procured under the MOD subjectto prior review. Armed with this information, supervisionmissions will further examine contracts that seem to be performing poorly and will agree on remedial actions with the Recipient. F. Detailsofthe ProcurementArrangements InvolvingInternationalCompetition 1. Goods, Works,and Non-Consulting Services (a) List of contractpackagesto be procuredfollowing ICB and Direct Contracting: - - 1 2 3 4 9 Ref Domestic Review Expected No. Contract Estimated Procure- Pre- Preference by Bank Bid- Comments (Description) cost, US$ ment qualific- (yesho) (Prior I Opening million Method ation W Construction of 8.00 ICB N o No Prior March' IDA 1 new offices for financing MECNT in 4.0 mill.; Kinshasa 4.0 from other donors, TBD TOTAL goods 8.00 and works 95 2. ConsultingServices (a) List of consulting assignments with short-lists containingforeign firms (MOD= delegated management contact) 1 2 3 4 5 6 Review Expected Ref. Description of Assignment Estimated Selectio by Bank Proposals Comments No. cost (US% n (Prior Submission million) Method or Post) Date c1 (a) Reinforcementof administrativefunctions 5.5 QCBS Prior July MOD of MECNT: training, technical experts, and 2009 equipment ($4.5mill, IDA) (b) Institutionalstrength-eningof ICCN ($1 mill. GEF financing) c2 Restoringthe functionsof MECNT field 8.9 QCBS Prior August MOD offices; strengthening the offices ofthe 2009 General Secretary, the Cabinet of MECNT, and the Division of CommunityForestry; office rehabilitationand supply of equipment to 3 ProvincialMinistriesofthe Environment c3 Integratedforest management system: 5.5 (3.2 sss Prior March MOD SyGIS/SIGEF/physicaltracking mill. IDA, with 2010 2.3 mill WRI WRI) c4 Monitoringand evaluation of management 4.5 QCBS Prior March MOD; plans; institutionalstrengtheningof SPIAF; 2010 collaboration technical support for participatoryzoning with SPIAF plans; consultationwith local communities for their effectiveparticipationinthe preparation and implementationofthe forest management plans c5 Settingup a logtracking andrelatedcontrols 2.9 TBD Prior MOD systems (SGS) 2010 C6 Conductingconsultative forums 1.o QCBS Prior February 2010 MOD (short list of NGOs c7 Micro-projectsfor the capturingand 4.0 QCBS Prior April MOD ; 1.9 conservationof carbonthroughthe carbon (short 2010 mill. GEF fund list of financing NGOs C8 Communitymicro-projectsfor the 7.8 SSS with Prior August MOD ; developmentand diversificationof economic A m , 2009 4 contracts activities inforest zones wcs, & 2 WWF c9 Participatorymanagement of Maiko National 3.1 QCBS Prior January2010 MOD: GEF Park (short financing list of NGOs c10 Designand supervisionof MECNT office 0.9 QCBS Prior April 2010 Selectionfor building design and supervision, contractedin 2 phases c11 M& E, includingthe socialand 0.9 QCBS Prior August 5 years environmentalmitigatingmeasures 2009 TOTAL 45.0 96 Annex 9: Economic and Financial Analysis Democratic Republic of Congo FOREST AND NATURE CONSERVATIONPROJECT Introduction 1. Methodolou The project's dual thrust on institutional capacity building (58% of project resources) and local investments (42%), has important implications for the economic analysis. A considerable part o f economic benefits, those related to capacity building, are in fact hardto quantify and the analysis must focus primarily on the measurable economic benefits o f local investments (in addition to the benefits arisingfrom fiscal revenues). 2. There are several elements of the project that have not been included in the calculated ERR. The ERR omits the substantial positive environmental impact; had it been possible to quantify these environmental benefits, the ERR would have been considerably higher. Additional environmental and indirect benefits are: improved management of production forests, protected areas and other forest lands reduced poaching; reduction in conflicts and the promotion o f sustainable exploitation of forest resources. These benefits contribute to reduced deforestation, more sustainable wildlife offtakes and protection o f endangered species.`The environment and economic impact o f the strengthened ICCN and rehabilitation of Maiko NP has been calculated and presented separately usingan economic model that is innovative but not necessarily compatible with the methodology used in assessing the rest of the project. The costs of establishing an enabling milieu for realization o f a range o f environmental services from forests and the associated benefits are omitted from the ERR because the precise nature of this intervention has not yet been specified in a way that benefits could be quantified. Finally, the cost budgeted for the redeployment and redundancy schemes for MECNT staff has been omitted from the economic analysis. 3. The economic analysis has focused especially on Component One which include: (a) heavy costs for long terms capacity building and the creation of an enabling environment; (b) quantifiable benefits from increased capture of forest taxation; and Component Two which includes community development investments and generatesmeasurable economic benefits. Economicimpactof projectinterventions Comvonent I: Institutional Strengtheningof MECNT 4. MECNT's operational capacity to perform its core institutional duties will be restored. The project investment (including the specialist expertise necessary for the project's Coordination Unit, monitoring and evaluation systems and a management information database) is essential for the overall success of the project; the associated costs are therefore included in the ERR calculation. However, the quantification of directly attributable benefits is not possible. For example, Component 1 will create effective management systems and a well-trained, efficient cadre of staff, both centrally and at Provincial level. There will also be additional, secondary benefits from this enabling investment that will extend well beyond the scope of FCNP. Similarly, the TA support to the project Coordination Unit is also considered essential to the project's success though the (non-quantifiable) benefits of the associated training element are not estimated. There financial benefits generated by the improved management systems as appliedto the fiscal regime ofthe forestry sector (see below). 5. Important costs under Component 1are the capital investment in, not only the TA, but a new HQ in Kinshasa (US$4.0 million) plus the cost of rehabilitation of field offices in the three pilot provinces. These investments will help ensure the smooth and effective delivery o f services by MECNT that are 97 considered important to the success of the current project and therefore the costs are included in the central case for the cost-benefit analysis. 6. Quantifiable benefits under this component will be mostly fiscal. They will stem primarily from increased recovery rates of fees and taxes originating from commercial logging. Following the legal review of forest logging contracts (completed on January 19, 2009) the legally constituted forestry concessions make up an area of 9,700,000 hectares. It is assumed that this area will remain constant during the life of the project and that the area tax will remain at US$O.SO/ha for five years to pass to US$0.75/ha from year 6 onwards. Based on these assumption, fiscal revenues would increase from the currently estimated of US$2 million per year to US$7.6 million based on a 75% recovery rate by the end of the project. (or US$8.8 million assuming a 85% recovery)29. Component2: CommunityParticipation in Forest Management 7. , The consultative process to indentify forest zones, map environmental resources, create forest management plans and publicize widely the Forest Code will generate immediate and longer term indirect benefits due to the potential created for more cohesive, participatory and transparent management of the forestry sector. The forest management planning exercise will stimulate the involvement and commitment by the communities in the sustainable management of their local resources which will have substantial, but not directly quantifiable, environmental benefits; these plans may involve a commercial, industrial forestry enterprise and the joint development of cahiers de charges will create the potential for further, but as yet unquantifiable, benefits to the community. 8. The most important element o fthe project with regardto the generation of quantifiable benefits is the subcomponent 2.2 that will promote the diversification of economic activities by communities in the project selected locations. A gamut of initiatives will be offered from which quantifiable benefits are expected to be generated. Support grants and technical advice will be offered to improve production systems and processing technology. Benefits will arise from increased production from improved systems o f cultivation and high yielding cultivars. The principle additional marginal costs to the beneficiary households will occur due to a greater use of available labour and the cost of the improved planting materials. The communities are expected to contribute 20% in the form of labour. For the economic analysis, a basic farm enterprise production model reflects the phased introduction o f improved Estimatedrecovery US$ 5,922,990 6,245,939 6,556,618 6,676,110 6,551,380 8,773,650 Recoveryrate (imputed) 6 79% 81% 79% 80% 80% 86% Alternative recovery rates 7 35% 40% 45% 50% 60% 75% Alternative recoveryestimate US$ 2,617,537 3,089,536 3,702,864 4,211,360 4,949,095 7,640,933 98 cropping systems. Experience indicates that adoption rate for new practices i s initially very slow but improves based on the number of years that the community has contact with the project initiatives. The economic analysis is restricted to the four targeted landscapesbut it is likely that nearby communities will become aware of the potential benefit of project recommendations and also adopt improved practices; the impact ofthis ripple effect have not been included inthe analysis. 9. The crop production and processing models have been developed based on a range of enterprises existing in the project area that are likely to be preferred by the local communities. Basic budgets have been prepared in Excel formats to permit updating as new and more accurate data emerges (see project file). The holding size for crop production i s assumedto be an average of 1.5 ha per household with a 3-5 year fallow. Farm size and cropping patterns are assumedto remain the same duringthe project but the improved systems will help reduce the fallow period and the associated total area affected by slash and burn cultivation (benefits not included in the analysis). The models are based on discussions with farmers, field-based NGO's and others with a detailed knowledge of DRC agric~lture.~~Increases in yields3'are based on the potential of existing improved varieties and superior cultivation practices rather than the introduction o f agrochemical inputs that would entail a costly distribution network. The availability of labor is not considered a constraint to improved cultivation and processing practices and a shadow wage rate of $2has been used. 10. Producer prices Price data is scarce and sometimes o f dubious accuracy both regarding the prevailing commodity prices and the associated high costs of transport. Therefore, best estimates have been made for farm gate prices based on those currently prevailing in the larger markets to which the products would be sold. The local market prices have been adjusted downwards by 25% to reflect the cost of transport to those markets. Then a positive price differential of 10% has been assumedto reflect an improved quality of product compared to the without-project circumstances (processedchipped cassava, better smoked fish and bushmeat, clean honey, less weevil-infested graindpulses). No real price increase has been assumed and assumptions made regarding the greater proportion of increased productionthat might be retained for home consumption. 11. Marketing Information for the four landscapesindicates the following: Lac Tumba benefits from the proximity o f urban markets -Mbandeka and Kinshasa; Salonga evacuatesproduce arduously along old colonial roads and has the poorest accessibility but communities are aware and desire to improve the situation; M L W has recently benefitedfrom commercial barges aware ofthe available produce and this has greatly assistedwith crop marketing; and Ituriis bisectedby a roadalongwhich many ofthe populationreside. Roadimprovements are being made underthe Bank-funded Pro-Routes project. 30 The farm management datapreparedby the IFAD-fundedProgrammede RelanceAgricole dans la Provincede L'Equateur(PRAPE) and Province Orientale (PRAPO) projects was usedfor comparativepurposesto moderate other data sources. 31 Increasesof less than 50% of existingyields havebeenassumed inall cases, includingmanioc where a doubling o f existingyields is readily achievable using improvedmosaic resistant varieties. 99 12. Investment in small-scale infrastructure Under Component 2.2 additional investment will be available at community level for small scale infrastructure, improved sanitation, storage and transport (e.g. crop evacuation tracks, landing stages) amongst other things. These will spawn widespread socioeconomic benefits for the community as a whole and for its individual members (improved health, reduced storage losses, lower costs of transport, communication, etc.) and improve the viability o f the project-supported production initiatives. The community is expected to contribute between 30 percent of the cost ofthese investments byprovisionof labor andraw materials. 13. Direct Beneficiaries : During the five year investment period, 165 village communities will be contacted directly in each landscape, each community comprising 100 households and indigenous families are direct beneficiaries; intotal it i s anticipated that 384,000 (12%) including of the 3.2 million inhabitand of the four pilot landscapes will benefit due to project interventions. A large number of additional families are expected to take advantage of the enhanced productivity (improved planting material, marketing/processing opportunities, etc.). The small scale infrastructure (Micro-projects) to allow access and marketing (e.g. roads, boat landings, and pirogues) plus improved sanitation, dispensariesand specialized training will benefit all members of the 165 contact communities. During the five year investment period, 165 village communities will be contacted directly in each landscape, each community comprising 100 households that are direct beneficiaries; in total it i s anticipated that 384,000 (12%) of the 3.2 million inhabitandof the four pilot landscapes will benefit due to project interventions overall. 14. The average imputedincome per family for adopters is expected to increaseby US$1400 per year due to improved cropping systems (cassava, maize, pulses, etc.) and an additional US$600 per year for those adopting a new enterprise (apiculture, fish dryers, cassava processing, etc.). Comuonent 3: Management of protected areas and strengtheningof ICCN 15. Investments under Component 3 will contribute to conserving the global public goods of DRC's forest ecosystems.The rehabilitation and installation o f strengthened and improved management for Maiko National Park will bringconsiderable environmental benefits through the preservation o f multiple rare species and protection for the surrounding environment covering 10.8 millionha. Economic rate for returnand sensitivity analysis 16. The ERR and sensitivitv analvsis The calculated project ERR reflects the benefits accruing from the impact of project interventions at community level which arise from the increased value of production, processing and marketing activities. An economic analysis o f the project gives an IRR of 12%. 17. In an effort to avoid burdening the analysis of productive components with long term infrastructure and overall capacity building costs, the analysis chose to us the all project costs excluding the Component Ilong term investmentsas its base case scenario. This scenario provides an IRRof 17%. The sensitivity analysis based on this scenario shows that if project activities at community level are deferred for a year while maintaining the same project disbursement rate, the IRR remains at 15%; this reflects the fact that the initial build-up o f benefits i s slow and, even if they are sluggish to materialise, their impact in the longer term ensures that the project is a sound investment. A sensitivity analysis indicates that the ERR is relatively robust to delays but less so to reductions inyields or sales values. To 100 calculate the ERR, a five year investment period and a twenty year horizon have been used.32 The following table shows a summary of results and a sensitivity analysis: Table 2: Economic rate of return and sensitivity analysis for central case scenario Scenarios Economic rate ofreturn 2. Base case scenario: ie. ExcludingComp Iinvestmentand coord.. 17% 3. Communitydevelopment deferredby one year 15% 4. Sales revenue falls by 10% 14% 5. Only 75% of communitydevelopment achieved 19% 6. Yield reducedby 25% but costsremainthe same 13% Component3 not taken into account. Calculation of the rate of return of separate project components has not been attempted because all interventions are interrelated and interdependent. 18. Returns to beneficiaries Local investment by the project will improve incomes for participating households and these are expected to rise by US$700 and US$2000 per year depending on the activities adopted. These outcomes are based on an analysis of the likely income generating initiatives that will be adopted combined with micro-project investments that will improve marketing outlets, access, potable water sources to improve the general .socioeconomic status of the communities in the four pilot landscapes. Additional secondary benefits will accrue to traders involved in the greater volume of marketed produce. No account has beentaken of a potential, short-term fall inthe incomes of those inthe bushmeat trade (or fisheries) where the community management plans may call for the reduced off-take to permit stocks to recover. 19. Long term additional revenues against proiect-induced cost At the end of the project, it is estimated that MECNT will face US$2.2 million in additional annual operating costs attributable to the project and that this amount will become a long term recurrent cost if the project impetus is to be maintained. At that time, annual forest revenues are estimated to have grown to US$7-9 million per year. 25% of the recovered area-basedforest taxes - US$2.6 million -would go to the Province and 15% to the sub-district where the income was generated. The Case of Environmental Servicesand Innovative Forest Carbon Initiative 20. Embedded into the project are features that aim at reducing deforestation and introducing new forest management models based on the production and trade of environmental services in the global market. US$ 4.0 million o f project funds are set aside as seed money to promote innovative schemes ranging from reduced deforestation and forest degradation, protected area Trust Funds, debt or money for-nature swaps, eco-securitization, conservation concessions, afforestation under the clean development mechanism and comparable schemes. 21. While pursuing these initiatives and others highlighted in the outcome of the Chatham House workshops on "Alternative models and finance mechanisms for sustainable forest use in DRC" uncertainties about markets and fundingmechanisms discouraged an economic analysis ofthese schemes. 32 Futuremaintenancecosts of buildingsconstructed by the project is factored inat lo%, replacement of vehicles and equipment at 15% plus forecast hture net additionalrecurrent costs ofMECNTA shadow wage rate of $2!day has beenappliedto incremental labor. 101 22. The following paragraphs provide updates on how most talked-about innovative initiatives apply to the DRC and suggest how the project will support these initiatives. The following initiatives are considered: (i)Afforestation under the Clean Development Mechanism; (ii)Voluntary Carbon Markets; (iii) (variousoptions);and(iv)ConservationConcessions. REDD Afforestationunder the CleanDevelopmentMechanism. 23. Afforestation and reforestation (on land already deforested as at 1990) are eligible for carbon credits under the Clean Development Mechanism (CDM). These credits differ from those generated, for example, in the energy sector. They are considered "non-permanent" and provide "short or long temporary credits" (period o f validity equal to a commitment period, i.e. 5 year or the duration of a project) and must be replaced upon expiry. Market observation shows that private investors are reluctant to buy temporary credits particularly in transitioning countries such as DRC. The recent European Commission's decision that forest CDM credits are not accepted as counting towards the objectives of companies participating inthe EUmarket for greenhouse emissions permits goes in the same direction. In practice, at this time, the Bio Carbon Fundo f the World Bank appears to be the only buyer o f this type of credits and current and projected availability of funds for DR makes large scale C D M interventions appear unlikely at least for the coming five years. The BioCF is currently supporting a reforestation project in DRC, the Ibi Bateke Fuelwood Reforestation project, led by Novacel, a local private company. The project aims at reforesting4,500 ha of degraded landfor fuelwood production, aimed at the Kinshasa market. Voluntary CarbonMarket 24. The voluntary carbon market i s increasing at a rapid speed. According to the "State of the Voluntary Carbon Markets" (Ecosystem Marketplace, 2008), the carbon transactions in 2007 more than doubled in relation to 2006. Contrary to the CDM, carbon transactions in the area o f forestry and agriculture respond to a great share of overall transactions (around 20% in 2007). Experts predict an increase in the demand for forest carbon credits in the voluntary market, including from activities that reduce emissions from deforestation and degradation. 25. Recent REDD transactions demonstrate the potential o f this market. The Marriot chain of hotels have signed a multi-million agreement with the Brazilian state of Amazonas to purchase credits from a project that would reduce deforestation in a development reserve in the state (specific figures have not been disclosed). Merry1Lynch has invested in the Ulu Masen Ecosystem project in Aceh, Indonesia, providing US$ 9 million of upfront payment for a project that would replaces logging concessions for conservation concessions. In addition to these deals with the private sector, the Government o f Norway has pledged up to US$ 1 billion to Brazil, contingent upon their reducing emissions from deforestation and degradation at the national level. 26. These examples indicate that DRC could greatly benefit from the carbon market, be it regulated (CDM-like) or voluntary. REDDOptions 27. DRC can take advantage o f the REDD (Reduction of Emissions from Deforestation and Degradation) mechanism. The overall architecture and the rules for REDD are currently being discussed at the international level. The specifics o f the REDD mechanism that will be eventually adopted will influence greatly the benefits DRC can draw from REDD. If the reference scenario o f emissions from deforestation and degradation is based solely on historical deforestation, as suggested by Brazil in the international negotiations, DRC would not be in a position to benefit from REDD due to its historically 102 low rates of deforestation. On the other hand, if reference scenarios can also be based on predicted future deforestation, DRC would need to demonstrate the increased pressure on its forests. DRC and other Congo Basin countries have been advocating for the latter option in the international negotiations and there seems to be emerging consensus that `forward-looking' baselines should be allowed when setting a nationalreference scenario for REDD33. 28. REDDwould have different impacts onDRC depending on whether its structure were: (i)Market-based mechanism with national level baselines and targets: This option would provide rewards to the Government in the form o f carbon credit whose marked value is determinedbythe market (current REDDmainstream option) (ii)Mechanismbackedby aSpecialFundwithnationallevel baselinesandtargets: Thisoption would provide rewards to the Government inthe form of cash or other negotiated assets at a fixed price (option is favoured by Brazil inongoing negotiations) (iii) Mechanism with baselines and targets established in the j?amework of speciJic project: According to this option, rewards would not go to the Government but to local deforestation reduction initiatives, i.e. projects. The principle would be similar to the current Clean Development Mechanism (CDM), but conservation and forest management activities would be eligible34. 29. At this time, it would appear that a reward mechanism backed by a Special Fund and open to rewardtargets on a project sub-national scale would work best for DRC. DRC REDDwould then be built around a Special Fund that rewards a broad range of measures leading to reduced deforestation & degradation in well identified geographic areas of the country where results would be measured. 30. Such a REDDarchitecture would allow to take into account cross cutting issues such as support capacity building, clarification of forest and land rights, intensification of agriculture, etc. In addition it would immediately allow to directly rewarding the provision of environmental services from schemes such as conservation concessions and deforestation reductions obtained through implementation of certified loggingusing reduce impact techniques. Conservation Concessions 31. Conservation concessions can be framed as both a REDD initiative or a stand-alone activity, whatever the outcomes o f international negotiations on REDD architecture. Since DRC is the only country where certain unique species can be found (Le. the bonobos), there i s a strong rationale to finance operations of the type of the Bonobo's Conservation Concession proposed by C I at the Chatham House Kinshasa Seminar and Round Table. To be effective, these types o f activities need to integrate social equity and financial sustainability into design. Rewards and compensations proposed to stakeholders must take into account opportunity costs for both local people and the Government. 33 The WorldBankis currently preparingaconcept note on a study that would allow DRC and the other Congo Basincountries to modelfiture rates of deforestationand degradation, generating inputsfor the countriesto decide on `forward-looking' baselines. 34 This optionhadbeenruledout at the UNFCCC COP6 inThe Hague in 2000 (thenat COP6 bis andCOP7 in 2001) due to the riskof leakages(displacementof deforestation)ifthe full countrywere not coveredby suchprojects.Howeverattemptsare being carriedout to re-introduceit. 103 Annex 10: Safeguard Policy Issues Democratic Republicof Congo FORESTAND NATURE CONSERVATIONPROJECT Introduction 1. The project strategy to implement the SEA-recommended environmentaland social safeguard measures is threefold: (a) integrating key safeguard measures into project design; (b) identifying and funding implementationof residualmeasures through a social and environmentalmanagement plans as mandated by the suite of safeguard-documents includingthe ESMF, the RPF, the PF, the IPPF and the PCRF; and (c) settingaside an unallocated amount of financialresources for implementingthe activities in line with the project's suite of safeguard documentationdescribed above. These safeguard framework requirementswill be complementedas appropriateby specific safeguard instrumentsas deemednecessary by the Bank and the Government. This apply, for example to forest zoning activities or which the Government has developed with assistance from all donors involved and under a highly participatory process involving local communities and NGOs an Interim Guide for Forest Zoning (IGFZ) which was disclosed as part of the safeguard-documentation. IGFZ has been reviewed and found fully consistent with all ofthe World Bank's applicable guidelines for disclosure and consultationand shall completethe safeguard requirements under the ESMF, RPF, IPPF and PCRF as they apply to any zoning activity undertakenwith the project assistance. '2. While this strategy is applicable to all forest and nature conservation initiativesfinanced by all Donors in the DRC, the Bank will take responsibility for the activities specifically funded under the present Project, whose scope and size have been deliberatelycircumscribedto selected capacity building and community support efforts in the Ministries HQand three provinces rather than the entire country. Social and environmentalmeasures related to initiativesfunded by other donors will be integrated into, financed and supervisedas part oftheir respectivedue diligenceefforts. B. ENVIRONMENTALMANAGEMENT OF THE PROJECT 3. As mentioned above, a Strategic EnvironmentalAssessment (SEA) was adopted by the MECNT for the whole PNFoCo and will apply to this Project. This SEA also covered the Bank-managed Multidonor TF for Forest Governance and the nationalforest and nature conservation program. On the basis of the SEA findings and recommendations, an Environmentaland SocialManagement Framework (ESMF), a Resettlement Policy Framework (RPF), a Process Framework (PF), an Indigenous People Policy Framework (IPPF) and a Physical Cultural Resources Framework (PCRF) were developed, adopted and disclosed. These safeguard documents identified and analyzed the most important risks to forest ecosystems and to biodiversity and provided a large set of environmental mitigation measures encapsulated into the EnvironmentalManagement Framework (ESMF). Also, to complement the above- described safeguard documents, the MECNT has adopted through a comprehensive and inclusive participatory process "Interim Guidelines for Forest Zoning" A substantial part of these mitigation measures have been integrated into project design and will be implemented as part of overall project implementation.The safeguard documents have been largely debated during public consultations and workshops. The minutes ofthese meetingsare attachedto the SEA andESMF. 4. Project sub-componentswhich will only be further designed during project implementationwill be screened through the procedure elaborated in the ESMF and further developed into the Project Implementation Manual. This screening will be done under the responsibility of the NGO by the environmental and social specialists which will be part of the CU and the relevant nationalagency. This 104 screening procedure is consistent with World Bank Safeguard Policies procedures, since DRC does not at present have an adequate and comprehensive EL4 regulatory framework. Sub-components shall be screened and assigned a category (three categories A, B and C are defined for the purpose of the Project). A scoping will determine the nature and depth of the required environmental analysis and or mitigation measuresto be implemented. According to the category and scoping the appropriate safeguard documents will be prepared, including public consultations and disclosure in-country and in the World Bank's Infoshop. For small community projects, financed through sub-grants, the screening form shall be part of the proposal for financing and a decision will be made whether further environmental and social analysis will be required. The Bank shall use supervision to review EA for subcomponents or activities that require a full EL4 or EMP and activities that may involve complex environmental and social issues such as forest zoning or forest use and provide feedback and clearance as appropriate. 5. Throughout its execution, the CU, based on input from technical directorates of MECNT and ICCN, and from MOD contractors, will consolidate annual work plans that will be submitted to the Bank for review and the to the Steering Committee for adoption. These plans will include (i)a description of activities proposed to be carried out under the Project during the subsequent year; (ii)a budget, (iii) a description of social and environmental measures carried out for the preparation o f said activities and of mitigation measures to be implementedintheir support thereof, all incompliance with the ESD (together with a Safeguard Plan for such activities if the Bank determines it is so requiredpursuant to the project safeguard documentation), and (iv) implementationarrangements. Disclosureand Implementation 6. The SEA, and ESMF were disclosed inthe country as shown in section C of the present annex and made available to the Bank Infoshop on December 16, 2008. The project's mitigation instruments will be listed inthe Legal Agreement. Mention will be made that during implementationwhere and when needed EAs will be prepared in conformity with the content and directives of the ESMF, and will be prepared and disclosed before the start o f any infrastructural work. Other safeguard-related instrument such as the Interim Guide for Participatory Forest Zoning has been disclosed as part of the safeguard documentation for the Project and shall be used in conjunction with the relevant safeguard documents when a forest zoning activity is to be financed through the Project. 7. The Coordination Unit (CU) will manage and coordinate the project. It will comprise, among other experts, a locally hired environmental specialist who will be responsible for the environmental management dimension o f the project and the implementation of the EMPs. The environmental specialist shall be assistedby internationalexperts and other local experts on need basis. He/she will be accountable for the quality and time efficiency of the implementation of the mitigation measures of the environmental safeguards. Hisher responsibilities include: Coordination with and between agencies involved inthe implementation of the mitigation measuresand inmonitoring the implementation of environmental management measures. The environmental specialist will be accountable to the Coordinator of the CU; 0 Supervision of the implementing and monitoring agencies; 0 Organizationo ftraining and logistical support to the implementing and monitoring agencies, as needed; 0 Coordination and liaison with government and ministryagencies involved in safeguard issues (e.g. GEEC); 0 Coordination with the social and communication experts of the CU; and 0 Organizing and managing independent audits at the completion of each environmental mitigation measure. 105 8. The environmental specialist will be given the necessary equipment and resources to travel to the field as needed. He/she will work closely with the social and communication specialists of the CU to manage and organize communicatiodsensitization campaigns. The local environmental specialist will be supported by an experienced international expert at least during the two first years of the project. In addition to providing day-to-day technical assistance, the international expert will fulfill the following tasks: 0 Prepare a training program (during the first three months) and train the environmental specialist and other people implicated inthe project as needed; Identify adequate environmental indicators (duringthe first three months) to help monitor and evaluate the overall environmental impact of the project, with emphasis on the environmental safeguards and sustainable forestry management, and ascertain that these indicators are properly integrated into the overall monitoring and evaluation indicators; 0 In collaboration with the environmental specialist organize and prepare a yearly supervision and monitoring program of the safeguard activities; and 0 Develop an efficient reporting system. 9. In the field, the supervision and monitoring of the implementation of and compliance with the safeguard requirements will be the responsibility of the field technical services o f the Direction de la Forestrie Communautaire, Ministry o f Environment, Forests, Conservation, and Nature Conservation and Tourism, which will be equipped and trained through the Project. Inthe protected areas, the supervision and monitoring will be done by ICCN. The work of these field units will be coordinated by the environmental specialist in the CU. The Bank will conduct regular supervision missions to ensure implementationof and compliance with the Project safeguard requirements. 10. The CU will contract out the preparation of the required EAs to national or international specialized firms, as the need arise. The technical supervision of the preparation and implementation of these EAs will be done by the environmental specialist, in collaboration with the monitoring and evaluation unit of the CU, the international expert while on assignment, and other experts working inthe field on need-basis. The budget shown below covers exclusively the implementation and monitoring of safeguard requirements related to activities directly financed under the present project and the Bank- managed Multi-donor Trust Fund. Safeguards related to other initiatives financed by other Donors in the framework of the PNFOCO will be financed, implemented and supervised in the framework of their initiatives. staff inthe environmental evaluationof National with every new the Project .Sensitizationo f leaders and environment partner managers and staffofpartners(DO) expert Internationalsupportto the CCP in Consultant 400 000 On key momentso f environmental managementfor on the program, in average 3 monthsper year for 5 years particularat the start Specific complementary studies Consultant 300 000 Inthe preparation phase of certain activities Remunerationand operational expenses Project 700 000 Throughoutthe 106 Elements Responsible Approximate cost (US%) Deadlines for 3 nationaVregiona1experts for 5 years I Coordination I program Annualprovisionof $200 000 for Project 1000 000 I When required implementationofthe ESMFand its Coordination mitigationmeasures and contingencies Total 2 500 000 Conclusion 11. The present project is not expected to have significant negative impacts on the environment. To the contrary, it will initiate important actions that have been missing up to now, and which will help to protect naturalforests, critical natural habitats and world class biodiversity. B. SOCIALMITIGATIONPLAN 12. This project will interact with a variety of natural ecosystem and with populations having varied social, economic and cultural settings. Project activities will be subject to year by year planning and community-based initiatives identified in a participatory manner with project beneficiaries. While the provinces and districts and sub-districts where the project will operate have been identifiedtheir precise location and the potential impact on local communities i s not known at this stage. For this reason, a Process Framework (PF), a Resettlement Policy Framework (RPF) and a Physical Cultural Resources Management Framework (PCRF) have been prepared. Resettlement Action Plans (RAPs) will be prepared to respond to unexpected situations where people may have to relocate to make space for social infrastructures or may be economically affected. 13. Given the presence of indigenous populations in the project area, OP/BP 4.10 related to Indigenous People applies, and an Indigenous People Policy Framework (IPPF) has consequently been prepared. Duringimplementation, wherever the presenceof indigenous peoples groups or communities i s identified, an Indigenous Peoples Development Plan will be prepared and implemented in accordance withthe terms and procedures described inthe IPPF. 14. The implementation of the social mitigation plans will be based on a phased schedule and according to the annual programs. Disclosureand Implementation 15. As for the SEA and ESMF, the RPF, PF, CRF and PDF were disclosed in country as shown in section C of the present annex and made available to the Bank Info Shop on December 16, 2008. The project's mitigation instruments will be listed in the Legal Agreement. This will indicate that during implementation where and when needed safeguard instruments such as RAPs andor IPDP will be prepared in conformity with the content and directives of the IPPF and/or RPF, and will be implemented prior to the start of any activity that may negatively impact a local community, group including indigenous peoples groups and communities. Appropriate covenants will be included in the Grant Agreement to specify these requirements. Project Annual Workplans prepared by the CU will specify safeguard-related measures associated with proposed activities as appropriate and will be submitted to IDA for review. 16. A concerted effort has been made by the donor community in the last 10 years to help the government develop its capacity for the management o f its natural resources and to prepare and implement environmental and social mitigation measures. Projects such as PRO-ROUTES and PUSPRES 107 have allocated budgets for training and technical support in this area. An environmental study group (Groupe d'e`tudes Environnementalesdu Congo, GEEC) has been created with assistance from PMURR and its staff trained. GEEC is already operational, but its institutional status is ambiguous and it lacks financial support. Well trained staff in sufficient number is not yet available in governmental institutions and it will take several years before adequate capacity in the field of environment i s established on a national scale. For this reason, the present project will provide specific safeguard training and support to MECNT, the NGOs and firms involved inthe implementation of activities financed underthis project. 17. A large number of national, regional and local NGOs that are working for the protection of forests and environment and the welfare of indigenous people exist and are generally competent, with a few exceptions. Some have participatedinBank-assisted projects, and their overall performance has been satisfactory. 18. The Coordination Unit (CU) managing this Project will comprise, among other experts, a locally hired social scientist in charge of the social safeguards and social development. He/she will be accountable for the quality and time efficiency of the implementation of the mitigation measures o f the social safeguards, specifically the RAPS,the Process Framework, and the IPDPs. Hidher responsibilities include: Coordination with and between agencies involved in the implementation o f the mitigation measures and in monitoring. The agencies will be accountable to the social scientist. Inturn, he/shewill be accountable to the Coordinator of the CU; Supervision of the implementingand monitoring agencies; Organization o f training and logistical support to the implementingand monitoring agencies, as needed; Coordination and liaison with government and ministryagencies involved in safeguard issues (e.g. GEEC); Coordination with the environmentaland communication experts o fthe CU; Coordination and liaison with village committees. He/ she will liaise between the village committee and the project coordinator and will address social issues related to community services and infrastructure; and Organizing and managing independent audits at the completion o f each social mitigation measure. 19. The social scientist will be given the necessary equipment and resources to travel to the field as needed. He/she will work closely with the environmental and communication specialists of the C U to manage and organize EMPs and communicationhensitizationcampaigns. The local social scientist will be supported by an experienced international expert at least during the two first years of the project. In addition to providing day-to-day technical assistance, the international expert will fulfill the following tasks: e Prepare a training program and train the social scientist and other staff implicated in the Project as needed; e Identify adequate social indicators (during the first three months) to help monitor and evaluate the overall social impact of the Project, with emphasis on the social safeguards and community based forestry. In collaboration with the social scientist organize and prepare a yearly supervision and monitoring program of the safeguard activities; and Develop an efficient reporting system. 108 . 20. Inthe field, the supervision and monitoring of the implementationof the mitigation plan will be the responsibility ofthe field technical services oftheDirection de la Forestrie Communautaire, Ministry of Environment, Forests, Conservation, and Tourism, which will be equipped and trained to start operating at the central level and inthe three provinces supported by the Project. Inthe protected areas, the supervision and monitoring will be done by ICCN. The work of these field units will be coordinated by the social scientist inthe CU. Implementation and Monitoringof Social Safeguard Mitigation Instruments 21. The CU will contract out the implementationofthe RAPSand PDPs to one or several national or international specialized firms or NGOs including experienced national and local indigenous NGO(s) or NGO(s) working with indigenous people. The technical supervision of the implementation of these contracts will be done by the social scientist in charge of safeguards and social development, in collaboration with the monitoring and evaluation unit of the CU, the international expert while on assignment, and GEEC. 22. A list of firms and NGOsthat would be able to and interested inparticipating inthis programwill be prepared at the start of the project for the dual purpose of selecting making a selection o f some for a contract and for all to benefit from the training activities, as needed. Budget Policy framework Budget estimate InvoluntaryResettlementPolicy Framework US$500,000 Process framework us$2,000,000 Physicalculturalresourcesmanagement framework Taken from the annual provisionfor ESMF implementationifrequired Indigenous people development policy framework US$1,000,000 TOTAL US$3,500,000 Conclusion 23. The present Project is not expected to have any negative impact on the communities affected by the activities it finances. To the contrary, it will initiate important actions that have been missingup to now, and which will help to protect the livelihood of communities living in and around forests, including the Pygmies. These measures, defined on the basis of a wide consultation with various stakeholders, include adequate zoning, compliance with forest and environmental laws, development o f forestry-based community income generating activities as well as other development activities. At the national level it will contribute to better protect the country's resources and improve the ability of the government to manage them financially and technically with efficiency. In the unlikely event that involuntary displacement should take place, appropriate mitigation measures have been identified and adequate precautions have been taken to ensure their implementation as needed, including references to the mitigation plan in the Financing Agreement of the project, including suspension of disbursement in case of non-compliance. C. DETAILS OF CONSULTATION AND DISCLOSURE OF INFORMATION Information and consultation 109 2. Information about the PNFoCo and this project started in 2007 with the dissemination of the Terms of Reference o f the ESIA. Between April and September 2008, a National NGO facilitated information sessions about the PNFoCo program and the present project throughout the DRC. Sessions were held in Matadi, Lumubashi, Kisangani, Goma, Bukavu, Mbandaka and Bandundu. More detailed information sessions were heldat various locations inthe three provinces where the Bank-assisted project was more likely to provide support, namely the Orientale, Bandundu and Equator Provinces. Information sessions for the general public were supplemented by consultations to the exclusive benefit of indigenous people which were carried out by a leadingPygmy NGO. 3. The consultation process involved a large number of meetings across the country and yielded informationthat helped shape the design of the Government program and the presentProject. 4. Dialogues with communitiestouched on issues pertinentto each site, including industrial logging, social responsibilities of timber companies, protected area management, mechanisms for management of natural resources, and dissemination of the forest code. 5. Administrative and traditional authorities in Bandundu, central Bikoro, Iyembe Moke, and Mambassa as well as local and indigenous communities stressed that they were not likely to profit from timber exploitation, pointing to the fact that most timber jobs go to workers from outside the region. Further, the lack of on-site timber processing diminished local benefits. Itwas clear to the NGO piloting the discussions that local and indigenous communities are not prepared to negotiate social responsibility contracts with timber companies, and many community members were unaware o f the protection of user rightsgranted under the forest code and ofthe existenceo fthe role of cahiers des charges inclarifying the benefits that communities could receive from timber companies operating intheir locality. 6. In areas neighboring protected areas, such as central Bikoro and Epulu, local and indigenous communities acknowledged the positive side of protected area management, with indigenous peoples pointing at the abundance o f fauna within park boundaries and positive spillover effect into neighboring zones. Indigenous people also said they were increasingly implicated in protected area management due to their enormous knowledge of the forest. 7. The communities met in Lyembe Moke, Inongo, and Mambassa, indicated their preference for maintaining current land management arrangements which, defacto, grant free access to all forest resources. They also admitted that lack o f information on the forest code was leading to unsustainable exploitation of resources, but cited that local management had beenable to protect forest blocks important to them, such as sacred forests. 8. City dwellers in Mbandaka, Kisangani, and Bandundu city proper had a different perspective on the management of forest resources, one focused on lucrative resource use. Industrial exploitation was favored compared to other modes o f management as it was seen as a source o fjobs, public infrastructure, and increased local commerce. However, participants also acknowledged the problems associated with industrial exploitation, among them the threat of HIV, the destruction of local livelihoods sources due to demographic pressureand deforestation and the increaseof waterborne illnesses. 9. Facilitating NGOs also noted that knowledge of the forest code was practically nonexistent, and that this heldtrue for local and indigenous communities as well as administrative authorities. Free access zones do not have mechanisms for monitoring extraction rates, resulting in overexploitation of some resources and threatening the extinction of some species. Communities in all three of the provinces were and continue to be concerned by the lack of distribution of forest areataxes to decentralized units. 110 10. Based on their discussions with communities, the interviewers concluded communities believe that their customary rights are not protectedunder the law becausethey hadnot beenconsultedduring the process of allocating forest concessions. Indigenous communities lamented that they do not have their own forests, and interviewers said that 80% of revenues to indigenous communities are generated by the forest. Participantsalso believedthat the state would assume more responsibility and would help improve stakeholderparticipation through increased dialoguewith forest stakeholders. 11. The following table shows the dates locations and number of participants in consultations in the Equateur, Banduduand Orientale provinces. governor's counsel, the vice president ofthe provincialassembly chargedwith environment and naturalresourcescommission, and the provincial coordinationrepresentative; Bandundu proper Orientale Kisangani 3/6/08 25 Mambasa 3/8/08 22 Indigenous CommunityMembers: 7 Epulu 3/9/08 Local Community Members: 10 Beni 3/10/08 Meeting Disclosure 12. The ESIA, the ESMF RPF, PF, CRF and PDF were disclosed in the locations and on the dates listed in the following table. Mitigation instrumentswill be listed inthe Legal Agreement as appropriate. Mention will be made that during implementation where and when needed RAPSwill be prepared in conformity with the content and directives of the RPF, and will be implementedprior to the start of any infrastructural work and protective measures. Mention will also be made that an PDP will be prepared and implemented in compliance with the orientations given in the PDF. A covenant will be created to specify that disbursementwill be subjectto compliancewith these measures. 111 Site Language Province Kisangani, 11/20/08- Complete report in French Orientale : Epulu, 11/27/08 Summary distributedin French, Lingala, Mambasa, and English. Summary to be distributed Isangi in Swahiliby localauthorities. Radio programinFrenchand Swahili Kinshasa Kinshasa 12/10/08- Complete report inFrench (ProvincialMinister of 12117/08 Summary distributedinFrench, Lingala, the Environment,the and English World Bank, and MECNT) Radioprogram inFrenchandLingala Bas Congo Boma 12/20/08- Complete report inFrench Matadi 12/26/08 Summary distributedinFrench, Lingala, Kikongo, RadioprograminFrenchand Kikongo Bandundu Kikwit 12/15/08- Complete reportinFrench Nioki-Bandundu- 12/28/08 Summary distributedinFrench, Lingala, Inongo Kikongo, Radio program inFrench andKikongo Equateur Mbandaka, Bikoro 12/15/08- Complete report inFrench Yuki, 12/30/08 Summary distributedinFrench, Lingala, Lisala andEnglish Radioprogram inFrench and Lingala Kasai Kananga 02/02/09 - Complete reportinFrench occidental 06/02/09 Summary distributedinFrench, Jingala and Tshiluba Radioprogram inFrench and Tshiluba Kasai oriental Mbuyi-mayi 12/29/08- Complete reportinFrench 1/6/08 Summary distributedinFrench, Tshiluba, and Swahili Radioprogram inFrenchand Tshiluba Katanga Lubumbashi 12/10/08- Completereport inFrench 12114/08 Summary distributedinFrench, Tshiluba, Swahili, Lingala, and English RadioprograminFrench and Swahili 112 Annex 11: GEF Analyses Democratic Republic of Congo FOREST AND NATURE CONSERVATIONPROJECT IncrementalCostAnalvsis A. Baselineor Businessas UsualScenario DRC's forest ecosystemsand biodiversity 1. DRC harbors the largest expanse of forest in Africa. The country contains 50% of Africa's rainforest and the second largest tropical forest in the world, after Brazil. DRC's forests is spread across some o f the continent's most spectacular landscapesfrom the Ruwenzori Mountains and active volcanoes along the Albertine Rift to mountainous ridges with highland forest along the Great Lakes in the east. Thick forest and swamp areas interrupted by inselbergs cover central parts o f the country, while grasslands and savanna stretch toward the country borders. DRC forest ecosystems provide innumerable ecological, social and economic services and contain globally significant biodiversity, including over 50% o f the continents mammal diversity (Le. a total of 409 mammal species). Further, DRC's forests are home to some of Africa's most spectacular mammals, including the eastern lowland gorilla, the northern white rhino, the okapi, and the bonobo, and forest elephants. DRC's exceptional natural biodiversity environment was recognized with the designation of five World Heritage Sites (WHS) - more than the rest of all of Africa. 2. Inthe past, decades of armed conflict and political instability have left naturalresourcesina state of mismanagement and unsustainable exploitation. Poaching, forest encroachments, illegal mining, deforestation and forest degradation have occurred throughout the country, including within protected areas, thereby underminingthe environmentaland economic services that the forest ecosystemsprovide. 3. Rural livelihoods in DRC are closely linked to forests and about 40 million people depend on forests and forest products for their livelihoods, in terms of food, medicine, domestic energy, building materials, and cash income. With political stability returning and public infrastructure improving, drivers for deforestation, too, are expected to increase. World Bank's Support to the ForestSector inDRC 4. Restoring the rule of law on forests, embracing the principle of participatory governance, and starting the process of institutional strengthening have been key advancements in the forest sector since 2001, when the Bank re-engaged in dialogue with the DRC. Although the Bank has not financed investments in the forest sector in DRC thus far, the Bank has promoted and assisted forest reforms through policy dialogue and policy lending, studies, public information and consultations. The significant body of research completed between 2003 and 2005, together with important policy work conducted by the Bank with the Government and civil society has been presented in the sector strategy document: "Forest in Post Conflict Democratic Republic of Congo:Analysis of a Priority Agenda". 5. This document provides the analytical underpinningfor overall Bank support to the DRC forest sector and in particular the forthcoming US$ 64 million IDA grant to support the implementation of the National Forest Management and Nature Conservation Program (PNFoCo) developed under 113 Government leadership with support from development partners. Key objectives of the program include: i)creatinginstitutionalcapacity to ensurethe implementationofthenewforestpolicy, ii)ensuringthat the forests' social, economic, and environmental functions are preserved in the long term, iii)ensuring that forests contribute meaningfully to livelihoods and uplifting socioeconomic conditions of rural populations, and iv) expanding the network of protected areas to 15% o f the country's land area. The US$ 64 million IDA investment will concentrate on capacity building of the Ministry o f Environment, Nature . Conservation and Tourims (MECNT) as well as community participation inforest management: MECNT will be supported with general infrastructure, equipment and improved management systems, including the establishment of a specialized forest management system (GIS, integrated forest data management system, log tracking system, M&E, etc.) and associated capacity building. In addition, institutional readiness for the ongoing reorganization of MECNT will be supported. Support will be focused on both MECNT headquarters in Kinshasa as well as three heavily forested provinces: Equateur, Bandundu, and Orientale. Support to community participation in forest management will target the same three provinces, with special attention paid to four Congo Basin landscape^^^: Lac Tumba, Salonga, Maringa- Lopori-Wamba, and Ituri. Rural and forest communities will be the key beneficiaries. Project activities will lay the groundwork for participatory land use planning and land management, as well as strengthen civil society in order to reduce the risk of unsustainable and inequitable exploitation of natural resources. Communities will be empowered to play more prominent roles inforest management planning and negotiating landuse options. The IDA investment will further support economic diversification in the forest zones, aiming to improve rural livelihoods, with technology transfer for agricultural and sustainable forest practices. Business as Usual Scenario (no GEF Scenario) 6. The above IDA baseline would generate important global environmental benefits by mainstreaming landscape management within MECNT and incorporating conservation and rural livelihoods interests into land use decision-making. It is expected that based on the IDA investment, forest concessions will be better managed and monitored against sustainability principles and illegal exploitation will be reduced in the three pilot provinces. Most importantly, land use plans will be developed for the three pilot provinces based on broad participation of the different stakeholders in the forest sector and incorporate the principles set forth in the forest code. Further, communities will have beenempowered to fully engage inthe development o f management plans for adjacent forest concessions and will have access to grant funding and technical assistancefor income diversification activities. 7. While the IDA baseline would generate global environmental benefits in the broader landscape, no funds would be invested into DRC's Protected Area network or the Congolese Institute for Nature Conservation (ICCN), a parastatal that is mandated with protected area oversight and management. As a result, Maiko National Park would continue to be marginally more than a paper park withjust 40% of its total area patrolled by insufficiently trained and unequipped guards. The desolate ratio of one guard per 200km2 would continue to threaten effective and sustainable management and enforcement of Maiko National Park. Key threats to biodiversity would continue to endanger the ecological integrity of the forest ecosystem as well as globally important species, including notable gorilla populations. Limited support from regionalNGO-ledconservation programs would provide minimal support to Maiko NP, but without creating sufficient momentum to upgrade overall management o f the park. 35 11 landscapes were selected by more than 160 regional and international experts in April 2000 based on their outstanding biodiversity, intact populations of larger mammals (e.g. forest elephant, gorilla), and/or because they represent importantand distinctivehabitatsand communities of species. 114 DRC's ProtectedArea Network 8. The national network of protected areas in DRC constitutes 7 national parks and 57 nature and hunting reserves and includes five of Africa's World Heritage Sites, all o f which have been placed on the list of World Heritage Sites in Danger. Protected areas make up about 8 percent of the DRC area (18 million hectares out of 230 million). The opportunity and political will exists to expand the coverage of the protected area network from current 8% to 15% of the national territory, including very large areas o f closed forest which have not been subjected to industrial logging. Large forest areas have become available for conversion to more sustainable land use status due to the cancellation of 163 non-compliant . logging contracts totaling 25 million hectares in 2002 and a new regulatory framework preventing large- scale speculative acquisition of forests. In addition, a new National Strategy for Nature Conservation (NSNC) has been adopted in 2004, focusing on the rehabilitation of national protected areas and the preparation o f a new nature conservation law to replace the prior dated 1969. ICCN's vision 9. ICCN is a semi-autonomous institute responsible for protected area management in DRC. It prepared the National Strategy for Nature Conservation (NSNC), which i s basedon a tri-phased (5, 10, 15 yr) 2-pillar structure comprising: "Institutional rehabilitation at the national level" and "Site-level management, landscape approach". The Congolese Institute for Nature Conservation (ICCN) i s responsible for the Sub-program 5 of the National "Nature Conservation and Rehabilitation of Protected Areas". The NSNC identifies a number of mechanisms through which environmental conservation activities will contribute towards poverty reduction. Within the Forest and Nature Conservation Project (PFCN), this sub-program 5 i s probably the most advanced interms of strategic vision, multi-stakeholders coordination, government leadership, donor support, and implementation on the ground. Given the size of the country and ofthe challenges, it constitutes a de facto program in itself. 10. ICCN applied a scoring policy to carry out a prioritization process of protected areas within the national network. Criteria included: biodiversity importance, level of threat, practical feasibility/ability to counter the threat, and financial gap (see Table 11.1 below). For the identification of top priority areas, only those were considered that had a minimum level of feasibility and minimum level o f information level available. O f the 64 Protected Areas (PAS), ten (7 national parks, 3 reserves) were selected for priority rehabilitation action over the next five years (see Table 11.4 attached further below). Table 11.1: Criteria used for prioritization of existing protected areas CRITERIA SUB-CRITERIA NATURAL RESOURCE QUALITY I BIODIVERSITY I A 1Level of knownbio-diversityandhabitat diversity B Uniquenessrelativeto other DRCprotected areas THREAT/ C Fauna intact or able to readilyreestablish PROTECTABILITY BALANCE D Flora intactor able to readilyreestablish E Futurethreats foreseeable andmanageable Current externalsupport to DRC's protectedarea system 11. As shown well below in Table 11.5, all of the top priority protected areas in DRC with the exception of Maiko NP have been andor will be receiving substantial support from a range o f different donors. In contrast, Maiko NP has thus far only received minimal funds under the regional C A M E program, which spreads funds over 11 priority landscapes across the six Congo Basin countries. 115 Accordingly, there would be a critical gap in donor support to implementation of ICCN's protected area rehabilitation plans as per above baseline/business-as-usual scenario. Maiko NationalPark businessas usualscenario - 12. Despite a wealth of biodiversity and a history dating almost 70 years back, the functioning of Maiko National Park (NP) as a protected area has been severely limited by the lack of national and international support and inaccessibility and the long-term presence of rebels in the south and central sectors. The Park was officially gazetted as a National Park in 1970, but existed as a hunting reserve under the Belgian colonial government since 1938. Until recently, the park had never received international support, little attention from national authorities, and was thus not much more than a "paper park" with no real protection status afforded. 13. Forming part of the Maiko-Tayna-Kahuzi-Biegaforest landscape and thus one of eleven priority areas across the Congo Basin under the CARPE program, the park started to receive assistance from CARPE and Conservation International in recent years. As a result, a first draft management plan was developed as recently as September 2007 based on ICCN's new planning framework for National Parks. Some essential staff was put in place and about 40% of the surface area of Maiko Park can now be patrolled by guards who have received basic anti-poaching and biodiversity conservation training. Essential park infrastructure has been rehabilitated in the last few years, including 49 km o f road and 25 bridges to allow park rangers access to the park and to provide local populations in two sectors better access to markets and construction of patrol posts has begun. Recent accomplishments have been very promising, and a 2007 evaluation carried out by the ICCN ranked Maiko third among protected areas (after Garamba NP and Okapi Faunal Reserve) for latest accomplishments made. 14. However, as per baseline scenario, only meager funding from CARPE and the Government through ICCNwill continue to flow to Maiko National Park, allowing ICCNto continue to pay salaries o f essential senior staff and approximately 140 wardens and allow continued patrolling o f about 40% of the total park area. Without additional GEF funding many crucially important activities would remain unfunded, such as further upgrading of park infrastructure, providing critical ongoing training of park staff including guards, expanding surveillance across the other remaining 60% of the park, carrying out ecological and socioeconomic monitoring, building capacity for strategic management planning, and investing in community participation and community development activities. Without GEF support, ICCN's recent achievements and gained momentum would be placed at risk. Most importantly, the current opportunity to establish a landscapemosaic of national parks and a connecting biological corridor of community-managed nature reserves in the Maiko-Tayna-Kahuzi-Biegalandscape would probably be missed. B. GEFAlternative Projectobjectives,components,results 15. Under the GEF alternative, the project objective for the fully-blendedIDA-GEFForestand nature Conservation Project would be to increase the capacity of the Ministry o f Forests, Nature Conservation and Tourism the collaboration among government institutions, civil society and other stakeholders to manage forests sustainably and equitably for multipleuses in selected pilot areas inDRC. 16. Under the alternative scenario, IDA fundingwould focus on establishing essential capabilities to secure law enforcement in the forest sector and promote community-based approaches to manage forests holistically to the benefit of forests and indigenous populations, the local and national economy, and the global environment. Capacity building financed through IDA would strengthen the head offices of the 116 Ministryo f Environment, Nature Conservation and Tourism (MENCT) in Kinshasa and field operations and management approaches in 3 pilot provinces and in all 5 priority biodiversity landscapes located in the DRC. 17. As per alternative scenario, GEF-supported activities have been designed to meet the gaps identified in the IDA baseline, while avoiding any overlaps or double financing with other investments and initiatives targeting DRC's forest ecosystems. GEF support would fill a critically important financing gap for implementation o f ICCN's National Strategy for Nature Conservation (NSNC) and would ensure that all eight top priority protected areas identified in ICCN's national strategy will receive targeted support over the next five years by several different donors.. This would enable meaningful rehabilitation o f top priority protected areas inDRC and pave the way for increasing protected area coverage in DRC in the near future. A small portion o f GEF funding would further be used to pilot a range o f new and innovative financing models for sustainable forest management in collaboration with a group o f bilaterals and NGOs. Specifically, GEF funding would support Component 2.2 a) Use o f Funds for Environmental Services, Component 3.1 Institutional Strengthening o f ICCN, and Subcomponent 3.2 Rehabilitation o f Maiko National Park. The intermediary objective for Component 3 i s to strengthen capacity o f ICCN to conserve globally important biodiversity inthe field. Table 11.2: Overview of GEFIncremental activities Key results 2.2.a) Use of Funds . Creation of a Unit of Environmental Services (USE) at the Directorate of Sustainable . for Environmental Development (DDD),MECNT, to serve as a coordihation and knowledge resourcepoint Services for potential investments. (GEFUS$1.9 Innovative financing models for environmental services will be tested and catalyze a million) new financing stream. This will include: Facilitation of the establishmentof a .. conservationconce~sion~~, REDDpilots, facilitation ofdebt conversion. Complementary financing models will be supportedthrough an IDA contribution of US$2.1million. New financing streams from innovative financing models will linkedto community development projects. DDDwould serve as an interlocutor for environmental servicefinance andbeneficiary . community initiatives. 3. Management of P `tectedAreas and Strengthening of ICCN(GEF US$4.1 million) 3.1 Institutional Managementplanning capacity of ICCNand administrative and financial management .. Strengtheningof at local office inpilot provinces significantly improved. ICCN Basic infrastructure of key provincialoffices restored. (GEF US$ 1 ConservationLaw preparedadoptedand largely disseminated. million) Availability of key administration and monitoringdatathat has been validated through ground surveys inkey protectedareas. SyGIAP data systemoperationalized for this purpose. Central and local stafftrained onthe use of SyGIAP. 3.2. Rehabilitation .. Significant proportion of ICCN field staff inMaikoNP adequatelytrained, increased of Maiko National number ofman--daysperformed inthe field and staffperformancemanagement systems Park inplace; (GEF US$3.1 . Increaseintotal park area regularly patrolled and monitored; 36 A workshop with potential partners was held at Chatham House in London in December 2007 to identify potential alternative finance models for SFM in DRC. Discussions are ongoing with CI for a proposed Bonobo ConservationConcessionin Equateur Province; i.e. conversion of a cancelled timber concessionto a conservation contract. 117 million) ... .. Reductioninillegalhumanactivity inthe park (mining, poaching, agriculturalclearing); Stability of four key bio-indicatorspecies occurringinMaikoNP; Availability anduse of selectedkeyequipment (boats, etc.) Rehabilitationofkey infrastructure(patrolposts, staff housing, roads, bridges); ... Regular socio-economic surveys, biological monitoring, etc. with data on 16 priority conservationsites regularlyupdatedandreadily available throughSyGIAP at central and local level; Communitydevelopment activities leadingto improvedlivelihoodsfor local people; Compliancewith importantsocial safeguardinstrumentsto ensure fair and equitable accessto benefits arisingfiom the project. Developcommunity conservationinitiatives,adjacentto parkboundariesby supporting communitv-basedwildlife monitorine. Global EnvironmentalBenefits(GEB) 18. The expected benefits for global biodiversitywould include: GEF support would provide critically needed support for post-conflict conservation management of the largest lowland forest park in Eastern DRC, Maiko National Park and would generate important global environmental benefits with regard to conservation of eastern DRC's globally unique biodiversity. For example, improved park management would better protect globally endangered populations of Grauer's eastern gorilla (Gorilla gorilla beringi), eastern chimpanzee (Pan Troglodytesschweinfurthi), okapi (Okapi Jonstoni), forest elephants (Loxidonta Afiicana cyclotis), and the Congo peafowl (Afiopavo Congensis). GEF support would enhance the resilience and ecological integrity of the larger forest ecosystem, thereby supporting valuable carbon sequestration and other ecosystem services that the forests provide. At the national and local level, GEF funds will support awarenessand institutional capacity for better biodiversity conservation and sustainable resource management in line with the forest code and new conservation law. Training of ICCN staff at headquartersand the local level will make more effective and sustainable park management possible. Enhanced administrative and financial management of ICCN will significantly contribute to coordination between ICCN and a large number of donors and other partners contributing to biodiversity conservation and sustainable forest management. Fit with GEF Strategic Priorities 19. Given the Project's overall contribution to conservation and sustainable use of globally significant biodiversity within and around DRC's protected area network, the project fits under the new biodiversity focal area strategy of GEF-4. It i s aligned with Strategic Objective 1: "To catalyze Sustainability o f Protected Area Systems." Specifically, the project fits well with SP-3: "Strengthening Terrestrial PA Networks," as it provides critical support to implementation of a national program aiming to rehabilitate top priority protected areas within the overall national network. The project fits well with the GEF's principles of generating equitable socioeconomic benefits and new livelihood opportunities for local communities including indigenous people, whose livelihoods depend on forest resources. In line with SP-3, a key aspect has been the selection of the protected areas in terms o f DRC's ecosystem coverage gaps with the aim o f ensuring better terrestrial ecosystem representation and improved management effectiveness o f underrepresentedareas. 20. Complementary IDA support will focus on integrating protected areas management within the land use planning and land management o f the broader landscape. The project design acknowledges the important contribution that community managed biological corridors make and the enhancedconnectivity 118 they create betweenprotectedareas. Being integrated in the broader land use planning scheme, protected areas can better fulfill their fundamental conservation objective while also contributing to poverty alleviation inrural areas. Fit with the GEF umbrella program for Sustainable Forest Management in the Congo Basin (CBSP) 21. The project forms part of the multi-country Strategic Programfor Sustainable ForestManagement in the Congo Basin (CBSP), a larger GEF umbrella program coordinatedjointly with UNDP, UNEP, FAO, AFDB under the lead of the World Bank, which aims to strengthen sustainable management of forest ecosystems of the Congo Basin as a contribution to the conservation of the globally relevant biodiversity and ecosystem services, maintaining a solid foundation for the region's sustainable development. The CBSP aims to deliver multiple global environmental benefits, including biodiversity conservation, watershed services, and protections of the carbon-based capital of the Congo Basin for the benefit of local communities and indigenous people, whose livelihoods depend on the forest resources. The Forest and Nature ConservationProjectwill specifically contributeto Component 1"Conservation of ecosystem functions and values within the regional protectedarea network" ofthe CBSP by rehabilitating and strengtheningmanagement of one of the top three protected areas in DRC, Maiko National Park. In coordination with the CBSP, this project will help establish synergies and multiplier effects with associated and parallel projects under the Strategic Program. For example, a regional project aimed at enhancing institutional capacity on REDD issues will help DRC access new sustainable financing mechanismsand later realize benefits from forest-relatedcarbonmarkets. Incrementalvalue added by GEF funding 22. The value added of GEF involvement in this project can be demonstratedin the following three ways: First, the GEF will provide crucial support to fill a financing gap in ICCN's rehabilitation plan for top priority protected areas in DRC. Specifically, GEF-4 funding will support transformation of Maiko National Park from a de-facto paper park to an effectively managednational park. This would present an important step towards achieving ICCN's strategic vision of upgrading all existing priority parks to effective management within the next five years. Upon achievement, the GEF contribution will set the stage for ICCN to continue to expand DRC's .networkof protectedareas from 8% to 15%. Second, GEF will provide incremental support to build essential protected area system planning and management capacities within ICCNto ensure that it can fulfill its mandate effectively. Some of the more tangible key outcomes expected will be the operationalization of the SyGIAP data system as well as preparationand endorsement of the new ConservationLaw The former will provide a key planning instrumentfor ICCN . to manage and monitor implementationof its vision for the DRC protectedarea network. Third, the GEF will provide important seed funding to test new and innovative financing models for forest conservation and sustainable use. GEF funding will leverageadditional resources from IDA and other partnersto set up payment schemes for environmental services and a range of innovative financing mechanisms to forest dwelling communities supporting forest protection and sustainable use codes. Definingthe role of co financing 23. Various means to achieve the project's stated objectives were considered and evaluated before selection of the current approach. A SIL was chosen over an APL as the most appropriate lending instrument, as the current situation of the forest sector in DRC did not allow projecting the relevant triggers in five and ten years time applicable for a phased approach. Supporting this decision further was the rapidly expanding amount of external assistance to DRC, which would influence future Bank assistance in this sector. Another strategic decision taken was to focus the project on three out of 11 provinces rather than considering national coverage and to focus on the forest, wildlife and general green 119 environment, rather than the whole range o f subsectors under MECNT's mandate. This focus was considered most suitable to achieving immediate and tangible results on the ground. 24. The overall project is estimated at 70 million USD, with 64 million USD from IDA grant funding, and 6 million USD o f incremental funding from GEF (see Table 11.3 below for a detailed breakdown by subcomponents). 25. GEF incremental funding will be disbursed to MECNT which will spend according to plans agreed with and implementedunder the responsibility o f ICCN for capacity building and rehabilitation o f Maiko National Park. GEF incremental funds related to implementation o f innovative pilot activities for environmental service schemes will be disbursed via a delegated management contract (MOD) to (an) NGO(s) specialized in the field and preferably already engaged in partnership with MECNT. The technical responsibility for this activity will lie with the MECNT's Directorate o f Sustainable Development (DDD). functions 1.2. Establishmentof specializedforest 8,109,700 In kind 11,109,700 management systems 1.3 Institutional readiness and transformation 5,000,000 In kind 11,000,000 1.4 Supportto Project Management 5,186,000 In kind .6,186,000 TOTAL COMPONENT 1 37,177,600 47,177,600 2. COMMUNITY PARTICLPATIONIN FORJ?STMANAGEMENT 2.1 Participation of local communities and civil 5,532,400 In kind 6,532,400 society 2.2 Developmentactivities for forest 1,867,600 9,965,400 In kind 12,833,000 communities Use of funds for environmental I,867,600 2,147,400 4,015,000 services Diversijkation of economic activities 7,818,000 7,818,000 inforested zones 2.3. Social, Environmental, and Cultural 3,500,000 In kind 4,500,000 SafeguardActivities TOTAL COMPONENT2 1,867,600 18,997,800 23,865,400 3. MANAGEMENT OFPROTECTED I AREAS 3.1 Institutional strengtheningof ICCN 1,02 1,000 In kind 2,02 1,000 120 26. There is strong complementarity and synergy between the proposed project and a larger suite of projects and donor efforts that jointly support implementation of the National Forest and Conservation Program (PNFoCo) and have been designed to complement each other. Specifically, the World Bank- GEF-3 project titled `ICCN's Program for the Rehabilitation of the Protected Area System' is complimentary and geographically focused on two other Protected Areas and their buffer zones: Garamba and VirungalMikeno. Support to institutional strengthening of ICCN under the GEF-3 project is focused on establishing basic functions of the ICCN's financial directorate with focus on financial management and procurement, as well as communication, M&E, and social impact management. Incontrast, this GEF- 4 financed `Forest and Nature Conservation Project' will focus GEF-fundingon the Maiko National Park. Capacity building support to ICCN under the GEF-4 project will focus on application and operationalization of SyGLAP (Systeme de Gestion d'Information sur les Aires ProtCgCes) for sites not yet covered (i.e. non-UNESCO sites). SyGIAP is a GIS based information management tool that will strategically enforce operational capacity of ICCN. Investments will further support ICCN with all aspects of the new Conservation Law (preparation, consultation, dissemination, etc.). Other noteworthy complimentary activities that focus specifically on the wider Maiko Tayna Kahuzi-Biega Landscape include GTZ & K f W support to the Kahuzi-Biega National Park and support from USAIDKARPE and a consortium of international and local NGOs including CI, DFGFI, JGI, WWF, ICCN, and UGADEC for natural resource management and land-use planning in the wider landscape between Kahuzi-Biega and Maiko NPs. For details on other complementary activities financed by a wide range of partners, see Table 11.6 further below. PROTECTEDAREA BIODNERSITY THREATPROTECTIONBALANCE I PRIORITY A B Score C D E Score Extremely Extremely Virunga N.P. high hig 4.0 513 512 511 3.1 7.1 -4 h-4 Extremely Maiko N.P. high Very high- 3.5 3 512 311 311 2.8 6.3 I I I I 1 I I I I -A I 1 I I , 1 I KahuziBiegaN.P. 1 Veryhigh-3 Veryhigh-3 3.0 513 512 411 2.7 5.7 GarambaN.P. Very high-3 Very high-3 3.0 513 512 411 2.7 5.7 OkapiReserve 1 Veryhigh-3 1Veryhigh-3 1 3.0 1 513 1 412 1 411 1 2.6 1 5.6 I SalongaN.P. Very high-3 High-2 2.5 512 311 311 2.8 5.3 KundulunguN.P. High -2 Very high-3 2.5 412 3I2 311 2.2 4.7 UpembaN.P. High-2 Very high-3 2.5 412 3I2 311 2.2 4.7 121 Table 11.5: Priority scoring of DRC's top priority protected areas (for which minimuminformation exists) Externalassistancein the Main source of current past decade and plannedassistance Virunga NP 8,100 1925 7.1 International Gorilla World Bank-GEF-3: W H S ConservationProgram, Enforcement of the World Wide Fund for ProtectedArea Network Nature (WWF), DFGF Maiko NP 10,000 1970 6.3 none USAIDKARPE Kahuzi-Biega NP 6,000 1970/75 5.7 GermanTechnical GermanTechnical Cooperation(GTZ), Cooperation (GTZ)/ Wildlife Conservation GermanFinancial Society (WCS) Cooperation (KfW), USAIDKARPE GarambaNP 4,900 1938 5.7 InternationalRhino World Bank-GEF-3: W H S Foundation, APF, FFI Enforcement ofthe ProtectedArea Network Okapi Reserve 13,700 1992 5.6 Wildlife Conservation GermanFinancial W H S Society (WCS), Gillman Cooperation (KfW), International Conservation Wildlife Conservation Society (WCS) SalongaNP 36,000 1970 5.3 Zoological Society of EuropeanCommission WHS Milwaukee, Lukuru (EC):ECOFAC (regional Wildlife Project, German forest conservation Max Planck Institute, project), USAIDKARPE Wildlife Conservation Society (WCS) Kundulungu NP 7,600 1970 4.7 none UNDP-GEF-3: Rehabilitation of Protected Areas inDRC UpembaNP 10,000 1939 4.7 none UNDP-GEF-3: Rehabilitation ofProtected Areas inDRC 0 see table "Scoring and Prioritization o f DRC's protected areas" for scoring criteria. 27. Table 11.6 shows all projects in support o f ICCN's program for rehabilitation o f protected areas, with a focus on the 10 most important and accessible parks, World Heritage sites and reserves. 122 Table 11.6: Summaryof donors' support to the ICCN program World Bank GEF medium-sizedgrant for the Approximately $0.5 mis likely to be Albertine Rift program (Greater mobilised for the Congolese Virunga Landscape) covering component ofthis program. Congo, Uganda, Rwandaand Burundi $7 millionGEF 2008-2013, plus $48 GEF FSP project ($7m): The inco-financing Congolese Institute for Nature Conesrvation(ICCN) Programfor the Rehabiliatation ofthe DRC's National ParksNetwork, covering mainly Garambaand Virunga NP. Expectedto start implementation in 2009. Multidonor Trust Fundfor forest governance ($7m secured). No direct linkwithnationalparksandICCN. GEF-PNUD Support to the entire network of $6.3 m2004-2008, of which protectedareas managedby ICCN, estimated$3.8m for the period 2007- with a focus on UpembaNP and 08. This is countedas associated KundelunguNP inthe Katanga financing. Province.Onnoinn. Y " EC summary for 2007-2011: Dongoing/approved: Euro 10.5 m (equi alent to $12.5m) Blikelyh prep: Euro 7.6 m(equivalent o $9.0 m) DSalonga NP and DG ICCN. Secured. Euro5.75m 2006-2010, o fwhich Euro 4.0m for the period 2007-10 D Ongoing monitoringof illegal Phase I1likely to start in2006. killing of elephants inDRC. In Approximately euro 0,2 d y r for 4 preparation. yrs., i.e. euro 0.6 m for 2007-2009 Institutional strengthening of DA detailed designofthis ICCN The EC has set aside an estimated 7.0 ICCN institutional capacity building, based millioneuro. Likely timing: 2008- on the results ofthe institutional 2011. review, was finalized in2006. Emergencypost conflict Emergencysupport to Virunga, Euro1.5 mPNVi and PNG (2005- support to ICCN Garamba, Salonga, Domaine de 2007), ofwhich Euro 0.5 m for 2007. Chasse de Bombo Lomene (DGBL), Euro 3.5 mfor APF-ICCN Jardin Botanique de Kisantu (JBK) partnership on PNG (2006-2009) o f andthe ICCN KinshasaHQ(4 which Euro 2.5 m for 2007-2009) sources of funding). All secured. Euro 2.0 mTrust Fund (2005-07), of which estimatedEuro 1.O mfor 2007. Euro 5.0 mfor PNS, PNVi, DGBL, JBK project (2005-2008) of which euro 2.5-m for the 2007-2008 Jnited States summary for 2007-2011: 1ongohg/approved/comitted: $23.0 I 1Interveninginthe 5 DRC landscapes. Currently $4.6 d y r and likely to Key axes of intervention are continue at approximately this level integratedland use planning and until2011.Likely total for period 2007- 123 sustainable naturalresource 2011 is $23.0 m. European Bilaterals 11 Germany GTZ Ongoing supportto PNKB - Current phase $3.4 m (2005-2007), of and the DG of ICCN which $1.O m for 2007 KfW Support to RFO & PNKB, - and DG of ICCN. Inprep. $8.0 m-likely to start in2007 and last 5 years until2011 France (FDS) Relocation of illegal squatters in $0.25 m 2006-2007, of which $0.1 in Virunga. Ongoing. 2007 Sweden (SIDA) -through 0Supports community conservation Possibly $0.25 dyr 2006-2010, Le. WWF and environmentaleducation total $1.Omfor 2007-2010 activities inand aroundVirunga This consortium mobilisesa large FFI, AWF) number of different private funding the IGCP inthe PNVi amounts to sources (WWF, AWF, FFI, and approximately $ 0,3 m/ year (2006- McArthurFoundation)inaddition to 2008), i.e. $0.6msecured for 2007- funding from the major bilateral and 2008 Likely to be sustained in multilateral funding agencies. coming years, Le. $0.9m over 2009- WWF mobilises funds from several 2011 WWF national appeals(Holland, WWF has secured$ 1.O mfor the UK,Belgium, Italy, UK,US). For period2007-2010 for various example WWF Holland will activities including boundary mobilise funds for LandUse marking, reforestation, landuse planning aroundthe Virunga NP. planning, monitoring, and voluntary relocation. wcs Albertine Rift program covering the Current levels of core funding for DRC, Uganda, Rwandaand Burundi. WCS programs inDRC are inthe 0DRC country program order of $0,2m/yr. Likely to be sustained incoming years, i.e. $1.O m for the 2007-2011 African Parks Foundation 0Emergencyrehabilitation of Committed to bring additional $0Sm Garamba through a management over 2007-2011 contract with ICCn signedin2005. APF invested$1.0 m in2005 and 124 2006. ZSL 0 Currently supportingguard training 0 Approximately $0,05/yr. Likely to and park management activities in be sustained inthe coming years: i.e. the PNVi total of $0.3m for 2007-2011 DFGF International (with 0 Supports the Tayna community 0 Approximately $0,02/yr from private funding from CI) reserve, gorilla conservation sources. Likely to be sustained inthe activities inPNVi, and community coming years: i.e. total of $O.lm for conservationinItombwe. 2007-2011 GIC supportto the Epulu Okapi 0 Current level of funding is $0,3 m/ domesticationcentre, community yr. It is hope that this will be activities, and direct supportto sustained inthe coming years: Le. ICCN(bonuses, equipment, total of $1.5m over 2007-2011. operationalcosts) Milwaukee University 0bonobo conservationand wildlife 0 currently approximately $O,O 1/ yr. surveys inSalongaNP Likely to be sustained inthe coming years: i.e. total of $0.05m over 2007- 2011 LWRF 0 bonobo conservationand research in 0currently approximately $0,03/yr SalongaNP buffer zone Likely to be sustained inthe coming years: i.e. total of $0.15 mover 2007- 2011 FZS 0Mountain Gorilla Conservation 0 Currently $0.3 m/yr and likely to be Promamme sustained between2007-2020 125 APPENDIX A TO ANNEX 11: DemocraticRepublicof Congo FOREST AND NATURE CONSERVATIONPROJECT SITEDESCRIPTIONFOR GEFINVESTMENTS: MAIKONATIONAL PARK Maiko NationalPark 29. Maiko National Park is the largest lowland forest park in eastern DRC. Remote sensing data indicates that more than 80% of the landscape is primary or old secondary forest. High-profile species that can be found inthe landscape include Okapi, Congo Peacock, Chimpanzee, ForestElephant, and the majority of the range of Grauer's Gorilla. A recent survey (October 2006) of the more accessible Southern Sector of the Maiko NP resulted in the following estimates for Gorilla abundance and the following elephantobservationsand encounterrates (see Tables 1& 2 below). Location I Area&* I Min Max Maiko NP I875 306 866 Mundo I375 II131 II131 Okoku/Obokola 375 131 131 Ntufia-Lowa 125 44 44 Total 1750 612 1478 Ndjula 3 7 2 0.34 Bitule-Okungu 1 1 3 0.06 Ntufia-Lowa I Total 11 14 I 8 12 14 I I 30. The total human PO ulation of the MTKB landscape is estimated at less than one million people or about 30 inhabitantdkm , significantly lower than in the bordering densely populated Albertine Rift P areas of Ruanda, Burundi, andUgandawith approximately300 people/km*.Main ethnic groups are Bantu groups as well as a small number of indigenous Ba'twa (pygmy), mainly in and around Kahuzi-BiegaNP. The population density of the region surrounding the Maiko National Park is among the lowest of eastern DRC, although regional population centers exist in Oninga and Opienge. The closest town is Lubutu, located some 40 kilometers from the western edge of the Park, which is linked to approximately 75 villages between Lubutu and L'Oso along the partially-completed Kisangani-Bukavu section of the Trans-African Highway, constituting the most densely populated of all the regions directly bordering the Park. Within the Maiko National Park itself, the most significant humanpresence is a result of permanent settlements establishedaround Silisa in the central zone of the Park by Simba rebels in the late 1960's. The current population of these settlements is variously estimated to be between 600 and 3,000 126 inhabitants, although these figures have yet to be formally confirmed, given the difficulty of access to the interior of the Park. 3 1. Socioeconomic conditions around the Maiko National Park are poor, with little access to health facilities, schools, clean water, or functional roads. Repeated looting by armed groups duringthe 1990's has discouraged local communities from investing in infrastructure or livelihoods, and agriculture is largely limitedto subsistence production of rice and manioc. As a result, malnutrition rates are high, with consequent high rates of death and disease, particularly among children. Health services are limited to those provided by international NGOs active in the region. Other economic activities are primarily associatedwith artisanal mining for gold or diamonds. The livelihoods of the groups within the Park are more constrained then those outside, being largely based on subsistence hunting and artisanal mining, with no access to health, education or other services. As part of the on-going conflict resolution dialogue with the Provincial Government, the inhabitants of the Simba settlements are involved in negotiations aimed at providing support for improved living conditions inareas outside the Maiko National Park. Threats and root-causes for biodiversity loss 32. A variety of threats confront the effective conservation of biodiversity in the Maiko National Park, in particular hunting, artisanal mining, the continued presence o f settlements withinthe Park, and a lack o f clarity regarding some segments of the Park boundary. A survey conducted in 1994 by Hart and Sikubwabo found evidence o f human activity within the past five years in every quadrant of the Park sampled, primarily linkedwith artisanal gold miningand hunting. For the most part, hunting within the Park is a subsistence activity associatedwith mining camps and permanent settlements, but poaching for ivory has had a significant impact on elephant populations. The root-causes of these threats to the conservation o f biodiversity include years of conflict, limitedlivelihood opportunities and poverty. 33. Across the broader MTKE? landscape, biodiversity loss, caused by agricultural expansion, artisanal mining, and by the bushmeat trade, i s accelerating as a result o f highrates of in-migration from the densely populated Albertine Rift. Commercial groups from the larger cities of the Albertine Rift further sponsor large herds of livestock (mainly cattle) and continue to clear forests. This leads to conflicts with local inhabitants practicing slash and burn agriculture. There is a steady migration o f slash- and-burn agriculturists from the densely inhabitedAlbertine Rift enteringthe park. 34. New threats that are emerging with the ongoing stabilization in the wider region include infrastructure development, commercial logging, and an increase in trade of natural resource products. There are no official forestry concessions in the landscape, but small-scale logging operations have long existed around villages and charcoal production on the eastern fringe o f the landscape.There are also no formal mining concessions, but mining for gold, tin, coltan and diamonds i s intensive in several areas of the landscape - to the degree that communities are abandoning farming. Bushmeat trade is not highly developed, but present and evolving, in particular around mining camps. Estimates suggest as much as 17 metric tons of bushmeat i s annually consumed. Huntingfor ivory also exists throughout the landscapeand is carried out by illegal armed groups. 35. The matrix (Table 3) below providesa more detailed Threats and Root Causes analysis. 127 TABLE3: THREATS TO BIODIVERSITY AND ROOT CAUSESANALYSIS Threat Root causes Establishedsettlements Within the Maiko National Park. the BAs part of the on-going conflict resolution within the Maiko most significant humanpresence is a dialogue with the Provincial Government, National Park result of permanent settlements the inhabitantsofthe Simbasettlements are established around Silisa inthe central involved innegotiationsaimed at providing zone ofthe Park by Simbarebels inthe support for improved living conditions in late 1960's. The currentpopulation of areas outsidethe Maiko National Park. The these settlements i s variously Project will supportthis effort through estimatedto be between600 and 3,000 targetedcommunity development activities. inhabitants, althoughthese figures have yet to be formally confirmed, given the difficulty of access to the interior ofthe Park. Lack of clarity Lack ofhumanand technical The Project will support aparticipative regarding some resources, combinedwith years of Park boundary identification process, and segments of the conflict, has preventedICCNfor subsequent community-based, labour- boundary of the Maiko engagingina concertedprogram of intensiveboundarydelimitation activities. National Park boundarydelimitation. Poaching of protected Decadesofpoverty have resulted The project aims to strengthenICCN's species, exotic animal pressures on natural resourcesbut the leadershipat the national level so that it can trade and excessive past decade of civil war inDRC and lobby effectively at the highest political hunting for bushmeat neighbouring countries (Sudan, level. For example strengthening its Uganda, Rwanda, Burundi) resulting relations with MONUC (mandate for UN's inageneralbreakdownoflaw and Peace keepingmission) will contribute order, increased circulation of significantly to resolving the problem of weapons, and increased insecurity, all armed bandits who operate inand around of which have greatly increased the protectedareas and who are often involved pressures on natural resources. inthe illegalhunting activities. Nationals fiom boththe DRC and Community conservationactivities can neighbouring countrieshave used contributegreatly to gaining confidenceof protectedareas both as places of neighbouring villagers and their local refuge and as places to undertake leaders, particularly traditional chiefs, who unauthorisedactivities including inturncanplay an important role in hunting ofwildlife. advocatingfor the respect ofthe parks, disciplining their own communities, providing intelligence on illegal activities etc. Poachingi s a low risk and low capital investmentactivity that provides quick Improvedpublic awareness and law income. enforcement The ivory trade has flourished inthe Improved information gatheringwill recent period of conflict as a result of contributeto detectingand reducing the breakdowninlaw and order and elephant poachingon the ground and will the increase inthe circulation of also contributeto reducing the illegal weapons. internationaltrade of ivory. However the marketsthat drive this trade are outside of the centralAfiican sub region. Mining The economic collapse and the Community conservation activities -ifthey breakdown of law and order, are DroDerlv focused- can contribute 128 Root causes Project alternative stratepy exacerbated by the war, have ledto a greatly to gaining confidence of local sharp rise inillegal mining activities in leaders, particularly traditional leaders, who protectedareas. These activities are inturncanplay an important role in almost always associated with a disciplining their own communities, number of negativesecondary effects providing intelligence on illegal activities includingpollution and deviation of such as mining. water courses, hunting for bushmeat and localised deforestation. 0 Strengthenedleadershipand visibility of Lack oftransparency inthe attribution ICCNat the national level will enhance of mining concessions i s also an cross-sectoralconsultation (for example important root cause of illegal mining with the Ministry of Mines) activitiec Industrial Logging Poor governance o fthe forest estate 0 Poor governance inthe forest sector will be leads to non transparentallocation of addressedwithin the framework ofthe concessions with insufficient DRC's PNFC. The GEF project is an consultation of local stakeholdersand integral part ofthe PNFC. poor economic spin-offs. Currently only a small number of companies are conforming to the new forestry regulations. Improved logging techniques will be addressedwithin the framework ofthe Inefficient logging techniques result in DRC's PNFC. unnecessarilyhigh damage and ecological impacts. Better application ofwildlife laws will be addressedwithin the framework ofthe Poor application ofwildlife laws in DRC's PNFC. logging concessions. New permanent human The civil wars inDRC and Strengthenedleadership and visibility of settlements in neighbouring countrieshave ledto ICCNat the national andregional levels ecologicallysensitive massivedisplacement of human will enable ICCNto lobby the relevant areas populations. The impact ofthe authorities inorder to prevent unplanned Rwandanrefugeecrisis inthe Kahuzi settlement from occurring, or to take Biega NPs was a dramatic example. effective and coordinated action ifand Maiko NP has also beennegatively when it does occur. ICCN's strengthened impactedby population movements monitoring and informationmanagement away from the overpopulated capacitieswill also ensure that timely and highlands to the lower altitude forests accurate information is available to support to the west. this process. Community conservation activities, inparticular participative boundary marking, will also contribute to safeguardingthe integrity of protected areas. Spread of disease into Poor understandingo fthe major health 0 Strengthenedcapacities for coordination, wildlife populations issues that are linkedto the bushmeat monitoringand communicationby ICCN due to human trade. will target this important issue inits public activities and vice Lack ofnational health guidelines for awareness/ communications strategy and versa. companiesactive innatural resources cross-sectoralcoordination. exploitation. Strict guidelines for gorilla viewing to be Transmissionof human diseases into included inthe tourism managementplan. mountain gorilla population through too close contact during gorilla viewing tourism. 129 P 4 . E . I. . . I .- a L a a E . a a rn 3 3 a a a I I e e e E . I& e e I * I . . L) 0 . m m 3 . Y 8a s0 a0 Annex 12: GovernanceandAnti-Corruption Democratic Republic o f Congo FORESTAND NATURE CONSERVATIONPROJECT 1. This annex describes the country and sector context, as well as the overall strategy adopted bythe project to improve governance. It also illustrates the measures designed to improve governance and reduce the incidence and magnitude of corruption under the Forest and Nature Conservation project. These measuresare dividedinto three categories: measuresto increasesector transparency and accountability; 0 measuresto combat illegal access and use of forest resources; and 0 measuresto combat fraud inproject administrationand management. Country Context 2. Poor management and corruption are prevalent inpost-conflict countries, which suffer from weak public institutions, lack of trained and experienced staff, poorly definedand followed administrative rules and regulations, and insufficient supervision. These institutions operate in an environment in which democratic governance, the press, and civil society are only gradually gaining the upper hand. In this context, the deployment of external aid to support urgent rehabilitation and reconstruction needs and to build basic capacity for public finance management and program implementation entail considerable risks.Good governance and anti-corruption measures are a central tenet of country assistance strategies, which combine the investments needed for economic revival and improvement in living conditions - the peace dividend- with programs to reform public institutions, build managerial capacity, and develop the framework for public accountability and transparency. 3. The elections in 2006 and the subsequent establishment of a coalition government in DRC offer the opportunity for the development of a stable governance system. The key governance issues in DRC are summarized in the "Contrat sur la Gouvernance" (Governance Compact) which i s part o f the Government program and provides the overall strategic framework for sector specific undertakings at the level of specific actors. The Compact contains three areas o f sector reform: (i)state-owned enterprises, (ii)mining,and(iii) security. It also advances four cross cutting priorities: (i) enhancing transparency, (ii) decentralization, (iii) financial management, and (iv) public service reform. These priorities form public the basis of the Common Assistance Framework (CAF) that has beenagreedto betweenthe Government and the donors. The priorities are also reflected in the World Bank Country Assistance Strategy (CAS of December 2007), which presents a coherent approach to supporting specific aspects of public sector management and capacity building in such areas as procurement and public enterprise reform and addresses cross-cutting priorities, in particular administrative decentralization under the Governance Capacity Enhancement Project, which was approved in May 2008. The CAS also advocates a gradual change from multi-sector rehabilitation programs executed by stand-alone implementation unitsto policy- based sectoral projects combining reform, investment, and capacity building. The Project exemplifies this transition for the forest sector, as detailed below. 4. Two specific areas that provide opportunities for corruption and which are the target of reforms and anti-corruption measures are procurement and financial management. The state o f the procurement system in DRC and its use in practice is presentedinAnnex 8. Followingthe finalization of the Country Procurement Assessment Report in 2004, the reform of the procurement system in the country started with the drafting o f the Procurement Code, which has recently been approved by the Cabinet and is now in Parliament. Once it has been passed and has become effective, other reform measures will have to follow. A reliance on an acceptable national system in Bank-assisted projects will have to wait till the 135 reform has progressed further. In the meantime the use of the Bank's Procurement Guidelines and procedures is requiredfor all procurement inBank-financedprojects. 5. In DRC the auditing of public accounts is nominally entrusted to the "Cour des Comptes" (equivalent to the Office ofthe Auditor General). However, this critical state organ i s not able at this time to fulfill its function as the supreme audit authority for public sector accounts. Annual audits on Bank- assistedprojects are instead carried out by independentexternal auditors (see Annex 7). Forest and Wildlife Sector Governance Issues 6. Forest and wildlife sector governance and corruption issues originate from a long legacy of mismanagement. Until recently the legal framework for the sector was provided by the 1948 forest code conceived to facilitate logging operation, with no provisions for recognition of rights for local people and no environmental and social obligations attached to extraction activities. 7. Forest allocation was free and upon demand. Forest logging contracts were often used as political favors or as a source of personal income. Forest taxes were negligible and mostly unpaid. As a result, almost all production forests were allocated to speculators and rent seekers with only few being used for production. N o record was kept of forest offenses; prosecution was rare and reserved to small crimes committed by poor people. 8. Logging was de-facto unregulated. Permits could cover million of hectares including villages and farmlands. Against the benefit of poorly paid employment, local population had practically no recourse against the action of logging companies, Conflicts were frequent and almost systematically were resolved to the advantage of forest companies. 9. Decades of war hit the already weak forest institutions hard: infrastructure in all provinces was practically destroyed, equipment gone and lines of communication broken, both physically and functionally. Staff remained unpaid for years and some usedtheir policing authority to eke out a living by harassing already impoverished rural people. Most of the existing staff was and remains untrained and beyond the retirementage. A large proportion o f forest staff in provinces ignores recent policy changes, the new forest code andthe important regulations issuedto make it operational. 10. The end of the conflict offered new opportunities for change. Genuine political will and international support helped DRC to introduce a priority agenda aimed at laying the ground for sustainable, equitable and participatory management of forests. This included: (i)the cancellation o f invalid forest concessions totaling over 25 million hectares; (ii)the increase of annual area taxes on concessions to curb forest land speculation, -(iii) the establishment of a moratorium on the award of new concessions; (iv) the legal review of all contracts remaining after the first cancellation wave; (v) the adoption of a new forest code with provisions for legal protection of traditional users' right in all forests and the right for local people to manage community forests; (vi) mandatory sustainable management plans including social and environmental clauses for production forests; (vii) revenue sharing with local governing bodies; (viii) expanding the protected areas network; and (ix) promoting environmental services. 11. The reform agenda moved ahead under difficult conditions and registered serious setbacks during the period 2002-2006 when several logging contracts were unlawfully re-instate and the moratorium was often breached. Nevertheless good progress has been made. The Legal Review was able to garner broad based support and the MECNT was eventually able to cancel the vast majority o f questionable logging contracts. In the meantime, new regulations to implement the 2002 forest code have been issued, partnerships between the Government, community development, environmental and scientific 136 organizations have been establishedto improve technical knowledge, transparency and equity inthe forest sector. While promising, these achievements remain fragile. National institutions have not yet been rehabilitated and national and donor supported investments in the forest and nature conservation sector havejust begun.It is therefore fair to expect that corruption is still pervasive in all segments o f the forest administration and that specific measures must be taken to strengthen the hand of those who promote good governance Project-supportedGovernmentStrategy to ImproveGovernanceand CombatCorruption 12. The overall project strategy is based on several integrated elements: i)creating new appropriate legislative and regulatory instrument; ii)disseminating these instruments widely to make all stakeholders to become aware of their rights and obligations, iii)restructuring and strengthening forest institution and establishing collaboration with non forest national institutions (Agriculture, Justice and Finance Ministries) to ensure understanding and enforcement of new forest policies and regulations; iv) establishing partnerships with national and international NGOs with proven record of good work on the ground; v) working with scientific bodies and firms to create GIS databases and remote sensing instruments to monitor activities on the ground, and track the transport of commercial timber (log tracking); (vi) appointing third party organization to set up independently verifiable control systems aimed at increasing transparency and combat corruption; apportioning adequate financial resources to implement an important body o f regulations aimed at securing public information and consultation on all major decisions related to forest use. The specific initiatives designed to implement this strategy are described below. They are financed through the present project, the Bank-managed Forest Governance Trust Fund, and other donors' efforts that support Governmental and non Governmental Organizations such as IUCN, the World Resources Institute, WWF and others. Measuresto combat illegalaccess and use of forest and wildlife resources 13. Observing the forest cover and detecting use of forest lands. The use of remote sensing and mapping tools helps to monitor changes in forest cover including changes due to legal and illegal trees harvests, slash and bum agriculture, development of legal and illegal roads and other human activities in forest lands and national parks. This information will be provided in real time to forest institutions and made available to the public online in the form of an Interactive Forest Atlas posted by the World ResourcesInstitute and the MECNT. 14. Tracking tax payment o f commercial forestry. The project will benefit from the establishment of a Forest Information Management System (SIGEF), which will capture and manage all non-spatial information on the activities o f the timber industry, from stump to sea-going vessel. The SIGEF i s an essentialcomponent of an effective log tracking system. 15. Securing payment o f forest taxes. A forest tax monitoring and securitization program will be established in collaboration with the Bank executed Forest Governance Trust Fund. This will be a joint endeavor of the Ministries in charge of Forests and Finance and will benefit from computer technology and linkages with the SIGEF and other forest monitoring systems 16. Forest TransDarency Initiative. Under this activity, the World Resources Institute will set up an interactive web-based directory of all timber companies of Central Africa, including DRC. The public disclosure of this information i s expected to lead to greater transparency and improved governance and empower local civil society and local communities to better fight illegal logging. 17. Monitoring o f revenue sharing. The new forest law mandatesthat the proceeds o f area taxes paid by forest companies be shared between the Treasury, the provincial government and the sub-district communities. This activity will be initially supported by the Forest Governance Trust Fund and the EU through a study and a test operation. In conjunction with this activity the project will launch a study on 137 the forest dimension of decentralization and provide a first basis for a clear distinction o f functions between the central and provincial ministries in charge of forests and wildlife. 18. Monitoringo f volumes and values of timber exuorts. Controls will be established with companies such as SGS to preventcorruption at ports and custom locations. Statistics of volumes, control of species, pricing, and other data will be compiled and cross checked with corresponding information in receiving countries. 19. ThirdParty Monitoring of Forest Law Enforcement Effectiveness. Followingup on a test carried out during project preparation, the Government will recruit a third party to join MECNT team in their forest control patrols. This party, generally referred as independent observer, will provide technology to document forest infractions, and will help follow cases up to the payment of the penalty established by the law. The Independent observer will report to the Minister of Forest. The reports of the IO will be subject to a review committee (comite de lecture) before publication in paper and through the internet in two languages.. Measuresto promotepublic information,increasesector transparencyand accountability; Public information will be used as means to discourage collusion and corruption by various stakeholders and to defend the rights of the citizens. The following actions are envisaged: 20. Dissemination of new laws and regulations. A compendium of the new forest code and all regulations published or soon to be publishedwill be printedinat least 1500 copies and made available to interested parties both in urban and rural areas. 21. Training workshops for iudges, lawvers, magistrates and other involved in auulving the forest -Pastexperienceshowsthatmagistratesmayoftenignorenewlyissuedlawsoryieldtothepressure law. of companies who try to use corruption to resolve cases inwhich they are the alleged perpetrators. These training workshops will be organized under the aegis of the Minister of Justice. In addition to providing useful information, these training will also convey a powerful message telling the magistrates that their impartiality will be closely monitored. 22. Measures to consolidate and secure the results of the legal review. It i s to be expected that several companies whose request for conversion has been denied will appeal incourt. To monitor progress, it has been decided to extend the Interministerial Commission in charge o f the legal review so that it can periodically report on how the review is implementedon the ground. In addition, the Ministry o f Justice has decided to create a poll o f specialized magistrates to report on the quality and celerity of processing of legal cases byjudges and magistrates. 23, Public local consultation on all aspects of project implementation. The project will explicitly: support meetings and events with the newly created national and provincial forest consultative groups which include representatives of various Government departments, local authorities, NGOs concerned with the environment and human rights and local communities including indigenous people. The project makes also provisions and allocations to ensure that activities requiring inputs from or having an impact on local communities are designedand implemented ina participatory manner. 24. Suuuort to communities during negotiations with Industrv or other economic partners. The legal review recommended that a formal agreement on social and environmental issues must be reached with local communitiesbefore the concession contract can be submittedfor signature by the Minister in charge of Forests. Given that some of the communities may not be familiar with the rights and obligations defined in the new forest legislation, specific assistance will be provided to them. Local NGOs familiar 138 with the way of life of forest communities and able to speak local languages and dialects will be selected to perform this function. 25. Communication capacity established under the project. A Communication Officer will be recruited inthe CU to keep the interested parties informed, disseminate information about good practices inforest management, report on the progresswith the implementationofthe forest program, including the project, and to receive and respond to suggestionsand complaints from the public. Measuresto combat fraud in projectadministrationand management. 26. Most of the project activities will be carried out through delegated management contracts either with a consulting firm recruited competitively or with an NGO. The standard form o f contract for lump- sum consulting assignmentswill be used, which contains provisions to combat fraud and corruption. The consultants will procure the delegated management activities incompliance with the Bank's Procurement Guidelines and procedures. The contracts will also contain guidelines for the selection and management of micro-projects, the actions to be taken in regard to the implementationof the environmental and social safeguards, and the reporting to MECNT of the data collected. The contracts will be managed by the coordinating Unit of MECNT. For the development activities in the forest zones, the project relies on collaborative partnerships with NGOs that have a proven track record in carrying out similar activities in designated areas. 27. To better manage these contracts, the project provides for an independent technical monitoring of the performance under the contract on a semi-annual basis and on request as the need arises. This arrangement will contribute to fairness and integrity in the relationship between implementingpartners and the CU and with other stakeholders. The regular monitoring will also provide the basis for the periodic communicationwith key stakeholders. 28. The table below lists sources of fraud and corrupt practices along with actions that are being integrated into the new management systems within MECNT through the delegated management contracts. Specific governance & mismanagement Specific Actions . issues (in addition to systemic ones mentionedabove) Procurement Undue use of single source selection of Systematic inventories consultants and direct contracting for goods Purchase planning linked with preventive and works . . maintenanceprogram Undue down paymentsto suppliers Inspectionof stores andrecords Weak and lax stocWstore management .. Systematic registry of bills and payment and practices(inaccurate records oftransfers) .. integrationofbillingandpaymentrecords Written proceduresfor supplies 9 Improved procurement and contract management and payment procedures Financialmanagement,accountingand . budgeting Late submissionof supporting documents Budgetcontrolproceduresandsystems Poor filing andrecords ITbasedcashmanagementproceduresand records Lack of system integration Improvement in the workplace to enhance security 139 ..Lack o f budget discipline and comfort Unauthorized commitment to suppliers, Surprise inspectionof cash .. bypassing budget and expenses vetting Treasury managementandplanning procedures Unsecured safekeeping and transportation of funds ..Unsuitable working environment for cashier Latepaymentsof socialsecurity charges Eauipment Management Making improperuse of equipment Delegated management contract to manage and build capacity . Transparency insourcing of equipment Managementof furnished equipment HumanResource(HR) Management Comprehensiveupdatingofpersonnelregistry m Lack of HR rules for promotion and ITbasedHRrecords managementsystem assignment Redeployment and re-trainingprogram Non-compliance with career management ...HR need assessment and development plan with 4-5 procedures year horizon Influence peddling inhiringand promotions m Linkages between HR registry and payroll Lack of training for new staff and non- management respectof qualificationsrequirements . Introduction of performance based evaluation and Lax supervisionby HRmanagers career development system Undue use of overtime by supervisory staff Non compliance with severance and employment contracttermination . Accumulationof salarv arrears 140 Annex 13: Project Preparation and Supervision Democratic Republic of Congo FORESTAND NATURECONSERVATIONPROJECT Planned Actual PCNreview 11/2012006 InitialPID to PIC 02/20/2007 InitialISDS to PIC 11/30/2006 Appraisal 01/29/2009 Negotiations 02/12/2009 BoardRVP approval 0312612009 Planneddate of effectiveness 06/25/2009 Planneddate of mid-term review 03/26/2012 Plannedclosing date 06/30/2015 Institutionsin charge of the project preparation: MinistryofEnvironment,Nature Conservation andTourism Bank staff and consultantswho worked on the projectincluded: Name Title Unit Giuseppe Topa LeadForestry Specialist, co-TTL AFTEN MohammedA. Bekhechi LeadCounsel LEGEN Laurent Debroux Sr. NaturalResourcesSpecialist LCSAR PaulMartin Sr. Environmental Specialist AFTEN Gilles Veuillot Senior Counsel LEGAF MohammedArbi Ben-Achour Senior Social Scientist AFTCS Jacqueline Doremus Consultant S&E AFTEN Aissatou Diallo Finance Officer LOACF Robert Robelus SafeguardSpecialist, Consultant AFTAR GerhardTschannerl Operations Advisor, Consultant AFTPC Philippe Mahele Procurement Specialist AFTPC Nestor Coffi Sr. .Financial Management Specialist AFTFM Jean-Charles Kra Sr. Financial Management Specialist AFTFM Gaspy Muanda Consultant AFTFM JeanMabi Mulumba Senior Public Sector Specialist AFTPR Louise Engulu Communications Officer AFREX ErnestineNgobo-Njoke LanguageProgramAssistant AFTEN Yves Prevost LeadEnvironment Specialist AFTEN Jeremy Staniforth Consultant AFTEN Thomas Jeffrey Ramin Senior OperationsOfficer AFTRL Bankfunds spent to date on project preparation: 1. Bankresources: $274,400. 2. Trust funds: $1,064,000 3. Total: $1,338,400 Estimated Supervisioncosts: 1. Estimatedannual supervision cost:US$200,000 Supervision requirements: Two to three missions per year must be fielded until Mid-term Review. Missions should visit project sites despite remoteness and high time requirements and high transport costs. A stable project team should be created inthe S M U including a forester, a sociologist, an environmental lawyer, and communication, monitoringlevaluation, disbursement and procurement specialists. At least one senior member o fthis team should be based in Kinshasa. Team members should remain in touch with the Government and other partners in between supervisionsso as to provide implementation support, anticipate problems and suggest solutions. Particularly intense supportwill be neededby the procurementexperts inthe six to eight months following Board presentation. 141 Annex 14: Documents inthe ProjectFile Democratic Republicof Congo FOREST AND NATURE CONSERVATION PROJECT FA0Project Preparation Report byA. Simon, October 2009 Description o fthe Four LandscapesIncluded inthe Project, July 2008 Economic Analysis by Jeremy Staniforth, February 2009 EnvironmentalImpact Assessment National Program for Forests and Nature Conservation -MECNT Government of Congo Reports on in depth consultation inthree provinces of concentration of the project ROC MeetingMinutes Minutesofthe QER InspectionPanel InvestigationReport INSP/40746-ZR DRC MECNT Minister statement on legal review and policy update October 16,2008 DRC InterimGuidelinesfor the Implementation of ParticipatoryForest Zoning MDTF:- Grant for Strengthening Governance for Natural Resources in Democratic Republic of Congo (DRC-Forest) -Grant Number TF092910 Maintext and 2008 update WRVAGRECO Reports on the LegalReview of Concessions Report by Independent Observer on the review of old forest harvesting title (3 reports -2008-2009) 142 Annex 15: Statementof LoansandCredits Democratic Republic of Congo FORESTAND NATURE CONSERVATIONPROJECT Difference between expectedand actual Original Amount in US%Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm.Rev'd PO86294 2007 ZR-Education Sector Project (FY07) 0.00 0.00 0.00 0.00 0.00 150.34 0.00 0.00 P104497 2007 CD-Em.Urban& SocialRehab ERL 0.00 0.00 0.00 0.00 0.00 164.05 56.06 0.00 (FY07) PO88751 2006 ZR-HealthSec Rehab Supt (FY06) 0.00 0.00 0.00 0.00 0.00 137.93 61.93 0.00 PO86874 2005 ZR-Emerg SOCAction (FY05) 0.00 0.00 0.00 0.00 0.00 45.58 13.53 0.00 PO88619 2005 CD-EmergenLivingConditions Impr 0.00 0.00 0.00 0.00 0.00 58.90 19.00 0.00 (FY05) PO71144 . 2004 CD-Priv Sec Dev & Competitiveness 0.00 120.00 0.00 0.00 0.00 45.33 16.41 0.00 (FY04) PO78658 2004 CD-EmergDemob ReintegrERL (FY04) 0.00 0.00 0.00 0.00 0.00 10.97 -8.50 0.00 PO81850 2004 CD-EmergEcon& SOCReunifERL 0.00 50.00 0.00 0.00 0.00 66.58 21.84 0.00 (FY04) PO82516 2004 ZR-MultisectoralHIV/AIDS (FY04) 0.00 0.00 0.00 0.00 0.00 69.59 -1.81 0.00 PO57296 2003 CD-EmergMS Rehab & RecoveryERL 0.00 410.00 0.00 0.00 0.00 224.73 5.65 4.67 (FY03) Total: 0.00 580.00 0.00 0.00 0.00 974.00 184.11 4.67 STATEMENTOF IFC's HeldandDisbursedPortfolio InMillionsofUS Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Adastra Miner... 0.00 0.09 0.00 0.00 0.00 0.01 0.00 0.00 2003 Celtel DROC 8.57 0.00 0.00 0.00 8.57 0.00 0.00 0.00 2005 Kolwezi 0.00 4.80 0.47 0.00 0.00 4.46 0.47 0.00 2005 PCB Congo 0.00 0.45 0.00 0.00 0.00 0.45 0.00 0.00 Total portfolio: 8.57 5.34 0.47 0.00 8.57 4.92 0.47 0.00 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. Total pendingcommitment: 0.00 0.00 0.00 0.00 143 Annex 16: Country at a Glance Democratic Republicof Congo FORESTAND NATURECONSERVATIONPROJECT Sub- POVERTY and SOCIAL Congo, Saharan Low- Dem. Rep. Africa income Development diamond' 2006 Population,mid-year (millions) 59 3 770 2,403 GNI per capita (Atlas method, US$) 130 842 650 Life expectancy T GNI (Atlas method, US$billions) 7 7 848 1,562 Average annual growth, 2000-06 Population(%) 2 8 2.4 1 9 Laborforce (%) 2 8 2.6 2 3 GNI Gross Per primar) Most recent estimate(latest year available, 2000-06) capita enrollmeni Poverty (% ofpopulation below national poverty line) Urban population (% of total population) 33 38 30 Life expectancy at birth (years) 44 47 59 Infantmortality (per 1,000live births) 129 96 75 Child malnutrition (% of children under 5) 31 30 Access to improvedwater source Access to an improvedwater source (% ofpopulation) 46 56 75 I Literacy(% ofpopulation age 15t) 67 59 61 Gross primary enrollment (% ofschool-age population) 62 92 102 -Congo, Dem Rep Male 69 98 108 - Low-income group Female 54 86 96 KEY ECONOMIC RATIOSand LONG-TERM TRENDS 1986 1996 2005 2006 GDP (US$ bilBons) 8.1 5 8 7.1 8 5 Gross capital formationlGDP 13.2 27 9 14.2 16 2 Exportsof goods and semceslGDP 24.7 30 0 31.6 29 5 Trade Gross domestic savlngslGDP 13.9 27 5 6.5 4 7 Gross nationalsaungslGDP 8.1 22 9 6.7 8 9 Current account balancelGDP 0.9 -0 5 -7 6 -7 5 InterestpaymentslGDP 1.7 0 0 I.4 Domestic Capital Total debffGDP 88.8 222 3 1492 savings formation Total debt servlcelexports 22.4 2 8 9.0 Present value of debffGDP 21.4 I Present value of debffexports 64.9 indebtedness 1986-96 1996-06 2005 2006 2006-10 ! (average annualgrowth) GDP -5.7 0.5 6 5 5.1 8 8 - Congo, Dem. Rep. GDP per capita -8.8 -2.0 3 3 1.9 4 0 Low-income grow Exportsof goods and services -9.6 9.1 8 8 2.4 7 8 STRUCTUREof the ECONOMY 144 1986 1996 2005 2006 (% of GDP) Growthof capitaland GDP(%) Agriculture 33.6 33.6 45.5 45.7 I20 Industry 26.4 32.6 26.9 27.7 10 Manufacturing . 10.6 8.9 6.6 6.5 0 m c e s 40.0 33.8 27.5 26.6 -10 Househddfinal consunptionexpenditure 78.1 66.3 85.2 88.1 -20 GeneralwJt final consumptimexpenditure 8.0 6.2 8.3 7.3 lmportsofgoodsandservices 24.0 30.3 39.3 41.O 1986-96 1996-06 2005 2006 (averagsannualgrowth) Growthof exportsand imports(%) Agriculture 2.9 -1.5 2.9 2.5 4 5 T I Industry -13.1 4.1 8.9 9.8 30 Manufacturing -11.3 -0.5 9.3 8.0 mces -10.6 -0.1 9.0 8.5 15 Hocsehddfinal consunptimexpenditure -5.0 1.2 0 GeneralwJt final consumptionexpenditure -11.9 -14.2 Gross&tal formation -16.9 5.8 lmportsofgoodsandservices -14.3 25.7 17.6 5.3 Note:2006dataarepreliminaryestimates. Thistablewas producedfromthe CeelopmentEconomicsLDBdatabase. *Thedimondsshowfourkeyindicatm inthecountry(inbdd)comparedwithitsi~roupa~~.Ifdataaremissing,thediamondwill Congo, D e m . Rep. P R I C E S a n d G O V E R N M E N T F I N A N C E 1986 1996 2 0 0 5 2 0 0 6 D o m e s t i c p r l c e s l n f l a t l o n ( % ) (%change) 600 Consumer prices 492.4 2 1.3 Implicit G D P deflator 28.5 638.2 2 1.6 13.1 400 G o v e r n m e n t f i n a n c e 200 ( % o f GDP,inciudes current grants) - 0 Current revenue 5.4 29.4 25.1 0 1 02 03 04 05 OB Current budget balance -4.2 13.9 13.5 Overall surplus/deficit -4.2 6.9 5.5 -GDP deflator -CPI T R A D E 1986 I 9 9 6 2 0 0 5 2 0 0 6 (US$ rn iilio ns) E x p o r t a n d I m p o r t l e v e l s ( U S $ mlll.) Totalexports (fob) 1,650 2,042 2,044 1.000 Copper 989 1,154 Coffee 93 M anufactures 305 Totalimports (cif) 1.011 2,465 2,607 F o o d Fuel and energy Capital goods 862 Export price index (2000=100) 00 0 1 02 03 04 05 Im PO rt price index (2000=100) IExports mlrnports Terms o f trade (2000=100) 145 MAP SECTION IBRD 36817 10°E 15°E CENTRAL CENTRAL 20°EAFRICAN AFRICAN REPUBLIC REPUBLIC 25°E 30°E To 5°N SUDANSUDAN 5°N To Bangui To Bangasso Kembe To Juba CAMEROON CAMEROON EQUATEUR EQUATEUR ORIENTALE ORIENTALE To Pakwach EQ. EQ. ITURI ITURI GUINGUINEAEA GUINEA LAC TOUMBA LAC TOUMBA Lake UGANDAUGANDA Albert MARINGAMARINGA LOPORI-WAMBALOPORI-WAMBA Kisangani Kisangani Mbandaka Mbandaka 0° MAIKOMAIKO 0° Lake Edward GABONGABON CONGO CONGO NORDNORD Lake KIVUKIVU Victoria GomaGoma To Ruhengeri RWANDA RWANDA SALONGA SALONGA Bukavu Bukavu To Kibuye Kindu Kindu SUDSUD Bandundu Bandundu BURUNDIBURUNDI KINSHASA KINSHASA MANIEMA MANIEMA KIVUKIVU To Bujumbura KINSHASAKINSHASA KASAI KASAI BANDUNDU BANDUNDU KASAIKASAI ORIENTAL ORIENTAL 5°S To Pointe- 5°S Noire BAS-CONGOBAS-CONGO OCCIDENTALOCCIDENTAL TANZANI ANZANIA ANZANIA CABINDACABINDA Lake (ANGOLA) (ANGOLA) MatadiMatadi Mbuji- Mbuji- Kananga Kananga Mayi Mayi To Damba ATLANTIC OCEAN Tangan yika KATANGAKA ANGA 10°E 15°E DEMOCRATIC REPUBLIC OF CONGO Lake Mweru FOREST AND NATURE CONSERVATION PROJECT 10°S ANGOLAANGOLA 10°S To Luwingu PROJECT SUBDISTRICTS (PROJECT COMPONENT 1) FOREST LANDSCAPES (PROJECT COMPONENT 2) ZAMBIAZAMBIA MAIKO NATIONAL PARK (PROJECT COMPONENT 3) To Lucano Lake Malawi Lubumbashi Lubumbashi NATIONAL PARKS This map was produced by the Map I NATIONAL ROADS Design Unit of The World Bank. The boundaries, colors, denominations PROVINCE CAPITALS 0 100 200 Kilometers and any other information shown To NATIONAL CAPITAL on this map do not imply, on the part of The World Bank Group, any Kitwe ALAW PROVINCE BOUNDARIES judgment on the legal status of any 0 100 200 Miles territory, or any endorsement or INTERNATIONAL BOUNDARIES acceptance of such boundaries. M 20°E 25°E 30°E MARCH 2009