Proposed Loan And Grant To The Republic Of Benin For The .
Document:EB 2018/124/R.23/Rev.1Agenda:7(d)(i)(a)Date:13 September �s reportProposed loan and grant to theRepublic of Benin for theAgricultural Development andMarket Access Support ProjectNote to Executive Board representativesFocal points:Technical questions:Dispatch of documentation:Abdoul Wahab BarryCountry Programme ManagerWest and Central Africa DivisionTel.: 225 09 33 50 28e-mail: a.barry@ifad.orgDeirdre McGrenraChiefGoverning BodiesTel.: 39 06 5459 2374e-mail: gb@ifad.orgSamir BejaouiProgramme Support OfficerTel.: 225 07 90 95 89e-mail: s.bejaoui@ifad.orgExecutive Board — 124th SessionRome, 11-13 September 2018For: Approval
EB 2018/124/R.23/Rev.1ContentsAbbreviations and acronymsiiMap of the project areaiiiFinancing summaryivRecommendation for approval1I.Strategic context and rationale1A. Country and rural development and poverty contextB. Rationale and alignment with government priorities and the resultsbased COSOP1Project description2A. Intervention area and target groupB. Project development objectiveC. Components/outcomes222Project execution3A. ApproachB. Organizational frameworkC. Planning, monitoring and evaluation, learning and knowledgemanagementD. Financial management, procurement and governanceE. Supervision33Project costs, financing and benefits5A.B.C.D.E.56789II.III.IV.V.Project costsProject financingSummary benefit and economic analysisSustainabilityRisk identification and mitigation1445Corporate considerations9A. Compliance with IFAD policies9B. Alignment and harmonizationC. Innovation and scaling upD. Policy engagement101010VI.Legal instruments and authority11VII.Recommendation11AppendicesI. Negotiated financing agreementII. Logical framework111i
EB 2018/124/R.23/Rev.1Abbreviations and AGProCarPSDSApublic-private-producer partnershipagricultural development poleagricultural professional organizationTerritorial Agricultural Development AgencyNational Steering Committeecountry strategic opportunities programmeeconomic internal rate of returnAfrican financial community francnet present valueOPEC Fund for International DevelopmentAgricultural Development and Market Access Support ProjectGovernment Action Programme "Revealing Benin"IFAD Rural Intervention Framework Programme in BeninStrategic Plan for Agricultural Sector Developmentii
EB 2018/124/R.23/Rev.1Map of the project areaRepublic of BeninAgricultural Development and Market Access Support ProjectDetailed design reportThe designations employed and the presentation of the material in this map do not imply the expression of any opinion whatsoever on thepart of IFAD concerning the delimitation of the frontiers or boundaries, or the authorities thereof.Source: IFAD, 2018IFADiii
EB 2018/124/R.23/Rev.1Republic of BeninAgricultural Development and Market Access SupportProjectFinancing summaryInitiating institution:IFADBorrower/beneficiary:Republic of BeninExecuting agency:Ministry of Agriculture, Livestock and FisheriesTotal project cost:EUR 89.5 millionAmount of IFAD loan:(Performance-based allocationsystem [PBAS]–2016-2018 cycle)EUR 13.3 millionAmount of IFAD grant (under the DebtSustainability Framework):EUR 13.3 millionTerms of IFAD loan:Highly concessional: Maturity period of 40 years,including a grace period of 10 years, with aservice charge of 0.75 per cent per annum.Cofinancier(s):OPEC Fund for International Development (OFID),private sector, financial institutionsAmount of cofinancing:OFID: EUR 8.6 millionPrivate sector: EUR 4.8 millionFinancial institutions: EUR 1.1 millionTerms of cofinancing:OFID: LoanPrivate sector: LoanFinancial institutions: LoanContribution of borrower/beneficiary:EUR 8.4 millionContribution of beneficiaries:EUR 2.8 millionFinancing gap:EUR 37.2 millionAppraising institution:IFADCooperating institution:Directly supervised by IFADiv
EB 2018/124/R.23/Rev.1Recommendation for approvalThe Executive Board is invited to approve the recommendation for the proposedfinancing to the Republic of Benin for the Agricultural Development and MarketAccess Support Project, as contained in paragraph 56.Proposed loan and grant to the Republic of Benin for theAgricultural Development and Market Access SupportProjectI.Strategic context and rationaleA.Country and rural development and poverty context1.As a result of the economic and institutional reforms introduced under theGovernment Action Programme (PAG) “Revealing Benin”, the Beninese economyhas entered a new era of growth. In 2017, the country reported 5.5 per centgrowth in its GDP, compared with 4 per cent in 2016. Nevertheless, it still facessignificant challenges, with a poverty rate of more than 40 per cent; persistentsocial and occupational inequalities to the detriment of women; food insecurity,which affects 15 per cent of rural populations and 21 per cent of farm households;and persistent unemployment (2.7 per cent) on top of a high level ofunderemployment (72 per cent), largely among young adults. Added to theseconstraints are the effects of climate change, which sap the resilience ofpopulations, especially in rural areas.2.Agriculture is a strategic sector of the Beninese economy, contributing an averageof 23 per cent of GDP and 75 per cent of export revenues and generating around 70per cent of the jobs. The National Investment Plan for Agriculture, Food andNutrition Security 2017-2021 five-year breakdown, prepared within the frameworkof the Strategic Plan for Agricultural Development (PSDSA 2017-2025), is aimed atmaintaining annual GDP growth of at least 6 per cent during the period andincreasing the average annual income of rural households by 7.5 per cent.B.Rationale and alignment with government priorities and theresults-based COSOP3.PADAAM was chosen to implement the country strategic opportunities programme(COSOP) for Benin 2018-2022 and is entirely under the agricultural component ofthe PAG 2016-2021. It has two strategic objectives: (i) the productive capacity,resilience to climate change and food and nutrition security of vulnerable ruralpopulations are sustainably improved; and (ii) access to agricultural output marketsis improved.4.The national value-chain promotion strategy focuses on three conventional valuechains – rice, maize and cassava – with a view to improving food security andincreasing the income of rural populations. PADAAM will thus support the threevalue chains stipulated in the PAG in order to: (i) bridge the food gap in terms ofthe domestic demand for rice, only 56 per cent of which was met in 2017, thusreducing the country’s dependence on mass imports of rice from the Asian market;and (ii) maintain and increase the value added of maize and cassava in associationwith the private sector, while developing trade with the subregional market.5.In the conventional value-chain niche, PADAAM will support government efforts topromote the value chains, ensuring household food security and creating valueadded. It will be devoted entirely to supporting the implementation of nationaldevelopment programmes in the value chains in question.1
EB 2018/124/R.23/Rev.1II. Project descriptionA.Intervention area and target group6.In the current strategic context, characterized by the promotion of value chains and“agro-clusters,” PADAAM will intervene in four agricultural development poles(ADPs) with the potential for production and economic partnership development,namely: (i) the south of pole 4, covering the department of Collines; (ii) pole 5,covering the departments of Zou and Couffo; (iii) pole 6, confined to thedepartment of Plateau; and (iv) pole 7, which stretches to the departments ofOuémé, Atlantique and Mono.1 The priority production areas in the ADPs will beselected on the basis of a detailed study conducted prior to project start-up.7.PADAAM’s target group will consist of the following categories: (i) smallholderfarmers and small rural entrepreneurs engaged in production or processingactivities in the three value chains (rice, maize and cassava); (ii) young adults fromfamily farms and/or young adults who have graduated and/or have some educationwho wish to work in the value chains as first-time entrepreneurs, as well as youngentrepreneurs who are already active in the value chains or wish to take advantageof the business opportunities they offer; (iii) agroentrepreneurs and downstreamactors in the value chains – for example, processors, merchants and individualsinvolved in service activities and organized into small or medium-sized enterprisesor cooperatives; (iv) agricultural professional organizations (APOs) with differentdegrees of organization and geographic positioning: grassroots farmers’organizations, unions, federations, regional collaboration platforms and nationalmixed groups of professionals.8.PADAAM will reach 51,000 households and approximately 255,000 rural people,2including smallholder farmers, farm youth, agroentrepreneurs and actorsdownstream in the value chains, as well as professional organizations. Thisapproach is designed to target and favour women and young adults (aged 15-35),who represent 40 per cent and 30 per cent of the beneficiaries, respectively.B.Project development objective9.PADAAM’s general objective is to reduce rural poverty in the project interventionarea by including stakeholders, both women and men, in diversified and profitablevalue chains.10.The project’s development objective is to sustainably increase the food andnutrition security, as well as the income, of smallholder farmers, particularlywomen and young adults.11.Attainment of this objective will be measured by the following indicators:(i) 204,000 low-income rural people benefitting from upward economic mobility, 40per cent of them women and 30 per cent of them young adults; (ii) an increase inthe yield per hectare of maize, rice and cassava; (iii) at least a 30 per cent increasein the income of 80 per cent of the beneficiaries; (iv) more than 400 productionpartnerships, bringing together some 1,600 organizations, and close to50,000 smallholder farmers developed; (v) 80 per cent of supported ruralbusinesses reporting higher profits; and (vi) 1,100 young adults engaged inbusiness initiatives in the three targeted value chains.C.Components/outcomes12.PADAAM will be implemented over a six-year period (2019-2024) and will havethree investment components: (i) strengthening partnerships and creating valueadded (EUR 39.4 million, or 44 per cent of the total cost); (ii) improving agricultural1The department of Littoral, included in ADP 7, is not part of the PADAAM intervention area.Average size of households (five individuals) based on the average size of rural households in theseven departments targeted by the intervention. Source: Cahier des villages et quartiers de ville, INSAE,August 2016.22
EB 2018/124/R.23/Rev.1productivity and production (EUR 40.1 million, or 44.8 per cent of the total cost);and (iii) coordination and management under the IFAD Rural InterventionFramework Programme in Benin (ProCar) (EUR 10 million, or 11.2 per cent of thetotal cost).13.Component 1: Strengthening partnerships and creating value added. Thiscomponent should result in: (i) the formalization of sustainable economicrelationships between smallholder farmers and the private sector; (ii) an increase inthe volume of raw materials processed in the three value chains and sold on thedomestic and international market; (iii) a significant increase in the income ofsmallholder farmers; and (iv) strengthening of the institutional and governancebase of professional organizations.14.Component 2: Improving agricultural productivity and production. Thiscomponent is aimed at increasing the average yield per hectare by around 44 percent, with production in the three targeted value chains reaching the volumesspecified in the PSDSA for 2021. Under this component, PADAAM will alsoparticipate in increasing the availability and quality of infrastructure for productionand implementation support, with the following as the main indicators:2,500 hectares of wetlands improved, 91 storage facilities rehabilitated or built and250 km of feeder roads built.15.Component 3: Coordination and management under ProCar (Coordination,monitoring and evaluation and knowledge management). Implementation ofthis component will be based on the programme approach used in the creation ofProCar and the reforms to the territorialization of agricultural development adoptedby the Government. This framework programme governs the administrative andfiduciary management of all projects in IFAD’s portfolio in Benin, and supports theshared functions of monitoring and evaluation, knowledge management,communication, targeting and youth support.III.Project executionA.Approach16.Geographic approach. Benin has chosen the geographic approach for agriculturaldevelopment, and PADAAM will endorse it. This new approach will be implementedthrough the ADPs under the new institutional architecture that gives the territorialagricultural development agencies (ATDA) technical coordination functions thatcover the ADPs and the promotion of value chains, making the departmentalbureaus of agriculture, livestock and fisheries responsible for the regulation of theinterventions and geographic monitoring and evaluation at the territorial level.17.Value-chain approach. PADAAM supports a change in paradigm centred on thesustainable creation of value added through the promotion of inclusive economicpartnerships that link smallholder farmers and their organizations with the privatesector and the market in the three priority value chains.18.Outsourcing approach. The project will employ an inclusive outsourcing approachto implementing the activities related to partnerships, employing a mechanisminvolving different consulting and facilitation firms whose services will becoordinated by international technical assistance in direct support of projectcoordination. This approach will also help to bring young adults into the workforcethrough on-the-job training provided by experienced training centres selected for acustomized partnership.B.Organizational framework19.PADAAM will be overseen by the Ministry of Agriculture, Livestock and Fisheries andbe part of ProCar’s organic framework. ProCar’s National Steering Committee (CNP)will be expanded to PADAAM with the participation of new stakeholders and/or focal3
EB 2018/124/R.23/Rev.1points. Four participatory territorial planning committees will be created in the fourADPs in question – the south of pole 4, pole 5 and poles 6 and 7).20.PADAAM’s execution will involve an array of complementary functions divided intotwo categories: (i) the country programme functions already established in ProCar(financial administration and management, procurement, monitoring andevaluation, communication and knowledge management, gender, young adults andtargeting, etc.); and (ii) specific technical functions, which will be buttressed bytechnical assistance.21.In the ADPs, PADAAM will be implemented by the ATDAs, which will be supportedwith technical assistance under a mandate governed by a clear and assured exitstrategy with a three-year horizon, capacity building and the acquisition ofcompetencies by the ATDAs. ProCar programme functions in the four ADPs will beguaranteed by two regional support units.C.Planning, monitoring and evaluation, learning and knowledgemanagement22.The planning and budgeting of PADAAM activities will be built on the workprogrammes and annual budgets, prepared using a bottom-up approach. Theparticipatory territorial planning committees will meet in the ADPs each year tovalidate the work programmes and annual budget, which will ultimately besubmitted to ProCar for approval during the annual sessions of the CNP.23.The PADAAM monitoring and evaluation system will be anchored in the ProCarsystem and implement a results-based management system, using the programmeapproach adopted in 2016 and the monitoring and coordination mechanism of theNational Value-chain Development Programmes fostered by the ATDAs responsiblefor their coordination. The system will be buttressed by: (i) monitoring andevaluation assistants assigned to the regional support units, (ii) the creation of adata-gathering mechanism and tools to ensure optimal and regular informationabout the PADAAM’s chain of results, and (iii) the ProCar database, along withthose of the ATDAs in the ADPs.24.Learning, knowledge management and communication. PADAAM will base itslearning and knowledge management system on ProCar’s monitoring andevaluation mechanism. A management plan will be prepared at project start-up tospecify the different communication products and tools that should be developed,the most suitable formats and support for the different types of users and thefrequency with which these products and tools should be developed.D.Financial management, procurement and governance25.Financial management. This will be based on the ProCar mechanisms andprocedures for the execution of portfolio operations. Resource management willfollow country and IFAD procedures. ProCar will prepare the financial statements,which it will regularly transmit to the Government and IFAD.26.Procurement. The works and supplies, as well as the consulting and advisoryservices necessary for the project, will be delivered in accordance with the currentBenin procurement code, insofar as they are aligned with IFAD’s procurementmechanisms. Within the framework of productive partnerships and ruralmicroenterprise promotion, the beneficiaries – farmers’ organizations and youngpromoters of rural enterprises – will participate in procurement through the specificmodalities defined in the manuals.27.Governance. PADAAM will apply the principles of good governance: (i) to thenational orientation and monitoring committee’s mobilization and participationmechanism through Benin’s civil society stakeholders’ platform; (ii) thanks to theterritorial decentralization groups’ involvement in creating facilitating infrastructurefor the implementation of productive partnerships; (iii) through beneficiary4
EB 2018/124/R.23/Rev.1participation in the planning and evaluation of investments; and (iv) by overseeingthe implementation of partnership business plans by farmers’ organizations.E.Supervision28.PADAAM supervision will consist of two supervision missions per year, organizedand conducted jointly by IFAD, the Government and the principal stakeholders,notably the members of the CNP and the ADP participatory territorial planningcommittees. Supervision will be conducted using the new online Operational ResultsManagement System, which will facilitate the updating of data and information onthe project’s status. The first supervision mission will essentially support projectstart-up by establishing the implementation mechanism at all levels, finalizing themandates, and issuing the tender documents for the baseline studies and otherpriority activities. The supervision missions will particularly emphasizeimplementation monitoring, achievement of the results, outcomes and impacts andthe effectiveness of institutional and technical outcomes intended for consolidationand replication on a large scale. Specific implementation support missions can alsobe organized as needed.IV. Project costs, financing and benefitsA.Project costs29.The total cost of PADAAM, including provisions for physical contingencies and priceincreases, is EUR 89.5 million. The base cost is EUR 84.1 million. The amount forphysical and financial contingencies is EUR 5.4 million. Taxes, which are included,come to EUR 8.4 million.30.Project costs can be broken down into the following components: (i) strengtheningof partnerships and creation of value added: evaluated at EUR 39.4 million, or44 per cent of the total project cost; (ii) improvement of agricultural productivityand production: EUR 40.1 million, or 44.8 per cent of the to
(COSOP) for Benin 2018-2022 and is entirely under the agricultural component of the PAG 2016-2021. It has two strategic objectives: (i) the productive capacity, resilience to climate change and food and nutrition security of vulnerable rural populations are sustainably improved; and (ii) access to agricultural output markets is improved. 4.
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