Mozambique - Transfrontier Conservation Areas and Tourism Development Project

Document of The World Bank FOR OFFICIAL USEONLY ReportNo: 32148-MZ PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDCREDIT INTHEAMOUNT OF SDR 13.9MILLION (US$20MILLIONEQUIVALENT) AND PROPOSEDGRANT FROMTHE GLOBAL ENVIRONMENT FACILITY TRUST FUND INTHEAMOUNT OFUS$ 10MILLION TO THE REPUBLIC OF MOZAMBIQUE FORA TRANSFRONTIERCONSERVATIONAREAS AND TOURISM DEVELOPMENT PROJECT November3,2005 This document has a restricted distribution and may be used by recipients only in the performanceo f their official duties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective July, 31,2005) Currency Unit Metical 1US$ 21,300 1SDR US$1.4453 1US$ SDR 0.89662 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS APDF African Project Development Facility (IFC) APL Adaptable Program Lending CAS Country Assistance Strategy CBNRM Community-Based Natural Resource Management CDS Centropara o Desenvolvimento Sustentavel (Center for Sustainable Development) CDS-ZC Center for Sustainable Development - Coastal Zone CITES Convention on the International Trade inEndangered Species CMBMP Coastal and Marine Biodiversity Management Project CPI Centro da Promoqa"o dos Investimentos (Center for the Investment Promotion) CTF Community Tourism Facility GDP GrowthDomesticProduct DFID Departmentfor International Development DINAGECA DirecqGo Nacional de Geografia e Cadastro (National Directorate for Geography and Cadaster) DINATUR DirecqEo Nacional do Turismo (National Directorate for Tourism) DINAPOT National Directorate o f Territorial Planning DNAC Direcpio Nacional das kreas de Consewaq6o - National Directorate for ConservationAreas DNAIA National Directorate o f Environmental Assessment DNFFB Direcqio Nacional de Florestas e Fauna Bravia - National Directorate for Forest and Wildlife DNGA National Directorate for EnvironmentalManagement ECDA Elephant Coast Development Agency FMS Monthly Financial Report GDP Gross Domestic Product GEF Global Environment Facility GEO Global Environmental Objective 11 ..  GIS Geographical Information System GLTFCA Great Limpopo Transfrontier Conservation Area GLTP Great Limpopo Transfrontier Park GOM Government o f Mozambique ICR Implementation Completion Report IDA International DevelopmentAssociation IDDP IntegratedDistrict Development Planning IDDPs IntegratedDevelopment Plans F C International Finance Corporation INDER Institute o fRural Development JNPF National Institute o fPhysicalPlanning IR IntermediateResult I U C N World Conservation Union KFW Kreditanstaltfur Wiederaufbau (development agency o f GermanMinistry for Cooperation) LNP Limpopo National Park M&E Monitoring and Evaluation MADEP Ministry o fAgriculture and Rural Development MICOA MinistryofEnvironmental Coordination MITUR MinistryofTourism MP Management Plan NBSAP National Biodiversity Strategy and Action Plan NEPAD New Partnership for Africa's Development NGO Non-GovernmentalOrganization NP National Park NR National Reserve OP OperationalPolicy ORAM: Rural Association for Mutual Assistance OUZIT Okavango Upper-Zambezi International Tourism initiative P A Protected Area PARPA Plano de Acqiopara a Reduqio da Pobreza - (Mozambique's strategy for poverty reduction (PRSP) PAT1 Priority Area for Tourism Investments PDFB (GEF) Project DevelopmentFacility grant PDO Project Development Objective PROTUSC Programa para o turismo sustentavel epara a consewaqio - (sector wide program for sustainable tourism and conservation) PRSP Poverty Reduction Strategy Paper RCSA Regional Center for Southern Africa SADC Southern African Development Community SDI Spatial Development Initiative SEA Strategic EnvironmentalAssessment SEATIP South Eastern Africa Tourism Investment Program (IFC) SME Small and Medium Sized Enterprise SPDTM Strategic Plan for Development o f Tourism inMozambique STD Sexually Transmitted Disease ... 111  TFCA Transfrontier Conservation Area TFCAPISP Transfrontier Conservation Areas Pilot and Institutional Strengthening project TFCATDP Transfrontier Conservation Area Tourism Developmentproject UNDP UnitedNationDevelopment Program USAID UnitedStatesAgency for InternationalDevelopment WB World Bank WTO World Tourism Organization ZADP Zambezia Agricultural Development Project ZIMOZA Zimbabwe/Mozambique/Zambia(TFCA) Vice President: Gobind Nankani Country Director: Michael Baxter Sector Manager: Richard Scobey Task Team Leader: Jean-Michel G. Pavy iv  MOZAMBIQUE TransfrontierConservationAreas and TourismDevelopmentProject CONTENTS A. STRATEGIC CONTEXT AND RATIONALE........................................................... 1 1.1. Country and sector issues......................................................................................... 1 2 2 Rationale for Bank involvement ................................................................................ 1.2. The TFCA Program ................................................................................................. .. 4 5 B PROJECT DESCRIPTION........................................................................................... .3 Higher level objectives to which the project contributes ........................................... 2. Project development and global environment objectives and key indicators 1. LendingInstrument.................................................................................................... 5 3. Project components .................................................................................................... ............55 6 4. Lessons learned and reflectedinthe project design................................................... 8 9 C. IMPLEMENTATION................................................................................................. 5. Alternatives considered and reasons for rejection ..................................................... 10 10 2. Institutional and implementation arrangements....................................................... 1. Partnership arrangements.,....................................................................................... 11 14 4. Critical risks and possible controversial aspects...................................................... 3. Monitoring and evaluation o f outcomes/results....................................................... 16 17 D APPRAISAL SUMMARY......................................................................................... .5. Credit conditions and covenants .............................................................................. 19 Annex 1: Country and Sector or Program Background............................................... Annex 2: Major Related Projects Financed by the Bank and/or Other Agencies ........32 25 Annex 3: Results and Monitoring Framework............................................................. 35 Annex 4: Detailedproject description......................................................................... 43 Annex 5: Project Costs................................................................................................. Annex 6: Implementation Arrangements ..................................................................... 64 65 Annex 7: FinancialManagement andDisbursementArrangements ........................... 69 Annex 8: Procurement Arrangements.......................................................................... 79 Annex 9: Economic and Financial Analysis ................................................................ 86 Annex 10: Safeguard Policy Issues.,............................................................................ 90 Annex 11: Project Preparation and Supervision.......................................................... 95 97 Annex 13: Statement o f Loans and Credits .................................................................. Annex 12: Documents inthe Project File.................................................................... Annex 14: Country at a Glance................................................................ 98 100 Annex 15: Letter o f Sectoral Policy........................................................... 102 Annex 16: Incremental Cost Analysis ....................................................................... 122 Annex 17: GEF STAP Review and Response to Review.......................................... 132 Annex 18: Description o f Targeted TFCAs............................................................... 140 Annex 19: Lessons learned and reflected inthe project design................................. 145 Annex 20: Map IBRD 34018 ..................................................................................... 148 V   MOZAMBIQUE TRANSFRONTIER CONSERVATION AREASAND TOURISM"DEVEL0PMENT PROJECT PROJECTAPPRAISALDOCUMENT . AFRICA., AFTS 1 Date: November 3,2005 TeamLeader: Jean-Michel PavvG. . . CountryDirector: Michael Baxter Sectors: Forestry (50%); General agriculture, Sectormanager/director Richard G. Scobey fishing and forestrysector(40%); General Project ID: P071465 industry andtrade sector (10%) Lending Instrument: Specific Investment Loan Themes: Biodiversity (P);Other environment and natural resources management (S);Environmental policies and institutions (S);Other financial and private sector development (S) Environmental screeningcategory: Partial Assessment Safeguard screeningcategory: Limited impact Global Supplemental ID: P076809 TeamLeader:Jean-Michel G.Pavy Lending Instrument: SpecificInvestment Loan Sectors: Forestry (50%); General agriculture, Focal Area: B-Biodiversity fishing and forestrysector (40%); General SupplementFully Blended?: Yes industry and trade sector (10%) Themes: Biodiversity (P);Otherenvironment and naturalresourcesmanagement (S);Poverty strategy, analysis and monitoring (S);Other trade For Loans/Credits/Others:36.7 million Total Bankfinancing (US$m): Credit 20.00 + GEF Grant 10.00 0.78 0.00 0.96 INTERNATIONAL 19.04 DEVELOPMENT 20.00 ASSOCIATION ENVIRONMENT GLOBAL FACILITY 10.00 0.00 10.00 ministry 3.72 0.00 3.72 IPHRD GRANTS LOCALOF SOURCES BORROWING 2.20 0.00 2.20 COUNTRY Total: 35.74 36.70 Borrower:Republic of Mozambique ResponsibleAgency: Commission for Tourism Facilitator and the MinistryTourism of L  IExpected effectivenessdate: April 2,2006 Expected closing date: June 31,2013. - I' . - . .~.. . *..~,,., ,.,. .. \...~,., , .., /,. ,, ,.*"%_., I & l.. >~.".'/*,-...."h.j a.,,>.,,-._l .m,,? ,?..X"",_.i,. x ~ I Does the project depart from the CAS in content or other significantrespects? Re$ PAD A.3 [ ]Yes [X]No Does the project require any exceptions fromB*&policies? Re$ PAD D.7 Have these been approvedby Bank management? Is approval for anypolicy exception sought from the Board? [ jYes [ ]No cRe$ Does the project include any criticalrisks rated "substantial" or "high"? PAD C.5 [XIYes [ ]No Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [.] No - Project developmentobjective Ref:PAD 23.2, TechnicalAnnex 3 - s ~ Growth in community-privatesector led environmentallyand sociallysustainabletourism in TFCA Global Environment objective 'Ref: PADB.2, TechnicalAnnex 3 Increase the area, connectivity and effectivenessof biodiversityconservationin TFCA Project description[one-sentencesumkary ofeach component] Re$ PAD B.3.a,'Technical Annex4 Component 1:StrengtheningPolicy, Legal and InstitutionalFramework forTFCAs: Building on the Iachievements of the first phase, Component 1will strengthenthe enabling environment for TFCAs. Component2: IntegratedDistrict DevelopmentPlanning: The TFCATDP will pilot in two districts under a proactive approachto integratedplanning. Component 3: Community and Private Sector-Led TourismDevelopment: Component 3 is designed to developthe capacity of the tourism sector (government,communitiesand the private sector)to participate in the preparation and implementationof tourism masterplans for key tourism districts. Component4: ProtectedAreas Management: This componentsupportthe identification,monitoring and protection of the most significantand vulnerablebiodiversityassetswithin the three TFCAs, through the establishment/rehabilitationand managementof a network of National Parks and. . Reserves. Component 5: Project Management,Communications,and Monitoringand Evaluation  Which safeguard policiesare triggered, if any? ref PAD 0.6, TechnicalAnnex 10 OP4.01 is triggered because of the potential impactof some local infrastructure--such as tracks, fencing, housing,offices, lodges in formal PAS, outside PAS and the coastline--on the on environment. OP4.04 on Natural Habitat and OP4.36on Forest are triggered even though the project is expected to have significant positive impacton the country natural habitat and forest. Still, with the economic development triggeredby the project and, someof the infrastructure built, there maybe negative impact locally. Infrastructure which willbe identified as part of the IDDP,will be built in Ponto do Oro and Vilankuloto increasethese town basic facilities and make them attractive to tourism investors. The impact of such construction will needto be monitored. Still,the projectis not expected to induce major or irreversible negative impacts. The developmentof Mozambique's coastlineand interioris expected, whether or notthe project is implemented. The project is intendedto mitigate that environmental and social impactby providing a framework for promoting sustainabledevelopment, throughan ecosystem management approach: the IDDP. The ESMF proposes the IDDPhas process toidentifyand avoid,or mitigate, negative impactof individual project investments. OPBP 4.12 related to Involuntary Resettlement and Land Acquisition: Two major factors have led to the triggeringof OPBP 4.12. The first factor is the restrictionsand the incompatibilityof local communities livelihoods activities with the objectivesof the TFCAs and PAS. TFCATDPin protecting the natural environment and supporting biodiversityconservation and natural resource managementin the TFCAs include the establishment of boundaries, the potential for establishing new PAS, and the developmentof regulations, criteria,procedures and institutional structures for planning, management and development. These imply the restriction of access to natural resourcesby the local communities inside the PAS andin buffer zones. Communities livingin TFCA interstitialareas are also potentially affected insofar asthesemulti-resource use areaswillbe included in zoning and development plans for sustainableresource use that may include community-basedinformal'PAcreation. To avoid such a negative effect on the population and avoid unnecessary conflicts,a Process Frameworkhas been completed. The purpose of the framework is to describe the processby whichpotentially affected communitieswill participatein resource planning and management. Once developed,an Action Plan should become part ofthe natural resources management plan. The second factorthat contributed to the triggering ofOPBP 4.12 is the objective to promote and link conservation andnature tourism activities to community participation and access to direct and indirect benefits, as well asto encourage communities landdelimitationto strengthentheir rights bases. The growth of nature tourism activities may require land acquisition to build infrastructure, and buildings. Theproject may also cause displacement ofpeople from their homes and areas asa result of the threatof wildlife. Because presently, the location, nature and scopeof possibleland acquisition and displacement are not yet known,a Policy Framework (PF), asa mitigation measure, has been completed.The PF establishes the policy principles tobe used for the development of specific RAPS. During project implementation, when the detailsof land acquisition and involuntary resettlement are fullyknown, Resettlement Action Plan(s)(RAPs) will be defined, prepared, and implemented. Burial and sacredsiteswill be protected and documented and recorded in the management plans and the RAPs.  Significant, non-standard conditions,if any, for: ref PAD C.7 Board presentation: None Loadcredit effectiveness: The Cofinancing Agreements with AWF andPPF is signed; the TFCAUs financial management software functionsin form andsubstancesatisfactoryto the Bank; the TFCAU has retained: (i)one procurement clerk andone short term procurement consultant for the TFCA Unit, (ii) three project accountants, (iii) a assistant accountant for the TFCA Unit, (iv)an accountant for the regional office of Xai-Xai, and(v) an accountant for the regional officeof Chimoio; the TFCAU has compileda short listof external auditors, with qualificationsand under terms of reference satisfactory to the Bank; the Borrowerhas adopted in form and substance satisfactoryto the Association, (i) the Project Implementation Plan, (ii)Financial Procedure Manual,(iii)the Procurement Manual, (iv) the Monitoring andEvaluationManual, (v) the CEF Manual, and (vi) the Annual Work Plan for the first year of Project implementation Covenants applicableto project implementation: Financial covenantsare the standard onesas stated in ArticleIV (including single opinion) of the Development Credit Agreement and Project Agreement.  A. STRATEGIC CONTEXT AND RATIONALE 1.1.Countryand sector issues Poverty - Poverty declined rapidly in Mozambique over the 96197-02103 period in rural areas and inmost urban areas from 69 percent to 54 percent. Rural poverty fell slightly more (by 22 percent) than urban poverty (by 16 percent). The decline was broad based, and can be seen in improvements in both monetary and non-monetary poverty measures. Despite this good progress, more than 50 percent o f the population remains in poverty today. The poor in Mozambique are mostly living in rural areas and working in agriculture, although increasingly one earner inthe household will get income fiom another sector as well. Poor adults have little education, and their children are less likely to be in school. Many still do not have access to safe water, and have inadequate housing. Lifting the other 50 percent out o f poverty will require continued broad-based growth in the economy, coupled with continued expansion o f social services to the poorest. Biodiversity - Mozambique falls within the biodiversity-rich Zambezian biogeographic region, and contains a wide diversity o f habitats including mountainous, woodland, wetland and coastallmarine ecosystems. I t s 2,700 km o f coastline i s unique inthe East African Marine Region interms o f the quality, diversity and species richness. Many o f the most important areas are on, or very close, to international frontiers and well-established conservation areas and tourism routes in neighboring countries. These large areas are important both for their biodiversity richness and because they contain topographic and ecological gradients and transition zones, and historical corridors for large scale animal movements (terrestrial and marine). Among the most significant are the Chimanimani massif and the Maputaland area and Lebombo mountain range (notable for their high levels o f endemism), the Gaza area adjacent to South Africa's Kruger National Park. These national parks, in addition to conserving biodiversity, represent valuable tourism assets. Tourism in Mozambique -InMozambique, tourism is starting from a low base, but arrivals increased by 10-15 % annually between 1995-2001, reaching 400,000 in 2001. Tourism i s also now the third largest investment sector in the country. The GOMhas taken actions to promote this economic sector, including creating a separate Ministry o f Tourism (MITUR) in 2001, adopting a Tourism Policy and Implementation Strategy (TPIS 2003); preparing a Strategic Plan for Tourism Development in Mozambique (SPTD 2004-2008) and releasing a new tourism law that provides a framework for building regulatory capacity. The policy and strategic plan recognize that Mozambique's comparative advantage lies in its varied and relatively pristine environment, together with its rich cultural heritage, as well as the potential to link with South Africa. It identifies tourism as a means to provide new sources of income in some o f the poorest areas o f the country, where agricultural potential i s low, and to attract investment to these areas. These factors among others have led the GOM to identify the Transfrontier ConsewationAreas (TFCAs) as Priority Areasfor Tourism Development (PATIs). Transfrontier Consewation Areas - TFCAs, as described in the country biodiversity and tourism strategies, are large, defined areas which include both core Protected  Areas (PAS)and multiple-use ("interstitial'") areas where the primary management objective i s to promote environmentally sustainable development compatible with the TFCA's conservation goals. The TFCA concept reflects the GOM's National Biodiversity Strategy and Action Plan (NBSAP), including the participation o f local communities and other stakeholders and sustainable use o f the natural resources by communities, particularly through sustainable tourism. Chimanimani, Lubombo, Greater Limpopo were Mozambique's first three Transfrontier Conservation Areas (TFCAs). Two more TFCAs are planned: the Niassa-Cab0 Delgado TFCA (linking terrestrial and marine conservation areas with others in Tanzania and possibly Malawi), and the Zimoza TFCA (linkinga community natural resource management area in northwest Mozambique with conservation areas in Zimbabwe and Zambia). These large natural areas represent important global biodiversity resources, as well as a valuable resource base for a sustainable tourism industry. Annex 17 provides firther details. Tourism and conservation planning - The GOM strategy recognizes that a cross- sectoral approach i s needed to develop economically, environmentally and socially sound tourism. This includes integrating tourism needs into the local and national economic and physical planning processes and priorities. In this way options for sustainable tourism development are not foreclosed by incompatible development that may generate short-term returns for a small number o f people, at the cost o f longer term sustainability and wider economic impacts. The strategic plan therefore indicates that Integrated District Development Planning (IDDP) should be carried out in all the PATIs, to provide a guiding framework for development of the areas. The IDDP process begins with and is a logical extension o f Strategic Environmental Assessment (SEA), which has been identified by the Ministry o f Environmental Coordination (MICOA) as the key to mainstreaming environmental sustainability in development, particularly at the Provincial, District and local level, as called for inthe National Environmental Management Plan. 1.2. The TFCA Program Under the first TFCA Project, the G E F N o r l d Bank resources and influence have been instrumental in sparking the TFCA process in Mozambique and in the region. The World Bank and the GEF remain well placed to continue to bringvalue added to the program. The program - The Transfrontier Conservation Area and Tourism Development Project (TFCATDP) represents the second phase o f a 15-year program (the TFCA Program). The long-term objectives o f the TFCA Program are to conserve the biodiversity and natural ecosystems within the TFCAs, and to promote economic growth and development based on sustainable use o f their natural resources by local communities, with a particular emphasis on ecotourism. The TFCA program supports the establishment and management o f multiple-use conservation areas (including core PAS) on the Mozambique side of three areas with significant transfrontier biodiversity linkages. Environmentally sustainable tourism development links the conservation and development objectives o f the TFCAs by providing an economic alternative to unsustainable, destructive use o f natural resources, as well as a direct economic ' Le., thenon-protectedareas within which the PASare embedded 2  incentive to maintain the natural ecosystems and their biodiversity. While the TFCAs span national boundaries, this i s a national program supporting the GOM's participation in international agreements and committees aimed at coordinating activities across the national borders, and on-the-ground activities in the portions o f the TFCAs within Mozambique. It i s complemented by a TFCA program in South Africa and several smaller scale initiatives in Swaziland, Zambia and Zimbabwe. Phase 1 (completed) The first phase o f the program, supported by the GEF-financed - Transfrontier Conservation Areas Pilot and Institutional Strengthening project (1998- 2003) (TFCAPISP), was developed inthe context o f a growing interest inlarge scale (including transfrontier ) spatial development initiatives (SDI) within the southern African region. The TFCAPISP launched the TFCA concept. Its achievements include the establishment o f three TFCAs (Limpopo, Chimanimani and Lubombo), policy and institutional development, and modest investments to strengthen the management o f the PAS within those three TFCAs. While these achievements provided an enabling context, the TFCAs remain somewhat intangible on the ground, lacking boundaries, legal designation, and institutional structures and procedures for land use planning and management o f natural resources*. Phase 2 (this project) - The TFCATDP will support the second phase o f the program, to implement the TFCA concept on the ground in the original 3 TFCAs: Limpopo, Lubombo and Chimanimani. The newer Niassa-Cab0 Delgado and Zimoza TFCAs will be developed through funding from separate donor and NGO projects. The main strategic choices for phase 2 o f the TFCA program are: (1) legal designation o f TFCAs, including establishment o f regulations, criteria, procedures and institutional structures for planning, management and development); (2) the preparation and implementation o f a IDDPs in each TFCA, to provide an environmentally sustainable framework for land use planning, natural resource management and development investment within the TFCAs; (3) the development o f environmentally sound and socially inclusive nature tourism (emphasizing community/private sector partnership), and directly related economic activities, in areas with high tourism potential as identified in the IDDPs; and (4) improving the effectiveness o f the PA networks within the TFCAs by: (a) improving the management capacity o f the National Directorate for Conservation Areas (DNAC), (b) expanding or creating new formal PAS, and rehabilitating/constcting key protected area infrastructure, and (c) supporting the establishment of community reserves and conservation areas ("informal PAS") in key areas outside the formal PAS(e.g. corridors, dispersal areas, cultural sites, etc.) Phase 3 - The third phase o f the TFCA program i s expected to support the replication and scaling up of models tested during the first two phases, and integration with other regional tourism initiatives. By the end o f the program, it is expected that environmentally sustainable, socially beneficial tourism will be well established as an economic activity and integrating force within the region, with Mozambique playing an important role and realizing substantial benefits. * Onlythe formal PASwithin the TFCAs are legally designated, under the jurisdiction of the DepartmentofNature Conservation(DNAC) 3  2. Rationale for Bank involvement Aligned with poverty reduction program - Mozambique's strategy for poverty reduction (PARPA3) for 2001-2005 highlights the need for promoting sustainable and environmentally sound economic development, and distributingbenefits o f growth to the poor and economically marginalized people and areas. The PARPA recognizes tourism as having the potential to provide employment to alleviate poverty in rural areas, by expanding demand for local goods and services. However, worldwide experience shows that not all tourism development i s pro-poor. The TFCATD project incorporates numerous measures to ensure that local communities participate in and benefit from tourism development, rather than being disenfranchised by it. The project also supports the Government's commitment to improve the business environment inorder to stimulate private sector investments and economic growth. Aligned with CAS - The 2003 Country Assistance Strategy (CAS) for Mozambique stresses the need to prevent degradation o f natural resources and promote sustainable development. Decentralization and local empowerment, improved governance, and improved capacity o f the public sector to deliver services and support the private sector are cited as means to this outcome. Tourism i s specifically cited as a sector with potential to create economic opportunities and reduce poverty. The CAS proposes World Bank assistance for the GOM to implement its recently approved national framework for sustainable tourism and environmental management, including support for tourism development and biodiversity conservation in transfrontier areas, a sector-wide tourism support program (PROTUSC4), and a program to promote private sector tourism investment in southern Africa (SEATIP). It identifies specific areas for WBG support, including institutional strengthening (national and decentralized levels), strengthening and improving the regulatory framework to improve the business climate, and land demarcation and capacity buildingto increase community participation intourism development andbenefits. Aligned with Bank and GEF global commitment - As a GEF implementing agency, the Bank brings incremental grant resources from the GEF to continue to assist Mozambique and the region inadvancing the TFCA initiatives, and addressing issues o f global environmental concern. These issues include ecosystem protection and management, species protection, and the enhanced management and protection o f important transfrontier water catchments. Complements other initiatives The first phase TFCA project was one o f the earliest - large projects for biodiversity conservation in the post-conflict era in Mozambique, and established the Bank as an important source o f financial and technical assistance to the GOM. Several other donors and international non-governmental organizations (NGOs) are now supporting related activities (e.g. KFW and the NGO Peace Parks Foundation supporting establishment of the Greater Limpopo Transfrontier Park; The US Agency for International Development's (USAID'S) recently completed Transfrontier Natural Resource Management initiative and has just launched a new tourism development project in the northern provinces; the African Wildlife Foundation's support for community land demarcation and capacity building in and Plano de aqa'opara a reduqa`odapobreza Programa para o turismo sustentavel epara a consewaqzo 4  around Zinave and Banhine National Parks. The project complements inland, and in southern areas, the joint DANIDNGEF initiative on coastal zone management. The proposed project provides the broad coverage, horizontal and vertical integration, policy level engagement and long- term commitment that are required to implement the TFCA approach effectively. The project complements private sector development and district planning respectively supported by the PODE and DSFP. The Bank's continued involvement also provides a link to IFC-supported activities such as the Small and Medium Grants program and the Southeast Africa Tourism Investment Program (SEATIP), which will be essential for facilitating the private sector investment and developing the regional tourism market necessary for community- based tourism to succeed. 3. Higher level objectivesto which the projectcontributes The project falls under the Biodiversity Conservation focal area o f GEF. Because o f the variety o f habitats within the TFCAs, the relevant GEF operational programs include: Semi-Arid Zone Ecosystems (OP#l); Coastal, Marine and Freshwater Ecosystems (OP#2), Forest Ecosystems (OP#3) and Mountain Ecosystems (OP#4). In accordance with these OPs, it supports conservation and in-situ protection by establishing and strengthening a system o f conservation areas (including both the multiple-use TFCAs and their exclusive core PAS), and combines biodiversity and socio-economic goals through sustainable use o f biodiversity resources. The project i s also aligned with GEF Strategic Priority #1: Catalyzing Sustainability o f Protected Areas, It will reduce existing pressure on the PASand their biodiversity resources by increasing their economic value, creating incentives for local communities and decentralized authorities to help maintain them. It will also improve management o f the PASover the long term, both by buildingcapacity within the public sector and by bringing in the private sector, both as partners in management and as investors for financial sustainability. Mozambique signed the Convention on Biological Diversity in 1992, andratifiedit in 1995. B. PROJECT DESCRIPTION 1. LendingInstrument Full-sized GEF grant ($10 million) hlly blended with an IDA Credit ($20 million) and a PHRD grant ($3.7 million). 2. Projectdevelopment and globalenvironmentobjectives and key indicators The Development Objective of this project (PDO) i s to achieve growth in community- private sector led environmentally and socially sustainable tourism in TFCAs. The project's Global Environment Objective (GEO) i s to increase the area, connectivity, and effectiveness o fbiodiversity conservation inthree TFCAs. Key end o f project indicators included for the PDO: 3,500 local residents formally and informally employed inconservation and tourism intarget districts; 100,000 visitors and bed-nights intourism facilities inthe target districts; 5  . .. 80% of tourism ventures intarget districts that have adopted a conforming District Tourism Master Plans (DTMP); $2 million of new capital in investment in private tourism and/or conservation- relatedjoint-ventures with communities intarget districts; $0.85 million of total annual revenues i s generated by targeted formal PAS K e y end ofproject indicators for the GEO: m 3,400 km2 o f new priority areas formally designated & managed for biodiversity . conservation; 10%increase inbioindicator species (2 speciedarea) informal PAS; Less than 10% o f area with agriculture, habitation or incompatible land use inall areas zoned for biodiversity conservation 3. Projectcomponents Component I:Strengthening Policy, Legal and Institutional Framework for TFCAs ($1.15 M) -IDA: $0.50M; GEF: $0.65M Building on the achievements o f the first phase, Component 1 will strengthen the enabling environment for TFCAs. It will help create the policy, legal and institutional framework for the GOM to implement its strategic choices: i.e. improve regional collaboration for management o f transfrontier resources; promote interagency collaboration and vertical linkages between central and local governments; build the capacity o f public sector institutions at all levels and communities to manage biodiversity and natural resources; and to form productive partnerships with the private sector. Community land and natural resource ownership and use rights will also be addressed. The TFCATDP will finance consultation, workshops, and study tours, as well as the cost o f producing, publishingand disseminating information materials available to all on the project: (1) a national conservation strategy and policy; (2) legal framework for TFCA, protected area and wildlife; (3) guidelines for tendering conservation concessions; (4) the protected area and wildlife institutional reform; (5) the regulation of the new tourism law; (6) guideline for tendering tourism concessions, and (7) four transfrontier agreements. Component 2: Integrated District Development Planning ($0.48 M) - IDA: $0.29 M; PHRD $0.19M The establishment and management o f TFCAs i s centered around participatory land use and economic planning that allow for a balance between tourism, the conservation o f biodiversity and the sustainable use o f natural resource assets in a defined spatial development context. The success o f the TFCAs may depend on the degree to which: (1) these plans are mainstreamed into the GOM's economic development plans; and (2) the commitment and capacity o f GMO and its partners at the local and central level to implement these plans. The TFCATDP will pilot in two districts under a proactive approach to integratedplanning. The process identified i s called Integrated District Development Planning (IDDP) and focuses o n defining and implementing a 6  series of practical steps to ensure that biodiversity and natural resource based assets are mainstreamed inDistrict Development Plans (DDP). Component 2 is divided into two Subcomponents: (2.1.) National capacity building and stock-taking, and (2.2.) IDDP per se. Subcomponent 2.2. will follow these steps: (1) Capacity building and initial consultation at provincial, district and local levels; (2) District diagnostic, includingbasic data gathering and consolidation with tourism and conservation overlays produced by other component; and (3) Production, adoption and diffusion o f the DDPs. Component 3: Community and Private Sector-Led Tourism Development ($12.96 M) - IDA: $5.47 M; GEF: $4.08M;PHRD $3.30 M Component 3 i s designed to both develop the capacity o f the tourism sector (government, communities and the private sector) to participate inthe preparation and implementation of tourism master plans for key tourism districts. This component will support MITUR to establish a comprehensive and clearly defined set o f procedures to implement an A-Z process for land concessioning, from land identification to on the ground investment. It will also support MITUR to implement legislation allowing them to `recuperate' land allocated for tourism investmentwhere the investment period has expired so that this land can be marketed to appropriate investors. Component 3 i s divided in two subcomponents: (1) Unlocking opportunities for sustainable tourism investment and growth; (2) Community-led conservation and tourism development. Subcomponent 3.1. will support building capacity through MITUR in DINATUR, DPC, FUTUR, ECDA and targeted private sector and community associations to develop and implement; (1) tourism plans in the target TFCAs, (2) business development and financing, (3) the collection o f tourism statistics and data, (4) strengthened capacity for licensing, inspection and grading, (5) the implementation o f the DTMPs. Subcomponent3.2. will support to communities through (1) Land demarcation; (2) a Community Enterprise Fund for organized communities to either proceed with the creation and management o f community reserves in interstitial areas or enter into joint venture partnerships with private investors for tourism or conservation related investments such as creation of game ranches, lodges, etc.,; (3) the participatory and compensation process to improved natural resource management and land acquisition. Component 4: Protected Areas management ($16.64M); IDA: $8.46M; GEF: $5.27 M;PPF and AWF: $2.20 M This component will support the identification, monitoring and protection of the most significant and vulnerable biodiversity assets within the three TFCAs, through the establishmenthehabilitation and management o f a network o f National Parks and Reserves under the direct management o f DNAC. This will begina long-term process o f major improvement of the Maputo Special Reserve, including gazetting the Futi corridor and a new marine reserve; support to Banhine National Park and the Chimanimani Special Reserve. Modest support will be provided to Limpopo National Park, to supplement current Peace Park Foundation (PPF), KfW & AFD efforts, and to Zinave National Park. 7  Component 4 i s divided in two subcomponents: (4.1) Capacity building and applied research; and (4.2) Biodiversity conservation in formal protected areas. Under Subcomponent 4.1., (a) DNAC's capacity will be reinforced; and (2) survey, inventories, conservation priority setting and applied research will be carried out. For targeted parks or reserves, Subcomponent 4.2. includes: (a) improvement o f park design and planning; (b) increasing the area under protection; (c) building or rehabilitating essential infrastructure;, (d) procurement o f essential equipment required for management; (e) deployment and capacity building o f staff; (0 improvement o f communication and information, (g) launching effective law enforcement; (h) carrying out research, monitoring and evaluation, and (i) increasing the PAS'revenue generation capacity. Component 5: Project Management, Communications, and Monitoring and Evaluation ($4.90M) - IDA: $4.68M; PHRD $0.22A4 This component will finance the project management costs including project procurement, accounting and monitoring as describe by their respective manuals. It will strengthen the capacity o f the TFCA Unit to coordinate TFCA program, and will support its related operating costs. This includes recruiting a few additional long-term staff for the Unit, including TFCA Coordinators based in the field in order to support the shifting o f planning and implementation to the Provincial and local level. The component includes the implementation o f an M&E system to track and assess project implementation and impacts, and a system for adaptive management based on this information; and the development and implementation o f an information system and a communications strategy to ensure timely flow o f accurate information among the implementing agencies, and to increase awareness and understanding about ecosystem management and TFCAs nationally, regionally and worldwide. 4. Lessons learned and reflectedin the project design The project design has drawn upon experience and lessons learned during the first phase project (TFCA Pilot and Institutional Strengthening), as identified by the Implementation Completion Report (ICR) prepared in March 2004, and from many existing efforts in southern Africa and worldwide to achieve synergy between biodiversity conservation and economic development through community-oriented, nature-based tourism and other types o f sustainable use o f biodiversity. For a detailed analysis o f lessons learned duringphase 1, including a summary o f the ICR's lessons, see Annex 19. These lessons have been incorporated into the TFCATDP design. The economic benefits o f tourism development, and its linkage with conservation, are placed at the forefront, with support from all stakeholders. The IDDPs which will be prepared to address the issues o f proper planning for tourism development, and will be carried out under the leadership o f Provincial and District governments. Institutional and implementation capacity developed under the first phase project will be utilized, and built upon with a considerable investment in technical assistance, training and institutionalreform. 8  The project now focuses on a manageable set o f priority sites, based on the core objective o f stimulating sustainable tourism development. Institutional analyses carried out during project preparation clarify the institutional structure for implementation and the strengths and weaknesses o f the different actors. Realistic targets and specific capacity building requirements were identified. The project includes early interventions to alleviate the regulatory and capacity constraints and perverse incentives that are presently limiting private sector investment, while at the same time taking immediate measures to ensure that communities are recognized as valued partners in tourism development instead of being displaced by it. The project time frame has been extended for capacity buildingto precede activities such as the IDDPs and community initiatives. Specific additions to existing technical and implementation capacity include long term advisors to facilitate private sector partnerships (including development o f transparent and effective concessioning procedures at both national and decentralized levels), on-the-ground coordinators to support decentralized government bodies and NGOs, and an M&E coordinator. The first phase project tried but failed to support a broad community-based natural resource management (CBNRM) program, due in part to a lack of implementation capacity and in part to poorly focused objectives and unrealistic expectations. The TFCATDP adopted a more focused approach targeting only activities that directly support conservation and tourism objectives. It will also offer alternative types o f incentives for communities to support conservation in areas which have high biodiversity value but low eco-tourism potential. Activities in the first 1-2 years of the project will emphasize policy and legal reform and institutional and individual capacity building, such as training IDDP coordinators and preparing stakeholders to participate in the IDDP process; mobilizing and organizing communities to be able to enter into business partnerships; strengthening basic tourism literacy and business skills at the community level; and restructuring D N A C to be more efficient and work more effectively with community, private sector and other partners. The issue o f people inparks i s being addressed up front through a Process Framework and a Policy Framework as well as through policy development inComponent 1 (sees Section on Critical Risks and Possible Controversial Issues, below). Assurances have been sought from the Government who has registeredthe core principle o f the Process Frameworks into a Letter o f Sectoral Policy (see Annex 16). 5. Alternatives considered and reasons for rejection The main alternatives considered were: (1) having no follow-up to the first phase TFCA project; (2) project limited to policy and capacity building, (3) a simple sectoral approach, such as a traditional conservation project, a conventional C B N R M program for the non-protected areas o f the TFCAs, or a tourism sector support program; and (4) a multisectoralproject covering five TFCAs. No project option - The option o f having no follow-up to the first phase project was rejectedbecause the TFCA concept remains valid and important for national, regional and global objectives, the groundwork that has been laid justifies continuation, and phase 1 results were not yet sustainable. The Bank acknowledged from the beginning that achieving these objectives would require a long-term commitment, given the capacity limitations and other conditions in Mozambique and the inherent 9  complexities o f the TFCA model. GOM commitment, judged to be weak at the beginning o f the program, has grown, and many elements o f an enabling environment for TFCAs have been put in place. This commitment needs to be supported and nurtured, and it would have the opposite effect if the WB and GEF discontinued support. Policy and capacity building option - This i s a valid option, however, it i s hard to justify involvement in the conservation and tourism sector without justifying both biodiversity and tourism outcome. In addition, the various entities have already started to build capacity and the policy framework i s already improving. In conservation, it i s always better to accompany policy changes and capacity building with field work bothto deliver results and buildexperience. Traditional sector project - The option o f a simpler, sectoral approach would not be consistent with the core principles and objectives o f the TFCA model. The project has therefore been designed as a multi-sectoral operation. The inherent risk o f the more complex approach i s reduced by focusing on a limited set o f objectives and activities, and by the fact that the lead agency (the TFCA Unit) has gained implementation experience through the first project and has a clear mandate and established mechanisms for coordinating the sectoral players within the TFCAs. Multisector project with comprehensive coverage The alternative o f a larger project, - covering five instead of three TFCAs, was rejected because project resources would have been spread too thinly, and because capacity o f the TFCA Unit and other actors i s considered not ready to take on additional areas at this stage. This includes shifting responsibility and support for planning and implementation to the Provincial and District levels, supporting communities to establish joint ventures with private sector partners, and coordinating biodiversity conservation inside and outside PAS. Hence, the project i s becoming increasingly complex involving several different institutional sectors, multiple disciplines and different levels with corresponding increase in the number o f players. The opportunity to undertake TBCA projects in ZIMOZA and Niassa i s important, however, and should be seized before other developments close this window. Other donors are encouraged to pick up on the planning done for these areas duringpreparation. C. IMPLEMENTATION 1. Partnershiparrangements Partnership among different levels o f government, communities and the private sector i s at the heart o f the TFCATDP. Each of these partners will have specific responsibilities and contributions to make in the implementation and adaptive management o f the project, and each will receive support to be able to fulfill these responsibilitieseffectively. The project will be co-financed by IDA, Japan (PHRD Grant) and GEF, with parallel financing by other partners. A number o f other donors and partners are supporting programs and activities that complement the project (see Annex 2). This includes not only multilateral and bilateral donors and international NGOs, but also private 10  companies investing in the interstitial areas. The TFCA program serves as a conceptual umbrella for these activities. The project will collaborate closely with complementary initiatives such as IFC's SEATIP and the Small- and Medium-sized Enterprise (SME) project which will provide a source o f financing for companies interestedininvesting intourism. The project also complements a number o f Bank-financed and other initiatives which support TFCA objectives either directly or indirectly (see Annex 2). For example, Component 2, on IDDP, will both draw upon and continue capacity building in MICOA, in Ministry o f Planning and Development (MPD), which have been supported by WB and DANIDA over the past several years. Component 3 will supplement WB support to tourism statistics under PODE and other by modernizing and building the capacity o f the MITUR. The project will also coordinate with several existing or proposed GEF-financed projects are supporting biodiversity conservation objectives at the regional level in southern Africa (e.g. the Regional Southern Africa Biodiversity Support Program (2000), the Africa Community outreach program for conservation and sustainable use o f biological resources (1999); and a regional program for integrated management o f dryland biodiversity through land rehabilitation inMozambique/Zambia/Zimbabwe. 2. Institutionaland implementation arrangements Project Location - The TFCA processes are well underway in the Greater Limpopo and Chimanimani TFCAs, whereas in the Lubombo TFCA international protocols have been signed, but the degree o f complex and multifarious interventions in this area have delayed focused and concerted action. These three TFCAs will continue to be supported under the Project. Inthese TFCAs, the project will be implemented in7 to 9 districts o f 4 Provinces: Ihambane (Vilankulo District), Maputo (Matutuine District), Manica (Sussudenga District), and Gaza (priority 1: Chicualacuala, Massingir, Mabote, Massangena; priority 2: Chigubo, Mabacane). In the 3 TFCAs, the protected areas targeted are Chimanimani Special Reserve, Maputo Special Reserve, Limpopo NP, Banhine NP, and Zinave NP. In addition, the beach tourism towns of Vilankulo and Ponto do Oro will see their infrastructure environment improved. During the Jirst phase TFCA project, the Government established the TFCA Unit within MITUR to coordinate the management and administration o f TFCAs, for both conservation and sustainable development. This institutional level commitment the GOM's recognition that multi-sectoral coordination in TFCAs is an integral and ongoing requirement. In this role, the TFCA Unit will continue serve as the lead implementing agency for the TFCATDP. The TFCATDP phase 2 oversights are with the Commission for Tourism Facilitation (CTF), acting as Steering Committee. MITUR, which chairs the CTF, is responsible for the project. Coordination o f the overall project i s vested to the TFCA Unit. Implementation o f each component i s in turn vested in each o f their "lead agencies" as per the diagram below. Each lead agency will work with a set o f main partners according to their functions and role in the GOM. For example, even though the Directorate for National Planning & Budget (Portuguese acronym DNPO) is the lead agency for the IDDP, SEA will fall under MICOA and tourism planning under 11  DINATUR. The TFCA Unit and the lead agencies together form the Project Management Team. Each component will prepare its annual work plans and budget, its annual report and handle collection and analysis o f M&E data required by/for their component. The TFCA Unit will act as a service agency by managing all funds and centralizing procurement. It will also centralize M&E information and produce the consolidated annual report. Commissionfor Tourism Facilitation Ministryof Tourism C1.TFCA C2. c3. c4. C5. TFCA Unit DNPMP DINATUR DNAC Unit The Project's financial management i s strengthened by the following features: The first phase project was implemented by the TFCA Unit within the Ministryof Tourism, which is subject to this assessment. However, the project was operating inweak financial management environment. Recently, an accountingpackage was installed at TFCA Unit. The project financial management i s weakened by the following salient features: At the Project level Projects take a "ring-fenced" approach to ensure funds are used as per the objectives agreed on for Project implementation; At the country-wide Level Delays and insufficient allocation o f counterpart funds; Financial management in Mozambique i s weak. There are pieces o f the puzzle missing, such as a comprehensive and up-to-date set o f Procedures Manuals for government budgeting and accounting that includes Project financial management procedures; uniform application throughout the government o f systems for financial management and budgetary execution; and information systems sophisticated enough to produce timely and accurate information for reporting and control purposes; and Weak internal and external audit system. The weaknesses identified are addressed inthe financial management action plan. Internal audit Internal auditing across the entire Government (including projects) i s the responsibility o f the Inspectorate General o f Finance (InspecqCo Geral das Finanqas- IGF), but it has limited capacity to oversee project implementation. Taking into account that the internal audit functions are weak, there needs to be strong supervision 12  and quality assurance in the project. The day-to-day supervision o f accounting functions will be assured by the organization structure o f TFCA Unit. External audit Relevantly qualified, experienced and independent auditors will be appointed on approved terms o f reference. The external audit will cover all World Bank, GEF, and Counterpart fhds in the project. The Legal Agreements will require the submission of audited financial statements to the Bank within six months after the year-end. The formats to be adopted will be documented inthe Financial Procedures Manual. A single opinion on the Audited Project Financial Statements in compliance with International Standards on Auditing (IASs), will be required including the accuracy and the propriety o f expenditures made under the SOE procedures and the extent to which these can be relied upon as basis for credit disbursements. In addition to the audit report, the auditor will be requiredto prepare a separate Management Letter. Disbursement Arrangements Disbursements from IDA, GEF, and PHRD would be initially be made on the basis o f incurred eligible expenditures (transaction based disbursements). The TFCA Unit will open three Special Accounts for the deposit o f funds transferred from the IDA credit Account, GEF Grants, and the PHRD Grant. The TFCA Unit will make payments o f eligible project expenditures from the Special Accounts to suppliers. And, direct payments can also used by the TFCA Unit for project expenditures above 20% o f the respective Special Accounts allocations. Special Accounts - With respect banking arrangement, for IDA, GEF, PHRD and Government funding, the TFCA Unit will maintain four bank accounts: (a) three Special Accounts in U S Dollars at a commercial bank acceptable to IDA for deposit o f funds transferred from IDA, GEF, and PHRD, and (b) Project Account in Meticais at a commercial bank acceptable to IDA for deposit o f Government funds. The authorized allocation will be for IDA US$ 1million for GEF US$ 0.5 million and for the PHRD grant US$ 200,000 representing about four months o f eligible expenditures. Statement of expenditures (SOEs) - Disbursementswill be made on the basis o f SOEs for contracts with an individual valued less than those requiring IDA'Sprior review. Thus, all applications to withdraw proceeds from the credit account will be fully documented, except for expenditures for contracts with an estimated value o f less than US$ 200.000 each for works, and goods; (a) expenditures for consultant's services with an estimated value o f less than US$ 100.000 each for firms and US$30.000 for individuals; (b) training, studies and operating costs. Details on implementation arrangements are providedinAnnex 6 and 7. 13  3. Monitoring and evaluation of outcomedresults An M&EManual has been developed. Sufficient resourceshave been allocatedinthe project budget to implement it. The M&E plan will address both project implementation and impacts, and will identify key indicators, targets and responsibilities for data collection (see Annex 3, including the addendum on arrangements for results monitoring, for further details). To ensure that M&E i s carried out effectively and provides useful ongoing input for project implementation, a full-time M&E specialist will be placed within the TFCA Unit to coordinate the implementation of the M&E plan. Collection and analysis o f data on biodiversity impacts will be the primary responsibility o f lead agencies, and will be carried out in collaboration with local Universities, NGOs and others engaged in conservation activities in the TFCA areas, including local communities. In accordance with the recommendations o f the I C R for the first phase project, an approved M&E manual i s a condition o f effectiveness. Implementation o f the plan will be assessed after the first year and during the Midterm Review, to enable corrective measures to be taken. Sustainability and replicability Sustainability Environmental and economic sustainability are the cornerstones o f the - project's objectives and design. Environmental sustainability will derive from the IDDP process which is at the heart o f the project, and which begins with a SEA. In addition, the project will support both regulations and incentives (and the capacity to implement them), aimed at ensuring that tourism development within the TFCAs i s environmentally and socially sound. The IDDP also contributes to sustainability o f the biodiversity conservation aspects o f the project, because it stresses a multiple-use, landscape management approach with appropriate zoning that seeks to balance conservation and development objectives. The emphasis i s on sustainable use o f natural resources, rather than protection and exclusion (except within the core PAS), which i s regarded as politically and practically unsustainable, given Mozambique's urgent need for economic development and poverty reduction. Financial sustainability i s based on the strong prospects for continued growth o f the tourism sector in Mozambique, which has experienced a 10-15 percent annual increase between 1995-2001 (400,000 tourist arrivals in 2001), and in southern Africa overall (annual arrivals projected to increase at 7.8 percent annually over the next few years, reaching 30.5 million by 2020). Tourism i s now the third largest sector for investments in the country. The TFCAs and the two targeted beach districts have particularly high prospects because nature-based and sustainable coastal tourism are expected to be the largest growth area in the coming decades: 60 percent o f South Africa's 6 million tourists now visit protected areas each year, producing revenues o f US$ 2.5 billion. This i s reflected inGOM's tourism policy and strategic development (SPTDM), which emphasize development o f sustainable tourism in natural areas. It specifically highlights the potential o f the TFCAs as priority areas for tourism product and market development. The linkage between conservation and tourism-based development inthese areas i s further emphasized by the fact that the TFCA Unit and DNAC have been placed within the Ministry o f Tourism. GOM i s committed to tourism as a key sector for economic growth, and has designed the TFCATDP to be a core instrument for implementing the SPTDM. This provides a basis for institutional 14  sustainability o f the project. (See Annex 1 for further details on the tourism sector in Mozambique). The private sector-led approach focusing on the business environment under the project will also help to ensure economic and financial sustainability o f tourism investments, as only viable enterprises will be attractive to private investors. Subsidies will only be provided to help meet the incremental costs o f carrying out activities for biodiversity conservation, social empowerment and participation, and will be provided to the community partners rather than the investors. Investments within the PAS are also aimed at enhancing long-term financial sustainability, by improving management efficiency and promoting revenue-earning through tourism. The project will promote institutional sustainability and local ownership and empowennent, through capacity building and decentralized implementation. At the national level the project will support revision of the regulatory framework necessary for carrying out the TFCA program and the reorganization and strengthening o f concerned institutions. Replicability - The TFCAs represent pilots for other Priority Areas for Tourism Investment (PATIs). Lessons learned and experience gained through the project will be applied to tourism development in the other areas, including the environmentally- based IDDPs and mechanisms to encourage and facilitate private sector investment, private-community joint ventures and public-private. The IDDPs, in particular, are expected to become the core instrument for land use and development planning, even to the extent o f becoming legal instruments required as a prerequisite for public and private sector investment. It i s expected that the Community Equity Grant Facility (CEF) will attract additional funding from other sources, which will make it possible to expand its coverage beyond the project area. The policy, regulatory and institutional reforms achieved and the capacity built within the Ministry o f Tourism and other sectoral agencies both nationally and at the Provincial and District levels, and within decentralized administrations, will create a better environment for environmentally and socially sustainable tourism on a national level, beyond the end o f the project. Similarly, the new approaches to P A management introduced under the project (particularly the involvement o f communities, NGOs and private partners) are expected to be adopted in other PAS in the country as a result o f the project's demonstration effect, institutional restructuring and capacity building. Many elements of the project are expected to be replicable elsewhere in southern Africa. This includes administrative and technical mechanisms for biodiversity conservation through ecosystem management and transfrontier natural resource management; the IDDP as an instrument for decision making and planning at the local level and for integrating local and broader objectives and interests; and the promotion o f market- driven, environmentally sustainable tourism through community/ private sector partnerships. Valuable lessons (on transfrontier conservation, IDDP and ecosystem management, community/private sector partnership) that emerge from the project and from the overall TFCA program overall, will also be disseminated regionally and world wide through the communications strategy (Component 5), which will include a website and other outreach activities. 15  4. Critical risks and possible controversial aspects Risks RiskMitigation Measures RiskRating with Mitigation To project development objective Tourism developmentmight The project includesmeasuresto prevent M displace local peoplerather displacementand impoverishmentof local people, than involving andbenefiting including: (i)triggering of the Bank's'OP/BP4.12 them relatedto Involuntary Displacement;(ii) use of the IDDP to identify and support local priorities; (iii) the demarcationand registration of community landas aprerequisiteto bringing in external investment; and (iv) supportand incentivesfor equitablecommunityiprivate sector partnerships. Resettlementcosts are budgetedfor 300 families if they choose to move out ofprotectedareas. Tourism development,ifnot The IDDP is based on strategic environmental M well plannedand regulatedcan assessments; also, the project will strengthen cause environmentaldamage planning and regulatory capacityat national and decentralizedlevels. Investorswill have to prepare investmentandmanagementplansinwhich environmentalprotection measuresare identified and spelt out. Improvementsachievedunder Basic restructuring of DNAC to support M the project in formal protected institutional and policyreforms; direct support and areas are not sustained due to incentivesto encouragepartnerships;measuresto financial and other constraints increaserevenuegenerationwithin and around PAS. ~~To component results ~ Insufficient Government The project supports tourism development, which N ownership or political support GOM has identified as a primary sector for for reform agenda. economic growth; project has been explicitly designedto support GOM's own tourism policy, strategy and action plan; also support decentralizationpolicy which has strongpolitical commitment Tourism sites inTFCA may Major tourism developmentis expected only in M not be attractive or developed three sites where bush-beachlinkagesare enough to attractinvestors identified: Matutuine District in Lubombo TFCA, Limpopo National Park in Great Limpopo TFCA and Vilankulo District linkedto Limpopo TFCA. These are brandedas the "Great Africa Routes" and, in addition to this project's support will receive supportthrough IFC-supportedSEATIP. Insufficient capacityto carry Projectwill draw upon pilots alreadyunderway out IDDP and other innovative (WB coastalzone and district planning projects), activities. and will provide substantial up-front training and capacitybuildingprior to launching IDDP process onthe ground, as well as short and longterm TA. Tourism concessionsare Inthe Letter of Sector Policy, the Government awardedwithout transparency commits to increasedtransparencyin dealing with and for purpose others than tourism concessions and regularly publishesthe list that ofthe tourism plans. of concessions andnew concessions. The Bank will monitor these publications. Privatesector responseto Closeconsultationwith the private sector during M policy reforms and incentives project preparationand implementation, to identify 16  provided through the project is the main obstacles from their perspective(e.g. less than expected, resulting in basic infrastructure,lack of transparency in low levels of investment concessioning, capacityconstraintsto partnership and/or lack of private sector/ with communities,etc.); Community Enterprise community partnerships Fundwill enhance communities' attractivenessas investmentpartners. Complexity of multi-sectoral The existing TFCA unit has project implementation approach may cause delays in experience and establishedmechanismsfor inter- implementation sectoralcoordination; emphasis on implementation at decentralized/locallevels where there is typically better cross-sectoralcoordination: Disbursement Complexity of projects, with four componentstrustedto various implementing agencies and partnersto separate lead agencies slows perform within their existing mandates and spheres down implementation. of responsibility: DNPO for the IDDP; MITUR for facilitating tourism investmentand development, DNAC for PA management; and DNFFB for naturalresourcemanagementoutside PAS. ~ Weakness inpublic sector A qualified Accountant with experience inpublic S accountingprofession sector financial managementwill be appointedfor this project Weakness inthe budgetary This project will be inscribedinthe government's S process budget and its executionwill follow government procedures. It is also financed 100%TTC and therefore requiresno counterpart funding. Controversial issues - The controversial issue of the status and rights of people currently residing inside vulnerable core PASare addressed in a Process Framework and a Resettlement Policy Framework that were prepared as part o f project preparation, and in a Letter of Sector Policy from the GOM (see attached in Annex 16). GMO has demonstrated its interest in finding positive approaches to the problem. 5. Credit conditions and covenants Effectiveness There are no anticipated, nonstandard conditions for Board presentation or effectiveness. Standard conditions are: 0 The Cofinancing Agreements with AWF and PPF; 0 the TFCAU's financial management software functions in form and substance satisfactory to the Bank; 0 the TFCAU has retained: (i) procurement clerk and one short tern one procurement consultant for the TFCA Unit, (ii) project accountants, (iii) three a assistant accountant for the TFCA Unit,(iv) an accountant for the regional office of Xai-Xai, and (v) an accountant for the regional office o f Chimoio; 0 the TFCAU has compiled a short list o f external auditors, with qualifications and underterms of reference satisfactoryto the Bank; 0 the Borrower has adopted in form and substance satisfactory to the Association, (i)the Project Implementation Plan, (ii)Financial Procedure Manual, (iii) the Procurement Manual, (iv) the Monitoring and Evaluation Manual, (v) the CEF 17  Manual, and (vi) the Annual Work Plan for the first year of Project implementation Legal Covenants Financial covenants are the standard ones as stated in Article IV (including single opinion) of the Development Credit Agreement and Project Agreement. 18  D. APPRAISAL SUMMARY 1. Economic and financial analyses The macroeconomic situation intourism in2015 i s estimated as below. Scenario Gross Contri- Direct Local Total Annual 2015 Forex bution Employment Incomes Employment Capital US$m ToGDP% No U S $ m No Investment 1 Low 180 1.5 45,000 145 120,000 30 US$m 2 Middle 290 2.4 60,000 230 195,000 55 US$ m 3 High 440 3.4 75,000 330 275,000 85 US$ m Under the low scenario (continuing as we are now), there i s growth in the industry, contributing 1.5% to GDP compared to 1.2% now, but there i s 50+ % under- performance. It could contribute 3.4%. The above figures apply to the impact o f the inbound tourism expenditure. I t does not include for domestic tourism. The TFCATDP would provide an additional capital investmentinthe order of US$34 million. This investment i s being put into improving the conservation o f the environment and ecology associated with the planning for tourism. As indicated previously, the returns from such investment will accrue not only through future charges that can be secured from both tourists (say, bednight taxes) and from the tourism industry (say, through concession fees for sites), but also through the higher prices that can be charged by the tourism operators, thus making them more profitable. The future scale of the tourism industry in Mozambique, where in ten years time it i s possible to be talking about inbound tourist expenditureapproaching US$ 300 million per year (in a middle scenario) to US$ 450 million per year (in a highscenario), would suggest that a supplemental investmentof US$ 36 million ina key initiative that will underpin chargeable tariffs and Government revenues is not `out o f kilter' with the potential. 2. Technical No activity with significantly high technical input is planned under TFCATDP. The IDDP i s an innovative process that can require new technology such as satellite images analysis, computer modeling o f conservation hotspots. Ecological monitoring can also call upon new technology such as GPS for animal tracking and statistical analysis. Veterinary monitoring also requires up to date technology. All of these will be contracted out to universities or specialized institutes. Finally, none o f the infrastructure built require new technology. It i s anticipated that engineering and architecture studies will be carried out by experts found inMozambique. 3. Fiduciary Financial management The TFCA Unit subject to this assessment was responsible for handling fiduciary aspects (Financial Management and Procurement) of closed Transfrontier Conservation Areas Pilot and Institutional Strengthening hnded by a GEF Grant. It 19  should be noted that this assessment i s carried out inthe context o f this project being a phase 2 project as follow-on to the previous project which i s referred to in this document as phase I.The TFCA Unit i s currently, handling the fiduciary aspects o f the PPF and Trust Fund, which are supporting activities related to preparation o f proposed TFCATDP. The auditors raised major matters o f deficiencies in the system o f internal controll other accountability issues in the Auditor's repodmanagement letter during the implementation o f previous phase I project. During the supervision missions, the Bank concluded that significant shortcomings in the financial management were jeopardizing the capacity to provide timely and reliable information required to manage and monitor the project. The following shortcomings indicated that project's FM arrangements were not at a satisfactory level: several significant deficiencies in the system o f internal control and accountability have been reported in recent audit reports; inadequate budget system; delays and insufficient allocation o f counterpart funds; and periodic reports were not produced on regular and timely basis. Also the overall conclusion o f the Country Financial Accountability Assessment (CFAA) dated December, 2001 is that `>public sector financial management systems in Mozambique are very weak, as evidenced by the Report of the Tribunal Administrativo of the Government General Accounts Reportfor 1998 and 1999, and will require substantial strengthening over several years. In the interim, risk of waste, diversion and misuse of funds are assessed as high. The public sector financial environment in Mozambique denotes a situation of high fiduciary risk: material receipts and payments are excluded from the budget and from Government accounting and reporting system; accounting systems and standards are outmoded; internal and external auditing require substantial support; and parliamentary oversight requires strengthening, , .Efforts have been made in recent years to reduce thefiduciary risk through (among other measures) the strengthening of the internal audit capacity of the IAD, and the creation of external audit capacity within the AT. Both of these efforts (as well as others) need to be intensij?ed, because there is still a lot of work to be done in this area." The Public Financial Management Assessment conducted by Scanteam5 in September 2004 concludes that "Overall P F M Risk in Mozambique remains High. Management of the economy has been quite satisfactory, but comprehensiveness and transparency of the budget is poor, the medium-term planning and budgeting is weak, while budget execution and accounting and reportingpresent quite serious weaknesses. The area of greatest concern, however, is external audit and accountability. At the same time, PFM reforms are moving ahead in a very structured and comprehensive manner. The trend in PFM is therefore seen as quite positive, where successful implementation of the new financial management information system SISTAFE is intended to address many of the current weaknesses". Fourteendonorsand funding institutions(commonlyreferredto as the "G14"), givingdirect budget support to Mozambiquerequesteda Public FinancialManagementassessment (PFM).The principal objectiveofthis PFMAssessmentis thus to providethe Governmentof Mozambiqueand donors with an updatedassessment of the situationandtrends with respectto Fiduciary Riskin Mozambique.The PFMassessmentwas undertaken asjoint exercise betweenthe Ministryof Planningand Finance, and a tern of consultants (Scanteam). 20  A short-term Financial Management Consultant was contracted with PPF funds to develop the Financial Procedures Manual. The Financial Procedures Manual will document the FM arrangements, covering financial policies and procedures, accounting and internal control system, financial reporting, flow o f funds and auditing arrangements. The first draft o f the Manual was presented to the TFCA Unit and it was reviewed by Bank Financial Management staff. The comments for the improvement o f it were shared with the TFCA Unit team and the consultant. The Financial Procedures Manual will be finalized before credit effectiveness. The contract o f the accountant, which handled the Financial Management issues duringthefirst phase o f the project, was terminated inMarch 2005. The TFCA Unit will appoint a new Financial Controller and Assistant Accountant. The recruitment of a Financial Controller i s inprocess. The overall conclusion o f the financial management assessment i s that the TFCA Unit operates in a weak environment in terms o f financial management arrangements. In order to establish an acceptable control environment and to mitigate financial management risks, the measures indicated inthe financial management action plan (in paragraph 16) should be taken before credit effectiveness. By credit effectiveness, the project will not be ready for report-based disbursements. Thus, at the initial stage, transaction-based disbursement procedures, as described in the World Bank Disbursement Handbook, will be followed Le. direct payments, reimbursement, and special commitments. However, subsequent to project implementation, as soon as the borrower has acquired sufficient capacity, they may request conversion to report-based disbursements. The Bank will then review the TFCA Ucapacity before authorizing the conversion. Procurement The TFCA Unit has a procurement specialist who has produced the 18-month action plan according to the Bank's standard format. The Unit's capacity will need strengthening, through procurement training, at least for the first two years o f implementation. One additional procurement officer will be recruited. When needed, the TFCA Unit will seek short-term assistance to develop bidding proposals. Moreover, additional record keeping equipment and adequate premises will be provided to enable the procurement unit to operate properly. 4. Social The project was prepared and will be implemented under a participatory framework where all stakeholders, inparticular the local communities, play a central role. From the beginning, the participatory process identifies local priorities through local stakeholder workshops and consultation meetings to produce SEASand spatial zoning plans. The IDDP formulation process will result in comprehensive development strategies for each TFCA. IDDP implementation will involve the establishment and management o f multi-use conservation areas (including formal and informal core PAS, appropriate buffer and support areas); and the initiation o f economic alternatives (environmentally sustainable tourism development, co-management, private sector 21  partnerships in community based tourism etc.) to unsustainable, destructive use o f natural resources by local communities. Further, a community strategy will be a key tool for creating awareness, for consensus building, for generating participation in processes o f change and development, for making informed decisions and for resolving conflicts. At the community level, the communication strategy will focus on the needs to ensure access to information for all local stakeholder groups; and to strengthen the ability o f all stakeholders to articulate and disseminate information, and make their own informed decisions. It i s expected that the communities will feel empowered and will effectively and gradually develop an ownership inthe TFCA development programs. The project includes a significant nature tourism component focusing on gradually involving local communities in co-management o f PAS as well as promotion o f business partnerships to obtain direct concrete benefits from tourism initiatives in the PAS and buffer zones. The project will also support the improvement o f the communities' livelihood and the resilience o f the vulnerable groups. This will involve programs with focus on capacity building (inparticular acquisition o f income generating skills, leadership and community planning skills), reproductive health awareness raising, institutional development, and, to the extent feasible, development o f priority community services and infrastructure. 5. Environment The project will not trigger major land use changes or habitat transformation, but rather mitigate ongoing habitat transformation and coastal land unplanned development. Without the project, the coming years will see infrastructure and private sector development in certain areas which could lead to the expansion o f tourism nodes, population increase, and in-migration. These trends are already being observed in certain coastal areas. The challenge will be to ensure that the project induces positive change, and encourages sustainable pro-poor and environmentally- friendly tourism. The project i s given a Category B rating because o f the potentially negative local impact o f some o f the infrastructures the project will finance. The project i s designed to provide a framework for an environmentally sound planning process called the IDDP. Extensive public consultation processes considered essential to underpin participatory planning for ecosystem management will be triggered through the IDDP. This process i s described in detail in the Environmental and Social Management Framework (ESMF). According to the ESMF, all investments financed by the project will be subject to individual environmental assessments. 6. Safeguard policies Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.0 1) [XI [ I Natural Habitats (OP/BP 4.04) [XI [ I Pest Management (OP 4.09) [I [XI Cultural Property (OPN 11.03, being revised as OP 4.1 1) [I [XI Involuntary Resettlement (OP/BP 4.12) [XI [ I Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I [XI 22  Forests (OP/BP 4.36) [XI [I Safety o f Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP/GP 7.60)* [ I [XI Projects on International Waterways (OP/BP/GP 7.50) [I [XI The TFCATDP focuses on conservation and sustainable use o f Mozambique's immense natural habitat estate. It seeks institutionalizing ecosystem management, and mainstreaming it into development planning processes. As such it i s expected to have significant environmental and social benefits relative to a no-project situation. The project also has the objective o f promoting environmentally sustainable tourism and other sustainable land uses such as game farming. The project will operate in the context o f a highly dynamic socio-economic and political landscape. GOM i s keen to promote private sector investment and i s also responsible for a sizable public sector investment program, so the project will require adaptable experiential learning processes rather than blueprints. OP4.01 i s triggered because o f the potential impact o f some local infrastructure--such as tracks, fencing, housing, offices, lodges in formal PAS, outside PASand on the coastline--on the environment. OP4.40 on Natural Habitat and OP4.36 o n Forest are triggered even though the project i s expected to have significant positive impact on the country natural habitat and forest. Still, with the economic development triggered by the project and, some o f the infrastructure built, there may be negative impact locally. Infrastructure which will be identified as part o f the IDDP will be built in Ponto do Oro and Vilankulo to increase these towns' basic facilities and make them attractive to tourism investors. The impact o f such construction will need to be monitored. Still, the project i s not expected to induce major or irreversible negative impacts. The development o f Mozambique's coastline and interior i s expected, whether or not the project is implemented. The project i s intended to mitigate that environmental and social impact by providing a framework for promoting sustainable development, through an ecosystem management approach: the IDDP. The ESMF proposes the IDDP has process to identify and avoid, or mitigate, negative impact o f individual project investments. OP/BP 4.12 related to Involuntary Resettlement and Land Acquisition: Two major factors have led to the triggering o f OP/BP 4.12. The first factor i s the restrictions and the incompatibility o f local communities' livelihoods activities with the objectives o f the TFCAs and PAS. TFCATDP in protecting the natural environment and supporting biodiversity conservation and natural resource management in the TFCAs include the establishment o f boundaries, the potential for establishing new PAS,and the development o f regulations, criteria, procedures and institutional structures for planning, management and development. These imply the restriction o f access to natural resources by the local communities inside the PASand inbuffer zones. Communities living inTFCA interstitial areas are also potentially affected insofar as these multi-resource use areas will be included in zoning and development plans for sustainable resource use that may include liBy supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties` claims on the disputed areas 23  community-based informal P A creation. To avoid such a negative effect on the population and avoid unnecessary conflicts, a Process Framework has been commissioned and completed. The purpose o f the framework i s to describe the process by which potentially affected communities will participate in resource planning and management. Once developed, an Action Plan should become part o f the natural resources management plan. The second factor that contributed to the triggering o f OP/BP 4.12 i s the objective to promote and link conservation and nature tourism activities to community participation and access to direct and indirect benefits, as well as to encourage communities' land delimitation to strengthen their rights bases. The growth o f nature tourism activities may require land acquisition to build infrastructure, and buildings. The project may also cause displacement o f people from their homes and areas as a result o f the threat o f wildlife. Because presently, the location, nature and scope o f possible land acquisition and displacement are not yet known, a Policy Framework (PF), as a mitigation measure, has been completed. The PF establishes the policy principles to be used for the development o f specific RAPs. During project implementation, when the details o f land acquisition and involuntary resettlement are filly known, Resettlement Action Plan(s) (RAPs) will be defined, prepared, and implemented. Burial and sacred sites will be protected and documented and recorded inthe management plans and the RAPs. 7. Policy Exceptions and Readiness Policy exceptions - There i s no policy exception under this project. The Government policies, not adopted yet but declared as a matter o f principle by the Government, in anticipation to policies to be adopted during the project time, are listed inthe Letter o f Sectoral Policy (see annex 17) Readinessfor implementation - The Bank appraised the draft PIPS,Financial manual, M&Emanuals and draft procurementplan. Revisions insome o fthe documents have been requested and are now conditions o f effectiveness (page 17). The ESMF, RPF and PF have been approved and have been disclosed. The project disbursement schedule has been designed with a significant capacity building phase inmind. Slow disbursement i s expected in year 1 and 2 with gradual increase in year 3 to 7 as capacity i s built and the impact or earlier reforms (e.g. the protected area management reform) are felt. 24  Annex 1: Countryand Sector or ProgramBackground MOZAMBIQUE: TransfrontierConservationAreas and TourismDevelopment Project EconomicDevelopmentinMozambique At the end o f the conflict in 1992, Mozambique was listed as the poorest country in the world. The country then experienced a relatively high rate o f economic growth, averaging 8.5% annually (annual GDP per capita growth averaging 6%) between 1995 and 2002. The benefits o f this growth have been mainly concentrated in and around Maputo and some other urban areas. Rural areas, where most Mozambicans live (71%), continue to be affected by extreme poverty. The key challenge that Mozambique faces i s to maintain highlevels o f growth while distributingthe benefits more evenly to the economically marginalized people and areas o f the country. Mozambique's strategy for poverty reduction (PARPA6)for 2001-2005 identifies the need for promoting sustainable and environmentally sound economic development. The PARPA recognizes tourism as having the potential to provide employment to help alleviate poverty in rural areas. Tourism creates a highlevel o f employment per dollar o f investment and expands the demand for other local goods and services, creating opportunities for new sources o f income for rural communities. The 2003 Country Assistance Strategy (CAS) for Mozambique also recognizes the importance o f tourism development for Mozambique, with significant potential to bring economic opportunities and reduce poverty. The CAS therefore includes support by the World Bank Group (WBG) to assist the government to implement its national framework for sustainable tourism and environmental management. An important element o f this framework i s tourism development and biodiversity conservation in transfrontier areas, which i s supported by the Transfrontier Conservation Areas (TFCA) program. The TFCA approach will be complementedby a program to promote private sector investment in tourism (IFC's SEATIP7). The CAS stresses the need to prevent degradation o f natural resources and promote sustainable development. Key elements in achieving these goals include decentralization and local empowerment, improved governance, increased public sector capacity to deliver services, and support for the private sector. Therefore, the WBG will support institutional development and capacity building at both national and decentralized levels, strengthening o f policy and regulatory frameworks, and capacity building and other mechanisms to ensure that communities participate inand benefit from natural resource management. Specific reference i s made to territorial zoning, spatial planning, and land-titling and facilitating land demarcation for communities prior to awarding o f development concessions to private sector for tourism or other activities. Finally, the CAS identifies the need to improve the business climate and create an enabling environment for private sector investments in tourism and other enterprises, by increasing transparency and addressing regulatory and other barriers. 'PlanoEast de apio para a redyca'o da pobreza South Africa TourismInvestmentProgram 25  BiodiversityConservationinMozambique,andthe Importanceof Transfrontier ConservationAreas Mozambique signed the Convention on Biological Diversity in 1992, and ratified it in 1995. Mozambique lies within the Zambezian biogeographic region, a zone recognized for its remarkably high biodiversity, including 22 distinct habitats. Mozambique itself i s characterized by a wide diversity o f ecosystems including mountainous, woodland, wetland and coastal/marine. The country's extensive coastline (2,700 km) i s considered unique in the East African marine region in terms o f the quality, diversity and species richness o f its habitats. These natural assets are globally important from a biodiversity perspective and are valuable resources through which Mozambique can develop a sustainable tourism industry. Some biodiversity rich areas in Mozambique are currently under threat resulting from poorly managed and unsustainable use o f their natural resources (timber logging, charcoal making, poaching, over fishing, overgrazing, subsistence and commercial hunting, etc.), and from environmentally unsustainable development (including agriculture expansion, industrial development, mining, plantation forestry, human settlements, and poorly planned tourism development etc.). While local populations inrural areas (particularly where agricultural productivity is low) are very dependent on biodiversity and natural resources to fulfill their daily survival needs and to provide income, acute threats often arise as a result o f unplanned or unsuitable commercial exploitation or development. There i s a lack o f appropriate institutional structures, capacity and incentives for planning and management o f land and natural resource use, including biodiversity conservation. Lack o f transparency and a largely ad hoc approach to the granting o f large-scale agriculture, tourism, huntingand other natural resource-related concessions threaten the sustainability o f development in these areas. The benefits of investments associated with these concessions are largely being captured by narrow interests, and local communities are often excluded from decision-making and gaining little benefits. However, the GOM fully recognizes these problems and i s seeking ways of addressing them through better planning, establishing community rights through land demarcation, and the development o f environmentally sound economic alternatives. Much o f the richest and best preserved biodiversity and natural habitat in Mozambique (and southern Africa in general) i s located in areas adjacent to national borders, in many cases contiguous with terrestrial and/or marine protected areas and well established nature tourism sites in the neighboring countries. Preservation o f habitats and ecological linkages, such as migration corridors and watercourses, on both sides of the borders provides a unique opportunity to protect large, intact ecosystems that span a wide range o f altitudes and climatic zones. Ecosystem services such as water catchments are also crucial, as demand for water increases in the region, and the frequency o f extreme weather events also increases. This is recognized as essential for effective long-term biodiversity conservation, particularly inview ofanticipatedimpactsofclimate change inthe future. As a result, the establishment o f Transfrontier Conservation Areas (TFCAs) has become a top priority in national and international strategies for sustainable biodiversity conservation in southern Africa, including that o f Mozambique. In addition to the opportunity to preserve large scale ecosystems and ecological linkages, 26  the TFCAs often contain specific biodiversity "hot spots." For example, the Chimanimani massif (within the Chimanimani TFCA) and the Maputaland area o f plant diversity (within the Lubombo TFCA) have been identified by the GOM and globally as priority biodiversity areas because o f their high levels o f species endemism. The Lubombo TFCA also includes coastal areas important for the conservation o f coral reefs and threatened turtle nesting grounds. The existing Limpopo TFCA and Lubombo TFCAs are important for maintaining transfrontier movements o f wildlife, while the coastal and near-shore portion o f the proposed Lubombo TFCA i s equally significant for transfrontier breeding and movements o f ' fish stocks. The Mozambique National Biodiversity Strategy and Action Plan (NBSAP) highlight the biodiversity importance o f these TFCAs and the need for Mozambique to participate in coordinated regional initiatives and bilateral agreements for conserving them. It also endorses many aspects o f the specific model for TFCA management that has been developed under the first phase o f the WB/GEF-supported TFCA program. These include: the involvement o f local communities and other stakeholders in the management o f Protected Areas (PAS); protection o f natural habitats both inside and adjacent to PAS; integrated management planning, and the integration o f conservation and sustainable use o fbiodiversity into sectoral and cross-sectoral plans, programs and policies; inter-sectoral planning, management and monitoring for conservation and sustainable use o f coastal and marine biodiversity; community-based sustainable use o f biodiversity and recognize, document and promote the use of traditional knowledge systems o f importance to the conservationo f biodiversity; and promotion o f tourism development that contributes to conservation and sustainable use o f biodiversity, particularly through equitable partnerships between the private sector and local communities (including, explicitly review and updating o f legislation relating to the rights o f local communities to acquire rights over their land and resources). Tourism in SouthernAfrica and Mozambique Tourism i s one o f the fastest growing economic sectors worldwide. Global tourism arrivals reached 692 million in2001, with a 5.5% annual increase forecast for the next decade. Southern Africa accounted for approximate 1.6% o f the total in 2001 (10.7 million arrivals), with a projected annual increase o f 7.8% over the next few years, reaching some 30.5 million by 20208. Within the international tourism industry, all trends point to exclusive, nature-based and sustainable coastal tourism as being an important growth area in the coming decades. Sixty percent o f South Africa's 6 million tourists (representing $2.5 billion in annual tourist revenues) already visit protected areas. Nature-based and coastal tourism are also areas in which many African countries, including Mozambique, have the greatest comparative advantage, due to their natural endowments and to the relatively l o w extent o f environmentally * Figures ~~ ~ ~ from World Tourism Organization 27  destructive mass tourism to date. Despite these advantages, Africa's overall share o f the global tourism market remains low (increased by only 1 percent over the past 15 years) due to constraints that hinder private sector investment, such as inadequate infrastructure, poorly defined and non-transparent regulation, and a lack o f planning. The tourism industry has become increasingly competitive as more and more countries recognize its potential and take measures to attract and encourage development. Without a comprehensive approach to address these constraints, African countries will be hard pressed to benefit from the estimated $2 trillion global tourist receipts expected in2020. The tourism industry i s also experiencing rapid growth in Mozambique (10-15 % annual increase in arrivals between 1995 and 2001; 400,000 tourist arrivals in 2001). Tourism i s now the third largest sector for investment inthe country. Recognizing the growing importance o f the sector for the national economy and poverty alleviation, the GOM created a separate Ministry for tourism in 2001. In addition to the overall economic promise o f tourism development, many o f the areas with greatest tourism potential are located in some o f the poorest provinces o f the country, where agricultural potential i s lowest, where opportunities for other types o f income generation are limited and where conservation-based tourism i s one o f the few potential sources o f growth. The GOM therefore promotes the development o f pro- poor tourism in these areas as a unique opportunity to improve the livelihoods o f the local communities. The GOMrecognizes that Mozambique's comparative advantages lies inits relatively untouched/intact environment, and i s strategically focusing on sustainable tourism that contributes to the conservation o f natural areas. Mozambique can also benefit from its prime geographical location, particularly its proximity to the rapidly expanding local and international tourism market in South Africa, and the potential for highly marketable "bush and beach" circuits linkinginland wildlife areas with the coast. The three TFCAs are strategically located from this perspective'. The GOM understands the urgent need to protect and capture the advantages o f these natural assets, preventing the onset o f irreversible change through inappropriate and unsustainable tourism development or other uses. Its marine parks, including Bazaruto, the Quirimbas, are also a major tourism asset. Existing constraints to tourism development in Mozambique include poor infrastructure and access to many high potential areas, the lack o f institutional capacity to plan and manage tourism development and integrate it with other development plans and priorities, a poor business climate and the absence o f marketing and a creative approach to product development. Inasmuch as people have greater access to information than ever before (including websites that focus on Mozambique), the industry must be agile in recognizing travel trends and responding with products that differentiate them from other countries' offerings and, crucially, add value. It i s increasingly recognized that tourism generates backward and forward linkages that must be approached broadly in the context o f a national framework and that the tourism sector alone cannot alone achieve these. The GOM therefore envisions a cross-sectoral approach inwhich sustainable tourism i s integrated into the LubomboTFCA, Great LimpopoTFCA, Chimanimani TFCA, ZimozaTFCA, andNiassa-Cab0 DelgadoTFCA. 28  country's overall policies and economic and physical planning processes. In short, tourism i s to some degree everyone's business. The guiding framework for tourism development is in Mozambique has been established inthe GOM's Tourism Policy and Implementation Strategy (2003) and its Strategic Plan for Tourism Development in Mozambique (2004-2008) (SPTDM). As stated in these core documents, the objectives of the tourism policy are: to develop and position the country as a world-class tourism destination; to contribute to employment creation, economic growth and poverty alleviation; and to develop a sustainable tourism which will contribute to biodiversity and cultural conservation. A new tourism law has been adopted and provides the framework for building a solid regulatory framework The SPDTM defines priority products and target markets, and identifies priority areas for tourism investment (PATIs) and routes and circuits linking them. The three TFCAs to be supported under the TFCATDP are identified as PATIs inwhich conservation-based tourism is regarded as the leaddevelopment opportunity. The SPDTM emphasizes private sector involvement as the key driving force for tourism development, with community participation as a high priority, and with the Government having the role of creating the enabling institutional, legal and business environment to attract suitable investors. It also calls for a strategic and integrated development planning process (IDDP) to be undertakenwithin each PAT1as the basis for sustainable tourism and other development. The TFCA SupportProgram The proposed TFCATDP represents the second phase of a support program (the TFCA Program) for Mozambique, which i s expected to last approximately 15 years. The long-term objectives o f the TFCA Program are: (i)the conservation o f biodiversity and natural ecosystems within a number o f large Transfrontier Conservation Areas (TFCAs); and (ii)economic development within these areas based on sustainable use of their natural resources by local communities. The term "Transfrontier" underscores the essential element o f international collaboration to manage and develop shared resources. "Conservation Areas" denotes multiple use areas that encompass a range o f land uses, including traditional national parks and other filly protected areas, various types of informal and formal reserves where some types of economic utilization are restricted, community based natural resource management areas, and private concessions for tourism and hunting. The TFCA thus represents a departure from the previous concept o f a Transfrontier Park, and reflects the GOM's policy that biodiversity and natural resources must be both conserved and sustainably used for the benefit o f local communities and national economic development. While the TFCAs span national boundaries, the Mozambique TFCA program i s a national program supporting the GOM's participation ininternational agreements and committees aimed at coordinating activities across the national borders, and on-the- ground activities in the portions o f the TFCAs within Mozambique. This i s complemented by an active TFCA program in South Africa, which i s strongly supported by the Government and NGOs, and several smaller scale initiatives in Swaziland, Zambia and Zimbabwe. Regular international meetings and committees at both political and technical levels provide the mechanisms for developing and 29  implementing specific agreements and protocols to promote transfrontier conservation, natural resource management and tourism. The first phase of the program was supported by the fully GEF-financed ($5 million) Transfrontier Conservation Areas Pilot and Institutional Strengthening project (1998- 2003) (TFCAPISP). It was developed in the context of a growing interest in large scale (including transfrontier) spatial development initiatives (SDI) within the southern African region, which aim to stimulate private sector investment in underdeveloped areas by creating development nodes linked by transport corridors. The TFCA approach shared the SDI principles o f transfrontier linkages and cross- sectoral planning, but placed a stronger emphasis on environmental sustainability, ecosystem management and biodiversity conservation. The TFCAPISP was meant to launch the TFCA concept, and designed to provide a learning experience for Government agencies, NGOs, rural communities and the private sector on both sides o f international boundaries, and set the stage for much more significant investments in the future. Some o f the principal achievements o f the project include: international agreements creating three TFCAs (Limpopo, Chimanimani and Lubombo), and one o f the world's largest PAS (the Greater Limpopo Transfrontier Park); the creation o f important institutional structures including the TFCA Unit within the Ministry o f Tourism, and the Elephant Coast Development Authority (in the Matutuine District, within the Lubombo TFCA); updating and strengthening o f the national policy, strategy and development plan for tourism, as well as policies and institutions relating to wildlife and other natural resource management; and improved management o f core protected areas within the three TFCAs. As the TFCA Program i s not a formal Adaptable Program Loan (APL), no specific targets were established to trigger the move from the first phase project to the second phase. However, sufficient progress was made and lessons learned from the pilot activities to justify moving into an implementationphase. While these achievements provided an enabling context, the TFCAs remain somewhat intangible on the ground, lacking boundaries, legal designation, and institutional structures and procedures for land use planning and management o f natural resources". Outside the core PAS, their ecological integrity and biodiversity value are threatened by unsustainable use of their natural resources (timber logging and fuelwood/charcoal collection, poaching, fishing, overgrazing, subsistence and commercial hunting), and by land use and development (e.g., agricultural expansion, mining, plantation forestry, human settlements, industrial development and tourism development) which i s in many cases ecologically inappropriate, economically inefficient, and/or carried out in environmentally unsustainable or socially inequitable ways. The granting o f concessions and licenses for tourism, hunting or large scale agricultural or industrial development i s largely ad hoc and often non- transparent, with little the benefit from these investments rarely reaching local communities. The TFCATDP, which will be financed by both GEF and IDA, will support the second phase o f the program, which involves implementing the TFCA concept on the loOnly the formal PASwithin the TFCAs are legally designated, under thejurisdiction of the Departmentof Nature Conservation(DNAC) 30  ground. The project aims to further strengthen biodiversity conservation and natural resource management in the TFCAs, while demonstrating that sustainable tourism development can provide both economic alternatives to unsustainable use and an incentive for protecting and managing biodiversity resources. The main mechanism for achieving these objectives will be the preparation and implementation of Integrated Development Plans (IDDPs), which will provide the framework for planning and investment in sustainable development within the TFCAs (see next section). This includes both private sector investment in tourism and related enterprises, and public sector investment (e.g. priority infrastructure) needed to create a favorable environment for this tourism development. The second phase o f the project will continue to support implementation of the same three TFCAs. Inkeeping with the Government's decentralization policies and widely accepted principles for natural resource management, the focus for planning and implementation (and associated institutional development and capacity building), will now shift mainly to the provincial district and local levels. At the same time, national and regional stakeholders and priorities must continue to be included, in order to ensure that the larger scale ecological systems and linkages that underlie the TFCA concept are maintained. The third phase o f the TFCA program i s expected to support the replication and scaling up of approaches and models developed and tested duringthe first two phases. It will also emphasize integration with other national and regional tourism development initiatives such as the roposed sector-wide program for the tourism sector in Mozambique (PROTUSC ) the IFC SEATIP, and the NEPAD-based I: OUZIT'* initiative, which are presently at early stages o f development but are expected to represent an important mechanism for partnership and expansion in the future. By the end o f the program, it is expected that environmentally sustainable, socially beneficial tourism will be well established as a major economic activity and integrating force within the region, with Mozambique playing an important role and realizing substantial benefits. "Programapara TurismoSustentavel eConsewacao ''Okavango Upper-ZambeziInternationalTourism 31  Annex 2: M a j o r Related Projects Financed by the Bank and/or Other Agencies MOZAMBIQUE: Transfrontier Conservation Areas and Tourism Development Project The first phase Transfrontier ConservationAreas Pilot and Institutional Strengthening project (TFCAPIS), 1997-2003, pioneered the TFCA concept in Mozambique. With Ford Foundation support, it pioneered community tourism in the Chimanimani TFCA. Within the next few years, a number o f complementaryinitiatives were developed. This included a large program for transfrontier natural resource management under the U S A I D Regional Center for Southern Africa (RCSA)'s Initiative for Southern Africa (2000- 2004). Two o f the four focus areas o f the U S A I D program included areas within Mozambique: the Greater Limpopo TFCA (formerly "Gaza-Kruger- Gonarezhou" TFCA) and the proposed ZIMOZA TFCA13 area in the mid-Zambezi basin, which includes Zumbo and Magoe Districts in Mozambique. The U S A I D program, implemented through a number o f NGOs and contractors (African Wildlife Foundation, IUCN, Impacto, Development Alternatives Inc, etc.) aimed to promote cooperation in the conservation and management o f transfrontier biodiversity and natural resources. Among the activities supported were the development o f a CBNRM program (Tchuma Tchato) on the Mozambique side o f the ZIMOZA area, and community land demarcation and land use planning in several areas within the Limpopo TFCA as well as preparation o f management plans for Zinave and Banhine National Parks. The RCSA i s not active anymore in Mozambique, but there will be a new $4 million tourism-development USAID tourism project as well as other tourism- related investment through a $150 million U S government's Millennium Challenge Account funding. Both are exclusively targeting northern Mozambique including the Cab0 Delgado-Niassa TFCA. Other conservation and tourism related activities in the TFCAs in Mozambique include a project o f the KFWI4 and AFD supporting management o f the Limpopo National Park (LNP) and surrounding areas with technical assistance from the Peace Parks Foundation (PPF), The KFW/AFD/PPF program provides technical and financial assistance to DNAC for park management, including the creation o f a fenced wildlife sanctuary within the LNP as a first step to restocking wildlife in this area on the border with Kmger National Park. The TFCATDP will complement AFD and KfW support by enabling communities inand around the park to access the CEF and byproviding$500,000 for investment inthe park. The Niassa Special Reserve i s managedby a private company (Sociedade de Gestao e Desenvolvimento da Resewa da Niassa), in partnership with the NGO Fauna and Flora International, with additional contributions from U S A I D (Regional Center for Southern Africa), the U.S. State Department and the World Wildlife FundlNonvay. Among other activities, the Niassa program has supported biological and community surveys and scout training and i s inthe process o f developing a management plan and establishing a small tourist camp. l3the name derives from ZIMbabwelMOzambiqueiZAmbia l4German Cooperation : KfW Kreditanstalt fur Wiederaufbau, AFD FrenchAgency for Development 32  The GOM has entered into agreement with the Greg C a n Foundation for establishing a specific autonomous private-public partnership institution for the management of the Gorongoza National Park. This arrangement i s currently piloted for a one-year trial test. The ZIMOZA TFCA i s being developed with assistance from AWF who has leveraged funding from Holland and USAID. AWF has also approached the FFEM (French GEF). Inaddition to these activities specifically focused within TFCAs, there are a number o f other projects that support biodiversity conservation and/or nature-based tourism development in Mozambique, including regional projects that encompass Mozambique. These include several GEF-funded projects that are recently completed, ongoing or under preparation. The Southern Africa Biodiversity Support Program (UNDP) i s implemented by SADC (Forestry Sector Coordination Unit) with technical assistance from WCN. It aims to promote the conservation and sustainable use o f biological diversity in Southern Africa by strengthening regional biodiversity planning and information exchange. This i s an important element o f cooperation for management of TFCAs. The project will draw upon it for baseline data, monitoring methods, and as a means of disseminatingresults to the nine other member countries o f the SABSP. The integrated district development planning process will incorporate strategic tourism planning in the interstitial areas o f the TFCA's and into the decentralized planning frameworks as provided by the two distinct planning processes that have been taking place in Mozambique. These are the Spatial Development Plans (SDP) process being implemented through the GEF/IDA supported Coastal and Marine Biodiversity Management Project (CMBMP) and the District Development Plans (DDP) being implemented under the IDA supported Decentralized Planning and Finance Project (DPFP) which forms part o f the GOM's DecentralizationProgram. The TFCATDP will draw upon and further strengthen the capacity that is being built for IDDP under the Coastal and Marine Biodiversity Management Project (WB). The two projects operate in different areas, but share objectives o f supporting biodiversity conservation linked with tourism investment. A relevant project in the GEF pipeline i s the regional project for Reduction o f Environmental Impact from Coastal Tourism through Introduction o f Policy Changes and Strengthening Public-Private Partnerships (UNEP - International Waters window). The regional project aims to reduce the negative impacts o f tourism on coastal and marine environments, through promoting appropriate policies and strategies, capacity buildingand supporting pilot projects in several African countries. Like the TFCATDP, it would emphasize private sector involvement and public/private partnerships. Other important tourism related initiatives include the IFC's Southeastern Africa Tourism Investment Program (SEATIP) and the Okavango and Upper Zambezi Tourism initiative (OUZIT) (a program proposed under the auspices o f the Southern African Development Community and the New Partnership for African Development, 33  inwhich the Development Bank of southern Africa has coordinated activities) which aim to develop the integrated regional tourism routes and markets that will be key to successful tourism development inMozambique. Demarcation and registration o f community lands i s an essential element o f the strategy to ensure that tourism development benefits and involves local communities. DFID has been active in supporting implementation o f this aspect o f the land law, in collaboration with provincial government services responsible for land rights registration and a local NGO (ORAM), through the land tenure component o f its ZambCzia Agricultural Development Project (ZADP). The ZADP closed in2003, but DFID is inthe process o f preparing a follow-up operation which is likely to establish a funding mechanism to support community land demarcation. DFID has also supported implementation o f the land law through a land component within the sector investment program (PROAGRI) o f the Ministry o f Agriculture and Rural Development (MADER). In the realm of tourism development, the project supplements the WB Enterprise Development Project (PODE). The PODE already supports the MITUR up to mid- 2006. This includes the design o f a statistical system, the drafting o f most regulations o f the Tourism L a w and the reclassification o f hotels and lodges as well as some office equipment. PODE phase 2, whose preparation will begin in late 2005, intends to continue in its second phase. In addition, the TFCAs must be seen within the context o f a broader trend towards large scale spatial development planning (SDI), many o f them involving transfrontier elements, being promoted in southern Africa by regional institutions (Southern Africa Development Community; Development Bank for Southern Africa) and national governments. For example, South Africa has made a substantial commitment to SDIs, including some involving Mozambique (e.g., Maputo Corridor SDI; Lubombo SDI; Mtwara Corridor). There i s considerable geographical overlap between the TFCAs and some o f these SDIs. The objective behind SDIs is to focus political and financial support on areas where socio-economic conditions require concentrated assistance, and where there i s under-utilized potential. The basic model involves identification of target sites for mainly public and private sector investment (development nodes), and linking them through transport corridors. While not inherently aimed at tourism or conservation, many o f the SDIs have in fact focused on nature-based tourism as an appropriate area for investment and development in areas, such as some o f the TFCAs, which have limited agricultural or industrial development potential. Inthese cases, where the TFCAs and SDIs have common objectives, there i s considerable scope for synergy, particularly as the SDIs usually enjoy strong high- level political support. However, where development envisioned and promoted through SDIs may be incompatible with the objectives o f TFCAs, this needs to be recognizedand addressed through the IDDP process. 34  Annex 3: Resultsand MonitoringFramework MOZAMBIQUE: Transfrontier ConservationAreas and TourismDevelopment Project PDO/Global Outcome Indicators Use of ResultsInformation Environmental Objective PDO:Growth in ' I . Numbers of local residentsemployed. . - Iftourism developmentand community-private formally and informally, inconservation employment numbers do not increase, sector led & tourism intarget districts= 3500; it could indicatethe project has not environmentally and 2. Number of visitors andbed-nightsin created sufficient or appropriate incentives, or not effectively identified socially sustainable tourism facilities inthe target districts = or addressedthe main obstaclesto tourism inTFCAs 100,000; 3. %tourism ventures (in area where a investment. District Tourism Master Plans (DTMP) is adopted) in conformity with such Ifby the endofthe project thereare a GEO:Increase the DTMP = 80. significant number of tourism area, connectivity, & 4. Amount of new private tourism or operationswithin the TFCA that do effectiveness of conservation-relatedinvestment not meetthe environmental and social biodiversity leveragedasjoint-venture with criteria, it could signal a lack of Conservation in communitiesintarget districts = $2 commitment to the IDDP process and TFCAs. millions principles, or an ineffective regulatory 5. Amount oftotal annualrevenues framework. generatedby targetedformal PAS= $850 000 (MSR 180, BNP 40, LNP 500, Ifareas managedfor biodiversity ZNP 10, CSR 20, Z 100) conservationwithin TFCAs do not 6. Km2of new priority areas formally increase, it could indicate that short- designated & managedfor biodiversity mediumterm incentives for conservation= 3400 (Lubombo 1400, community/private conservationare Limpopo 2000); insufficient to compete successfully 7. % increase inbioindicator species (2 against other land uses. speciedarea) informal PAS= 10(MSR, BNP, CNR); 20 (LNP) 8. % of area with agriculture, habitation or incomuatible land use inall areas zoned for biddiversity conservation< 10. Intermediate ResultsIndicators for Use o f OutcomeMonitoring outputs eachComponent One per Component Component 1: Component 1: Component 1: StrengtheningPolicy, 9. # of national framework instrument Ifthenecessaryinternational Legal & Institutional developed& approved(national agreementsare not signedinatimely Frameworkfor TFCAs policylstrategyhpdated fashion, or if supporting conservation 1awiConservation& wildlife policy and legislation are not put in Output 1:An enabling regulationsiTourism regulations)= 5; place, it would indicate either environmentfor 10. Degree of establishmentof the new continuing institutional problems or a effectivehstainable conservationmanagement institution or lack of political commitment to TFCA managementof PPP as definedinthe policy & law as objectives biodiversity is measuredby point systemI5= 25 out of Ifnational conservationpolicy isnot established 35 possible; approvedand/or legislation i s not 11. # international ageementsitreaties& updated, it may reflect a lack of additional technical protocols for TFCA Governmentcapacityor commitment managementsigned=4 IfDNACdoesnotmeetthe identified targets for institutional development Decree creates the institution or possibility of PPPs (Spts), institutions' boardadopts bylaws andprocedures(Spts), institutions possessasuitable fiduciary management system (Spts), key managementstaffare recruited (Spts), PPP are established(1 pt per PN Totalpossible10pts), staffhaveallreceivedjob adaptationtraining (Spts): Total 35 pts. 35  during life of the project. Component2: Component2: Component 2: Integrateddistrict 12. # of DDP preparedwith IDDP process Ifat least 2 IDDPs are not approved development planning that are endorsedat district andprovince by year 3, it could indicatethat (IDDP) levels = 2; institutional capacity constraints and 13. InMatutuine district, % of new other obstacles were underestimated Output 2: IDP legally developmentactivities (other than Iflocal administrations do not follow established & inuse as tourism-related), which, as per national the macro-zoning plans, it will the basis for environmentallegislation require an indicate that the IDDP process was development in 5 EIA, comply with such legislation & poorly designedor implementedin TFCAs. with the DDP = 80. that it failed to achieve consensusand ownershipby key stakeholders 8 Ifdevelopmentoccursthat is not consistentwith approvedIDDPs, it could indicate that: (i)IDDP is not an effectiveiappropriate instrumentin this context; (ii) educationand more outreachto stakeholderson IDDP objectives and management principles is needed; or (iii)capacityto implement IDDPs is lacking. Component 3: Component3: Component3: Community & Private 14. # of DTMP preparedin conformity with ffcommunity landinpriority tourism Sector-ledConservation regional tourism and conservation areas is not demarcatedandregistered & Tourism overlays = 4 for the communities, it could indicate Development 15. % ofnew tourism concessions in either inadequatecapacity targeteddistricts that conform with new (DINAGECA and NGOs), or Output3: The guidelinesfor tending concession= 80; interferenceby vestedinterests investmentclimate for 16. aggregate# bed of new tourism Ifthere is littleincreaseintourism environmentally & operations in targeteddistricts that are in development indicators, it could socially appropriate conformity with TMPs = 1480; indicate that incentives were tourism inTFCAs has 17. # of community organizationintargeted inadequateand/or constraintsto the improved districts that are engagedinconservation business environment were not or tourism activity in conformity with effectively addressed; TMPs = 20; Iftourism developmentoccursbut 18. YOincrease in investor satisfactionin with little community participation, it targeteddistricts = 50. could meanthat communities aren't being supportedsufficiently (legally, financially, technically). Iffew CCiCBNRMactivities are initiated it could indicate that DNACNGO capacity to supportthem i s inadequate, or that incentivesneed to be strengthened. Component4: Component 4: Component4: Biodiversity 19. Change of ManagementEffectiveness16 IfMPs arenot being implemented conservation& score for parks & reserves: Maputo SR satisfactorily, it could indicate that protectedarea (33, 78), Banhine(31, 69), Zinave (24, measuresto strengthencapacity of management 49), Chimanimani (36, 71), Maputo DNAC at field level are inadequate. Marine (I,36), Limpopo (43, 72). IfCCiCBNRMinitiatives do notmeet Output 4: The 20. # of existing protectedareas that have the criteria indicated, it could reflect managementof existing developed,adoptedand are applying a ineffective implementation and/or & new areaszoned in performance-basedmanagementsystem monitoring of this component, TFCAs for biodiversity and prepareda businessplan = 3 out of 5 particularly inrelation to micro- conservationhas possible; project design significantly improved. 2 1. YOplannedand budgetedinfrastructure Ifpopulation of(depleted)target completedintargetedformal PAS= 80. species does not increaseat the proposedrate, it could indicate l6Management Effectiveness score asper WWF/WB Tracking tool 36  ineffective PA managementand protection, and/or or a failure in community extensionactivities. Component 5: Component 5: Component 5: Project Management, 22. % of activities inannual work plans Consistentunderachievementof work Monitoring, & completedeach year = 80; plantargetscould indicatethe project Communications 23. % ofproject outcomes/outputs indicators i s too ambitious in relation to updatedaccordinglyto schedule+ institutional/implementationcapacity Output 5: Project incorporatedinmanagement decision= Ifannualwork plansdonot implementation i s 100; incorporateinformation from M&E efficient & well 24. # of hits on website >10,000 at year 2 & system, it could indicate indicators coordinated,with good increasingby 25% every year after. are impractical or M&E system is internal & external poorly implemented; information flow. Ifthere is littlecoverageofTFCAs in local or international media, or information provided is inaccurate,it would indicate communications/outreachactivities needto be improved 37  Addendumto Annex 3: Arrangementsfor ResultsMonitoring An M&E Manual has been developed. Sufficient resources have been allocated in the project budget to implement it. The M&E Manual addresses both project implementation and impacts, and identifies key indicators, targets and responsibilities for data collection. For biodiversity conservation impacts, the M&E Manual focuses on the increase o f total priority areas brought under conservation management, and specific features o f global biodiversity significance ineach target TFCA. Complex processes such as the IDDPs are broken down into steps. Baseline data, such as the number o f tourist beds presently occupied, total areas protected for biodiversity conservation, identification and assessments o f indicator species, and effectiveness o f current P A management have been collected duringproject preparation, with data gaps to be filled, and targets to be refined during the first year of the project. Final targets reflect realistic assessments o f the potential for growth and improvement. Targets for increases in populations and distribution o f indicator species i s conservatively based on experiences with growing population far from carrying capacity and still subjected to harvests. To ensure that M&E i s carried out effectively and provides useful ongoing input for project implementation, a full-time M&E specialist will be placed within the TFCA Unit to coordinate the implementation o f the M&E plan. Collection and analysis o f data on biodiversity impacts will be the primary responsibility o f lead agencies, and will be carried out in collaboration with local Universities, NGOs and others engaged in conservation activities inthe TFCA areas, including local communities. The Head o f the TFCA Unit will be responsible for ensuring that the results o f the ongoing M&E are discussed with the implementingagencies and other stakeholders, are incorporated inthe annual work plans and progress reports, and are used to support adaptive management and ongoing improvement o fproject implementation. In accordance with the recommendations o f the ICR for the first phase project, an approved M&E Manual i s a condition o f effectiveness. Implementation o f the plan will be assessed by a specialist after the first year and during the Midterm Review, to enable corrective measures to be taken ifneeded. The following pages present the M&E framework for the project. Baselines, targets and monitoring arrangements to be completed at Project Appraisal as some o f the data are currently beingcollected 38  3I:% g4 E O 0 0 8 3 3 2 N - 0 0 9 % E CI 0 0 w 8 0 0 2 0 0 z I 2 0 0 m d 0 0 8 I 0 0 0 m W 8 8 0 0 N 0 z 0 I 0 0 3 -- 0 z 0 I 0 0 3  0 2n Y 8 .3 Cc bn + E 4 .3 d 0 B 8 0 & P 8x 0 W f  0to f 0hl m 0 N m 0 m vl hl 0 0 3 b z 0 I I 0 0 I t I 0 0 - I 0 I if m N  0 2 0 2 0 2 N d  Annex 4: Detailedprojectdescription MOZAMBIQUE: TransfrontierConservationAreas and TourismDevelopment Project The proposed project represents the second phase o f a support program (the TFCA Program) for Mozambique, which i s expected to last approximately 15 years. The long- term objectives o f the TFCA Program are: (1) the conservation o f biodiversity and natural ecosystems within a number o f large Transfrontier ConservationAreas (TFCAs), and (2) economic development within these areas based on sustainable use of their natural resources by local communities andprivate sector. The three TFCAs that collectively encompass the target area for this project" are also believed to contain sites with good potential for nature-based tourism development. They have been identified as Priority Areas for Tourism Development (PATI's) in the Mozambique Strategic Plan for Tourism Development. There i s already considerable investor activity and interest in some o f the prime sites. The tourism development and conservation objectives are intended to be synergistic. However, in order for the development to be environmentally sustainable and to contribute to local livelihoods and economic development, it must be planned and monitored, and the incentive and regulatory frameworks must support and favor responsible tourism and discourage exploitative tourism. The TFCATDP strategic choices are: (1) legal designation o f TFCAs, including establishment o f regulations, criteria, procedures and institutional structures for planning, management and development); (2) the preparation and implementation o f a locally-led Integrated District Development Plan (IDDPs) in each TFCA, to provide an environmentally sustainable framework for land use planning, natural resource management and development investment within the TFCAs; (3) the development o f environmentally sound and socially progressive nature tourism (emphasizing community/private sector partnership), and directly related economic activities, in areas with high tourism potential as identified in the IDDPs; and (4) improving the effectiveness o f the PA networks within the TFCAs by: (a) improving the management capacity o f the National Directorate for Conservation Areas (DNAC), (b) expanding or creating new formal PAS, and rehabilitatinglconstructing key protected area infrastructure, and (c) supporting the establishment o f community reserves and conservation areas ("informal PAS") in key areas outside the formal PAS(e.g. corridors, dispersal areas, cultural sites, etc.). The TFCATDP i s implementedin 5 components: . . Component 1 : Strengthening the Policy, Legal and Institutional Framework for TFCAs Component 2 : IntegratedDistrict Development Planning Component 3 : Community and Private Sector-led Tourism Development Greater Limpopo TFCA; Lebombo TFCA, and Chimanimani TFCA are already declared through formal agreements; Zimoza TFCA will be declared shortly; Niassa-Cab0 Delgado TFCA i s at an early stage o f identification 43  . Component 4 : Protected Areas management Component 5 : Project Management, Communications, and Monitoring and Evaluation As a general rule in all components, IDA will finance activities with potential national benefits and economic retum while GEF will fund activities with potential global benefits, inparticular on biodiversity. The PHRD grant will finance technical assistance, studies, workshop and training for to component 2 and 3. PROJECT COMPONENTS Component 1: StrengtheningPolicy,Legal and InstitutionalFrameworkfor TFCAs ($1.15 M) IDA: $0.50 M;GEF: $0.65 M - Financing rule: Training and operating costs financed by IDA All consultant services , financed by GEF. Building on the achievements o f the first phase project, this component will further strengthen the enabling environment for implementation o f TFCAs. It will enable the G O M to continue and improve regional collaboration for protection and management o f unique transfrontier resources, promote interagency collaboration and vertical linkages between central and decentralized government levels, and build the capacity o f public sector institutions (particularly at Provincial and District level) and communities to manage biodiversity and natural resources, and to form productive partnerships with the private sector. Community land and natural resource ownership and use rights will also be addressed. This component focuses on policy, legal framework and institutional structures, while Components 3 and 4 address other aspects o f institutional capacity building, such as capital investment,training and operational support. The TFCATDP will finance consultation, workshops, and study tours, as well as the cost of producing, publishingand disseminating information materials available to all on the project (1) a national conservation policy, (2) legal framework for TFCA, protected area and wildlife, (3) guidelines for tendering conservation concessions, (4) the protected area and wildlife institutional reform, (5) the regulation o f the new tourism law, (6) guideline for tenderingtourism concessions, (7) four transfrontier agreements. Specific activities supported by the project include. Activity 1 - Development of a national conservation strategy andpolicy Mozambique currently has no national conservation policy, and the legislation for PA and wildlife management needs to be updated. The law recognizes only four categories o f PAS: National Parks, National Reserves, zones o f historical and cultures use, and HuntingBlocks (coutadas). This does not cover the diversity o f categories called for in modem conservation approaches. Human residence inside N P s and N R s i s prohibited, making the legal status o f the thousands o f people presently living inside these areas 44  unclear. The Government has made a commitment to address this issue in a positive, consultative manner, but has not yet articulated a clear policy and approach. There i s also no policy or legal framework defining or regulating the management o f TFCAs, beyond general statements o f their conservation and sustainable development objectives ininternational agreements. For example, existing TFCAs do not have clear boundaries, and the institutional responsibilities for managing their land and resources i s often unclear. This lack o f clarity has negative implications both for biodiversity conservation and for attracting responsible tourism investment. For example, the procedures and criteria for awarding concessions to private investors for development o f tourism or other activities are unclear and often non-transparent (in TFCAs, as elsewhere in the country). Other important issues that need to be addressed involve policies and regulatory safeguards for restocking o f wildlife inside and outside PAS, and empowering communities to establish their own legally recognized conservation areas, with clear objectives andregulations and the ability to restrict access by other users. The project will support development o f a national conservation policy, and review and o f relevant legislation, to provide the framework needed to support the development and management o f TFCAs in particular, and Conservation areas and initiatives in general. This includes the review and update o f other policies and legislationthat bears on TFCA objectives and management, such as those relating to community land and resource ownership and use rights. Activity 2 -Drafting new law and regulationfor wildlife, protected areas and TFCAs The project will finance the drafting o f a new legislation that covers above identified shortcomings and meet the new policy expectations. This includes putting inplace legal mechanisms for establishing community reserves and conservation areas. Activity 3 - Drafting Guidelines for Tendering Process of Concessions in Protected Areas (as technical annex to new wildlife andprotected area law) The process o f drafting the guidelines and regulations for concessioning in formal protected areas completes the drafting o f legislation for conservation and wildlife discussed above. These will be drafted just after the legal categories o f protected areas had been discussed and agreed. The description that will be given to the categories o f TFCA will guide the principles and tending process that will apply on the concessioning in the TFCA's including. During the preparation phase there was a study done on the Principles and Guidelines for Land Use and Concessions in the Areas between the Conserved Areas within the Greater Limpopo TFCA. This document provides draft guidelines that could be used to elaborate the definitive guidelines for all TFCA's. Activity 4 -Drafting regulationsfor the TourismLaw. G O M has recently approved a new policy and strategy for tourism development as well as a new law. To become effective the new law requires that its regulation be drafted, approved, published and disseminated. This includes regulation on hotel classification, 45  licensing and tourism statistics. The TFCATD will support MITUR to fully develop these regulations. Activity 5 - Drafting Guidelines for public tourism-land demarcation, titling, marketing and tendering as tourism concessions (as technical annex to new tourism law) The process o f drafting the guidelines for tendering tourism concessions completes the drafting o f tourism law regulations. This component will support MITUR to establish a comprehensive and clearly defined set o f procedures to implement an A-Z process for land concessioning, from land identificationto on the ground investment. Activity 6 - Establishing a new protected area management institution or several long term Public Private Partnerships (PPPs) DNAC has responsibility for protection and management o f all PAS in Mozambique, including those falling within TFCAs. It is currently under-resourced and not well structured or equippedto fulfill its mandate or to adopt modem approaches and practices, such as ecosystem-based management based on monitoring and targeted research, integrating land and wildlife management inside and outside PAS,businesslike operation, cross-sectoral coordination and collaboration, and partnership with local communities and the tourism industry. Even so, DNAC as an institution has demonstrated a willingness to experiment with new ideas and approaches, such as contracting management o f certain PAS to NGOs or the private sector, or entering into co- management agreements (e.g. Limpopo National Park). The GOM has indicated an interest in transforming D N A C into a semi-autonomous parastatal as a means o f increasing its effectiveness and efficiency and making it more self-sufficient financially. Another option i s to establish various PPPs, in the form o f various park boards, whereby each park i s jointly managed by private/public entities. However, experience elsewhere shows that this type o f transformation i s not an easily implemented "magic bullet," but needs to be undertaken with careful planning, and technical and financial support during the transition period. Support to this process will include technical assistance for institutional development activities such as creating an appropriate institutional structure, preparingjob descriptions and performance criteria, provision o f short and/or long term advisors in specific technical areas, staff recruitment and preparation and implementation o f a training needs analysis and training strategy and plan. Support under this component complements assistance to DNAC to improve its capacity and performance on the ground, described under Component 4. Activity 7 -Establishing international treaties andprotocols The project will support continued international collaboration, at national and local levels and at political and technical levels, for management o f transfrontier biodiversity and natural resources, and facilitation o f tourism development across borders. It will support 46  negotiation o f additional international agreements for the Niassa and Zimoza TFCAs and technical protocols for TFCAs for the Limpopo and Lubombo TFCAs. Specific activities include supporting Mozambique's participation in TFCA diplomatic/political and technical meetingsand committees, legal services and general awareness raising. Component2: IntegratedDistrict DevelopmentPlanning($0.48 M) IDA: $0.29 M; - PHRD $0.19 M Financing rules: All equipment, training and operating costs financed by IDA. All consultant services financed by PHRD grant. Two distinct planning processes that have been taking place in Mozambique. These are the Spatial Development Plans (SDP) process being implemented through the GEF/IDA supported Coastal and Marine Biodiversity Management Project (CMBMP) and the District Development Plans (DDP) being implemented under the IDA supported Decentralized Planning and Finance Project (DPFP) and other donors' projects. The later forms part of the GOM's DecentralizationProgram. These two processes will be combined into one process: IntegratedDistrict Development Planning (IDDP). The "coastal" districts o f Vilankulo and Matutuine are registered as PAT1inthe Strategic Planfor Development of Tourism in Mozambique (SPDTM). These districts are `tourism districts' because it i s likely that tourism will form the main basis for economic growth. It i s therefore important that the district planningprocess reflects a strong tourism overlay and that the District Development Plan (DDP) forms the basis for a Tourism Master Plan (TMP). Under the IDDP approach, the guidelines for community participation developed under the DDPs will be used, as well as the capacity building process for supporting local administrations. In Vilankulo district, with DANIDA support, the CDS is undertaking the Spatial Development Planning and the GTZ i s supporting the District Development Planning (DDP). These processes will be harmonized before effectiveness to ensure that they conform to the IDDP and are informedby a tourism and conservation overlays. Component 2 will finance the steps required for the completion, publication and distribution o f the above two District Development Plans (DDP) inthe two focal TFCAs. Component 2 i s divided into two Subcomponents: (2.1.) National capacity building and stock taking; and (2.2.) IDDPper se, which will follow these steps: Capacity buildingand initial consultation at provincial, district and local levels; . District diagnostic, including (1) basic data gathering and consolidation, (2) tourism planning, (3) conservation priority setting; Spatial Development Planning; 47  Production, adoption and diffusion o f the DDPs. Subcomponent 2.1. -National capacity buildingand stock taking Specific activities supported by subcomponent 2.1, include. Activity 1- Capacity building of MDPfor implementation of Component 2 The Project will finance one IDDP advisor who will be posted in Maputo in the existing PPFD Coordination Unit at MDP as well as modest equipment, training and operating cost. The advisor will coordinate the entire component for MDP as well as closely coordinate the IDDP processes in two districts: Vilankulo (where Danida and GtZ are already financing the IDDP) and Matutuine. Activity 2 - Stock taking and rejnement of DDP & IDDP Processes M D P departments-working with an IDDP working committee made up o f the main participants o f MICOA's SDP process and the lead agency o f MDP, DINAPOT (and partners)--will register the IDDP methodology in a manual. The manual will be used duringTFCATDP and regularly adapted as needed. Subcomponent 2.2. - IDDP Process Specific activities supported by the subcomponent 2.2. include. Activity 3 - Capacity buildingfor districtplanning at provincial and district levels In each targeted districts, the project will finance the creation and training o f (1) Provincial Steering Committees; (2) Provincial District Planning Support Teams whose role i s to train, advise and help technical teams as well as bridge the technical teams and the provincial government; (3) Technical Teams for District Planning (called after "technical teams"), whose role i s to collect information for the district diagnostic, to consult with all consultative councils, to provide technical and sectoral input at all stage, to contribute to drafting o f the SDP and then the DDP. The technical team i s composed o f people with expertise in planning and community participation such as civil servants representing their sectors (e.g. agriculture, health, education, tourism, transport, etc.) as well as members o f the civil society. They are assisted on a daily basis by their IDDP advisor Activity 4 - Capacity building in support of the consultationprocess at district, posto ' and `localidal' levels Ineach targeted districts, the project will finance the creation and training o f consultative councils at district, locality and village level. The role of consultative council is to dialog with the government inthe process o f IDDP and implementationto ensure that the needs of people are well addressed. The consultative councils will play a role in liaising with 48  the technical teams. These councils will have representatives o f various stakeholders, namely representatives o f economic activities, traditional authority, women and political parties will not make part o f it. The District Consultative Council will be called upon to provide input at each stage o f the IDDP process. Activity 5 -District Diagnostic District basic data collection and analvsis - The project will the operating cost for the district technical team to collect as much information as possible on various issues concerning the district including maps (vegetation, coastal, settlements, rainfall, etc.), household surveys, socioeconomic surveys, land use, agriculture, livestock, mining, etc. They will also gather national or provincial plans (school map, health unit map, roads, etc.) that matter at the district level. They will be provided by DINATUR, DNAC and TFCA with additional information related to conservation and tourism planning as prepared under Component 3 (draft District Tourism Master Plans) and Component 4 (Conservation priority setting). They will compile the information, cross reference with sectoral authorities at district and provincial level and initiate rough macro planning for each sector. The technical team will be able to leverage assistance from other partners such as the Centers for Sustainable Development (CDS). Compilation o f District Diagnostics - With all the above information available, the "technical team" assisted by their IDDP advisor will compile all above information in a single document: the District Diagnostic. If necessary, the project may finance the assistance o f consultants. Stakeholder consultation - The project will finance the meeting o f the District Consultative Councils to present them and discuss the District Diagnostic. The diagnostic will also be presented to the Provincial District Planning Support Teams and the Provincial Steering Committees. Activity 7 - District Development Plan (DDP) Drafting the DDP - With all the above information available, the technical team assisted by the IDDP advisor will draft the DDP, ifnecessary; the project may finance the assistance o f consultants. Stakeholder consultation - The project will finance the meeting o f the District Consultative Councils to present them and discuss the DDP. The DDP will also be presentedto the Provincial District Planning Support Teams and the Provincial Steering Committees. Validation Workshop, publication and diffusion of DDP - The project will finance the organization of validation workshops with all stakeholders at the locality and district levels. The DDP will be then finalize and submitted to the Provincial Government for final endorsement. The DDP will be published, multipliedand diffused in all spheres o f the province and district. 49  Component 3: Community and Private Sector-Led Tourism Development ($12.96 M) IDA: $5.47 M;GEF:$4.08 M;PHRD$3.30 M. - Financing rules: All civil work, equipment, training and operating costs financed by IDA. Consultant services for all activities except 6 and 8 which are financed by IDA. All Community EquityFacility (CEF) subproject grants financed by GEF. Component 3 i s designed to enhance the capacity o f the tourism sector (government, communities and the private sector) to fully participate in the preparation and implementation of District Tourism Master Plans (DTMPs). These plans are regarded by the GOM as necessary instrumentsto promote and guide tourism investments that can unlock the economic potential o f the TFCA to contribute to both biodiversity conservation and the development objectives o f Mozambique. It i s expected that DTMPs will inform the IDDPprocess where applicable, but that the DTMPs will also stand alone and serve to identify priority actions, including infrastructure gaps, for tourism development in the districts concerned; (1) Vilankulo district; (2) Matutuine district; (3) Sussudenga district; (4) a combined plan for the 6 districts of the Limpopo TFCA in the Gaza province. Interms ofnational capacity, focused support will beprovidedto MITUR in.the areas of information systems and statistics collection, and, licensing and regulation, to strengthen and inform the DTMP process at the local level. Building on ongoing WB PODE- financed needs assessment and training inthese departments inMITUR2', this component will target the collection o f quality tourism statistics and data (such as expanding on the existing inventory o f businesses to include employment and revenue profiles) in defined tourism-centric districts such as Vilankulo andMatutuine. Inthe concerned districts, the project and PODE will harmonize support to private sector and community associations involved with tourism to strengthen their constituencies to improve skills, advocate for sector reform, expose new opportunities and access markets. This will be carried out inclose collaboration with IFC's SEATIP as well as NGO's and bilateral donors, particularly USAID support program to CTA. In Matutuine District, the government has mandated the Elephant Coast Development Agency (ECDA) to facilitate integratedand sustainable tourism development. The project will work with ECDA and tourism stakeholders at the national and district level to coordinate and support the DTMP process. Inline with MITUR's Strategic Plan for Tourism Development, this integrated approach focuses on improving the quality o f tourism investments in the TFCAs by strengthening the policy, regulation and operational linkages between the public and private sector (at the national and district level). A key issue blocking quality investment i s that much o f existing tourism investment in the TFCAs i s low quality, speculative and under- capitalized. A significant proportion o f these investments (particularly along the 2oDPC andDINATUR's LicensingandRegulationDept. 50  coastline) operate in the informal sector and `lock up' prime tourism land. Inaddition, lack o f secure tenure, appropriate procedures for transparent concessioning, registration and licensing o f "legal" tourism enterprises are disincentives to responsible investors. MITUR's Strategic Plan and a number o f recent consultant reports identify the resolution o f these issues as a critical area o f strategic focus for DINATUR. In response, a new Tourism Law was enacted allowing MITUR to `reserve' land for tourism, so that this can be tendered to responsible investors. DINATUR and FUTUR (jointly through SEATIP), in partnership with other key actors, will be supported to enable MITUR to direct the process o f land identification and leasing or concessioning. DINATUR intendsto use the macro zoning developed by the CDS-ZC2*to identify and demarcate landto be reserved for tourism. A strong operational link with SEATIP (including joint supervision missions) will closely follow the process o f identifyingland for tourism development. Component 3 i s divided in two subcomponents: (1) Unlocking opportunities for sustainable tourism investment and growth; (2) Community-led conservation andtourism . development. Subcomponent 3.1. will support building capacity through MITUR in DINATUR, DPC, FUTUR, ECDA and targeted private sector and community associations to develop and implement; (1) tourism plans in the target TFCAs, (2) business development and financing, (3) the collection o f tourism statistics and data, (4) strengthenedcapacity for licensing, inspection and grading, (5) the implementationof the DTMPs. Subcomponent 3.2. will support to communities through (1) Land demarcation; (2) a Community Enterprise Fund(CEF) for organized communities to either proceed with the creation and management o f community reserves ininterstitial areas or enter into joint venture partnerships with private investors for tourism or conservation related investments such as creation o f game ranches, lodges, etc.,; (3) the participatory and compensation process to improved natural resource management and land acquisition. Subcomponent 3.1. Capacity Building Activity 1- Capacity building in MITUR cfov component implementation, tourism planning, statistics and data collection, licensing, vegulation andpolicy) The project will finance a technical advisor at DINATUR with adequate equipment, training and operating costs to improve its capacity to implement the component as well as the integrated development o f tourism in TFCAs and PATIs. The component will support DINATUR participation in tourism forums and committees o f the TFCAs, nationally and internationally. Under this component DINATUR will be strengthened to participate in the IDDP process through reinforcing its role intourism planning and inits regulatory and coordinating functions related to the identification and formalization o f land leases and concessions. 2'Centro para o Desenvolvimento Sustantavel - Zona Costeira (Center for Sustainable Development - Coastal Zone). This center provides technical capacity for supporting Integrated Coastal Management. 51  Activity 2 - Capacity building of DPC for tourism statistics and data collection) The project will finance the implementation o f an appropriate and sustainable tourism statistics and data collection framework for Mozambique. Financed by PODE and with input to TOR definition during appraisal, MITUR's Directorate for Planning and Cooperation (DPC) will obtain consultancy services to design and test an appropriate tourism statistics and data collection program. The project will finance elements o f systematic data collection (including annual exit surveys and training a small unit in DPC) linked to the tourism hubs o f the TFCA areas. The project will collaborate with RSA's Department o f Environment and Tourism (DEAT) and World Tourism Organization (WT0)-that have already established provincial and national tourism satellite accounts (TSA)22 in Africa-to finance the establishment o f an appropriate (workable inMozambique) tourism satellite account framework. The project will finance capacity building for organization o f data collection, data analysis and annual statistical reports. Activity 3 - Capacity building in DINATUR's Licensing and Grading Directorate (to strengthen appropriate regulation and standards in accommodation within the TFCA) The project will support the Directorate to establish an appropriate and sustainable licensing, inspection and grading system for tourism hubs in the TFCAs. PODE i s financing a consultancy to establish a classification system for Mozambique to which input to the TORSwas provided during appraisal. The project will finance training and the implementation o f recommendations from the PODE study in the TFCA districts. It hoped that these will serve as pilots for DINATUR to assess the impact of improved licensing and grading on the performance o f tourism in those districts. The project will collaborate with RSA's Department o f Environment and Tourism (DEAT) to establish a standard classification system applicable inthe region23. Activity 4 - Capacity building in ECDA (to facilitate the Matutuine DTMP process and output) Building on support in the first TFCA project, this project will continue support to this institution and facilitate it to fulfill its mandate. In particular the project will support ECDA activities linked to the DTMP process inMatutuine. 22 TSA are becoming important tools linking tourism activities to more precise socio economic indicators that can bothprovide a mechanism for results-based monitoring inthe project as well as allowing governments to assess the value o f tourism inthe economy 23 Mozambique's tourism strategy as well as IFC's SEATIP i s linked closely to being able to market tourism product inthe region. This will require some consistency inthe classification of accommodation. 52  Activity 5 -District TourismMaster Plans (DTMP) Phase 1- Establishing; Baselines - The project will finance a specialized consulting firm24 which would apply a Strategic Environmental Assessment (SEA) approach to develop a broad Spatial Development Plan (SDP) to overlay the 3 targeted TFCAs and Vilankulo District. The SEA overlay will contribute to a district zoning process that informs the DTMP and the IDDP. The SEA processes will also provide a set o f useful environmental indicators and identify mitigation activities for tourism development and unregulated access to natural resources. The project will also finance two related baseline surveys. The first will gather data (employment, revenue, costs) by typology (e.g. hotels, transporters, craft seller etc.) on all tourism-related enterprises in the DTMP area. The second will look into socioeconomic data (through a sampling o f households) for employees/participants in each category o f enterprise including an assessment of formal versus informal employment. Stakeholder consultation - The project will finance the meeting of the District Consultative Councils to present and discuss the SDP. The SDP will also be presented to the Provincial District Planning Support Teams and the Provincial Steering Committees. The socio economic surveys will be carried out with the full collaboration o f the district public and private sectors including DINATUR's Provincial Departments. Phase 2 - Developing: Draft DTMPs - Under the leadership o f DINATUR's Provincial Departments, 4 Tourism Master Plans will be prepared; (1) Vilankulo district; (2) Matutuine district; (3) Sussudenga district; (4) a combined plan for the 6 districts o f the Limpopo TFCA in the Gaza province. For each plan, the project will finance consulting firms (with appropriate expertise) through a consultative process to deliver drafts and a final product. The plans will emphasize the development o f the regional and national tourism circuits that will support the TFCAs through bush-beach and cultural linkages. Draft DTMPs would incorporate the already gathered baseline data and roughly include: (1) an inventory of attractions; (2) infrastructure analysis, including human resource capacity; (3) market demand analysis; (4) supply and competitiveness analysis; (5) carrying capacity assessment; (6) an assessment o f the tourism footprint; (7) a cost-benefit analysis. Based on above and independent information (such as feedback and revisions from the district planningprocess on the SENSDP) about land availability, the drafts will propose scenarios and locations for tourism development opportunities and public and private investment. 24Peace Park Foundation (PPF) has already much information indigital format and will able to produce the map at low costs. PPFwill receive a sole source contract on the basis that they will use free information already available intheir database. They will exploit all diagnostic information ina digitalize manner to produce district maps with macrozoning. 53  Stakeholder consultation - The project will finance the meeting o f key stakeholders to present them and discuss the drafts. "Critical path" methodology will be used to define the best scenarios for tourism development in the each district. The final DTMP will incorporate refinements and detail an implementation strategy, action plan and specify monitoring indicators. Phase 3 - Final DTMP Production and Dissemination - The project will finance the publication o f the final plan. The project also will finance a public relations and marketing firm (working with the WB Communications Officer) to develop a communications strategy and disseminate the DTMP. Activity 6 - Transformation of FUTUR for releasing the business potential of the sector and implementing the DTMPs) The project will finance key priority activities and infrastructure gaps identified in the DTMPs. It will build capacity and develop FUTUR, and inparticular the "Great Africa Route" that includes the TFCAs. It will finance a Business Plan for FUTUR25to examine its role as inmicro-finance o f the tourism sector, financier o f tourism initiative, trustee o f tourism land for concessioning, and possible agent for implementation o f infrastructure development. Activity 7 - Provision of tourism infrastructure In some cases, infrastructure development may be required to provide additional incentives to the private sector to invest in these areas. These may be necessary to service new tourism concessions or to generally improve the "viability" or aesthetic o f these two small towns. Infrastructuremay include street access or lighting, water towers, drainage, landfill, airstrip rehabilitation, boat jettee, etc. Subcomponent 3.2. Community-based conservation and tourism development Communities within TFCAs' interstitial areas will be encouraged and assisted to conserve habitats and protect biodiversity in areas identified as conservation priorities in the TFCA, which are not formal PAS(such as community conservation areas and private reserves which are not used for tourism development) or P A buffer zones.. Under the project, the area dedicated primarily to protection o f biodiversity i s expected to expand by at least 1,900 km2in two new protected areas. It is expected that this subcomponent will lead to an additional 10,000 to 30,000 km2under improved management for conservation, tourism development and local livelihoods. Subcomponent 3.2 also includes a participatory and community compensation planning process for potential loss o f access to resources previously used. This concerns 25FUTURis mandatedto manage Government-owned tourism assets and concession contracts, an SME development fund, tourism promotion and the creation of infrastructure where required. All revenues captured through tourism concessions are directed to FUTUR, which can inturn use these revenues to invest incritical infrastructure, support SMEs and community micro projects and destination promotion. 54  interstitial areas where project investments may take place, (1) the participatory process as per the Process Framework, (2) the compensation o f people in and around protected areas whose use o f resources may be limited as a result o f the project (including loss o f land to be acquired for infrastructure and other constructions required for the development o ftourism activities). Activity 8 - Community land delimitation The project would support community land demarcation in areas important as conservation corridor or park buffer or where the ProcessFramework has identified either a major risk or opportunity to the local communities in terms o f economic development (Le. prime areas for game ranching, planned tourism routes, major new roads, coastal resort development). Guided by the Land Law (Lei de Terra) o f 1997, a step-wise approach i s used in facilitating the titling o f community land. This involves identification and delimitation o f community land. The methodology for delineating community land considers the community itself as the major player in the identification o f its rights and the delimitation o f its corresponding territory. The project will finance the service of ORAM, a specialized NGO, to facilitate the process o f self-determination by providing the community with a participatory methodology that translated indigenous knowledge into a form that can be registered in a modem registry system, the National Cadastre through DINAGECA. The approach i s participatory, allowing communities to delineate and reach consensus on the boundary o f what they perceive to be their land. This land coincides with the lineage territory over which the local land users have jurisdiction over land and other natural resources, such as forests, water and pasture. Activity 9 - Screening of Community Enterprise Development Fund applications and audits of beneficiaries TFCATDP will finance, on retainer, the services o f a consulting firm to screen CEF applications. This entails the verification o f business proposalbefore recommendation to the TFCA Ufor a community sub-project. The criteria for project approval are many and vary with the nature o f the community project; they are registered in the CEF Manual. They include conformity with the target area and tourism master plan, conformity with country laws, adequacy o f governance arrangement for the enterprise or the joint ventures, verification of the private investors credential, verification o f the business plan, o f the community title, of the community's own contribution, etc. All o f the criteria and process for selection are contained inthe fund manual. Fundswill not be deposited with the fund manager. The firm will only act as clearing house for proposal. Disbursement will bemade directly from the project to the beneficiary. TFCATDP will also finance, on retainer, the service o f an audit firm which will be charged to carry out quarterly or annual audits o f CEF beneficiaries. 55  Activity 10-Assistance to communities facilitation and brokerage)for CEF In each TFCA, the project will finance the service of a Community Broker (CB). Because o f their presence in the TFCAs and their experience with community, this service will be provided by a joint venture PPF/XXX in the Lubombo and by a joint venture AWFIORAM in the Limpopo and Chimanimani TFCA. The CB will help community organize itself all along the process o f land demarcation, land allocation for conservation and/or tourism businesses, register communities organization or enterprise as well as help them develop their proposal, identify investors, identify the possible business arrangements, build, submit and monitor the proposal to the FM, monitor all contracts that may be required under the grant and accompany communities in implementation o f the grant. Activity 11 - Community sub-projects All CEF assistance will be provided in exchange for specific, concrete and lasting conservation actions and outcomes which are clearly identified and formalized in the proposal and in written agreements. These agreements will define the responsibilities o f all parties and provide for joint monitoring and enforcement o f actions and impacts. Only registered community organization will be eligible. Community organizations will be responsible for ensuring the compliance of community members. Activities eligible for CEF grants will be implemented by communities with the assistance o f the CB. Grants from the CEF would be available for eligible activities, or combination o f eligible activities, which are: Developing and implementingland and resource management plans. This basically supports the creation and management o f community reserves which will act as corridor between protected area s or as buffer. Implementation o f management plans may include legal support for gazetment o f area, short term technical assistance, training, small infrastructure (e.g. tracks firebreaks, fencing, small water structures), restricting outsiders' access, ecological monitoring, etc. Livelihood activities that arise as linkages to tourism and conservation development. This would include vegetable farming, handicraft production, sustainable agriculture, support for developing and marketing products based on sustainable use o f abundant and resilient species etc. Providing equity inthe form o f capital. This would enable organized communities to enter injoint venture with private investors for conservation or tourism venture such as creating game farms, setting up a lodge inor outside one o f the targeted parks, etc. Other activities such as training, legal support which support this partnership will also be funded when built into the requested subproject. Grants would be used by the community to cofinance investments such as lodge construction, fences, wells, advisory services, etc ... Matching Want for tourism or Conservation training - This would enable private investors to complement their own resources for training o f employees recruited within the community. 56  Activity 12-Implementation of the Process Framework and Policy Framework For each area where conservation or tourism investment i s identified for either private sector concessioning or potentially communities' projects, TFCATDP will finance implementation o f the Process Framework. The participatory process will be contracted out to national NGOs or consulting firms. In the case of community projects, the CB may implement the process framework. Biodiversity conservation and natural resource management may imply the restriction o f access to natural resources to past users by the local communities. Multi-resource use areas will be included in zoning and development plans for sustainable resource use that may include community-based informal PA creation. Ifnecessary,theProcessFrameworkincludescommunitycompensation, asdefinedand negotiated with communities, if and when community compensation are identified. Following implementationo f the Process framework, some families, living on land to be acquired for tourism concession or community projects, may request to be displaced. If this case presents itself, the project will finance NGOs or consulting firms to prepare Resettlement Action Plans (RAP), assist them in the implementation o f the RAP as well as all compensation measuresidentified inthe RAP. Process Framework - To avoid the above negative effect on the population and avoid unnecessary conflicts, a Process Framework describe the process by which potentially affected communities will participate inresource planning and management. The process Framework shows how an Action Plans will be formulated and adapted with the local population during the design and implementation phases o f the project. Action plans are instruments that emphasize actions to give communities a voice and that provide them with means to negotiate their position with project and government authorities. Once developed, an Action Plan should become part o f the natural resources management plan (for community reserves ininterstitial areas). Policv Framework - The development o f nature tourism activities may require land acquisition to build and develop infrastructure, and buildings. Because presently, the location, nature and scope o f possible land acquisition and displacement are not yet know, a Policy Framework (PF), as a mitigation measure, has been commissioned and completed. The PF, which i s a bindingpublic document, establishes the policy principles to be used for the development o f specific Resettlement Action Plan (RAP). During project implementation, when the details o f land acquisition and involuntary resettlement are fully known, RAPSwill be defined, prepared, and implemented. 57  Component4: ProtectedAreas management($16.64 M);IDA: $8.46M;GEF: $5.27 M;PPFandAWF: $2.20 M Financing rules: All civil work, equipment and operating costs financed by IDA. All consultant services and training financed by GEF grant. AWF and PPF finance their own This component will support the identification, monitoring and protection o f the most significant and vulnerable biodiversity assets within the TFCAs. This will include TFCA-wide activities such as biodiversity inventories and monitoring, and the establishment and management o f a network o f core protected areas (PAS). Component 4 i s divided in two subcomponents: (4.1) Capacity building and applied research, (4.2) Biodiversity conservation in formal protected areas. Under subcomponent 4.1. (1) DNAC capacity will be reinforced, and (2) survey, inventories and applied research will be carried out. For each park or reserve, Subcomponent 4.2. includes (1) a community participation and "in kind" compensation process will be implemented, (2) improvement o f park design and planning, (3) increasing the area under protection, (4) build or rehabilitate essential infrastructure, (5) procurement o f essential equipment required for management (6) deployment and capacity buildingo f staff, (7) improvement o f communication and information, (8) launching effective law enforcement, (9) carrying out research and monitoring and evaluation, (10) increase the revenue generation capacity. Subcomponent 4.1. Capacity buildingand applied research - Activity 1- Capacity building DNAC The Project will finance a technical advisor at DNAC as well as minimal equipment, training and operating cost. Institutional strengthening o f D N A C will include creation and strengthening o f appropriate park or reserve management units to support activities such as surveys and monitoring, applied research, community-based conservation, managing concessions and other contracts with the private sector, and developing and maintaining tourism-related infrastructure. Activity 2 -Identijkation of conservationprioritiesfor each TFCA A new conservation-planning tool was developed by the Durrell Institute for Conservation and Ecology (DICE) at the University o f Kent, and applied to the South Africa area belonging to the Lubombo TFCA. The tool has the potential to identify land areas where biodiversity conservation i s both important and technically possible (e.g. area with low human pressure, area easier to manage because it smoothens protected area limits). Conversely, it could identify areas, inprotected areas, where neither conservation i s important nor easily feasible. This planningtool has therefore the potential to provide information to modify the land area currently under park or reserve status to maximize biodiversity conservation success and to establish ecosystem connectivity outside 58  protected areas and optimize community establishment o f community reserves. This would provide an immediate mechanism for supporting the IDDP. The project will support an MoUwith DICE and with the Universidade Eduardo Mondlane to apply that tool inthe Limpopo and Lubombo TFCAs. Activity 3 - Biodiversity surveys, inventories, monitoring and applied research Technical and financial assistance will be provided to DNAC and other appropriate institutions such as the Universidade Eduardo Mondlane to identify and monitor nationally and regionally important biodiversity assets and ecological linkages within the TFCAs, and identify priority sites and interventions for protecting them. A research program (supported through small grants) will focus on topics that are likely to contribute directly to improved P A and biodiversity management, such as sustainability o f use of biodiversity resources, reducing humadwildlife conflicts and improved methods for biodiversity and ecological monitoring. Technical studies will include researchneeded to establish accurate baselines and realistic targets for rates o f increase and final populations o f species which the project aims to help re-establish or restore in the TFCAs. These targets must take into account factors such as the species' intrinsic rate o f increase and habitat carrying capacity. The project will also tap into results from other studies and apply them to management, such as African Wildlife Foundation's research in and around Banhine National Park, and MICOA-led studies on the marine transfrontier area in southern Mozambique (important in order to set boundaries, zone and plan management for the new marine protected area). Subcomponent 4.2. Biodiversity conservation informal Protected Areas DNAC currently has limited capacity and resources to manage protected areas effectively, and is dependent on external assistance26. In addition to the support for institutional restructuring discussed in Component 1, under this Component the project will provide investment and operational support to enhance DNAC's capacity and effectiveness on the ground. Although direct investments and support will be restricted to PAS within the three TFCAs, the capacity building provided under this project is expected to yield broader benefits across the entire organization. As the project's resources are not adequate to meet all o f the management needs o f the target PAS,the priority will be on: (1) investmentsand recurrent costs that will have the greatest impact on maintaining and improving the global biodiversity values o f these areas and improve DNAC's relationships and partnerships with local communities (particularly for GEF funds); and (2) infrastructure and other investments and activities needed to stimulate and monitor/regulate tourism development and enhance DNAC's longterm sustainability. 26 e.g., KFW is supporting management of the Limpopo NP; the Niassa Reserve Development Company i s supporting and managing the Niassa Special Reserve; the Cam Foundation i s supporting Gorongosa NP 59  Geographically the following are prioritized: Maputo Special Reserve and new marine protected area ($5.56M) (high biodiversity value, very high tourism potential, in good condition apart from the low numbers o f large mammals; with several threats and issues). This will be DNAC's showcase protected area, given its proximity to Maputo. It was seriously under-fundedinPhase 1 and it is now urgent to rehabilitate the existing reserve including infrastructure investment; gazette the adjoining Futi Corridor and marine area; promote participation o f and collaboration with the local communities; and develop tourism. Peace Parks Foundation (PPF) will provide technical support to reserve management through an MOUwith DNAC and TFCA Ufor the Lubombo TFCA. Banhine National Park ($5.11 M) and Chimanimani National Reserve ($5.54 M) (high biodiversity values; lower tourism potential; in good condition; communities interested in participating in tourism development). These protected areas will receive significant investment for infrastructure and improved management. Afi-ican Wildlife Foundation (AWF) will provide technical support for Banhine NP through an M O Uwith DNAC and TFCA U. Zinave National Park ($0.56 MI (reasonable biodiversity value but parts o f the park are under very heavy pressure from local communities; some tourism potential especially near the Save River). This park will receive fundingto maintain a minimal level o fmanagement and to complete infrastructureworks started inPhase 1. Limpopo National Park ($0.49 M) (highbiodiversity value; restocking and improved management taking place, with voluntary resettlement program in part o f the park). Since Limpopo i s receiving major support from other donors, the project will provide limited support to infrastructure development and to veterinary activities to monitor diseases affecting wildlife, livestock and in some cases people, on the Mozambique side o fthe TFCA. Specific activities to be supported include: Activity 3 -Implementation of the Process Framework and Policy Framework TFCATDP will finance implementation o f the Process Framework by national NGOs or consulting firms. It will also finance community compensation scheme, as defined and negotiated with communities, if and when community compensation are identified. If, following implementation o f the Process framework, families living inside protected areas request to be displaced, the project will finance NGO or consulting firm to prepare Resettlement Action Plans (RAP), assist them in the implementation o f the RAP as well as all compensation measures identifiedinthe RAP. Process Framework - To avoid the above negative effect on the population and avoid unnecessary conflicts, a Process Framework describe the process by which potentially affected communities will participate in P A planning and management. The process 60  Framework shows how an Action Plans will be formulated and adapted with the local population duringthe design and implementationphases o f the project. The Action plans are instrumentsthat emphasize actions to give communities a voice and that provide them with means to negotiate their position with DNAC. Once developed, an Action Plan should become part o f the protected area management plan (for National Park and Special Reserves). Policy Framework - The development o f nature tourism activities may cause displacement o f people from their homes and areas as a result o f the threat o f wildlife. Because presently, the location, nature and scope o f possible displacement are not yet know, a Policy Framework (PF), as a mitigation measure, has been commissioned and completed. The PF, which is a bindingpublic document, establishes the policy principles to be used for the development o f specific Resettlement Action Plan (RAP). During project implementation, when the details o f involuntary resettlement are fully known, a or several RAPSwill be defined, prepared, and implemented. While it sis expected that very few families will chose to be displaced, the project has budgeted the displacement o f 300 families. Activity 4 - Protected area creation and review of limits This includes: (1) Define or review o f boundaries: for new marine protected area and for Banhine and Zinave NPs to see if modifications are needed to in light o f important biodiversity beyond the boundaries (e.g. wetland to north o f Banhine) and possible exclusion of certain areas where there are large numbers o f people inside the parks; (2) Consultations and preparation o f legal documents for the expansion or creation o f PAS and (3) Boundary demarcation where needed. Activity 5 -Planning ofprotected area management This includes: (1) Developmentand updating o f PA management plans in a participatory manner; (2) Development o f tourism plans for PAS(closely integrated with the national tourism strategy and DTMP and tourism development in interstitial areas in Component 3); (3) Production o f business plans for protected areas; and (4) Technical assistance for specific organizational development issues, such as mechanisms for enhancing financial sustainability Activity 6 - Management Management o f the formal protected areas includes: (1) Capacity building (e.g. law enforcement, community liaison, P A management planning, business planning, organizational and financial management, personnel management, communication, tourism management, resource protection, ecological monitoring, training inresettlement policy and framework for PA stafY, HIV/AIDS prevention and mitigation in PA management and local communities); (2) Implementation o f management plans with improved management systems, and including close collaboration and participation of local communities; (3) Establishment of basic management for the marine protected area 61  (will also have to seek additional funding for this); (4) Rehabilitation and limited construction of priority infrastructure, based on approved management plans and environmental impact assessments (including roads, offices, staff accommodation, gates, air strips, boreholes, power units, game fencing etc.); (5) Implementation o f tourism development plans including tendering, concessioning, monitoring, interpretation; (6) Procurement o f goods and equipment for P A management (e.g. vehicles, tractors, computers, office furniture, radios, uniforms, and other field equipment); (7) Logistical support for wildlife restocking (e.g. transportation, technical assistance); (8) Veterinary surveillance including monitoring of diseases in translocated animals, wild populations and livestock in TFCAs, with particular attention to areas where fences may be removed and where there i s a serious risk o f diseases spreading from one country to another. Component 5: Project Management, Communications, and Monitoring and Evaluation($4.90 M) - IDA: $4.68 M;PHRD $0.22 M Financing rules: All equipment, operating costs, training and consultant services except for activity 3 which i s financed by the PHRD) financed by IDA. Component 5 will ensure effective coordination and management o f project activities, support project components through procurement and financial management services, and establish and track indicators o f project implementation and impacts. It will guarantee the information i s used to improve the project on an ongoing basis (adaptive management), ensure a flow o f accurate and timely information about the project and its objectives, and achievements both within and outside Mozambique. Activity1 - Project coordination and management Overall coordination and management o f the project will continue to be the responsibility of the TFCA Unit o f MITUR, which will be strengthened to be able to carry out this role. This includes adding some long term staff at the TFCA Unit in Maputo, as well as establishing TFCA Coordinator positions inthe field (consistent with the increased focus on activities at the Provincial and local level). Details o f existing and additional staffing are Technical Annex 6. The project will also make provision for short term technical assistance to supplement existing staffing in specialized areas, and will support the operating costs o f the TFCA Unit. Activity 2 - Capacity buildingfor project implementation The project will support the organization o f a launching workshop in Maputo and in the TFCAs. At project launch all teams will receive general training on all relevant aspects of the project including planning, M&E, procurement, financial management, safeguards, reporting, etc. Project staff, particularly those involved in fiduciary processes will be able to attend specialized training. Before the mid-term review, the TFCA U will organize a stock-taking facilitated-workshop where all project agencies and staff will be called upon to reflect on the previous years o f implementation and draft courses for improvement. 62  Activity 3 - Information and communication The TFCA concept as it is being developed in Mozambique is not sufficiently well understood either within the country or outside. For example, there i s a tendency (readily observable in the literature) to confuse TFCAs with the more limited and restrictive model o f transfrontier parks. It i s also important for potential investors and supporters to have up-to-date information on the merits and the status o f TFCAs and the measures being taken to develop and strengthen them. The project will support the development and implementation o f a multi-media communications strategy (led by a communications and information specialist within the TFCA Unit) to ensure that timely and accurate information is readily available both to project implementers and stakeholders and to other interested parties. While not a marketing strategy per se, it i s expected that the communications strategy will promote both tourists and private sector investment by raising the profile o f the TFCAs and demonstrating that they are the focus o f considerable interest and support from the government and major donors. This component will also support the development o f mechanisms to ensure two-way communication and knowledge exchange between the different levels o f government institutions and their stakeholders (particularly communities within the TFCAs) in the context o f the IDDP process. Activity 4 - Monitoring, evaluation and adaptive management The project will support the development and implementation o f an M&E program, which will track both project implementation and results (relating to biodiversity conservation, tourism development and community benefits), through selected indicators based on the Results Framework (Technical Annex 3). Beyond collecting data to track these indicators, the M&E program will involve analysis and dissemination o f the information and active assistanceto project implementingagencies to use the information to improve project implementation and, where appropriate, re-orient approaches or targets. Because MAE i s frequently neglected by project managers in view o f other, more urgent demands on their time, the project will support a full time M&E specialist within the TFCA Unit for the first two years o f the project, during which it is expected that the M&E system will be fully developed and launched. Inlater years, short term technical assistance may be required periodically to ensure that the M&E systemremains functional and relevant. Towards the end o f the project, the M&E system will be usedto provide guidance for the future direction o f the program. Activity 5 - HIV/AID education Inview ofthe enormous economic andlivelihoodimplications ofthe growing HIV/AIDS epidemic, and the inevitable linkages between tourism development and STDs, the project will also support the development and implementation o fpolicies andprograms to combat HIV/AIDS within the implementingagencies that have not done so. 63  Annex 5: ProjectCosts MOZAMBIQUE: TransfrontierConservationAreas andTourismDevelopment Project Project Cost By Component Local Foreign Total U S $million U S $million U S $million Strengthening policy, legal and institutional framework 1.06 1.06 IntegratedDistrict Planning 0.45 0.03 0.48 Community & private sector lead tourism & 12.13 0.10 2.23 conservation Protected area management 14.70 0.5 1 5.21 Project management, monitoring and communication 4.30 0.23 4.53 RefinancingPPF 0.61 0.61 Total Baseline Cost 32.63 0.87 33.50 Physical Contingencies 0.53 0.03 0.56 Price Contingencies 2.57 0.06 2.63 Total Project Costs' 35.74 0.96 36.70 Interest during construction Front-end Fee Total Financing Required 35.74 0.96 36.70 Project Cost By Component and IDA GEF PHRD NGOs GOV TOTAL financiers us us us us us u s $million $million $million $million $million $million Strengthening policy, legal and 0.50 0.65 1.15 institutional framework IntegratedDistrict Planning 0.29 0.20 0.49 Community & private sector lead 5.47 4.08 3.3 0.10 12.95 tourism & conservation Protected area management 8.45 5.27 2.20 0.78 16.60 Project management, monitoring 4.68 0.22 4.90 and communication Refinancing PPF 0.61 0.61 64  Annex 6: ImplementationArrangements MOZAMBIQUE: Transfrontier ConservationAreas andTourismDevelopment Project The Government has established a Tourism Facilitation Commission to provide oversight, guidance and high level coordination for aspects relating to tourism policy and development. The Commissionwill act as steering committee for the TFCATDP. MITURwill haveproject oversight. Duringthe first phase TFCA project, the Government established the TFCA Unit within MITUR to coordinate the management and administration of TFCAs. The TFCA Unit will continue serve as overall implementing agency for the TFCATDP. The TFCA Unit will have coordination and support function and will be staffed with contracted personnel to provide operational support to implementation and undertake fiduciary functions. Responsibility for implementation of the various components and sub-components will be divided among four lead agencies (TFCA U, DINATUR, DNAC all 3 of MITUR & DNPO o f MPD), in accordance with their respective institutional mandates. MITUR and MPD will enter into MoU, specifying implementation responsibilities of each agencies and procedures. Altogether the heads o f these 4 lead agencies will constitute a "management team" which will meet on a quarterlybasis, or as issues arise. For adequate integration o f government institutions at various levels o f administration, the project will have two levels o f management, central (Maputo) and provincial (the 3 TFCAs). In the Province of Gaza, Manica and Maputo, the provincial governors will have oversight (like for any public fundedactivity inthe provinces). The Provincial Directorates of Tourism (PDT) located in each targeted TFCA will have the oversight o f the project in "their" TFCA. The respective TFCA coordinator and an accountant will be posted in the respective PDTs. The TFCA Coordinators main responsibility i s to ensure adequate implementation and management o f field operations. The PDT will lead the provincial management committees composed by the Provincial Director o fPlanning andProvincialDirectorate of Environmental Affairs. The Matutuine District has a special arrangement. The Elephant Coast Development Agency (ECDA), was created to oversee and stimulate the development o f tourism inthe district. The ECDA will be strengthened and coordinate all tourism development activities inthe Lubombo TFCA. A Project ImplementationPlan(PIP) provides the overall structure and framework. It provides guidance to provincial, district implementers, national parks, etc. The PIP also defines lines o f accountability and reporting, criteria for access to project-provided 65  resources, systems o f supervision, procurement control management and the monitoring and evaluation o f local level implementation. Component 1 StrengtheningPolicy and InstitutionalFrameworkfor TFCA - TFCA Uwill be the lead implementationagency for Component 1. TFCA Unit will coordinate with MICOA, MITUR and M P D and work closely with various agencies including the National Directorate for Flora and Fauna (DNFFB) o f the Ministry o f Agriculture (MA), the Directorate o f Water Affairs, and with fisheries authorities on conservation policy and legislation. MICOA will lead the development o f the new conservation policy and legislation. DNAC will lead the institutional strengthening of protected area management. DINATUR will lead the tourism regulations and guidelinefor tourism concessions. Component2 -IntegratedDistrictDevelopmentPlanning National Directorate for Planning and Budget (DNPO) o f MPD will be the lead implementation agency for Component 2. DNPO i s already responsible for planning under the Decentralization Program and in particular implements the IDA-financed Decentralized Planning and Finance Project (DPFP). The TFCATDP will finance one additional member, an IDDP advisor, to that project's implementationunit. The IDDP advisor will coordinate the IDDP inthe District o fVilankulo and Matutuine. The Provincial Government and Governor, trough existing Provincial steering committees, will guide district implementation o f component 2. "Provincial teams for support to district planning" will ensure intersectoral coordination and the mobilization o f technical staff from relevant Provincial Directorates to undertake support and supervision functions at district level. The ground work is ensured by the "technical teams" constituted o fmembers o fvarious sector agencies and civil society. To implement this component, DNPO will mobilize technical support from the DINATUR, the National Directorate of Geography and Cadastre (DINAGECA) in the Ministry o f Agriculture (MA), the National Directorates o f Territorial Planning and Environmental Assessment (DINAPOT and DNAIA) in MICOA, the National Directorate o fPublic Works. Component3 - Communityprivatesector leadtourismdevelopment The National Directorate o f Tourism (DINATUR) will be the lead implementation agencies for Component 3. 66  The project will provide a long term technical advisor to DINATUR with responsibility to strengthen overall planning and institutional development, particularly at the decentralized DINATUR offices, to improve the Ministry's capacity to work with community and private sector partners to promote tourism development. The DINATUR offices will also be responsible for ensuring that tourism planning and development i s integrated with other sectoral agendas at the provincial, district and local levels. FUTURwill lead activities related to business development including the management o f funds for the minimal infrastructure platforms and the Community Enterprise Fund. DPC will leadthe activities related to tourism statistics development. Several other agencies will be mobilized for implementation o f the various activities. These could include DINAGECA andDNFFB. Component4 ProtectedAreas ConservationandManagement - DNAC will be the lead implementingagency for Component 4. DNAC will be reinforced by a technical advisor who will coordinate the daily implementationo f Component 4. Eachpark or reserve i s managed by a warden postedbyDNAC. They will implement the project in their respective PA and call upon the DNAC advisor or their TFCA Coordinators for planning, financial and fiduciary assistance. Special arrangements are planned for two areas. DNAC will enter in "Public-Private-Partnership (PPP)" with the African Wildlife Foundation (AWF) in Banhine NP and by the Peace Park Foundation (PPF) in Lubombo TFCA. The M o U will define the PPP arrangement. It will define the co management responsibility o f each partners. It i s expected that each NGO provides management services, or technical assistance, at their own costs. Inorder to improve coordination between all partners and stakeholders, a consultative or liaison committee will be established for each park or reserve. These committees will also include other key stakeholders, such as DNFFB (to facilitate synergies between the management of P A and interstitial areas), community representatives, NGOs or donors active inthe area, etc. Some activities under this component will be implemented by other conservation partners, such as NGOs, local Universities, etc., through contractual arrangements with the TFCA Unitor DNAC, or through grants (e.g. for appliedresearchprojects). 67  Component5 ProjectManagement,Communications and Monitoringand - Evaluation The TFCA Unitwill be the lead implementingagency for Component 5. This includes overall project coordination and administration, procurement and financial accounting, work program coordination and reporting. Given the greater scope and complexity o f the Phase 2 project, the Unit will be extended and strengthened both in terms o f technical and operational capacity. The TFCA Uwill be staffed by a TFCA U manager, a financial manager and an accountant clerk, a procurement sp and a procurement assistant an M&E specialist, a communication specialist and support staff. Because the focus in the second phase i s shifting increasingly to the Provincial and District levels and to activities on the ground, one important addition will be the recruitment for each o f the 3 TFCAs o f field-based Regional TFCA Coordinators and accountant clerks. 68  Annex 7: FinancialManagementandDisbursementArrangements MOZAMBIQUE: TransfrontierConservationAreas andTourismDevelopment Project 1.1 CountryRisks The overall conclusion o f the Country Financial Accountability Assessment (CFAA) dated December, 2001 i s that `public sector financial management systems in Mozambique are very weak, as evidenced by the Report of the Tribunal Administrativo of the Government General Accounts Report for 1998 and 1999, and will require substantial strengthening over several years. I n the interim, risk of waste, diversion and misuse of funds are assessed as high. The public sector financial environment in Mozambique denotes a situation of high fiduciay risk: material receipts and payments are excluded from the budget and from Government accounting and reporting system; accounting systems and standards are outmoded; internal and external auditing require substantial support; and parliamentary oversight requires strengthening ...Efforts have been made in recent years to reduce thefiduciay risk through (among other measures) the strengthening of the internal audit capacity of the IAD, and the creation of external audit capacity within the AT. Both of these efforts (as well as others) need to be intensiJied, because there is still a lot of work to be done in this area. " The Public Financial Management Assessment conducted by S ~ a n t e a min~ ~September 2004 concludes that "Overall PFM Risk in Mozambique remains High. Management of the economy has been quite satisfactory, but comprehensiveness and transparency of the budget is poor, the medium-term planning and budgeting is weak, while budget execution and accounting and reporting present quite serious weaknesses. The area of greatest concern, however, is external audit and accountability. At the same time, PFM reforms are moving ahead in a vey structured and comprehensive manner. The trend in PFM is therefore seen as quite positive, where successful implementation of the new financial management information system SISTAFE is intended to address many of the current weaknesses". 1.2 ProjectRisks Again from the CFAA: "Because of the high fiduciavy risk, IDA has taken special measures to ensure adequate financial management of its portfolio. Project management units are often established to manage IDA-financed projects and Bank funding is "ring-fenced '' to mitigate fiduciary risk. Accounting staff are hired as consultants, typically on salaries higher than civil service salaries, to work on projects, 27 Fourteen donors and funding institutions (commonly referred to as the "Gl,"), giving direct budget support to Mozambique requesteda Public FinancialManagement assessment (PFM). The principal objective o f this P F M Assessment i s thus to provide the Government o f Mozambique and donors with an updated assessment o f the situation and trends with respect to Fiduciary Risk inMozambique. The P F M assessment was undertaken as joint exercise between the Ministry of Planning and Finance, and a tern o f consultants (Scanteam). 69  even when a Ministry implements those projects. IDA projects are invariably audited by one of the "Big Four international auditfirms. )' " In summary, the key financial management related risks that project management may face, and the manner inwhich it should be addressedare furnishedbelow: 1 Typeof Risk I Risk IRisk Mitigating Measures Rating InherentRisk 1. Weakness inPublic sector S Qualified Accountant with experience inpublic sector b. FundsFlow M c. Staffing H Qualified and experiencedaccountant staff will be appointed to handle the financial management issues o f the project d. Accounting Policies and M A Financial Management Consultant was retained to Procedures prepare the Project's Financial Procedures Manual. e. InternalAudit H There needs to be strong supervision. f. External Audit H The appointment o f an external auditor i s conditions o f effectiveness and funds for annual audits will be budgeted. g. Reportingand Monitoring H The TFCA Unit shouldbe capable of producing h. InformationSystems H IControl procedures will be documented in the Financial Proceduies Manual and compliance will be enforced by I Overall the Financial Controller Control Risk ( H H=High S = Substantial M=Moderate N=Lowhegligible 1.3 Main Strengths andWeakness The project financial management is strengthened by the following salient features: 0 The first phase project (the closed Transfrontier Conservation Areas Pilot and Institutional Strengthening Project) was implemented by the TFCA Unit within the MinistryofTourism, which is subject to this assessment.However, the project was operating inweak financial management environment. 0 Recently, an accounting package was installed at TFCA Unit. The project financial management is weakened by the following salient features: 70  At Project level 0 Projects take a "ring-fenced" approach to ensure funds are usedas per the objectives agreed on for Project implementation; At countvy Level 0 Delays and insufficient allocation o f counterpart funds; 0 Financial management inMozambique i s weak. There are pieces o f the puzzle missing, such as a comprehensive and up-to-date set o f Procedures Manuals for government budgetingand accounting that includes Project financial management procedures; uniform applicationthroughout the government o f systems for financial management and budgetary execution; and information systems sophisticated enough to produce timely and accurate information for reporting and control purposes; and 0 Weak internal and external audit system. The measures to minimize the impact o f these weaknesses are described in the assessment below. 1.4 FundsFlow Fundswill follow from IDA, GEF, PHRD, and Government o f Mozambique to specific bank accounts to be opened and managed by the Ministryof Tourism though the TFCA UNIT. IDA funds will finance all five project components, GEF funds will finance components one, three, and four, and PHRD will finance components two, three, and five. The TFCA Unit will make payments for its owns and some expenditures for the provinces. Each specific activity will be paid by one source o f funds, Le., each invoice will be paid utilizing entirely one source o f funds. 71  GEF T L PHRD GoM W/A USD W/A USD WIA USD MZM Reports F- I GEF PHRD G o M 1 Special account Special account Special account Project account MinistryofTourism - TFCA UNIT MZM/ Reports/ Invoice USDIMZM Invoices I I A (sub accounts after FhlRcapacity established) t Chimoio/Xai-Xai Invoices +MZM I Suppliers W/A = WithdrawalApplication 72  1.5 Staffing Presently, there is no accounting staff at Financial Unit o f the TFCA Unit. The contract of the accountant, which handledthe FinancialManagement issues duringthefirst phase of the project, was terminated in March 2005. The TFCA Unit will appoint a new Financial Controller and Assistant Accountant. The recruitment o f Financial Controller i s inprocess. 1.6 AccountingPoliciesandProcedures The project adopts cash basis accounting method to record its financial operations. The project will comply with International Public Sector Accounting Standards (under the Cash Basis o f Accounting), as promulgated by the International Federation of Accountants (IFAC). The accounting policies and procedures will be documented in the Financial Procedures Manual to be finalized. 1.7 InternalAudit Internal auditing across the entire Government (includingprojects) i s the responsibility of the Inspectorate General o f Finance (Inspec@ Geral das Finanqas-IGF). The IGF is understaffed and suffers from a lack o f qualified staff. Therefore the IGF has limited capacity to oversee project implementation. Taking into account that the internal audit functions are weak, there needs to be strong supervision and quality assurance in the project. The day-to-day supervision o f accounting functions will be assuredby the organization structure o f TFCA Unit. 1.8 ExternalAudit Relevantly qualified, experienced and independent auditors will be appointed on approved terms of reference. The external audit will cover all World Bank, GEF, PHRD, and Counterpart funds in the project. The Legal Agreements will require the submission of audited financial statements to the Bank within six months after the year-end. The formats to be adopted will be documented inthe Financial Procedures Manual. A single opinion on the Audited Project Financial Statements in compliance with International Standards on Auditing (IASs), will be required including the accuracy and the propriety of expenditures made under the SOE procedures and the extent to which these can be relied upon as basis for credit disbursements. In addition to the audit report, the auditor will be required to prepare a separate Management Letter giving observations and comments, and providing recommendations for improvements o f accounting records, systems, controls and compliance with financial covenants inthe IDA, GEF, andPHRDAgreements. 73  1.9 Reporting and Monitoring Management Interim Reporting (Financial Management Reports) Formats o f the various quarterly management reports to be generated from the financial management system will be developed. There will be clear linkages between the information in these reports and the Chart of Accounts. These financial reports will be designed to provide quality and timely information to project management and various stakeholders on project performance. The Legal Agreements will require Quarterly management reports will be produced and will serve as Financial Monitoring Reports (FMRs) required by IDA. The contents o f these reports should as a minimum consist o f the following: 0 Financial Reports: 0 Sources and Uses o fFundsby FundingSource o Uses of Funds by Project Activity/Component 0 Physical Progress (Output Monitoring) Report 0 Procurement Report The formats havebeenagreed at negotiations. Annual Financial Statements The Legal Agreements will require the submission o f audited financial statements to the Bank within six months after the year-end. Inaddition to the monthly reconciliations and quarterly FMR's, the project will produce annual Project Financial Statements for analytical and audit purposes. These Financial Statements will compose of: a. A Statement of Sources and Uses of Funds / Cash Receipts and Payments which recognizes all cash receipts, cash payments and cash balances controlled by the entity; and separately identifies payments by third parties on behalf o f the entity. b. The Accounting Policies Adopted and Explanatory Notes. The explanatory notes should be presented in a systematic manner with items on the Statement o f Cash Receipts and Payments being cross referenced to any related information inthe notes. Examples of this information include: a summary o f fixed assets by category o f assets; a summary o f SOE Withdrawal Schedule, listing individual withdrawal applications; 74  c. A Management Assevtion that Bank funds have been expended inaccordance with the intendedpurposes as specified inthe relevant World Bank legal agreement. 1.10 InformationSystem The TFCA Unit at Ministry o f Tourism used for thefirst phase o f the project electronic spreadsheets to keep the bank accounts control, recording the payments made to suppliers and prepare the bank reconciliation and their financial statements. The TFCA Unit has recently installed accounting software, PHC. The Financial Controller to be appointed will test the package andrequest to supplier to makenecessaries adjustmentsifneeded. 1.11 Impact of ProcurementArrangements There are no specific Procurement arrangements that specifically impact the FM arrangements. 1.12 DisbursementArrangements Disbursements from IDA, GEF, and PHRD would be initially be made on the basis o f incurred eligible expenditures (transaction based disbursements). The TFCA Unit will open three Special Accounts for the deposits o f funds transferred from IDA credit Account, GEF Grants, and PHRD Grant. The TFCA Unit will make payments o f eligible project expenditures from the Special Accounts to suppliers. And, direct payments can also used by the TFCA Unit as consider necessary to pay project expenditures. 75  Allocationof Proceeds Part A Part B Part C Part D Part D Part A Part B Special Accounts With respect banking arrangement, for IDA, GEF, PHRD and Government funding, the TFCA Unit will maintain four bank accounts: (a) three Special Accounts inU S Dollars at a commercial bank acceptable to IDA for deposit o f funds transferred from IDA, GEF, and PHRD. The initial authorized allocation will be for IDA USD 1.OO millions, for GEF USD 0.50 million and for the PHRD grant USD 0.20 million representing about four months o f eligible expenditures. Statement of expenditures (SOEs) Disbursementswill be made on the basis o f SOEs for contracts with an individual valued less than those requiring IDA'Sprior review. Thus, all applications to withdraw proceeds 76  from the credit account will be fully documented, except for (a) expenditures for contracts with an estimated value o f less than US$200.000 each for works, and goods; (b) expenditures for consultant's services with an estimated value o f less than US$ 100.000 each for firms and US$50.000 for individuals; (c) training, workshops and operating costs. 1.13 Action Plan In order to establish an acceptable control environment and to mitigate financial management risks the following measures should be taken by the due dates as indicated inthe financial management actionplanbelow. FinancialManagementAction Plan -Action \TO. Status IConditionality 1 negotiations and submitted in electronic format o f formats to be luringnegotiations: attached to minutes Financial = agreed with FM Specialist o f negotiations) Procurement = agreed with Procurement Specialist Physical Progress = agreed with TTL - 2 3 1 TORSsubmitted by TFCAUnit 1 TORS approved by WB 4 5 6 7 8 77  1.14 Supervision Financial management supervision will be carried out regularly by the Financial Management Specialist (FMS) at least twice a year. The initial supervision will be on implementation progress o f agreed Financial Management Action Plan as per paragraph 1.13. The FMS will also: 0 Conduct an FMsupervision before effectiveness/disbursement; 0 Review the financial component o f the quarterly FMRs as soon as they are submittedto the World Bank; and, 0 Review the annual Audit Reports and Management Letters from the external auditors and follow-up on material accountability issues by engaging with the TTL, Client, and/or Auditors. 78  Annex 8: ProcurementArrangements MOZAMBIQUE: Transfrontier ConservationAreas and TourismDevelopment Project A. General Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRDLoans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. Procurement of Works: Works procured under this project would include: the minimal infrastructure platform in Vilankulo and Punto do Oro, which could include street rehabilitation, street lightning, wastewater treatment, landfill, sewage, storm drains, etc. (aggregate amount US$ 3.60 M), as well as community, tourism, park or reserve management infrastructures such as gravel roads, fences, airstrip, watchtowers, gates, office and staff housingbuildings, camp sites and lodges (aggregate amount US$4.70 M). The procurement will be done using the Bank's Standard BiddingDocuments (SBD) for all ICB and National SBD agreed with or satisfactory to the Bank. About half o f the procurement under the Community Enterprise Fund (CEF) will be carried out by communities when the amount procured is less that the Meticais equivalent o f U S $ 50,000 (aggregate amount US$ 2.20 M). Procedures for such procurement are found in the CEF Manual. Procurement of Goods: Goods procured under this project would include: vehicles, boats, quads, motorbikes (aggregate amount US$ 1.08 m) as well as office equipment computer, photocopiers, office furniture (aggregate amount US$ 0.34 M), and field equipment such as uniforms, camping stuff, GPS, tools, etc (aggregate amount US$ 0.47 M). National competitive bidding will be used for locally available goods less than US$200,000 and Shopping for locally available goods less than US$50,000. The procurement will be done using the Bank's SBD for all ICB and National SBD agreed with or satisfactory to the Bank. Insome cases which will require the Bank prior review, procurement from IAPSO could be used for vehicles and office equipment. Procurement of non-consulting services: Non-consultant services procured under the project includes a very limitednumber o f scholarships, study-tours, flight-timefor animal darting, surveys and surveillance. They will usually be procuredby direct contracting, 79  Selection of Consultants: Technical assistance and studies will be financed by the project. The TFCA Unit staff, the lead agency technical coordinators or advisors, some o f the park and reserve staff as well as studies such as the new conservation policy and legal framework, the design o f concessioning guidelines, the regulation o f the tourism law, the organization o f the new protected area management institution, the draft tourism and conservation plans, the district spatial development plan and maps, the district tourism development plan and then district tourism plans, the design and test o f tourism statistic facility, the preparation o f FUTUR business plan, engineering study for infrastructure design and monitoring o f construction, ecological survey design and test, NGO contract for community support through the participatory process and through the brokerage o fjoint ventures, etc. Consultations also include the organization o f numerous trainingmodules and workshops. Short lists o f consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o fparagraph 2.7 o fthe Consultant Guidelines. The following selection methods are to be used: (1) Selection by Qualification may be usedfor contracts below US$lOO,OOO inalternative to QCBS; (2) Quality and Cost for all contracts above US$lOO,OOO; (3) Least cost i s possible for services o f a standard nature such as audit; (4) Selection o f U.N. agencies and NGO as for sections 3.15 and 3.16 (respectively) o f Bank consultants guidelines, including sole source ifjustified; and (5) Single source as for section 3.10 o f consultants guidelines with prior approval by the Bank. Single source may be used, in alternative to selection through qualifications for training assignments, seminars and non -consulting services. Some NGOs or University have been already identified because o f their comparative advantage: The Durban Oceanographic Institute for the design o f the new Marine Protected Area ($60,000), the Durell Institute for Conservation and Ecology (DICE) for conservation planning ($160,000), Peace Park Foundation (PPF) for mapping o f district plans and protected areas ($160,000) and, in joint venture with national NGO, for ensuring the role o f community broker in the Lubombo TFCA ($236,000), the University Eduardo Mondlane for ecological applied research ($165,000), Wildlife Conservation Society for animal disease surveillance in Limpopo National Park ($87,000), African Wildlife Foundation, injoint venture with national NGO, for ensuring the role o f community broker in the Limpopo and Chimanimani TFCA ($488,000), the NGO ORAM for delivering community land demarcation in Limpopo TFCA ($277,000), World Tourism Organization for designing the licensing and grading o f national tourism investment ($100,000). In addition six TFCA U staff, which have been recruited in phase 1 with acceptable procedure and have performed satisfactorily, will remain on board (altogether $940,000 over 7 years). Operating Costs: Operating costs will be packaged as feasible and procured either through shopping (where packaging is feasible) or direct purchase (for consumables) to be documented throughinvoices 80  The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented in the Procurement Manual. Its endorsement by the Bank is a condition o f effectiveness. BiddingDocuments and Forms of Contract: The Bank's standardbiddingdocuments, including those for evaluation reports, will be used for all procurement under ICB and NCB procedures and for the selection o f consultants. The language o f the documents and contracts will be as follows: 0 ICB - Bidding documents in English, with Portuguese translation; bids can be submitted in English or Portuguese; contracts for ICB to be signed in the same language as that of the bid, Le. either English(with translation into Portuguese if desired) or in Portuguese (with translation into English for IDA), according to paragraph 2.15 of the Guidelines; a NCB and Shopping - The documents may be prepared only inPortuguese, according to paragraph 3.4 o f the Guidelines; 0 Consultants - Request for proposals in English, with Portuguese translation; consultants can submit their proposals in English or Portuguese; contract to be signed in the same language as that of the proposal, that is either English (with translation into Portuguese if desired) or Portuguese (with translation into English for IDA),accordingto paragraphs 1.20 and 1.21 ofthe Consultants Guidelines. 81  TableA8.1. Thresholds for ProcurementMethodsandPrior Review ProcurementCategory Contract Value ProcurementMethod ContractsSubject to Prior Threshold (US$) Review (US$) Works 500,000 or more ICB 200,000 or more: all Less than 500,000 NCB First 2 contracts Less than 50,000 Direct contracting 200,000 or more: all Goods 200,000 or more ICB All Less than 200,000 NCB First2 contracts Less than 50,000 Shopping Direct contracting & 200,000 or more: all UNAgencies (IAPSO) Consultant Services Firms - QCBS, QBS, CQS, 100,000 or more: all contracts; LCS for less than 100,000: all TORs Less than 100,000 CQS All TORs sss Consultant Services - I ICs 50,000 or more: all Individuals Less than 50,000: all TORs Consultant Services - UN All Agencies and NGOs Commercial practices Less than 50,000 Approval o f commercial practices Goods, works and services Less than 50,000 -Community participation II Notes: ICB International Competitive Bidding NCB National Competitive Bidding QCBS Quality and Cost Based Selection QBS Quality Based Selection CQS Selection Based on Consultants' Qualifications LCS Lest Cost Selection sss Sole Source Selection I C s Individual Consultants Selection B. Assessment of the agency's capacityto implementprocurement Procurement activities will be carried out by Transfrontier ConservationUnit (TFCA U). The agency is staffed by a director, one financial manager, two accountant clerks, one procurement specialist, one procurement assistant and support staff. Other key staffs are posted inthe three focal TFCAs. 82  An assessment o f the capacity o f the Implementing Agency complement procurement actions for the project has been carried out by the Bank on April 12, 2005. The assessment reviewed the organizational structure for implementing the project and the interaction between the project's staff responsible for procurement Officer and the Ministry's relevant central unitfor administrationand finance. The key issues and risks concerning procurement for implementationof the project have been identified and include (see table below). The corrective measures, which have been agreed, are described inthe table below. Risks/Issues Inadequatepremises working stations and one large office or 2 average sized offices Record keeping equipment insufficient Lack o f support staff Procurement assistant will be recruited 1By effectiveness Procurement staff Procurement plan with details o f procurement Done experience not with contracts for the first two years large/medium size Procurement manual will clearly detail the Byeffectiveness contracts procurement management processing TFCA Uwill recruit a highcaliber international Byeffectiveness consultant o f f i i to organize procurement team, train procurement staff, prepare additional training plan and launchprocurement activities Training to be attended by the Procurement Within 3 months after Officer and assistant effectiveness Lack o f experience with - Country Office & TTL will review first two Bank financed projects equipment, civil work and consultant contracts - Country office will provide continuous support as required - PO should attend procurement clinics delivered by the Country Office The overallproject risk for procurement is currently ratedas high. C. ProcurementPlan The Borrower developed a procurement plan for project implementation, which provides the basis for the procurement methods. This plan has beenagreed betweenthe Borrower and the Project Team on September 2, 2005 and is available at TFCA Uin Maputo. It will also be available in the project's database and in the Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 83  D. FrequencyofProcurementSupervision In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the ImplementingAgency has recommended every six months for the lStand yearly afterward supervision missions to visit the field to carry out post year review o fprocurement actions. E. Detailsof the ProcurementArrangementsInvolvingInternationalCompetition 1. Goods, Works, andNonConsultingServices (a) List o f contract packages to be procured following ICB and direct contracting: 1 1 2 3 4 1 5 1 6 7 8 9 Ref . Contract Estimated Procurement P-Q Domestic Review Expected Comments (Description) cost Method Preference by Bank Bid-Opening No. (yesho) (Prior / Post) Date 1 Transport $530,000 ICB No Prior 0612006 equipment 2 Transport $415,000 ICB No Prior 06/2010 Replacement equipment of vehicles (b) ICB contracts estimated to cost above 200,000 per contract and all direct contracting will be subject to prior review by the Bank. 2. ConsultingServices (a) List o f consulting assignments with short-list o f international firms. 1 1 2 3 4 5 6 7 Ref. Descriptionof Estimated Selection Review Expected Comments No. Assignment cost Method by Bank Proposals (Prior / Submission Post) Date 1 External auditors $60,000 LCS Post 0712005 Year 1-3 2 External auditors $70,000 LCS Post 0712008 Year 4-7 3 Conservationpolicy $166,00 QCBS Prior 0612006 4 PA legislations $40,000 QCBS Post 0612008 5 EstablishmentPA $110,000 QCBS Prior 06/2010 institution 6 Staff recruitment & $440,00 QCBS or FC Prior 0112011 adaptative training 7 SDP using SEA $200,000 QCBS Prior 06/2007 All districts 8 Tourism statistics $30,000 QC Post 0112008 training 9 FUTURbusiness $30,000 QCBS Post 01/2007 planning 10 CompletionTourism $55,000 QCBS Prior 0612008 Matutuine 84  Master Plans 11 District Tourism $220,000 QCBS Prior 0612008 Gaza districts & Master Plans Vilankulo 12 District Tourism $90,000 QCBS Prior 0612008 Sussudenga Master Plans 13 TFCA Ustaff $940,000 sss Prior Done Staff already (done) employedby TFCA U 14 Conservationplanning $160,000 sss Prior 0312005 DICE in3 TFCA 15 Mapping of 3 TFCA $160,000 sss Prior 0312005 PeacePark after/aspart of SEA, Foundation land demarcation& park management plans 16 MarinePA design $60,000 sss Prior 0312007 Oceanographic Institute 17 Applied ecological $165,000 sss Prior 06/2006 University research Eduardo Mondlane 18 Animal disease $87,000 sss Prior 06/2006 Wildlife surveillance Conservation Society 19 Application screening $180,000 QCBS Prior 06/2006 Financial firm (for Community Enterprise Fund) 20 Community broker in $488,000 sss Prior 03/2006 AfricanWildlife Limpopo, Foundationwl Chimanimani & tbd national NGO Zimoza TFCA 21 Community broker in $236,000 sss Prior 0312006 PeacePark Lubombo TFCA Foundationwl tbd national NGO 22 Community facilitator $277,000 sss Prior 0312006 ORAM for land demarcation inLimpopoTFCA 23 Designof tourism $100,000 sss Prior 0312007 World Tourism licensing and grading Organization (b) Consultancy services estimated to cost above 100,000 per contract for firms and $50,000 per contract for individual consultant and single source selection of consultants (firms) will be subject to prior review by the Bank. The Bank will review all consultant services TORSand procurement plans. (c) Short lists composed entirely o f national consultants: Short lists o f consultants for services estimated to cost less than $100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions o f paragraph 2.7 of the Consultant Guidelines. 85  Annex 9: Economic and FinancialAnalysis MOZAMBIQUE: Transfrontier ConservationAreas and TourismDevelopment Project The intention o f the report is to quantify the economic potential o f tourism in Mozambique, and to indicate the role o f the TFCA's in realizing that potential. Mozambique has a well-articulated tourism policy and a strategic plan. Tourist arrival statistics are around 400,000 per year; capacity i s around 14,000 beds and current contribution to GDP i s around 1.2%. The potential for tourism development is widely acknowledged, as i s the current underperformance. Mozambique has a miniscule share o f international tourism, and the challenge for Mozambique i s how to provide tourist products that are price and productivity competitive. Constraints The legacy o f the past (civil disturbance, central planning o f the economy, colonial indifference to local needs etc.) has left the country with a series o f hurdles that have to be overcome in pushing forward tourism development. These hurdles include weak governance (which makes it difficult to create an enabling environment for investment), lack o f infrastructure in a large country (which raises costs for all business operations), and low level o f local education and skills (which leads to very low productivity and makes the destination uncompetitive inprice and productivity). Scenarios and PriorityAreas Since 1992, there have been great advances, with new hotels and lodges, however, the challenges in realizing the potential for tourism will have to be met by a much greater degree o f focus, and, ideally, by more effective forward planning instruments. Scenarios for the future are infinitebut for the purposes o f this report are seen as three: 1. Continue as we are going now which means tourism as a `pioneer industry'; 2. Be more organized with IDP (integrated development planning) as the key instrumentinbringingforward development and investment(core initiatives); 3. Be even more organized with specific tourism development areas (TDAs), which also have associated regulatory powers and institutional capability, as the key instrument for bringing forward development and investment (proactive catalytic). The scenarios are largely on a continuum line in that the more highly organized the process o f development, the less the risks in investing, the lower the returns requiredby the investor, the higher the quality o f the investor and operator, the larger the investment, and the higher the economic returns to Mozambique - primarily in the form o fjobs and local incomes. Achieving the greater organization requires a high level o f political will combined with a higher level o f foreign involvement - investmentand operation. 86  Physical focus means that the Government has to prioritize areas for its assistance in bringing about tourism development. The need to focus is brought about by the size of the country and the legacy o f hurdles referred to above. The actual space required for a built tourism environment is infact relatively small. So a focus on relatively small areas will allow development to be achieved, which is not feasible all around the country. Achievement i s now key in order to show the local people what the gains can be from tourism. The priorities, which are open to discussion, but they have been selected inthis report as a result o f ajudgment about the opportunities/strengths within Mozambique, are: Develop Maputo and associated environs (e.g. Inhaca island) as a `must see' capital city. Maputo should become both a destination and also a market for other areas such as GLTFCA, Lubombo TFCA etc.; Develop VilankuloBazaruto Marine Park as a world-renowned resort destination area. It has the product portfolio and mix to achieve this; Develop PembdQuirimbas TFCA as a tourist destination in its own right (subject to feasibility study); Develop GLTFCA as a wildlife destination, as bush-beach linkage, and as a support to the Maputo destination; Develop Lubombo TFCA as a marine destination andas a support to Maputo; Develop the regional circuits (and TFCAs) to gain the most from Southern Africa. Other destinations can be included but there i s always the risk o f `dissipation o f resources' and then `no achievement', and then worse, `disappointment for locals'. Quantifying the Economic Potential Improvement in the statistics i s currently programmed by MITUR and by INE. In the meantime it is necessary to view all the statistics as broad orders of magnitude. The macroeconomic situation intourism in2015 i s estimated as below. Scenario Gross Contri- Direct Local 2015 Forex bution Employment Incomes =T-=-l Employment Capital U S $ m ToGDP% No US$m No Investment 1Low 180 1.5 45,000 145 120.000 30 US$m 2 Middle 290 2.4 60,000 230 3High 440 3.4 75,000 330 Under the low scenario (continuing as we are now), there is growth in the industry, contributing 1.5% to GDP compared to 1.2% now, but there i s 50+ % under- performance. It could contribute 3.4%. The above figures apply to the impact o f the inbound tourism expenditure. It does not include for domestic tourism, 87  Role of the TFCAs The principal roles o f the TFCAs are firstly as the key planner for some o f the priority areas - Vilankulo/Bazaruto, PembdQuirimbas, Greater Limpopo, Lubombo, and the TFCAs inthe regional circuits. And secondly, as the builder o f the base over 10 years on which the GOM (on behalf o f the people) can secure proper returns from the exceptional environment/ecology - marine and terrestrial - within the country. The principal means for securing these returns (which have to be earned by the Government illustrating its ability to look after these environments/ecology such that tourists are willing to pay) are through tourist bednight levies in specific areas, site concession fees from tourist accommodation providers, and through reasonable consumption taxes such as VAT. The Government could probably earn, but in 10 years time, up towards US$ 30 - 40 million per year in a high scenario. However, it is necessary to take a long-term view on this and for the tourist to see it as `value for money', and not for the Government to just take tax wherever it i s possible, as sometimes currently takes place (e.g. the visa fees). Role of the TFCA Unit The TFCA Unit has successfully managed the establishment o f the TFCAs and put in train many of the measures for conservation. The task has now been broadened to include tourism. In the future, tourism will be inextricably linked as a base for conservation, providing both funds and a level o f interest in the success o f conservation not only on the part o f the tourists themselves, but also on the part o f the tourism industry itself. For the TFCA Unit to fulfill its roles, it has to embark upon integrated development planning (IDP) for the TFCAs (conservation and tourism development) and to take it further with assistanceto special tourism development areas where such a concept canbe implemented. It is recommended that the Elephant Coast Development Agency (ECDA) be considered as a pilot project for a special tourism development area (TDA). The TDA would be based upon a fully integrated development plan (not just land use planning and sites for the development but including infrastructure, human resources, social and environmental planning and inter-sectoral planning). The TDA will bring economic benefits both to the local people and to the conservation o f the coastal areas and inland areas. The TFCA Unit would be a prime player and mover in the integrated development planning (IDP) that needs to be undertakenunder the auspices o fthe ECDA. Returns on TFCATDP Phase 2 o f the TFCATDP will be financed through a GEF Grant (ca. $10 million) and an IDA Credit (ca. $20 million). A substantial investment is being put into improving the conservation o f the environment and ecology associated with the planning for tourism. 88  As indicated previously the returns from such investment will accrue not only through future charges that can be secured from both tourists (say, bednight taxes) and from the tourism industry (say, through concession fees for sites), but also through the higher prices that can be charged by the tourism operators, thus making them more profitable. The future scale o f the tourism industry in Mozambique, where in ten years time it is possible to be talking about inboundtourist expenditure approaching US$450 million per year (in a high scenario), would suggest that an investment of US$ 30 million in a key initiative that will underpin chargeable tariffs and Government revenues i s not `out o f kilter'with the potential. However, to realise returns from these conservation activities through tourism, which i s perfectly possible, will rely upon a highly-organised development of the tourism industry requiringa highlevel ofpolitical will on thepart o fthe Government. 89  Annex 10: SafeguardPolicyIssues MOZAMBIQUE: Transfrontier ConservationAreas and TourismDevelopment Project SafeguardPoliciesTriggeredby the Project Yes N o Environmental Assessment (OP/BP/GP 4.01) [XI Natural Habitats (OP/BP 4.04) [XI Pest Management (OP 4.09) [I Cultural Property (OPN 11.03, beingrevised as OP 4.11) [ I Involuntary Resettlement (OP/BP 4.12) [XI Indigenous Peoples (OD 4.20, beingrevisedas OP 4.10) [ I Forests (OP/BP 4.36) [XI Safety of Dams (OP/BP 4.37) [ I Projects inDisputed Areas (OP/BP/GP 7.60)* [ I Projects on International Waterways (OP/BP/GP 7.50) [ I The TFCA and Sustainable Tourism Development Project is a major conservationproject which i s focused on sustainable use o f Mozambique's immensenatural habitat estate. Its primaryobjective is that of institutionalizing ecosystem management, andmainstreaming it into development planning processes. As such it i s expected to have significant environmental and social benefits relative to a no-project situation. The project also has the objective of promoting environmentally sustainable tourism and other sustainable land uses such as game farming. The project will operate inthe context o f a highly dynamic socio-economic and political landscape. G O M i s keen to promote private sector investmentand i s also responsible for a sizable public sector investment program, so the project will require adaptable experiential learning processesrather than blueprints. OP4.01 Social and EnvironmentalImpact, OP4.04 on Natural Habitats and OP4.36 on Forest Inspite ofthe expected social and environmentalbenefits, OP4.01is triggered because o f there may be minor social and environmental negative impacts. Undetermined infrastructure will be built in Punta do Oro and Vilankulo to increase these towns' basic facilities and make them attractive to tourism investors. The impact o f these constructions will need to be monitored as well. Large-scale impacts such as major land use change will not be induced by the project. The development o f Mozambique's coastline and interior i s expected whether or not the project i s implemented. The project i s intended to provide a framework for promoting sustainable development, through an ecosystem management approach. The project i s also not expected to finance or induce major irreversible impacts. * By supporting theproposedproject, the Bank does not intend toprejudice thefinal determination of theparties' claims on the disputed areas 90  Social - The project was prepared and will be implemented from a participatory perspective where all stakeholders, inparticular the local communities play a central role. At the planning stage, three key participatory mechanisms are being used to involve communities. These are: (a) Strategic Environmental Assessment (SEA) to provide information on environmental and social assets and constraints to help evaluate the sustainability and broader impacts o f various development options; (b) Macro or spatial zoning plans which define activities inthe different zones and the implementation norms for each zone; and (c) IDDPs to draw together stakeholders and sectoral, local and upstream development plans ina coherent TFCA-wide strategic vision. As from the beginning, the participatory process identifies local priorities through local stakeholder's workshops and consultation meetings to produce SEASand spatial zoning plans, The IDDP formulation process will result in comprehensive development strategies for each TFCA. IDDP implementation will involve the establishment and management o f multi-use conservation areas (including formal and informal core PAS, appropriate buffer and support areas); and the initiation o f economic alternatives (environmentally sustainable tourism development, co-management, private sector partnerships incommunity based tourism etc.) to unsustainable, destructive use o fnatural resources by local communities. To promote long term viability and coherence o f local level planning, preparation and implementation o f TFCA, IDDPs will be not only in conformity with, but integral part o f the participatory district development planning approach at all levels, inparticular at community level. Further, a community strategy will be a key tool for creating awareness, for consensus building, for generating participation in processes o f change and development, for making informed decisions and for resolving conflicts. At community level, the communication strategy should focus on the needs to ensure access to information for all local stakeholder groups; and to strengthenthe ability o f all stakeholders to articulate and disseminate information, and make their own informed decisions. This should help communities become full partners inthe process o f zoning and development planning. It i s expected that the communities will feel empowered and will effectively and gradually develop an ownership inthe TFCA development programs. The project will also support other activities and measures focused on the improvement o f the communities' livelihood and the resilience o f the vulnerable groups. This will involve programs with focus on capacity building (in particular acquisition o f income generating skills, leadership and community planning skills), reproductive health awareness raising, institutional development, and, to the extent feasible, development o f priority community services and infrastructure. The project includes a significant nature tourism component focusing on gradually involving local communities in co- management o f PAS as well as promotion o f business partnerships to obtain direct concrete benefits from tourism initiatives inthe PASand buffer zones. Environment The project i s given a Category B rating since the project will be designed - to provide a framework for environmentally sound planning processes. Extensive public consultation processes considered essential to underpin participatory planning for 91  ecosystem management will be triggered. Project preparation has designed the IDDP process, which begins with an SEA to be carried out as part o f project implementation. These processes will be set out in a disclosable Environmental and Social Management Framework, prior to project appraisal. All investments financed by the project will be subject to individual environmental assessments according to the ESMF. The project will also strengthen capacity and processes inMozambique for environmental assessment. Major landuse changes are not foreseen. However, even without the project, the coming years will see infrastructure and private sector development in certain areas which could lead to the expansion o f tourism nodes, population increase, and in-migration. These trends are already being observed in certain coastal areas. The challenge will be to ensure that the project induces positive change, and encourages sustainable pro-poor tourism. Natural habitats andforest - The natural habitat OP i s triggered even though the project i s expected to have significant positive impact in the securisation o f the country natural habitat and forest. Still, with the economic development triggered by the project and, some o fthe infrastructure built, there may be negative impact locally. . There are two levels at which the TFCA process will operate by: Influencing current and proposed investment plans - both public and private - towards more environmentally and socially sustainable patterns. This could mean realignment or repositioning o f infrastructure investments undertaken by the . Government or the private sector; Actively promoting investments which maximize opportunities for sustainable development in the TFCAs. This could mean supporting the development o f infrastructurewhich is essential for ecological management or for sustainable tourism development. These investments will not be hlly defined during the course of project preparation, except inthose areas where planning i s sufficiently advanced (for example under TFCA1) Dealing with these challenges will require a two-pronged approach: Strategic Environmental Assessments (SEA) would be carried out for the proposed TFCAs as part o f the spatial planning process. SEASare considered more appropriate for the large areas where boundaries remain undefined and where a number o f different development activities will betaking place. The SEAs will support a zoning process and help identify priority sites for private sector investment. The SEA processes will identify mitigation activities most likely inrespect o f the development . o f tourism nodes, unregulated access to natural resources, zoning and other factors. Within the broadly designedzones andpriorities set by the SEAs, specific public and private investmentswill emerge requiringproject specific environmental assessments. 92  OP/BP4.12 on InvoluntarvResettlementand LandAcquisition Two major factors have led to the triggering o f OP/BP 4.12. The first factor i s the restrictions and the incompatibility o f local communities' livelihoods activities with the objectives o f the TFCAs and PAS. The objectives o f the TFCATDP in protecting the natural environment and supporting biodiversity conservation and natural resource management in the TFCAs include the establishment o f boundaries, the potential for establishing new PAS, and the development o f regulations, criteria, procedures and institutional structures for planning, management and development. These imply the restriction o f access to natural resources by the local communities inside the PASand inbuffer zones. Communities living inTFCA interstitial areas are also potentially affected insofar as these multi-resource use areas will be included in zoning and development plans for sustainable resource use that may include community-based informal P A creation. Yet, the poorest and most vulnerable sectors o f rural populations are often the most dependent on renewable natural resources for income generation and risk management strategies. Often, they bear direct and indirect costs from living in and/or near conservation areas, interms o f loss o f access to resources, and damage to or loss o f crops, livestock and human life caused by wildlife. Hence, if affected communities do not participate in identifying their resources, designing and agreeing on restrictions to these, and inproposing the mitigation measures, it i s unlikely that they will comply with conservation plans. To avoid such a negative effect on the population and avoid unnecessary conflicts, a Process Framework has been commissioned and completed. The purpose o f the framework i s to describe the process by which potentially affected communities will participate in resource planning and management. The process Framework shows how Development Action Plans will be formulated and adapted with the local population duringthe design and implementationphases o fthe project. Action plans are instruments that emphasize actions to give communities a voice and that provide them with means to negotiate their position with project and government authorities. Their design and development provide the opportunity for involvement o f NGOs and other partners in helpingto empower local communities through various forms o f capacity building. Once developed, an Action Plan should become part o f the natural resources management plan. The second factor that contributed to the triggering o f OP/BP 4.12 is the objective to promote and link conservation and nature tourism development activities to community participation and access to direct and indirect benefits, as well as to encourage communities' land delimitation to strengthen their rights bases. The development o f nature tourism activities may require land acquisition to build and develop infrastructure, and buildings. The project may also cause displacement o f people from their homes and areas as a result of the threat o f wildlife. Because presently, the location, nature and scope o f possible land acquisition and displacement are not yet know, a Policy Framework (PF), as a mitigation measure, has been commissioned and completed.' The PF, which i s a binding public document, establishes the policy principles to be used for the development of specific RAPS, as specified in OP/BP 4.12. During project 93  implementation, when the details o f land acquisition and involuntary resettlement are fully known, several Resettlement Action Plan(s) (RAPS)will be defined, prepared, and implemented. No Indigenous people or sites known for baring cultural heritage have been identified. Burial and sacred sites will be protected and documented and recorded in the managementplans andthe RAPS. 94  Annex 11: ProjectPreparationand Supervision MOZAMBIQUE: TransfrontierConservationAreas and TourismDevelopment Project Planned Actual PCNreview Sept. 2000 Feb.2003 Initial PID to PIC Oct. 2000 March2003 Appraisal April 2005 May. 2005 Negotiations May.2005 Aug. 2005 BoardRVP approval Sept. 2005 Dec. 2005 Planneddate o f effectiveness Jan., 2006 Planneddate o fmid-term review Jan., 2009 Plannedclosing date Dec. 31,2013 Key institutions responsiblefor preparation ofthe project: TFCA Unit o f MITUR with assistance from DNAC, DINATUR, DNP Bank staff and consultantswho worked on the project included: Name Title Unit Agi Kiss Lead ecologist, TTL (until 09/2004), H Q Jean-Michel Pavy Sr. Environment sp., TTL AFTS1 (start 10/2004), Lusaka Cedric Boisrobert Operation Officer, HQ AFTS1 Aniceto Billa Operation Officer, Maputo AFTQK Caroline Guazzo Task assistant (HQ AFTS 1 Luisa Matsinhe Task assistant (Maputo AFTS1 Joao Tinga FMS (Maputo) AFTQK Slahedine Ben-Halima Lead Procurement AFTQK Mohamed Arbi BenAchour Snr. Sociologist (HQ AFTS1 Judith Oglethorpe Conservation sp. Consultant RodDe Vletter IDDP sp. Consultant IainChristie Tourism sp. Consultant Suzanne Morris Disbursementofficer LOAG2 Marius Koen FMS (HQ) AFTQK GehardTshernnerl Procurement(HQ) AFTQK Albert0 Ninio Counsel LEGAF MBnica Sawyer Counsel LEGAF 95  Bank funds expendedto date on project preparation: 1. Bank resources: US$303,75 1 2. Trust funds:US$384,859 3. Total: US$688,610 EstimatedApproval and Supervision costs: 1. Remaining costs to approval: US$5,000 2. Estimated annual supervision cost: US$80,000 96  Annex 12: Documentsin the ProjectFile MOZAMBIQUE: TransfrontierConservationAreas and TourismDevelopment Project ICR Phase 1 PCN MinuteofPCN GEFProiect Concept GEFReviewSheet & GEF Council Comments Pre-appraisal AM & BTOR PHRD Proposal Environment and Social management Framework Process Framework Resettlement Policy Framework MinutesofQERmeeting MinuteDecisionMeeting Appraisal Ah4 & BTOR Memo for negotiations Minutesofnegotiations 97  r In x 7 In (D N r 4  MOZAMBIQUE Statement o f IFC's Heldand DisbursedPortfolio (InU S DollarsMillions) Held Disbursed FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1998 BIM-INV 0 0.3 0 0 0 0.3 0 0 2000103 BMF 0 0.4 0 0 0 0.4 0 0 2004 ENH 0 18.5 0 0 0 0 0 0 1997101 MOZAL 49.65 0 58.5 0 49.65 0 58.5 0 1999 Maragra Sugar 10.3 0 0 0 0 0 0 0 2000 SEFAusmoz 0.72 0 0 0 0.72 0 0 0 1997 SEF CPZ 1 0 0 0 1 0 0 0 2000 SEF Cab0 Caju 0.58 0 0 0 0.51 0 0 0 SEF Grand 2001 Prix 0.58 0 0 0 0.39 0 0 0 2000104 SEF Merec 0 0 0 0 0 0 0 0 TotalPortfolio: 62.83 19.2 58.5 0 52.27 0.7 58.5 0 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. Totalpendingcommitments: 0.00 0.00 0.00 0.00 99  Annex 14: Countryat a Glance MOZAMBIQUE: TransfrontierConservationAreas andTourismDevelopment Project Sub- POVERTYand SOCIAL Saharan Low- Mozambiaue Africa income 1 Developmentdiamond' 2004 Population,mid-year(millions) 19.1 719 2,338 Life expectancy GNI per capita (Atlas method, US$) 250 600 510 I GNI (Atlas method, US$ blllionsJ 4.8 432 1,184 Average annual growth, 1998-04 Population(%) 2.0 2.2 1.8 Laborforce I%) 2.1 1.o 2.1 Gross + primary Most recent estimate (latest year available, 1998-04) enrollment Poverty(% ofpopulation belownationalpoverty line) 54 Urban population(% of total population) 27 37 31 Life expectancyat birth (years) 45 46 58 Infant mortality(per 1,000 live births) 101 101 79 Child malnutrition(% of children under 5) 24 44 Access to improvedwater source Access to an improvedwater source I%of population) 37 58 75 illiteracy (% ofpopulation age 15+) 55 65 61 - Gross primaryenrollment (% of school-agepopulation) 110 95 94 Mozambique Male 121 102 101 -Low-incomegroup Female 100 88 88 KEY ECONOMICRATIOS and LONG-TERMTRENDS 1984 1994 2003 2004 Economicratios' GDP (US$ biiiions) 3.4 2.3 4.8 6.1 Gross domestic investmenffGDP 11.7 25.5 25.9 20.1 Exportsof goodsand services/GDP 4.1 14.1 28.3 30.0 Trade Gross domesticsavings/GDP -2 5 -8.4 10.1 11.8 T Gross nationalsavings/GDP -0.2 -1.9 11.3 11.9 Currentaccount balance/GDP -14.1 -38.4 -19.9 -13.8 Domestic Interestpayments/GDP 0.1 2.4 3.0 2.4 investment Total debffGDP 42.6 323.1 103.0 83.3 savings Total debt servicekxports 7.8 28.6 25.4 24.0 Presentvalue of debffGDP 25.2 23.7 Present value of debffcurrentyear exports 86.0 77.1 indebtedness 1984-94 1994-04 2003 2004 2004-08 (average annualgrowth) -- GDP 4.1 8.3 7.8 7.2 7.0 Mozambique GDP per capita 3.1 6.1 5.8 5.3 5.2 Low-incomegrow ~ Exportsof goods and services 7.6 18.6 13.8 23.8 6.5 STRUCTUREof the ECONOMY 1984 1994 2003 2004 1 Growthof investment and GDP (Oh) (% of GDP) 1 Agriculture 30.2 353 industry 20.0 16.1 Manufacturing .. 9.5 Services 49.8 48.6 46.5 47.2 Private consumption 87.4 94 3 Generalgovernment consumption 15.1 14.1 10.3 10.1 importsof goods and services 18.4 48.0 44.1 38.3 1984-94 1994-04 Growth of exports and imports (Oh) (average annualgrowth) Agriculture 2.3 5.8 8.5 6.0 6o lndustly -3.0 17.4 10.2 8.6 40 Manufacturing .. 18.0 13.6 9.6 20 Services 6.4 6.2 4.8 8.0 0 Private consumption 3.0 4.0 9.9 9.1 -20 Generalgovernment consumption 5.7 9.1 10.8 5.0 4 0 Gross domesticinvestment 2.5 12.6 4.4 -13.9 -Exports &Imports  Mozambiaue PRICES and GOVERNMENT FINANCE 1984 1994 2003 2004 Domesticprices (% change) 20 Consumer prices 30.0 63.1 13.4 12.6 15 Implicit GDP deflator 17.7 54.7 9.0 12.6 10 Government finance 5 (% of GDP, includes cutrent grants) 0 Current revenue 16.0 17.9 16.6 15.1 99 00 01 02 03 04 Current budget balance -3.6 3.0 2.2 1.2 -GDP deflator *CPI Overall surpiuddeflcit -15.3 -12.9 -10.3 -8.9 TRADE 1984 1994 2003 2004 (US$ millions) Exportand Import levels (US$ mill.) Total exports (fob) 96 164 1,044 1,504 Cashew nuts and rawcashew 15 15 9 29 Prawn 28 63 76 92 2 000 Aluminum 568 880 1,500 Manufactures 3 15 19 Total imports (ci0 540 881 1,741 2,035 1000 Food 53 159 188 Fuel and energy 82 249 312 500 I Capital goods 201 400 737 0 98 99 00 01 02 03 04 Export price index (1995-100) 110 91 87 110 Import price index (1995-100) 94 91 91 101 &ports mimports Terms of trade (1995=100) 117 100 96 108 BALANCE of PAYMENTS 1984 1994 2003 2004 1 (US$ millions) Current account balanceto GDP (Oh) Exports of goods and services 157 355 1,353 1,828 0 Imports of goods and services 583 1,018 2,108 2,330 5 Resource balance -426 -662 -756 -503 .10 Net income -50 -202 -198 -340 -15 Current account balance beforegrants -476 -864 -953 -843 -20 Financing items (net) 539 917 1,076 1,055 -25 Changes in net reserves -53 -52 -122 -212 -30 Memo: Reserves includinggold (US$ millions) 38 209 947 1.159 Conversion rate (DEC, iocai/US$J 42.4 5,918.1 23,762.3 22,581.3 EXTERNAL DEBT and RESOURCEFLOWS (US$ millions) Total debt outstandingand disbursed 1,438 7,272 4,930 5,071 :omposition of 2004 debt (US$mlll.) IBRD 0 0 0 0 IDA 0 714 1,232 1,427 Total debt service 17 117 356 450 IBRD 0 0 0 0 IDA 0 4 8 6 Composition of net resource flows Official grants 168 565 514 491 Official creditors 612 219 142 254 Privatecreditors 198 0 17 -92 Foreigndirect investment 0 35 342 241 E: 2,352 World Bank program Commitments 0 427 163 206 I.IBRD E Bilateral Disbursements 0 176 159 197 B IDA - D Other multilateral - ~ F Private Principal repayments 0 0 2 2 IC-IMF G Short-term -- Net flows 0 176 157 195 Interest payments 0 4 6 4 Net transfers 0 172 151 191 101  Annex 15: Letter of SectoralPolicy MOZAMBIQUE: Transfrontier ConservationAreas and TourismDevelopment Project Introduction 1. The Mozambique Council of Ministers discussed the concept o f transfrontier conservation in 1991 and requested the Global Environment Facility (GEF) through the World Bank, to provide assistance for the preparation o f a project. During the course o f the preparatory activities the original idea o f a Transborder Park emerged into a broader multiple use "Transfrontier Conservation Area (TFCA) concept. TFCAs are defined as "relatively " large areas that straddle frontiers betweentwo or more countries and cover large scale natural systems encompassing one or more protected areas". 2. In 1996 the Government o f Mozambique (GOM) secured a grant from the Global Environment Facility Trust Fund to support the Transfrontier Conservation Areas Pilot and Institutional Strengthening Project. This project was implemented from 1997 to 2003. Among the achievements o f this project have been international agreements for establishment o f the Greater Limpopo TFCA, the Lubombo TFCA and the Chimanimani TFCA. Discussions are inprogress for two TFCAs, ZIMOZA and Niassa and when these are realized, Mozambique will have transfrontier agreements with South Africa, Swaziland, Zimbabwe, Zambia, Malawi and Tanzania. 3. The Government o f Mozambique has provided leadership in the region and commitment to conservation and development through implementation of the concept o f TFCAs. It intends to build on this platform constructed over thirteen years, through the Transfrontier Areas Conservation and TourismDevelopment Project the objectives of which are shown below. ProjectDevelopmentObjectiveand GlobalEnvironmentalObjective PDO: Growth in community-private sector led environmentally and socially sustainable tourism inTFCAs GEO: Increase the area, connectivity, & effectiveness o f biodiversity conservation in TFCAs. 4. The Government o f Mozambique through the Transfrontier Conservation Areas Pilot and Institutional Strengthening Project and work conducted in preparation for the Transfrontier Areas Conservation and Tourism Development Project (between September 2003 up to the present), identified a number o f issues that it will address to provide direction for and enhance the practice of conservation and tourism development in Mozambique. The Government recognizes that success inaddressingthese issues will require inter departmental collaboration within government and with the private sector, including affected citizens. The statements o f intent set out below therefore reflect the shared commitment o f the organs o f 102  the Government of Mozambique to jointly promote conservation and tourism development within the TFCAs. 5. The Government o f Mozambique also expects that these statements o f policy intent will provide assurance for the World Bank and other interested and affected parties o f Government's commitment to promoting environmentally, socially and economically sustainable tourism through conservation. 6. The Government of Mozambique i s seeking support from the World Bank and other donors to enable it to address these issues during implementation o f the Transfrontier Areas Conservationand Tourism Development Project. 7. This statement o f intent addresses policy issues, tourism development issues, safeguards issues in agreement with World Bank Safeguard Policies and conservation planning and practice issues. Policy issues 8. The Government o f Mozambique with the support o f the World Bank and donors, intends to embark on a process o f policy and legislative reform that leads to a broadly based nationalpolicy and legislative framework for conservation. 9. The policy will strongly reflect the relationships between people and conservation. It will acknowledge the rights o f those living in the affected territories to the use o f natural resources in conformity with protected area legislation and to participate inthe planning and implementation of conservation and tourism development while benefiting from conservation and associated development. 10. The policy will be oriented towards ecosystem and biodiversity conservation as a basis for sustainable tourism and economic growth. During the Transfrontier Conservation Areas Pilot and Institutional Strengthening Project it became apparent that the separation o f wildlife policy and legislation for conservation unnecessarily complicates effective ecosystem and biodiversity conservation and effective economic benefits associated with wildlife. The policy reform process will resolve these issues and provide a framework for optimizing the opportunities for synergy between government agencies that have roles in wildlife management. 11. The policy reform process will determine national categories o f protected areas that accord with contemporary understanding o f people and conservation. The Government i s actively promoting community conservation areas and has demonstrated this inthe ZIMOZA TFCA. Community conservation areas will be recognized and afforded appropriate status in the national categories. The policy reform process will establish the principles that define the relationships between people and each category of conservation area and the resources they support. 103  12. The policy and legislative framework will give a legal status to TFCAs, recognizing that they are multipleuse areas, and integrate them into national planning and development. 13. During preparation for the Transfrontier Areas Conservation and Tourism Development Project the Government o f Mozambique incollaboration with the World Bank, has prepared an Environmental and Social Management Framework. This defines the government's approach to managing environmental and social impacts that may arise during implementation o f the project. Specifically, the government commits to meeting the World Bank's Involuntary Resettlement Policy (OPBP 4.12) in all areas covered by the project, as described and reflected in the Resettlement Policy Framework and Resettlement Process Framework agreed to with the Bank. 14. The Government will incorporate the principles and processes o f the Environmental and Social Management Framework and the Involuntary Resettlement Policy into the national policy for conservation that will bepreparedduringimplementation. Tourism development issues 15. The Government has been consistent in its view that TFCAs comprise a mosaic o f different patterns o f resource use that together support the integration o f conservation and economic development. Recognizing that rights for the use o f resources within TFCAs should be regulated, Government commissioned a study that would define principles and guidelines that should be applied inTFCAs. The overarchingprinciples that Government will apply inTFCAs are: The economy o fTFCAs will focus on conservation and tourism; The process o f awarding concessions will be open, transparent and equitable; Conservation within TFCAs will be practiced at the level o f ecosystems giving recognition to biodiversity, ecosystem processes and habitats, connectivity between core conservation areas and landscapes; Sense o fplace associated with the natural character o f TFCAs will be safeguarded; Integration o f conservation and tourism development will be achieved through a process of integrated district development planning that ensures the sighting, placement and operation o f all developments are consistent with the concept for TFCAs; The use (consumptive and non-consumptive) o f the natural resources will be closely controlled and monitored to promote uses that are sustainable and equitable; and The administeringauthority will honor the principles for good governance (transparency and accountability). 16. The Government has identified Priority Areas and Routes for Tourism Development and has stated its intention to provide focused support for tourism development in the Strategic Plan for Tourism Development in Mozambiq.ue. Several studies conducted during preparation have identified that in order to achieve its objectives, the Transfrontier Conservation Areas and Tourism Development Project must focus its resources and efforts. With the TFCATDP, the Government intends to focus its resources to Lubombo, Limpopo 104  and Chimanimani. Inthe Lubombo TFCA, particularly the coastal zone, and marine areas. In the Greater Limpopo TFCA, Government will also support activities in the three national parks as well as in the area o f Vilanculos to enhance the tourism linkages between the GLTFCA and the coast. The Government includes the support to Chimanimani TFCA that includes the Chimanimani National Reserve its buffer zone, the Cultural Historic Zones. Less attention and resources will de directed to ZIMOZA TFCA to support community based conservation and tourism activities and to NiassdCabo Delgado TFCA, to match TFCATDP resources with the USAID support o f sustainable tourism program in northern part o f Mozambique. The program funded by USAID i s currently under implementation. 17. Consistent with its intent to focus on the Lubombo TFCA, the Government has accepted the proposal for community based tourism developed during preparation and will support this projects, including awarding the identified prime tourism concession to a community association or joint venture between the community association and tourism investor. The terms and conditions that would apply to such venture, and other ventures supported by the project, will be defined in early implementation. The Government intends that TFCATDP supports the creation o f a Community Enterprise Fundwhose objective i s to provide to legally registered communities a grant for them to bring as capital to a joint venture with professionalprivate investors. The equity grant will be designed to facilitate the investment inclusion into the community social and economic environment. Eligible venture would need to justify o f a tourism or conservation outcome in the selected TFCAs. This initiative would (1) bring the communities into the sharing o f tourism investments and benefits, (2) set strong incentive for ethical professionalprivate operator to invest in tourism inMozambique, (3) support the development of community-based conservation and tourism projects. Planning and consewationpractice issues Increase in area conserved 18, Studies conducted during implementation o f the Transfrontier Conservation Areas Pilot and Institutional StrengtheningProject led to proposals for two new conservation areas inthe Lubombo TFCA, the FutiCorridor anda Marine Protected Zone extendingnorthwards from Ponto do Ouro. The Futi Corridor provides an important migration route for elephants between South Africa and Mozambique. The Government has conducted studies to identify the area to be declared as protected. Adjacent to the proposed area the government has supported the demarcation o f community areas which make part o f the proposed buffer zone for the Futi corridor. At the request o f the community, portion o f the corridor will be fenced. The government will conduct the fencing using a consultative process that will lead to consensus on fencing alignment. 19. The Lubombo Spatial Development Agreement signed by the Mozambique Government in 1999, made provision for declaration o f a marine conservation area along the coast northwards from Punta do Ouro. The Government acknowledges the need and desirability for this Marine Protected Zone and will initiate a participatory process that will 105  lead to the delimitation o f the Zone and its proclamation as a conserved area in the appropriate category determined through the policy reformprocess. 20. The Government acknowledges that the protected areas in Mozambique may not make adequate provision for the conservation o f landscapes, habitats and biodiversity and envisages that during the definition and planning o f the TFCAs new priority areas or modification o f the limit o f existing protected areas (for example community conservation areas and catchments such as those for the Banhine wetlands or corridors such as the Futi corridor or modification o f limits o f the Zinave NP) may be identified within the TFCAs. All such new areas as may be identified in this process will be given consideration for conservation planning during the course o fproject implementation. Improved connectivity between conserved areas 21. The Mozambique Government established TFCAs with the specific purpose o f developing connectivity between protected areas in neighboring countries and between protected areas within the country, through promotion o f landuse practices that better sustain ecosystem processes. One o f the intentions o f Government's policy reform i s that protected areas within the country will make better provision for sustaining o f ecosystem processes by increasing the connectivity between the core conservation areas. Consequently, the Government will support application o f the principle of improving connectivity in the processes that define the boundaries o f the different categories of conservation area within TFCAs. Effectiveness of biodiversity conservation 22. The Government i s aware o f the challenges that it faces in ensuring that protected areas achieve the objectives for which they were established and acknowledges the urgent need to increase management effectiveness. During implementation o f the Transfrontier Conservation Areas and Tourism Development Project, the Government will incorporate management performance evaluationinto administration o f TFCAs. 23. The generation, collection and distribution o f revenue from visitors to protected areas will be an integral part o f support for these areas and for demonstrating the benefits o f conservation to society. Government i s committed to implementing institutional reforms that will improve the targetedprotected areas effectiveness and financial sustainability. 24. Government has committed to concession the use o f land and to use public-private partnerships that include local people, as instruments for economic development o f these concessions inconservation areas. A study duringpreparationhas provided Government with guidelines (Annex 1) and principles for land use and concessions that it will implement within the interstitial areas o f the TFCAs. The Government also intends that TFCATDP help community with the land demarcation process. 106  Institutional reform for conservation management 25. The Government will gradually establish autonomous protected areas to seek they self sufficiency. The process will imply a constitution for that specific protected area that will allow that the income generated in the protected area will revert in favor o f management o f that area as well as allowing for establishment o f an independent fund for that area inwhich the donors could directly finance. It will also include the formation o f a management board with representative o fmajor stakeholders that will oversee the management and development of the protected area. The initial phase of the process will involve the Limpopo National Park, Maputo Special Reserve, as they currently presenta potential to generate income. 26. The TFCATDP will support an elaboration o f a conservation policythat will guide on the institutional arrangement for protected areas in Mozambique that secure their long term financial sustainability. This will be the final stage o f the gradual process o f protected areas management autonomy. 27. The TFCATDP will support the staff o f protected areas during the initial years o f its implementation; the government will gradually commit funds to replace the budget for the core staff o f the parks. Planning 28, The Strategic Plan for Development o f Tourism in Mozambique and a number o f studies commissioned by Government during preparation have exposed the need for an integrated approach to development planning. Several government ministries have responsibilities for aspects o f development planning and have adopted somewhat different approaches. As it i s difficult to achieve effective integration under such circumstances, the Ministry o f Tourism will implement a consultative process that will use the existing experiences in the country that will be defined as the Integrated District Development PlanningProcess. This definition will be: Consistent with processes established by DNPO (National Directorate o f Planning) at the Ministry o f Planning and Development and DNAIA (environmental assessment) inMICOA; Incorporated into the formulation o f DNPO guidelines for District Development Planning Reachedthrough consultation and reflect consensus o f the major stakeholders; Structured to incorporate the experiences and lessons learned from ongoing planning processespresently being undertaken by the GOM, such as the IDP process promoted by MICOA under its Integrated Coastal Zone Program, and the District Development Planningpromotedby the Ministry o fPlanningand Development; and Structured to reflect the approach and procedures set out in the Environmental and Social Management Framework (ESMF) developed during preparation for the TFCATDP. It will specifically make provision to safeguard people through meeting the provisions of the World Bank's Involuntary Resettlement Policy. 107  ANNEX 1ofLSP Draft Tourismand Developmentguidelines within the TFCA's The TFCA contains many landscape features, the area i s not uniform and although it i s relatively sparsely populated, the people and communities are usually located on more productive land, especially land near water. The type o f tourism product which will form the basis o f the experience in this area has not been specifically defined. Obviously the focus will be on naturebased, probably outdoor recreation, but the exact product is not articulated. A cornerstone o fthe tourism development withinthe TFCA is the Transfrontier Conservation Areas and Tourism Development Project (TFCATDP). The development objective o f the TFCATDP is:- to obtain sustainable livelihood and economic development benefts from the well- managed use of Mozambique's biodiversity and other natural resources. There is a very strong and clear indication from this vision that tourism and the sustainable use o fbiodiversity must be engines for economic development. Tourism viability Tourism within this product range can vary from highto low density, from expensive to more affordable. Many conservation agencies in southern Africa have in the past tried to cater to as many o f these markets at once. This has lead to in many instances to tourism products which are not financially viable. Within the interstitial areas o f the TFCA, economic development and alleviation o f rural poverty are critical factors, and it could therefore be assumed that any tourism products must be financially viable or economically attractive to the people from the area. Financially viable and economically attractive can have very different outcomes. A financially viable business is one where all the costs o f operating it are covered and the enterprise, at least over time, will show a positive return. This return can typically be measured as an internal rate o f return (DUX), net present value (NPV) or a return on investment (ROI). These all measure the efficiency o f a business and will, using different approaches, include the costs o f capital, operations, marketing, overheads, levies, rental, taxes etc. They will determine if a project i s viable and will return a profit to once all the relevant costs have been deducted. The financial viability can also work at different levels. It may offer a good return for the tourism operator, because some o f the costs o f providing the service are excluded or external to their business. This can vary depending on the business and how it i s structured. In a concession on state or communal land for example the costs o f maintaining the roads, wildlife product and other support infrastructure (such as fences, water holes etc) may not be 108  carried by the concessionaire. These costs would be carried by a third party, usually the state. Where there i s no intention for subsidy, these may need to be factored into the rental paid for a concession, dependingon the objectives o fthe area. This is where the term economically attractive may become relevant. A project can still be financially non-profitable, but still be economically attractive. It will depend on the objectives set for the area. It may be that the creation o f jobs, the alleviation o f poverty, biodiversity conservation and the development o f infrastructure etc are important overriding objectives o f government. Inthese instances it may still be worthwhile to develop the project and in effect subsidize the costs of providing capital and if necessary its maintenance to achieve these goals. It i s unlikely that concessions held by the private sector would not optimize their return, so their assessment of profitability i s likely to be more rigorous. The h g e r National Park is probably a good example o f a product which i s not financially viable, if the full costs o f providing the tourism infrastructure are accounted for. But the economic return to the country would probably make it attractive because o f its beneficial effects on the local, regional and national economy. To understand the costs and benefits o f tourism, it i s critical that the costs associated with the development and maintenance o f the product are identified, assessed and understood in the context inwhich they will operate. These can be both financial and economic2*costs. Financial values are often easy to assess as they can simply be obtained by asking what consumers would pay for the product. This works especially well for products which are well traded and have a known market value. Economic values are more difficult to determine. They are often not known and usually have different values. For example the value o f an elephant to society may be very high; perhaps several thousand dollars. To a community or local person whose crops and possibly their life may be threatened by it; see the elephant as a threat and a liability. Its only value to them i s its meat and other products. The challenge to develop guidelinesand principles for the TFCA i s therefore to balance these costs, with the benefits and arrive at an outcome which optimises these while ensuring equity. There is no correct answer to this solution; it is driven by the objectives o f the project. Here it i s clear from the vision that economic growth coupled with the reduction o f poverty inan environmentally sustainable manner i s the most appropriate goal. Tourism investment and management options There are several approaches which can be pursued when developing tourism products and other facilities or services inthe area. The best approach will be determined by the resources available, the potential of the resources, the quality o f the tourism product and many others. The simplest model is probably where the state operates state owned facilities. These can range from small rudimentary camping sites to more elaborate formal accommodation. Lessons elsewhere have shown that very low key informal campsites catering to a few self contained tourists who are perhaps more adventurous, offer a low input but low reward 109  product. They do not deliver significant economic goods and are generally not that financially efficient for the state. They do however; serve to permit low levels o f use that may accord with the highest levels o f conservation The next step i s to provide more formalized accommodation and services. The tourism business i s however relatively high risk, it requires an adaptable management system which can respond quickly to opportunities; the marketing and reservations are also highly specialized functions. These factors coupled with generally high levels o f service imply that the state i s not the best provider and are often moving away from these operations. Investors generally offer the best opportunity for developing and operating the tourism products. They bring a wide range o f skills, capital and are better at managing the risk associated with tourism. They are however usually very good at maximizing their profit and this may be at the expense o fthe state, the local people and/or the environment. Ifinvestors are to be used, then the rights which they may be offered must be inproportion to what they are expected to deliver. This aspect i s one o f the most difficult issues to get right. If the conditions for investors are too strict and punitive for the products on offer, thenno or poor bids may be obtained. Ifthe conditions are too lenient then the full value o f the concession may not be realized. There i s no exact way o f determining this, but proper planning at the outset can help determine what the potential o f the resources are, what potential problems may exist and what risks an investor may face. Including tourism operators and investors inthe planning stages can help identify some o f these issues. By gaining an understanding o f these issues the concession rights are more likely to be correctly defined at the outset and the contract conditions optimized. This planning, which must be done as an integral part o f the integrated district development plan (IDDP), other management plans and strategic environmental assessments Strategic environmental assessment (SEAS)etc, i s critically important. Business plans must form an integral part o f the components o f these plans to help identifywhat development issues may need to be addressed. It is in this area that carefully directed state funding can play an important role. The costs o f developing a tourism facility do not start and end at the lodge gate. There is a wide range o f support services and infrastructure which can make a product more attractive to an investor and their clients. Ifthe state i s prepared to fund or at least assist with some o f these it makes the area more attractive to an investor. At one extreme an investor may be offered a `Greenfield' site in the middle o f the bush with no support infrastructure such as water or roads and no services, such as game patrols, access control, ecological management etc. These types o f arrangements can rarely yield concessions o f high value over the long term, with good financial and economic returns for the area. In contrast to a concession where game and habitat management is well defined, with a good track record, access control i s good, security o f tenure i s unquestioned, access roads are o f a good quality, there i s support infrastructure etc, this i s likely to attract a concessionaire, willing to investheavily in fixed assets, develop people and pay a competitive rental. It i s possible that government 110  could erect the developments and lease these to operators, the portion o f the "fee for leasing the buildings", could be used for leveraging social development. This passes more risk to government, but it may be more attractive to private partners to work under this arrangement as their risk i s considerably lower. However the construction o f the assets, to ensure that are appropriate i s important, ifgood value i s to be obtained. It may well be that for some o fthe sites the first option will be the most appropriate. Inthese instances it may be preferable to keep the concession periods short and limit the development rights which may be pursued. This will allow some benefits to flow but will not lock up a site for a long period. Inthe future the value o f this site may improve as the knowledge o f the area increases, the product becomes better known and demand for sites may improve. However these types o f concessions must still only be considered when there i s management capacity to monitor and control their operations. Failure to do this may result in unacceptable operations and activities. The viability o f a business, the transaction costs involved with managing the agreement by the state and the type o f investor who is required, generally implies that an annual minimum turnover threshold from the business i s required. Concessions which do not reach this hurdle will usually attract lower end operators, who are often unreliable, have little or no experience andbringlittle value to the agreement. They provide little inthe way o f economic benefits to local people, do not invest in the area and often push the limits o f their agreement. It i s also often not worthwhile for the state to monitor the agreements as the return i s too low. Generally businesses with an annual turnover o f less than about US$200 000, are not worth considering. They are unlikely to be able to pay fees o f more than about US$10 000 to $15 000 to the state, this is likely to be less than the costs o f managing and monitoring compliance with the agreement. These are some o f the reasons why an integrated approach i s required, to ensure control can be exercised efficiently, good quality products can be offered, planning helps remove uncertainty for investors and the state and economic returns canbe optimized. The role of tourism Tourism i s a cornerstone o f economic development within the TFCA. It can provide an excellent platform for attracting investment, developing skills and building a market. Tourism will be able to contribute significantly to this, although it may take a while to build the product and the market. The market position and the type o f product offered will also impact on the potential contribution which tourism may be able to make in the area. Experience elsewhere in southern Africa has clearly demonstrated that low density tourism catering to the more affordable end o f the market is usually not financially viable and does not make a significant economic contribution. Although there i s a role for it, it i s unlikely to be a significant contributor to achieving the vision. Tourism i s an excellent area for public private partnerships (PPPs), where concessions or areas are leased to private companies for discrete periods o f time with defined performance. 111  It has demonstrated significant benefits elsewhere in the region, but the process must be driven and directed by government. It can be an extremely efficient mechanism to leverage development, attract investmentand import skills, technology and investment to an area. But it mustbe done according to a plan with definedoutcomes, obligations, risks, responsibilities and benefits. Concessions which are not directed and driven by an overarching strategy are unlikely to optimize the goals, objectives and vision o f the TFCA. Haphazard concessions may lead to conflict between users, conflict with communities, overexploitation o f resources and people and a longterm impact on the market perceptions o f the area. The TFCA will need to position the tourism product and provide the market with a clear direction. This will needto consider the issues described inthe section below. Tourism guidelines The following is a list o f issues which will needto be finalized and described in a tourism development plan which will need to form an integral part o f the Integrated Development Plan (IDP). These would apply to any party (private, state or community) developing tourism products within the TFCA. This plan must clearly indicate what type o f product i s going to be offered, what the long term tourism goals are for the area, what social obligations will need to be met and other development parameters such as type and amount o f infrastructure (including support infrastructure), resource use and development etc. Experience has demonstrated that when a clear plan exists and a long term vision has been collectively developed, the benefits o f an area can be optimized. This attracts better, higher quality investors, who invest inthe environment, their product and people. This i s incontrast to ad hoc low level investments where the emphasis i s on short term returns which often exploit the naturalresources, the landscape and people. Type of the product The type o f tourism product probably has the widest range of possibilities. These products can vary from expensive, large concessions catering to small numbers o f tourists, where exclusive use o f an area i s awarded. At the other extreme are large numbers o f tourists from day visitors to campers to lower price products who use the all use the area and tourist densities are high. The product will in many ways be driven by the strategic direction or positioning which the TFCA chooses for the area. It may well be possible that several products can be offered within the area, especially ifit i s large enough to accommodate them indifferentzones. This hasthe advantage o fnot relyingon one marketto deliverthebenefits to the area. Tourism, especially the more expensive foreign products can be extremely fickle and can evaporate very fast in reaction to perceived problems. A wider range o f products may therefore offer better resilience for the area inthe long term. These do not needto all be developed immediately, but can be phased in over time. If this i s to occur it i s wise to publicize this to let all potential and perhaps current users know that the different products will be developed inthe area. 112  The size o f the TFCA may well accommodate a wide range o f users and products, the best choice probably being those which optimize economic development. As mentioned previously the net value which the products bring can either be measured in pure financial terms or ineconomic terms. Inreality a combination may offer the best solution. Market Niche Products can cater to the top end o f the market where all services are provided and the experience i s usually more exclusive and lower tourism densities would be common. The level o f service is usually very high and the staff to guest ratios often exceed more than one staff member per guest. These products are generally only marketable in the best areas within the TFCA, where the products being marketed are among the best on offer. The products can be wildlife, scenery, landscapes, cultural experiences etc. They may also offer better access to services and provide an attractive easy to access product, although this is not always applicable. They can be offered as separate discrete concessions, or have small exclusive areas, usually confined to a few square kilometers around the lodge, with larger shared traversing areas. The shared areas would usually be with operators o f a similar product. Inthese instances the management authority would need to provide some overall guidelines on operations, to ensure that a common code o f conduct i s developed and complied with by all within these areas. This arrangement works best inareas where good game viewing or scenery i s limited; it may be scattered and seasonal or variable over the area. In this way a large area can be offered to several concessions that would all still have access to a wide range o f products. In areas where the game i s resident and the viewing i s more constant over time, individual concessions may be preferable. The exclusive use and shared traversing areas would be defined geographically and access to these may need to be controlled and monitored periodically if required. These concessions are often viable and can deliver good economic goods to the area while paying competitive rentals. They are often small, ranging from 10 to 40 tourist beds. Their impact on the landscape may be lower if good development parameters are imposed and monitored. The socio-economic impact i s often high as they employ many staff compared to the number o f beds; the guests are usually highspenderswho demand good service. The other option i s for a lower priced product. Here the guests may be more self contained, expect lower service levels, but pay less in return. This i s a potentially good market, but i s not without problems. To manage it effectively good control i s required. This control i s expensive and the maintenance o f infrastructure can also be high. This often implies that a large facility catering to a large number o f guests, often in excess o f 100 i s required. This increases the environmental impact and the costs to mitigate this often increases. The employment ratios are much lower than the top end andthe staff training often less intensive, as service levels are lower. To accommodate this market effectively, facilities should be large and this implies a good network o f support infrastructure such as game drive roads and track, walks etc. To accommodate the volumes of people these support facilities are often more extensive than in 113  the top end on the market. Maintaining roads and tracks can be expensive and can offset any income which the faculties may earn. In addition achieving the occupancies requiredto be efficient (usually inexcess o f 50%) implies a steady stream.ofa large number o f guests. This means good marketing, control and reservations and support services. This product is probably not yet appropriate to the TFCA, as the visitor volumes are low, the road and track network poor, support facilities like shops and restaurants are not available and the financial viability may be questionable. It may in future be an option for some areas. The larger camps inthe Kruger National Park would typify this type o f product. The economic impacts of these facilities are often lower than the more up market products as they employ fewer people per bed, but the size o f the product i s often larger, this increases the environmental impact. Inaddition to the market niche, aproduct brandmustbe developed so that it canbebuilt and developed. It may well be that several different products are offered, but the general tourism culture or ethos that i s to be grown must be built. The `Big Five' and wildlife will be an important component, but not be available over the whole area. Will it be a wild wilderness destination or a more self contained `tame' experience? This brand helps position the product and gives investors an indication as to what the final product will look like in 10 or 20 years time. The area can be marketed as a destination, or as a stop over to the coast, these issues affect the type o fproduct offered. Consumptive use Game and other resources can be consumptively used. This can provide a very good income and deliver some economic opportunities to the TFCA if agreements are structured correctly and harvests are in line with sustainable use. The most appropriate use will depend on the nature o f the resources, their capital, rate o f increase and competing land uses. Planning and proper understanding o f the value o f the resources can help direct this. As with all the other uses, the assets must be sold for their correct value and the impacts o f harvesting on the resource base must be understood. The effects o f poaching or illegal harvesting must also be understood. By knowing the resource base carehl monitoring, this can provide valuable income. Consumptive use may take several forms and may include live capture and sale, hunting(trophy, citizen or recreational) or culling for game andcutting or collecting for trees and plants and fishing or nettingfor fish. For all o f these resources, quotas and standards are critically important. The most appropriate technique to harvest must be found, specifically specified and strict control enforced, especially the impact it may have on any local use o f the resource. Commercial or corporate Facilities can be developed for strictly commercial or more `corporate use'. Commercial facilities are those which cater to tourists who visit infrequently and hold no financial interest in the facility. These operations generally employ more staff, create more economic opportunity and can pay higher rentals, especially if the rental includes a component linked to turnover o f the business. They also increase the marketing and exposure o f the product. 114  Corporate facilities are somewhat different in that they may be owned by a company and usedfor corporate use and entertainment. They may also be ownedby a group o f individuals or syndicate, each owning a percentage, which gives them a defined access each year. This i s really a small scale timeshare arrangement. This offers a slightly diverse use o f the area, because it often has not turnover, a turnover based rental i s inappropriate. Although some o f the beds may be sublet from time to time. These facilities generally employ fewer staff, but they do diversifythe income and cater to a different market niche than the traditional tourist. It may be advisable that a percentage o f the beds available could be offered inthis form. As mentioned it does diversify the income and use o f the area. Tourists, especially foreign can be notoriously fickle. Environmental and development checklist The issues described are a broad list o f elements which may need to be considered for any tourism development opportunity or activity which may occur in an area or on a site within the TFCA. The standards applied during an assessment (EIA) may vary across the landscape, within Parks, multipleuse areas and other specified locations. Often activities are only permittedwithin certain limits or restrictions; these must be described inthis process as part o f the assessment. It also assumes that the TFCA authority will still operate the conservation or biological management o f the park and have significant control on resource management outside the formally protected areas and these thenwill only describe the on site effects o f tourism activities. These must be checked for each site and any specific restrictions must be listed and described. This initial screening would need to be conducted as part o f any feasibility study and then finalized before the site i s offered as a tender package, where these items may be specified indetail. This will then form an integral part o f any concession contract against which performance can bemonitored. It would also form the baseline criteria o f any environmental impact assessment (EIA) which would be required if the site i s to be developed in addition to any general norms which would apply. For this reason the limitations must be sufficiently explicit to stop or limit undesirable activities but not remove all creativity which a developer may needto explore. This i s necessary as when the screening is undertaken there may be no clarity on what form or structure the final development may take. The items outlined in the checklist are major items which would need to be assessedby an environmental expert. The list i s not comprehensive or in detail as sites varies in their specific requirements. It i s important that when the assessor i s undertaking the assessment, they must be objective and identify all the important issues; but only those, which are o f a critical nature, must be made as restrictions. The more restrictive the lists the less likely the project proceed. This i s not to say that environmental issues must be compromised at all cost, quite the contrary; but that those issues which are unique irreplaceable and in conflict with the Management P l d s must not be considered. There are a number of highly subjective parameters and where possible, values must be quantitatively assessed. It is anticipated that the developer would be responsible for any ELA and this EIA together with these limitations would form the basis o f an environmental management plan (EMP) which the TFCA authority or equivalent body would needto authorize and monitor to ensure 115  compliance with these issues; both during construction and during the operational phase o f the project. The TFCA must ensure that the EMP i s provided as part of the EIA and it does provide parameters against which the environmental impacts may be objectively measured. This EIA and EMPmust form an integralpart of any concession contract or agreement. N o t all issues are purely environmental; some are broader but need to be assessed. This same set o f guidelines can be applied to developments over the entire TFCA, including all bulk services, location of settlements, roads, water supply, electricity, communications etc. The parameters may be more relaxed away from areas of highbiodiversity value or tourismuse. The following issues are important especially in the design and construction construction parameters phase Visual impact How visible i s the structure and will it impact on other park users or activities within the TFCA, current and future? I s it necessary to `blend in' with the general physiognomy o f the area, its tone and texture may help to mitigate this? Must comply with the `sense o f place' and may require certain architectural style. Must consider Impact of services to the site across other areas of the parWlandscape. Construction Activities The site must be defined and initial buildingand development plans provided so that an initial assessment can be made. During construction the site mustbe well marked and understood by all, this may need to be pegged on the ground and defined in a Plan. What penalties will be imposed for violations on the site area, either off site impacts or trees or features which are defaced or destroyed? Issues which are irreplaceable and critical must be clearly marked and penalties described for any breaches. Disturbance to surrounding areas? What i s permitted and what may be removed or altered and what not (e.g. large trees etc) and detailed in the environmental management plan (EMP) which will flow from the EIA. Appointment o f an Environmental Control Officer (ECO) to oversee developments and ensure compliance with EIA and EMP? Accommodation o f construction workers, ablution facilities and other waste management - what i s permitted inthis regard? Use o f resources, especially local building supplies, i s this permitted if so what i s allowed, how will it be carried out andregulated and i s there any fee for it? M a x vehicle size, this may need to be limitedin some areas and access to Park restricted to certain times, for control and impact on other users. Chance cultural, historical and archaeological finds, define how these will be dealt with? I s there TFCA authority management capacity to oversee construction, a team or person must be appointed to oversee and manage this during the construction phase, perhaps the ECO or to work alongside the ECO? Buildings and structures If there are existing buildings what changes to them would be permitted? Is a deposit or guarantee required, before structures are damaged, altered 01 removed? Existing `Immovable' assets (pumps, borehole equipment, etc), what will happen to these, will use be permitted, who will maintain them and whal condition must they be in at the end o f the concession agreement if the concessionaire uses them? 116  If new structures are to be erected, what details are required of plans of new buildings including location on site? Ifthere are any restrictions, the plans must take these into account and this must therefore be stated. Are fixed structures permitted or only temporary structures? What may be erected on the site (not too restrictive), be specific on guidelines such as area, style, height, building material, colour, number o f guests and staff, services etc. These are often highly subjective issues, but they must be limited firstly by environmental and cultural factors (water, sewerage, habitat etc) but also on the visitor carrying capacity for the park and the market niche to be catered for, these issues mustbe broadly defined inthe management plan. Roads and Tracks What extend would these be required and who would develop and maintain them. What limitations may be provided for example i s `off-road driving permitted and if so under what circumstances. If roads are to be built what type i s permitted (single track or built up road). These should all require an EIA which must address the location and the sourcing o f any building material from quarries? The cost implications to the TFCA management authority must be considered. If the authority is to maintain the road network, what are the expected annual costs, this may carry large contractual obligations to the authority later on. The road network mustreflect the type o f product offered and the expected visitor usage. Are new roads or tracks permitted, what o f existing who i s responsible for their management? Support infrastructure Services and other issues which may impact beyond the area or site. Electricity/energy Are their any limits on type o f energy source which may be used? Reticulation to and on the site - overhead or underground? Who pays for the reticulation and what are the EIA specifications o f any powei supply? This may include the visual and other aspects o f overhead or buriec cables or any noise, air and fuel pollution from diesel or other power generatior systems. Costs must be borne inmindwhen determining these parameters. Potable water Water i s often a major limiting factor in any development and although the risk: for finding and supplying this must rest with the concessionaire, the TFCP authority should conduct a broad feasibility study initially to ensure that water i! present and is likely to meet the specifications expected for the site. In man] areas this may be a determining factor driving development. It is important that the TFCA authority defines what maybe used, specify quantities andthe source? I s any information available on the water source both quality and quantity, if so provide this, but ensure concessionaire conducts own test to verify this before investing? Risk if water `dries up' who carries the risk or quality deteriorates? Will meters be fitted, if so at whose cost, who will readthem and what penalties for overuse? Will water resources be shared with other users, if so mention these and specify quantities? Agreement may needto be reached on this issue. Communications What type i s acceptable? What standards are required for safety? Are overhead lines permitted? Masts and towers, what local specifications must be complied with when setting doing any EIA? 117  WasteManagement Issues relating to all types o f waste and its control inthe Park Liquid waste and by What are the standards for outflow o f waste water? iroducts What i s preferred system; if any i s known for the area? Storage o f liquid fuelsisolventsicleaning materials, what conditions apply, any limits on type or quantity or storage and containment structures? Toxic products, any banned (if so list these) and how will they be handled and managed on the site and transported? Environment friendly products, any policy inthis regard? Yolid Waste What i s the most appropriate system? If there is an existing system, is it practical and operational? Reduction at source policy, recycling and sorting? Storage prior to removal what specifications must this meet and how long may it be stored before it is disposed inappropriate site? Transport o f the waste; what types o f containers are permitted and what i s the preferred route to use? 4ir emissions Use o f incinerators, are they permitted, if so what standards apply? Environmental Broad environmental and development issues which need to be defined. Parameters Carying capacity H o w many guests are permitted to use the area; is there a restriction on staff numbers? T h i s carrying capacity issue i s often highly subjective, if the environmental and other factors do not limit this. Here guidance may be obtained from the management plan or from higher strategic decision making which must be in line with the management plan. Issues to consider must include how many staff would be required, what are the impacts o f vehicles and any existing park users or impacts on local communities and the ability o f the local area to support any additional visitors. Other users; will they increase as a result o f the added marketing and awareness, could the park infrastructure and management accommodate this additional use? Fauna andflora Are there any Red data, rare, endangered or endemic species 01 important/priority habitats which require special attention? Any restrictive conditions which may be applicable to the site or area to safeguard these organisms or habitats? Pet policy and introductions o f additional species, or perhaps removal o f existing exotics? Water holes and feeding o f animalshirds; i s this permitted in any f o m and if so what are the special conditions which may apply? What i s the polic) regarding water for game generally in the park, i s it addressed in the management plan? Problem animals, especially around the visitors, how wil these be dealt with? Capture, culling or hunting, i s this provided for in an) policy, if so i s it important to bring to the attention o f the concessionaire anc include in contract, the TFCA authority may want to reserve the right tc undertake this. Footpaths and trails Who will provide these and to what standard? Are standards available? Must supply details o f standards ifthis option is applied. Landscaping and Are any species not permitted and are there any restrictions inthis regard? Any gardening specific issues relating to landscaping (water features etc)? Use o f pesticides, herbicides and fertilizers? 118  PermittedActivities Provide a list o f permitted activities with definite restrictions if necessary, for example, no off-road driving, no hunting, protocol for driving in wet conditions after rain, rivers and in wet areas? Details o f what may be done, such as hunting, fishing, walking, aircraft safaris etc. Be clear to ensure what activities are included as rights within the concession contract and those which are specifically excluded. Disabled access I s there a requirement to make some or all facilities available for disabled access? Archaeological/cultural Are there any known sites which require special treatment? Policy if chance and historical find is encountered? I s there any relevant legislation which needs to be brought to the attention o f the concessionaire? 119  Management issues Issues which will impact on daily reserve management Access and exclusivity H o w will access to the park or TFCA and the site be regulated and controlled? Will the concessionaire be the only user of the area or will others also have access and use, or will more to be added during concession period? Will the general public be allowed access to the area or will all other visitors be excluded. Gates Are there any gates which mustbe controlled, if so, how will these be controlled, what o f trespassers to concession site? Signage Are there restrictions on signage, type, color, logos etc? H o w will the concessionaire provide directions to the site, if appropriate? Signage from the road, who will supply this? Pets What about concession staff and pets, i s there a Park policy which will apply? I Domestic Stock Are concessionaires allowed domestic stock, such as horses, elephants, camels or others for visitor use? If so are there any restrictions on enclosures, feeding, importing feed into the Park, removal o f waste etc? Fire I s fire management likely to impact on the concessionaire? What precautions mustbe taken by the concessionaire? I s there a policy on combating wildfires in the Park? Protecting property and life, firebreaks, how is this catered for? The need for insurance o f buildings. Will the concessionaire be provided with alternative areas if their entire concession area is burnt ina single season? Problem animals What is the mechanism for dealing with problem animals in and around the facility or inthe park or TFCA? Aircraft and airstrips Are these permitted, if so under what conditions? Construction o f strip, approach and take-off, other tourist interference, aerial safaris, Special Species inflight paths? Resource use M a y local building materials be used? If so under what conditions and restrictions, any payment? Huntingor fishing, i s this allowed, does it take place in the park currently? Are other users permitted to undertake these activities? Will they impact on concessionaire? Guest activities, staff What o f emergency procedures? Are there any special conditions people musi safety and be made aware o f (heat, dangerous game, diseases etc)? What about staf accommodation accommodation, location and standards, must any special protectionmeasures be applied such as fencing? Must concessionaire enforce park rules on guests? Any guiding standards or qualifications required; minimum requirements foi vehicles or buildings to meet special requirements? Marketing What marketing i s permitted, can logos and TFCA or park names be used? An) joint marketing o f reserve and product? Supervision and Who will do this, and who i s responsible for what? Are regular meeting! monitoring required? How will concessionaire be managed? What about othei concessionaires; will a forum be created to jointly agree on operations? Code 0: conduct and site development manual? These parameters must form an integral part o f the LDDP process and when developing overall strategic plans for the area, they should specifically be applied to ensure that the zonation and use i s appropriate for what i s anticipated. At a more detailed level they will 120  form the checklist againstwhich an environmentalimpact assessment EIA will be done. The exact parameterswhich will apply must be definedinthe IDDPprocess. 121  Annex 16: IncrementalCost Analysis MOZAMBIQUE: TransfrontierConservationAreas and TourismDevelopment Project 1.BroadDevelopmentGoals and the Baseline Course ofAction The Government's Development and Poverty Reduction Strategy (PRSP) focuses on efforts to increase economic opportunities by generating poverty reducing and employment-creating growth through the private sector; improve governance and empowerment, through a more effective public sector, improved rule o f law, and greater transparency and accountability; and improve humancapabilities. In 2000 agriculture, fisheries, mining and tourism-activities based on exploiting the environment-contributed about 45 percent o f GDP and 70 percent o f total exports. Ensuring that resource exploitation i s sustainable i s critical to long-term prospects for growth and poverty reduction. Although Government policy in this area i s fluid and capacity limited, there i s general movement towards integrating environmental aspects into all major policies and strategies, implementingprograms for environmental management, and subjecting major economic activities to environmental impact studies. The Government will also participate in regional efforts to manage the environment, particularly intourism, transportation, and water and wildlife conservation. 1997 the Government has adopted an Environment Framework Law and a new Land Law, a Forestry and Wildlife Law reforms followed by the year 2000. At present, key Government objectives include increasing capacity to ensure that regulations are properly implemented, formulating cross-sectoral approaches, and encouraging environmentally and socially sustainable private sector investment. IDA'Ssectoral programs (e.g. PROAGRI, National Water I,and Municipal Development) will provide support, as will IFC programs (SEATP, SME) that aim to support private sector investmentinsustainable tourism development and related activities. Tourism, natural resource management and small enterprise development are all areas that offer particular opportunities for employment, income and participation by women. In cooperation with NGOs, the Government i s also supporting women's associations that assist women household heads with weak economic capacity. Main natural resource management measures cited inthe Poverty Reduction Strategy (PRSP) o f 2001 - 2005 are: 0 Operationalization o f the national and local resources inventory system. 0 Development and adoption o f policies and programs for reforestation and the restocking o fwildlife, with the participation o f communities and the private sector. 0 Re-establishment and rehabilitation o f the hunting reserves, forestry and wildlife reserves and national parks. Other activities with a more indirect impact include: compiling and revising legislation and regulations to enable communities and the private sector to participate inthe sector; develop 122  and adopt policies and statutory instruments for the exploitation o f forests and wildlife; training technicians inmanagement, monitoring and evaluation skills at the provincial level. Principal implementing measures include the National Council on Sustainable Development; drafting and adopting regulations on environmental standards, CFCs and marine pollution; draft and adopt legislation on (a) territorial planning and zoning and (b) environmental crimes. Capacity-building inenvironmental management at local level are aiming to ensure the active participation o f communities and local bodies o f public administration and municipalities in the management o f natural resources. Principal measures include capacity-building programs for communities innatural resource management, with priority givento rural areas at greatest risk from environmental degradation; programs o f capacity buildingfor municipalbodies and local state administration inthe management o f the urban environment. 2. GlobalEnvironmentalObjective The project aims to support the conservation and sustainable use o f the biological diversity, inparticular species and ecosystems ofglobal significance, andofthe wider naturalresources within the three large transfrontier conservation areas (TFCAs) that constitute the target region. One specific objective i s to increase the size, representativeness and connectivity o f the network of PAS, by bringing additional priority areas under conservation management, either as official PASor as community conservation areas (see Table 1 o f main text).. The project adopts an integrated ecosystem management approach aimed at preserving large areas of intact natural habitat spanning altitudinal and climatic gradients and encompassing important ecological features such as wildlife migration routes and water courses. The TFCAs include both core protected areas and areas which are not formally protected but provide essential ecological linkages as well as support for rural livelihoods through sustainable use o f biodiversity resources. The inclusion of large, relatively intact tracts o f land spanning ecological gradients will help facilitate climate change adaptation for terrestrial and freshwater biodiversity. The addition o f the Lubombos marine protected area to the rapidly expanding network o f marine protected areas along the East and Southern Afi-ican coastline will similarly assist with climate change adaptation in the marine biome. Specifically, the conservation o f several forest areas will help to address GEF's climate objectives. Reducing land degradation and preserving transboundary watersheds will help support GEF objectives for management o f land & water, and international waters. The GEF support will enable the project to achieve specific global benefits such as effective international cooperation for protection and management o f transboundary biodiversity and ecosystems, monitoring the impacts o f tourism development and conservation activities on the global biodiversity value o f the areas; developing and testing models for ecosystem scale biodiversity management; and communication and dissemination o f results to a world wide audience. It will also support the achievement o f important GEF goals by enhancing aspects o f the project such as community empowerment and benefits, improved management o f PAS and incorporating biodiversity Conservation into local land and resource management plans and practices (see following section for details). 123  3. GEF alternative Enabled by GEF support, and in partnership with the private sector, IDA i s helping the Government o f Mozambique to develop a framework for conservation o f globally significant biodiversity through forestry and wildlife management in the Transfrontier Conservation Areas (TFCA). The joint GEF-IDA project will develop and refine mechanisms to promote biodiversity conservation along with environmentally and socially sustainable development in the TFCAs. Integrated management of the TFCAs will help to mobilize the economic value o f these landscapes and o f their natural resources for the benefit o f local communities and the nation at large while preserving their global biodiversity value. The conservation aspect will be centered on improved management o f Protected Areas - existing and new PAS,including community reserves- and the important ecological linkages between them (e.g. migration corridors and buffer zones). There is still a weak on scientzpc understanding about the linkages in the Limpopo TFCA -on wildlife migration; the importance of Banhine wetland catchment area; thefact that the importance of the east-west linkage between Limpopo and Banhine National Parks may be overplayed-. Similar questions are valid about the important linkages in Lubombos, apartfrom the Futi corridor and the marine linkages? E.g. East-west linkages? The incremental GEF hnding will greatly enhance and expand the achievement o f these objectives by providing essential resources for all aspects o f establishing and managing PAS, including identifying and monitoring priority areas, species and functions, partnership with local communities, and restoration o f damaged or depletedareas and populations. The economic development aspect will be centered on attracting private sector investment in environmentally sustainable tourism, with joint ventures and other mechanisms to involve and ensure benefits to local communities. The selection o f tourism reflects the natural assets and comparative advantage o f the TFCAs, as well as the potential for synergies between tourism development and conservation objectives. The project will not provide general support for local development or community-based natural resource management. However, within the constraint of available resources, the project will also provide some targeted support for other types o f community-based natural resource management and enterprise development that directly support the conservation and tourism development objectives o f the TFCAs. This includes mitigation o f potential negative environmental and social impacts o f tourism (e.g. increased demand for fuelwood; reduced access to important livelihood resources), and measures to encourage and support community conservation o f areas where tourism development i s not likely to provide a sufficient incentive. Project implementing agencies will also encourage other donors and interested parties to provide complementary support for broader community development initiatives that are consistent with these objectives. As inthe first phase project, institutional development and capacity strengthening will be an essential element. However, in this second phase, the main emphasis will be on capacity strengthening at the Provincial and local level, This is consistent with the decentralization policy o f the GOM, and reflects the recognition that decentralization - when accompanied with appropriate empowerment and capacity building-is an important element inimproving 124  natural resource management and associated poverty reduction. Capacity strengthening for central government will emphasize its role in establishing a supportive and enabling environment, through appropriate, effective and transparent policies, regulations and incentives. Inadditionto their biodiversityimportance, thethreeTFCAs that collectively encompassthe target area for this project2' have strong potential for nature-based tourism development that enables sustainable non consumptive uses o f biological diversity according to GEF's alternative program objectives inthis focal area. They have been identified as Priority Areas for Tourism Development (PATI's) in the Mozambique Strategic Plan for Tourism Development. Two focuses TFCA are considered to be o f particular interest under the IFC's Southeast Afiican Tourism Investment Promotion (SEATIP) program, currently under preparation. The tourism development and conservation objectives are intended to be synergistic. However, in order for the development to be environmentally sustainable and to contribute to local livelihoods and economic development, it must be planned and monitored, and the incentive and regulatory frameworks must support and favor responsible tourism and discourage exploitative tourism. Incremental GEF support will enable the government and other stakeholders to identify and implement actions needed to ensure that tourism and related development inthe TFCAs follows this sustainable, biodiversity-friendly approach. To help meet the conservation and sustainable development objectives o f the target TFCAs, the project will provide strategic assistance for capacity building within the Ministry o f Tourism and other government institutions, particularly at the local level where key decisions are made and actions are taken that either support or undermine biodiversity and ecological systems. 4. Project Description Maintaining large, intact natural ecosystems and ecological linkages that span national borders is an important goal for biodiversity conservation in southern Africa. At the same time, G O Mpolicies and objectives call for the rich natural resources o f these areas to be used ina sustainable way to contributeto improvingthe livelihoods and economic development of communities living in these areas. The three TFCAs to be supported under this project will contribute to these goals by creating and managing large multiple-use conservation areas in Mozambique with significant transboundary biodiversity linkages. Environmentally sustainable tourism development has the potential to link the conservation and development objectives o f the TFCAs by providing an economic alternative to unsustainable, destructive use o f natural resources, as well as a direct economic incentive to maintain the natural ecosystems and their biodiversity. The current project represents the second phase o f a long term program to support the establishment o f and management o f TFCAs inMozambique, Component 1: StrengtheningPolicy, Legal and Institutional Frameworkfor TFCAs ($1.15 M) -IDA: $0.50Mi GEF: $0.65M 29Greater LimpopoTFCA; Lubombo TFCA, andChimanimaniTFCAs are alreadydeclaredthroughformal Heads of State agreements 125  Building on the achievements o f the first phase, Component 1will strengthen the enabling environment for TFCAs. It will help create the policy, legal and institutional framework for the GOM to implement its strategic choices: i.e. improve regional collaboration for management o f transfrontier resources; promote interagency collaboration and vertical linkages between central and local governments; build the capacity o f public sector institutions at all levels and communities to manage biodiversity and natural resources; and to form productive partnerships with the private sector. Community land and natural resource ownership and use rights will also be addressed. The TFCATDP will finance consultation, workshops, and study tours, as well as the cost o f producing, publishingand disseminating information materials available to all on the project: (1) a national conservation strategy and policy; (2) legal framework for TFCA, protected area and wildlife; (3) guidelines for tenderingconservation concessions; (4) the protected area and wildlife institutional reform; (5) the regulation of the new tourism law; (6) guideline for tenderingtourism concessions, and (7) four transfrontier agreements. Component 2: Integrated District Development Planning ($0.48 M) - IDA: $0.29 M; PHRD $0.19M The establishment and management o f TFCAs is centered around participatory land use and economic planning that allow for a balance betweentourism, the conservation o f biodiversity and the sustainable use o f natural resource assets in a defined spatial development context. The success o f the TFCAs may depend on the degree to which: (1) these plans are mainstreamed into the GOM's economic development plans; and (2) the commitment and capacity o f GMO and its partners at the local and central level to implement these plans. The TFCATDP will pilot intwo districts under a proactive approach to integrated planning. The process identified i s calledIntegrated District Development Planning (IDDP) and focuses on defining and implementing a series o f practical steps to ensure that biodiversity and natural resource based assets are mainstreamed inDistrict Development Plans (DDP). Component 2 i s divided into two Subcomponents: (2.1 .) National capacity building and stock-taking, and (2.2.) IDDP per se. Subcomponent 2.2. will follow these steps: (1) Capacity building and initial consultation at provincial, district and local levels; (2) District diagnostic, including basic data gathering and consolidation with tourism and conservation overlays produced by other component; and (3) Production, adoption and diffusion o f the DDPs. Component 3: Community and Private Sector-Led Tourism Development ($12.96 M) - IDA: $5.47M; GEF: $4.08M; PHRD $3.30M Component 3 i s designed to both develop the capacity o f the tourism sector (government, communities and the private sector) to participate in the preparation and implementation o f tourism master plans for key tourism districts. This component will support MITUR to establish a comprehensive and clearly definedset o fprocedures to implement an A-Z process for land concessioning, from land identification to on the ground investment. It will also support MITUR to implement legislation allowing them to `recuperate' land allocated for 126  tourism investment where the investmentperiod has expired so that this land canbe marketed to appropriate investors. Component 3 is divided in two subcomponents: (1) Unlocking opportunities for sustainable tourism investment and growth; (2) Community-led conservation and tourism development. Subcomponent 3.1. will support building capacity through MITUR in DINATUR, DPC, FUTUR, ECDA and targeted private sector and community associations to develop and implement; (1) tourism plans in the target TFCAs, (2) business development and financing, (3) the collection of tourism statistics and data, (4) strengthened capacity for licensing, inspection and grading, (5) the implementation o f the DTMPs. Subcomponent 3.2. will support to communities through (1) Land demarcation; (2) a Community Enterprise Fundfor organized communities to either proceed with the creation and management o f community reserves in interstitial areas or enter into joint venture partnershipswith private investors for tourism or conservation related investments such as creation o f game ranches, lodges, etc.; (3) the participatory and compensation process to improved natural resource management and land acquisition. Component 4: Protected Areas management ($16.64M); IDA: $8.46M; GEF: $5.27 M; PPF and A WF: $2.20M This component will support the identification, monitoring and protection o f the most significant and vulnerable biodiversity assets within the three TFCAs, through the establishment/rehabilitation and management o f a network o f National Parks and Reserves under the direct management o f DNAC. This will begin a long-term process o f major improvement o f the Maputo Special Reserve, including gazetting the Futi corridor and a new marine reserve; support to Banhine National Park and the Chimanimani Special Reserve. Modest support will be provided to Limpopo National Park, to supplement current Peace Park Foundation (PPF), KfW & AFD efforts, andto Zinave National Park. Component 4 i s divided in two subcomponents: (4.1) Capacity building and applied research; and (4.2) Biodiversity conservation in formal protected areas. Under Subcomponent 4.1., (a) DNAC's capacity will be reinforced; and (2) survey, inventories, conservation priority setting and applied research will be carried out. For targeted parks or reserves, Subcomponent 4.2. includes: (a) improvement o f park design and planning; (b) increasingthe area under protection; (c) buildingor rehabilitating essential infrastructure;, (d) procurement o f essential equipment required for management; (e) deployment and capacity buildingo f staff; (0 improvement o f communication andinformation, (g) launching effective law enforcement; (h) carrying out research, monitoring and evaluation, and (i) increasing the PAS'revenue generation capacity. Component 5: Project Management, Communications, and Monitoring and Evaluation ($4.90M) - IDA: $4.68 M; PHRD $0.22M This component will finance the project management costs including project procurement, accounting and monitoring as describe by their respective manuals. It will strengthen the capacity o f the TFCA Unit to coordinate TFCA program, and will support its related 127  operating costs. This includes recruiting a few additional long-term staff for the Unit, including TFCA Coordinators based in the field in order to support the shifting o f planning and implementation to the Provincial and local level. The component includes the implementation o f an M&E system to track and assess project implementation and impacts, and a system for adaptive management based on this information; and the development and implementation o f an information system and a communications strategy to ensure timely flow o f accurate information among the implementing agencies, and to increase awareness and understanding about ecosystem management and TFCAs nationally, regionally and worldwide. Component cost us$ Domestic benefit 3lobal benefit category Millions 1. Strengthen the Baseline (B) 0.50 Improving tourismflow from 1Modest degree ofregional institutional and South Africa to Mozambique cooperation for conservation policy framework for Conservationpolicy and PA of biodiversity and TFCA legislation serving national needs transboundaryecosystems Continued intern. DNAC restructuredfor greater collaboration efficiency and sustainability; Development of a better able to develop nationalconservation partnerships with other policy and updating stakeholders PA legislation Institutional restructuringof DNAC GEFalternative (A) 1.15 Mozambique better able to Development and approval of Continued participate effectively in effective international international international negotiations, conservation policies, collaboration agreements, and collaborative agreements andprotocols and Development of a programs for management and supporting national nationalconservation conservationof transboundary institutional and legal policy and updating natural resources; reduced frameworks for management PA legislation conflicts of transboundary Institutional DNAC effectively structured to biodiversity assets and restructuring of support large scale ecosystem ecosystems DNAC basedmanagement Increasedintegrationof a Guideline for biodiversity objectives in concessioningon PA relevant sector policies. and guideline for Promotion of the concessioning conservation of unique tourism land endemic Southern Africa International Flora and Fauna in large ecosystems Increment (A - B ) 0.65 2. Integrated District Baseline (B) 0.49 IDDP processprovides a Identification and Development framework to steer and support reservation of zones Planning. sustainable development in containing globally Capacity building TFCA area districts. significant biodiversity in for the IDDP Decentralized development two pilot districts process planningprocess strengthened Preparationof and improved IDDPs intwo pilot Increased capacity built within districts and outside government in Participatory spatial various IDDP-related skills planning at the district level 128  Component cost us$ Domestic benefit ilobalbenefit category Millions ~~ Same as baseline GEF alternative(A) Same as baseline ame as baseline Increment (A - B ) 0.49 0 31 Community and Baseline(B) 8.87 Local land andresource use plans Increasedlikelihood of privatesector-led developed to promote and conservationof globally conservationand support sustainable economic important biodiversity and tourismdevelopment. development inimpoverished ecosystemsas a resultof D Participatory rural areas. increaseinareas allocated management Rural communities empowered for environmentally planning inpriority and welfare increased through sustainabletourism areas demarcationandregistration of D SUppOrttO community lands communities for Community associations formed tourism for bettermanagement of natural development resources andrelated economic D Community development conservation Increasein community-based (capacity building tourismenterprises and income and incentives) Promotion of private sector D Improvingthe investmentthrough improved environment for business private sector 0Mitigation of negative investment environmental and socio- economic impacts of tourism development Participatory GEF alternative(A) 12.95 0Improvedinformation and 1 Reestablishingthreatened management capacityto incorporate and endangeredpopulations planning in priority biodiversity conservation, of regionally and globally areas environmental sustainability and important species Supportto ecological restoration inlocal 1 Maintenanceof communities for land use planning transboundary ecosystems tourism Accelerateddemarcation and Increased commitment by development managementof priority governments, rural Community community tourism areas communities andprivate conservation Improved incentives for private sector to environmentally (capacity building sector investment in ecologically sustainabletourism as aland and incentives) and socially sound tourism use intransfrontier areas Improvingthe development PA managementmore environment for Expandedcommunity effectively incorporates private sector conservationprogram, involving transboundary elements investment and benefitinglarger areas and numbersofcommunities Increment (A -B ) 4.08 4. Protectedareas Baseline(B) 6.37 Rehabilitationand construction Basic environmental data conservationand of essential infrastructure, and collection (biodiversity management provisionof neededequipment inventories), Developmentand for improved PA management Addition of new protected updating of PAS Monitoring of socio-economic areas that strengthen Directinvestments and environmental regional linkages to improve developments. Increasedeffectivenessof management of PAS Institutional and HR capacity of Mozambique as a partner in Biodiversity and DNAC strengthened trans-boundaryconservation ecological surveys, Development of community activities monitoring and conservationareas and activities applied research to supplement formal PAS Training and other Enhanced sustainability of capacitybuilding for DNAC PA staff TA for specific 129  Component cost us$ Domestic benefit 3lobal benefit category Millions organizational development issues Support for PA operating costs Development and GEF alternative(A) 16.60 Effective monitoring of - 1 Maintenance of genetic updating of PA ecological and socio-economic resourcesincluding Direct investments impacts of conservationand transboundary gene flow to improve developmentactivities in 1 Contributing to development management of PAS TFCAs of scientific based Biodiversity and Increased capital investmentin ecosystemmanagement ecological surveys, infrastructure, equipment and bEnhancingresilience of monitoring and operations for more effective ecosystems to climate and applied research and comprehensive PA other changes Training and other management(including visitor Conservationof a unique capacity building for centers, etc) marine habitat in terms of PA staff More effective operation of diversity, species richness, TA for specific DNAC and greater progress and uniqueness organizational towards long term sustainability development issues Support for PA operating costs Increment (A - B ) 5.27 5. Project Baseline (B) 4.90 Strengthened institutional Increased awareness of Management, capacity for TFCA management nationaland international Monitoringand Smooth and efficient project benefits of TFCAs Evaluation implementation and effective Information on project Project coordination management and accounting of objectives and information and management, project finances available to interested includingtechnical Basic information on TFCAs parties outside country and administrative available through website and staffing and publications operating costs of Adaptive project management the TFCA Unit through use of M&E results An information management system and amultimedia communication strategy A monitoring, evaluation and adaptive management system to track project implementation and results Same as baseline GEF alternative (A) 4.90 e Improvedresponsiveness and Increased awareness of flexibility of project biodiversity benefits and management through analysis continuous monitoring of of M&E results large scale ecosystem e Pro-active communications functions and linkages strategygenerates greater Worldwide dissemination of interest inand support for information and improved TFCAs amongnational and understandingo f how to local stakeholders manage large scale, transboundarybiodiversity resources and ecosystems Knowledge exchange benefiting the global conservation community 130  Comaonent I cost I U S $ I Domestic benefit IGlobal benefit I category Millions Increment (A - B) 0.00 I I PPF IIBaseline II0.61 Project preparation Same as baseline Increment (A - B) GEFAlternative 0.61 0.00 Total Program Baseline(B) 26.70 Enhancethe sustainability o f local Maintain large, globally benefits(Summary) livelihoods inthe target areas significant transf'rontier ecosystems intact with their biodiversity and ecological conservation and maintenance 131  Annex 17: GEFSTAP ReviewandResponseto Review MOZAMBIQUE: TransfrontierConservationAreas andTourismDevelopment Project COUNTRY:Mozambique PROJECT: Transfrontier Conservation Areas and Tourism Development Project (TFCATDP) DATE: 10May 2004 REVIEW BY: Janis Bristol Alcom COMMENTS BASED ON REVIEW OF: Project Brief, Technical Annexes 1, 3, 4, 6, Description o f TFCAs, and TFCATDP Logical Flow Chart SUMMARY: TFCATDP i s an exciting, ambitious project that i s based on excellent analyses, and has been well-planned for meeting realistic goals over the next five years as part o f the 15 year cycle o f work that will be required to reach the long term conservation goals. As a second phase project, it builds on the base and lessons learned from an initial five year project. Recognizing constraints, the need for resolving tenurial rights and boundaries o f communities within TFCAs, and the demand for market-driven income generation, this phase two project takes the next logical steps without rushingtoward overly ambitious goals. Rather than being a diffuse regional project, it wisely focuses on one country - Mozambique, and its collaboration with seven neighboring countries through transfrontier zones important for maintaining Mozambique's (and neighboring countries') biodiversity. The project recognizes that conservation success depends not only on spatial corridors through which wildlife and marine species move during their lives, but also on the institutional and market relations betweenprotected areas and their socio/political-economic environment. It realizes tourism i s not a magic bullet and retains options for other types o f assistance for communities where necessary. The attention to Monitoring and Evaluation framework for documenting and analyzing project impacts, as well as for promoting communication, i s excellent, and well thought out. The five components cover the full range o f modalities necessary to reach achievable goals: policy and institutional strengthening; integrated land use planning (under IDA); linking community benefits to tourism development; protected areas management; and project management, communication and M&E. Within this framework, special attention to cross-scale institutional linkages could improve the project's chances for success. The project faces endemic governance issues (mentioned tangentially inthe documents) and should attempt to link with other Bank, UNDP, and donor projects that are addressing governance issues inMozambique and its neighboring countries. 132  DETAILEDCOMMENTS: Scientific and technical soundness o f the proiect: TFCATDP i s based on sound social and ecological analyses o f the problems and feasible solutions for conserving biodiversity while achieving development inone o f the world's poorest regions. The project recognizes that conservation success depends not only on spatial corridors through which wildlife and marine species move during their lives, but also on the institutional and market relations between protected areas and their socio/political- economic environment. The second phase has been well-prepared by analyzing results from the first phase. It realizes tourism i s not a magic bullet and retains options for other types o f assistance for communities where necessary. The attention to Monitoring and Evaluation framework for documenting and analyzing project impacts, as well as for promoting communication, i s excellent, and well thought out. The documents do not provide sufficient information about the types o f "contracts" that will be drawn up between communities and (Who? - Project? Nation? Each other? The tourism company? The NGO?) That will bind the parties to meeting consewation objectives. So Icould not evaluate the soundness o f that element, but assume that the Bank will ensure that these covenants are drafted based on lessons learned from past attempts to use conservation contracts and on an analysis o f options most likely to result inaccountability ofboth/all parties inthe Mozamibiquan context. My sole concern is that special attention to scale relations must to be built into the management TORS, and followed carefully by the indicators andM &E framework. The project area covers over 10 million hectares, crosses seven countries, and includes coastal and terrestrial situations. Project staffs attention to the vast geographic scale o f the project, the globalized market, and to their particular component's scale, could overwhelm opportunities for paying critical attention to actions' "fit" to the governance relations betweennation-states and communities, and the "fit" to the local ecologies, and thereby fail to create long tem sustainability. One size does not fit all and cross-scale links are not easy to maintain. Good two way communication across the scales i s essential. Cross-scale communication needs to be bi-directional to be effective, and needs to have clear nodes that reflect broad knowledge o f situation at that particular scale. The local nodes need to be nurtured, as they are often weak and marginalized voices. This will require the project to pay more attention to how local voices will share information upward and laterally. The recent "Bridging Scales" conference o f the MillenniumAssessment offered some insights into the problem as it was clear that even when a commitment to cross-scale sharing is shared, the vocabulary and the interests o f project idea from Alaska -- a knowledge cooperation network, by which local people and voices from different scales make the translation difficult. One possibly interesting scientists share information about caribou herds with each other. The website is www.taiaa.net. This sort of "technical" sharing, if done right, can create new informal networks that cross scales. Other lessons for cross-scale linking to improve local management would focus less on knowledge and more on strengthening civil society's role in collaborating for conservation. One example would be the Swedish efforts to build cross-scale links (see 133  Carl Folke for details). Another example would be Field Museum's efforts in Pando, Bolivia, to build cross-scale links to conserve biodiversity through similar set o f project components in a similar situational context (low population density, poverty, high biodiversity regional corridor, tourism potential, poor roads, etc). Field has initiated a bottom-up approach in a large region (over 60,000 km2) - nurturinglocal ownership and communication links by working with local governments, individual large landowners, farmers federations, and communities to do land use planning and development o f local regulations, etc; and from there scale up to regional land use planning that incorporates local land use plans already developed with communities to fit national regulations for protecting the environment. This approach reverses the order o f focus, from grassroots upward (but shaped by national regulations about conservation and land use) rather than developing broad plans that are not created consensually with landowners based on existing land use and options. The project includes similar components: clarifying tenure, land use planning and landscape management. The project might also learn from the governance challenges and lessons learned from the LIFEprogram with conservation areas inNamibia - a transitional democracy with governance issues and histories similar to those faced inMozambique. 2. Global benefits &/or drawbacks. Although the project documents did not describe the global biodiversity values o f the project areas, the protected areas linkedby the TFCA matrix are among the most important in the world for maintaining wildlife, forests and marine biodiversity unique to East and Southern Africa. The project smartly embeds attention to these globally important marine and terrestrial protected areas in a broader business and governance matrix o f biodiversity-friendly regulations, incentives, and markets, while maintaining attention to preventing negative social impacts. 3. Fit with GEF goals, strategies and priorities, fit with relevant conventions. The project fits well with GEF goals, strategies and priorities, as well as relevant conventions. 4. Regional context. TFCATDP is a transfrontier project based on a regional vision incorporating both biodiversity and the tourist market - both o f which are in fact transfrontier in nature. It would be useful to include a map in the project documents, showing project area, national borders, known tourist routes, and protected areas - to quickly orient readers who are unfamiliar with the area. 5. Replicability. . The lessons learned from this effort to use private sector tourism to generate local economic and social benefits will support replicatiordadaptation in other areas o f the world. Nature tourism is one o f the few businesses that offer potential development benefits in remote areas that are marginal for agricultural and other sectors. And rural communities are generally eager to participate in tourism ventures but unfamiliar with how to manage the income flow and control negative impacts. The project documents recognize and make sound, good faith efforts to address the fact that investmentsmust be targeted carefully so that tourism does not further marginalize local communities - making them the objects o f tourism, 134  depriving them o f their existing resources, bringing disease, and straining the social fabric of communities. The particular institutional aspects o f transborder park management will be replicable to other parts o f Africa, but generally will not be replicable in other regions due to major regional social, historical, political, demographic, and ecological differences. 6. Sustainabilitv. The project includes an excellent set o f components that cover the rangenecessary to support sustainability -policy reforms, institutional strengthening, capacity building, communication, links to private sector, and monitoring & evaluation. 7. Linkages to other focal areas. Ido not have sufficient information to comment on whether this project contributes to other efforts to mitigate/prevent global climate change, etc. 8. Linkages to other programs and action plans at regional or subregional levels. The project i s designed to complement other programs, projects and action plans at regional, national, and provincial levels. 9. Other beneficial or damaging environmental aspects. The land use planning will yield additional environmental benefits if the land use plans are incorporated into broader development planning and regulation as envisioned under the project. 10.Degree o f involvement o f stakeholders. Because the project is a phase two project, I assume that the first phase has provided adequate opportunity for identifying and sorting out how to best involve stakeholders. From the documents provided, Icould not ascertain the degree to which a range o f local and international tour operators and their representative organizations have been involved inthe design, but they will be on significant committees duringthe project. The project has involved government as a key stakeholder, at national, provincial and district levels. The role o f local community governments (in their various forms in different places) is unclear, but they should also be incorporated as key stakeholders, as well as analyzed for their weaknesses when developing the project implementation strategy. The project recognizes that good government institutions are essential for managing biodiversity, and for managing development so that biodiversity is not destroyed in the development process. However improved government agencies are not sufficient for achieving conservation. Rural people can be strategic allies for conservation, weak victims o f development (and conservation) or threats to conservation. The project has the opportunity to develop positive policies and processes for recognizing the rights o f thousands o f people currently living inside protected areas, while protecting the rights of communities to regulate the activities and immigration o f outsiders, and collaborate on conservation inways that meet conservation and human development needs. This i s one o fthe project goals. 135  The documents, however, mention that the community-level work was not successful during the first phase, and it is unclear to what degree the analysis o f lessons learned included discussions in focus groups or other efforts to incorporate local opinions about improving local stakeholder involvement in this next phase. Such efforts to incorporate the voices representing community interests and analysis o f the issues need to be included inComponent 1(policy) as well as inproject implementation committees. Inadditionto "contracts" for communities, a formal and efficient process for lodging and handling complaints and recourse needs to be developed for the communities to use when they feel the tour company or the project has damaged them (as this i s a potential risk for the project). The role of, and interface with, influential international NGOs (conservation and others sectors) working inthese same geographic areas i s not addressedinthe documents. 11,Capacity building. The project includes significant and appropriate focus onbuilding capacity of DNAC (the agency responsible for protected areas inMozambique). Community capacity building i s also mentioned, presumably this will include assistance and facilitation with decision-making and governance related to transparent income sharing, financial management, community-run projects, and accounting. Relevant lessons could be learned from Tanzania's experimentation (WWF, GTZ, DFID funded) in building community level governance capacity as part of their community-based programs to share tourism and hunting benefits on the east and west sides o f Selous (which i s part of one of the TFCA's inthis project). Capacity building will also result fi-om training all participants in how to use M&E for adaptive management decisions and how to use M&E as a basis for the good communication flow that i s essential for good project management. It is not clear to what degree the private tour companies will receive capacity building to enable them to better interface with communities in ways that generate community cooperation and benefits. Both communities and the tour companies needto be trained in the process (to whom, how, when, etc?) by which communities will have recourse to improve the situation ifthey are displeased with a tour company's conduct, or the project in general. This recourse element and training inhow to use it should be added, innot already included inthe project's plans. 12.Innovativeness. The conservation project, (with IDA funding) is innovative in its incorporation of large scale land use planning (IDDP inthis case) recognizing that the landscape matrix incorporates protected areas as well as the "interstitial areas" around and between them. This i s key to protecting the integrity o f protected areas in the long term. It is also refreshing to see the project's realistic approach to working with the tourism industry- as it attempts to buildlong term sustainability by harnessing market energy to 136  veal community benefits linked to community "buy-in" to conservation via attention to local capacity building and capital needs, and via targeting sites prioritized for their likelihood to generate the necessary level o f tourist traffic to provide the profits that will keep business running. 137  RESPONSETO STAPREVIEWER'S COMMENTS 1) While generally praising the project objectives and design, the STAP Reviewer's main concern was the need to indicate how the project's design (including monitoring and evaluation) will support cross-scale linkages. The importance o f such linkages i s clear, given the different scales at which project activities, decision-making processes and activities will occur. From an institutional perspective this ranges from the international (involving high level political committees and technical cooperation across national borders), to the community level; from a geographic perspective it ranges from national coverage (tourism and conservation policies and strategies) to protection, management and development o f specific priority sites within the TFCAs. In response to these comments, the Project Brief has been revised to provide more information on the objectives of, and mechanisms for, ensuringtwo-way exchange of information and knowledge, communication and participation indecision-making. The principalmechanism for this is the Integrated District Development Planning (IDDP) process which lies at the heart o f the project. The IDDP i s a participatory planning mechanism through which local priorities and opportunities are identified in the context of, but not dictated by, national strategies such as the Strategic Plan for Tourism Development. For example, while the general locations o f the TFCAs and the Priority Areas for Tourism Development (PATI's) have been identified at the national level, their actual boundaries and their internal zoning will be determinedby local stakeholders through the IDDP process. The project includes a number o f measures to empower and equip local stakeholders to play this role, and thus be responsible for directing their own development. At the same time, there is the need to incorporate larger scale issues such as ecosystem functions, globally important biodiversity assets and regional tourism routes within the planning process. Therefore, IDDP also involves national and regional stakeholders through mechanisms such as Strategic EnvironmentalAssessment and targeted support and incentives for activities that are consistent with higher level objectives and strategies. The interaction among these different levels o f stakeholders within the IDDP process provides the cross- scale linkage which the Reviewer rightly identified as essential to the success o f the project. This will be supported by a communications strategy which provides for two-way flow o f information among the stakeholders at different levels. As recommended by the Reviewer, the project's M&Eplan will include indicators to ensure that there is a match between levels of decision-making and activities and the scale on which decisions and actions are needed. The project team has noted and incorporated Reviewer's point regarding the need to ensure that Component 1 (strengthening the enabling policy/legal/institutional framework for TFCAs) addresses community rights and interests. 2) The Reviewer noted the need for more information regarding the types o f agreements that will be drawn up between communities and private sector tourism operators, and/or DNAC, to create bindingcommitments to meeting conservation objectives. While formal agreements are envisioned, the form o f those agreements cannot be determined at this time. Ongoing preparation work i s reviewingregional experience with such agreements to identify potential models and pitfalls. Component 3 o f the project will include technical assistance for developing model agreements, as well as legal assistance to communities to enable them to protect their interests and negotiate effectively with prospective investors. The Reviewer's 138  point regarding the need for a mechanism for community groups to raise grievances and to have recourse to mechanisms to have them addressedhas beennoted and incorporated. 3) The Reviewer noted that the project documents did not adequately describe the global biodiversity values of the protected areas linkedby the TFCA matrix (while also noting that they are among the most important areas in the world for maintaining wildlife, forests and marine biodiversity unique to East and Southern Africa). While space constraints limit the specifics that can be provided, the appropriate descriptions have been expanded to better reflect the global biodiversity values. 4) The Reviewer indicated that the role o f local community governments should be made clearer. It i s not entirely clear what this refers to, as the project description emphasizes the involvement o f Provincial and District administrations and local governments. However, this aspect will be made clearer when the Environmental and Social Management Framework for the project (currently under preparation) i s completed. 5) In response to the Reviewers comments, additional information has been provided regardingthe interface with international NGOs working inthe same geographic areas. 6) The project team notes that the Tanzanian (e.g. Selous) experience with community- based programs to share tourism and hunting benefits has been taken into account in the project design, along with similar experience from other countries including Zimbabwe, Zambia, Namibia, South Africa, etc. 7) The Project Briefhas been revisedto better reflect the Reviewers' point that both communities andtourism companies will requiretraining to enable them to develop and implementeffective and mutually beneficialpartnerships. 8) At the Reviewer's suggestion, an informal map has beenadded to the Project Briefto help orient readers. I t should be noted, however, that the map inthe Project Document will be a formal map provided by the appropriate unit within the World Bank. 139  Annex 18: Descriptionof Targeted TFCAs MOZAMBIQUE: Transfrontier ConservationAreas and TourismDevelopment Project Table A18.1:Mozambique Transfrontier Conservation Areas Nameof Existing ExpectedTargets TFCA: Formally GlobalBiodiversity (b2) TotalSurface Protected Values* Area Areas in TFCA New formal (b2) Mozambique ("interstitial P.A. in portion/ " area) in Mozambique km2 Mozambique ** Great LimpopoNP/ Includes one ofworld's largest 30,000 Limpopo: 10,000 fully protectedareas (Great 84,868 Banhine NPI Limpopo TransfrontierPark, - 7000 35,000 km2) andthree additionalNationalParks in (Mozambique's Zinave and Mozambique: Zinave NP Banhine,Zimbabwe's 52,868 3700 Gonarhezou); Veryhighspecies diversityin Total GLTFCA several higher taxa, including 20,700 rare, near endemic and (plus: Zimbabwe: endangeredspecies; 9,000 transfrontier elephant RSA 23,000) migrationroutes Lubombo: Maputo Special Variedmosaicof numerous 950 900 for Futi 4170 Reserve1 terrestrial, freshwater ,coastal Corridor 700 andmarine ecosystems; highly diverse coral reefs; turtle in nestinggrounds; includes 1000 for Mozambique: Total LTFCA MaputalandCenter ofPlant Maputo Marine 2550 700 Diversity;numerous endemic Reserve (the plants,reptiles, amphibiansand exact area will be determined (plus: Swaziland: mammals,transfrontier fish during 900 and elephantmigrations RSA: 720) implementation) Chimanimani: Chimanimani Includes Chimanimani 7816 National massif, known for species Reserve richness and highlevels o f in 7500 endemism (e.g. 1000spp. Mozambique: vascular plants including 45 7500 Total CTFCA endemic to TFCA); 7500 endangered spp. (e.g. blue sparrow) (plus: Zimbabwe: 316) TOTAL 28500 30,950 1,900 TFCATDP 140  ZIMOZA: None Important transfrontier 20,666 0 31,833 riverine ecosystem with shared fish and wildlife in resources requiring Mozambique: cooperative management; 20,666 component of Great Rift Valley system (plus: Zimbabwe: 7699 Zambia: 3468) Niassa-Cab0 Niassa Special One of Africa's largest 17,000 10,000 Delgado: Reserve/ remainingpristine natural 67,000 15,000 areas; diverse ecosystems includingmangroves, dunes, riverine, forest, Lake Niassa; in heart of the 3.5 mill h2 Mozambique Miombo Ecoregion (per 42,000 WWF), andone ofworld's largest protectedmiombo woodlands; high species (plus: Tanzania: diversity andregional 25,000) endemism;highest concentration of wildlife in Mozambique, and only location with viable populations of most large mammals, including large- tusked elephant (migrating between Moz. and Selous Reserve inTanz.). Potential for eventualTFCA corridor from Lake Malawi to coast TOTAL 33,200 70,784 11,900 TFCAs ** including areas which might become designated community conservation areas The three TFCAs targetedby the TFCATDP are described ingreater detail below. Great LimpopoTFCA The Great Limpopo Transfrontier ConservationArea (GLTFCA) comprises a matrix of land use systems centered on core conservation areas. The TFCA as a whole covers almost 90,000 km2. Most o f the attention to date has focused on the 35,000 km2section which comprises the Great Limpopo Transfrontier Park (GLTP). The GLTP links the Limpopo National Park in Mozambique, Kruger National Park in South Africa, and Gonarezhou National Park, Manjinji Pan Sanctuary and Malipati Safari Area inZimbabwe, as well as two areas between Kruger and Gonarezhou (the Sengwe communal land in Zimbabwe and the Makuleke region in South Africa). It was established in December, 2002 when the three Heads of State signed an international treaty to establish the Great Limpopo Transfrontier Park (GLTP) at a ceremony in Xai-Xai, Mozambique. Shortly thereafter, part o f the fence between the Limpopo and Kruger National Parks was removed to symbolize the creation of what is to intended become the world's largest wildlife conservation area. One specific 141  objective o f removal of this fence i s to re-establish historical dispersal areas for the growing elephant population and other large mammal species inKruger NP. The GLTFCA also includes the Banhine and Zinave National Parks in Mozambique, which are separated from the GLTP by substantial stretches o f non-protected "interstitial" area. Realizing the vision for the GLTFCA requires that land and resource use practices in these areas are aligned with the principles o f conservation and eco-tourism and are supportive o f the objectives for the national parks that are constituents o f the TFCA. While ecological connectivity i s not yet fully understood for GTFCA, certain elements are known. For example, the exceptional wetlands to the north and east o f Banhine National Park merit special conservation, as does their catchments area which extends into Gonarezhou National Park across the border with Zimbabwe. Development o f the area including improved access roads for tourism needs carehl management, including control o f hunting, charcoal extraction, and harvesting o f building poles from the extensive stands o f Androstachys johnsonii (ironwood). LubomboTFCA The Lubombo Transfrontier Conservation Area was formalized under the Lubombo Spatial Development Initiative in June 2000. It straddles the border between South Africa's KwaZulu-Natal province, southern Mozambique and Swaziland, stretching from the Lebombo Hills in the west to the low-lying coastal plain o f the Indian Ocean in the east. Altogether it measures 4,195 km2,o f which 2,783 km (66%) i s inMozambique, 1,095 km (26%) i s in South Africa and 317 km2(8%) i s in Swaziland. It includes the biologically rich southern section o f the Mozambique Indian Ocean coast, from Inhaca to Punta do Ouro, which serves as an important refuge for harvestable, endemic and shared fish stocks. Coral ecosystems and turtle nesting grounds are typical examples o f threatened biota found in this section o f coast, These provide unique and substantial tourism opportunities some o f which are being exploited to the extent that there are growing concerns for the sustainability. As this area adjoins a major coastal protected area in SouthAfrica, the Greater St Lucia Wetland Park, that incorporates a Marine Protected Zone, there are good opportunities for regional collaboration in marine conservation and tourism development. This coastal plain supports an unusually high biodiversity by virtue o f its position at the confluence o f a number o f biogeographic regions. A new Marine Protected Area i s proposedunder the TFCA, to link with that in South Africa. Together they will form part o f an important and expanding network of marine protected areas along the length o f the east coast of Africa, from Somalia through Kenya, Tanzania and Mozambique to South Africa. This network will help to conserve a good range o f the habitats and species in this marine region, protect important breedingareas for fish and other species, and facilitate climate change adaptation for marine species through its north-south alignment coupled with patterns of prevailing currents. Inland, the TFCA i s centered on several existing reserves: the Maputo Special Reserve in Mozambique, Ndumo Game Reserve and Tembe Elephant Park in South Africa and the Hlane Wildlife Sanctuary, Mlawula Nature Reserve and Ndzinda Nature Reserve in Swaziland. The Maputo Special Reserve lies about 70 km south of Maputo, stretching from the Machangula peninsula in the north, southward along the coast (through important sea 142  turtle nesting sites) of the Mozambique Channel, with the Rio Futi serving as the western boundary, It i s one o f the most beautifuland unspoilednatural areas insouthern Africa, with habitats including tall sand forest, riverine woodlands, open grassland, marshlands, freshwater lakes, lagoons and sea shore. Three large saline lakes support a wide variety of bird and fishlife. The Maputo reserve is believedto bethe core area for a coastal population of elephants that once ranged south across the international border into Kwazulu-Natal (the Tembe Elephant Park and Ndumbo Game Reserve) during the wet season, through the Futi Corridor. In the context o f the TFCA, it i s proposed to expand the area under protection (through a community-based conservation approach) to include the 900 km2Futi Corridor, securing this migration route and linkingthese important elephant habitats and populations. The Lubombo TFCA is also globally very significant for botanical biodiversity, as it falls within Maputaland Center o fPlant Endemism. At least 1,100 species o f vascular plants have been identified in this area (estimates are that the total number may be as high as 3,000), including at least 4 endemic genera and 168 endemic species. The associated avifauna is also very rich, with over 472 species o fbirdsincluding47 endemic or near-endemic subspecies. The Lubombo TFCA also includes the southernmost Priority Area for Tourism Investment (PATI) identified inthe GOM's Strategic Plan for Tourism Development i s referred to as the Elephant Coast Zone. It is incorporated as part o f a tourist route, the Lebombo Circuit, which links Kosi Bay and the Ndumo and Tembe Reserves and Lake St. Lucia (South Africa), Punta do Our0 and the Maputo Special Reserve (Mozambique), and Namaacha (Swaziland) . ChimanimaniTFCA The 2056 km2Chimanimani TFCA links the Chimanimani National Park in Zimbabwe and the Chimanimani National Reserve in Mozambique. The area forms part o f the eastern escarpment o f the Interior Continental Plateau o f south-central Africa. Although relatively small, it i s characterized by an exceptionally highdiversity o f habitats and species, including nearly 1000 recorded vascular plant species (of which 45 are endemic, including five Aloe species), over 160 bird species and 60 reptile species. The Chimanimani massif is recognized as an area o f particularly high endemism within the region. Some bird species which inhabiting moist montane forests in Chimanimani are otherwise considered to be endemic to eastern Africa, highlighting connections between this area and the Eastern Arc Mountains o f Tanzania. Despite having a lower formal level o f protection, the Mozambique portion is better preserved, representing a relatively intact Afio-montane ecosystem. The Reserve also contains distinctive landscapes, and numerous rivers, streams and waterfalls, which enhance its touristic value. There are three distinguishable zones within the Reserve at present: a northern zone with relatively high population densities and use, a lowland zone with significant numbers of settlements, and a mountain zone which represents the "essence o f Chimanimani" from both a biodiversity and a socio-cultural standpoint (sacred sites, a number o f which have been 143  designated as cultural protection areas). The total population o f the area i s about 66,000, with most people living alongside the main rivers and inthe foothills. A workshop in 1999 proposed the establishment o f a Core Conservation Zone and Outer Conservation Zone within the TFCA. The Strategic Plan for the Development o f Tourism in Mozambique identifies the Chimanimani as an important tourism destination in the `Central Eco-tourism Route' that connects Beira, Marromeu Reserve, Gorongosa National Park, Gorongosa Mountain, Chimoio, Chimanimani, Lake Chicamba, Manica and Beira. The Chimanimani TFCA i s incorporated into the Manica Tourism Zone as a Priority Area for Tourism Investment (PATI) in which emphasis i s given to eco-tourism, adventure tourism with backpackers and `overlanders' as the primary target, at least inthe short to mediumterm. 144  Annex 19: Lessons learnedand reflectedin the projectdesign MOZAMBIQUE: TransfrontierConservationAreas and TourismDevelopment Project The project design has drawn upon experience and lessons learned during the first phase project (TFCA Pilot and Institutional Strengthening), as identified by the Implementation Completion Report (ICR) prepared in March 2004, and from many existing efforts in southern Africa and worldwide to achieve synergy between biodiversity conservation and economic development through community-oriented, nature-based tourism and other types o f sustainable use o f biodiversity. Some important observations o f the ICR relevant to the second phase project include: 0 Component 1 (Institutional and Policy Development) was well designed and improved the policy and institutional environment for conservation. The subcomponent on private sector investment correctly identified the need to start by creating an enabling environment, but over-estimated the potential for such investment; 0 Component 2 (Habitat and Wildlife Management) was also well designed; however the needs for infrastructure rehabilitation far exceeded the resources available under the first project and requires follow-up inthe secondphase; 0 Component 3 (Community Mobilization and Pilot Programs) did not adequately take into account the very poor infrastructure in the three TFCAs, which makes marketing o f goods difficult, and the lack o f experience o f the G O M and local NGOs for implementing community-based natural resources management 0 Component 4 (Monitoring and Evaluation) was adequately designed but poorly implemented(treated as low priority). The ICR also identified a number o f specific lessons that have been incorporated in the designo f the secondphase project: Demarcating land for communities can be an effective way o f establishing community rightsover local natural resources inorder to benefit from eco-tourism, puttingthem ina stronger bargaining position with private investors (over 70,000 hectares were demarcated under the first, pilot phase; this needs to be continued and consolidated inthe second phase); Conservation and community development projects need to demonstrate clear linkages to economic objectives such as growth, income generation or poverty reduction; the importance o f tourism in this respect should have been more emphasized from the beginning,at the level o f GOM and local communities; Potential negative environmental and social impacts must be avoided through careful planning and regulation; Institutional development i s a time consuming process that requires commitment from all stakeholders, and extensive capacity building (it took four years o f implementation for institutional arrangements to reach their current form, and therefore for the project to function effectively); 145  Sensitive issues such as communities living infuture National Parks need to be dealt with up-front, with all stakeholders (the controversial "people in parks" issue did not arise in relation to the GEF-fundedproject, but has implications for the future); 0 A trade-off may exist betweenthe expedience and efficiency o f delivering a project, and the inclusion and strengthening o f provincial and district governments that i s needed to improve sustainability (the first phase project developed the capacity o f the park management units largely inisolationo f local government) 0 An advisor on private sector issues should be appointed early on, to deal with the challenge o f creating an enabling environment for the private sector (including the establishment of a realistic role for the private sector, and up-front demand side assessment); 0 An M&E system mustbe inplace at project effectiveness; 0 Transparency in concessioning i s important ( donors must support G O M to ensure that communities are not marginalized, and that the true values o f the land are attained through auctions or tenders) Other lessons derived from the first phase and relatedexperiences include the needto: maintain a clear focus on a core set of objectives and activities; set concrete, results-oriented indicators and targets, together with the flexibility to adjust these targets based on experience and changing circumstances; to establish a clear legal and institutional framework for TFCAs themselves, and for communities and development within them (e.g.: the legal designation o f TFCAs; establishing the legal status and rights o f communities insidePAS); balance policy, institutional development and planning aspects with support for visible activities and investments on the ground; put inplace a structured, participatory, spatial planning process to develop a agreed-upon common framework for the many different actors and interests; place local tourism initiatives within a broader context o f regional development o f markets, routes, circuits, and destinations that will generate a critical volume o f tourist flow; ensure that tourism development i s private sector-led and market-based (with feasibility studies, business plans, market development, etc.); and Manage expectations regarding the total probably levels and timeframes for tourism development and associated financial and economic benefits to communities. These lessons have been incorporated into the TFCATDP design. The economic benefits o f tourism development, and its linkage with conservation, are placed at the forefront, with support from all stakeholders. The IDDPs which will be prepared as a first step address the issues o f proper planning for tourism development, and will be carried out under the leadership o f Provincial and District governments. Institutional and implementation capacity developed under the first phase project will be utilized, and built upon with a considerable investment intechnical assistance, training and institutional reform. Based on these lessons, the project has also been designed to focus on a manageable set o f priority sites and activities, based on the core objective o f stimulating sustainable tourism 146  development. Institutional analyses being carried out during project preparation will clarify the overall institutional structure for implementation and the strengths and weaknesses o f the different actors, in order to develop realistic targets and identify specific capacity building requirements. The project includes early interventions to alleviate the regulatory and capacity constraints and perverse incentives that are presently limiting private sector investment, while at the same time taking immediate measures to ensure that communities are recognized as valued partners in tourism development instead o f being displaced by it. The project time frame has been extended to allow for the needed capacity building to precede activities such as the IDDPs and community initiatives. Specific additions to existing technical and implementation capacity include long term advisors to facilitate private sector partnerships (including development o f transparent and effective concessioning procedures at both national and decentralized levels), on-the-ground coordinators to support decentralized government bodies and NGOs, and an M&E coordinator. The fact that TFCAs have been identified as priority tourism areas by GOM and in regional initiatives will help ensure both Government commitment (necessary to achieve effective cross-sectoral collaboration) and complementary regional and international support. The first phase project tried but failed to support a broad community-based natural resource management (CBNRM) program, due inpart to a lack o f implementation capacity and inpart to poorly focused objectives and unrealistic expectations. The TFCATDP will adopt a more focused approach targeting only activities that directly support conservation and tourism objectives. It will also offer alternative types o f incentives for communities to support conservation in areas which have high biodiversity value but low eco-tourism potential. Activities in the first 1-2 years o f the project will emphasize policy and legal reform and institutional and individual capacity building, such as training IDDP coordinators and preparing stakeholders to participate in the IDDP process; mobilizing and organizing communities to be able to enter into business partnerships; strengthening basic tourism literacy and business skills at the community level; and restructuring DNAC to be more efficient and work more effectively with community, private sector and other partners. At the same time, the project will support the continuation o f some ongoing activities on the ground within each of the TFCAs to maintain momentum and enthusiasm that have been built up duringthe first phase ofthe program. The issues o f people inparks are being addressed up front through a Process Framework and a Policy Framework as well as through policy development in Component 1 (see Section on Critical Risks and Possible Controversial Issues). Assurances have been sought from the Government who has registeredthe core principle o fthe Process Frameworks into a Letter o f Sectoral Policy (see A n n e x m . 147   IBRD 34018 30