Burkina Faso - Private Irrigation and Agroprocessing Project

Report No. PID2062 Project Name Burkina Faso-Pilot Private Irrigation... Development Project Region Africa Regional Office Sector Irrigation & Drainage; Project BFPE50886 Borrower GOVERNMENT OF BURKINA FASO Implementing Agency Association des Professionnels de l'Irrigation Privee et des Activites Connexes (APIPAC) Contact Person: Mr. Jules Dekrin TRAORE Tel: (226) 32 041 01 Fax: (226) 30 41 67 Email: dipa@fasonet.bf Environment Category B Date PID Updated August 11, 2000 Appraisal Date May 23, 1998 Board Date February 8, 1999 1. Country and Sector Background 1.1. Main Sector Issues Burkina Faso's economy is primarily agriculture-based, and rainfed farming is the dominant agricultural enterprise. Recurrent droughts affect production and incomes, and exacerbate poverty and income inequalities, by reducing the production assets of the poor. Yet, the country's irrigation potential is poorly developed, only 12t of about 165,000 hectares in total. Most of the area is under low performing public schemes. Only 20 percent of the irrigated area is under informal/private small-scale irrigation which has developed spontaneously in response to the risks associated with rainfed agriculture. The average size of these small private holdings is less than 1.5 hectares. 1.2. Government Strategy Significant potential exists for widespread smallholder-based irrigation and its corollary in terms of income generation, diversification in production, marketing and agro-industry. To promote that potential, the Government prepared a national irrigation strategy that was premised on the expansion of private sector involvement, leading to a significant contribution to sustained agricultural growth. The strategy emphasizes priority actions including: (a) providing training and technical support to private operators for irrigation development; (b) promoting public-private partnerships, and adopting legislative and regulatory measures to encourage the emergence of investors in the sector, and (c) putting in place an appropriate stakeholder-based institutional framework for managing these investments and for coordinating donor interventions in the sector. This  strategy was translated into a national program that the government submitted to various donors, including IDA, for financing. However, many of the features of the program design were insufficiently tested, or could lead to outright failures. It was therefore decided that a future national irrigation development program should be grounded on a thorough testing of various approaches to address the critical institutional, financial and technical issues. 1.3. Sector Issues to be Addressed by the Project and Strategic Choice A beneficiary assessment showed that the potential for smallholder irrigation was constrained, in order of priority ranking, by: (a) lack of operational grassroots farmer groups, cooperatives and associations; (b) limited access to financing, (c) limited marketing infrastructure and opportunities, (d) technological shortcomings; and (e) policy distortions. Beneficiary surveys, client consultation workshops and lessons from past operations point mainly to "off-farm" constraints: policy and institutional environment; and packaging of upstream and downstream services. Some responses to these constraints already exist: (a) appropriate technologies for profitable on-farm investments in smallholder irrigation, such as the treadle pump and tube-well washboring are available; and (b) relatively good experience, through agricultural support services, with the delivery of technical messages to small-holders, especially rainfed farmers. However, we don't know: (a) reasons for the very limited use of treadle pumps and tubewell technologies in Burkina Faso; (b) the health, social and environmental impact of widespread application of these techniques; (c) on the institutional side, the responsiveness, cost-effectiveness and sustainability of delivering systems using professional organizations to support off-farm activities; (d) cost-effective mechanisms for sustainable smallholder finance of agricultural production and investments; and (e) the appropriate packaging of support services for off-farm agricultural activities. Thus, innovative approaches to these issues should be explored. This entails relatively low cost pilot schemes as a means to gain experience and test their replicability on a larger scale. 2 The Project 2.1. Summary Description Target beneficiaries consist of: (i) small-scale irrigation farmers (less than 10 ha); (ii) private operators involved in the marketing and processing of irrigation products, most of whom are women; and (iii) providers of farm inputs and services to irrigation activities. Support services will focus on transferring technical and managerial know-how to these beneficiaries, aiming at increasing incomes and employment through: (i) improvements in irrigation equipment and techniques, crop production, and post-harvest technologies, (ii) enhancing their access to product and input markets, and to financial services, and (iii) improving their land tenure security. Support would also be provided to grassroots groups and cooperatives, established by beneficiaries, to enhance their capacity to respond to their members' needs. APIPAC, a newly-established irrigation smallholders' association, will provide support services, under various cost recovery arrangements to be tested, sometimes directly but mostly indirectly through contracts with NGOs, -2 -  public and private agencies, local consultants and lending institutions. All on-farm and off-farm services related to training, technical assistance, technology demonstrations and adoption will be contracted out by APIPAC. APIPAC will facilitate and intermediate service delivery as well as perform proper coordination, monitoring, representation and promotional functions. Because the support services will be demand-driven, the process of support services delivery will generally include four critical stages: (a) identification of demand for support services; (b) establishment of detailed implementation plans for the delivery of support services; (c) implementation of the support operation; and (d) continuous detailed monitoring. Key Project Components: (Costs, including Contingencies, and excluding Taxes) NOTE: This document contains tables that cannot be converted into text files. However, if you have MS Word or Word Viewer on your computer, you should be able to download the complete original version by going to http://www.worldbank.org/pics/pid/bf50886.doc 2.2. Institutional and Implementation Arrangements Implementation Period. The project will be implemented over a three- and-half-year period from August 1999 to December 2003. Technical Coordination of the Project. APIPAC, which is an association governed by private law, has been contracted by Government to implement the Project, thus acting as a public service for the State account, through an Execution Protocol. The Protocol includes mechanisms to ensure full accountability for the use of the public resources entrusted to APIPAC, which operates on the principles of autonomy, transparency, accountability and cost-effectiveness. Its Board of Directors, consisting of 11 members (two of whom are women) drawn from private operators active in subsector activities, is elected by APIPAC's General Assembly. During project implementation it will be carefully monitored that the most powerful larger farmers or traders do not exercise undue influence and disproportionate control over operations, or over government's irrigation development policies. APIPAC will be based in Ouagadougou and its mandate will be countrywide. Initially, five regional antennas will be established, which correspond to the concentration of potential demand for irrigation-related services: Ouagadougou, Bobo- Dioulasso, Banfora, Dedougou and Koudougou. These regional branches will receive and process demands, and facilitate intermediation between beneficiaries and service providers, as well as to ensure close monitoring and coordination of field operations. APIPAC's support services operations will need to be cost effective and its intermediation costs kept low. Its staff must stay small and services to farmers will be provided as much as possible through subcontracting to existing institutions. APIPAC will aim at long-term financial sustainability- -its representation/lobbying activities will therefore be financed entirely through membership fees and the cost of support services initially subsidized by the government will be recovered in part from beneficiaries. This aspect will be carefully monitored during project execution, with a view to progressively reducing the share of subsidies. Eligibility and selection criteria to access APIPAC's services are outlined in a Manual of Procedures, which has been reviewed by IDA. - 3-  APIPAC's Technical Project Unit (TPU) is responsible for the day-to-day implementation of the project. This Unit is headed by a Director and comprises a small team of five nationals, who are appointed by, and answerable to the Board of APIPAC. TPU is responsible for overall project implementation performance, including evaluation and approval of requests for APIPAC support, for processing guarantee requests, for procurement and contract management; and for relations with Government agencies, the private sector, NGOs and all other stakeholders, and for establishing a work program and a budget each year. TPU's Director and staff have been appointed under terms and conditions satisfactory to IDA. Financial Coordination of the Project. A Financial Coordination Unit (UCOF) has been established at the Ministry of Agriculture and is responsible for the financial management of the Project, including: (a) preparing the meetings of the Steering and Monitoring Committee (COS) which will be responsible for approving APIPAC's work program and budget; (b) monitoring the execution of the budget, and reporting to the COS; (c) administering the Project Special Account, including paying APIPAC for services rendered under the Execution Protocol, and paying APIPAC subcontractors directly; (d) coordinating the purchases of goods; (e) administering the Guarantee Facility; and (f) accounting, reporting and audits, as well as preparing disbursement requests. 2.3. Accounting, Financial Reporting and Auditing Arrangements UCOF and APIPAC will establish and maintain adequate financial management systems -- including accounting, financial reporting and auditing -- that provide accurate and timely information regarding project resources and expenditures. The Government will establish a Project account and deposit an amount equivalent to US$5,000 each year as its contribution to UCOF. Following the approval of the Guarantee Facility Manual, the Government will establish an Escrow Account, which will be used exclusively to back up guarantees, and deposit into this account US$ 800,000 during the project. 2.4. Monitoring and Evaluation, Supervision and Reporting Monitoring and Evaluation (M&E). The M&E system will be based on an internal performance and impact monitoring system, and on external evaluations and assessments of beneficiary response and impact contracted out to agencies or enterprises external to the project. Mid-term and End of Project Reviews. Government and the Bank will conduct a mid-term review, by the end of the second year of project implementation, to determine if adjustments need to be made to the design of this pilot operation. An end-of-Project review will also be conducted jointly by Government and the Bank, to ascertain the desirability of generalizing all or part of the support delivery system, including the Guarantee Facility, on a larger scale. Project Supervision. Project activities will be subject to periodic joint supervision missions of the Government and the Bank. A Steering Committee (COS), chaired by the Ministry of Agriculture, will be the overall supervisory body on the Government's side. Its responsibility will be limited to approve and ensure the proper enforcement of the Execution Protocol. -4-  Reporting. UCOF and the TPU will prepare and submit semi-annual progress reports to APIPAC's board, COS and IDA, including up-to-date physical and expenditure data, assessment of the performance of the contracting process and technical support and training activities.. The Borrower would submit to IDA a Project Implementation Completion Report within six months after the closing date of the IDA credit. 3. Summary Project Analysis In light of the nature of this project, economic analysis of different prototype arrangements and investment activities will be tested by the Technical Project Unit. The global IRR of the project has been estimated at 22 percent. The project will improve access to financial services by the target beneficiaries, most of whom are poor, for their diversified income-generating activities. Results from the beneficiary assessment indicate that poor are not necessarily bad credit risks. Rather, lacking assets, collateral and access, the poor find it difficult to use the formal credit market. The project would test the guarantee fund approach. As a result of project support, APIPAC would be expected to acquire the necessary capacity to: (i) assist beneficiaries prepare credit applications; and (ii) assess the guarantee required for smallholders to obtain credit. Promising techniques including those adaptable to the resources and management capabilities of small farmers (treadle pumps, washbore and tubewell drilling techniques, improved agro-processing technologies) will be tested, adapted, demonstrated and disseminated. A major focus of this project is to develop cost-effective institutional arrangements for the delivery of a package of services to small-holders. APIPAC was designed as a cost-effective autonomous private agency on the basis of best practices. APIPAC would adopt transparent contract management practices to subcontract implementation of most of the project components to third parties. In light of the significant role women play in small-scale irrigation activities, special attention would be paid by the M&E system to gender in the execution of this project. In addition, the project would provide demand-driven support on the administrative and legal procedures to follow to obtain secured land tenure and related property rights. 4. Environmental Aspects The environmental category "B" has been assigned to the proposed project. The results of the environmental assessment for the preparation of the national irrigation program indicate that the activities envisaged under this project would not have any significant negative effects on the environment. The project will not finance substantial investments in surface water irrigation that result in a large off-take of water. Hence, riparian rights issues are minimum. In any case, the riparian states have been duly notified about this project. In light of the fact that irrigation projects do have a potential for generating health problems associated with disease transmission through water, as well as other environmental impacts, the project will undertake studies and pilot selected best practices in - 5 -  participatory environmental management. This will lead to a better understanding of the complex interrelationships among water quality, supply, use and disposal and the subsequent design of a mitigation plan for a future large-scale operation. 5. Sustainability and Risks 5.1. Sustainability The project, exploring uncharted territory, will have a built-in monitoring and evaluation system to make adjustments as required and to test alternatives during implementation. As such, it is expected to generate approaches for designing sustainable support programs for private irrigation development, based on private management, voluntary farmer groups and professional associations, NGOs, and on public services and funding. A built- in participatory process will ensure ownership by rural stakeholders. It is expected that the private association (APIPAC) will, as it develops capacity and acquires experience, be able to provide services upon demand, and assure progressively larger cost recovery from the beneficiaries as those increase their income as a result of the project. The cost-effectiveness of this private delivery model, i.e. the ability of APIPAC to deliver services at lower costs than public delivery systems will be an important determinant of affordability and sustainability. This will be closely monitored and evaluated. In addition, participation aspects will receive close attention on the grounds that without strong beneficiaries' motivation and commitment the viability of the project may be compromised. 5.2. Critical Risks The main risks are: (i) the Government may reverse its policy of decentralization and empowerment of rural stakeholders; (ii) APIPAC fails to become cost-effective; or (iii) larger farmers exercise disproportionate influence in management of the smallholder association. Measures, in particular, the continuous monitoring and evaluation, have been developed in the project design to minimize these risks. There will be two independent external evaluations of the project outcome to determine success and sustainability of test results. 6. Compliance with Bank Policies This project complies with all applicable Bank policies. 7. Contact Points: Francois Gadelle The World Bank 1818 H Street NW Washington, DC 20433 Fgadelle@worldbank.org Ibrahim Nebie The World Bank BP 622 Ouagadougou, Burkina Faso -6-  (226) 30 62 37/30 62 38/30 72 57 (226) 30 86 49 Inebie@worldbank.org 8. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Processed by the InfoShop week ending August 18, 2000. - 7 -