Madagascar - Irrigation & Watershed Management Project - GEF

Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB2807 Project Name Watershed Management Project Region AFRICA Sector Irrigation and drainage (50%);Agro-industry (30%);Crops (20%) Project ID P088887 Borrower(s) GOVERNMENT OF MADAGASCAR Implementing Agency Environment Category [X ] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Safeguard Classification [ ] S 1 [X] S 2 [ ] S 3 [ ] S F [ ] TBD (to be determined) Date PID Prepared July 15, 2004 Estimated Date of Appraisal Authorization May 2, 2005 Estimated Date of Board Approval July 5, 2005 1. Key development issues and rationale for Bank involvement Development/Sector Issues : Overall growth in Madagascar has not kept pace with population growth, leaving per capita GDP lower today than in 1960. Over two thirds of Malagasy are poor, with 60 percent categorized as extremely poor. Poverty is largely rural and agricultural, 85 percent of the poor live in rural space and small farmers have the largest incidence of poverty. Agricultural growth over the past 40 years has been based primarily on expansion of area, and high average growth from 1996-2001 had little impact on urban, and none on rural poverty. Extensification has also not prevented the rural population from falling deeper into poverty, has led to widespread deforestation, and has, in a number of watersheds, caused massive soil loss and sedimentation that severely reduce the productivity of irrigated lowlands. Growth has to become more inclusive and sustainable if Madagascar is to achieve the MDG goals. The removal of distortions in the late 1908s and early 1990s has failed to lead to a supply response, which suggests that constraints to rural productivity should be considered primarily of a structural nature. The 2003 Rural and Environmental Sector Review identifies a number of constraints to accelerating the contribution of the sector to more inclusive growth, including technology, water management, rural credit, and road infrastructure, and improved access to markets. Each of these constraints represents a necessary, but on their own insufficient building block; addressing them in a comprehensive way requires a long time perspective. Past support for the sector has not been able to overcome disappointing sector performance. The ICR of the PPI2 points out that the project outcomes were impacted by a lack of cohesion between the different sectors involved in agricultural growth, and recommends that future operations should be part of a multi-sectoral approach that would address constraints in a more coherent way. This approach is referred to as a