Mozambique - Rural Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 11474-MOZ STAFF APPRAISAL REPORT MOZAMBIQUE RURAL REHABILITATION PROJECT FEBRUARY 25, 1993 Southern Africa Department Agriculture Operations Division This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EOUIVALENTS Currency Unit = Mozambican Metical (MZM) US$ 1.00 = MZM 2,456 (September 30, 1992) 1,000 Meticais = One Conto WEIGHTS AND MEASURES Metric System FISCAL YEAR Government of Mozambique: January 1 - December 31 ABBREVIATIONS AND ACRONYMS Afl)B African Development Bank AGRICOM Empresa de Comercializacio Agrfcola (State Enterprise for Agricultural Marketing) BCM Banco Comericial de Mocambique (Commercial Bank of Mozambique) BM Banco de Mocambique (Bank of Mozambique) BPD Banco Popular de Desenvolvimento (People's Development Bank) CCADR Caixa de Crddito Agrario e Desenvolvimento Rural (Agricultural Credit and Rural Development Fund) CENE Commissio Executivo Nacional de Emergencia (National Emergency Commission) CFA Centro de Formaqco Agraria (Agricultural Training Center) CNP Commissio Nacional de Plano (National Planning Commission) CPFA Centro Provincial de Formacao Agraria (Provincial Agricultural Training Center) CPP Commissao Provincial de Plano (Provincial Planning Commission) DANIDA Danish International Development Agency DINAGECA Direcc,o Nacional de Geografia e Cadastro (National Directorate for Geography and Cadaster) DNA Direccio Nacional de Agua (National Directorate for Water) DNO Direccio Nacional de Oreamento (National Directorate of Budget) DNP Direcc,o Nacional de Plano (National Directorate for Planning) DPA Direce,o Provinical de Agricultura (Provincial Directorate of Agriculture) DPF Direcc,o Provincial das Finanqas (Provincial Directorate of Finance) DPCA Direccio Provincial de Construqio e Aguas (Provincial Directorate of Construction and Water) DPCCN Departamento de Prevencio e Combate das Calamidades Naturais (Department for the Prevention and Control of Natural Calamities) EAR Estaleiro de Agua Rural  FOR OFFICIAL USE ONLY (Disrict Water Supply Workhop) EC European Community ECMEP EBnpreas de Construilo a Manutencio do Estradas e PoMtes (Road and Bridp Construction and Maintnane Enteaprie) EME Estado Major de Economia (Provincial Technical Council) EMOSE Empresa Mogambicana de Seguros (Insurance Company of Mozambique) EPAR Estair Provinical de Agua Rural (Provinical Water Supply Workhop) ERP Economic Recovery Program ESRP Economic and Social Recovery Program PAO/CP FAO/World Bank Coopertive Program GDP Gross Domestic Product GIS Geographic Information Systems GOM Government of Mozambique GPS Geographic Positioning System IDA International Development Association INDER Insttuto do Desenvovlimento Rural (Insitut of Rural Development) INIA Instituto Nacional de Investigaqio Agronomo (National Institute for Agricukuml Research) MCA Miniaterio do Construcio e Aguas (Ministry for Construction and Water) MOA Ministry of Agriculture NGO Non-Governmental Organiztion NRP National Reconstruction Program O&M Operation and Maintenance PAO Plano Anual de OperaqZe (Annual Plan of Operations) PDP Priority Ditricts' Program PEC Progrumma do Educario Communitkrio (Community Education Progrm) PESU Progrma de Emergencia de Sementes aUtenilios Agricolas (Emergency Seeds and Tools Program) ePP Projeot Preparation Facility PROpORGE Projecto de Pormagao e Gestao (Tmrining and Managemcnt Project) PRONAR Programs Nacional de Agua Rural (National Rural Water Supply Program) PRONIP Programa Nacional do Irripa$o National Small Scale Irrigation Program PTIP Plano Trienal de Invetimuento Publioo (Triennial Public Invedtment Program) RDA Rurl Development Agent RRP Rural Rehabilitation Project ROCS Roads and Coutal Shipping Project SEMOC Scmentes de Moc,ambique (Mozambique Seeds Company) SIDA Swedish International Development Agcy UNDP United Nations Development Progrm UNDRO United Naions Diuster Relief Organization UNV United Nationr Volunteers USAID U.S. Agency for International Development VLOM Village Level Operation and Maintenance WB World Bank I This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   MOZAMBIOUE RURAL REE[BIITATION1PROJEC TABLE OF CONTENTS Credit and Project Summary ......................... . I L.BACKGROUND ......................... , ,ee944G4*o 1 A. Introduction .......................... 1 B. Country Characteristics .......................... I General .......................... 1 Population and Security ....................... ... 2 Economic Context ........................... 2 Agricultural Sector ........................... 3 Financial Sector .......................... 4 C. Land, Resettlement and Rural Infrastructure ...................... S Land .. 5 Resettlement of War-Displaced Households .................... 7 Rural Infrastructure ................................... 10 Rural Water Supply ................................... 10 D. Administrative Arrangements ............................... 12 Administrative Capacity ................................ 12 Public Administration and Funding of Investments .. o. ............ 12 District and Local Administration ............ - ........... 13 Decentralization ............................... o ..... 13 Government Institutions in Rural Development ............... o.. 14 E. External and Non-Governmental Organizatio ............ 16 F. Lessons Learned ....................................... 16 I. THE PROJECT ........................oooooo .... 1s A. Rationale and Objectives ............... .... ........ ... 18 B. Design Considerations .................................... 19 Flexibility ...................... ... o ........... 19 Technical Assistance and Training Requirements ................. 19 Phasing ......................... .. .......... 19 The Project Area .................................... 20 Availability of Credit ...... 20 Rationale for IDA Involvement and Links with Conty Strategy .. 20 Tlis report is bsed on the findings of an apprisal mission which viited Mozambique in June-July of 1992. Te mission wu comprised of Messrs /Mesdames Daniel Cotlar (mision leadw and main aWbor of dhis rport), Jon Olivars (Principal Economist/implementation specialist), Jacob Intator (turnd crd spooia , Hanndo Clanon (institutions specialist), Susana Lastarria (land information spcialist), Micheb MoNab (h s rity speawist) and Juan Estrada (Hydraulic Engineer). Mr. Francois PaUoux is lad advisor ad Msesrs. Alai Tobeim ad Maurice Amo are peer revicwver for this project. Mr. Chaim Helman and Mr. Stephe Demming am th managing Division Chief and Depaitment Director, respoetively, for th opation.  C. Summary Project Description ............................... 20 D. Detailed Description of Project Components ...................... 21 Support for Decentralization Component ...................... 21 Land Component .................................... 27 Distribution of AgPacks Component ........................ 29 Rural Water Supply Component ........................... 30 HI. PROJECT IMPLEM TATION ............ .. ................ 34 A. Overall Organizational Arrangements .......................... 34 B. Management of Project Components ........................... 34 C. Programming of Activities ................................. 36 D. Project Implementation Review .............................. 36 E. Monitoring, Evaluation and Beneficiary Assessment ................. 37 F. Status of Project Implementation ............................. 37 IV. COST ESTIMATES, FINANCING AND PROCUREMENT ............. 39 A. Cost Estimates ........................................ 39 B. Financing ........................................... 40 C. Procurement .......................................... 40 D. Disbursements ........................................ 43 E. Accounts and Audits ..................................... 45 V. BENEFITS, RISKS AND ENVIRONMENTAL ASPECTS ............... 46 A. Benefits . ........................................... 46 B. Risks ................... .. ......................... 46 C. Environmental Aspects ................................... 47 D. Sustainability ......................................... 47 E. Gender Focus ......................................... 47 VI. ASSURANCES AND RECOMMIENDATIONS ..................... . 48 U of Annexes I-1 Global Investments for 1992 - by Sector and Type .51 1-2 Executed Investments by Level of Government (Millions of MTs) .52 1-3 Investment Budget for 1991 - Provincial Summary (Millions of MTs) .53 1-4 Provincial Planning Commission of Zambezia - Summary of Resources .54 I-S Provincial Planning Commission of Sofala - Summary of Resources .55 1-6 Organization of Provincial Planning Commissions ..................... 56 I-7 Ongoing Investment Projects in Sofala Province ...................... 57 I-8 Seed and Tool Distribution under the PESU ......................... 58 1-9 Sample Composition of AgPacks for Various Zones in Zambezia Province ... .. S8 1-10 Calendar for AgPack and VegPack Distribution ...................... 59 I-11 Financial Intermediaries in the Project Area ......................... 60 I-12 The Center for Agrarian Training . .............................. 62 I-13 Donors Providing Support to the CFA .......... .................. 66 1-14 Provision of Potable Water in Rural Areas ........ ................. 67 1-15 Main Donor Support to Land Services Institutions ..................... 68  11-1 The Role of NGOs in the Rural Rehabilitation Project .................. 69 II-2 Examples of Possible Sub-Projects .............................. 74 m-lI Table of Contents for the Operations Manual ........................ 79 EII-2 Accounting and Auditing Guidelines ............................. 80 IV-1 Terms of Reference for Program Advisor .......................... 90 IV-2 Terms of Reference for Financial Management Specialist ................ 91 IV-3 Terms of Reference for Project Planning and Appraisal Specialists .... ....... 92 IV-4 Terms of Reference for Image Interpreter Expert ..................... 93 IV-5 Terms of Reference for Image Interpreter Cooperante .................. 94 IV-6 Terms of Reference for Cartographer Cooperante ..................... 95 IV-7 Terms of Reference for Geographic Information Systems Specialist .... ...... 96 IV-8 Terms of Reference for Water Supply Advisors ...................... 97 IV-9 Terms of Reference for Project Director ........................... 98 IV-10 Terms of Reference for Financial Controller .99 IV-11 Terms of Reference for Accounting and Finance Officers .100 IV-12 Terms of Reference for Rural Development Agents .101 IV-13 Terms of Reference for Training Coordinator .102 IV-14 Terms of Reference for Land Tenure Study .103 IV-15 Terms of Reference for Organization and Administration of the Rural Water Supply Service Study .109 P1-16 Terms of Reference for the Inventory of Rural Water Supply Infrastructure .1 1 1 1V-17 Summary of Technical Assistance and Studies .114 V-i Project Implementation Structure ............................. 117 V-2 Implementation Schedule . ............................. 118 V-3 Key Monitoring Indicators .............................. 119 V-4 Supervision Plan ............................. 120 V-5 Lessons Learned in Project Implementation ......................... 123 V-6 Documents in Project File .............................. 125 VI-1 Project Costs by Expenditure Category ............................ 127 VI-2 Estimated Duties ............................. 128 VI-3 Disbursement Schedule .......... ................... 129 Maps IBRD Nos. 24277, 24278, and 24279   -i- Mozambique Rural Rehabilitation Project Credit and Project Summary Borrower: Republic of Mozambique Beneficiaies: INDER, Provincial Planning Commissions, small-scale farmers. Amount: SDR 14.5 million (US$20 million equivalent) Terms: Standard, with 40 years maturity Project Objectives: The overall objective of the project is to undertake pilot activities to support decentralized rural economic recovery, while simultaneously creating the capacity and procedures necessary to respond to the challenges of post-war national reconstruction. The project has four specific objectives: i) to build capacity in the institutions that will be responsible for post-war reconstruction and to develop procedures for decentralized rural development; ii) to provide information about land use and to develop policies to secure tenure security for smallholders; iii) to help households that have been displaced by the war restart agricultural production on their traditional lands; and iv) to improve the health and quality of life of rural households by increasing the coverage of the rural water supply. ject Descripitin: The project is a three-year pilot activity to be carried out in support of the Government's National Reconstruction Program. It has four components. The Support for Decentralization Component includes a pilot activity in two provinces to test procedures for identifying, funding and implementing community-based investment subprojects. The component focuses heavily on institution building and training government officials, NGOs and community groups. The Lands Component will improve land use information and will support the development of policies to demarcate smallholder lands. The Distribution of Agpacks Component will provide seeds and hand tools to smallholders returning to their traditional lands after the war. The Rural Water Supply Component will increase the coverage of the rural water supply in the two provinces, improve the organization and management of provincial water supply institutions, and stimulate community participation in the operation and maintenance of the systems. Benefits and Risks: The project will help Mozambique begin the enormous task of post-war reconstruction. Smallholders in the project area will benefit directly through increased investment in local infrastructure, and greater tenure security. Smallholders who were displaced from their lands by the war will benefit from seeds, tools and other support provided by NGOs. The country as a whole will benefit from capacity building and training activities.  -ii- Security remains the greatest risk, even though a peace accord has been signed. It is possible that law and order will not be fully restored for years or that further unrest will erupt as demilitarization and the planned elections proceed. Project activities will be concentrated in districts that have been selected, in part, for their relative security. The districts can be changed during project implementation if warranted. The second major risk is the Government's weak implementation capacity. The project design addresses this weakness through its focus on pilot activities, training and capacity building, as well as its inclusion of technical assistance and NGO participation. Mozambique Rural Rehabilitation Project Estimated Costs' (US$ Millions) Mflions of US Dolars % Total % Foreign IAc Foreign Total Exchange Base Cost A. SUPPORT-DECENTRALIZATION 1. Courss and Seninar. 0.36 0.23 0.59 38.3 3.1 2. Subprojec; Cap Bldg. 1.69 4.13 5.82 71.0 30.9 Subtotal 2.06 4.36 6.41 68.0 34.1 B. LAND 1. Land Usc Mapping 0.25 1.92 2.17 88.5 11.5 2. Land Study & Pilao Demarc. 0.34 0.35 0.69 50.8 3.7 Subtotal 0.59 2.27 2.87 79.3 15.2 C. DlSTRIBUTION OF AUPACKS 0.38 4.18 4.56 91.7 24.2 D. RURAL WATER SUPPLY 1. Sofula 0.36 1.19 1.55 76.6 8.2 2. Zambdzia 0.64 1.95 2.59 75.4 13.8 3. Support to Ccnter 0.13 0.71 0.84 84.7 4.5 Subtotal 1.13 3.85 4.98 77.3 26.5 Total BASELINE COSTS 4.16 14.67 18.82 77.9 100.0 Physical Contingencies 0.55 1.69 2.24 75.6 11.9 Price Continencis 0.93 1.03 1.96 52.4 10.4 TOTAL PROJECT COSTS 5.64 17.39 23.02 7S.S 1223 'Numbers may not add up due to rounding.  -iii- Mozambique Rural Rehabilitation Project Financing Plan' (US$ Millions) Amount IDA Beneficiaries Government Total I Foreign 17.39 0.00 0.00 17.39 II Local (excl. taxes) 2.57 1.07 0.28 3.93 Ill Taxes 0.00 0.00 1.71 1.71 TOTAL PROJECT 19.96 1.07 1.99 23.02 'Numbers may not add up due to rounding. Estimated Disbursements (US$ Millions) IDA FIscal Year 1994 199S 1996 1997 1998 1999 Annual 6.49 6.83 5.00 0.54 0.54 0.55 Cumulative 6.49 13.33 18.33 18.87 19.41 19.96   -I- I. BACKGROUND A. Introduction 1.01 More than a decade of conflict in Mozambique has resulted in the massive displacement of rural populations and the destruction of rural infrastructure, including schools, clinics, storage facilities, shops and roads. A peace accord was signed in October 1992 and initial steps have been taken towards restoring peace. As a result of these positive developments, the Government and donors have begun to plan post-war rehabilitation and resettlemente activities. The Government is preparing a National Reconstruction Program (NRP), which will identify and prioritize nationwide needs. 1.02 The implementation of any large-scale reconstruction program faces major obstacles, even if peace can be fully reinstated. In Mozambique, reconstruction will be a slow process because of the scale of destruction and the possible movement of several million people, years of inefficient central planning, and one of the world's lowest levels of literacy and technical skill available. The Government and donors have recognized the urgent need to prepare for national reconstruction through capacity building at all levels and through pilot activities designed to test new approaches and build necessary skills. 1.03 The Rural Rehabilitation Project (RRP) has been designed to support the NRP. It will be a three-year pilot project aimed at supporting rural economic recovery, while creating the capacity and procedures to respond to the challenges of post-war national reconstruction. The project will support the development of policy and capacity building at the central level. Field activities will be concentrated in the provinces of Sofala and Zambezia in central Mozambique. A follow-up Rural Rehabilitation II Project is expected to expand to additional areas of the country, in line with the Government's National Reconstruction Plan, improved security and experience gained in the pilot phase. The RRP has been designed to be flexible so it can respond to the changes likely to occur during the life of the project. B. Country Characteristics General 1.04 Mozambique has a total land area of 786,380 square kilometers, with an additional 13,000 square kilometers of inland waters including Lake Cahora Bassa and part of Lake Malawi (Lake Niassa). Its predominant physiographic feature is a large, flat coastal plain, wider in the southern part of the country, which rises steadily in elevation to the mountainous areas in the west. The country's resource base is favorable for agricultural production. Land is plentiful relative to population. Throughout most of the country, soils are fertile and rainfall is usually adequate. The south, however, is characterized by a tropical dry climate with a low 'The term nresettlement" is used in this document to apply to households voluntarilv moving back to their traditional lands after the war. Some of these households will be categorized as refugees returning from neighboring countries (regresados), others will be those returning from camps for displaced persons (deslocados), still others will be households whose agricultural production has been curtailed by the war (hyfectados). Most are expected to spontaneously return to their lands; some refugees in Malawi and other countries might receive international assistance for their return.  -2- annual rainfall (400-800 mm) concentrated in a short rainy season, relatively light soils, and average temperatures of 23-26