China - Southwest Poverty Reduction Project

Document of The World Bank Report No.13968-CHA STAFF APPRAISAL REPORT CHINA SOUTHWEST POVERTY REDUCTION PROJECT MAY 18, 1995 Agriculture Operations Division China and Mongolia Department East Asia and Pacific Regional Office  CURRENCY EQUIVALENTS (As of December 1994) Currency Unit = Yuan (Y) $1.00 = Y 8.70 Y 1.00 = $0.115 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet 1 kilometer (km) = 0.62 miles 1 hectare (ha) = 15 mu 1 ton (t) = 1,000 kg = 2,205 pounds ACRONYMS AND ABBREVIATIONS 8-7 Plan - National Seven-Year Plan for MCH - Maternal and Child Health Poverty Reduction (1994-2000) MOA - Ministry of Agriculture ACWF - All-China Women's Federation MOF - Ministry of Finance ADBC - Agricultural Development Bank of MOL - Ministry of Labor China NCB - National Competitive Bidding BPREZ - Beihai Poverty Reduction Enterprise PADO - Provincial Poor Area Development Zone Office CAS - Chinese Academy of Sciences PLG - Project Leading Group EPB - Environmental Protection Bureau PMO - Project Management Office ERR - Economic Rate of Return RCRD - Research Center for Rural EU - Environmental Assessment and Development Monitoring Unit SOE - Statement of Expenditures FRR - Financial Rate of Return SPC - State Planning Commission IBRD - International Bank for SSB - State Statistical Bureau Reconstruction and Development TAG - Technical Advisory Group ICB - International Competitive Bidding TVE - Township and Village Enterprise IDA - International Development WBPO - World Bank Project Office Association IMR - Infant Mortality Rate LGPR - Leading Group for Poverty Reduction  CHINA SOUTHWEST POVERTY REDUCTION PROJECT LOAN/CREDIT AND PROJECT SUMMARY Borrower: People's Republic of China Beneficiaries: Provincial and County Governments of Guangxi, Guizhou and Yunnan; Beihai, Nanning and Fangcheng Municipalities; and the Cental Government's Leading Group for Poverty Reduction Poverty: Program of Targeted Interventions Amount: Loan: $47.5 million equivalent Credit: SDR 128.6 million ($200 million equivalent) Terms: Loan: 20 years, including 5 years of grace, at the Bank's standard variable interest rate. Credit: IDA standard terms with 35 years' maturity. Commitment Fee: Loan: 0.75 percent on undisbursed loan balances, beginning 60 days after signing, less any waiver Credit: 0.50 percent on undisbursed loan balances, beginning 60 days after signing, less any waiver Onlending Terms: Loan: 20 years, including 5 years of grace, onlent from the Borrower through the provinces to the project enterprises at interest rates no less than the prevailing rates for Agricultural Development Bank of China loans for similar purposes Credit: 20 years, including 6 years of grace, at 2.00 percent annual interest rate Financing Plan: See para. 3.44 Economic Rate of Return: 36 percent overall Map: IBRD 26525 Project ]ID Number: CN-PA-3639   CONTENIS 1 Absolute Poverty In China ........................... 1 A. Introduction ................................. I B. Rural Absolute Poverty .......................... 1 C. The Government's Poverty Reduction Program .... ........ 5 D. Origin of the Project ............................ 7 E. Rationale for Bank Group Involvement ................. 8 F. Bank Group Sector Work and Lending Operations ... ....... 8 G. Lessons Learned from Previous Bank Group Operations ...... 9 2 The Project Area ................................. 11 A. Natural Resources, Land Use and Poverty ............... 11 B. Social Services ................................ 14 C. Rural Infrastructure ............................. 16 D. Labor Markets, Employment and TVE Development ... ..... 17 E. Incidence of Poverty ............................ 19 F. Ethnic Minorities .............................. 19 G. Selection of Project Counties, Townships and Villages ....... 21 3 The Project ..................................... 23 A. Objectives and Scope ............................ 23 B. Description .................................. 23 C. Detailed Features .............................. 25 This report is based on the findings of a preappraisal mission in September 1994 and an appraisal mission in December 1994, comprising Messrs./Mmes. A. Piazza, J. Goldberg, P. Stott, J. Shi, M. Goldberg, E. Liang, M. Bi, R. Zweig (IBRD/IDA), C. Saint-Pierre, R. Glencross, R. Yip, C.L. Cheong, E. Leman, K. Rippen, R. Weller, and L. Chen (Consultants). Ms. C. Lucas participated in the preparation of the report in Washington. Peer reviewers are E. Jimenez (PRDPH), J. Socknat (ASTHR), H. Ribe (AF6HR), and H. Beemer (EA2HR). The preparation team gratefully acknowledges the strong support of a Japan: Policy and Human Resources Development Fund grant, without which the preparation of this complex and innovative project would have been extremely difficult. The Task Manager is Alan Piazza, the Division Chief is Joseph Goldberg, and the Department Director is Nicholas C. Hope.  - ii - D. Status of Preparation ........ . . . . . . . . . . . . . . . . . . . 35 E. Implementation Schedule ........... .. ............ 36 F. Project Costs and Financing ....... . . . ......... . . . . . 36 G. Procurement .......... . . .. ............ . .. . . . 37 H. Disbursements ...... ........... ............... 40 I. Accounts and Audit ............. .. .............. 41 J. Environmental and Social Impact ........ .. .......... 42 4 Project Organization and Management ................... 44 A. Project Organization and Management ....... .. ........ 44 B. Financial Management ............ .. ............. 47 C. Execution of Project Works ........... .. ........... 48 D. Project Launch Workshop ........... .. ............ 49 E. Monitoring, Evaluation, and Reporting ....... .. ........ 49 5 Production and Markets .50 A. Production .50 B. Markets .52 C. Prices .53 6 Benerits and Risks ..54 A. Benefits ..54 B. Cost and Rent Recovery ..55 C. Financial and Economic Analysis ..55 D. Risks ..57 7 Agreements Reached and Recommendation .58 ANNEXES 1. Project Area Statistics .61 2. Education Subcomponent .65 3. Health Subcomponent .81 4. Labor Mobility Component .95 5. Guangxi Municipal Employment Development Subcomponent 117 6. Rural Infrastructure Component .143 7. Land and Farmer Development Component .152 8. Poverty Monitoring Component .166 9. Cost Estimates .176 10. Implementation Schedules .195 11. Disbursements .198 12. Financial and Economic Analysis .199  -1.1- - mi - 13. Proposed Bank Group Supervision Input .................... 218 14. Selected Documents and Data Available in the Project Files ... ..... 223 15. Project Counties and Townships ......................... 225 CEAR