Algeria - Rural Employment Project

Report No. PIC4383 Project Name Algeria-Rural Employment Project (@) Region Middle East and North Africa Sector Rural Development Project ID DZPA43724 Borrower Government of Algeria Implementing Agency Ministry of Agriculture and Fisheries (MOAF) Contact: Mr. Abdallah Ghebalou, Director General General Directorate of Forestry Ministry of Agriculture and Fisheries 12, Boulevard Amirouche Algiers, Algeria Tel: (213-2) 61 48 51 Fax: (213-2) 74 80 14 or 74 80 19 Date initial PID prepared September 1996 Date this update prepared December 1996 Proposed Appraisal Date December 1996 Projected Board Date March 1997 1. Background. Algeria has been implementing a macroeconomic reform and structural adjustment program since 1994. Agricultural reform measures had actually started in 1987 with the transformation of the socialist state farms into smaller collective and individual farms. Agricultural price and trade liberalization have figured prominently in economic reforms. 2. Financed by its oil wealth, Algeria had chosen a public enterprise- led, capital intensive industrialization strategy. However, the expected benefits of this policy did not materialize due, amongst other things, to lack of competitiveness. As a result, the State, through the administration and the public enterprises, employed more than half of the active population in the early 1990s. Even under these circumstances, the limits to labor absorption resulted in official unemployment rates of over 20 percent. Rural unemployment rates were considerably higher at around 26 percent and this situation was aggravated by underemployment in agriculture. The situation has now been further accentuated by two factors: (i) economic reforms have led to increased unemployment as the economy has had to adjust to a market environment; and (ii) the increased problems of security in urban agglomerations have led to a reverse migration towards rural areas. As a consequence, the Government now gives high priority to addressing the problems of unemployment and underemployment in rural areas and agriculture. 3. Project Objectives. The project objective is to promote rural employment through asset creation, natural resource management and  protection of the environment, with the purpose of increasing labor productivity in a sustainable manner. This project would also be the first phase of a broader set of activities with similar objectives in the long run. It would provide a model and laboratory for developing experience in community involvement in rural development. 4. Project Description. Project operations would include labor- intensive civil works activities in rural areas, focusing on agricultural infrastructure, especially maintenance of existing infrastructure, and environmental protection activities and structures on public land and on farmers' fields. The project would target areas of high rural unemployment in four wilaya in NW Algeria, namely, Tlemcen, Ain Temouchent, Sidi bel Abbes and Mascara. The project zones include communes in the perimeters of Mont de Tlemcen, Monts de Traras, Sbaa Chioukh, Tessala, Cheurfa II and Monts de Beni-Chougrane. The Project would use nondiscriminatory hiring practices, especially involving women. Specific activities include: erosion control measures including afforestation, reforestation, and flood control structures; these activities were chosen because of two principal reasons: (i) they are amenable to labor-intensive techniques and hence conducive to significant employment creation; and (ii) they involve significant environmental externalities, thus justifying public investments as public goods; agricultural development interventions comprising on-farm land improvement through destoning, windbreaks, and fruit trees and grapevines on sloped land to replace cereal monoculture, and maintenance and opening of rural roads to integrate populations into a larger economic area (desenclavement); the on-farm activities are also labor- intensive with direct benefits to the populations in the project area and they also create externalities in reducing erosion; small-scale water resource mobilization through hill reservoirs (retenues collinaires), wells and springs; water availability was expressed by the populations in the project area to be of high priority and these activities have been maintained due to the potential indirect effects they can have on health, welfare and production; activities targeting disadvantaged women with limited income sources, such as widows, divorcees, landless women, etc., through handicraft workshops, family gardens, apiculture, etc.; institutional development which will emphasize capacity development in the decentralized rural organization of the implementation agency, the General Directorate of Forestry (DGF); this component includes vehicles (4WD vehicles, mobylettes and spare parts) and office equipment (computers, printers, etc.), and significant training activities; and (f) resources: (i) to ensure independent audits for accelerated disbursements through the 90-day advance option for the Special Account; and (ii) for independent consultants to monitor project performance. 5. Project Implementation. The project would be implemented by the - 2-  General Directorate of Forestry (DGF) in the Ministry of Agriculture and Fisheries (MOAF). Project activities would be executed mainly by local private and public enterprises through competitive processes. Project design would give priority to labor intensive activities. 6. Project Cost and Financing. Total project cost is currently estimated at US$123.6 million, with a Bank loan placed at US$89 million. 7. Project Sustainability. The success and sustainability of the project would depend on three factors. First, the focus would have to be on asset creation which would increase labor productivity rather than social transfers. Second, strong support and participation of the local population in the project would be needed. Third, consistent employment policies would need to be implemented in non-agricultural sectors, especially in industry. 8. Rationale for Bank Involvement. The country strategy for Algeria has identified rural employment as a high priority issue. The Bank concurs with the Government in the urgency of addressing the problem of rural unemployment to address rural poverty. The Bank has also approved a Social Safety Net Project which has utilized a similar approach of asset creation, and this project will complement that effort. 9. Environmental Aspects. The proposed project has an environmental rating of B. Please see attached Annex. 10. Project Benefits. The project would be expected to have positive effects on short term employment creation as well as longer term employment through asset creation. The focus on rectifying local agroecological problems would have positive environmental effects. The involvement of the private and public enterprises in project implementation would increase local capacity. Contact Point: Mr. K. Somel, Task Manager The World Bank 1818 H Street N.W. Washington D.C. 20433 Telephone No.: (202)473-2499 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by the Public Information Center week ending February 21, 1997. - 3 -  Annex Environmental Aspects The Project would have positive environmental effects as environmental infrastructures such as retenues collinaires, windbreaks, etc., would be maintained, rehabilitated or constructed, and afforestation and reforestation would take place on farmers' fields and public land. Erosion control would be a critical activity. Prior technical studies including environmental impact assessment would be required for investments in water resource mobilization and rural roads. Monitoring environmental effects would be part of project implementation. The proposed project has an environmental rating of B. - 4 -