for official use only - the world bank · for official use only financial management information...

Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 53219 - BI

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED GRANT

IN THE AMOUNT OF SDR 28.1 MILLION (US$43 MILLION EQUIVALENT)

TO THE

REPUBLIC OF BURUNDI

FOR AN

AGRO-PASTORAL PRODUCTIVITY AND MARKETS DEVELOPMENT PROJECT

(April 6,20 10)

Agricultural and Rural Development Unit Sustainable Development Department Country Department AFCEl Africa Region

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.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective February 28,2010)

AAP ACSA AfDB AFS APL APPDM CAADP CFAA CICOS

CNTA CoA COMESA DA DGAT DGE DGMAVA

DGPAE

DPAE

EAC ESIA ESMF EU FA0 FBu FM

CurrencyUnit = Burundifianc FBu1,224.50 = US$1 US$1.53258 = SDRl

FISCAL YEAR January 1 - December31

ABBREVIATIONS AND ACRONYMS

Africa Action Plan Agents communautaires de sante' animale (Community animal health workers) African Development Bank Audited Financial Statement Adaptable Program Loan Agro-Pastoral Productivity and Markets Development Project Comprehensive African Agricultural Development Program Country Financial Accountability Assessment Commission Internationale du Bassin du Congo-Oubangui-Sangha (International Commission of the Congo-Oubangui-Sangha Basin) Centre National de Technologies Agro Alimentaire (National Agro-Industry Center ) Chart of Accounts Common Market for Eastern and Southern Africa Designated Account Direction Ge'ne'rale de I'Administration Territoriale (General Directorate of Rural Works) Direction Ge'ne'rale de I'Elevage (General Directorate of Livestock) Direction Ge'nnbale de la Mobilisation pour I'Auto-dheloppement et la Vulgarisation Agricole (General Directorate of Agricultural Research and Extension) Direction Ge'ne'rale de la Planification de I'Agriculture et de I'Elevage (General Directorate of Planning for Agriculture and Livestock) Direction Provinciale de I 'Agriculture et de I 'Elevage (Provincial Directorate of Agriculture and Livestock) East African Community Environmental and Social Impact Assessment Environmental and Social Management Framework European Union Food and Agriculture Organization Burundi Franc Financial management

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FOR OFFICIAL USE ONLY Financial Management Information System Gross Domestic Product Global Environmental Facility Government of Burundi Hectare International Competitive Bidding International Development Association International Fund for Agricultural Development Interim Financial Report Institut National pour I 'Environnement et la Conservation de la Nature (National Institute for Environment and Nature Conservation) Inter-Provincial Coordinating Unit Indigenous Peoples Development Plan Institut de Recherche Agronomique et Zootechnique (Institute for Agronomic and Zoo- Technology) Internal rate of return International Standard on Auditing Institut des Sciences Agronomiques du Burundi (Institute of Agronomic Sciences of Burundi) Least Cost Selection Local service provider (Prestataire de service local) Monitoring and Evaluation Minist&-e de la Dtkentralisation et du Dkveloppement Communal (Ministry of Decentralization and Communal Development) Ministire de IEau, de IEmironnement, de I'Am6nagement du Territoire et de I'Urbanisme (Ministry of Water, Environment, Land Management, and Urbanization) Ministire de I 'Agriculture et de 1 'Elevage (Ministry of Agriculture and Livestock) MinistPre du Commerce, de I'lndustrie et du Tourisme (Ministry of Commerce, Industry and Tourism) Management Information System; Market Information System National Agricultural Strategy (Strategie Agricole Nationale) National Competitive Bidding New Partnership for Africa's Development Non-governmental Organization Net Present Value Projet d 'Appui ri la Reconstruction du Secteur de I 'Elevage (Livestock Sector Reconstruction Project) Project Coordination Unit Project Development Objective Public Expenditure Management and Financial Accountability Review Public Financial Management Project Implementation Manual Pest Management Plan

FMIS GDP GEF GOB ha ICB IDA IFAD IFR INECN

IPCU IPDP IRAZ

IRR ISA ISABU LCS LSP M&E MDDC

MEEATU

MINAGRIE MINICOMT

MIS NAS NCB NEPAD NGO NPV PARSE

PCU PDO PEMFAR PFM PIM PMP

This document has a restricted distribution and may be used by recipients only their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

PO PRASAB

PRSP PSC PSP QCBS RPF SBD SIL SOE SP TOR UN UNDP UNIPROBA USAID WARDA WUA

Producer Organization Projet de Rbhabilitation et d 'Appui au Secteur Agricole et de Gestion Durable des Terres du Burundi (Agriculture Rehabilitation and Support, and Sustainable Land Management Project of Burundi) Poverty Reduction Strategy Paper Project Steering Committee Private Service Providers Quality-and Cost-Based Selection Resettlement Policy Framework Standard Bidding Document Sector Investment Loan Statement of Expenditures Service Provider Terms of Reference United Nations United Nations Development Program Unissons-Nous Pour La Promotion des Batwa United States Agency for International Development West Africa Rice Development Association (the Africa Rice Center) Water User Association

Vice President: Obiageli Katryn Ezekwesili Country Director: John Murray McIntire Country Manager Mercy Miyang Tembon

Sector Director: Inger Andersen Sector Manager: Karen McConnell Brooks

Task Team Leader: Nicaise Ehouk BlCouC

iii

BURUNDI

Agro-Pastoral Productivity and Markets Development Project

CONTENTS

Page

STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 A Country and sector issues .................................................................................................... 1 B . Rationale for Bank involvement ......................................................................................... 3 C . Higher level objectives to which the project contributes .................................................... 4

I1 PROJECT DESCRIPTION ................................................................................................. 4

I

A . B . D . E . F .

I11 A . B . C . D . E . F . *A* B . C . D . E . F . G .

Lending instrument ............................................................................................................. 4

Project components ............................................................................................................. 6

Alternatives considered and reasons for rejection ............................................................ 10

Partnership arrangements .................................................................................................. 10 Institutional and implementation arrangements ................................................................ 11 Monitoring and evaluation of outcomes/results ................................................................ 12 Sustainability ..................................................................................................................... 13 Critical risks and possible controversial aspects ............................................................... 14 Loadcredit conditions and covenants., ............................................................................. 15 Economic and financial analyses ...................................................................................... 16 Technical ........................................................................................................................... 17 Fiduciary ........................................................................................................................... 18 Social ................................................................................................................................. 19 Environment ...................................................................................................................... 19 Safeguard policies ............................................................................................................. 20 Policy Exceptions and Readiness ...................................................................................... 21

Project Development Objective (PDO) and key indicators ................................................ 4

Lessons learned and reflected in the project design ............................................................ 8

IMPLEMENTATION .................................................................................................... 10

. * .

Annex 1: Country and Sector Issues ......................................................................................... 22

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Annex 2: Major Related Projects Financed by the Bank and/or Other Agencies ................ 29

Annex 3: Results Framework and Monitoring ........................................................................ 31

Annex 4: Detailed Project Description ...................................................................................... 36

Annex 5: Project Costs ............................................................................................................... 47

Annex 6: Implementation Arrangements ................................................................................. 48

Annex 7: Financial Management and Disbursement Arrangements ..................................... 51

Annex 8: Procurement Arrangements ...................................................................................... 61

Annex 9: Economic and Financial Analysis ............................................................................. 67

Annex 10: Safeguard Policy Issues ............................................................................................ 72

Annex 11: Project Preparation and Supervision ..................................................................... 77

Annex 12: Documents in the Project File ................................................................................. 79

Annex 13: Statement of Loans and Credits .............................................................................. 80

Annex 14: Country at a Glance ................................................................................................. 81

Annex 15: Maps ........................................................................................................................... 84

V

BURUNDI

AGRO-PASTORAL AND MARKETS DEVELOPMENT PROJECT

PROJECT APPRAISAL DOCUMENT

AFRICA

AFTAR

Team Leader: Nicaise EhouC BlCouC

Source RECIPIENT Beneficiaries IDA Financing Gap Total:

Date: April 6,20 10 Country Director: John Murray McIntire Sector ManagerDirector: Karen McConnell Brooks Project ID: P107343

Local Foreign Total

2.20 2.20 41.67 1.33 43.00

43.87 1.33 45.20

Lending Instrument: Specific Investment Loan

Sectors: General agriculture (35%) and livestock (1 5%); Irrigation and drainage (30%); Agriculture marketing and trade (20%) Themes: Rural services and infrastructure (P); Other rural development (P); Capacity and institution building (S); Water resource management (S); Other environment and natural resources management (S); Environmental Screening category: Partial Assessment- Cat B

[ ]Loan [ ]Credit [XIGrant [ ]Guarantee [ ]Other: For Loans/Credits/Others: Total Bank financing (US$m): 43.0

Recipient: REPUBLIC OF BURUNDI Responsible Agency: MINISTRY OF AGRICULTURE AND LIVESTOCK BP 1850, Bujumbura, Burundi Contact Person : Salvator Nimubona Tel: (257) 22 24 86 97 Fax: (257) 22 24 86 98 Email: coordepp(ii,v aho0.k

vi

FY 201 1 2012 2013 2014 2015

[ ]Yes [XINO Does the project depart from the CAS in content or other significant respect? Ref: PAD I. C.

Annual Cumulative

.#

Does the project require any exceptions from Bank policies? Re$ PAD I K G. Have these been approved by Bank management? Is approval for any policy exception sought from the Board? Does the project include any critical risks rated “substantial” or “high”? Re$ PAD III.E. Does the project meet the Regional criteria for readiness for implementation? Ref: PAD IKG. Project development objective (PDO) Re$ PAD 11 B.., Technical Annex 3 The PDO is to increase small producers’ productivity and market access for targeted commodities in the project area. Project description. Re$ PAD ILD., Technical Annex 4 The project has the following three components: Component 1: Support to agricultural productivity and access to markets (US$30.08 million). Component 1 will provide matching grants to improve productivity of agricultural investments (sub-projects) and access to markets of targeted commodities. These investments will be at the production, post-harvest collection, storage, transformation, processing, and marketing stages in the targeted value chains and for watershed management. This component is expected to promote the adoption of technology packages by small producers and other beneficiaries so that they can increase their yields and marketed surpluses. This component will also finance programs to build the capacity of beneficiaries and public institutions through support for advisory services and training for professional associationshooperatives in the project value chains and capacity building for partner public institutions such as in agricultural research and extension, seed certification, veterinary services, trade standards, etc. Component 2: Irrigation development and feeder road rehabilitation (US$9.58 million). Component 2 will finance the rehabilitatioddevelopment of: (i) marshland irrigation; (ii) protection and conservation of watersheds adjacent to the irrigation schemes; and (iii) tracks within marshlands and rural roads linking marshlands to the communal road network. It will also support the establishment and capacity building of water user associations to manage and maintain the irrigation systems and the preparation and implementation of management and maintenance programs for the irrigation systems. This component is expected to improve the production environment for irrigated rice and associated crops while facilitating producers’ access to markets for these commodities. Component 3: Management and coordination of project activities (US$5.54 million). Component 3 will finance the coordination, planning, management, monitoring and evaluation,

[ ]Yes FINO [ ]Yes [ IN0 [ ]Yes F I N O [XIYes [ ]No

[XIYes [ IN0

8.73 8.62 1 1.06 10.34 4.25 8.73 17.35 28.41 38.75 43.00

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audits, and other operating costs of the Project Coordination Unit (PCU) and other activities necessary for project coordination and management. Which safeguard policies are triggered, if any? Re$ PAD IV, Technical Annex 10 The project is considered a Category By and six safeguard policies are triggered: Environmental assessment (OPBP 4.01), Pest Management (OP 4-09), Indigenous People (OPBP 4.10), Involuntary resettlement (OPBP 4.12), Safety of Dams (OPBP 4.37), and Projects on International Waterways (OPBP 7.50).

Conditions of effectiveness:

(a) The Recipient has prepared and adopted the PIM satisfactory to the Association.

(b) The Recipient has entered into the following contracts, in form and substance satisfactory to the Association, for the project:

(1) with the following staff from the PRASAB’s project coordination unit: (i) the project coordinator, (ii) the administrative and financial officer, (iii) the senior accountant, (iv) the procurement specialist, (v) the monitoring and evaluation officer, (vi) the capacity building specialist, (vii) the irrigation and infrastructure specialist, and (viii) the agriculture and livestock specialist;

(2) and with the following staff from each of the PRASAB’s interprovincial project coordination units: (i) the coordinator, (ii) the monitoring and evaluation officer, and (iii) the agriculture and livestock specialist.

Covenants applicable to project implementation:

(a) No later than 3 months after effectiveness: The Recipient has appointed an external auditor on the basis of terms of reference, and with qualifications and experience satisfactory to the Association.

(b) No later than 3 months after effectiveness: The Recipient has adapted its existing computerized accounting system and trained its staff to use the accounting software.

... Vll l

I STRATEGIC CONTEXT AND RATIONALE

A Country and sector issues

1. Country context. Burundi is small, landlocked, and densely populated with an estimated 8 million people.’ With a growth rate averaging 3 percent, Burundi is expected to grow rapidly in the next 40 years. Nearly all social indicators deteriorated sharply as a result of the conflict that the country experienced in the 1990s. Burundi is currently one of the poorest countries in the world, with about 67 percent of its population living below the poverty line.2 It ranks 174 out of 182 countries in the 2009 Human Development Index of the United Nations Development Program (UNDP). It is unlikely to achieve its 2015 Millennium Development Goals (MDGs).

2. The civil crisis and ethnic conflict of the 1990s tore apart Burundi’s socio-economic and environmental fabric. Per capita income fell by almost 40 percent during the war, from US$170 in 1993 to US$110 in 2007. The gradual return of stability following the Arusha Peace Agreement in 2000 led to a slow economic recovery, with real GDP growth averaging 3 percent per year from 2001 to 2008. The social recovery is still fragile, punctuated by spells of internal violence and instability. In this generally poor investment climate, growth in GDP is barely sufficient to keep pace with population growth. Although the economy remains highly dependent on agriculture, the sector’s performance is mixed and volatile. Ten years after the signing of the Arusha Peace Agreement, Burundi depends on food aid for approximately one-quarter of its domestic needs (see Figure 1.1, Annex 1).

3. Sector context and issues. Burundi is a rural country. Agriculture accounts for 50 percent of GDP, with commercial agriculture making up more than 90 percent of the country’s export earnings. Between 90 and 95 percent of the country’s 1.2 million households are in the countryside. Rural Burundi is dominated by small family farms where traditional subsistence agriculture is practiced. The farming systems are dictated by weather cycles and organized around multiple crops to reduce risk. The low-yielding food crops and livestock products from these farms are used mainly for household consumption. Yields of major food crops have changed little over the past 40 years. A comparison of crop yields in Burundi with crop yields in other countries shows that Burundi’s agriculture faces a productivity crisis. Expressed in cereal equivalents (CEs) to facilitate comparisons of nutritional value, food crop production in 2007 was only 62 percent of the pre-conflict level. From a per capita perspective, the decline is even more dramatic: Per capita crop production in 2007 was only 45 percent of the 1993 level. Not surprisingly, more than 70 percent of the population is food insecure, and Burundi has the world’s second highest malnutrition rate. Judging from the difference between food demand and food supply: the net national food deficit after food aid is estimated between 180,000 and 350,000 tons of cereal equivalent^.^

See the Census of the Population and Habitat of 2008. Poverty is most acute in rural areas, where nine out of ten people live. Food demand is calculated as the consumption requirements of the national population, and food supply as

domestic food production. Reliable data on food imports are lacking. It is assumed that the food deficit is partly covered through food imports. The remaining gap in consumption indicates that the population’s nutritional status is still inadequate.

Imports consist mainly of maize, beans, and rice from Uganda, Kenya, and Tanzania, as well as potatoes from Rwanda. Rice and wheat are imported from outside the region. The average deficit of animal protein is estimated at

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4. Burundi’s extremely high population density and dependence on agriculture constrain development options in the long run. Burundi has one of the highest population densities in Sub- Saharan Africa (from 400 to 1,000 inhabitants per square kilometer), and its farms are only about 0.5-1.0 hectare. Given the continued sub-division and shortage of agricultural land, future growth in food crop production must come from intensification and productivity gains. Only more intensive and market-oriented agriculture will allow families an adequate livelihood from their small plots, abundant labor, and relatively ample irrigation water.

5. Presently food and livestock raised largely for household consumption cannot generate enough resources to pay for the improved seed, implements, and chemicals needed for more intensive agriculture. Agriculture must orient itself toward markets, but the transition must be gradual owing to Burundi’s very deep poverty, farmers’ inexperience with new technologies, and the poorly developed markets.

6 . The importance of food aid attests to Burundi’s continuing food crisis and M e r emphasizes the need for a gradual transition to more commercial agriculture. Greater household food security and more resilient local markets will curb the episodes of violence that still plague the country.

7. Prospects for successful intensification are real and substantial. Current yields are extremely low compared to potential yields. The products that people demand, and to a modest degree already purchase on local markets, are largely the same ones that they produce: bananas, rice, and livestock products, particularly dairy. Improving production and gradually increasing the proportion marketed will require public investments that enhance productivity and provide better access to markets. Necessary changes in the short run include fostering the use of high- quality seed and fertilizer, improving livestock management practices, and tapping irrigation potential. In the medium and long run, research-extension linkages should be strengthened and producer associations should be promoted. Investments in infrastructure to ease market access, as well as market intelligence, are needed to meet the increasing domestic demand of urban centers and foster the competitiveness of Burundi’s agricultural value chains in East and Central Africa.

8. Cash crops account for almost all of the country’s export revenue. Coffee is produced by about 800,000 households and accounts for about 85 percent of export revenues. Tea is Burundi’s second-largest cash crop. It provides 12 percent of export earnings and is produced in four large provinces by over 50,000 smallholders. Horticulture has had some degree of development in the past. It has the potential for renewed expansion by catering to niche markets. Horticultural exports will help agricultural exports gain a needed degree of diversification. On- going and projected reforms in the coffee and tea sub-sectors, as well as the development of small entrepreneurs in the horticultural sub-sector, are vital to increase the contribution of export crops to growth. Success depends on increased productivity, an improved investment climate, and access to rural finance.

about 80 percent. Per capita consumption of milk and meat is three to four times behind the averages for the East African Community and Sub-Saharan Africa. Meat products equivalent to about 20 percent of the population’s consumption are imported from Tanzania, and a significant volume of milk is imported from Uganda.

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9. Poor market access confines farmers to subsistence agriculture. The prices that farmers receive for their products are generally low and erratic, for several reasons. Burundi’s marketing system is undeveloped. Storage facilities, especially for perishable food crops, are lacking, and local feeder roads connecting farmers to markets have deteriorated. Weak fanner organizations have limited bargaining power, and farmers have little information on prices and market opportunities. Fanners typically are forced to sell their products soon after the harvest, when prices are depressed, and at the local level, where prices are lower than in urban markets.

10. For some time, the World Bank has supported the Government of Burundi’s (GOB) efforts to help small-scale farmers raise yields, improve food security, and increase revenues. The PRASAB’ project, nearing completion, has been a first stage in this effort. Despite the complex and difficult post-conflict environment, PRASAB yielded positive outcomes6 by providing matching grants for small productive investments at the community level. The project’s main intent was to restore subsistence agricultural production at the household level and to rebuild small infrastructure at the community level. The proposed project will use the approach introduced by PRASAB to help households move modestly beyond the recovery of subsistence production and toward production for markets-largely but not exclusively local markets-by making those markets more accessible. By revitalizing local markets, the proposed project will strengthen food security and the resilience of the rural economy.

B. Rationale for Bank involvement

11. The Bank will support the proposed project for two main reasons:

(a) The GOB specifically requested the Bank to continue supporting agricultural intensification on hillsides (rainfed agriculture) and marshlands (irrigated agriculture) along with market development. The government’s request is the result of a two-year close dialogue with the Bank, supported inter d iu by the Bank-funded Sources of Rural Growth study.’

(b) Through the proposed project, and in collaboration with other development partners, the Bank will continue contributing to the policy dialogue, in particular with respect to the competitiveness of the coffee sub-sector.’ The government has decided with the Bank and other partners on a common vision for agriculture as expressed in the National Agricultural Strategy (NAS)pkpad. This strategy is aligned with the Africa Action Plan (AAP) as well as the Comprehensive Africa Agriculture Development Program (CAADP), under which a compact was signed

Projet de Rkhabilitation et d’Appui au Secteur Agricole et de Gestion Durable des Terres du Burundi (Agriculture Rehabilitation and Support and Sustainable Land Management Project of Burundi).

As evidenced by the beneficiary impact assessment in 2008. ’ World Bank, “Breaking the Cycle: A Strategy for Conflict-Sensitive Rural Growth in Burundi,” Working Paper no. 147, Washington, DC, May 2008. In the context of an overarching commitment to good governance, the study proposes reforms and investments targeted at improving state capacity and accountability and boosting the contribution of food and export crop production to growth. The study emphasizes the development of value chains and increased private sector involvement (see Annex 1).

The government is currently reforming the coffee sub-sector. It is privatizing coffee washing facilities to enhance productivity and value-added. This action should increase farmers’ share of the flee-on-board price by making coffee exports more competitive, especially on the specialty coffee markets.

3

recently between the government and its development partner^.^ As the lead donor in the a ricultural sector and co-chair of the national Agriculture Sector Working Group, the Bank plays a crucial role in harmonizing approaches among the development partners. This coordination is critical to support Burundi’s transition from a fragile state to a stable country grounded by a recovered economy. The proposed project is consistent with the CAADP compact and understood to contribute toward the implementation of the national strategy.

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C. Higher level objectives to which the project contributes

12. The proposed Agro-Pastoral Productivity and Markets Development (APPMD) Project will directly improve food security by increasing production and market access for products important to domestic consumption. The project is fully consistent with the Poverty Reduction Strategy Paper’s (PRSP’s) strategies and activities concerning equitable and sustainable growth. The proposed project will contribute to economic growth and job creation to benefit the most vulnerable groups. This contribution is expected to help consolidate peace and stability while achieving results closely aligned with the MDGs, especially with respect to malnutrition and hunger. Contrary to the recent Bank emergency assistance in the wake of the food price crisis, which is inherently short term, the project offers a medium to long term framework for strengthening food production and marketing on a sustainable basis.

I1 PROJECT DESCRIPTION

A. Lending instrument

13. The project will be financed through a US$43 million equivalent International Development Association (IDA) stand-alone Sector Investment Grant. It will be implemented over five years.

B. Project Development Objective (PDO) and key indicators

14. commodities in the project area.

The PDO is to increase small producers’ productivity and market access for targeted

15. To achieve this objective, the proposed project will: (i) support agricultural technology transfer in targeted value chains and rehabilitate irrigation infrastructure to increase productivity, and (ii) strengthen the capacities of producers and their partners to link to the market by improving post-harvest infrastructure, market intelligence, and feeder roads. The selected value chains are those for which accessible markets exist and for which productivity gains can be achieved by adopting known technologies. The key indicators against which the PDO will be measured are: (i) average yield of commodities in targeted value chains (bananas, irrigated rice,

The Comprehensive African Agricultural Development Program (CAADP) is the African Union program to increase the competitiveness of African agriculture. The development partners include the Common Market for Eastern and Southern Africa (COMESA), the New Partnership for Africa’s Development (NEPAD), and the African Union, as well as civil society and the private sector. lo This coordination group includes all development partners, as well as government institutions, active in Burundi’s agricultural sector.

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coffee and milk) (in tonsha or liters per cow respectively), and (ii) the percentage of production of commodities in targeted value chains marketed by participating producers.

C. Geographic scope, activities, and beneficiaries

16. Geographic scope. The project will cover the 10 rural provinces currently covered by PRASAB”, and subject to IDA’S prior approval other coffee-producing provinces (where it will support the ongoing privatization of coffee-washing facilities).

17. Activities. The project will focus initially on a limited number of value chains that are important for food and nutritional security and also have sufficient potential to respond to market opportunities. The project will cover two sets of value chains. The first-priority value chains are bananas, irrigated rice (and minor-season crops such as vegetables), milk, and coffee. The second-priority chains are cassava, potatoes, meat, fruit, and tea (Annex 4). As explained in greater detail later, the project will support a range of interventions all along the first-priority value chains and will support a few very specific interventions to improve productivity in second-priority chains. All of these crop and livestock activities contribute to smallholders’ household food security, nutrition, and income. It is expected that some of these value chains will generate surpluses that can be sold locally and nationally (bananas, vegetables, and milk), whereas others will substitute for imports (rice and meat). The World Food Program in Burundi has confirmed that it will procure surplus food produced by the project to satisfy demand in food-deficit areas. As for coffee, it is an integral part of traditional farming systems in many parts of Burundi’s highlands. It provides much-needed cash for smallholders and is a large source of employment. The value chains covered by the project could expand eventually, depending on farmers’ needs and the potential of the new areas to be covered.

18. Beneficiaries. The project beneficiaries will be the producer organizations, associations, and cooperatives in the targeted value chains. The project will consider requests for matching grants for all production, post-harvest, processing, pre-market, and market activities along the first-priority value chains. The project will pay particular attention to the poor and to the most vulnerable social groups (such as the Batwa people and women), as in the PRASAB project.12 A total of about 2,630 matching grants are expected to be awarded during project implementation, benefitting 90,000 households (about 550,000 people) (see Annex 4). The private sector will be eligible for project financing, specifically relative to the soft part of investments (training, business planning, study tour, etc)

Burundi has 16 rural provinces and 1 urban province corresponding to the capital city, Bujumbura. Data show that about 45 percent of the beneficiaries from PRASAB’s interventions are women.

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D. Project components

19. The project will include three components to be implemented over a five-year period.

Component 1: Support to agricultural productivity and access to markets (US$30.08 million)

20. Component 1 will promote the adoption of improved technology packages by beneficiaries through the implementation of productive sub-projects. These investments will cover specific stages of the targeted value chains (at the production, post-harvest, processing, and marketing stages) and watershed management and also focus on integrating activities across stages (sub-component 1.1). This component will also finance the attendant advisory support and training for professional associations/cooperatives in the value chains and capacity building for partner public institutions (sub-component 1.2).

Sub-component 1.1: Support to productive investments (US$26.88 million) 21. The sub-component will finance matching grants for productive investments (sub- projects) to be implemented at various stages of the value chains (primary collection, storage, processing, and marketing). The technology packages included in this sub-component would be for: (i) production (for example, improved seed and other inputs-including pesticides-and small equipment for marshland rehabilitation and water management); (ii) post-harvest activities (for example, improved storage and small-scale processing facilities, drying techniques, price and marketing information, small-scale packaging, and pasteurization units); and (iii) watershed management (for example, improved seed and seedlings for fodder plants and trees to control erosion).

Sub-component 1.2: Capacity building, institutional support, and facilitation of access to markets (US$3.20 million) 22. This sub-component will: (i) strengthen technical and organizational capacities along the entire value chain for first-priority commodities and (ii) remove specific technical and organizational constraints at key stages in value chains for second-priority commodities. Coordination and dialogue between actors in the value chains will improve through the establishment of professional institutions and support of partnerships between actors, including public-private partnerships.

23. This sub-component will finance the following activities: (i) building the capacity of producer organizations benefiting from sub-proj ects (such as producer groups, water user associations, and cooperatives) and supporting the organization of priority value chains to which these entities belong; this latter activity includes support for establishing a Market Information System (MIS), and (ii) building the capacity of public institutions supporting sub-project beneficiaries; these institutions will include, among others, the Institute of Agronomic Sciences of Burundi (ISABU) for development research and seed certification; the Ministry of Agriculture and Livestock (MINAGRIE) through the General Directorate of Agricultural Research and Extension (DGMAVA) for extension; the General Directorate of Planning of Agriculture and Livestock (DGPAE) for agricultural information; the Provincial Directorates of Agriculture and

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Livestock (DPAEs) for monitoring and evaluation; the General Directorate of Livestock (DGE) for veterinary services, animal disease prevention, and pest control; and the Ministry of Trade for trade standards and fraud control.

24. The project will help strengthen partnerships between these institutions and regional and international institutions commanding improved technologies, such as the Africa Rice Center13 for rice, the International Institute of Tropical Agriculture (IITA) for root and tuber crops, the International Livestock Research Institute (ILRI) for livestock, and the Association for Strengthening Agricultural Research in Eastern and Central Africa (ASARECA) for general crop research.

Component 2: Irrigation development and feeder road rehabilitation (uS$9.58 million)

25. This component’s objective is to improve basic infrastructure so that producers can increase the volume of agricultural production and improve their links to the market. This component aims at developing marshland irrigation and rehabilitating feeder roads, as well as establishing the systems needed to manage this infrastructure. Eligible infrastructure will include basic infrastructure for developing marshland irrigation, such as the development of the watersheds adjacent to the marshlands, as well as the tracks within marshlands and the feeder roads linking marshlands to the communal road network. Specific marshland areas will be selected based on technical and socio-economic studies focusing on (i) the basic soil and other characteristics of the marshland, (ii) the corresponding upstream watershed characteristics, (iii) the economic and financial viability of marshland production, and (iv) the environmental and social features of the area being developed. To the extent possible, all construction related to this component will be carried out through intensive labor techniques, thereby generating employment for local people.

Sub-component 2.1: Irrigation development (US$5.58 million) 26. This sub-component’s objective is to provide support to the government for the rehabilitation of marshland irrigation systems and for the protection and conservation of watersheds adjacent to those systems. This work will capitalize on approaches to small-scale irrigation developed by PRASAB and focus on existing intensive systems for growing rice in rotation with minor-season vegetables, pulses, and potatoes.

27. The rehabilitation of irrigated perimeters will cover roughly 2,000 hectares. Conservation and protection measures will be undertaken on the hills and slopes of the watershed surrounding the irrigated perimeters (five hectares of watershed for each hectare of perimeter rehabilitated, for a total of 10,000 hectares). Activities will include establishing water user associations (WAS), building their capacity, and preparing management and maintenance programs for irrigation facilities and equipment. The sites to be rehabilitated will be selected based on: (i) their proximity to markets, (ii) a cost and quality evaluation, and (iii) interest expressed by W A S in building the tertiary irrigation network and subsequently managing and maintaining it.

Sub-component 2.2: Upgrading and rehabilitating feeder roads (US$4.00 million)

l3 West Africa Rice Development Association (WARDA).

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28. Investing in feeder roads and road connectivity will have a positive effect on agricultural productivity and outputs. Better road connectivity will increase production, reduce the costs of transporting goods and services, and raise the farm-gate price of crops. Under this sub- component, marshland production areas will be linked to communal roads by rehabilitatinghpgrading interior tracks and access roads. About 100 kilometers of road will be rehabilitated. Roads will be selected on the basis of the following criteria: (i) they lead to marshland selected for rehabilitation or development, (ii) they connect to existing seasonal roads and/or markets, and (iii) they do not correspond to roads that are already being rehabilitated under programs financed by other partners, including IDA, the European Union (EU), African Development Bank (AfDB), and IFAD. Design and implementation of this sub-component will be undertaken in close collaboration with the National Road Agency (Office des Routes), which is in charge of road sector planning and works supervision.

Component 3: Management and coordination of project activities (US$5.54 million)

29. This component will finance project coordination and management activities. It will cover the costs related to the equipment, staff salaries, and recurrent expenditures of the Project Coordination Unit (PCU) and Inter-Provincial Coordinating Units. In particular, this component will finance the operating cost of the financial management system and attendant staff training, including external audits as well as planning, programming, and budget preparation at the national and local levels. It will also finance monitoring and evaluation (M&E) activities. The Management Information System (MIS) currently in place at PRASAB will be used to collect baseline data and information on progress in project implementation. The PCU will pay particular attention to monitoring environmental and social impacts. It will develop the required tools and procedures and provide capacity building for actors involved in these activities. The PCU will handle the project?s communications activities, including the dissemination of information related to project implementation.

E. Lessons learned and reflected in the project design

30. The proposed project draws on lessons learned from PRASAB. These lessons are highlighted in a Beneficiary Impact Assessment (April 2009) and a Gender Analysis and Comprehensive Social Impact Assessment (September 2009), among other documents. In spite of the difficult external environment in which it is being implemented, PRASAB?s achievements have been notable (Box 1).

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BOX 1: Achievements of the Agriculture Rehabilitation and Support and Sustainable Land Management (PRASAB) Project

Yields increased for the major agricultural and livestock production activities in the project area: irrigated rice (from 2.5 to 4.8 tons per hectare), milk (from 1 to 6 liters per day per cow), and cassava (from 8 to 12 tons per hectare). Beneficiaries perceived a high positive impact (80-100 percent) on income generation, capacity building, and nutritional status. A legal framework for land management and environment was adopted, promulgated, and put into effect. The National Agricultural Strategy was prepared, adopted, and disseminated. Three thousand investment sub-projects have been approved, completed, and/or are being implemented; 45 percent of these sub-projects were for female beneficiaries. Marshlands (1,500 hectares) were rehabilitated and developed. Eight provincial master plans for land use were prepared and are being implemented. Sustainable land management practices (simple soil and water conservation technologies and cover crops) were adopted on 10,000 hectares of watershed. Community forests were established on 28,000 hectares with 56 million trees, mostly local species, introduced in farming systems. PRASAB reached large numbers of people: 75,000 rural households (375,000 people, including 170,000 women) benefited from production sub-projects and 140,000 households benefited from community development sub- projects. About 200,000 households of refugees and displaced persons benefited from the emergency support provided by the project for their reinsertion.

31. project:

Several specific lessons from PRASAB were considered in designing the proposed

(a) In a fragile state such as Burundi, grassroots organizations-particularly farmer groups and cooperatives that are adequately supported by service providers-an substantially improve their performance and achieve tangible results. The project will build on that approach and ensure adequate capacity building at the grassroots level.

(b) Service provision by the private sector has proven more efficient than public sector service provision. The project will therefore rely on private service providers while continuing to reinforce the capacity of the government administration for those public services falling under its purview, such as planning, research and extension, sanitary control, and M&E. Whenever possible, private-public partnerships will be sought to mobilize the mix of expertise required.

(c) PRASAB focused on improving on-farm productivity and recovering production, largely for own consumption. The relative success of PRASAB argues for giving attention to markets and market access at this stage.

(d) PRASAB’s experience has revealed that, where farmer credit is limited or nonexistent-which is currently the case in Burundi-a well-targeted matching grant scheme is effective in assisting small-scale farmers to rebuild their assets and develop basic production activities. In this context, matching grants do not create unfair competition with weak or nonexistent micro-finance services. On the contrary, they

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help farmers establish the production base required to access these financial services where they exist.

F. Alternatives considered and reasons for rejection

32. The team considered and rejected three alternatives:

(a) The team first considered an agribusiness project focusing on export crops. This option was rejected because Burundi has had very little exposure to external markets, apart from markets for coffee and tea. While potential for exports exists, it will take time for Burundi to embark on a full-fledged development strategy for market-oriented agriculture.

(b) The team explored the possibility of two separate projects. One would focus explicitly on food security, which would have been justified apriori by the recent food crisis that has adversely affected Burundi. The other would have focused on agribusiness market development and private sector support. This option was rejected as the government was keen to target small-scale farmers as a follow-up to PRASAB. Since smallholders are not exclusively oriented toward either subsistence or export production, having two separate projects would not have served the government's interests adequately and would have been administratively cumbersome.

(c) The team considered an Adaptable Program Loan (APL). The need to provide long- term assistance on the part of the Bank would have justified that approach. The sequential phases of an APL, however, and the triggers for moving from one phase to the next introduce complexity and additional risk. A SIL offers greater flexibility and simplicity and is therefore more attuned to the context of a fragile, post-conflict country.

I11 IMPLEMENTATION

A. Partnership arrangements

33. IFAD, the United States Agency for International Development (USAID), and the EUI4 already engage in agricultural productivity, diversification, and market linkage through projects under implementation or in preparation (Annex 2). Under the proposed project, the government will work closely with these development partners to ensure efficient and effective coordination, and, in some cases, scale up their interventions. The government will also explore the possibilities for commercial financial institution^'^ to finance project beneficiaries' activities.

l4 USAID is working on strengthening the dairy value chain for the local market, on horticulture, and on the coffee sub-sector (to enter niche and specialty coffee markets). IFAD intends to promote sub-projects to link small-scale and poor farmers to local markets. The EU is also involved in horticulture and coffee chain development, with a s ecial focus on infrastructure development and rehabilitation. '?One of these institutions showed great interest in pursuing an approach attempted by USAID, in which USAID provided a guarantee fund to cover up to 50 percent of potential losses incurred.

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The proposed project will (i) complement Bank projects16 by providing complementary services to its beneficiaries, and (ii) scale up PRASAB’s achievements through small-scale productive investments. Through sub-projects, the project will support targeted initiatives and community associations’ investments to revitalize the coffee sub-sector (see sub-component 1.1). The project will also build on approaches used successfully under other donor-funded projects, such as Farmer Field Schools for extension of the work sponsored under the Livestock Sector Reconstruction Project (PARSE) project” sponsored by the Food and Agriculture Organization (FAO) and IFAD, the multifunctional extension system program in the coffee value chain (USAID), or the community animal health workers program” (FAOAFAD). Coherence of these various interventions is pursued through the Agricultural Sector Working Group.

B. Institutional and implementation arrangements

34. Where possible, the project will use PRASAB’s capacity built at the national, provincial, communal, and grassroots levels. MINAGRIE will have overall responsibility for project implementation in close coordination with the Ministry of Water, Environment, Territorial Development and Urbanism (MEEATU), Ministry of Decentralization and Communal Development (MDDC), and Ministry of Commerce, Industry, and Tourism (MINICOMT). Details are presented in Annex 6.

35. Governance arrangements. The Project Steering Committee (PSC) will guide and oversee project implementation. It has been established and is headed by MINAGRIE, with membership composed of high ranking officials from MINAGRIE, MEEATU, MDDC, MINICOMT, and other key ministries, the Second Vice Presidency and related agencies.

36. Implementation arrangements. The Project Coordination Unit (PCU), reporting to MINAGRIE, will manage and coordinate all project activities. It will be headed by a Project Coordinator and staffed by a small management team of experienced technicians. The PCU will be responsible for the technical and financial implementation of project activities, including procurement, financial management, M&E, mitigation of potential negative social and environmental impacts, and communication about project implementation and results. The PCU will be represented in the provinces by three decentralized Inter-Provincial Coordination Units (IPCUs) in charge of field coordination, guidance, and supervision of project activities. Each IPCU will cover at least three provinces. Staff from PRASAB PCU and IPCUs will be hired for Projet de Productivite‘ et de De’veloppement des Marches Agricole’s (PRODEMA) PCU and IPCUs.

37. Component 1 will be implemented through two groups of actors: private operators and public institutions. Sub-component 1.1 will be executed through private service providers (PSPs) that will support the sub-project cycle and provide organizational support for first-priority value chains. PSP responsibilities will include: (i) sensitization campaigns (focused on sub-project beneficiaries) and sub-project identification, preparation, and selection, as well as subsequent technical follow-up and (ii) support for building capacity of project value chain institutions. The

l6 Financial and Private Sector Development Project (FPSD), Burundi Community and Social Development Project (PRADECS), Economic Reform Support Grant, Public Works and Urban Management Project, as well as Regional Transport Project and Regional Agricultural Productivity Project. l7 Projet d’appui ii la reconstruction du secteur de l’devage (Livestock Sector Reconstruction Project).

Agents communautaires de santd animale (ACSAs).

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PSPs will be recruited on a competitive basis, and each will be responsible for project activities in a given province. These service providers will have the expertise and experience suitable for project implementation. The PSPs will work with producer organizations (POs) (for example, through participatory diagnostic meetings) to help them choose their priority investments and prepare sub-project plans and financing requests. They will collaborate closely with the provincial agriculture and livestock directorates (DPAEs). The latter will be fully informed of progress with project activities and given all pertinent data. Training and technical assistance will be provided to DPAEs so that they can deliver on their core public responsibilities, particularly their planning, monitoring, and evaluation activities in the rural sector. Sub-component 1.2 will be implemented through conventions established with public institutions, such as ISABU, CNTA?, IRAZ, INECN, and MINAGRIE and other ministries.

38. The matching grants under sub-component 1.1 for sub-projects developed by POs will be approved at the communal level for amounts below US$15,000 and at the communal and provincial level for amounts from US$15,000 to US$50,000. For that purpose, the committees already established by PRASAB-the Communal Approval Committees (CACs) and the Provincial Approval Committees (PACsFwill be strengthened and their roles expanded, consistent with the government?s decentralization strategy. The committees will be composed of provincial government officials, and representatives of professional and non-governmental organizations (NGOs).

39. Component 2 will be implemented by private local contractors in close collaboration with POs. Technical studies will be prepared by private consultants in liaison with the PCU. These studies will be vetted by the General Directorate of Rural Works (DGAT) (for irrigation works) and MDDC (for rural roads) to ensure that they adhere to norms and regulations and are coherent with other irrigation investments and the communal road network. Work supervision will be entrusted to private consulting firms. Irrespective of the nature, scope, and size of the primary irrigation investments, beneficiaries will be responsible for constructing, operating, and maintaining the tertiary irrigation network as their contribution to project activities. Water management will be the responsibility of W A S to be created following the construction of irrigation infrastructure.

C. Monitoring and evaluation of outcomes/results

40. The results framework in Annex 3 presents the performance indicators for project components and sub-components. The PCU will be responsible for M&E of project activities and related reporting requirements. The project M&E system will link technical and financial data for the overall measurement of progress. It will work both as a day-to-day management tool and a mechanism for assessing project impacts. It will support project supervision by ensuring that baseline data on performance indicators are updated and available on a regular basis.

41, At provincial and communal levels, DPAEs (decentralized units of MINAGRIE) and PSPs will follow sub-project implementation. They will collect and transmit the data to the Inter-

l9 CNTA is the Centre National de Technologies Alimentaires (National Food Technology Center); IR4Z is the Institut de Recherche Agronomique et Zootechnique (Agronomic and Livestock Research Institute); INECN is the Institut National pour 1?Environnement et la Conservation de la Nature (National Institute for Environment and Conservation of Nature).

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Provincial Coordination Units (IPCUs, the PCU’s decentralized sub-units). The PSPs will be responsible for providing periodic monitoring data on sub-projects. These data will be aggregated at the communal level, consolidated and analyzed by the IPCUs at the interprovincial level, and transmitted to the M&E specialist at the PCU at the national level.

42. Monitoring and evaluation reports, including environmental and social monitoring results, will be prepared quarterly at the provincial and communal levels and semi-annually at the central level. The semi-annual reports will be circulated to sector ministries and interested development partners. The project will undertake: (i) an update of the baseline data collected by PRASAB before beginning implementation and (ii) an impact assessment at mid-term and a final impact assessment six months prior to completion.

43. A Management Information System (MIS) will be established at the PCU and operated by the PCU M&E specialist. It will build on PRASAB’ current MIS. The M&E specialist will also be responsible for training the IPCU coordinators, PSP staff, and MINAGRIE staff. This will ensure that they have the expertise to collect the required information and that they adhere to a uniform reporting process,

44. The MIS will include environmental monitoring indicators to: (i) determine whether the mandatory environmental screening for sub-proj ects and other project investments has been completed as per Bank procedures and (ii) assess the effectiveness of the environmental mitigation measures implemented, including the extent to which sub-proj ects are prepared and subsequently managed in an environmentally and socially sustainable manner. The data collected through the M&E system on management and impact indicators will be disaggregated, and allow for proper assessment of gender impacts as well as impacts on vulnerable groups (such as refugees and Batwa people).

45. The joint Bank- GOB semi-annual supervision missions will assess the status of key project outcomes and update legal covenant compliance. The Mid-Term Review will be conducted no later than August 1, 2013 (three years after effectiveness) to assess the project midway through implementation. An independent impact evaluation will be conducted no later than August 1, 2015, to assess overall achievement of expected project results. The implementation completion report will be submitted no later than October 30,2016.

D. Sustainability

46. The government is strongly committed to this project, which will consolidate PRASAB achievements and lay the foundation for increased commercialization in agriculture. As noted, the project was designed following two years of intensive consultations with all stakeholders as part of the Bank-financed Sources of Rural Growth study. To sustain the project’s benefits, the government is committed to:

(a) Systematically engaging the private sector in market development and reinforcing the capacity of private operators. Task forces including the private sector have been established to lay out strategies and action plans as well as institutional development for the first-priority value chains covered by the project.

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(b) Using matching grants to start the process of intensification, and linking producers to relevant micro-finance institutions to finance continuation.

(c) Mainstreaming project implementation arrangements within MINAGRIE’s services. MINAGRIE staff and agencies will be reinforced to ensure that implementation responsibility is transferred over upon project completion.

(d) Monitoring the performance and sustainability of sub-projects based on their expected technical, economic, and financial viability to identify problems early.

E.

47.

Critical risks and possible controversial aspects

The critical risks and potential controversial aspects are summarized below.

Table 1: Critical risks and potential controversial aspects

I Risk Political In the aftermath of elections

socio-political instability may affect project implementation. Operation- specific risks Technical 0 Climatic

(upcoming),

0 Low adoption of improved technologies

0 Crop pests and livestock diseases

Low implementation capacity Inadequate capacity at local and national levels to implement activities Insufficient effective demand to absorb marketed

Risk Rating

High

Substantial

Moderate

High

Risk Mitigation Measures

The Bank will continue to work closely with the United Nations (UN) and bilateral and international development partners to monitor the political situation. Concerted efforts of the international community will attempt to reduce the likelihood of resumption of conflict.

Adoption of drought-resistant technology and adapted irrigation system.

Crop extension systems will be strengthened (for example, by establishing demonstration programs using new approaches that have proven effective in Burundi, such as Farmer Field Schools.

Crop protection and veterinary services will be strengthened.

The project will benefit greatly from PRASAB’s management experience. Regular training and supervision will be provided to strengthen capacities of all project actors. Regular evaluation will be carried out to ensure that the knowledge sharing objective is reached.

Market potential will be taken into consideration in selecting value chains. Domestic supply for food aid programs will be explored.

Rating aft Mitigatio

High

Substantia: but declining over projec implement ion

Low

Moderate

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Risk surplus; miscalculation of demand could result in depressed prices Low fiduciary capacity may trigger elite capture and grant misallocation Social and environmental safeguards The proposed project will benefit from environmental and social management capacity established under PRASAB at the local and provincial levels. However, there is a need to M e r strengthen this capacity to ensure that the planned investments do not have adverse social and environmental impacts. Overall Risk Rating

Risk Rating

Substantial

Substantial

Substantial

Risk Mitigation Measures

Robust selection criteria are designed with awareness campaigns, as in PRASAB. Training will be undertaken to strengthen capacity at all levels No matching grant will exceed US$50,000.

The Recipient is preparing (i) an Environmental and Social Impact Assessment (ESIA), (ii) an Environmental and Social Management Framework (ESMF), (iii) a Pest Management Plan as part of the ESIA report, (iv) a Generic Dam Safety Analysis as part of the ESIA report, (v) a Resettlement Policy Framework (RPF), and (vi) an Indigenous Peoples Development Plan (IPDP). The above documents were disclosed in Burundi on December 24,2009 and at the Bank InfoShop on December 29,2009. The Recipient will hire qualified consultants who will take into account experience gained under PRASAB and provide relevant recommendations for further strengthening environmental and social management capacity under the proposed project.

Rating after Mitigation

Moderate

Moderate

Moderate

F. Loadcredit conditions and covenants

48. Conditions of effectiveness

(a) The Recipient has prepared and adopted the PIM satisfactory to the Association.

(b) The Recipient has entered into the following contracts, in form and substance satisfactory to the Association, for the project:

(1) with the following staff from the PRASAB’s project coordination unit: (i) the Project Coordinator; (ii) the administrative and financial officer;

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(iii) the senior accountant; (iv) the procurement specialist; (v) the monitoring and evaluation officer; (vi) the capacity building specialist; (vii) the irrigation and infrastructure specialist; and (viii) the agriculture and livestock specialist;

(2) and with ‘the following staff from each of the PRASAB’s interprovincial project coordination units: (i) the coordinator; (ii) the monitoring and evaluation officer; and (iii) the agriculture and livestock specialist.

49. Dated covenants

The IDA Grant Agreement will include dated covenants requiring that no later than three months after the credit effectiveness:

(1) The Recipient has recruited an external auditor with qualifications and experience satisfactory to the Association.

(2) The Recipient has adapted its existing computerized accounting system and trained its staff to use the accounting software.

IV APPRAISAL SUMMARY

A. Economic and financial analyses

50. Project-supported investments will generate substantial financial benefits for rural households in the areas served by the project, as well as substantial economic benefits for Burundi’s society as a whole. The results of the analysis show that the project will generate substantial additional production. A share of the additional production will be used to ameliorate food insecurity in rural households; another share will generate monetary revenues for these households to meet their minimal recurrent cash needs and investment requirements.

51. Project activities are expected to generate four main benefit streams: (i) increased value of production generated by sub-projects on hillsides and plateaus and in irrigated marshlands rehabilitated and developed under the project; (ii) returns to investments from sub-projects concerning small commercial infrastructure and processing facilities, as well as investments in access roads linking irrigated marshlands to the communal network; (iii) returns to investments in soil erosion and conservation on watersheds surrounding irrigated areas (through sustainable land management technologies); and (iv) benefits from capacity building for farmer groups and cooperatives and other organizations along the value chain. These benefit streams lend themselves more or less readily to quantification. For the present economic and financial analysis, the returns were fully estimated for benefit stream (i). They were partially captured for benefit stream (ii) through production volumes, which account for the reduction in post-harvest losses, and through prices that incorporate the increased value-added generated by investments in

16

storage, processing, and marketing facilities.20 Benefits were not computed for category (iii) and (iv). These benefits are extremely positive and therefore are expected to substantially enhance overall project returns.

Gross margins Remuneration of family labor

52. The adoption of improved technology packages under the project is expected to increase yields markedly for target crops (62 percent for rice, 78 percent for bananas, and 96 percent for coffee). Milk production is expected to increase almost threefold. Corresponding returns to investment were measured in terms of increases in the remuneration of family labor and gross margins. Compared to the “without-project” scenario, under the project the remuneration of family labor reflects an average increase of 60 percent for crop enterprises and 89 percent for livestock enterprises. Increases in gross margins in the “with-project” scenario are substantial, with an average rate of 109 percent for crop enterprises and 385 percent for livestock enterprises (Table 2). The targeted value chains therefore generate very positive benefits. Returns allow for ample coverage of the additional investment and recurrent costs incurred as a result of access to improved technology packages and are sufficient to entice producers to adopt these packages.

71 62 100 385 89 30 68 89

Table 2: Percentage increase in yields, gross margins, and remuneration of labor

I Yield I 62 I 78 I 96 I 271 I

53. The project internal rate of return (IRR) is estimated at 28.2 percent (financial IRR) and 21.2 percent (economic IRR). The net present value (NPV) at an opportunity cost of capital of 12 percent is projected to reach FBu 33.7 billion or US$27.4 million (financial NPV), and FB 10.4 billion or US$8.4 million (economic NPV) (see Annex 9).

54. The sensitivity analysis shows that projected benefits are robust as far as investment costs are concerned. They are quite sensitive to yield gains, and they depend critically on prices received by project beneficiaries. The sensitivity to yield gains implies that the project will have to provide close support for the adoption of new technology embodied in the sub-projects and ensure that farmers adhere strictly to technology prescriptions. The project will also have to ensure that support services to deliver inputs are readily available. The sensitivity to prices means that every effort will have to be made to improve production collection, processing, and marketing as well as to facilitate partnerships between farmers and marketers.

B. Technical

5 5 . The project approach builds on past World Bank experience in Burundi and lessons learned in East and West Africa. The project’s technical design has been widely discussed and agreed upon by the government and stakeholders. It includes two prominent technical features:

2o For example, these investments could involve the building of grain drying areas, storage facilities, grain processing facilities, milk collection centers, and cold storage and marketing facilities. The nature and scale of these investments will be demand-driven, so the benefit streams cannot be estimated based on a pre-set portfolio.

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(a) Technology transfer and adoption. The project will address all key determinants of technology transfer, including the provision of advisory services and training, and provide matching grants to facilitate producers’ access to technologies.

(b) Value chain development and matching grant development. The experience with designing matching grants in Burundi has demonstrated that these grants are more appropriate than other mechanisms for supporting the provision of goods and services with high public good content in a fragile state. The use of one-time capital grants to support technology adoption was an innovation when PRASAB was designed. Based on global experience with this approach, the proposed matching grant scheme will also contribute to specific activities related to value chain development, including market access, innovative extension and advisory services, and the development of business linkages between small- and medium-scale commercial farmers.

C. Fiduciary

56. Financial management and disbursement arrangements. The PCU and the financial management unit will be responsible for ensuring compliance with the financial management requirements of the Bank and the government, including forwarding the quarterly unaudited IFRs and audited Annual Financial Statements (AFS) to IDA. The project will follow disbursement procedures described in the World Bank “Disbursement Guidelines Applicable to Projects dated Mq 2006”. Regarding flow of funds and banking arrangements, IDA will disburse the grant through a Designated Account (DA) on the basis of Statement of Expenditures (SOEs). “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15,2006 shall apply to the project. The PCU will maintain adequate financial management arrangements to support the deployment of project resources in an economic, efficient, and effective manner to achieve the stated development objectives. The project will be implemented in a moderate-risk environment with financial management risks inherent to the project having been assessed as substantial. Appropriate mitigation measures as outlined in Annex 7 have been incorporated into the design of the financial management arrangements, which will reduce the inherent risks to moderate. Detailed financial management and disbursement arrangements are described in Annex 7. The

’ implementing entities are compliant with the Bank’s financial management requirements; and there are no overdue audit reports and interim financial reports from these entities

57. Procurement. Procurement for the proposed project will be carried out in accordance with the World Bank’s Guidelines: Procurement Under IBRD Loans and IDA Credits (May 2004; revised October 2006), Guidelines: Selection and Employment of Consultants by World Bank Borrowers (dated May 2004; revised October 2006), and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general in Annex 8. For each type of contract to be financed by the grant, this annex presents the procurement or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame as agreed between the Recipient and the Bank in the procurement plan. The procurement plan will be updated at least annually or as required to reflect project implementation needs and improvements in institutional capacity. An 1 8-month procurement plan has been prepared by the procurement unit of the PCU. An assessment of the capacity of the implementing agency (PRASAB) was carried out and completed in February 2010, by Bank staff. The following key issues have been identified: (i) weaknesses in bidding

18

documents, RFPs and selection of consultants since the procurement specialist is newly recruited, (ii) Bid evaluation report approval and contract award mechanism not appropriate (iii) need for clear procedures for filing and archiving procurement documents separately for the two projects (PRASAB and PRODEMA). Although they will be a limited high value procurement activities and the PCU has some experience in handling procurement activities, the overall risk for procurement is “High”. Annex 8 describes the detailed procurement arrangements.

D. Social

5 8 . Consultations with key stakeholders involving the private sector, the public sector, civil society, and the most vulnerable groups (indigenous groups such as the Batwa,*’ women and youth, and refugees) have been conducted during project preparation. Key actors have been involved in defining the scope of activities and will be engaged throughout preparation and implementation, supervision, and evaluation. Youth and women, in particular, are expected to benefit from the project because they are heavily involved in most of the activities and processes within food crop supply chains. The food security status of families impacted by the project is expected to improve with successful adoption of the proposed production, storage, and marketing technologies.

E. Environment

59. The project will finance sub-projects (investments) in small-scale irrigation, market infrastructure, and the production of bananas, rice, milk, and coffee. These activities may generate adverse environmental and social impacts, such as accumulated residues from banana production (Muyinga and Makamba Provinces) and rice production (Bubanza Province). Pesticide poisoning and soil and groundwater pollution are potential threats, given the limited institutional capacity in Burundi for safe pest management and farmers’ lack of equipment and knowledge ‘for the safe storage, transport, and application of pesticides, insecticides, and herbicides.

60. Negative environmental impacts from small-scale irrigation sub-projects may include siltation, shrouding due to malfunctioning dams, and an increase in malaria from additional water in irrigation canals. The consultant’s site visit to representative small dam sites in the project area showed the importance of canying out technical and environmental studies prior to dam construction, installing correct drainage systems to prevent water runoff from damaging the infrastructure, and integrated watershed management to prevent siltation, soil erosion, and deforestation. None of the dams constructed under the project will be of a size requiring a dam safety review prior to appraisal. The safety guidelines for small dams have been disclosed and will be adhered to (see Annex 10 for details).

61. The project will: (i) support training for stakeholders and (ii) arrange for the recruitment of an environmental and social specialist if needed, particularly at the beginning of project implementation. Although environmental monitoring will be the responsibility of local service providers (LSPs) selected among the NGOs, the PCU-with support from a qualified environmental and social specialist-will arrange for both the environmental screening and

’’ The Batwa Development Action Plan was discussed, finalized, and endorsed by six organizations representing the Batwa on December 12,2009.

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environmental impact assessment of sub-projects. He/she will continue to: (i)ensure that future subprojects include environmental and social criteria, in addition to the criteria of eligibility, identification, appraisal, and implementation which are included in the Implementation Manual; (ii) ensure that the environmental and social screening process outlined in the Environmental and Social Management Framework (ESMF) is efficiently implemented with the participation of the beneficiaries; (iii) ensure that the Ministry of Environment reviews and approves the project’s environmental studies, issues Environmental Compliance Certificates as necessary, and supports the project with regard to environmental monitoring.

F. Safeguard policies

62. The proposed project is rated category B and is not expected to induce significant adverse environmental and social impacts. Some of the planned investments-such as feeder road rehabilitation, small dams, and productive investment sub-projects-may, however, have localized, temporary environmental and social impacts. To address these risks and ensure environmental and social sustainability of fbture sub-projects, the Recipient has prepared six safeguard documents: an Environmental and Social Impact Assessment (ESIA), an Environmental and Social Management Framework (ESMF), a Dam Safety Analysis (Annex 2 to the ESIA report), a Pest Management Plan (Annex 3 to the ESIA report), an Indigenous Peoples Development Plan (IPDP), and a Resettlement Policy Framework (RPF). Drafts of these documents were disclosed on December 24, 2009, in Burundi in publicly accessible places and on December 28, 2009, at the Bank’s Infoshop. Mitigation measures have been identified, costed, and will be financed by the project.

63. The project will support small-scale irrigation and other water management structures on International Waterways and therefore triggered OP 7.50 (Projects on International Waterways). The Bank, acting on behalf of Burundi, notified the riparian states22 of the proposed project. By the deadline set in such notification to object, no objection had been received. The Bank received positive responses from the Government of Egypt (November 21,2009), which confirmed its no objection to the project and stated that it looked forward to the project meeting its objectives and contributing to the welfare of the people of Burundi, and from Eritrea (November 20, 2009), which expressed its supportive position to the implementation of the project with the Bank’s assistance. The Government of the Central African Republic responded on December 3, 2009, expressing its support for the project and suggesting the development of (i) an ESMF to identiQ and assess potential environmental and social impacts; (ii) a monitoring and evaluation system; (iii) clear environmental and social management measures and institutional responsibilities in this regard; and (iv) a capacity-building and training program. The Bank responded to the Central African Republic on March 1, 2010 that its recommendations were fully taken into account under the Bank’s social and environmental safeguard policies, which are triggered by this project. The Government of the Republic of Congo informed the Bank on December 17, 2009, that the Bank’s notification letter had been forwarded on December 17, 2009, to the country’s responsible institution, namely the Commission Internationale du Bassin du Congo- Oubangui-Sangha (CICOS). No further responses to the riparian notification letter have been received thus far, and the Bank does not expect any unfavorable response because of the nature of the proposed project.

22 Angola, CAR, Congo, DRC, Egypt, Eritrea, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, Uganda and Sudan.

20

Table 3: Agro-Pastoral Productivity and Markets Development Project

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [ I Natural Habitats (OPBP 4.04) [ I [XI Pest Management (OP 4.09) [XI [ I Physical Cultural Resources (OPBP 4.11) [ I [XI Involuntary Resettlement (OP/BP 4.12) [XI [ I Indigenous Peoples (OPBP 4.10) [XI [ I Forests (OPBP 4.36) [ I [XI Safety of Dams (OP/BP 4.37) [XI [ I Projects in Disputed Areas (OP/BP 7.60). [ I [XI Projects on International Waterways (OPBP 7.50) [XI 1 1

G. Policy Exceptions and Readiness

The project complies with all Word Bank Policies and no exception is required. A procurement plan for the first 18 months of project implementation was finalized by the Recipient during appraisal and approved by the Bank. The Grant Agreement effectiveness conditions are expected to be met on time.

By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas.

21

Annex 1: Country and Sector Issues BURUNDI: Agro-Pastoral Productivity and Markets Development Project

Country context

1. Burundi is a small, landlocked, densely populated country recovering from a severe civil crisis and ethnic conflict in the 1990s. Since 2000, the country has progressively recovered from a decade of negative growth (average -1.8 percent) to a positive growth rate of 3-5 percent in 2006-08. However, it is yet to enjoy the typical post-conflict bounce in GDP growth. Economic growth remains volatile, all the more because Burundi is highly dependent on agriculture, a sector that typically experiences significant fluctuations.

Sector context

2. Burundi is a rural country. Between 90 and 95 percent of the country’s 1.2 million households live in rural areas. Rural Burundi is dominated by small-scale, subsistence-oriented family farming units that use traditional, low-yielding, multi-cropping practices. These units produce most of the food they consume. Virtually all households grow a mix of food crops, sometimes associated with cash crops, and keep some animals for cash, own consumption, and manure (Box 2 describes the agricultural sub-sectors). The emphasis on multi-cropping and self- reliance is a rational strategy that has emerged in response to the increasing shortage of agricultural land, erratic functioning of food markets (a legacy of the civil conflict), and lack of opportunities outside agriculture (resulting from the underdeveloped non-farm rural economy). Burundi was self-sufficient in food production prior to the conflict. During the crisis, looting and destruction of household goods and livestock deprived farmers of their most important income- generating assets. Distribution and marketing channels for agricultural and livestock inputs and products collapsed together with milk-processing facilities. The animal health system collapsed following the destruction of infrastructure and disorganization of services. Political and social unrest was most devastating in regions that experienced intense fighting, where displacement of the population caused a return to slash-and-burn agriculture and rapid deforestation. Agricultural output declined sharply. The 1997 production level was 21 percent lower than the average volume for 1989-93, and agricultural per capita GDP was down by 33 percent.

22

Box 2: Burundi’s agricultural sector

Food crops. Food crops occupy a large proportion of agricultural land in Burundi (85 percent of the cultivated area or 28 percent of Burundi’s land mass). The leading food crops, ranked by volume of production, are bananas, roots and tubers, pulses, cereals, vegetables and fruits, and oilseeds. The importance of food crops to the national economy is considerable. Food crops contribute 46 percent of GDP and 80 percent of agricultural GDP. Bananas alone cover 17 percent of the cultivated area, account for 45 percent of total food production in volume, and provide 30 percent of smallholders’ incomes. Most food crops in Burundi are produced for own consumption. The share of surplus production marketed varies from one commodity to another. For all food crops combined, it is 20 percent on average.

Livestock. Animals are an important feature of the rural landscape. Livestock are an essential component of household strategies to reduce poverty and vulnerability. Between 40 and 60 percent of rural households own livestock (40-60 percent own goats andor sheep, about 25 percent own poultry, 10-20 percent own cattle, and 5-10 percent own pigs). Livestock production is tightly linked to crop production-not surprising, given the multi-faceted production systems and self-reliance that are characteristic of small household farms. Livestock contribute 12 percent of GDP, and fisheries contribute 2-3 percent. In addition to providing income, food, and manure, livestock are valued as indicators of wealth and social status.

Export crops. Export crops contribute 8 percent of GDP and generate 90 percent of export earnings. Coffee, the main contributor by far, is produced by about 800,000 households and accounts for 90 percent of export revenue. Tea is currently Burundi’s second-largest cash crop. It is produced by four large estates and over 50,000 smallholders, and it provides 12 percent of total export earnings. In past years, coffee productivity has been mediocre even though coffee has benefited substantially from public investments. The coffee and tea sub-sectors are currently undergoing regulatory reforms and privatization to improve their competitiveness and increase their contribution to growth.

Horticulture. In recent years, Burundi has renewed efforts to expand horticulture for the domestic urban and the export markets. The country’s long history of fruit and vegetable production for home consumption and local rural markets is a strong foundation on which to launch future growth in horticulture. Overall, the horticulture sub-sector (excluding bananas) is Burundi’s fourth most valuable agricultural sub-sector (earning more than US$60 million in 2005), surpassed in value only by bananas (cooking and beer bananas), dry beans, and sweet potatoes.

3. has the second- highest malnutrition rate in the world. Burundi has a structural food def icz3 and is likely to continue to be chronically food insecure in the short to medium term. It is a net food importer. Judging from the difference between food demand and food supply,24 the net national food deficit in cereal equivalents (CEs) represents one-third of the total consumption, covered essentially by food aid and, for a small portion of the population, by imports (Figure 1.1). Road traffic at major crossing points suggests that imports consist mainly of maize, beans, and rice from Uganda, Kenya, and Tanzania as well as potatoes from Rwanda. Increasing numbers of cattle represent about 20 percent of consumption and are walked into the country from Tanzania. A significant volume of milk is imported from Uganda.

About 72 percent of the population is food insecure and the coun

23 The average consumption deficit for animal proteins is estimated at about 80 percent. 24 Food demand is calculated as the notional consumption requirements of the national population and food supply as domestic food production.

23

Figure 1: Composition of food needs (metric tons cereal equivalent)

Composition of food demand in Burundi 1 1 1 1800

( b ~ cereals rqulvatcmt, metric ton)

1600

1400

1200

1000

800

600

400

200

0 1 2003 2004 2005 2006 2007 2008 2009

R U ncovercd food needs

BCovcred food needs Coni rnwcial imports

fra Domestic production

Source: FAO/MINAGRIE

Sector issues and constraints

4. Burundi’s agricultural sector faces a number of constraints that contribute to low profitability during roduction and after harvest. The main constraints facing the sector are summarized below. 2 9

5 . Low agricultural productivity. Yields of major food crops have remained stagnant over the past 40 years. Productivity gains resulting from improved cropping practices have been offset by soil fertility losses. Only milk productivity has improved slightly, although it remains below potential.

6. Inadequate agricultural research and extension services. Research and extension services declined during the conflict and have not yet been rebuilt. In spite of this difficulty, a sufficient stock of technological innovations, including livestock innovations, exists and could increase small-scale farmers’ productivity.

7. Poor water management. With an average of 1,300 millimeters of precipitation, Burundi receives more rainfall than most other African countries, but its distribution is often erratic. In addition, Burundi has many micro-climates, since it is a mountainous country. Localized droughts are common, and low-lying areas are prone to flooding. Crop losses caused by erratic water supplies could be reduced with the help of irrigation, but the country’s

25 See World Bank, “Breaking the Cycle: A Strategy for Conflict-Sensitive Rural Growth in Burundi,” Working Paper No. 147, Washington, DC, May 2008.

24

considerable irrigation potential remains largely unexploited. Less than 10 percent of the country’s 50,000 hectares of potentially irrigable area are under irrigation.

8. High input prices. Prices of inputs, particularly fertilizer, are high because these products have to transit neighboring countries and the volumes demanded in Burundi are low. Transport and handling costs make up more than 50 percent of the final retail price of fertilizer. The little fertilizer that is used is applied mainly to cash crops, especially cotton and tea. Production and distribution of improved seed and animal breeds ceased during the conflict. The production of foundation seed has partly recovered, but the low capacity for seed multiplication results in shortages for farmers. Livestock breeds are imported at high risk and high cost because domestic availability is low.

9. Low and variable output prices and poorly developed markets. Farmers generally receive low, variable, and often erratic prices for their products. Most food crops are characterized by low value-to-weight ratios, making it unprofitable to transport them over large distances. Most food products are marketed at very local markets dominated by a small number of relatively large-scale traders who are organized into networks, wield significant negotiating and market power, and own important storage facilities. The lack of long-term storage facilities for food crops that are often perishable means that many farmers are forced to sell during the post-harvest period when prices are at their lowest or forced to sell locally even though prices are significantly higher in urban markets (especially for milk and meat). The seasonality of food crop prices in Burundi appears to be unusually high by regional and international standards, owing to poor storage and producers’ inability to finance holding stocks. Despite current deficiencies in the functioning of food markets in rural areas, the high population density offers potential for active marketing.

10. Poor access to credit. Few formal credit programs target the agricultural sector. Where formal credit is available, it is almost always directed to cash crops-coffee, tea, oilseeds, fruits, and vegetables. Producers of food crops finance their recurrent production costs when necessary by borrowing in the informal sector at high interest rates.

1 1 Post-harvest and processing constraints. Most food crops are consumed with little or no processing. A limited amount of processing takes place, mainly at the household level with the objective of improving quality (for example, hulling rice, pasteurizing milk), enhancing storage characteristics (for example, converting cassava into flour and starch), or adding value (for example, brewing banana and sorghum beer). Household-level processing using traditional methods is time consuming and inefficient. It does not lead to a substantial increase in the storage life of most crops. Industrial processing of food crops is almost non-existent at present because of the total breakdown of the agro-processing sector during the conflict. Recent promising growth in milk processing is constrained by limited access to credit and difficulties securing reliable milk supplies of good quality.

12. Weak producer organizations. Professional producer organizations in Burundi are weak. Coffee is the only sub-sector in which professional organizations have reached national confederation level. These professional organizations are poorly managed and governed and technically weak.

25

Government medium-term strategy

13. In July 2008, the GOB formulated a National Agricultural Strategy (NAS) (Stratdgie Nationale Agricole-2008-2015). The strategy is supported by the World Bank and other donors. It is organized around six pillars, three of which are relevant to the proposed project: (i) the increase in agricultural productivity, the development of sustainable food and livestock production systems, and the promotion of market-driven agriculture to ensure food security; (ii) the strengthening of producer organizations and the promotion of private sector initiative; and (iii) reform of the traditional export crop sector, particularly coffee and tea. The Bank contributed to the NAS and other strategy documents as part of its AAA/ESW work program, which included preparation of the Sources of Rural Growth study.

14. For the livestock sector, the GOB has prepared, with support from FAO, the World Bank, and IFAD, a strategy aimed at operationalizing the NAS objectives. The strategy is organized around four objectives seeking to increase the livestock sector’s contribution to poverty reduction and economic growth.26 The strategy has two axes: (i) increase production and productivity of animals and (ii) secure access to markets. A stakeholder workshop will be organized in March 20 10 to validate the strategy, and the government intends to have it officially approved before the project’s start.

15. The government has adopted a National Food Security Program (2009). In line with the agricultural sector strategy and in light of persistently high food prices, the government has taken a number of short-term measures, including tax relief on basic food products (beans, maize, and potatoes) and the reduction of tariffs on diesel imports.

Future prospects for Burundi’s agricultural sector

16. The Bank jointly with the government examined the challenges of Burundi’s rural sector in a study on the potential sources of rural growth (World Bank, “Breaking the Cycle: A Strategy for Conflict-Sensitive Rural Growth in Burundi,” Working Paper no. 147,.Washington, DC, May 2008). The study concluded that Burundi’s comparative advantage for the foreseeable future lies in agriculture, that the resource endowment necessitates intensification and higher productivity, and that very deep poverty at present makes a strategy of intensification difficult to finance. The course selected therefore relies on a gradual transition from subsistence to commercial agriculture that targets products with solid domestic demand and at the same time improves the performance of sub-sectors for which exports are already established. The study emphasizes the development of value chains and increased private sector involvement. In all value chains, investment should target small-scale producers and their partners, including potential investors who bring, in addition to cash, better management and the best available know-how, technologies, and equipment. Specifically, the working paper lays out the challenges for the three most important agricultural sub-sectors and describes the means for the government to meet them.

26 The objectives are, by 2020: (i) triple the total added value for the livestock sector, (ii) increase the contribution of value chains to total added value by 45 percent, (iii) double the numbers of persons whose revenue from livestock activities is equivalent to the poverty threshold, and (iv) double the population meeting its animal protein needs (from about 17 to 40 percent).

26

17. Food crops. Future demand will be shaped by three main factors: (i) population growth, (ii) income gains, and (iii) urbanization and changing tastes. Burundi’s population is projected to grow at about 3 percent per year through 201 5 . Demand for food can be expected to grow at least at the same rate. The main factors that will affect the ability of the food crop sub-sector to respond to these projected changes are Burundi’s favorable climate for agriculture, its fertile (although depleted) and well-drained soils, abundant and generally well distributed rainfall, its moderate temperatures (which permit production of a wide range of food crops), as well as its small size (which favors links between rural production zones and urban consumption centers and leaves producers well placed to access markets). Cultivated area can expand modestly by developing additional marshlands for irrigation. In the case of staples, planted area is likely to decrease as farmers shift into more profitable high-value crops such as h i t s and vegetables, oilseeds, and industrial specialty crops. One notable exception is rice, which can generate attractive returns, especially when grown under irrigation using improved practices and an optimal level of fertilizer.

18. Future growth in food crop production must derive from increased productivity. Prospects for successful intensification of food crop systems appear bright given the extremely low yields and the large scope for increasing them by using improved inputs and soil and water management practices. The uptake of improved technology will have to be supported by strategic investments in the development of irrigation and drainage systems, the restoration of degraded land, and terracing of hillsides.

19. Burundi is landlocked, but the distance to ports is not great given the small size of the country. Regional integration and improvements in regional transport will reduce the costs of purchased imported inputs and contribute to intensification, but it will also expose domestic producers to regional competition. The natural protection long enjoyed by Burundi’s food crop sub-sector may soon be eroded, as the government has begun to foster greater regional integration, unilaterally reduced tariffs on many categories of imports, entered the COMESA and East African Community (EAC) free trade zones, and adopt the common external tariff system of the EAC. Comparative advantage analysis undertaken as part of the Sources of Growth study for rice, maize, wheat, and beans concluded that producers in these value chains are under competitive pressure from producers in neighboring countries. Tanzania, Uganda, and Kenya have underused land that can be brought into production at relatively low cost. In contrast, if producers in Burundi are to remain competitive, they will have to lower unit costs by increasing productivity-which will be a challenge, in view of the high cost of fertilizer and other imported inputs. Ultimately, as Burundian producers become more accustomed to decision-making in commercial agriculture, they are likely to shift to specialty crops that have higher value within regional trade and source staple foods from competitive neighbors. This transition will take time, however.

20. Export crops. The mediocre performance of cash crops, particularly coffee, has been largely responsible for the weak and volatile growth of the Burundian economy, even though it has absorbed significant public expenditure.

21, Burundian coffee, tea, and horticultural products could reach fair trade and other niche markets that value production from fragile countries, but success in accessing these markets requires sophisticated marketing strategies.

27

22. Livestock sub-sector. Livestock products have very high income elasticity of demand. Economic growth can thus be expected to generate more demand for livestock products than for other foods. Scarcity of land also constrains the livestock sector, and the appropriate response entails reducing the number of animals and increasing their productivity through genetic improvement, improved nutrition, and improved veterinary care. Intensification may also be accompanied by a change in the composition of the national herd, with a shift away from cattle toward smaller species.

23. Intensification will also be accompanied by increased specialization, bearing in mind that livestock producers will rely increasingly on dedicated feed producers. The livestock sub-sector will become more market oriented and more specialized. The increasing specialization and commercialization will lead to the emergence of new economic opportunities for feed producers, extension advisors, veterinary services, and marketing assistance, as well as for those offering specialized operations such as fattening and finishing.

24. The future competitiveness of Burundi’s livestock will depend partly on developments in trade policies. The recent entry of Burundi into the EAC has exposed it to some added competition from international (non-regional) sources. This competition could be particularly important for the dairy sector, because many wealthy countries produce chronic surpluses of dairy products (milk, butter, cheese) that are often dumped on global markets andor distributed as food aid.

28

Annex 2: Major Related Projects Financed by the Bank and/or Other Agencies BURUNDI: Agro-Pastoral Productivity and Markets Development Project

Sector Issue Latest Supervision

financed projects only) Project (PSR) Ratings (Bank- Description of Sector-related projects

Rural Agricultural Development Rehabilitation and

Sustainable Land Management Project (PRASAB) (P064558)

Water Multisectoral Water and Electricity Infrastructure Project (P097974)

IP S

MS

Education

Transport

Social Development

Other develo

Education Sector S Reconstruction Project (P064557)

Road Sector MS Development Project (P064876)

Community and S Social Development Project (PO9521 1)

Agency USAID

Sector

IFAD

Project Description nent agencies

Project Ago-industrial and Rural Enterprises Promotion Program (PAIR) Rural Development Relaunching

Transitory Post- (PRDMR)

the coffee and other selected value chains, capacity building, and structuring and organization of economic agents

conflict Reconstruction (PTRPC)

Agriculture and Rural Development

DO S

MS

S

MS

S

Improving food security, revenue, land management, and community development

To restore the productive capacity of rural areas through investments in production and sustainable land management and through capacity building for producer organizations and local communities, Beneficiaries include war-distressed returnees and internally displaced persons To increase access to water supply services in peri-urban areas of Bujumbura; increase reliability and quality of electricity services; increase water supply quality and reliability in Bujumbura; and strengthen the state company responsible for Urban Water and Electricity Services (REGIDESO's) financial sustainability To improve the capacity of schools to educate a rapidly increasing number of primary-level students; and of the GOB to carry out policy analysis, strategic planning, and program implementation To contribute to Burundi's post-war revival by restoring part of the priority road network, generating employment for the rural poor, and improving institutional capacity in the road sector To promote better and more equitable local service delivery


Rebuild social capital and restore food security for the most vulnerable; agriculture, livestock, and environmental rehabilitation through local governance, infrastructure

29

EU


Livestock Sector Reconstruction Support Project (PARSE)

Productivity and Local Market Development

Value Chains Development Project (PRODEFI)

Rehabilitating and Relaunching Value Chains Post-Conflict Rural Development Project (PPCDR)

(PAIVA-B)

rehabilitation, socio-sanitary support Improving productivity and production of livestock sector and marketing of milk and


I valuechains I Increasing selected uroducts and valued

added, capacity buiiding, infrastructure

30

Annex 3: Results Framework and Monitoring BURUNDI: Agro-Pastoral Productivity and Markets Development Project

Table 4: Results framework

Project Development Objective (PDO)

Increase small producers’ productivity and market access for targeted commodities in the project area.

Intermediate outcome

Component 1 : Agricultural technology transfer and linkage to market

Component 2: Irrigation development and feeder roal rehabilitation

Irrigation development

D Feeder road rehabilitation

PDO Indicators

Average yield of commodities in targeted value chains (bananas, irrigated rice, coffee and milk) (tonsha or liters per cow, respectively).

Percent of production of commodities in targeted value chains marketed by participating producers Outcome indicators

Percentage of participating farmers (male/ female) adopting new technology packages (for production, post-harvest, processing, etc.) Percentage of producers adopting animal breeds and husbandry practices for milk production Percent participating producer groups/associations/cooperatives having contractual arrangements with marketing agents Number of direct project beneficiaries of the new technological packages and market linkages Number of indirect project beneficiaries of the new technological packages and market linkages

Number of sub-projects completed

Area of marshland irrigation rehabilitated (ha)

Area of hillside areas sustainably protected (ha)

Feeder road rehabilitated (km)

Use of outcome monitoring

PDO indicators would show the efficiency and effectiveness of sub-projects and other project investments in boosting agricultural productivity (increase in yields) and generating market surpluses (fraction of production marketed) for targeted value chains

Use of outcome monitoring

This indicator would show how effective project services are in assisting farmers with technology change

This indicator would show the effectiveness of the transfer of knowledge p d advisory services.

This indicator would show to what degree producer groups/associations/cooperatives are embarking on commercial agriculture

This indicator would show how the project will impact the beneficiaries

This indicator would show how the project would affect other people living in the project area

This indicator would show the overall effectiveness of sub-project completion. This indicator would assess progress in developing irrigation infrastructure in project marshland areas

This indicator would assess efforts in protecting hillsides adjacent to irrigated areas being rehabilitated under the project This indicator will assess efforts made to rehabilitate feeder roads linking marshlands to the communal network

31

3 2

3 E

3 2

2 0 CI 0 N 0 CI

2 03 0 8

W 3 0 W m d

E r: 0

0 % 9

E 2 8 v, E 0 m 0 m m

2 v! 0 8

d m d

v, 3

.- P : I e ep

0 x s 0 e e 0

Arrangements for results monitoring

1. Institutional issues. The General Directorate of Planning of Agriculture and Livestock (DGPAE) of MINAGRIE will oversee the M&E activities and will work in close collaboration with the directorates of Ministries of Environment, Infrastructure, and Solidarity. The PCU will be responsible for monitoring and evaluating project activities and related reporting requirements. It will use PRASAB’s current MIS. The project M&E system will link technical and financial data to give an overall measurement of the project’s progress. The system will work both as a day-to-day management tool and as a mechanism for assessing project impact. It will support project supervision by ensuring that baseline data on performance indicators are updated and available on a regular basis. 2. To monitor progress and impact indicators, baseline data will be refined at project inception. The project will also hire a specialized institution to conduct an impact evaluation analysis at mid-term and at the end of the project. Prior to the impact evaluation, a clearly defined methodology will be shared and approved by the stakeholders to ensure that it will measure project effectiveness adequately. 3 . Data collection. To monitor project performance, project-specific data will be collected by the PCU and other participants. At the provincial and communal levels, the DPAEs (decentralized units of MINAGRIE) and private services providers (PSPs) recruited by the project will monitor sub-project implementation. They will collect and transmit the data to the Inter-Provincial Coordination Units (IPCUs, the PCU’s decentralized sub-units). The PSPs will be responsible for providing periodic monitoring data on sub-projects (this requirement will be mentioned in the sub-project financing agreements). These data will be aggregated at the communal level, consolidated and analyzed by the IPCUs, and transmitted to the M&E specialist at the PCU. The project will use information and communications technology to involve producer groups in reporting their own data. 4. The MIS will include environmental monitoring indicators with a view to (i) determining whether the mandatory environmental screening for sub-projects and other project investments has been completed following Bank procedures and (ii) assessing the effectiveness of the environmental mitigation measures implemented, including the extent to which sub-projects are prepared and subsequently managed in an environmentally and socially sustainable manner. The data collected through the M&E system on management and impact indicators will be disaggregated by gender to allow proper assessment of gender impacts. 5. M&E reports, including environmental and social monitoring results, will be prepared quarterly at the provincial and communal levels by the IPCUs and semi-annually at the central level by the PCU. The semi-annual reports will be circulated to sector ministries and interested development partners. 6 . Capacity. A capacity-building program will be developed for all stakeholders involved in the management of the M&E system. The training will enable them to manage a quality monitoring and evaluation system and use M&E as a management tool for assessing project outputs and outcomes and taking corrective action to achieve the PDO. Specifically, the project will strengthen the M&E unit of MINAGRIE by providing specialized technical assistance and equipment so that it can collect, process, and disseminate data concerning project activities.

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7. A Management Information System (MIS) will be established at the PCU and operated by the PCU M&E specialist. The M&E specialist will also be responsible for training the IPCU coordinators, staff, and MINAGRIE staff. This will ensure that they have the required expertise to collect the pertinent information and that they adhere to a uniform reporting process.

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Annex 4: Detailed Project Description BURUNDI: Agro-Pastoral Productivity and Markets Development Project (APPDM)

A. Project strategy

1. The project will respond to small-scale farmers’ twin goals of: (i) increasing food production to gradually attain a higher degree of food self-sufficiency and place a larger volume of products on the market and (ii) developing commercial crops for the domestic and external markets to increase income.

B. Project Development Objective and key indicators

2. commodities in the project area.

The PDO is to increase small producers’ productivity and market access for targeted

3. To achieve this objective, the project will: (i) support agricultural technology transfer in targeted value chains and rehabilitate irrigation infrastructure to increase productivity and (ii) strengthen the capacities of producers and their partners to link to the market by improving post- harvest infrastructure, market intelligence, and feeder roads.

4. chains in the project zones and facilitate market access.

It is expected that the project will sustainably increase the production from targeted value

(a) Key outcomes indicators of the proposed project will be:

(i) Average yields of commodities in targeted value chains (bananas, irrigated rice, coffee, and milk) (tons per hectare for crops and liters per cow for milk production).

(ii) Percent of production of targeted value chains marketed by participating producers.

(b) Key intermediate outcomes indicators include:

(i) Number of sub-projects completed. (ii) Percentage of producers adopting improved crop technology packages. (iii) Percentage of producers adopting breeds and husbandry practices for milk

production. (iv) Percentage of producer organizations, associations, and cooperatives having

contracts with marketing agents. (v) Marshland rehabilitateddeveloped. (vi) Watershed areas protected. (vii) Feeder roads rehabilitated.

36

Targeted activities

For Local Consumption and National Market

5. The project will focus initially on a limited number of value chains that are important for food security and nutrition and have sufficient market opportunities (as proven by PRASAB). The project will also focus on traditional commercial crops such as coffee that generate income for smallholders.29

For Export Value Chains

1" priority

Yd priority

1

Food Crops Livestock 'Commercial Crops Bananas Irrigated rice Milk - Coffee

Cassava Potatoes Meat Fruit Tea

6 . The first-priority value chains, except for the coffee chain, involve food products that meet smallholders' needs to varying degrees for food security, nutrition, and cash. It is expected that some producers will generate surpluses (specifically of milk, bananas, and vegetables grown in the minor cropping season after rice) that can be commercialized locally and nationally. Other products (rice and vegetable) will substitute for imports. Coffee is a cash crop that is integral to traditional farming systems in many parts of the highlands. The project will strengthen capacity all along these value chains. For the second-priority value chains, the project will focus on critical constraints hampering their development.

Box 3: Project value chains Rice (and crops grown in the minor season after rice). In the irrigated lowlands to be rehabilitated under the project, rice is the main crop, followed during the minor season by food crops (beans and sweet potatoes) and vegetables (such as cabbage, tomatoes, onions, carrots). Rice and vegetables are mainly produced for the market, whereas beans and sweet potatoes are consumed by the producing households. Bananas. Ubiquitous in smallholders' fields, bananas are the base of food security in rural Burundi and grow across a large array of agroecological conditions. Milk. Practices for milk and manure production are supported by the project, which will promote the use of improved livestock breeds. Milk production is a subsistence and commercial activity. Milk sales generate badly needed cash, and milk is a critical nutritional staple for the household. Animal manure fertilizes food crops, particularly bananas. Estimated at opportunity cost, manure may account for up to 40-50 percent of smallholders' dairy production activity. Coffee. Coffee, produced for cash, is integral to many traditional highland farming systems. Coffee refoms are slowly being implemented-for example, a few coffee washing and dehusking centers have been privatized. Second-priority value chains (cassava, potatoes, meat, fruit, and tea). The proposed project will support specific interventions to improve the productivity of these value chains. For example, the cassava and potato value chains require improved planting materials and storage facilities; the meat value chain will benefit from the introduction of improved Boer goats and the control of African swine pest virus and Newcastle disease.

29 The selection of these value chains was agreed upon with the Project Steering Committee for project preparation.

37

7. Technology packages. The project supports the adoption of improved technology (Table 7) to increase productivity, reinforce market links, protect watersheds, and assist vulnerable groups. Technology packages developed by the national research system are the basis for the sub-projects designed to further these objectives. The project will ensure that inputs, equipment, and advisory services for using them efficiently are available.

Rice

Table 7: Main technology packages to be used in sub-projects

Inputs (including improved seed and pesticide) and small equipment (such as manual pumps) for marshland rehabilitation and water management.

Sub-project Category

Cow milk

Goat meat

Production Improved breed multiplication, housing for semi-intensive livestock activities, vaccination, tick control, seed and other inputs for high-yielding forage crops (such as Desmodium, Stylosanthes, and Gliricidia spp., Leucaena leucocephalu), supplementation with improved feed, use of balanced feed, and artificial insemination.

Improved breed multiplication (Boer goats), housing and semi-intensive fattening, vaccination, tick control, and forage production.

Collection, transformation,

marketing

Bananas

Coffee

Watershed management

Storage facilities, small-scale processing facilities (for juice, flour, cookies, jam, and other products), and price and market information.

Rehabilitation of coffee-washing facilities, environmental mitigation measures, and price and market information.

Vulnerable populations (repatriated people and

Batwa) * Packages include

Milk

Value Chain

More hygienic and efficient milk collection and distribution networks (bicycles, containers, improved sale points), small-scale packaging- pasteurization units, and development of a collection center.

Improved Package*

n.a Improved Boer goats, housing and semi-intensive fattening, vaccination, tick control, fodder production, seed, fertilizer, and hoes.

“Vitroplants” (special disease-free planting material), manure, fertilizer, Bananas I hgicide, and pesticide.

Improved seedlings, manure, fertilizer, pesticide, and pruning and small Coffee I production equipment.

Storage facilities, small-scale processing facilities (polished rice), and price Rice I and market information.

Seed and seedlings, including fodder plants and trees for erosion control and sustainable watershed protection.

38

Geographic scope

8. The project will cover the 10 rural provinces currently covered by PRASABj’ as well as coffee-producing provinces (where it will support the ongoing privatization of coffee washing facilities). The 10 PRASAB provinces are divided into three zones: the Northern Zone (Ngozi, Kirundo, Muyinga, and Cankuzo Provinces), Central Zone (Mwaro, Muramvya, and Bubanza Provinces), and Southern Zone (Bururi, Makamba, and Rutana Provinces). The project will complement and capitalize on PRASAB’s activities in these provinces, where other donor- funded projects are also present and offer opportunities for synergy. For its livestock work, the project will maintain close links with the IFAD-financed PARSE project, which operates in Burundi’s remaining six provinces (not covered by PRASAB). For its work on crops, the project will maintain similarly close links with other donor-funded projects, such as IFAD’s Productivity and Local Market Development Project (PAIVA-B). The project may be extended to other areas as agreed upon by the Association, if an extension is justified by the needs and potential of value chains in these areas.

Project area

Burundi

Beneficiaries

4,613,283

7,177,465

9. The project will benefit producer organizations, associations, and cooperatives in the targeted value chains. It will consider requests for matching grants for all production, post- harvest, processing, pre-market, and market activities along the value chains. Priority will be granted to sub-projects that support women’s role in the development of the targeted value chains, as under the PRASAB project.31 The project will also pay particular attention to the poor and the most vulnerable social groups, such as the Batwa.

Total target population Percentage of rural population in project area Percentage of rural population in Burundi

10. About 2,630 matching grants for sub-projects are expected to be awarded during implementation. More than 90,000 households are expected to benefit directly from the sub- projects and about 550,000 people are expected to benefit indirectly (Table 8).

555,750 12.0 7.7

Table 8: Project target population versus. total population

I Rural population I

30 Burundi has 16 rural provinces and 1 urban province (corresponding to the capital city, Bujumbura). 3 1 Women constituted about 45 percent of the beneficiaries of PRASAB’s interventions; the target for the current project is 45 percent.

39

C. Project description

11. The project comprises three components: (i) support to agricultural productivity and access to markets; (ii) irrigation development and feeder road rehabilitation; and (iii) management and coordination of project activities.

Component 1: Support to agricultural productivity and access to markets (US$30.8 million)

12. The objective of component 1 is to promote the adoption of improved technology packages through the implementation of productive investments (sub-projects) by beneficiaries. These investments will be directed at specific stages in targeted value chains (production, post- harvest and storage, processing, and marketing) (sub-component 1.1). Component 1 will also improve the management and performance of institutions related to the targeted value chains through technical support and training (sub-component 1.2).

Sub-component 1.1: Support to productive investments (US$26.88 million)

13. This sub-component will finance matching grants for sub-projects to be implemented at the production and other stages of the value chain. Technology packages will be available for: (i) production (improved inputs, such as seed and pesticide, and small equipment for marshland rehabilitation and water management); (ii) post-harvest (improved storage and small-scale processing facilities, drying equipment small-scale packaging and pasteurizing unit), and price and marketing information; and (iii) watershed management (improved seed and seedlings for fodder plants and trees to control erosion).

14. Matching grants. The objective and justification for the matching grant scheme are described in Box 4 Matching grants will be awarded to qualified applicants for sub-projects in agriculture or related activities. Farmer groups, associations, or cooperatives may request grants (requests from individuals are not eligible for support). For the first-priority value chains, matching grants will finance activities at individual stages of the value chain or activities that extend across the value chain to promote integration. For the second-priority value chains, matching grants will finance very specific activities that remove critical constraints.

40

Box 4: Objective and justification for matching grants

Matching grants provided through the project, along with capacity building at all stages of the targeted value chains, will help small-scale farmers recapitalize their fgming enterprises and lay the foundation for them to grow. Smallholders have yet to recover from losses incurred over a decade of unrest. They need financial and technical assistance to undertake the technical changes that will make their farms more productive and spur economic growth. Although farmers have much to gain-their yields are far below potential yields--changes in farming practices require a technological leap that is risky and costly.32 Matching grants help to compensate farmers for the costs and risks associated with that process. More generally, the grants are justified by the general hardship and market failures that must be mitigated to foster the agricultural change sought through the project.

NO. Sub-

projec ts

2,225

50

15. Overall it is expected that about 2,630 sub-projects will be financed by the matching grants, of which 2,225 will be for the production stage of the value chains, 50 will be for the post-harvest, processing, and storage stages, 125 will be for watershed protection, and 30 will be for distressed and vulnerable people, and 200 will be for Batwa people. Table 9 presents the main characteristics of the sub-projects and the corresponding amount of the matching grants.

'Yo of Total

85%

2%

Table 9: Characteristics of Sub-projects and Cost of Matching Grants

Avg. Avg. No. Matching House-

Grant holds Amount (US$)

8,000 25

30,000 300

10,000 100

15,000 150

3,000 25

Sub-project Type

Total % of No. Direct No. Matching Total Beneficiaries Indirect

Grants Grants Bene- (US$ 000s) ficiaries

17.800 82% 55,625 333,750

1.500 7% 15,000 90,000

1.250 6% 12,500 75,000

0.450 2% 4,500 27,000

0.600 3 yo 5,000 30,000

Production

9,886

Post-harvest, processing, and marketing

2 1.600 100% 92,625 555,750

Watershed protection and erosion control Vulnerable/ distressed populations Batwa people

Total

y 200 8%

Sub-project Characteristics

Total Sub-projects

32 Farmers using traditional practices in marshlands typically obtain rice yields of about 2 tons per hectare, whereas PRASAB farmers obtained 4.8 tons per hectare and researchers have obtained 6 tons per hectare.

41

16. Each production, post-harvest, processing, and marketing sub-project will need to be economically viable, as demonstrated by a business plan. Additional eligibility and selection criteria include: (i) the sub-project builds on PRASAB’s achievements in the targeted value chains; (ii) the sub-project will be undertaken in the appropriate zone; (iii) the sub-project involves the use of new technology; (v) the amount of the grant requested; and (vi) the grantee’s ability to make the matching contribution. No specific eligibility criteria apply to sub-projects to protect watersheds (structures and plantings to prevent erosion) or for vulnerable groups and Batwa. Table 10 summarizes some of the matching grant conditions; detailed eligibility and selection criteria are included in the Project Implementation Manual.

Sub-project Category Beneficiary

Contribution Other Grant Conditions (”/I

Grant per subproject: < US$30,000

Production

Post-hawest, processing, marketing

5% Grant per household: < US$500

Group membership: 20-30 households Grant per subproject: US$30,000-50,000

Grant per household: < US$500 No. of groups : > 2

No. of households: > 100

15%

0% Watershed protection and erosion control

Grant per hectare : < US$ 100 Grant per subproject: US$5,000-30,000

Sub-project area: 50-300 hectares

17. Sub-project cycle support. Technical support required for the sub-project cycle, from awareness campaigns to sub-project identification, proposal preparation, selection, and technical follow-up, will be contracted to PSPs.

Vulnerable/distressed populations

18. The sub-project mechanism used by PRASAB will be retained, particularly the stakeholder committees charged with vetting and selecting sub-projects. The PSPs will continue to facilitate the operation of these committees. The PSPs will also be responsible for managing and consolidating PRASAB’s sub-project portfolio, which will provide an opportunity to identify the best practices that should be used in the new sub-projects.

Beneficiary “Peace Village”: > 50 households

Grant: < US$30,000

42

Batwa people Group membership: > 15 households Grant: < US$5,000

0%

Sub-component 1.2: Capacity building, institutional support, and facilitation of access to markets (US$3.20 million) 19. This sub-component will strengthen the organizations and capacities of actors at all levels of the value chains for first-priority commodities. For commodities in second-priority value chains, the project will address specific capacity and organizational constraints at key stages where they are binding. This sub-component will improve coordination and dialogue between the actors along the value chain to develop partnerships and alliances and support the establishment of professional organizations within the value chain.

20. This sub-component will support several related activities: (i) capacity building for professional associations or groups benefiting from sub-projects (producers groups, water user associations, management committees, and others); (ii) capacity building for the project’s public partner institutions (essentially for field activities that directly support sub-project beneficiaries); and (iii) organizational development and institutional strengthening within value chains, including facilitating access to markets.

21. Capacity building for professional associations. The project will work with established associations and will help form new ones. To serve these associations, the project will build capacity through specific training, demonstrations, extension work, and targeted technical assistance. This support will be contracted out to service providers (either NGOs or private operators). They will aim to equip associations with the managerial and technical expertise required to implement sub-projects. Training will emphasize the establishment of partnerships and the attendant contractual relationships between actors.

22. Organizational development and institutional strengthening of value chains. The organization and management of value chains will be facilitated and reinforced by professional organizations. If some value chains have no professional organizations, the project will conduct awareness and training campaigns to encourage value chain participants to form inter- professional organizations with a defined legal status. Because the targeted value chains are at different stages of organization, the level of support will be adapted to the needs and conditions in each value chain.

23. The actors in a given value chain will be encouraged not only to organize but to articulate a shared vision of the development of their value chain in collaboration with the public services concerned. To that end, the project will support the preparation of strategic development plans, annual action plans, and other specific investment plans for all value chains. For the livestock sector, these plans will be based on the livestock services’ strategic plan (Document d’orientation Stratdgique, prepared with support from the World Bank and FA0 and for which the investment plan remains to be developed). This work will also be aligned with the methodology developed under the regional livestock initiative of the African UnionAnterafrican Bureau for Animal Resources,33 in the framework of the regional livestock platform (ALive Africa Livestock). For the other sectors as well, all strategy documents will be reviewed, updated, and validated by the professional organizations.

33 Supported by the World Bank, FAO, and Centre de Coopdration Internationale en Recherche Agronomique pour le DBveloppement (CIRAD, the French Agricultural Research Center for International Development).

43

24. Critical constraints, especially those related to marketing, will be identified in the course of producing these development, action, and investment plans. Value chain actors will prepare these plans under the responsibility of their inter-professional organizations and/or of ad hoc structures piloted by the project to represent value chain operators, such as the working groups created in preparing the project.

25. To complement the preparation of strategies and action plans, the project will support other capacity-building activities, including the strengthening of member organizations, the preparation of studies that could benefit the entire value chain (new markets and products, the identification and promotion of new technologies). Lastly, to reinforce marketing efforts, a Market Information System (MIS) will be established to improve the flow of market information. This effort will build on the lessons from other initiatives, such as the market price monitoring unit set up with EU assistance at MINAGFUE?s Planning Directorate. Owing to its innovative nature, the activity will be implemented with the assistance of specialized consultants.

26. Strengthening public support services. The project will strengthen the public service provision at the field level in project areas to support the implementation of sub-projects. It will facilitate the adoption of new approaches and best practices, such as those developed under PRASAB or other projects, including Farmer Field Schools (FA0 and IFAD), a multi-functional extension system in the coffee value chain (USAID), or community animal health workers (ACSAs) (FAO, IFAD).

27. Agencies targeted for capacity building include ISABU for development research services; DGMAVA for extension services; DGPAE for agricultural information; DPAEs for monitoring and evaluating ODP activities and sub-proj ect implementation; DGE for animal disease prevention and control (African swine flu, Newcastle disease), grassroots animal health services (ACSAs), sanitary control of marketed animal products, and management and supervision of multiplying and distributing improved animal breeds; the Ministry of Trade for establishing trade standards, fraud control (watering milk, for instance), and support for adherence to quality standards (for example, though traceability and labels of origin); and MINAGRIE?s seed and breed certification services.

28. All of these activities will be implemented in conjunction with value chain organizations (professional and inter-professional). As they grow stronger, these organizations will assume increasing responsibility in their value chains, beyond the public functions that are the purview of the national administration.

Component 2: Irrigation development and feeder road rehabilitation (US$9.58 million)

29. This component contributes to the enabling environment for agricultural development by helping to provide the basic collective infiastructure that producers need to increase production and improve the quality of their products. Basic production and marketing infiastructure will be rehabilitated or built, including marshland irrigation facilities and rural roads linking marshlands to the communal road network. Special attention will be given to establishing maintenance and management systems for these facilities and works.

Sub-component 2.1: Irrigation development (VS 5.58 million)

44

30. This sub-component will develop irrigation systems in marshlands, using approaches pioneered by PRASAB, in which existing schemes are rehabilitated for intensive rice cultivation, in rotation with minor-season vegetables, pulses, and potatoes.

31. Project interventions will focus on developing irrigated perimeters over an area of roughly 2,000 hectares. This effort will include: (i) conducting technical studies leading to the preparation of detailed project studies and bidding documents;34 (ii) presenting and discussing rehabilitation plans with the involved constituencies; (iii) conducting environmental and social impact assessments; (iv) the execution of works by local contractors; (v) establishing and building capacity for W A S , as well as building capacity for local technical agencies supporting W A S ; and (vi) preparing, with all stakeholders, a management and maintenance program for facilities and equipment. The civil works will be labor-intensive to generate local employment.

32. Pre-design studies for two sites are available, and the project will start its work at these two sites and initiate technical studies of other schemes. Sites will be selected based on: (i) their proximity to markets, as evidenced by the existence of a paved road or passable track; (ii) a cost and quality evaluation; and (iii) interest expressed by W A S that are committed to building, managing, and maintaining the tertiary network.

33. The restoration of irrigation networks will be complemented by new efforts to conserve the surrounding watershed under sub-component 1.1. Five hectares of watershed will be conserved for every hectare of rehabilitated irrigation perimeter (a total of 10,000 hectares). These hillside and sloping areas are typically degraded. The objective will be to develop their agricultural potential through the promotion and adoption of suitable intensification and soil conservation techniques. These techniques will underpin the sub-projects undertaken by local producers.

Sub-component 2.2: Upgrading and rehabilitating feeder roads (US$4.00 million) 34. Investing in feeder roads and road connectivity will have a positive effect on productivity and outputs. Better road connectivity increases production, reduces costs of transporting goods and services, and raises the farm-gate price of crops. Marshland production areas will be linked to communal roads by rehabilitating or upgrading interior tracks and access roads. It is estimated that around 100 kilometers of feeder road will be treated by the end of the project.

Component 3: Management and coordination of project activities (US$5.54 million)

35. The project will finance equipment, staff salaries, and operating costs of the PCU. This component will also finance the establishment of the financial management system and attendant staff training, including external audits, as well as planning, programming, and budget preparation at the national and local levels. The project will also finance the implementation of the M&E system within the PCU. Stakeholders will be involved in M&E, including the environmental and social impact assessments, to ensure that project results are monitored and evaluated in a participatory way. The PCU will develop and implement tools and procedures for environmental management; provide capacity building for all of the actors involved;

34 Avant-Projet DBtaillBs (APD); Documents d’ Appel d’Offres (DAO).

45

communicate information related to project implementation; and cover the operating expenses of the Project Steering Committee.

46

Annex 5: Project Costs BURUNDI: Agro-Pastoral Productivity and Markets Development Project

Local Foreign Total US $million US $million US $million Project Cost By Component anuor Activity

A.

B.

C.

Support to Agricultural Productivity and Access to Markets Support to Productive Investments Strengthening of Capacity, Institutional Support and Facilitation of Access to Markets

Irrigation Development and Feeder Road Rehabilitation Development of Irrigations Systems in Marshlands RehabilitatiodConstction of Access Roads

Management and Coordination of Project Actlvities Coordination and Monitoring & Evaluation Project Preparation Advance (PPF)

Total Baseline Cost Physical Contingencies Price Contingencies

Total Project Costs

29.68

26.88

2.80

8.86

5.23

3.63

4.,75 4.19 0.56

0.25 29.93

26.88

0.25 3.05

8.86

5.23

3.63

0.51 5.26 0.51 4.70

0.56

43.29 0.77 44.06 0.4 1 0.07 0.48 0.64 0.02 0.66

44.34 0.86 45.20

Identifiable taxes and duties are US$2.68 million, and the total project cost net of taxes is US$40.32 million. Therefore the share of project cost nest of taxes is 94.07 percent.

47

Annex 6: Implementation Arrangements BURUNDI: Agro-Pastoral Productivity and Markets Development Project

Governance arrangements

1. The Ministry of Agriculture and Livestock (MINAGRIE) will have overall responsibility for project implementation in close coordination with the Ministry of Water, Environment, Territorial Development, and Urbanism (MEEATU) and the Ministry of Commerce, Industry, and Tourism (MINICOMT). Project implementation will build on PRASAB’s successful implementation experience. To the extent possible, it will use all PRASAB capacity at the national, provincial, communal, and grassroots levels.

2. Project Steering Committee (PSC). The PSC has been established to steer and oversee project implementation. It is headed by MINAGRIE, with membership composed of high ranking officials from MINAGRIE, MEEATU, MINICOMT, and other key ministries; a representative from the Second Vice Presidency, as well as representatives of related agencies. Other member ministries will be the Ministries of Development Planning and Reconstruction (MPR), Finance (MOF), Decentralization and Communal Development (MDDC), and National Solidarity and Repatriation of Displaced and Expatriated People and National Reconstruction (MSNRRRS). The Director General of the Agronomic Sciences Institute of Burundi (ISABU) and Project Coordinator will be non-voting members.

3. The PSC will decide on major strategic orientations for project implementation and related execution modalities. It will be responsible for vetting project impacts based on the results of M&E activities. It will approve annual work plans and budgets and ensure that they are aligned with the project’s development objective. The PSC will organize at least one annual meeting with donor representatives to ensure adequate coordination of rural sector development activities.

Implementation arrangements at the national level

4. Project Coordination Unit (PCU). The PCU, reporting to MINAGRIE, will be responsible for the technical and financial implementation of project activities. It will be headed by a Project Coordinator and staffed by a team of experienced technicians, including a capacity building and institutional development specialist, an agricultural and livestock specialist, a rural development specialist, a M&E specialist, a financial specialist, a procurement specialist, a chief accountant and an accountant, a statistician and support staff. Staff from PRASAB PCU will be hired for PRODEMA’s PCU no later than effectiveness.

Implementation arrangements at the provincial, communal, and local levels

5. Inter-Provincial Coordination Units (IPCUs). The PCU will be represented in the provinces by three decentralized IPCUs in charge of field coordination, guidance, and supervision of project activities. Each IPCU will cover at least three provinces. Like PR4SAB’s current decentralized units, the IPCUs will be located in the following towns: (i) Makamba, for

48

Bururi, Makamba, and Rutana Provinces; (ii) Muyinga, for Kirundo, Muyinga, Ngozi, and Cankuzo Provinces; and (iii) Muramvya, for Muramvya, Bubanza, and Mwaro Provinces.

6. Staff from PRASAB IPCUs will be hired for the PRODEMA’s IPCUs no later than effectiveness. The IPCUs will be headed by an inter-provincial coordinator and staffed by a M&E officer, an agricultural/livestock officer, and a secretary/accountant. The coordinators and their teams will oversee and monitor implementation of all project activities in their respective provinces. In addition to serving as the project’s representatives in the provinces, they will be in charge at the provincial level of coordination, administration, financial management, and procurement, as well as the collection, processing, and reporting of M&E data. The IPCU staff will work closely with provincial and communal services. They will provide technical assistance and hands-on training to these services to build government capacity at the provincial and communal level and promote the transfer of knowledge between the project and these services.

7. Private Service Providers (PSPs). PSPs will be recruited on a competitive basis to help Producer Organizations (POs) choose their priority investments and prepare sub-project plans and financing requests. The PSPs will have operational offices at the communal level. The PCU will recruit the PSPs before project start-up. As a first task, the PSP will hold an information campaign for the general population to give general guidance on project implementation. At the outset, for each project province, the PSP will prepare an inventory of eligible POs, including the category to which they belong (cooperative, association, women’s group, and so on), the nature of their activities, their structure and staffing/membership, and other pertinent information. The inventory will include an assessment of their strengths and weaknesses. The PSPs will inform POs about project-sponsored facilities, services, and the procedures for applying for a matching grant.

8. The PSPs will work with interested POs through participatory diagnostic meetings and in other ways to help them choose their priority investments and prepare sub-project plans and financing requests. They will work closely with DPAEs to monitor sub-project processing and implementation. Liaison with DPAEs will be established through extensive dissemination of all information and data pertaining to project implementation, thus helping DPAEs to deliver on their core public responsibilities, particularly concerning planning and monitoring and evaluation of activities in the rural sector.

Sub-project approval cycle

9. Building on the PRASAB approach, project activities will be demand-driven. The POs will identify, prepare, and execute sub-projects supported by the project, with the help of the PSPs. The POs targeted by the project will include mainly farmer groups, associations, and cooperatives, as well as other collective organizations within the selected value chains. Since the project disburses public funds, POs wishing to participate in project activities will have to be legally constituted in accordance with Burundi’s law.

10. The implementation of sub-projects will be the responsibility of the POs that have identified and initiated them. The PSPs will provide assistance for sub-project planning, advisory assistance, and technical advice. They will be specialized local agencies and consulting firms that either have the necessary skills or have sufficient potential and interest to be trained by the

49

project. The PSPs, through their communal offices, will help process and evaluate the applications. The detailed approval process for sub-projects is explained in the PIM.

11. The PCU will ensure that the PSPs on the one hand and the approval bodies (the Provincial and Communal Approval Committees) on the other will comply with the approved screening, vetting, and approval rules. Criteria for approving sub-projects include: (i) activities pertinent to project objectives; (ii) total cost and average cost per benefiting member; (iii) expected financial benefits (total and per member); and (iv) likely sustainability, including the viability of the sub-proj ect management and maintenance plans. Sub-proj ect sustainability is typically difficult to assess beforehand, but information such as the PO’S date of establishment, implementation of past activities, recommendations by the local administration, and membership characteristics (group cohesion, commonly owned capital, cash or bank account, herd, or piece of land) could offer suitable guidance.

Use of service providers

12. The project will contract with private providers to design and implement sub-project activities. The project will ensure that all service providers with expertise and experience suitable for project implementation are duly identified. Information exchange and capacity building activities will be organized for all service providers with such characteristics.

Liaison with government services and agencies

13. The project will work closely with government services and agencies involved with the project through conventions for service provision. The targeted services and agencies will include: ISABU for development research services; DGMAVA for extension services; DGPAE for agricultural information; DPAEs for M&E of PSP activities and sub-project implementation; Directorate General for Livestock (DGE) for animal disease prevention and control, grassroots animal health services, and sanitary control of marketed animal and vegetal products; Ministry of Trade for establishing trade standards, fraud control, and supporting adherence to quality standards; MINAGRIE’s seed and breed certification services; and the Coffee Sector Regulatory Authority (ARFIC). The training and technical support they receive for these activities under the project will help to ensure sustainability once the project ends.

50

Annex 7: Financial Management and Disbursement Arrangements BURUNDI: Agro-Pastoral Productivity and Markets Development Project

A. Executive summary

1. The project’s financial management (FM) will be carried out by the Ministry of Agriculture through an existing PCU of PRASAB. Thus a FMA was carried out of the existing financial management arrangements at PRASAB in accordance with the Financial Management Practices Manual issued by the Financial Management Sector Board on October 2009

2. The objective of the assessment was to determine whether: (i) PCU has adequate financial management arrangements to ensure funds will be used for purposes intended in an efficient and economical way, (ii) PCU’s financial reports will be prepared in an accurate, reliable and timely manner, (iii) arrangements exist for an independent audit of the sources and uses of funds, and (iv) the entities’ assets will be safeguarded. The assessment also included the identification of key perceived financial management risks that may affect project implementation in achieving its intended development objectives and proceeded to develop mitigation measures against such perceived risks as outlined in the risk matrix below (Table 11).

3. Based on the assessments conducted, the proposed financial management arrangements put in place by the project meet the Bank’s minimum requirements for project financial management as per OPBP 10.02.

B. Country issues

4. The Country Financial Accountability Assessment (CFAA) concluded in 2004, documented the evaluation of the Public Financial Management (PFM) environment in Burundi. It revealed several weaknesses in the PFM system attributed to years of civil war. Notable areas of weaknesses included budget formulation and execution, financial reporting, oversight systems as well as weak linkages between agreed policies, budgeting planning and execution. However since then, significant progress has been made in a number of areas, notably:

(a) A fully operational interim Financial Management Information System (FMIS) which generates standard quarterly budget execution reports and reports on poverty- reducing expenditure and/or HIPC expenditure execution; (b) The adoption and implementation of a new unified functional and economic budget classification system and a double-entry accounting system which has served to improve budget monitoring process while also addressing the weak treasury controls and thus the closing of government’s extra-budgetary accounts is successfully on track; and (c) The Audit Court (Cow des Compfes), established in 2004, has been an important step toward the strengthening of jurisdictional control over public financial management.

5. The GOB is committed to implementing additional reforms and is preparing an integrated medium-term reform action plan, on the basis of the recently completed (2008) joint government-Bank PEMFAR report, covering the legal framework, budget formulation, budget execution, public procurement, financial management and reporting, internal control and audit, external oversight, and control over the wage bill.

5 1

C. Risk assessment and mitigation

6. The following are necessary features of a strong financial management system:

(a)

(b)

The PCU should have an adequate number and mix of skilled and experienced financial management (FM) staff;

The internal control system should ensure the conduct of an orderly and efficient payment and procurement process, and proper recording and safeguarding of assets and resources;

(c) The integrated information system should support the PCU' s requests for funding and meet its reporting obligations to fund providers ;

(d) The system should be capable of providing financial data to measure performance when linked to the output of the project; and

(e) An independent, qualified auditor should regularly review the project's financial statements and internal controls.

7. The risk assessment and mitigation table below shows some of the key perceived risks to the project may face in achieving the intended project objectives and provides a basis for determining how management should address the identified risks using the mitigation measures outlined.

Table 11: Financial Management Risk Rating Summary

Risk

Inherent Risk

Country Level CFAA conducted in 2004 revealed weaknesses in PFM systems attributed to years of civil war. CPIA assessment show a high FM risk.

Entity Level The capacity in government institutions to carry out the oversight remains weak, a fact exacerbated by the unclear roles and responsibilities for each one and the possibility of resulting duplicated functions: Burundi has a generally weak audit environment without a proper regulatory mechanism

'reliminaryhesidua Risk

Rating

WS

SA4

Risk Mitigation measures

The government has embarked on a revision of its legal and regulatory framework for budgetary and financial management in order to update it and strengthen compliance with the principles of efficiency and effectiveness of public financial management.

~ ~

The creation of an Audit Court (Cow des Cornptes) in 2004 was an important step toward the strengthening the jurisdictional control over public finance management.

Condition of Vegotiations,

Board or Effectiveness

(y/N?)

Risk

Project Level Weak PCU capacity and related interna controls may affect the project financia management.

Control Risk Budgeting The existing budgeting procedures a described in the Administrative Budgeting, Accounting and Financia Procedures Manual are not suitable fo the project. Accounting The accounting procedures being used b the PCU may not respond to thl requirements of the new project.

Internal Control The existing internal controls procedure manual as described in th Administrative, Budgeting, Accountin, and Financial Procedures Manual may no be suitable for the new project.

PCU does not have an internal audj function.

Peliminary/residua, Risk

Rating

ML

MA,

MA,

ML


PCU’s core accounting, financial reporting and auditing are satisfactory in the current projects. Involvement of few sectors, less spending units and previous experience in bank financed projects keeps the risk to manageable levels.

The specific budgeting arrangements have been well documented in the updatednew procedures manual developed under PPF

A project specific Financial Management Manual has been developed and has been reviewed, and will be updated and approved by IDA to take into account the specificities of the project as implementation is being undertaken.

The specific internal control arrangements have been well documented in the updatednew procedures manual developed under PPF

The project internal controls will include all the means by which the implementing unit will ensure that its operations are carried out efficiently and effectively and that appropriate segregation of duties exists. The PCU will be canying out interim audit to cover up the absence of the internal audit function

7ondition of ?egotiations, Board or

vfectiveness (r/N?)

53

Risk

Funds Flow Even though the PCU personnel have sufficient experience in Funds flow management from experience in implementing World Bank projects, there may be delay in submitting WA

There may be a risk of mixing funds for different projects .

Risk Rating

LIL

LIL There may be financial reporting dela even though the project has adequat

complying with IDA requirements as th

Financial Reporting

experience in preparation of IF

PCU has still a running project.

Auditing Burundi has a weak audit environment and the capacity of the audit sector to follow acceptable International Auditing Standards is low.

S / M

Overall Risk Rating I S/M


A segregated Designated Account will be opened at project effectiveness denominated in US dollars which will be opened under terms and conditions acceptable to IDA. The accounting software that 'is being used is designed to account for multiple projects.

One accounting unit will be assigned to this new project and focus on the financial reporting of the project. IFR formats will be agreed with the PCU during negotiation

PCU will recruit independent external auditors acceptable to IDA whose terms of reference will include the need to follow ISA.

Condition of Vegotiations,

Board or Yffectiveness

(WN?)

Whin three nonths after ffectiveness

H: High; S: Substantial; M: Moderate; L: Low

(i) Strengths and weaknesses of the Financial Management System

8. The PCU's financial management is strengthened by the following salient features:

e PCU has a strong experience in managing IDA-financed projects together with an experienced work force.

9. The project financial management may be weakened by the following:

e The financial management manual may not be adequate for implementation purposes but will be upgraded to meet specific project needs.

54

(Ii) Financial management action plan

10. management arrangements and the dates that they are due for completion.

The action plan below indicates the actions taken by the PCU to strengthen its financial

Table 12: Financial management action plan

ency will be opened

after effectiveness

D. Institutional and implementing arrangements (see Annex 6)

1 1. project execution, coordinate the project implementation by:

The PCU will be responsible for the overall implementation of project. It will, during

(a) (b) (c) (d) Handling project procurement matters.

Project monitoring, reporting, and evaluation; Contractual relationships with IDA and other co-financiers; Financial management and record keeping, accounts, and disbursements; and

E. Budgeting arrangements

12. The budgeting. arrangements have been well documented in the updated procedures manual. The Administration and Finance Officer has sufficient experience drawn from hisher previous engagement with an IDA-financed project and will take the lead role in budgetary preparation. Budget analysis will be conducted to ensure budget variances are addressed in an adequate and timely manner.

13. The budget format will be based on project components and will be integrated into the project accounting system. The budget will be used as a management tool. Expenditures will be authorized in accordance with agreed budgets.

14. The specialists of the different components of the project will first discuss the budget with the technical focal points for activities to be done. After this discussion, the PCU will consolidate the budget and submit it to the steering committee for analysis and approval. The approved budget will then be submitted to IDA for no objection.

55

F. Accounting arrangements

(i) Books of Accounts

15. Adequate books of accounts which include ledgers, journals, and the various registers, will be maintained by the PCU. The accounting system described in the updated Financial Management Manual will be used to track, record, analyze, and summarize the project’s financial transactions. The PCU accounts will be prepared on a cash basis in accordance International Public Sector Accounting Standards, the grant agreement, and the laws and regulations in Burundi. The accounting system will allow for the proper recording of project’s financial transactions, including the allocation of expenditures in accordance with its components, disbursement categories, and sources of funds. Appropriate controls over the preparation and approval of transactions should be put in place to ensure that all transactions are correctly made, recorded, and reported upon. In this regard, the PCU will ensure proper books of account are maintained, a revised and updated Chart of Accounts (CoA) has been adopted.

(ii) Staffing arrangements

16. The overall responsibility over the PCU’s financial matters will remain with the Administration and Finances Officer assisted by Chief Accountant, an Accountant and the Assistant Accountant. The Accountant will be responsible for the preparation of payments to be reviewed by the Chief Accountant and approved by the Administration and Finances Officer and the Project Coordinator. The Administration and Finances Officer will oversee the preparation and submission of IFR and audited financial statements to IDA.

17. The accounts department has currently four staff members with clear job descriptions for each one of them: an Administration and Finance Officer, a Chief Accountant, an Accountant and an Assistant Accountant. The account department is sufficiently staffed and there will not be any need for an additional accountant.

(iii) Information systems

18. The PCU is currently using an integrated information management system TOMATE to maintain its books of accounts. The software is designed to account for multiple projects. Therefore, it is anticipated that the same software will be used to maintain its books of accounts under the new project. Therefore, this existing computerized accounting system will have to be adapted to the new project within three months after effectiveness date.

G. Financial monitoring and reporting

19. The PCU, under the current bank financed project prepares Unaudited Interim Financial Reports in the format complying with World Bank guidelines on the preparation of IFRs for Borrowers and submitted on a quarterly basis to the World Bank for review. This will be adopted for the new project to ensure that they provide quality and timely information to the PCU, and various stakeholders monitoring the project performance. A separate IFR for this project will be submitted to the World Bank within 45 days after the end of the quarter being reported will comprise of:

56

(a) (b) (c) (d) statements will be disclosed in the report.

A designated account activity statement; A sources and uses of funds statement; A statement of uses of funds by project activity/component; and The accounting policies and procedures adopted and notes to the financial

H. Audit arrangements

20. The PCU under current bank financed project provided satisfactory audits to IDA and in compliance with the provisions of the grant agreement. The project annual financial statements will be audited by independent external auditors recruited under terms and conditions acceptable to IDA. A separate annual audit report including a management report will be submitted to IDA within six months following the end of each financial year. The auditors will provide a single opinion on the project financial statements, the Designated Account and statements of expenditures. They will be required to carry out a comprehensive review of the internal control procedures and provide a management report outlining any recommendations for their improvement. Terms of Reference containing the audit scope to ensure the efficient use of funds for intended purpose and stating whether the audit has been conducted in accordance with ISA was agreed with IDA at appraisal and will be given to the appointed auditors.

I. Internal control and internal audit arrangements

21. The project internal controls will be documented in updated Project Implementation Manual complemented with a Financial Management Manual. The accounting systems, policies and procedures employed by the PCU in accounting for and managing project finds will thus be documented in the updated PIM and Financial Management Manual (FMM). The accounting policies will specify the accounting treatment for the PCU’s financial transactions and will constitute basic principles designed to ensure that the accounting records are complete, relevant and reliable and that accounting practices are followed consistently. The revised PIM and FMM will be used by: (i) IDA to assess the acceptability of the PCU’s accounting, reporting and Internal Control Systems, (ii) staff as a reference manual, and (iii) by the auditors to assess its accounting systems and controls and in designing specific project audit procedures.

22. Specific procedures will be documented for budgeting, accounting systems, internal controls, funds flow, reporting and auditing, depicting document and transaction flows, the appropriate filing of project documents, management approvals and organizational duties and responsibilities. The accounting system will consist of the methods and records established to identify, assemble, analyze, classify, record and report the transactions of a project, and to maintain accountability for the related assets and liabilities. The aspects to be covered in the updated manuals will include: (i) flow of funds, (ii) financial and accounting policies, (iii) accounting system (including centers for maintenance of accounting records, CoA, formats of books and records, accounting and financial procedures), (iv) procedures for authorization of transactions, budgeting, and financial forecasting, (v) financial reporting (including formats of reports, linkages with CoA and procedures for reviewing financial information), (vi) auditing arrangements, and (vii) aspects of human resources.

57

23. The PCU does not have an Internal Auditor to exercise an oversight function, review the financial monitoring reports and carry out regular internal audit reviews. However, the project internal controls will include all the means by which the implementing unit will ensure that its operations are carried out efficiently and effectively.

566,450

43,000,000

J. Flow of funds arrangements

Amount payable pursuant to section 2.07 of the General Conditions

24. The table below sets out the expenditure categories to be financed out of the Grant proceeds. This table recognizes the prevailing Country Financing Parameters for Burundi in setting out the financing levels, which show that IDA will finance 100 percent of eligible expenditures, taxes included.

Table 13: Expenditure categories to be financed out of grant proceeds ~~ ~

Category

(1) Goods, works and consultants’ services for Subprojects under component 1

(2) Goods, works and consultants’ services, trainings, workshops, audits and operating costs under the Project (other than goods and services for matching grants under component 1)

(3) Refund of Preparation Advance

TOTALAMOUNT

Financing Allocated (expressed in US$)

26,929.400

Percentage of Expenditures to be

Financed (inclusive of Taxes)

100%

25. Disbursement arrangements and methods. Disbursements from IDA will be transaction based. Upon grant effectiveness, an initial advance up to the ceiling of the Designated Account (“Advance’’ method) will be disbursed from the proceeds of the IDA grant and will be deposited into a PCU Designated Account (DA) to expedite its implementation. The PCU will submit Withdrawal Applications (at least monthly) supported by statements of expenditures (SOE) or records, as the case may be, to report actual eligible expenditures paid from the DAY and at the same time may request a new advance up to the ceiling amount. The PCU may also submit requests for reimbursement of eligible project expenditures which the recipient has pre- financed from its own resources. The PCU will also use the direct payment method, whereby payments may be made directly to third parties (such as a supplier, contractor, and consultant) at the Recipient’s request. Another acceptable method of withdrawing from the proceeds of the IDA grant is the special commitment method. Under this method, payments may be made to

58

third parties for eligible expenditures under special commitment entered into, in writing, at the recipient’s request and on terms and conditions agreed between IDA .and the Recipient. The minimum value of applications for reimbursement, direct payment and special commitment is 20 percent of the DA ceiling.

26. The DA ceiling is set at US$2.5 million, calculated to represent approximately 4 months of eligible project expenditures. Monthly bank reconciliations will be prepared by the accountant, reviewed by the chief accountant, and approved by the administration and finances officer. PCU payments of project transactions regardless of the currency will be done through the bank and converted at the day’s mean exchange rate.

27. Supporting documentation and use of Statements of Expenditures. Statements of Expenditures for applications to request reimbursements or to report eligible expenditures paid from the DA should be submitted with records evidencing eligible expenditures (such as copies of receipts or supplier invoices) for payments against contracts of (i) works valued at US$200,000 or more, (ii) goods valued at US$150,000 or more, (iii) services of consulting firms valued at US$lOO,OOO or more, and (iv) services of individual consultants valued at US$50,000 or more.

28. with the Country Financing Parameters (CFPs) for Burundi.

The project will finance 100 percent of eligible expenditures inclusive of taxes consistent

29. The PCU will open a DA for this project and the account signatories will be updated as necessary in the Accounting and Financial Management Procedures Manual. Authorized signatories will be designated in accordance with their positions. The current signatories of PRASAB include the project coordinator and the administration and finances officer.

59

Figure 2: Funds Flow chart

IDA

the Commercial Bank denominated in US$

K. Supervision plan

30. Since the current overall FM risk rating of the project is moderate, a minimum

Commercial Bank denominated in BIF

f one n- site supervision visit will be conducted each year, which is commensurate with the risk levels. The objective of the supervision missions will be to ensure that strong financial management systems are maintained for the Grant throughout the life of the project. Reviews will be carried out regularly to ensure that expenditures incurred by the PCU remain eligible for IDA funding.

60

Annex 8: Procurement Arrangements BURUNDI: Agro-Pastoral Productivity and Markets Development Project

A. General

1. Procurement for the proposed project will be carried out in accordance with the World Bank’s Guidelines: Procurement under IBRD Loans and IDA Credits (published in May 2004; and revised October 2006), Guidelines: Selection and Employment of Consultants by World Bank Borrowers (Published in May 2004; and revised October 2006), and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general terms below. This annex presents, for each contract to be financed by the grant, the different procurement methods or consultant selection methods, the need for pre- qualification, estimated costs, prior review requirements, and time frame as agreed between the Recipient and the Bank in the procurement plan. The procurement plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

2. Procurement of works. Works procured under this grant will include marshland rehabilitations as well as earth rural roads linking these marshlands to the communal road network; collective infrastructures for post-harvest, storage, processing, and marketing of agriculture and livestock products; and small office rehabilitations. The procurement will be done using the Bank’s Standard Bidding Documents (SBD) for all International Competitive Bidding (ICB) and National SBD agreed with or satisfactory to the Bank for National Competitive Bidding (NCB).

3. Contracts estimated to cost US$3,000,000 equivalent and above will be awarded through International Competitive Bidding (ICB). Contracts estimated to cost more than US$l 00,000 equivalent but less than US$3,000,000 equivalent will be awarded through National Competitive Bidding (NCB) in accordance with the provisions of paragraphs 3.3 and 3.4 of the above- mentioned Guidelines for Procurement under IBRD Loans and IDA Credits. Small works estimated to cost less than US$ 100,000 equivalent will be procured on the basis of quotations obtained from at least three qualified contractors in response to a written invitation. The written invitation will include a description of the works, basic technical specifications, completion date, and if necessary the plan of the works. The Project Implementation Manual (PIM) will furnish the standard bidding document to be used for NCB and shopping procedures.

4. Procurement of goods. Goods procured under this grant will include vehicles, motorcycles, office supplies and furniture, laboratory supplies and equipment. The procurement will be done using the Bank’s SBD for all ICB and National SBD agreed with or satisfactory to the Bank for NCB. The above-mentioned goods will be procured using a combination of the following procedures: (i) International Competitive Bidding (ICB) for contracts estimated to cost more than the equivalent of US$500,000; (ii) National Competitive Bidding (NCB) for contracts of value amount of more than the equivalent of US$50,000 but less than US$500,000; and (iii) shopping for contracts estimated to cost less than the equivalent of US$50,000. In situations and circumstances that are in compliance with the provisions of paragraph 3.6 of the Guidelines for

61

Procurement, direct contracting may be used with Bank's prior review. United Nations Agencies may also be considered with the Bank prior approval.

5. Procurement of non-consulting services. Non-consulting services under this grant shall consist of office maintenance, operation and maintenance costs for vehicles and equipment, rental expenses, communication and telephone costs and transport. Non-consulting services will be procured following shopping procedures as described in the PIM.

6. Procurement for sub-project implementation. Under sub-component 1.1, the project will finance a broad spectrum of activities to be undertaken as part of investment sub-projects. It is not possible to determine the exact mix of goods, works and services to be procured under this component due to their demand-driven nature. Funding for these activities will be in the form of matching grants. Therefore, the types of activities to be financed and their procurement details will depend on the needs identified following the process defined in the PIM. The goods, works and services will be procured following simplified procurement procedures as described in the PIM for community-based projects. Under the PIM the main procurement methods to be used would be the following: (i) Shopping for goods and works where quotations are solicited from at least three qualified suppliers or contractors on basis of simplified documents ; (ii) Local bidding for goods and works which is an open competition similar to NCB apart from that the invitation for bids is advertised using radio, local ( instead of national ) newspapers or through posting notices at strategic places in the community, (iii) community force account where the communities implement themselves the subproject using their own resource and (iv) Direct contracting. For services the selection methods to be used are the following: (i) Individual consultants; (ii) consultants qualifications and (iii) single source selection for the selection of individual consultants and firms. All the above mentioned selection method will be applied as spelled out in the Bank's consultant guidelines. The PIM will describe the details in a clear and simple language that be easily understood by the targeted users.

7. Selection of consultants. Consultants' services required will cover consultancies for technical studies and audits, technical assistance, private service providers, and training for capacity building and financial audits. Contracts estimated to cost the equivalent of US$200,000 or more, will be procured through Quality-and Cost-Based Selection (QCBS). The contracts for services estimated to cost less than the equivalent of US$200,000 per contract may be procured under contracts based on Consultants' Qualifications in accordance with the provisions of paragraphs 3.1 and 3.7 of the Consultant Guidelines.

8. Financial and technical audit estimated to cost less than the equivalent of US$lOO,OOO may be procured under Least Cost Selection (LCS) in accordance with the provisions of 3.1 and 3.6 of the Consultant Guidelines. Consultants for services meeting the requirements of section V of the Consultant Guidelines may be selected under the provisions for the Selection of Individual Consultants (in essence, through the comparison of the curriculum vitae of at least three qualified individuals).

9. 3.9-3.12 of the Consultant Guidelines.

Single Source Selection (SSS) may be used exceptionally in accordance with paragraphs

62

10. To ensure that priority is given to the identification of suitable and qualified national consultants, shortlists of consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

11. The advertisement for all consultant services estimated to cost the equivalent value of US$200,000 or more will be done in UNDB online and DGMarket as well as in local newspapers in respect of clause 2.5 of the Guidelines for the Selection and Employment of Consultants.

12. Training, workshops, conference attendance, and study tours will be carried out on the basis of approved annual work programs that will identify the general framework of training or similar activities for the year, including the nature of traininghtudy tours/workshops, number of participants, and estimated cost.

13. Operating costs are the incremental expenses incurred on account of project implementation, consisting of reasonable expenditures for office supplies, vehicle operation and maintenance, communication and insurance costs, banking charges, rental expenses, office and office equipment maintenance, utilities, document duplicatiodprinting, consumables, travel cost and per diem for project staff for travel linked to the implementation of the project, and salaries of contractual staff for the project, but excluding salaries of officials of the Recipient’s civil service.

B. Assessment of the agency’s capacity to implement procurement

An assessment of the capacity of the implementing agency to implement procurement actions for the project was carried out during pre-appraisal in December 2009 and completed in February 20 10 by Melance Ndikumasabo, Country Office Procurement Specialist, with Sylvain Rambeloson, Senior Procurement Specialist. The assessment reviewed the organizational structure for implementing the project and the interactions between project staff responsible for procurement and the Ministry’s relevant central unit for administration and finance. The assessment has been conducted for PRASAB which will become, as agreed with the MINAGRAIE, the PCU for the new project. The PCU will be responsible for: (i) selecting and recruiting consultants in charge of technical studies and technical assistance, (ii) managing bidding process and awarding contracts for goods, (iii) supervising quality of studies and supervising contracts of goods, (iv) approving invoices, and (v) receptions of goods and services. The existing PCU has conducted successfully procurement activities for PRASAB. Technical staff from the Ministry of Agriculture will be solicited to participate in the technical evaluation. The experience acquired and lessons learned from the six years of PRASAB procurement implementation will be capitalized. However, some key issues and risks concerning procurement for implementation of the proposed project have been identified and detailed in the table below with corrective measures as agreed with MINAGRIE.

63

Table 14: Project coordination unit assessment

Identified Risks Weaknesses in bidding documents, RFPs, and selection of consultants.

Inadequate filing procedures for maintaining archives on two separate projects

Salary grid not harmonized, creating potentially conflictive work environment. New project procurement specialist recruited for PRASAB but waiting for Bank no objection to be hired.

Bid evaluation report approval and contract award mechanism not appropriate.

Project Implementation Manual not ready.

Risk Mitigation Measures Identify every year in the annual program activities requiring specific action in the preparation of bidding documents and RFPs. Take into account recommendations raised by annual post procurement reviews. Implement knowledge on archiving following Bank’s filing manual. Maintain separate files for new and former project. World Bank supervision to ensure filing procedures implemented. Invite the MOF to harmonize salary grid for staff working within projects. Submission of documentation of newly recruited procurement officer (PRASAB) for Bank’s review and

consulted before the Coordinator makes the final decision for attribution. Technical staff from MINAGRIE will be solicited to participate in the technical evaliation. Preparation of a PIM with adequate procurement processing and standard bidding documents for project use.

Date During supervision mission

Expected for project effectiveness

First supervision mission

When dealing with new contract and contract renewal

Completed on March 22, 2010

To be part of the PIM

Before effectiveness

14.

C. Procurement plan

The overall project risk for procurement is rated high.

Entity in Charge of Implementation

World Bank and PCU- PRODEMA

PCU-PRODEMA

World Bank

MOF - PCU- PRODEMA

PCU-PRODEMA

PCU

PCU-World Bank

15. The Borrower, at appraisal, developed a procurement plan for project implementation that provides the basis for specifying the required procurement methods. This plan has been agreed between the Recipient and the project team on March 22, 2010, and is available at

64

PRASAB office, Boulevard du ler Novembre, Immeuble OWE DU GOLF. It will also be available in the project’s database and on the Bank’s external website. The procurement plan will be updated in agreement with the project team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

1

Ref. No.

1-1.2.1

16. The demand-driven nature of sub-projects to be implemented by NGOs, civil society organizations, private sector entities, producer organizations, and local communities makes it difficult to finalize a procurement plan at this stage. However, the appraisal document of each approved sub-project will include a procurement schedule for completing the sub-project.

2 3 4 5 6 7 8 9

Contract Estimated Procurement P- Domestic Review Expected Comments (Description) Cost Method Q Prefer- by Bank Bid-Opening

ence (Prior I Date (yeslno) Post)

Vehicles 500,000 DC No No Yes July 20,2010 UNOPS

D. Frequency of procurement supervision

1 2 3 4

Ref. No. Description of Estimated Selection Assignment cost Method

Multiple Renewal of ’ sss- locally recruited INDIVIDUAL staff contract CONSULTANT

providers FirmsMGOs I11 I 1.2.1 Field Service 509,000 SSS-

17. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended annual supervision missions to visit the field to carry out post review of procurement actions.

5 6 7

Review Expected Comments by Bank Proposals (Prior / Submission Post) Date Yes Aug. 2010 PRASAB staff

Yes Nov.20 10 FirmsMGOs operating with

E. Details of the procurement arrangements involving international competition

I11 1.3.1 I UpdateorIFMS I 16,000 I SSS-

1. Goods, works, and non-consulting services

Yes I Jan. 2011 I Tompro

(b) for works per contract and all direct contracting will be subject to prior review by the Bank.

ICB contracts estimated to cost above US$500,000 for goods and US$3,000,000

2. Consulting services

I software

65

(b) Consultancy services estimated to cost above US$200,000 equivalent per contract for firms and US$lOO,OOO for individuals and all contracts awarded on a single source basis (SSS) will be subject to prior review by the Bank.

(c) Shortlists composed entirely of national consultants: Shortlists of consultants for services estimated to cost less than US$lOO,OOO equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

66

Annex 9: Economic and Financial Analysis BURUNDI: Agro-Pastoral Productivity and Markets Development Project

A Conceptual framework for the economic and financial analysis

1. The project will cover the 10 rural provinces currently covered by PRASAB3’ and the coffee-producing provinces (to support the ongoing privatization of coffee-washing facilities in those provinces). The project will provide direct and indirect socio-economic benefits to populations in these provinces, thereby contributing to Burundi’s national socio-economic welfare. As part of project preparation, an attempt has been made to measure some of the direct benefits expected from the project by comparing scenarios “with” and “without” the project.

2. Target crop and livestock enterprises (value chains). The project will target the following cropping and livestock enterprises: marshland (irrigated) rice, coffee, bananas, and milk (first-priority enterprises) and vegetables, tea, potatoes, beans, cassava, h i t , and meat (second-priority enterprises). Smallholders are familiar with these enterprises, which are an integral part of their farming systems. The analysis focuses on the first-priority enterprises. Since the project is also expected to have a positive impact on second-priority enterprises, either directly or indirectly (for example, through improved soil fertility and market access), project benefits are likely to be significantly underestimated in the present analysis.

3. Direct project benefits. Direct project benefits are estimated for activities corresponding to sub-component 1.1 (investment sub-projects) and component 2 (irrigation development and feeder road rehabilitation). For sub-component 1.2 (capacity building, institutional support, and facilitation of access to market), no cost-benefit analysis has been prepared, because benefits are hard to quantify. Given that the investments for sub-component 1.1 are to be demand-driven, the type and size of sub-projects cannot be known beforehand, and the economic and financial analysis cannot be based on a pre-set portfolio of sub-projects. Rather, the analysis is based on the typology of sub-projects expected to be implemented, as a proxy for actual investments. Although illustrative, the analysis conforms as closely as possible to real conditions, as it considers model sub-projects calibrated to agricultural systems prevailing in project areas, including the sub-proj ects supported by PRASAB.

4. The “without” and “with” project situations. In the without-project situation, producers use low-yielding traditional seed put aside after earlier cropping seasons or bought on the market before the current season. Their animals are local breeds (such as the ankol6 breed) and produce minimal milk and meat. Farmers use some manure but virtually no chemical fertilizer on their crops, except on coffee and tea, and no feed supplements for animals. They have only manual implements that typically are outdated and in need of replacement. They get little or no outside advisory support for cropping, post-harvest storage, processing, or marketing. Farmers typically intercrop, which is a practice well adapted to low-input agriculture. In the with-project situation, producers gain access to package of improved production technology (high-yielding seed, improved animals, chemical inputs, feed supplements, good agricultural tools, etc). They are provided with advisory services to apply the technical packages, especially

35 Burundi has 16 rural provinces and 1 urban province corresponding to the capital city, Bujumbura.

67

in the case of improved production and soil fertility management practices. They also get access to post-harvest technology (drying areas, storage facilities, and so on) and processing facilities that add value to their products, as well as marketing advice that improves their knowledge of markets, increases their negotiating power, and allows them to obtain better prices. Finally, they move toward more systematic sole-cropping practices that respond better to new production packages, The adoption of the improved packages is expected to markedly increase yields for individual crops (from 62 percent for marshland rice to 78 percent for bananas and 96 percent for coffee). Milk production is expected to increase almost threefold (Table 15).

Without Project

Table 15: Yields for crop and livestock enterprises

Increase With Project

I ~~~

I Yield

I l % l

5. Benefit streams. Project activities are expected to generate four main benefit streams: (i) increased value of production generated by production sub-projects on hillsides and plateaus, and in irrigated marshlands rehabilitated and developed under the project; (ii) returns to investments fiom sub-proj ects concerning small commercial infrastructure and processing facilities, as well as investments in access roads linking irrigated marshlands to the communal network; (iii) returns to investments in soil erosion and conservation on watersheds surrounding irrigated areas (through sustainable land management technologies); and (iv) benefits from capacity building for farmers’ groups and cooperatives, and other organizations along the value chain. These benefit streams lend themselves more or less readily to quantification. For the economic and financial analysis, the returns were fully estimated for benefit stream (i). They were partially captured for benefit stream (ii) through production volumes, which account for the reduction in post-harvest losses, and through the prices used, which incorporate the increased value-added generated by investments in storage, processing, and marketing fa~i l i t i es .~~ Benefits were not computed for category (iii) and (iv). These benefits are extremely positive and therefore are expected to substantially enhance overall project returns.

6. Economic and financial analysis. This analysis was carried out at the micro level (crop and livestock enterprise^)^' and then aggregated to project level to derive overall measures of project worth. For the first benefit stream, profitability measures (gross margin and return to family labor) were calculated independently for the project’s first-priority crop and milk enterprises. To derive overall returns, the benefit streams from individual enterprises were

36 These investments could concern, for example, grain drying areas, storage facilities, grain processing facilities, milk collection centers, and cold storage and marketing facilities. As noted, the nature and scale of these investments will be demand-driven, so the benefit streams cannot be estimated based on a pre-set portfolio. 37 In this analysis, crop enterprises are equated to production sub-projects funded by the project as part of sub- component 1.1.

68

aggregated using the number of sub-projects expected to be generated during project implementation. The total benefit streams were compared to project costs to derive the net present value (NPV) and compute the project financial and economic internal rates of return (IRRS).

7. Price data for 2004-08 were used for the baseline analysis. During this period, no major policy distortions affected the prices of inputs or outputs, so financial prices and economic prices for tradable goods were essentially identical following correction for transfers and taxes. Trade barriers with major trading partners (Uganda, Rwanda, and Tanzania) are now negligible following the recent accession of Burundi to the East Africa Community Customs Union, and exchange rate distortions are minimal. With regard to factors of production, the shadow price of unpaid family labor was assigned a value of FBu 1,000 per day for the economic analysis, below the cost of unskilled hired labor used in agricultural production. The use of a shadow price for the economic analysis was considered appropriate in view of the limited alternative employment opportunities for casual labor in rural areas. For the financial analysis, the cost of family labor was valued at the “reservation” wage rate. This wage rate was assumed to be equal to the shadow price. Investment costs and technical parameters used for the analysis (quantities of grain dried and stored, yield losses avoided, price effects) were based on PRASAB’s experience.

B. Gross margin and remuneration of family labor

8. The gross margin was computed for individual crop and livestock enterprises (or sub- p r o j e c t ~ ) ~ ~ (Table 16) based on estimated expenditures and revenues. In the with-project situation, compared to the initial situation, all crop enterprise budgets show a substantial increase in gross margin. For the three priority crop enterprises, the increase in gross margin is 97 percent for bananas, 98 percent for rice, and 162 percent for coffee. For the milk enterprises the increase is almost fourfold.

9. Total labor requirements were estimated for all crop enterprises (based on the individual requirements for each production task, such as plowing, seeding, weeding, harvesting, and feeding and milking cows). Casual labor (hired) was deducted from this total to get an estimate of family labor spent on the various tasks. The division of the gross margin per total family labor days applied to these tasks in turn made it possible to estimate the remuneration per family labor day (Table 16). In the with-project situation, the remuneration of family labor increases substantially. The increase for the three priority crop enterprises supported by the project is 55 percent for marshland rice, 58 percent for bananas, and 68 percent for coffee. For the milk enterprise, the remuneration of family labor increases by 89 percent. Even for coffee and milk, the enterprises for which the remuneration of family labor is lowest (FBu 4,124 and FBu 4,136, respectively), the remuneration remains far higher than the farmer “reservation” wage (estimated at FBu 1,000). These results are sufficient to entice producers to adopt the new technologies.

38 The sub-projects financed under the project will each concern one specific priority crop or livestock enterprise. Hence the enterprise budgets are used here as a proxy to assess sub-project viability.

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Table 16: Gross margin and remuneration of family labor, per crop and livestock enterprise

Enterprise

Ban an as

Gross Margin Remuneration of Family Labor Without With Project Increase Without With Project Increase project Project

000 FBu Iyrlha % FBu /day YO 1,790 3,527 97 11,191 17,633 58

Rice Coffee

I Milk

510 1,010 98 2,108 4,124 68 495 1,296 162 3,096 4,800 55

I 130 I 630 I 385 I 2,301 I 4,366 ~ 1 89 I

C. Overall project profitability measures

1 0. Overall, proj ect-supported investments will generate substantial financial benefits for rural households in areas served by the project, as well-as substantial economic benefits for Burundi’s society as a whole. Only benefits from increased production generated by sub-project investments have been quantified (these benefits capture indirectly the impact of infrastructure sub-projects and access roads to irrigated marshlands, through the decrease in production losses and through price gains). The benefits derived from building capacity of producers and other actors targeted at various levels of the value chains were not included. These benefits are important, especially for the poorest, because the project is expected to equip them to produce and market more efficiently and in turn improve their economic status. This point applies particularly to women, given that 45 percent of the sub-project beneficiaries are expected to be women.

1 1. The results of the economic analysis at the overall project level show that the project will generate substantial additional production. A share of this producgion will ameliorate food insecurity in rural households, and another share will generate monetary revenues for these households to meet their minimal recurrent cash needs and investment requirements. Based on the hypotheses retained in the enterprise budgets, the additional production in the project area will be roughly 61,000 tons of fresh bananas, 12,300 tons of paddy, and 3,000 tons of coffee (cherries) from the crop enterprises as well as 35 million litres of milk, 400,000 tons of manure and 1,000 tons of meat from the livestock enterprises. These quantities are limited compared to national and regional production, so they will be absorbed in both national and external markets without causing any glut.

12. Details on financial and economic profitability measures for the project are in Table 17. The financial IRR is estimated at 28.2 percent overall for the project, with the following breakdown for each typical farm situation: (i) 45.6 percent for the production system based on rice (plains and depressions), (ii) 15.14 percent for the production system based on tea and potatoes (highlands), and (iii) 17.42 percent for the production system based on marshland rice and coffee (central plateaus). The financial NPV at an opportunity cost of capital of 12 percent is projected to reach FBu 33.7 billion, or US$27.4 million. Total economic benefits, at FBu 10.4 billion or US$8.4 million in NPV, are expected to generate an economic rate of return of 21.2 percent.

70

13. The sensitivity analysis shows that projected benefits are robust as far as investment costs are concerned, but they are quite sensitive to prices and depend critically on the yield gains that are achieved. This finding implies that the project will have to provide close support for adoption of the new technology embodied in the sub-projects and ensure that farmers adhere strictly to technology prescriptions. The project will also have to ensure that support services are readily available to deliver inputs. The sensitivity to price means that every effort will have to be made as well to facilitate production collection, processing, and marketing as well as to facilitate partnerships between farmers and marketers.

IRR (%) NPV (12%) in FBu billion

Table 17: Internal rate of return (IRR), net present value (NPV), and sensitivity analysis

21.2 28.2 130.8 177.1

I I Financial Analysis I Economic Analysis I

20% increase in project costs 30% increase in Droiect costs

16.4 22.0 14.6 19.7

I Sensitivity analysis (IRR) I

30% decrease in prices 10% decrease in vields

I 10% increase in project costs I 18.6 I 24.7 I

4.6 7.8 13.4 18.2

30% decrease in yields

1 10% decrease in prices I 11.4 I 16.0 I

6.8 10.3

I 20% decrease in prices I 9.9 I 14.0 1

I 20% decrease in yields I 9.2 ' I 13.1 I

71

Annex 10: Safeguard Policy Issues BURUNDI: Agro-Pastoral Productivity and Markets Development Project

1. The project will include significant activities that may have an adverse environmental and social impact, including feeder road rehabilitation, small-scale irrigation development, and market infrastructure sub-projects. To ensure that the proposed project is implemented in an environmentally and socially sustainable way, six safeguard policies have been triggered: Environmental Assessment (OPBP 4.0 1); Pest Management (OP 4.09); Involuntary Resettlement (OPBP 4.1 1); Indigenous People (OPBP 4.10); Safety of Dams (OPBP 4.37); and Projects on International Waterways (OPBP 7.50). The project has been assigned Environmental Category B. The safeguard instruments prepared are an Environmental and Social Impact Assessment, which has several annexes: the Environment and Social Management Framework (ESMF); the Safety of Dams; the Pesticide Management Plan (PMP), the Resettlement Policy Framework (RPF), and the Indigenous Peoples Development Plan (IPDP). Mitigation measures to be financed by the project have been identified and costed. The above-mentioned documents were disclosed in-country on December 24, 2009, and at the Bank’s InfoShop prior to appraisal on December 29,20 10.

OPBP 4.01 Environmental Assessment

2. The Recipient has prepared the appropriate instruments consistent with the requirements of OPBP 4.01 and B~u-undi’s environmental legislation: (i) the Environmental and Social Impact Assessment (ESIA) report, which provides an overview of the current constraints, opportunities, and potential environmental and social impacts due to activities in agricultural production, livestock production, the construction of market infrastructures, and small-scale irrigation; (ii) the Environmental and Social Management Framework (ESMF) for Future Sub-projects (Annex 1 of the ESIA report), because the precise locations and potential adverse localized environmental and social impacts of future sub-projects could not be identified and assessed prior to appraisal and implementation; (iii) the Safety Analysis for Small Dams (Annex 2 of the ESIA report), to ensure water availability for agricultural production; and (iv) the Pest Management Plan (PMP) (Annex 3 of the ESIA), given that the project will support increases in agricultural production that are likely to increase the use of pesticides, fungicides, or herbicides to reduce crop losses.

3. The ESIA report specifically identifies opportunities for revenue generation from increased crop and livestock production and price stabilization for established producer organizations. Adverse environmental and social impacts are likely to include waste generation as a result of crop production and processing. Relative to small-scale irrigation, the ESIA report discusses the positive and negative impacts of water management facilities such as small flood protection dams, irrigation and drainage networks, small dams, and other small water management works for use in the areas frequently experiencing droughts. While positive impacts are mostly related to the storage of water for additional agricultural production cycles and provision of water for livestock, negative impacts are likely to include siltation, shrouding due to malfunctioning small dams, and an increase in malaria due to increased water in the irrigation canals. As an example, to mitigate the impacts of malaria, the ESIA report recommends the use

72

of bed nets and the construction of irrigation canals with an appropriate slope to ensure continuous movement of water.

4. The ESMF describes the potential adverse environmental and social impacts (water, air, and soil pollution; loss of vegetation) due to the constructiodrehabilitation of market infrastructure (rural roads, storage facilities). The environmental and social screening process will enable sub-project implementers to (i) screen investments at the planning stage for potential adverse environmental and social impacts, including the presence of Batwa populations and the need for land acquisition by using the environmental and social screening form (Annex 1 of the ESMF); (ii) assign the appropriate environmental category to the sub-project as required under OP/BP 4.01; (iii) carry out the appropriate level of environmental measures (that is, the application of simple mitigation measures or the preparation of a separate ESIA report for the sub-project); (iv) arrange for the review and approval of the screening results and separate ESIA reports at the appropriate institutional levels; (v) carry out public consultations during the environmental and social screening, as well as during the preparation of the separate ESIA report; (vi) develop an environmental monitoring plan to ensure that the appropriate mitigation measures, as recommended in the screening form and/or the separate ESIA report, have been implemented; and (vii) prepare relevant environmental monitoring indicators to be followed as part of the project’s M&E program. In addition, the ESMF includes environmental guidelines for contractors (Annex 3 of the ESMF); a summary of the Bank’s safeguard policies (Annex 4 of the ESMF); generic environmental and social mitigation measures (Annex 2 of the ESMF); and generic Environmental Assessment terms of reference to be adapted to the requirements of each particular sub-project (Annex 3 of the ESMF). A Summary Environmental and Social Management Plan (ESMP) provides information on the potential adverse environmental and social impacts, mitigation measures, time horizons, and institutional arrangements for implementing the ESMP.

OP/BP 4.09 Pest Management

5 . OP/BP 4.09 has been triggered due to the planned increase in agricultural production which, in turn, is likely to increase the use of pesticides, herbicides, and/or insecticides. The Pest Mana ement Plan (PMP) for the proposed project describes: (i) common crop diseases and pest^'^ and current mitigation measures, such as the application of chemicals, the use of agricultural practices to reduce the impacts of pests and diseases, or a combination of the two measures; (ii) the negative social impacts (pesticide poisoning) likely to result from improper application techniques or lack of protective equipment. This impact is further aggravated by the difficulty of local clinics to quickly diagnose cases of pesticide poisoning, and the lack of laboratory facilities that could determine the level of pesticide poisoning; (iii) the negative environmental impacts, such as groundwater pollution and soil contamination, which are likely to be incurred during transport, storage, application, or unsafe disposal of agro-chemicals. The PMP also describes the best practices in the application of correct doses of pesticides, so that all project stakeholders will fully benefit from them. The Surveillance and Crop Disease Intervention Service of Burundi will be responsible for monitoring the country’s pest management activities and will assist with the implementation of the PMP as appropriate. Thus,

39 Depending on the type of disease, crop losses can range fiom 40 percent for sorghum to 40-60 percent for bananas and potentially 90 percent for cassava.

73

the PMP recommends that existing institutions such as the Crop Protection Department (DCpartement de la Protection des VegCtaux) and other technical services be strengthened through relevant training and cooperation with regional institutions such as COMESA, CEEAC, or EAC. Furthermore, laboratories should be equipped appropriately, and farmers as well as technical services should be trained appropriately.

OP/BP 4.37 Dam Safety Analysis

6. OP/BP 4.37 has been triggered because the proposed project will finance the constructionhehabilitation of small dams and other water management structures that will contribute to increased agricultural production. The consultant visited representative small dam sites in the provinces of Ngozi, Cankwo, Rutana, and Makamba and drew the following lessons: (i) it is important to determine at the planning stage whether the small dam will be constructed with bricks or consist of gabions, (ii) farmers need to be organized efficiently to ensure good maintenance and thus long-term sustainability of the water infrastructures, (iii) livestock need to be kept out of the agricultural areas to avoid soil compaction and destruction of the irrigation canals, (iv) drainage is needed to channel run-off water to prevent landslides; (v) technical and environmental studies must be undertaken prior to the decision to construct small dams and other water management structures, and (vi) there is a need to integrate watershed management, a critical factor for improving overall sustainable development The Directorate of Rural Infrastructure will monitor the proper management of the small dams and other water management infrastructures.

OP/BP 4.12 Involuntary ResettlementResettlement Policy Framework

7. Involuntary Resettlement (OP/BP 4.12) has been triggered as the civil works of the project may induce land acquisition. A Resettlement Policy Framework has been prepared and the Resettlement Action Plans (RAPS) will be prepared and implemented, prior to the commencement of civil works, including market and storage infrastructures. The cost for implementing the mitigations measures (except for the payment of compensation for land) will be covered by the Grant.

OP/BP 4.10 Indigenous Peoples

8. Project intervention areas involve vulnerable groups such as the Batwa. A comprehensive Indigenous Peoples Development Plan (IPDP) has been prepared to suggest appropriate ways of further integrating this vulnerable group, building upon the successful experience of PRASAB. The plan suggests scaling up PRASAB’s activities to reach Batwa communities not yet involved in the 10 provinces covered by the proposed project. The project intends to use the services of Unissons-Nous Pour La Promotion des Batwa (UNIPROBA) to identify and build upon the best practices and lessons learned during the implementation of previous IPDPs to enhance Batwa participation and livelihoods.

OP/BP 7.50 Projects on International Waterways

9. OPBP 7.50 has been triggered due to the project’s support for small-scale irrigation sub- projects and other water management structures. At the request of the government of Burundi, the Bank notified Burundi’s riparian neighbors (Sudan, Tanzania, Zambia, Kenya, Democratic

74

Republic of Congo, Rwanda, Egypt, Eritrea, Ethiopia, Angola, Central African Republic, and Congo) and the Nile Basin Initiative on October 28, 2009, requesting a response by November 30,2009. Uganda was notified on March 1 , 2010 with a deadline to respond on March 18,2010.

10. No riparian state had objected to the Project by the set deadline. The Bank received positive responses from the government of Egypt (November 21,2009), which confirmed its no objection to the project and stated that it looked forward to the project meeting its objectives and contributing to the welfare of the people of Burundi, and from Eritrea (November 20, 2009), which expressed its support of the implementation of the project with the Bank’s assistance. The government of the Central African Republic responded on December 3, 2009, expressing its support for the project, and suggesting the development of (i) an ESMF to identify and assess potential environmental and social impacts, (ii) a monitoring and evaluation system, (iii) clear environmental and social management measures and institutional responsibilities in this regard; and (iv) a capacity building and training program. The Bank responded to the Central African Republic on March 1, 2010 that its recommendations have been fully taken into account under the Bank’s social and environment safeguard policies, which are triggered by this Project. The Republic of Congo informed the Bank on December 17,2009, that the Bank’s notification letter had been forwarded on December 17, 2009, to the country’s responsible institution, namely CICOS. By March 18,20 10 no unfavourable response was received from the riparian countries.

11. forwarded to the Vice President of the Africa Region on March 30,2010 for approval.

A memorandum summarizing the outcome of the riparian notification process has been

Consultations with various stakeholders and project-affected groups and beneficiaries

12. The design of the proposed project was participatory at several levels: national, donor community, and regional, local government, and local community levels. The ESIA report was prepared in consultation with relevant stakeholders such as representatives of PRASAB, the Imbo Regional Development Association, MINAGRIE, the Ministry of Health, Ministry of Water, phytosanitary (pesticides) inspectors, technical centres at the national and provincial levels, POs, Federation of Coffee Producers, seed production centres, Catholic Relief Services (CRS), FA0 programs, ISABU, and vendors of agricultural inputs at the provincial level. The stakeholders expect improvements in their agricultural value chains, such as improved varieties and distribution of rice seed, diversification of milk products, availability of irrigation water, and improved planting material and seed to produce bananas and other crops throughout the year.

Mechanism to monitor the implementation of agreed mitigation plans

13. To ensure efficient implementation, the project will: (i) support relevant training for project implementation units, technical services, professional organizations, private producers, local administrations, and populations in the areas of environmental management, including the implementation of the ESMF, pest management, and safety of small dams; and (ii) arrange for the recruitment of a safeguard specialist, as needed, as a local long-term consultant (six-month renewable contract over a period of two years). This specialist will be responsible for supporting and coordinating environmental and social management activities with the Environmental Focal Points located in the project’s provincial technical service offices, such as the Directorate of Rural Roads, the Provincial Directorate for Agriculture and Livestock or the Directorate for Crop Protection (Direction de DCfense des VCgCtaux), and the Directorate of Agricultural Extension

75

(Direction de Vulgarisation Agricole), and supporting the PCU in the environmental and social screening of sub-projects as well as the preparation of separate ESIA reports for sub-projects, if necessary.

Safeguard Policies Triggered by the Project Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04)

14. Environmental monitoring will be the responsibility of local service providers selected among the NGOs, while the PCU-with support from the qualified environmental specialist (consultant)-will arrange for the environmental screening and environmental impact assessment of sub-projects.

Yes No

[XI El 1 1 [XI

Table 18: Agro-Pastoral Productivity and Markets Development Project

Pest Management (OPBP 4.09) Physical Cultural Resources (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10)

[XI [ I [ I [XI [XI [ I [XI 1 1

Forests (OPBP 4.36) Safety of Dams (OPBP 4.37) Projects in Disputed Areas (OPBP 7.60); Projects on International Waterways (OPBP 7.50)

[ I [XI [XI 1 1 [ I [XI [XI 1 1

* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas.

76

Annex 11: Project Preparation and Supervision BURUNDI: Agro-Pastoral Productivity and Markets Development Project

Planned Actual PCN review 07/02/2009 07/02/2009 Initial PID to PIC Initial ISDS to PIC Appraisal Negotiations Board/RVP approval 04/29/20 10 Planned date of effectiveness 08/0 1 /20 1 0 Planned date of mid-term review 02/28/20 13 Planned closing date 04/3 0/20 16

09/04/2009 09/03/2009 02/25/20 10 03/22/2010

Key institutions responsible for preparation of the project:

MINAGRIE (PRASAB team), ISABU

Bank staff and consultants who worked on the project included:

Name Title Unit

Soulemane Fofana Operations Officer AFTAR Christine Cornelius Program Coordinator AFTAR

Nicaise Bleoue Ehoue Sr. Agricultural Economist AFTAR

IJsbrand Harko de Jong Sr. Water Resources Specialist AFTWR Jean-Philippe Tre Sr. Agriculture Economist AFTAR Edeltraut Gilgan-Hunt Environmental Specialist AFTEN Cheikh A.T.Sagna Sr. Social Scientist AFTCS Paul-Jean Fen0 Environmental Specialist AFTEN

Sameena Dost Sr. Counsel LEGAF Nicolette DeWitt Lead Counsel LEGAF HClhne Bertaud Senior Counsel LEGAF Marie-Claudine Fundi Program Assistant AFTAR

Aurore Simbananiye Program Assistant AFMBI Christophe Ravry Sr. Agribusiness Specialist AFTAR Aurelien Serge Beko Poverty Economist AFTP3 Deo-Marcel Niyungeko Sr. Municipal Engineer AFTU Soumaila Amadou Irrigation Expert FAO/CP DCsirC Coquillat Consultant AFTAR Marc Moens Livestock Expert FAO/CP Jean Claude Balcet Consultant AFTAR Emmanuel Sinzohagera Financial Management Specialist AFTFM Donald Mphande Sr. Financial Management Specialist AFTFM Melance Ndikumasabo Procurement Specialist AFTPC

Vildan Verbeek-Demiraydin Sr. Economist (M&E) AFTRL

Elisabeth Mekonnen Program Assistant AFTAR

77

Sylvain Rambeloson Sr. Procurement Specialist AFTPC Aissatou Diallo Financial Officer CTRFC Willem Janssen Lead Agriculturist (peer reviewer) LCSAR Grahame Dixie Sr. Agriculturist (peer reviewer) SASDA Mathurin Gbetibouo Lead Agricultural Economist (peer reviewer) LCSAR

Dwede Tarpeh ST Temporary AFTAR Patrice Sade ET Temporary AFTAR

Bank funds expended to date on project preparation: 1. Bank resources: US$265,000 2. Trust funds: - 3. Total: US$265,000

Estimated Approval and Supervision costs: 1. Remaining costs to approval: - 2. Estimated annual supervision cost: US$150,000

78

Annex 12: Documents in the Project File BURUNDI: Agro-Pastoral Productivity and Markets Development Project

1. Bank Documents

(a) Project Concept Note (b) (c) (d) (e) Preparation Mission Aide Memoire (9 Project Appraisal Document (Draft) (g) Project Preparation Facility Agreement

Project Information Document (Concept Stage) Integrated Safeguard Data Sheet (Concept Stage) Minutes of the Concept Note Review Meeting

2. Safeguards-Related Documents

(a) Environmental Assessment (ToRs) (b) (c) Pest Management Plan (ToRs) (d) Resettlement Policy Framework (ToRs)

Environmental and Social Management Framework (ToRs)

3. Reference Documents

World Bank, 2008: Country Assistance Strategy for the Republic of Burundi MINAGRIE, 2008: National Agricultural Strategy MINAGRIE, 2008: National Food Security Program (2009-201 5 ) World Bank, “Breaking the Cycle: A Strategy for Conflict-Sensitive Rural Growth in Burundi,” Working Paper no. 147, Washington, DC, May 2008. World Bank, EU, 2009: ACP Study on Marketing, Post Harvest, and Trade Opportunities for Fruit and Vegetables in Rwanda MINAGRIE, 2008: StratCgie de DCsengagement de 1’Etat - Dispositif Institutionnel et RCgulatoire MINAGRIE, 2007: Diagnostic des Organisations des Producteurs du Secteur Rural MINAGRIE, 2009: Appui au Renforcenent des CapacitCs des Organisations Professionnelles Agricoles MINAGRIEEU, 2009: Etude Technique des MarchCs Potentiels pour les Produits Agropastoraux Issus des Cinq Provinces d’Intervention du PPCDR MINAGRIEPRASAB, 2009: Etude d’Evaluation IndCpendante des RCsultats et des Impacts du Project et leur ApprCciation sur les BCnCficiaires USAID, 2009: Dairy Value Chain Action Plan

79

Annex 13: Statement of Loans and Credits BURUNDI: Agro-Pastoral Productivity and Markets Development Project

Dillerenee between expected and actual disbursements Original Amount in USS millionr

Project W FY Purpose m m WA SF GEF Caned. Undisb. Orig. Frm.Rev?d

PI13506 P112998

P101160 PI09964

PO97974

PO64557

PO95211

PO64558 PO78627

PO64876

PO65789

2009 2009

2009

2008 2008

2007

2007

2005

2004 2004

2001

BI: Emerg Demob and Transitional Reint. BIFublic Work and Urban Management

BI-Health Project (FYO9)

BI-Sccond HIV/ADS MAP (FYO8) BI-Multisearal Water & Electricity Inf

BI-Educ. S ector Reconm. (FY07)

BI-Community and Social Dvpt SIL (FYO6)

BI-Agr Rehab & Sustain Land Mgmt (FYO5) BI-Econ Mgmt Supt SIL (FY04) BI-Road Scc Dcv SIM (FY04)

Regional Trade Fac. Project- Burundi

0.00 15.00

0.00 45.00 0.00 25.00

0.00 15.00

0.00 50.00

0.00 20.00

0.00 40.00

0.00 50.00

0.00 26.00 0.00 51.40

0.00 15.00

Total: 0.00 352.40

0.00

0.00 0.00

0.00 0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00 0.00 15.69 0.00 0.00

0.00 0.00 46.78 1.74 0.00 0.00 0.00 26.11 0.00 0.00

0.00 0.00 11.83 1.28 0.00

0.00 0.00 46.41 2.28 0.00

0.00 0.00 9.47 1.41 0.00

0.00 0.00 32.93 5.37 0.00

0.00 0.00 11.17 -5.25 0.00

0.00 0.00 12.78 10.75 0.00

0.00 0.00 19.30 18.20 0.00

0.00 0.00 5.74 -2.28 3.22

0.00 0.00 238.21 33.50 3.22

BURUNDI STATEMENT OF IFC?s

Held and Disbursed Portfolio In Millions of US Dollars

Committed Disbursed

FY Approval Company

IFC IFC Loan Equity Quasi Partic. Loan Equity Quasi Partic.

Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic.

Total pending commitment: 0.00 0.00 0.00 0.00

80

Annex 14: Country at a Glance BURUNDI: Agro-Pastoral Productivity and Markets Development Project

STRUCTURE of the ECONOMY

81

(MofGDP) Agriculture industry

services Manufacturing

1987 1997

55.1 49.2 n.i 15.8 n5 7.8

27.8 35.0

Household final consumption expenditure 83.7 817 General gov't final consumption expenditure 9.7 8.8 Imports of QOOdS and SeNiCeS 25.7 n.4

(average annual gmah) Agriculture Industry

Manufacturing SeNiCeS

1987-97 %97-07

-12 -17 -2.8 -4.7 -5.1 -0.8 9.1

Household final consumption expenditure -18 General gov't final consumption expenditure Gross capital formation 0.8 Imports of goods and services

0.8

0.8

2006

90.9 29.3 47.8

2006

2007

2007

/Growth of c r p l t r l and GDP (X) 1

I -GCF -GDP 1

Note:2W7 dataare preiiminaryestlmates. This table was pmducedfrom the Development Economics LDB database. 'Thediamonds showfour key indicators in thecountry(in bo1d)comparedwith its lncome-gmup average. Wdata are missing, thediemond will

Burundi

PRICES and GOVERNMENT F I N A N C E

Domest ic pr ices (%change) Consumer prices 7.1 Implicit GDP deflator 3 . 4

Government finance (%of GDP, Includes cunent grants) Current revenue 14.8 Current budget balance 11 Overall surpius/deficit -14.4

1987

T R A D E

(US$ mllllons) Totalexports (fob)

coffee Tea Manufactures

Total Imports @it) Food Fuel and energy Capital goods

Export price index(2WO=W) import price Index (2wO=W) Terms of trade (2000=00)

1987

98 70 5 D

8 8 P 29 73

150 72

207

1907

311 32.4

15.3 -2.8 -5.2

1997

87 77

I tB

I 4 32

149 95 158

n

n

2006

5.4 2.8

2006

2007

8.0 9.5

2007

Inf lat ion (X)

15

x)

5 0

5 03 04 05 M) 07

-GDPdoflllor -CPI 1 I

Export and Import levels (US$ mlll.)

250

200

150

Y)O

50

0

82

BALANCE o f PAYMENTS

(US$ millions) Exports of goods and services Imports of goods and services Resource balance

Net income Net current transfers

Currant account balance

Financing items (net) Changes in net reserves

Memo: Reserves including gold (US$ mi//iofls) Conversion rate (DEC,/oceVUS$)

EXTERNAL DEBT and RESOURCE FL

(US$ mi/lions) Total debt outstanding and disbursed

iBRD IDA

Total debt service iERD IDA

Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment (net inflows) Portfolio equity(net inflows)

Warid Bank program Commitments Disbursements Principal repayments Net flows interest payments Net transfers

1987

1x) 291 -81

-28

-a8

207 -79

69 P3.6

ws 1987

770 0

252

47 0 4

32 ‘125

1 0

-a

f3 43

2 41 2

39

1997

96 140 -45

-f3 48

-I)

-54 64

I 8 352.4

1997

1069 0

566

29 0 9

46 7 0 0 0

0 t? 4 7 5 3

2006

-33

-57

01 1028.4

2006

1411 0

797

40 0

22

328 23 -2 0 0

0 29 8 t? 6 6

2007

-34

-96

777 10819

2007

0 830

0 23

0 B 8 2 6 4

Current account balance to GDP (K)

0

-2

4

e

8

-10

-72

:ornposltion o f 2006 debt (US$ mlll.)

F,, G: 30 I

- IBRD E- 61laterd - IDA D - Other rmlliladerd F . Private 3- IMF 0-ylort-ter

Note:This tablewas pmducedfrom the Development Economics LDE database. 9/24/08

83

Mt. Heha(2,670 m)

Most distantheadwater ofthe Nile River

C I B I T O K EN G O Z I

K AYA N Z A

B U B A N Z A K A R U Z I

K I R U N D O

M U Y I N G A

C A N K U Z O

R U Y I G IG I T E G A

M WA R O

R U TA N AB U R U R I

M A K A M B A

M U R A M V YA

B UJ U

M

B UR A

Nyanza-Lac

Rumonge

Mabanda

Matana

Bukirasazi

Mutangaro

Rusiba

MusadaBuhiga

Bururi

Mwaro

Gitega

Muramvya

Bubanza

KayanzaNgozi

Cibitoke

Ruyiga

Cankuzo

Karuzi

Muyinga

Kirundo

Rutana

Makamba

BUJUMBURA

C I B I T O K EN G O Z I

K AYA N Z A

B U B A N Z A K A R U Z I

K I R U N D O

M U Y I N G A

C A N K U Z O

R U Y I G IG I T E G A

M WA R O

R U TA N AB U R U R I

M A K A M B A

M U R A M V YA

B UJ U

M

B UR A

Nyanza-Lac

Rumonge

Mabanda

Matana

Bukirasazi

Mutangaro

Rusiba

MusadaBuhiga

Bururi

Mwaro

Gitega

Muramvya

Bubanza

KayanzaNgozi

Cibitoke

Ruyiga

Cankuzo

Karuzi

Muyinga

Kirundo

Rutana

Makamba

BUJUMBURA

DEM. REP.OF CONGO

RWANDA

TANZANIA

Kanyaru

Rusiz

i

Rum

pung

u

Kagera

Ruvuv

u

Ruvuvu

Ruvuv

u

Luvi

ronz

a

Mwerusi

Muragarazi

LakeTanganyika

LakeKivu

LakeCohoha

LakeRweru

To Kasulu

To Uvira

To Kibondo

To Kakonko

To Nyakanura

To Rulenge

To Kigali

To Gitarama

To Butare

To Cyangugu

Mt. Heha(2,670 m)

Most distantheadwater ofthe Nile River

29°E

29°E

30°E

30°E

31°E

31°E

4°S 4°S

3°S 3°S

BURUNDI

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

0 10 20 30

0 10 20 30 Miles

40 Kilometers

IBRD 33380

SEPTEMBER 2004

BURUNDI

SELECTED CITIES AND TOWNS

PROVINCE CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES