FEDERAL REPUBLIC OF NIGERIA FEDERAL MINISTRY OF AGRICULTURE AND WATER RESOURCES THIRD NATIONAL FADAMA DEVELOPMENT PROJECT (FADAMA III)

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2 FEDERAL REPUBLIC OF NIGERIA AC UNITY AND FAITH PE E AND PROGRESS FEDERAL MINISTRY OF AGRICULTURE AND WATER RESOURCES THIRD NATIONAL FADAMA DEVELOPMENT PROJECT (FADAMA III) VOLUME 1: PROJECT IMPLEMENTATION MANUAL (PIM) National Fadama Coordination Office Nafisah Plaza, Plot 502, Off Constitution Avenue, Central Business Area, Abuja fadamanfco@yahoo.com; fadamanfco@fadama.net MANUAL NO. 1

3 LIST OF ABBREVIATIONS AND ACRONYMS AA Asset Acquisition ADB African Development Bank ADP Agriculture Development Program ADPEC Agricultural Development Project Executive Committee ASA Agricultural Service Activity CAADP Comprehensive African Agriculture Development Program (NEPAD) CAS Country Assistance Strategy CBAS Capacity building and advisory services CBO Community-based organization CDD Community-Driven Development CFAA Country Financial Accountability Assessment CNA Community Needs Assessment CPAR Country Procurement Assessment Report DCA Development Credit Agreement (now called Financing Agreement) DFID Department for International Development (United Kingdom) EIA Environmental Impact Assessment EIG Economic Interest Group EMP Environmental Management Plan EOI Expressions of Interest ERR Economic Rate of Return ESIA Environmental and Social Impact Assessment ESMF Environmental and Social Management Framework EU European Union FADPEC Federal Agricultural Development Program Executive Committee FAO Food and Agricultural Organization of the United Nations FARAH Financial Accounting, Reporting and Auditing Handbook FA Financing Agreement FCA Fadama Community Association FEM Finance and Expenditure Management FGN Federal Government of Nigeria FI Financial Intermediary (Category relating to World Bank OP 4.01) FM Financial Management FMAP Financial Management Action Plan FMAWR FMARD Federal Ministry of Agriculture and Water Rural Development Resources FMC Financial Management Consultant FME Federal Ministry of Environment FMF Federal Ministry of Finance FMR Financial Monitoring Report FMS Financial Management System FPM Financial Procedures Manual FR Financial Regulation FRR Financial Rate of Return FUEF Fadama Users Equity Funds FUG Fadama User Group GEF Global Environment Facility GIMPA Ghana Institute for Management and Public Administration GPN General Procurement Notice IAS International Accounting Standard IC Incremental Cost ICB International Competitive Bidding IDA International Development Association (World Bank Group) i

4 IFAD IGAs IP/DO IRR ISA ISR JICA JISU LDP LFD LFDC LG LGA LGC MDG M&E MIS MOU NBF NCB NCF NFCO NFRA NFTC NGO NPV NRM NS OCSPR OD OP OSAG PAS PAU PCC PCD PDO PDR PFMU PHRD PIM PMI PPF PMP PRA PRAP PRIU QCBS RFP RPF International Fund for Agricultural Development Income-Generating Activities Implementation Progress / Development Objective Internal Rate of Return International Standards on Auditing Implementation Status Report Japan International Cooperation Agency Joint Interim Strategy Update Local Development Plan Local Fadama Desk Local Fadama Development Committee Local Government Local Government Authority Local Government Council Millennium Development Goal Monitoring and Evaluation Management Information System Memorandum of Understanding Non-Bank Financed National Competitive Bidding Nigerian Conservation Foundation National Fadama Coordination Office National Food Reserve Agency National Fadama Technical Committee Nongovernmental Organization Net Present Value Natural Resource Management National Shopping Procurement Services Policy Group Operational Directive (of the World Bank) Operational Policy (of the World Bank) Office of the State Accountant General Project Accounting Section Project Accounting Unit Public Procurement Commission Project Complétion Document Project Development Objective Process Documentation Research Project Financial Management Unit (state) Policy and Human Resource Development Fund (Japanese Grant) Project Implementation Manual Project Management and Institutional Arrangements Project Preparation Facility (IDA Fund) Pest Management Plan Participatory Rural Appraisal Participatory Rural Appraisal (learning) for Planning Procurement Reform Implementation Unit Quality and Cost-Based Selection Request for Proposal Resettlement Policy Framework ii

5 SA Special Account SD Social Development SDO Social Development Outcome SFCO State Fadama Coordination Office SFDC State Fadama Development Committee SIL Sector Investment Loan SIP Strategic Investment Program for Sustainable Land Management in Sub-Saharan Africa SLGAO State and Local Government Affairs Office of The Presidency SLM Sustainable Land Management SOE Statement of Expenditure SPA Subproject Agreement SPI Small-Scale Productive Infrastructure SPN Specific Procurement Notice SSA Sub-Saharan Africa TTAO Training and Technical Assistance Officer UNDP United Nations Development Program UNCITRAL United Nations Commission on International Trade Law USAID United States Agency for International Development iii

6 TABLE OF CONTENT 1. INTRODUCTION: PURPOSE AND SCOPE OF THIS MANUAL: PROJECT OVERVIEW: Objectives and Strategy: Beneficiaries: Key performance indicators: THE PROJECT: TARGET POPULATION: GEOGRAPHIC COVERAGE: PROJECT COMPONENTS: INSTITUTIONAL ARRANGEMENTS AND PROJECT MANAGEMENT: PROJECT IMPLEMENTATION PERIOD: OVERVIEW OF PROJECT IMPLEMENTATION: FEDERAL LEVEL PROJECT COORDINATION: FEDERAL-LEVEL PROJECT OVERSIGHT: STATE-LEVEL PROJECT COORDINATION: STATE-LEVEL PROJECT OVERSIGHT: LOCAL GOVERNMENT LEVEL: COMMUNITY-LEVEL PROJECT IMPLEMENTATION: FADAMA COMMUNITY ASSOCIATIONS (FCAs) COMMUNITY-LEVEL PROJECT IMPLEMENTATION: FADAMA USER GROUPS: FACILITATORS: SERVICE PROVIDERS: SUBPROJECT CYCLE: IMPLEMENTATION ARRANGEMENTS: COMPONENT 1: CAPACITY BUILDING AND COMMUNICATIONS AND INFORMATION SUPPORT (US$87.5 M): Capacity Building Support to Fadama Community Organizations (US$66.7 M): Capacity Building for Local Government (US$13.9 M): Communication and Information Support (US$6.9 M): COMPONENT 2: SMALL-SCALE COMMUNITY-OWNED INFRASTRUCTURE (US$73.57 M) FCA-Owned Infrastructure Subprojects: Cross-FCA Infrastructure Subprojects: iv

7 4.3 COMPONENT 3: ADVISORY SERVICES AND INPUT SUPPORT (US$39.5 M) Advisory Services Subcomponent (US$24.5 M): Input Support Subcomponent (US$15.00 M): Negative List of Activities not Eligible for Input Support Matching Grant Financing: COMPONENT 4: SUPPORT TO THE ADPS, SPONSORED RESEARCH AND ON FARM DEMONSTRATION (US$ 37.43M): COMPONENT 5: ASSET ACQUISITION FOR INDIVIDUAL FUGs/EIGs (US$ M) COMPONENT 6: PROJECT MANAGEMENT, MONITORING AND EVALUATION (US$59.3 M) Coordination and Implementation at the National Level: Coordination and Implementation at the State Level: Monitoring an Evaluation: ENVIRONMENTAL MANAGEMENT PLAN MANAGEMENT: Sub-Project Activities: Community Development Sub-Project Activities: Individual Development Sub-Project Activites: MITIGATION: CAPACITY STRENGHTENING: Institutional Capacity Strengthening Program: EMP MONITORING: FINANCIAL MANAGEMENT ARRANGEMENTS: OBJECTIVE OF THE FM SYSTEM: PLANNING AND BUDGETING: INTERNAL CONTROL AND INTERNAL AUDITING: ACCOUNTING: FINANCIAL REPORTING: Monthly Submissions: Quarterly Submissions Annual Submissions: AUDITING: FINANCIAL MANAGEMENT SUPERVISION PLAN: FUND FLOWS AND DISBURSEMENT ARRANGEMENTS: v

8 6.8.1 Bank and IDA Accounts: Funds Flow Diagram: DISBURSEMENT METHODS: Minimum Value of Applications: Reporting on Use of Credit Proceeds Designated Account: Counterpart Funding: Monthly Replenishment Applications: Disbursement by Category: PROCUREMENT ARRANGEMENTS: 77 A. GENERAL:...77 B. IMPLEMENTATION ARRANGEMENTS:...79 C. GUIDELINES:...79 D. ASSESMENT OF THE AGENCY'S CAPACITY TO IMPLEMENT PROCUREMENT:...80 E. PROCUREMENT PLAN:..81 F. FREQUENCY OF PROCUREMENT SUPERVISION: 81 G. PUBLICATION OF RESULTS AND DEBRIEFING:..81 vi

9 Tables TABLE 1: FADAMA POPULATION...11 TABLE 2: PROJECT COST BY COMPONENT...12 TABLE 3: POTENTIAL ADVISORY AND INPUT SUPPORT PROVIDERS IN DIFFERENT AGRICULTURAL ACTIVITIES...39 TABLE 4: TYPES OF M&E ACTIVITIES TO BE UNDERTAKEN TABLE 5: MITIGATION AND APPLICATION OF BEST PRACTICES...70 TABLE 6: INSTITUTIONAL CAPACITY STRENGTHENING PROGRAM...72 TABLE 7: EMP MONITORING...75 TABLE 8: DISBURSEMENT CATEGORIES Figure FIGURE 1: ORGANIZATIONAL CHART...29 FIGURE 2: THE SEQUENCE FOR REQUESTING, APPROVING AND DISBURSING THE INPUT SUPPORT MATCHING GRANT FIGURE 3: PROCEDURE FOR IMPLEMENTING SUPPORT FOR THE EXTENSION FUNCTION OF ADPs.. 47 FIGURE 4: ORGANOGRAM NFCO...55 FIGURE 5: ORGANOGRAM: SFCO & LFD...57 FIGURE 6: INFORMATION FLOW CHART...60 FIGURE 7: MONITORING FEEDBACK MECHANISMS...76 FIGURE 8: FUNDS FLOW DIAGRAM...81 Appendixes Appendix 1: Agriculture, Inputs Support Form...40 Appendix 2: FCA Input Request Summary Form...41 Appendix 3: FCA Input Request Summary Form Fadama User Group Sub-Project Financing Agreement vii

10 I INTRODUCTION 1.1 PURPOSE AND SCOPE OF THIS MANUAL The purpose of this Project Implementation Manual (PIM) is to guide staff of the National and State Fadama Coordination Offices (NFCO & SFCOs), the National Food Reserve Agency (NFRA), and other stakeholders in implementing the Third National Fadama Development Project. It is also designed to assist project-contracted facilitators and participating local governments to undertake project-related activities at the level of Fadama Community Associations (FCAs) and other beneficiary groups. A summarized version of this document that is more user-friendly for adoption at the FCA level will be prepared, and will be translated into local languages. This Project Implementation Manual Volume 1 comprises seven chapters while Volume 2 comprises four annex (i.e. a facilitation guide, guidelines for subprojects, Terms of Reference for project-staff and Fiduciary Management for CDD-type projects. 1.2 PROJECT OVERVIEW The Project is a comprehensive five-year action program developed by the Federal Ministry of Agriculture & Water Resources (FMAWR) in close collaboration with the Federal Ministry of Environment (FME) and other federal and state government ministries, local governments and key stakeholders (donors, private operators, NGOs). Fadama areas are flood plains and shallow aquifers found along Nigeria's major river systems. The first Fadama project (Fadama I) focused exclusively on irrigation farming while both Fadama II and Fadama III are more of agricultural diversification programs, providing financing for the diverse livelihood activities which the beneficiaries themselves identify and design, with appropriate facilitation support. 1.3 Project Development Objective: The development objective of the Fadama III Project is to increase the income of users of rural land and water resources on a sustainable basis. By increasing their incomes, the Project will help reduce rural poverty, increase food security and contribute to the achievement of a key Millennium Development Goal (MDG). Specifically, the Project aims at sustainably increasing the incomes of Fadama resource users by directly delivering resources to them (i.e. the beneficiary rural communities), efficiently and effectively; and empowering them to collectively decide on how resources are allocated and managed for their livelihood activities and to participate in the design and execution of their sub-projects. A team of Facilitators will be deployed in each community to provide training and technical assistance support to ensure that Fadama resource users, including women and other vulnerable groups, have a voice in the decision-making process and benefit equally from project inputs. These objectives will be achieved through the financing and implementation of four main components designed to transfer financial and technical resources to the beneficiary groups -- the FCAs in: (i) institutional and social capital development; (ii) physical infrastructure for productive use; (iii) incomegeneration and livelihood improvements; and (iv) transfer and adoption of technological know-how; as well as (v) implementation coordination. The Project will be coordinated by the National Fadama Coordination Office (NFCO) of the NFRA, the implementing agency of the FMAWR, while the day-to-day implementation will mainly take place at the state level. The Project aims to cover an estimated 7,400 Fadama Community Associations in 37 participating states including FCT. Each new participating State will implement Project activities in up to 20 Local Government Areas while the old Fadama II States will implement in 10 additional Local Government Area. PDO is to increase the incomes of Land and Water resources users on a sustainable basis. 1

11 1.4 Beneficiaries The Project will intervene in all 36 States plus the FCT. Target groups will include: (a) the rural poor engaged in economic activities (farmers, pastoralists, fishermen, nomads, traders, processors, hunters and gatherers as well as other economic interest groups); (b) relatively disadvantaged groups (women including widows) such as the handicapped, the sick including people living with HIV/AID,S, and the youth; and (c) service providers, including government agencies, private operators and professional/semiprofessional associations operating in the project areas. This will reach approximately 2.2 million direct beneficiary households, or about 16 million household members. The inclusion of all private economic agents, who legitimately share the common land and water resources in the project zone, as beneficiary groups, aims to ensure that: (i) conflict arising from the competition to access the scarce land and water resources in the Fadama and non-fadama beneficiary communities is acknowledged and addressed; and (ii) to ensure that the potential impact of land degradation on ecosystem services is reduced. The beneficiaries will be encouraged to organize themselves into economic interest groups, named Fadama User Groups (FUGs), each having on average around 20 individual members (plus benefits accruing to roughly 15 additional household members for each FUG member). In addition, they will be facilitated to establish Fadama Community Associations (FCAs), which are apex organizations of 15 FUGs on average at the community level. The objective is to establish 200 FCAs in each state (10 FCAs per LGA in case there are 20 LGAs), which corresponds to 7,400 FCAs in the 560 LGs to be covered in the 37 States (including FCT). The Project would reach approximately 2.2 million direct beneficiary households, or about 16 million household members. In addition, it is expected that the Project would also reach at least two million indirect beneficiary households, as members of the Fadama communities not benefiting directly from subprojects (LDPs), and non-fadama communities will gain from the investments in public infrastructure and from additional income and employment effects. 1.5 Key Performance Indicators The key indicators and targets that with allow for tracking progress toward the Project Development Objective and include: (see the Results Framework which summarizes the M&E arrangements for the Project): Income of participating households: 75 percent of Fadama user households, who benefit directly from project-supported activities, would have increased their average real incomes by at least 40 percent by Yields of primary agricultural products of participating households: 20 percent increase in yield of primary agricultural products of participating households. Savings of participating groups: 10 percent of the replacement value of the common asset used for income-generating activities of the FUGs is saved annually (with effect from year 2). Physical verification of operations, maintenance and utilization of assets at midterm and at project closing by surveys of random selected sites Surveys at mid-term and at project closing to show that that at least 75 per cent of Fadama users are satisfied with operations, maintenance and utilization of community owned infrastructure and capital assets acquired through the project. 1 In state with less than 20 LGAs, the number of FCAs per LGA will increase accordinly. 2

12 2 THE PROJECT 2.1 TARGET POPULATION The roughly 16 million individuals that the Project's aims to support include the following target groups: (a) the rural poor engaged in economic activities (farmers, pastoralists, fishermen, nomads, traders, processors, hunters and gatherers, as well as other economic interest groups); (b) the disadvantaged groups (widows, the handicapped, the sick and other vulnerable groups, including people living with HIV/AIDS and the youth; and (c) service providers, including government agencies, private operators and professional/semi-professional associations operating in the project areas. The inclusion of all private economic agents who legitimately share the common land and water resources in the project zone as beneficiary groups aims to ensure that (1) conflict arising from resource access-based among competing users is acknowledged and addressed, and (2) participatory implementation mechanisms are needed to sustainably manage the land resource at scales larger than plot (i.e., watershed, ecosystem, landscape). 2.2 GEOGRAPHIC COVERAGE The Project coverage will be national. It will include, first and foremost, the 19 States which did not benefit from the Fadama II Project and the Fadama II States that meet the eligibility criteria, which include: (i) satisfactory disbursement performance; and (ii) pro-poor impact from the resources disbursed directly through community subprojects. The project will be implemented in 20 LGAs per State (and in all LGAs in States with less than 20 LGAs). In Fadama II States, up to ten LGAs will be added to the 10 LGs that have benefited from the ongoing Fadama II Project. The 37 States involved are as follows: 2 Less than ten if total number of LGAs per state is less than 20. 3

13 Table 1: Fadama Population (You need to fill the gaps) State 3 Total Population Fadama Population % pop Fadama (in thousands) Adamawa 3,168 Bauchi 4, , FCT 1,405 Gombe 2, , Imo 3,935 Kaduna 6,067 Kebbi 3,239 Lagos 9,014 1, Niger 3,950 Ogun 3,729 Oyo 5,592 Taraba 2, ,780 8 Nasarawa 1,863 17, Osun 3, , Anambra 4,182 2,042, Zamfara 3, , Abia 2,834 1,246, Sokoto 3, , Bayelsa 1, , Ekiti 2, , Yobe 2, , Ondo 3, , Cross River 2, , Ebonyi 2, , Enugu 3,257 Delta 4,098 Edo 3,218 4, Benue 4,219 4, Rivers 5,185 90, Akwa Ibom 3,920 4, Kano 9, , Katsina 5,793 Jigawa 4,349 Borno 4,151 1,954, Kogi 3, , Plateau 3, , Kwara 2,371 1,417, Totals 3 Total population from Census 2006 and Fadama population from ADP 4

14 2.3 PROJECT COMPONENTS There are six Project components, including Project management, monitoring and evaluation, plus additional preparation facility. These components are summarized in table 2 below. Table 2: Project Cost by Component (in US $M) Component Indicative Costs % of Total Bank Financing % of Bank Financing 1. Capacity Building, Communication and Information Support Small-Scale Community-owned Infrastructure Advisory Services and Input Support Support to ADPs and Adaptive Research Asset Acquisition for Individual FUGs/EIGs Project Administration, Monitoring and Evaluation Project Preparation Facility Total Project Costs % % The Project will be implemented over a five-year period-from July 2008 to June It will terminate in December The Project is anchored on the Community-Driven Development (CDD) approach. Community organizations will decide on how the resources will be allocated among the priorities that they themselves identify and they will manage the funds. Extensive facilitation, training, and technical assistance will be provided through the Project to ensure that poor rural communities, including women and vulnerable groups, especially the physically challenged, participate in the collective decision-making process. The Project will help give voice to the communities as well as promote the principles of transparency and accountability in planning and management of public investments within the LGAs. Improving the way the LGAs do business is expected to reinforce trust between the communities and the local government administrations. Enhanced trust will underpin popular participation in efforts of local administrations to address management of public lands and to enforce regulations on environmental protection. Supplemental GEF-SIP support under the partially blended operation aims to: (i) enable Fadama User Groups (FUGs) and Fadama Community Associations (FCAs) to identify and address SLM priorities; and (ii) support stakeholders and sub-national governments to implement a comprehensive programmatic approach to sustainable land management based on knowledge, investments, and monitoring of results. GEF support will also embed technical SLM options, including local land-use planning, into the CDD framework and the Local Development Planning (LDP) tools. Project cost. The total project cost is $450.0 M, of which, the Bank will finance with an IDA Credit of $250 M, the Borrower will contribute $200.0 M (Federal Government $40.0 M, State Governments $60.0 M, Local Governments $40.0 M), and the Communities, including the private sector and civil society, $60.0 M. Twenty percent of beneficiary contributions will be in kind (materials and/or labor). GEF aims to provide a grant of $7.0 M under the Bank-led SIP umbrella. Component 1: Capacity Building, Communications and Information Support--$87.5 M (of which $28.2 M financed by IDA): This component comprises the following three subcomponents: (a) Capacity Building Support for Community Organizations (US$66.7 M): This subcomponent will include: (I) community mobilization, organizing beneficiaries into viable Fadama User Groups (FUGs)/economic interest groups (EIGs) and their apex association or federation, the 5

15 (b) (c) FCAs (Fadama Community Associations); training and TA support to empower the communities to identify, design, share investment costs, implement and maintain productive assets and activities at the community level in a sustainable manner; the training of women, vulnerable and marginalized groups will be emphasized in order to make the project more socially inclusive; (ii) preparation of LDPs; (iii) support to FUGs/FCAs in operating savings schemes, linking beneficiaries with MFIs and enhancing their capacity in formulating demand for and managing advisory services; and (iv) training, TA, and facilitation support for project implementation at the local level. This support includes what is needed for the establishment and operation of the Fadama Users' Equity Funds (FUEFs under Component 5). GEF support will strengthen selective communities and local institutions to integrate land management into the LDPs. Capacity Building for Local Governments (US$13.9 M): The Project will finance technical assistance, training, equipment and other institutional support to the participating local governments. The expected outcomes of this subcomponent include: (i) innovations in local planning at the community level; (ii) integration of community plans in the local government (LG) planning program to enhance sustainability; and (iii) improvements in good governance and organizational capacity of local governments (both elected officials and line department staff). The Project will build capacity of LGs to extend technical, financial and management support to communities as well as enhance their efficiency in operational work, such as, investment planning, community mobilization, and supervision and monitoring of community development projects. Through training, technical assistance, and institutional support to local governments, particularly at District administrations, and by improving their internal and financial procedures, the LG's capacity for decentralized administration and their effectiveness to deliver services to community operations will be enhanced. Moreover, by decentralizing decision-making authority and funds management to the local level for project implementation this Project will help facilitate government's decentralization efforts as well. It will improve LG's role in the Fadama system, including the review and appraisal of proposals by FCAs (through the LFDC) and by providing process facilitation and community mobilization support. Financial management and accounting controls will be put in place to reduce fiduciary risks. Each LG will keep a dedicated project account that will be subject to annual audits. There will be an MOU between the State Fadama Coordination Office (SFCO) and participating LGs. As there are a maximum of 20 MOUs (i.e., 20 LGs per state) to be signed, these MOUs will be finalized prior to transfer of funds. All MOUs will be signed at project start. Communications and Information Support (US$6.9 M): The Project will finance: (i) technical assistance to permit the participating states to disseminate information about the Project and its guidelines to potential beneficiary communities; enhance the level of the beneficiaries' comprehension of the contents of the project implementation manual, their rights and obligations under the project, and increase their awareness of what actions they can take to report irregularities of possible fraud, elite capture and collusion during project implementation; (ii) the design and implementation of a communications program. In addition, the Project will (in close partnership with the social CDD operations assisted by the Bank in the project zone) also fund the establishment of one pilot community radio (CR) station in each selected Fadama community. Community radio is owned, operated, and run by the community on a volunteer basis. The implementation costs of the communications subcomponent will include appropriate multimedia mobile vehicles, simplified posters, leaflets, radio/television spots, and videos/dvds. The Project will provide technical assistance and funds for piloting of the use of information technology by community associations and local governments to increase transparency by making available real time information about the Fadama III program as well as using the internet to connect communities to markets. GEF financing will support the development of communication and awareness building modules on sustainable land management integrated into the above. The instruments for implementing the various forms of capacity building under this component will include a combination of workshops, limited external training, technical exchanges, on-site/on-farm training and/or demonstration, and more traditional technical assistance, drawing upon local expertise within the state consultants, universities/colleges, nongovernmental organizations (NGOs), and other local service providers as well as national and international technical assistance agencies and individual consultants. To this effect, the Project will finance consultant services, training materials and courses, seminars, workshops, related studies and operating costs. In addition to the consultant fees, this 6

16 component will also finance costs related to the operational work of the consultants, particularly, the Fadama Development Facilitators (FDFs), such as travel, operating costs not covered by government counterpart, motorcycles (provided on loan) for the FDFs, vehicles (if necessary) and office rental and equipment for the Fadama Desk Officer, and facilitation work. The criteria for selecting facilitators, consultants, and other service providers are covered in Vol. 2: Annexes to the PIM (Facilitation Guide). Component 2: Small-Scale Community-owned Infrastructure --$73.57M (of which $66.07M is financed by IDA): Much remains to be done to improve rural infrastructure. This operation is designed to allow communities to identify and act on their most urgent needs for improved infrastructure. Grant resources will be allocated annually to each of the participating FCAs for implementing priority demand-driven community-owned projects. The FCA-owned infrastructure subprojects, ranging in size from $1,000 to $10,000, identified by the communities, and complementary services identified in the LDPs will adhere to cost-sharing principles. The menu of subprojects will include: (a) rehabilitation and/or construction of feeder and access roads, culverts, and small bridges; (b) rural markets; and (c) infrastructure for sustainable natural resource management including improved conservation of soils and agronomic practices, and water harvesting techniques, and, where feasible, integration of this infrastructure into local/community land-use planning supported under Component 1. In addition, the Project will finance: (d) infrastructure that cuts across FCAs and/or LG boundaries, including stock routes, pastures and watering points. The cross-fca infrastructure subprojects identified by groups of FCAs will range from $10,000 to $35,000. The distance of the roads to be funded will be established during the participatory needs assessment (PNA) and the Project will rely on variable design standards to deal with local agro-ecological conditions and differential capacity to pay. The Project will finance civil works and related equipment, technical services for pre-feasibility studies, and infrastructure subproject design, including estimation of subproject costs, technical and financial viability analysis, appraisal of O&M plans, bidding documents as well as environmental and social impact analysis. Funding principles will be 90 percent grants and counterpart contributions of up to 10 percent of the investment costs (in cash or in materials and labor) from the FCAs. Prototype designs for the menu of subprojects to be funded under this component are presented in the Manual. Component 3: Advisory Services and Input Support--$39.5 M (of which $24.6 M financed by IDA): Under this component the Project will finance the following two subcomponents: (a) delivery of advisory services responsive to the needs of Fadama users in production, processing, marketing, and supply chain management; and (b) input support. (a) Advisory Services (US$24.5 M): The Project will provide support to empower Fadama users-- farmers/pastoralists and other economic interest groups (EIGs), working within their organizations and through their LGAs--to purchase advisory services from both public and private sources. Grants will be channeled from the state level of government through the SFCOs to the FCAs for use in financing advisory service contracts. The content and scope of the advisory services will be determined by the FCAs, with the assistance of the Facilitators and qualified consultants and articulated in the LDPs. The Project will finance the delivery of comprehensive advisory service packages demanded by the FCAs working within and through their organizations and SFCOs. Fadama users will select their service providers. Further details on the eligibility criteria to access this facility and the applicable guidelines will be outlined in the Advisory Services Operational Manual. Information on the permissible limits of annual advisory service contracts per FCA/FUG can be obtained from the Manual. (b) Input Support (US$15.0 M): The Project will continue the matching grant arrangement successfully tested under the Fadama II Project. This facility shares the risks involved in the adoption of a new technology by the farmers to enhance their financial capacity to purchase farm inputs (mainly seeds, fertilizers and agro-chemicals) and to build savings from incremental earnings to finance future purchases. Farmers receive a grant, equivalent to 50 per cent of the purchase price of the input per FUG, with the remaining 50 per cent due as the FUG-beneficiary-counterpart contribution. Confirmation of deposit of the counterpart contribution into the Project Account by the Project is required before actual purchase of the input. Access to this facility will be for a maximum of two years, during which time the FUGs are expected to become familiar with the selected new technology. The criteria to access this input support facility is covered in Vol. 2: Annex to the PIM (Guidelines for Subprojects). 7

17 In order to ensure sustainability of the production process after the second season, the beneficiaries will be assisted to link with financial institutions through capacity building support (component 1) to open savings accounts and to access credit for future purchase of inputs. Component 4: Support to the ADPs, Sponsored Research and On-farm Demonstrations-- US$3743 M (of which $6.43 M financed by IDA): The Project will provide support to the Agricultural Development Program (ADPs) offices to carry out the following 5 specific and limited areas: (a) (b) (c) (d) (e) Support to Advisory Service Providers. The Project will provide specialized technical assistance, training, experience-sharing, and knowledge-exchange opportunities to service providers, with emphasis on improving the quality, effectiveness, availability, affordability and timeliness of advisory services. The beneficiaries will be established public and/or private sector service providers, with a proven record certified by the ADP. The training menu will include specific agricultural technologies, such as new varieties and cultivation methods, participatory methodologies and facilitation skills, marketing and enterprise management, improved cultural practices, soil fertility management, sound use of agro-chemicals, soil and water conservation, sustainable pasture management, as well as sustainable ecosystem management. The Project will finance the cost of training and mentoring activities, including contracting consultant services in areas in which the ADPs lack the necessary expertise and production and provision of training materials. Quality Assurance of Advisory Services. The Project will fund the incremental operating costs to allow the ADPs to certify service providers and provide technical quality control to ensure that the advisory services delivered to project beneficiaries meet established quality standards. To strengthen the ADPs' capacity to provide training to service providers and the Facilitators and to perform quality control on advisory services, the project will finance the setting up of a small computerized research laboratory with full internet connectivity. It is estimated that each participating ADP will require at least 5 computers to operate this facility. The laboratory will give the ADPs capability in data coding, analysis and monitoring of adoption of project-funded technologies through improvements in the M&E system. It will also allow access to real time information and regular update of techniques relevant for the training of the Facilitator and the advisory service providers. The subject-matter specialists of the ADPs will, thus, have the opportunity to update knowledge, keep up with developments in their fields and acquire cuttingedge skills and information that they can use to support on-farm demonstrations, in partnership with contractors from participating research institutions/centers. Training of Facilitators. The Project will provide periodic support to the facilitators, including training, workshops on formulation of demand for advisory services, and participatory implementation and supervision of such activities as well as to perform quality control functions in order to ensure that the subprojects emanating from the FCAs meet minimum technical standards. Sponsored Research and On-farm Demonstrations. The Project will undertake, through entering into a Performance-based Contract with public and private research centers, including centers of excellence such as the International Institute of Tropical Agriculture (IITA), sponsored research to develop technical propositions/recommendations on crop, livestock and other activities, and also respond to problems and constraints identified by farmers. Research institutions will be encouraged to form partnerships in order to bid for these contracts. The research centers will collaborate with the ADP extension agents to conduct on-farm demonstrations. The main objectives of this activity are to test new crop varieties and management methods for crops, agroforestry, livestock, and fisheries. Training of Extension Staff. The Project will fund focused training of extension staff. This activity will be contracted out by the National Food Reserve Agency (NFRA) to public/private research/extension centers and/or specialized institutions under a Project Coordinator. Limited external training will be provided in selected disciplines of high priority. The training menu will include new methods of instruction and information dissemination for the ADPs, workshops/retreats, and study visits designed to upgrade skills and acquire new ones to support demand-driven community investments. 8

18 The Project will finance: (i) contracting with third parties; (ii) minor civil works for ADP office renovations; (iii) vehicles, goods, and equipment for ADP and National Food Reserve Agency (NFRA) zonal office operations; (iv) staff training, including limited external training; (v) support to service providers and Facilitators; and (vi) operating costs for the ADPs and NFRA's central and zonal offices as well as program monitoring and evaluation. The Head of Unit of the NFRA will use the zonal offices to coordinate the implementation of the component in all the states, drawing upon the critical mass of trained manpower resources available in the various departments of the Ministry of Agriculture and Water Resources (agriculture, irrigation, forestry, livestock, and fisheries, etc.). A separate Special Account (SA) will be established for the implementation of this component. A Senior Agricultural Services Advisor, to be recruited by the NFRA under competitive and transparent procedures satisfactory to the Bank, will be entrusted with the responsibility of day-to-day coordination in conjunction with a core team that will include a specialist in contract management and an operational specialist with background in monitoring and evaluation. Component 5: Asset Acquisition for Individual FUGs/EIGs--$150.0 M (of which $105.0 M financed by IDA): This component will include a matching grant fund to finance acquisition of assets for income-generating activities. Under this component, the Project will scale up the matching grant approach, successfully piloted under Fadama II, to support common interest groups (FUGs/EIGs) and their apex associations (FCAs) to undertake initiatives which would assist them to increase value added from the products produced by their members and diversify their sources of livelihood. The matching grant will be targeted to economic interest groups (EIGs) of poor Fadama users, including the disadvantaged groups (such as the handicap, widows, the sick and economically-inactive members of the community) who do not currently have access to either subsidized or market rate credit, and, who, as individuals, are too costly to be served by financial institutions due to the perceived high risk, lack of information and high transaction costs. Prior to the Project, the target beneficiaries were disorganized and operated as individuals, widely dispersed across rural space. They lived in communities that are beyond the reach of financial institutions that may be willing and able to extend services to the poor. This facility, thus, serves as a mechanism to mobilize the formation of community groups, to give FCA members practical financial experience as well as revenue from small income-generating activities, thereby, making them more attractive to be financed as a group by mainstream financial institutions International experience has shown that directed credit has low repayment rates and high administrative costs. Under the proposed project, such costs would not be an issue, as fiscal recuperation of the bulk of the funds is not envisaged. Through proper targeting, including high counterpart contributions plus savings (as reflected in the design features of the project) the matching grant will contribute positively to the development of rural financial intermediation. While enhancing the credit worthiness of the financially handicapped rural inhabitants, the matching grant will actually help reduce their vulnerabilities and risks, thereby making them more attractive to formal financial institutions. Funds have been provided under component 1 to provide appropriate training to build a savings culture among the FUGs and to enhance the capacity of the participating MFIs to deliver products to the beneficiaries on demand basis Assets to be acquired are not identified ex ante since a demand-driven planning approach will be used during implementation. Based on the experience in Fadama II, however, the menu of subprojects is likely to include the following: (i) improvements in existing farming systems for horticultural produce, grains, roots and tubers; (ii) rearing of small animals (birds, sheep, goats, and pigs, beekeeping); (iii) promotion of technologies and investments in the livestock sector, such as dual purpose cattle raising (dairy and meat, hides and skins); (iv) aquaculture and smallholder fisheries production activities; (v) diversification of production systems and micro-enterprise development in non-traditional crops (such as, vanilla, macadamia, ginger, gum arabica, peppers, flowers, etc.); (vi) equipment and support for processing and value addition; (vii) establishment of seed and plant nurseries; (viii) small farming equipment and tools; (ix) construction material for small-scale operations; (x) small works and installations; (xi) small irrigation and drainage works and equipment, including water lifting and distribution equipment; (xii) plantations and nurseries; (xiii) storage facilities for produce/products; and (xiv) soil and water conservation technologies that are proven to be profitable with short pay-back periods. GEF support will amplify the soil and water conservation options in all the states by expanding the options to include those with preponderantly public rather than private benefits.. 9

19 For the economically active FUGs, who constitute the majority of beneficiaries, the Project will contribute 70 percent of the total cost of the demanded subproject, while the beneficiaries will make upfront cash payment of 30 percent of the subproject cost. The cash counterpart payment will be deposited in an approved commercial bank/financial institution. In addition, it is recommended that these FUGs establish a savings scheme in order to promote community-level capitalization as well as to ensure sustainability of the investment activities funded through this component. The FUGs will establish and implement a user fee for each use of the common asset. The user fee to be collected annually will be equivalent to at least 10% of the replacement value of the common asset. This annual user fee will be the minimum amount that the members will pay. It will be deposited in a savings account with an approved bank, and will constitute the FUG's capitalization/revolving fund. This facility will enable the FUGs to expand their livelihood activities and/or graduate out of matching grant-dependency. The user fees that will be collected from the non FUG members who use the FUG-owned asset/s will also be deposited in the same account, thereby increasing the amount resources available in the capitalization fund. At the individual FUG member level, the Facilitators will encourage the members to save part of their household incomes from their enhanced income generating activities into a personal savings account at the same bank. This will enhance the credit worthiness of each individual member as an individual and as part of the FUG. In this way, the FCAs can negotiate with the financial institutions on behalf of their members to ensure better access to financial services like loans, insurance, remittances and higher interest payments on their members' deposits. This arrangement is expected to improve access to commercial financial services to the participating FUGs. The eligibility criteria to access the matching grant, which will include adoption of a viable plan for O&M, in form and detail satisfactory to the Bank, are covered in Vol. 2: Annexes to the PIM and the Operational Manual for this component. The vulnerable groups will receive a one-time grant equivalent to the full cost of their asset subproject to assist them to constitute an asset base for their income-generating activities. Additional support will be provided to their FUGs under the capacity building component (component 1) to enhance their entrepreneurial skills and their organizational capacity to engage in profitable livelihood activities and to build a savings culture. This capacity building support and the grant provided to build the start-up capital base will permit the FUGs of the vulnerable groups to become economically-active, thereby helping them to graduate from grant dependency. Eligibility criteria for access under this group are covered in Vol. 2: Annexes to the PIM. The weight of the evidence from the Bank's recent AAA work on rural finance and from practitioners in Nigeria is that rural Nigeria is underserved. Information from the local micro finance institutions (MFIs) show that only 2 percent of rural households have access to any form of institutional financing. Furthermore, since matching grants are not loans, there will be no repayment obligations. By their very nature grants should not attract interest charges on cost-recovery. Consequently, they do not pose any risk of causing distortions in financial markets as would interest-bearing loan programs. While enhancing the credit worthiness of the financially handicapped rural inhabitants, the proposed matching grant and the associated capacity building support are expected to reduce the vulnerabilities and risks of the beneficiaries, thereby making them more attractive to formal financial institutions. The Fadama Users' Equity Fund (FUEF) In addition to the 30 percent upfront beneficiary contribution to the cost of the demanded subproject/capital asset, the FUGs will set aside funds as indicated above that will constitute a capitalization/revolving fund called the Fadama Users' Equity Fund (FUEF). The FUEF, which will be limited to only the economically-active FUGs, will operate on guidelines outlined in an Operational Manual and integrated into the PIM. The facilitators will train the FUGS in financial literacy and will help in linking them with markets, where they can sell their produce/products at prevailing market prices, while at the same time ensuring that the agreed funds to be saved in the FUEF are deposited in the accounts as required. The FUGs of the vulnerable groups will not be required to establish a FUEF, although they will be assisted to establish and operate savings schemes. The FUEF will operate on guidelines outlined in an Operational Manual and covered in Vol. 2: Annexes to the PIM. 10

20 A full-time rural finance specialist at SFCO level will be responsible for supervising the implementation of this facility, and will use NGOs, private consultants, and other qualified service providers to ensure that the revolving funds are properly managed. Linkages with established financial institutions/intermediaries will be sought. The FUEFs (as second generation funds) will be invested by the FUGs at the community level according to priorities and mechanisms defined by them as the sole owners of the funds. The recovered amounts will thus remain as financial capital circulating in the community, or may take the form of physical capital depending on the investment decision made by the FUGs. This will constitute the basis for the development of sustainable savings and loan schemes. Component 6: Project Management, Monitoring and Evaluation, and EMP Compliance -- $59.3 M (of which $17.0 M financed by IDA): The institutional arrangement of the project rely on the existing framework for Fadama II both at the national and local levels, and is mainstreamed within the overall program of the supervising ministries of agriculture and water resources at the federal and state levels. Each of the 19 incoming participating states established their core teams for their respective State Fadama Coordination Office, in compliance with a key eligibility criterion to participate as a beneficiary state. The staff of SFCOs of the 18 Fadama II states and the staff of the NFDO will be recruited under terms and conditions satisfactory to the Bank. The PIM includes staffing requirements and TORs. The Project will finance costs for project management and coordination (excluding salaries of reassigned/seconded active civil servants), including supervision, M&E, impact evaluations, an MIS and accompanying knowledge base as well as contracting of specific implementation tasks. In addition, the Project will finance technical assistance, training, and equipment to strengthen the operational capacity and effectiveness of the NFRA in carrying out its principal mission of coordination of all agricultural sector projects and in providing services to the Project. Project Management includes the following three subcomponents: (a) Technical Assistance to National and State Level Implementation Coordination (US$2.4 M). Twenty-four person months of an externally recruited Procurement Advisor to the National Fadama Coordination Office (NFCO) will be provided initially over a two-year period to: (i) develop and implement a program to improve the management of procurement at both the national and local levels; and (ii) advise the National Project Coordinator on matters related to procurement and the implementation of the financial architecture of the Project. In order to ensure adequate technical quality control, especially on equipment and services provided under the Project, 48 person-months of short-term international and local consultant services will be funded over the duration of the Project. These consultancies will be deployed to reinforce the technical supervision functions of the State Fadama Coordination Offices (SFCOs). In addition, approximately 80 person-months of mostly local or short-term international consultancies will be provided to reinforce the skills and enhance the technical efficiency of NFCO and SFCO teams. (b) Project Coordination (US$44.8 M). The Project will support the operational activities of NFCO supported by 36 SFCOs plus the FCT (fadama coordination office). NFCO will be responsible for overall coordination, while SFCOs, which are all located in the project zone and closer to the communities, will carry responsibility for coordination at the state level with the following specific duties: (i) to review community proposals for consistency with the state development strategy and compliance with project guidelines and eligibility; (ii) to monitor project performance through the MIS and to periodically report progress; (iii) to prepare annual implementation and physical performance reviews; and (iv) to submit Annual Project Operating Plans to the Bank (through NFCO) for review and approval. NFCO is answerable to NFRA. NFCO provides the quality assurance support to SFCOs and coordinates the information on implementation progress for processing and sharing with the oversight agencies. The Project will finance management and coordination at the federal and local levels as well as associated recurrent and operating costs. These will include: (i) administrative and overhead costs of federal, state, local government and district offices, vehicle rental and loaned (mainly motorbikes to Facilitators), and travel allowances; (ii) equipment and vehicles including the purchase and rental of vehicles, furniture, and fixtures for both state and LG-level offices; and (iii) computer equipment and requisite software and multimedia equipment. In addition, the Project 11

21 will finance the cost of the establishment and operation of a suitably equipped office complex to be known as Fadama House for the administration of the Fadama program and use as a venue for project-related training, retreats, seminars, and other project-related events. This investment is justified on cost-effectiveness grounds as it will result in savings from rising office rental costs in Abuja. The Project will finance the facilitation, coordination, financial management and reporting, financial auditing, financial flows, and contract management required for overall implementation coordination. Funds will also be provided to finance Special Studies comprising: (i) a comprehensive review and analysis of the existing technology development and extension systems; and (ii) the development of a comprehensive strategy and Action Plan for implementing the government's vision for Nigerian agriculture by the year 2020 and (iii) a study on gender and vulnerable groups, leading to a comprehensive strategy on these groups (pl. verify if these studies are funded in the cost tables, under Project Admin NFCO. In volume 2, you need to have TORs for each of these studies, or state when these will be available) (c) 12 Monitoring and Evaluation System, MIS, Knowledge Management, and EMP Compliance (US$11.6 M). Monitoring and Evaluation (M&E) activities will accomplish the following: Generate Project specific information on progress, processes and performance; Analyze and aggregate data generated at various levels to track progress, process quality and project sustainability; and Document and disseminate feedback and key lessons learnt to relevant users and stakeholders. (i) The M&E system, combined with the knowledge base, will serve actors nationwide who seek to inform their decisions based on Fadama experience. Supplemental GEF support will enhance the SLM dimensions of the M&E system. This support will also co-finance the development the comprehensive national Knowledge Base on productive and land conservation activities, to overcome the fragmented nature of knowledge in the country. These functions will be reinforced by improvements to be made to the Management Information System (MIS) established under Fadama II. The MIS will therefore be one common tool for Project staff and stakeholders to track (a) project administration, (b) results monitoring and evaluation, and (c) knowledge management. (ii) Based on the experience of Fadama II, the results-based M&E system will be strengthened to support the quality and spread of implementation under Fadama III. This will improve real time monitoring of the entire project cycle with a renewed emphasis on results reporting. M&E capacity at all levels of implementation will be strengthened with the recruitment of qualified and experienced professionals, who will be fully equipped to work full time on M&E. The system consists of self-monitoring at the community level, input-output monitoring through the Management Information System, process monitoring system, comprehensive impact evaluation, and the methodical incorporation of knowledge management. The comprehensive impact evaluation will be incorporated to measure income, welfare, environmental performance, and social capital gains. Taken together, this system will strengthen implementation and the planned intensive supervision regime; strengthen the technical quality of investments and up scaling by transferring knowledge across settings, and support adaptive management by the Project. (iii) The Project will finance the costs for carrying out and managing the M&E system, including data collection, aggregation, and analysis, training on M&E, impact evaluation, reporting, and supervision. Experts in information technology and M&E will be funded by the Project. In addition, the Project will include the implementation of a supervision regime based on the six Project zones. To add additional value to the supervision, the Project will finance consultant services to develop and implement studies to evaluate the impact of the subprojects and to provide feedback to improve project operations (see the table on arrangements for results monitoring in Annex 3). One reason the Project aims to apply strong monitoring is to strengthen the Project's adaptive management capacity and so will collect and analyze data on cost indicators and physical parameters from the most frequently approved types of subprojects, so as to calculate a range of values for the indicators and to adjust subproject eligibility criteria accordingly (these adjustments will

22 then be incorporated in the PIM). Lastly, the technical knowledge base will consolidate best practice in the Project and in Nigeria on productive activities. It would include stock taking, existing studies, and distillation of M&E findings and other relevant studies undertaken within and outside the project, including experience from other parts of the world that might be relevant for Nigeria. This info would be used for the capacity and awareness-raising described in Project Component 1. GEF would support a needs analysis to define better the scope of the knowledge base and more broadly, a methodical approach for the Project to transfer knowledge vertically and horizontally across the country. 3 INSTITUTIONAL ARRANGEMENTS AND PROJECT MANAGEMENT: The proposed Project will utilize the existing institutional structure of the Federal Ministry of Agriculture and Water Resources (FMAWR) its federal and state level coordination offices as well as state ministries of agriculture without creating any add-on project implementation unit. The management of the Project will be based on a decentralized, demand-responsive structure that will grant community organizations as much decision-making authority as possible, and will promote community ownership of and responsibility for operations and maintenance of infrastructure investments. The key features of the proposed organizational structure and functional responsibilities are described below. 3.1 PROJECT IMPLEMENTATION PERIOD The Project will be implemented over a five-year period, from July 2008 to June It will terminate in December OVERVIEW OF PROJECT IMPLEMENTATION The Federal Ministry of Agriculture and Water Resources (FMAWR) will have overall responsibility for execution of the Project through the National Food Reserve Agency (NFRA). This Department is entrusted with responsibility for coordinating the implementation of all agricultural sector projects, including those that are externally-funded. Most of the Project's administrative, financial and implementation arrangements will be decentralized and demand-driven, and critical decisions will take place at the community level, within the FCAs and the various EIGs which constitute them. Since no new coordination structure will be created under this Project, the NFRA will delegate the functions and responsibilities of day-to-day implementation coordination to a strengthened NFDO, which will now be called the National Fadama Coordination Office (NFCO). 3.3 FEDERAL LEVEL PROJECT COORDINATION At the Federal level: The NFRA through NFCO will coordinate Project activities on behalf of FMAWR. At the highest level in FMAWR, a small advisory committee to be called the National Fadama Technical Committee (NFTC), which is a sub-committee of the Federal Agricultural Development Program Executive Committee (FADPEC), will be responsible for project oversight, overall policy guidance, coordination with other projects, strategic direction and review and approval of the annual work program and budget of NFCO. It will review project progress, review and approve work plans and budgets. The NFTC will be chaired by the Permanent Secretary of the supervising ministry. It will comprise Permanent Secretary level representation from the participating/relevant departments, such as, Finance, Water Resources, Environment, Cooperative Affairs, Commerce and Industry, Women Affairs, two representatives of Federations of Farmers, a representative of the private sector, a representative of each of the co-financiers and a representative of civil society. NFTC will convene at least every six months or as determined by the chair to review progress in implementation and review and approve work plans and budgets. NFCO will serve as the secretariat for NFTC and be responsible for day-to-day federal level coordination. In this capacity NFCO will be responsible for ensuring that Bank guidelines and procedures are followed on procurement, disbursements, auditing and overall financial management, and that the environmental and social guidelines are followed in both developing and implementing components NFCO would be headed by a National Project Coordinator (NPC), supported by a core technical team comprising: Senior Technical Operations Officer (national); Senior Community Development Officer (national); Environmental Officer (national, through secondment); Senior M&E Officer (national); M&E Advisor (international 2 years plus part time thereafter); Procurement Advisor (international 2 years plus part time thereafter). Final arrangements including job descriptions, recruitment process, and staffing levels of NFCO will be developed by the Director of NFRA according to agreed criteria. The annual work programs and budgets of the Project will be subject to review and approval by the Bank. 13

23 Responsibilities of the NFCO are as follows: (a) Ensure that Project operates according to the Project Implementation Manual; (b) Prepare and submit to the NFTC and IDA a consolidated work program and budget; and quarterly, semiannual, and annual reports on the performance and financial situation of Project; (c) Initiate and support Project activities in participating states; (d) Manage the Project M&E and information system, including a data base of service providers; (e) Provide input for updating technical manuals and guidelines; (f) For those states with no existing PFMU: review the SFCO annual work plans and budget and submit to the SFDC for approval; monitor compliance with budgetary ceilings and financial operations of SFCO; and review fund withdrawals from Project account to states and to the communities and farmer groups in order to ensure that they are within the allocation; (g) Prepare and forward withdrawal application forms to IDA; (h) Identify ongoing needs for capacity building and training aimed at improving the performance and impact of Project; (i) Sub-contract implementation activity to participating public agencies, NGOs, and consultants; and (j) Liaise with the Federal Ministry of Finance (FMF) and states to ensure timely release of Borrower's counterpart contributions. 3.4 FEDERAL-LEVEL PROJECT OVERSIGHT At the highest level in FMAWR, a small advisory committee, to be called the National Fadama Technical Committee (NFTC), which is a sub-committee of the Federal Agricultural Development Program Executive Committee (FADPEC), will be responsible for project oversight, overall policy guidance, coordination with other projects, strategic direction and review and approval of the annual work program and budget of the NFCO. It will review project progress, review and approve work plans and budgets. The NFTC will be chaired by the Permanent Secretary of the supervising ministry. It will comprise Permanent Secretary level representation from the participating/relevant departments, such as, Finance, Water Resources, Environment, Cooperative Affairs, Commerce and Industry, Women Affairs; two representatives of Federations of Farmers, a representative of the private sector, a representative of each of the co-financiers and a representative of civil society. The NFTC will convene at least every six months or as determined by the chair to review progress with implementation and review and approve work plans and budgets. The NFCO will serve as the secretariat for NFTC and be responsible for day-to-day federal level coordination. Responsibilities of the NFTC are as follows: a. Ensure coordination of the Project with other relevant programs of the FMAWR, other ministries and donors; b. Ensure appropriate linkage across the sub-sectors to avoid duplication and overlaps; c. Review state plans with respect to relevant sub-sector activities and make recommendations; d. Provide feedback to respective technical departments; e. Report quarterly to technical departments, FADPEC and IDA. f. Assess progress of implementation; g. Approve NFCO annual work plan and budget for funding (subject to review and approval by IDA); h. Approve amendments to the Project Implementation Manual and Implementation Plan; i. Review quarterly progress reports; j. Approve annual physical and financial reports, auditors reports and Project accounts; and k. Commission an independent team to undertake concurrent annual evaluation of the Project. 14

24 3.5 STATE-LEVEL PROJECT COORDINATION At the State level: Coordination will be carried out by the State Fadama Coordination Office (SFCO) of the participating states. The SFCO will be responsible for executing a communications strategy, recruiting and organizing training of facilitators, organizing training of all relevant stakeholders, tracking financial and physical progress of subprojects implemented by FCAs, using a MIS, and monitoring and evaluating performance. During preparation, the SFCO will recruit, train and deploy a team of Facilitators who, in turn, will provide technical assistance and training support to beneficiary groups in the participating communities. The Facilitators will assist in the formation and raising awareness of groups, assist communities in the preparation of LDPs and in the planning, designing and implementation of their selected subprojects. The SFCO will be responsible for the supervision and monitoring of the Facilitators, recruiting consultants to design and implement the training programs both for the Facilitators and the communities, facilitate linkages of the FCAs with and other support agencies, including local banks. SFCO Team comprises: (i) State Project Coordinator; (ii) M&E Officer, (iii) Community Development, Gender and Youth Officer, (iv) Rural Finance and Livelihoods Officer, (v) Environment Officer, (vi) Training and Technical Assistance Officer, (vii) Procurement Officer, (viii) Communications Officer and (ix) Project Accountant (on secondment from the State Accountant General's Office). The SFCO team must have been recruited as a condition for participation in the Project. All members must have qualifications and experience satisfactory to the Bank, and must be recruited in accordance with a competitive and transparent bidding process and procedures before disbursement begins at State level. The SFCOs of the eligible Fadama II states, in consultations with the NFRA/NFCO and the State Ministry of Agriculture, will re-advertise all the staff positions with a view to ensuring that the team for Fadama III implementation includes requisite skills in finance, training, environmental safeguards, community development, gender, communications and monitoring and evaluation. Responsibilities of the SFCO are as follows: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Prepare the Annual Work Plan and budget to be submitted to the SFDC and NFCO; Liaise with PFMU with the objective of ensuring proper and timely provision of IDA resources and release of state counterpart funds for the implementation of Project activities; Promote broad dissemination of the Project and its components, directly and/or in partnership with the Facilitators, in all Local Governments that comprise the Fadama areas, with the objective of allowing all FCAs and non-governmental organizations to understand the Project's goals, guidelines, eligibility criteria, coverage and operational mechanisms, and encourage them to participate; Provide technical assistance in launching rural participatory processes through organized training of trainers and then at the FCA level for the elaboration of the LDPs; Sign grant agreements with FCAs whose subprojects have been approved; Process approved subprojects and transfer resources in tranches to FCAs; Ensure compliance with environmental guidelines for the approval and implementation of subprojects; Prepare and submit accounting statements and carry out, through independent auditors, the annual financial audit of the Project, according to the frequency and terms of reference agreed with IDA; Establish and operate a computerized MIS for Project monitoring and evaluation, including data on subprojects and financial transactions/disbursements; Prepare or contract out studies to evaluate the impact of subprojects and provide feedback on the implementation process through: (i) annual physical performance studies, to assess the quality and sustainability of subprojects financed most frequently by the Project and to evaluate the procedures used by communities to acquire goods, works and services; and (ii) detailed evaluation, to be carried out at mid-term review, including consultations and impact evaluation (baseline and final evaluation), as perceived by FCAs. 15

25 3.6 STATE-LEVEL PROJECT OVERSIGHT The oversight, policy and strategic orientation functions will be performed by the State Fadama Technical Committee (SFTC), which is a Sub-Committee of the Agricultural Development Project Executive Committee (ADPEC). The SFTC will be chaired by the Permanent Secretary of the State Ministry of Agriculture and Natural Resources, who may delegate chairmanship to the Programme Manager/Managing Director of ADP and will meet every six months, and/or at any other time determined by the chair, to assess progress of implementation, and review and approve work plans and budgets. Other member will include the Directors of relevant technical department of SMANR and representatives of State Ministry of Environment (FME) and State Ministry of Water Resources (FMWR) with the SFCO as secretariat, as well as members of civil society and the private sector. 1/3 of which should be women. The State's annual work programs and budgets will be subject to review and approval by the Bank. For administrative purposes, the State Project Coordinator will report directly to the Program Manager/Managing Director of the State ADP. The SFCO will report every six months to the SFTC, but to perform its Project coordination functions effectively, it will enjoy sufficient operational flexibility and autonomy and will work closely with the ADP and other line departments. The SFCO will serve as the secretariat for the SFTC. Responsibilities of the SFTC are as follows: (a) Review SFCO Annual Work Plan and Budget for funding; (b) Articulate sector policies and ensure compliance during implementation; (c) Ensure appropriate linkages across the sub-sectors to avoid duplication and overlaps; (d) Review quarterly progress reports; (e) Approve annual physical and financial reports, auditors' reports and Project accounts; (f) Commission an independent team to undertake concurrent annual evaluation of the Project. (g) Assess implementation progress; (h) Approve Annual Work plan and budget for funding after review by SFDC; (i) Review quarterly progress reports; and (j) Approve annual physical and financial reports, auditors reports and Project accounts. 3.7 LOCAL GOVERNMENT LEVEL A Local Fadama Desk (LFD) and Local Fadama Development Committee (LFDC) will be established in the participating states by the Project. The LFDC and its Secretariat (LFD) will be responsible for local level review and approval of subprojects. The LFD will comprise one or two civil servants, with qualifications and experience satisfactory to the SFCO, seconded to the Project to play the role of a clearing house for LDPs. It will screen LDPs to ensure that they meet a basic set of criteria as spelled out in the PIM, and will call meetings of the LFDC to review and approve the plans. Decision-making on subproject investment proposals emanating from the communities is delegated by the state government to the LFDC. The LFDC will also be responsible for reviewing and approving subproject and advisory service activity proposals. The LFDC will be chaired by the chairperson of the local government council or his/her representative; a traditional or community leader will serve as the deputy chairperson. At least one-third of the total membership of the LFDC shall be women. Government representation in the LFDC will be limited to one-third of the committee's total membership in order to ensure a majority representation of the stakeholder-beneficiary groups - the FCAs, civil society and the private sector groups. The LFDC will also be responsible for monitoring community mobilization efforts and ensuring that the needs and priorities of Fadama resource users are reflected in the LDPs. The Project will finance technical assistance and consultant services to enhance the quality of work of the LFDC. The LFDC discusses and seeks to build consensus on priorities and approves community proposals in the context of an indicative annual budget determined by the state. After the committee's recommendations have been reviewed by the SFTC/SFCO to determine consistency with state development strategy and compliance with the guidelines in the PIM, funds are disbursed directly to pay the service provider for services and/or goods actually delivered, and confirmed as such by the beneficiary-group. Copies of the transactions are thereafter forwarded to the NFCO for record-keeping and monitoring purposes. 16

26 Responsibilities of the LFD are as follows: (a) (b) (c) (d) (e) (f) (g) Collection of LDPs submitted by the FCAs; Screening of the LDPs to ensure that they conform to the checklist of criteria specified in the PIM and kept in each FDO: (i) submitting the screened LDPs which have been cleared to the LFDC for appropriate action by the SFCO; (ii) returning the rejected LDPs to the FCAs with specific recommendations on how these can be improved for resubmission; Convening meetings of the LFDC, in consultations with and at the instructions of the LFDC Chair or delegated representative, to review and approve the LDPs. Monitoring of community mobilization efforts; Ensuring that FCA priorities are reflected in the LDPs; Help coordinate technical assistance from relevant Ministries to support the implementation task at the community level, including preparation of subprojects; Screen subproject proposals emerging from the LDPs; Responsibilities of the LFDC are as follows: (a) (b) (c) (d) Review and approve LDPs which have been screened against a subproject checklist of criteria by the LFD; Review and approve proposed subprojects from the FCAs; Transmit approved subprojects to the SFCO for funding; Harmonize agricultural and rural development projects within the Local Government Area to avoid duplication and ensure judicious use of scarce resources. Membership of the LFDC is not to exceed twelve (12) persons. As the key decision-making body in the Project, it is imperative that the composition of the LFDC is carefully selected to represent a broad spectrum of stakeholders. Not more than 1/3 of the membership of the LFDC shall comprise of public servants. The remaining two-thirds will be representatives of the FCAs, private sector, NGOs and representatives of local women's groups. The decisions of the LFDC will be based on one-man-one-vote. And, there will be zero tolerance for non-compliance with this fundamental democratic principle. To ensure representation of women's perspectives on Fadama development, one quarter of the membership shall be women. Decisions of the LFDC are veto-proof, although LDPs will be subject to review by the SFCO to determine consistency with State and LG development priorities and objectives and compliance with relevant project guidelines. Recommended membership is as follows: Chairperson of the LGC (Chair) Traditional Community Leader (Deputy Chair) FCA representatives Others (Private sector, NGOs and representatives of local women's groups) Resource persons with non-voting rights: Fadama III Zonal Coordinator Counselor of Agriculture Counselor of Works SFCO Rep. Consultant Team 3.8 COMMUNITY-LEVEL PROJECT IMPLEMENTATION: FADAMA COMMUNITY ASSOCIATIONS (FCAS) Critical community-level decisions will take place within the FCAs and the various economic interest groups (EIGs) which constitute them. The Fadama Community Association is an apex organization of economic interest groups which derive their livelihood from the shared natural resources of the Fadama. These FCAs are entities created for the Project and will be registered according to existing local and state laws. They identify, prepare, implement, operate and maintain their subprojects, assisted by facilitators and technical specialists whom they contract either through the State Fadama Coordination Office or directly, and through technical assistance and training made available by the SFCO. 17

27 The number of FCAs in a particular Local Government Area (LGA) will depend on the size of the Fadama area, the population of the area and the number of FUGs. The role of the FCAs is to link FUGs with the Project resources to facilitate capacity-building, advisory services and investment financing of their development activities. To gain such access, FCAs must meet specific eligibility criteria and follow specific procedures, outlined in chapter 4 of this manual. Once subprojects are approved by the Local Fadama Development Committee, FCAs can access a share of the costs for design and implementation. Subproject agreements (SPA) are signed between the SFCO and FCAs. These agreements spell out the terms and conditions for the funding, execution, ownership, operation and maintenance of the approved subprojects. Resources are then transferred directly from the state level Special Account (PFMU) to the FCA's bank account. The set up and responsibilities of Fadama Community Associations are as follows: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) Become registered as a legal entity in accordance with existing local and state laws; Elect a management committee, including a monitoring committee; Assign representatives to the LFDC meetings, on the condition that no FCA should be allowed to review or approve their own LDP or subproject in order to avoid any potential conflict of interest; Identify, through a consensus-building process, priority investments for the members they represent; With facilitation support, ensure reasonable balance among choices from project components in order to foster synergy and reflect the interrelatedness of the various components for maximum impact; Use technical assistance, if needed, to prepare subproject proposals that deal with members' priority concerns, as identified in the LDP; Ensure that all required procedural and substantive elements are contained in the LDPs, particularly to ensure that a broad range of constituents have participated in LDP preparation; Ensure that all members receive appropriate training; Prepare an LDP, following a participatory and socially-inclusive process and ensure timely submission to the LFD. Sign any necessary agreements with the Project and with service providers; Open a specific bank account to receive subproject funds; Open a specific account for deposits of FCA member funds, for a revolving investment recovery fund; Carry out approved and agreed upon activities, with responsibility for members' contributions to the financing of such activities; Contract goods and technical assistance to develop operation and maintenance programs and techniques; Operate and maintain subprojects, with responsibility for collecting user fees that ensure the resources needed for the operation, maintenance and future replacement of financed investments; Be equipped with physical and financial control instruments; and Keep records of bookkeeping and other relevant information for Project supervision missions. Membership of the FCA Management Committee should not exceed twelve (12nos) persons and comprising of the following officers: Chairperson; Treasurer; Secretary; Maintenance Sub-Committee (3 persons); Monitoring and Evaluation Sub-Committee (3 persons); Procurement Sub-Committee (3 persons). 18

28 The committee will be transparently elected and should include representatives of different user groups. To ensure the representation of women on the committee, it is proposed that at least one quarter of the membership of the FCA management committee should be reserved for women. 3.9 COMMUNITY-LEVEL PROJECT IMPLEMENTATION: FADAMA USER GROUPS Members of Fadama User Groups (FUGs) are the primary beneficiaries of the Project. A user group will be defined by the members themselves. The size of a Fadama User Group is projected to be between ten and twenty households and as such, may comprise from 150 to 350 individuals. The Fadama lands are used for a range of purposes by different user groups. In the context of this Project, the FUGs may be organized via the following economic activities: Fadama User Associations Pastoralists (sedentary or nomad) Hunters Fishermen Gatherers of edible and non-edible plants Crop Production Food and Crop Processing, Marketing and Distribution Other interest groups (i.e. land management, agro-forestry, charcoal production, etc.) Each user group will have an association that represents its interests and will have the following responsibilities: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Select a Management Committee, including a monitoring committee; Represent members at the FCA level and sign any necessary agreements; Identify, through a consensus-building process, priority investments for the members they represent; Use technical assistance, if needed, to prepare subproject proposals that deal with Members' priority concerns; Open a specific bank account to receive subproject funds; Open a specific account for deposits of members' funds, or for a revolving investment recovery fund, etc.; Carry out approved and agreed activities, with the member's commitment to make contributions towards the financing of such activities; Be equipped with physical and financial control instruments; Operate and maintain subprojects, with responsibility for collecting user fees to fund the Operation, maintenance and future replacement of financed investments; Keep records of bookkeeping and other relevant information for Project supervision missions. The FUG Management Committee will comprise of no more than 12nos persons democratically and transparently elected as: Chairperson; Treasurer; Secretary; Maintenance Sub-Committee (3 persons); Monitoring and evaluation sub-committee (3 persons); and Procurement Sub-Committee (3 persons). 4 This number is derived from estimates of the size of Fadama User Associations active in the first Fadama Project (see Annex). 19

29 3.10 FACILITATORS FUGs will require Project assistance to constitute an FCA, as their apex organization and they will require assistance in community needs assessment and rural participatory appraisal. Facilitators will be hired by and report to the SFCO on performance contracts. Nationwide roughly 1600 facilitators are anticipated to be engaged; for this reason the Project will endeavor to ensure that the facilitators are well trained and equipped to execute their duties on the front line, and monitor and report back up to higher levels. More details on the role of facilitators are contained in the description of Component 1. There will be zero tolerance for: (a) Facilitators substituting their choice for that of the FCA, rather than facilitating a transparent process that will enable the FCAs to arrive at their own/decision/choice; and (b) collusion with third parties, such as Service Providers, for private/personal gain. The NFCO and SFCO should come-up with both incentives and sanctions on the issue of choice of subprojects as well as integrity of fundsmanagement at the community-level in consultation with the Bank team. The important caveat here is that similar measures/safeguards must be outlined to address possible fraud in the community bid tendering stage. Responsibilities of Facilitators are as follows: (a) Introduce and sensitize FUG members to the goals and procedures of the Project; (b) Assist with the formation of FCAs; (c) Liaise with the Local Fadama Desk; (d) Facilitate needs assessments for FUGs; (e) Preparation of LDPs; and (f) Raising awareness about the environmental implications of subproject implementation. See PIM volume II for details on facilitation guide SERVICE PROVIDERS To promote partnerships in rural development, the Project will promote the contracting of professional public/private support services required for implementing demand-driven productive and income generating subprojects and advisory services activities. More details on the role of service providers are contained in the description of Component 2, 3, 4 and the Guidelines for implementing subprojects. Qualified Service Providers to be considered under the Project are: Public sector: Agricultural Development Programs (ADPs), National Livestock Projects Division (NLDP), Training and Research Institutes, Agricultural and Rural Management and Training Institute (ARMTI), International Food Policy Research Institute (IFPRI), Universities and NAERLS. Private Sector IITA, etc. etc. Individual consultants; Artisans; Private entrepreneurs; Community groups; and NGOs and qualified civil associations; 20

30 3.12 SUBPROJECT CYCLE The subproject cycle is organized as follows: A statewide information campaign, to be implemented with effect from the project preparation phase, will increase awareness about the Project, its potential benefits and facilitate comprehension of the criterion which will be used in the selection of beneficiaries; Organized Fadama Community Associations (FCAs) will undertake a Participatory Needs Assessment (PNA), which will generate the social mapping and economic profile of the community, identify the development opportunities and the associated physical, technical, institutional and environmental constraints. The PNA report will be the information source book for launching the local development planning process a socially inclusive and participatory process- starting with the collective identification and decision-making on their local investment priorities, based on their own choices and information provided concerning the state's development objectives and priorities; these will be translated into investment activities which will be articulated in the Local Development Plan (LDP) and related budget. FCAs will be assisted by the Facilitators and local consultants to prepare subproject proposals on the package of interventions eligible for funding under the Project, notably productive investments, capacity building support and advisory services, including input support; Subproject proposals from FCAs are submitted to the Local Fadama Desk (LFD), where they undergo initial screening against an agreed checklist to determine completeness of the documentation; The screened subproject proposals are then submitted to the Local Fadama Development Committee (LFDC), where the proposed subprojects are prioritized and approved, based on the associated indicative resource envelopes and after determination that they are compatible with the local government development plan; The State Fadama Coordination Office (SFCO) technically evaluates the approved subprojects and confirms compliance with subproject technical, social, and environmental guidelines established in the Project Implementation Manual (PIM); Subproject Agreements (SPAs) are signed between the SFCO and the FCA. These agreements spell out the terms and conditions for the funding, execution, ownership, operation and maintenance of the approved subprojects, including agreement that the beneficiaries' associations would contribute to subproject costs, either in cash or in-kind (i.e., labor and/or materials). The minimum level of contributions is specified in the respective subprojects and in the PIM; Once the subproject has been approved by the LFDC and certified by the SFCO, the SPC would sign an implementation agreement (IA) with the FCA that would specify fund flow arrangement and commitment of their counterpart contribution and to the O&M program, where applicable. The implementation process would commence with the project launch ceremony at the project site. It would be the forum where the roles and responsibilities of all stakeholders are clarified. Resources, equivalent to the Project's share of the cost of the design and implementation of the subprojects are then earmarked to be paid to the service provider/s, upon formal confirmation of delivery of service and/or according to the terms of the contract; FCAs are responsible for contracting goods, works and technical assistance for subproject execution, unless otherwise specified in the PIM and the Financing Agreement (FA). As a general rule, FCAs/FUGs will seek at least three written quotations from service providers, and would reach agreement through their procurement committee, to allow a member to award the contract to the least cost supplier. The process and procedures for community-based procurement will be outlined in the procurement guideline. Community associations also bear responsibility for operation and maintenance of all subproject investments; and may request technical assistance to improve their capability to manage these investments. 21

31 Figure 1: Organizational Chart FADAMA III IMPLEMENTATION CHART FEDERAL Review & approve annual work programs & budgets of NFRANFRA/NFCO NFTC NFRA/SA-Comp 4 NFCO/SA-A IDA STATE LOCAL GOVT COMMUNITY Review & approve annual work programs & budgets of SFCO SFTC Review and approval of subprojects LFDC ADP SFCO Fadama Community Associations M&E M&E Local Govt LFD subprojects contracting M&E OSAG PFMU/SA Local development plans contracting Facilitators Advisory Service Providers LFDC: Local Fadama Development Committee LFD : Local Fadama Desk NFCO: National Fadama Coordination Office NFTC: National Fadama Technical Commitee OSAG : Office of the State Accountant General NFRA : National Food Reserve Agency, Federal Ministry of Agriculture PFMU: Project Financial management Unit SA-A: Special AccountNFCO SA-Comp 4: Special Account NFRANFRA SFTC: State Fadama Technical Committee SFCO: State Fadama Coordination Office Dotted gray lines represent flow of funds 22

32 4 IMPLEMENTATION ARRANGEMENTS 4.1 COMPONENT 1: CAPACITY BUILDING AND COMMUNICATIONS AND INFORMATION SUPPORT (US$87.5M) This component will include: (a) mobilization, and capacity building through training and technical assistance in: (i) the sociallyinclusive and participatory development of the Local Development Plan (LDP) as the basis for the active participation of the beneficiary rural communities in the planning, and management of their development programs, including systematic training on various aspects of the subproject cycle including needs assessment, design, collective identification and selection of investment activities and preparation, implementation and monitoring of the subprojects; and (ii) enhancing the capacity of each group participating in project implementation to acquire the capabilities needed to effectively carry out their responsibilities. The process and guidelines applicable to the LDP and the FCA involvement are outlined in the PIM volume II. (b) assisting the participating Local Governments to strengthen their role to respond to the needs of their communities as well as to improve decision-making capabilities; create capacity for investment planning, community mobilization as well as supervision and monitoring of community development projects; and (c) providing technical assistance and costs for designing and operating a communications education and information dissemination program for the Project Capacity Building Support to Fadama Community Organizations (US$66.7 M) The overall objective of the capacity building subcomponent is to strengthen the institutional capacity of community user groups, the coordination agency, local administration and private service providers to plan, implement, operate and maintain viable investments in productive infrastructure in a participatory and accountable manner. The activities of this subcomponent are closely linked to the Infrastructure and Asset Acquisition components as well as the project implementation and coordination functions. At the Federal, state and community levels, training and technical assistance will be provided to enhance skills for project implementation, coordination and supervision. 100 percent of the capacity building support to the community organizations will be grant-funded, with limited and targeted support provided to service providers (public and private sector) to improve their ability to deliver services to community associations and Fadama user groups and to the Project in general. The Project will finance the recruitment, training and deployment of a critical mass of Fadama Development Facilitators (FDFs), with a mix of social and technical facilitation skills; as well as the costs of contracting of consultants and other entities to assist the project implementation coordination teams at the national, state and local levels in coordination, supervision and monitoring and evaluation tasks. A team of facilitators will comprise one male and one female for community mobilization and community development tasks, including assistance in needs assessment and subproject development. All FDFs would receive appropriate training with effect from the project preparation phase until they have acquired the skills to remain effective in their facilitation work. The ADPs will also provide customized training designed to enhance the technical quality of subprojects emanating from the FCAs. Trained Facilitators, SFCO staff and consultants, in cooperation with the relevant departments of the LGAs, will provide FCAs and their member-fugs/eigs with information and TA support required to make informed choices, but choice rests completely with the FCA themselves, through the socially-inclusive and participatory LDP process. The Project will enforce a policy of zero tolerance for any behavior which undermines the FCA's ability to exercise their right of choice in the framework of the LDP. The FDFs will be responsible for mobilization of the FUGs/EIGs, and providing them with the necessary assistance for getting organized into FCAs, providing awareness-raising and training support to facilitate comprehension of the Project approach, principles, the subprojects to be funded and the guidelines established in the PIM as well as in undertaking a needs assessment as the basis for the collective identification of the communities' development priorities and investment decisions in the form of subprojects to be funded within the financial envelope of the FCAs' approved LDP. After successful completion of their mandatory training and induction, the FDFs will be deployed in each participating Fadama community to provide awareness-raising support, training and technical assistance. The types of training and assistance to be provided to the communities will include transfer of know-how on group formation, building a culture of social inclusion and community participation; subproject 23

33 preparation, including formulating and managing demand for advisory services, environmental and social screening and adoption of environmental-friendly practices. In addition and as implementation support to the sustainability mechanisms built into component 4, the Project will finance technical assistance, training and costs of establishing and operating the Fadama users' equity funds (FUEFs) aimed at ensuring sustainability of the public investment funds provided to the communities. This support will include targeted capacity building assistance to interested local banks and community-based financial organizations to enable them to provide appropriate financial services to the FCAs, especially the user groups of the disadvantaged beneficiaries. The Project would also provide specialized technical assistance, training, experience-sharing and knowledge exchange opportunities to service providers, with emphasis on improving the quality, effectiveness, availability, affordability and timeliness of advisory services. The goal here is to provide professionalism and technical capacity in the advisory services business. The beneficiaries will be established public and/or private sector service providers, with a proven track record. The Project will finance well-focused training activities based on local skill gaps and priorities that would enable the service providers to improve their know-how to design and deliver services of high technical quality to the FCAs. The training menu will be diversified and will include participatory methodologies and facilitation skills, building appropriate know-how and professional competences in services related to marketing and enterprise management, improved cultural practices and topics related to ecological sustainability, e.g. soil fertility management, sound use of agro-chemicals, soil conservation practices, rational water management and sustainable pasture management as well as sustainable ecosystem management, especially for service providers working in areas with sensitive ecosystems. Training and learning activities for service providers will be highly practical and oriented to learning-by-doing. The Project will finance the cost of training and mentoring activities, including consultant services, production and provision of training materials. Specific areas to be covered will vary depending on the needs of the individual FCA (to be identified through a participatory planning process), but are expected to include issues such as: (a) (b) (c) (d) (e) (f) (g) (h) Identification and use of appropriate technologies; Organizational principles; Techniques for participatory planning and conflict management; Information, communication and awareness raising strategy; Strengthening capacity for environmental screening, review and enforcement of subprojects; Financial management, procurement and contracting; Subproject cycle management ; and Methods of monitoring and evaluation. Each FCA will consist of representatives of various FUGs, which currently exist or which will be encouraged to form in order to be eligible beneficiaries of this Project Capacity building for Local Government (US$13.9m.) The Project proposes to integrate participatory, demand-driven development of low-income households with well-coordinated, transparent delivery of public services at the local government level. The strengthening/formation of self-managed Fadama user groups based on common economic activity/profession, affinity (primarily relationships of trust and mutual support) and of the network of the apex organizations (FCAs) are important expected outcomes of the Project and will help develop social and human capital and empower the poor. The (i) innovations in local planning at the community level; (ii) integration of community plans in the local government planning program; and (iii) improvements in good governance and organizational capacity of local governments (both elected officials and line department staff) are also expected outcomes of the Project. Deficiencies in these areas have seriously hindered public services from responding to the needs of the poor and the poor from accessing these services. Redefining and restructuring more healthy and sustained interfaces (or links) among community associations, local institutions, and the Federal government is a central challenge for the Project 24

34 This subcomponent aims at strengthening the LG's ability to respond to the needs of their communities, focusing on improving their capacity to extend technical, financial and management support to communities; as well as creating capacity for investment planning, community mobilization, supervision and monitoring of community development projects. Providing training, technical assistance and institutional support to local governments, as well as improving their internal and financial procedures will enhance their capacity for decentralized administration and their effectiveness to deliver services to community operations. Moreover, by decentralizing decision-making authority and funds to the local level for project implementation, this Project would also help facilitate the Government's decentralization efforts. It will improve the LG's role in the Fadama system, including the review and appraisal of proposals by FCAs (through the LFDC) and providing process facilitation and community mobilization support. Financial management and accounting controls will be put in place to reduce fiduciary risks. Each LG will keep a dedicated project account that will be subject to annual audits. There will be an MOU between the SFCO and participating LGs. As there are a maximum of 20 MOUs (i.e., 20 LGs per state) to be signed, these MOUs will be finalized prior to transfer of funds. The Project will finance technical assistance, training, equipment (if necessary) and other institutional support to the participating local governments Communication and Information Support (US$6.9m) Support for communication education and information dissemination is central to the success of the Project funded interventions to empower the communities to be in the driver's seat. Communication will be used to ensure that beneficiaries are empowered and motivated to participate in their own development, build an interactive and participatory culture, and ensure information flows within the Project and outside stakeholders. The Project would finance the costs of designing and operating a communications and information dissemination program for the implementation of the Project. With effect from the preparation phase, the Project would finance local technical assistance in the design and development of a communications and information campaign to continuously disseminate information about the Project, its potential benefits, the eligibility criteria to participate in it, thereby increasing awareness, transparency and participation in the program. The Project would finance (a) technical assistance to design this campaign and (b) the implementation costs, including appropriate multimedia mobile vehicles, simplified posters, leaflets, radio/television spots, and videos/dvds.the preparation of a statewide communication/information campaign acceptable to the Bank would be a condition of Board presentation. In addition, the Project will provide technical assistance services and funds to support piloting of the use of information technology by community associations and Local Governments to increase transparency, by making available, in real time, information about the Fadama III program itself as well as using the internet to connect communities to markets, particularly the large domestic market. NFCO and SFCO will facilitate the dissemination of information about the Project to the various stakeholders. Gender and environment issues will be focused on in all major components, with varying degrees of emphasis. The strategy will include, inter alia, the following: Face-to-face meetings with local government and state officials, political and traditional leaders, non-governmental organizations and others ; Orientation and training workshops for desk officers, extension workers and administration officials, such as the Local and State Executive Committees; Radio programs in several formats such as jingles, one minute slots, five minute and 15 minute programs, interviews, commentaries and radio plays in major languages to sensitize stakeholders. These programs will focus on important aspects such as: i. the key principles and operational strategies of the Project; ii. Participation of FUGs in the subproject cycle; iii. key preparation activities as well as implementation strategies. Other sensitization tools including flyers, drama, posters and videos. Implementation: The instruments for implementing the various forms of capacity building under this component will include a combination of workshops, limited external training, technical exchanges, onsite/on-farm training and/or demonstration, and more traditional technical assistance, drawing upon local expertise within the state consultants, universities/colleges, NGOs, and other local service providers as well as national and international technical assistance agencies and individual consultants. To this effect, the Project would finance consultant services, training materials and courses, seminars, workshops, related 25

35 studies and related operating costs. In addition to the consultant fees, this subcomponent will also finance all costs related to the operational work of the consultants, particularly the FDFs, such as travel allowance (as the Project will provide motorcycles to them, on loan), operating costs not covered by government counterpart, vehicles (if necessary) and office rental and equipment for the Fadama Desk Officer (FDO) and facilitation work. The criteria for selecting facilitators, consultants and other service providers are covered in Vol. 2: Annexes to the PIM. 4.2 COMPONENT 2: SMALL-SCALE COMMUNITY-OWNED INFRASTRUCTURE (US$75.00 M) This operation is designed in such a way that the actual locations of the proposed infrastructure interventions are not identified ex ante since a demand-driven planning approach will be used during implementation. A limit on the total cost of any FCA-owned infrastructure subproject has been set at $10, 000 though in general, works under this component are expected to be small, averaging $1,000. Joint/cross- FCA subprojects, involving 2 or more FCAs within or across local government administrations will range from $10,000 to $35,000, with an important caveat that concerned LGAs and States may choose to expand their counterpart contributions in order to undertake a subproject that exceeds the established threshold. Non-productive infrastructure needs and priorities not allowed in this Project will be studied and forwarded to other community development projects at the LGA for necessary action FCA-Owned Infrastructure Subprojects Implementation: Grant resources will be allocated annually to each of the participating FCAs for implementing priority demand-driven community-owned productive infrastructure investments of the public good type, and complimentary services identified in the LDPs. These infrastructure subprojects will include: (a) low-cost rehabilitation and/or construction of feeder and/or Fadama access roads, culverts and small bridges and rural markets; (b) infrastructure for sustainable natural resources management, including improved conservation of soils and agronomic practices, and water harvesting techniques. The distance of the roads to be funded will be established during the needs assessment and the Project will rely on variable design standards to deal with differential capacity to pay by different communities. Changes to the subproject menu the positive list will require the prior approval of the government and IDA. The Project will finance civil works, and related equipment, technical services for pre-feasibility studies and infrastructure subproject design, including estimation of subproject costs, environmental and social impact analysis and analysis to show technical and financial viability of the subproject. Funding principles would be 90 percent grants and counterpart contributions of up to 10 percent of the investment costs (in-cash or in materials and labor) from the FCA. Recurrent costs will not usually be provided for by the Project but, FCAs can use own-funds for services not provided by the Project. The investments in physical infrastructure are to enable improved access and better systems of marketing of agro-pastoral produce and acquiring inputs, and the delivery of related services to the beneficiary-communities. Targets for individual subproject implementation will be set within the proposals, in terms of quality, cost, scale and schedule for all productive investment subprojects (notably components 2 and 5). Rough estimates of subproject implementation targets, including the completion date and the subproject disbursement cycle will be set at the state level (SFCO), but these are only indicative and must be flexible enough to allow for community-level variations. Eligibility criteria for FCAs to access grant funds under this component include: (a) (b) (c) (d) The FUGs must be under a registered and eligible FCA; The subproject to be implemented must be part of the approved LDP and be for FUGs and included in the positive list ; Any infrastructure subproject not included in the positive list, but which meets the Project objective and is within the purview of the FUGs, must first receive approval for inclusion by the SFDC before proposal for the subproject can be prepared by the FUGs through their FCA; The FCAs must have received training from facilitators on the following: (i) procurement methods and rules; (ii) contracting procedures including those for hiring of transport and labour; (iii) simple bookkeeping; (iv) opening a bank account; (v) safe storage of materials; (vi) procedures for environmental impact screening, (vii) recording and reporting of minutes; and (viii) assistance to the FUG on how to get expertise for the design, supervision and training to operate and maintain the infrastructure investment subproject; 26

36 (e) The subproject must be screened and prioritized, with disadvantaged FUGs within the LGA receiving the highest priority (based on poverty data and other pre-existing information); (f) Agreements for the type of contribution made by the FUGs must be made up-front, (i.e. who provides labor, material or cash and/or a combination of both) to a minimum of 10% of the cost of the subproject; (g) The period of improvement or rehabilitation or construction of the infrastructure subproject implementation should not exceed twelve months. (h) The FCA or FUG must have a maintenance plan for the infrastructure and must have set up the appropriate sub-committees to procure, monitor and maintain the infrastructure. The FUGs then proceeds through the following approval processes in order to receive the Project grant funds and implement the Project: (a) (b) (c) (d) (e) Prepare with the help of an NGO or a consultant detailed overall designs, cost estimates, supervision, training needs and maintenance/operation arrangements. In a meeting with the FUGs all changes and adjustments must be incorporated into the design before making application to the LFD for screening of the subproject; FCA must fill out the subproject application form as required (Annex II of the Guidelines for Subprojects) and sign and submit to the LFD for screening all the required attachments; Provide a plan and procedure of how the investment will be procured. As much as possible, all works should be done by contract; The total cost of the subproject funding must not exceed funding allowed under the Project guidelines; The time and schedule of materials required to implement the subproject must be stated; Cross-FCA Infrastructure Subprojects Implementation: Grants resources will be allocated to finance infrastructure investments that cut across FCAs. Such infrastructure may be identified and reflected in the individual LDPs by contiguous FCAs. They may also be identified by a local government (LG) or the State Fadama Coordination Office (SFCO) as a priority investment either to support conflict reduction or for effective management of shared natural resources. The SFCO will contract out the design and implementation of these subprojects to consultant services, including public agencies, according to a transparent and competitive bidding process. Where the subproject is reflected in the LDPs of contiguous FCAs, the project funds (100 percent grant) will be channeled to the respective FCAs under the overall supervision of the SFCO. Where the subproject is identified by either the LG or SFCO, counterpart contribution of about 10 percent for the subproject will come from the affected local government which will also be required to give a written commitment to meet the recurrent costs and operations and maintenance of the installed cross-fca infrastructure. The subproject proposal will include detailed engineering designs, bill of quantities and schedule of material required for the infrastructure improvement or rehabilitation. All detailed subproject proposals must specify components, site, cost, plans for financing the subproject, FCAs contribution (if applicable), agreements for maintenance and operations, as well as arrangements for participatory monitoring and evaluation. The eligibility and selection criteria, to be agreed during Negotiations, shall ensure that subprojects are demand-driven and meet essential technical, economic, financial, environmental and social criteria. For the most common types of subprojects, the NFCO, in consultation with the concerned line departments at both the Federal and state levels, would develop standard designs and cost indicators for use by the community, the FCAs and the facilitators and consultants are to ensure quality and costing of the subproject implementation. Departures from these standard designs would have to be fully justified in the subproject proposal, as would proposed investments which fall outside the range of standardized costs. The Project will make sure that the FCAs fully understand the recurrent cost implications and the O&M requirements of the installed infrastructure and complementary community development schemes selected by the communities. Accordingly and prior to the commencement of the works, the FCAs will enter into a commitment/agreement, under which they will provide labor resources to maintain the community infrastructure, consistent with their capabilities. The Roads Department of the State Ministry of Works will provide equipment and overall supervision for these activities. The main instrument to guide the implementation of this component would be an Infrastructure Operational Manual (IOM). 27

37 The investments in physical infrastructure are to enable improved access and better systems of marketing of agro-pastoral produce and acquiring inputs, and the delivery of related services to the beneficiarycommunities. Targets for individual subproject implementation will be set within the proposals, in terms of quality, cost, scale and schedule for all productive investment subprojects (notably components 2 and 5). For the most common types of subprojects, the NFCO, in consultations with the concerned line departments at both the Federal and state levels, would develop standardized designs and cost indicators for use by the FCAs, the facilitators and consultants to ensure quality and costing of subproject implementation. Departures from these standard designs would have to be fully justified in the subproject proposal, as would the proposed investments which fall outside the range of standardized costs. An operational manual detailing the principles and guidelines pertaining to this component will be developed during project appraisal and adopted as a disbursement condition for this component. The Project will make sure that the FCAs fully understand the recurrent cost implications and the O&M requirements of the installed infrastructure and complementary community development schemes selected by the communities. A MOU detailing the reciprocal obligations of the contracting parties will be entered into between the FCA and the LGC for the implementation of this component. 4.3 COMPONENT 3: ADVISORY SERVICES AND INPUT SUPPORT (US$39.5 M) The output of this subcomponent is that Fadama resource users will have increase in productivity and diversified their sources of income in an environmentally sustainable manner. Under this component the Project will finance: (a) delivery of advisory services (mainly diversified problem-solving research and extension services) that are responsive to the production, processing, marketing and supply chain management needs of Fadama users; and (b) input support. This support would include capacity strengthening for advisory service providers to link with FUGs and FCAs to deliver SLM packages directly to land users. GEF support would reinforce this in all the States Advisory Services Subcomponent (US$24.5 M) The Project will provide support to empower Fadama users--farmers/pastoralists and other economic interest groups (EIGs), working within their organizations and through their LGAs, to purchase rural advisory services from both public and private sources. Grants would be channeled from the state level of government through the SFCOs to the FCAs for use in financing advisory service contracts. The content and scope of the advisory services would be determined by the FCAs, with the assistance of the facilitators and qualified consultants and articulated in the LDPs. With this support, Fadama users would be assisted to gain access to a diversified menu of farm/enterprise advisory services, including the knowledge, technology, information and guidance with regard to the technical and economic management of specific crop and livestock enterprises and value-adding activities (such as processing, grading, marketing and trade facilitation). The Project would finance the delivery of comprehensive advisory service packages demanded by the FCAs, working within and through their organizations and SFCOs, as well as related training, technical assistance and incremental operating costs, when necessary. Fadama users will decide on which service providers they will contract out the demanded services. Only the service providers duly certified by the ADPs will be eligible to participate in this component. Further details on the eligibility criteria to access this facility and the applicable guidelines would be outlined in the Advisory Services Operational Manual (ASOM) to be prepared during Appraisal and incorporated in the PIM. Information on the permissible limits of annual advisory service contracts per FCA/FUG can be obtained from the ASOM Input Support Subcomponent (US$15.00M) The provision of input support is a high priority, given that many of the rural communities do not have assured and reliable access to critical factors of production of good quality on a timely basis. The Project will continue the matching grant arrangement which has successfully been tested under the ongoing Fadama II Project. This facility is adopted to share the risks involved in the adoption of a new technology by the farmers, to enhance their purchasing power and hence financial capability to purchase farm inputs (mainly seeds, fertilizers and agro-chemicals) and to build their savings to finance future purchases. As innovation support, the farmers will receive a one-time grant for up to a maximum of two years. The beneficiaries would contribute half the value of the required input, with the other half provided by the Project. Eligibility to the Second season grant will depend on evidence of incremental returns and the desire to scale up production. 28

38 In order to ensure sustainability of the production process after the Second season, the beneficiaries would be assisted to link with financial institutions, through the advisory services and asset acquisitions support components, to access credit for future production support. Private Service providers, NGOs and other rural stakeholders will be encouraged to facilitate the link between financial institutions and the farmer groups (FCAs) graduating after two years of project support. In addition, by linking the grant to a savings instrument, farmers' groups would increase their bargaining power vis-à-vis input providers and stimulate market development. The funding process involves: (a) a down-payment of half the cost of inputs required by a beneficiary FUG into a group savings account; (b) a matching grant from the project to meet the balance would be deposited; and (c) payment of the supplier based on group decision for the input being procured. The group would procure the inputs in accordance with the agreed community-based procurement guidelines. The above sub-component is expected to address issues of affordability and accessibility emanating from the presence of government in the input market (fertilizer, seed etc) leading to poor distribution, corruption and expensive farm inputs. This results in low use of farm inputs and the consequent poor output. Instrument for effective Implementation of the Input Support Sub-Component Input must be requested as a package based on technical recommendation. (For example a request for an improved variety of maize must be accompanied by the request for other inputs that form the package for the improved variety of maize such as fertilizer, or herbicide. Also the maize variety must be that approved for the agro-ecological zone or area. FCA & FUG must have a final say in selecting the dealer that provides the input. Creating an enabling environment for private sector involvement and investment in agro-input marketing. Enforcement of quality control regulations to protect farmers. Provision of market information and intelligence on inputs. The use of the voucher system in paying for input support. The provision of input support is a high priority, given that many of the rural communities do not have assured and reliable access to critical factors of production of good quality on a timely basis. The project will provide a matching grant arrangement whereby the project finances up to 50% of the cost of consumable agricultural inputs (seeds, fertilizers and agro-chemicals) up to approximately $200 equivalent per household per year (for a maximum of two years), with the beneficiary FCA contributing the remaining 50%. The FCAs' counterpart financing would be deposited into their bank account. The maximum amount of grant for inputs per FCA will be set at US$40,000 equivalent. This sub-component will finance matching grants for the purchase of farm inputs that support the local smallholder agriculture, crop, livestock, forestry and fishery sectors, including processing. Only user groups within participating FCAs will be eligible for the matching grants. The overall objective of this sub-component is to promote science and technology-based commercial agriculture among the rural poor and enhance users' productivity and income by facilitating the use of the right type, quantity and quality of farm inputs by individuals or Fadama users groups. Eligible items in the IGAs will include: Crop Production (a) Seed and seedlings; (b) Fertilizers and manure; and (c) Agro-chemicals for the protection of crops and livestock. Livestock Production (a) Foundation stock (day old chicks, winners and calves, etc.) (b) Feeds (c) Drugs 29

39 Pastoralist (a) Pasture seeds (b) Fertilizer and manure Fisher Folks a) Fingerlings b) Feed c) Fertilizer including lime d) Drugs Agro-forestry (e.g. bee keeping, snailry etc) (a) Parent stock (b) Feed (c) Drugs In support of the input sub-component the project will fund: (a) farm input requested as a package and based on technical advice; (b) activities that provide market information and intelligence on input; (c) activities that enforce quality control regulation to protect farmers; and (d) activities that encourage private sector involvement in input marketing. Application, Review and Disbursement Procedure for Input Support The sequence, as illustrated in Figure 2 will be followed in requesting, approving and disbursing the input matching grant. The application is initiated by the FUG based on the technical advice of the ADP extension agent (EA). The FCA will produce a summary of FUGs request for input in the Summary Form 1 & 2. (See Appendix 1&2). The LFDC will review and approve the input support grant applications. The LFDC will advice the SFCO to sign the contract for input with the FCA and make payments through a voucher system ( figure 2 below) directly to the FCA once it is determined that the user group/fca has paid up its 50 percent of the input cost. The fifty percent contribution of the FUG/FCA is made into a designated bank account once approval for the purchase of the input is made by the LFDC. The farmer/fug/fca receives the predetermined number and type of input from an input dealer and pay with the voucher. The dealer submits the voucher to the cooperating bank or her local agent or money changer in the locality and gets paid full cost of the input he supplied the farmer. The voucher printed in the local language authorizes a farmer or FUG to receive predetermined quantity of inputs from a specified local input dealer. The voucher will be designed and printed with special markings agreed by the SFCO and the Bank/ Money Changer to ensure that they could not be duplicated easily. The FCA will be responsible for ensuring that the procured inputs are used for the intended purpose, and thus must oversee the procurement and process management of inputs by the user group. 30

40 LF Desk/LFDC Request for approval SFCO Request for approval Approval &Transmission of voucher Approval &Transmission of voucher Payment of 50 % of cost Approval & payment of 50% of cost Bank/Money changer Request for payment FCA & FUG Supply of Input Transmission of Voucher Input Supplier Figure 2: The Sequence for Requesting, Approving and Disbursing the Input Support Matching Grant Negative List of Activities not Eligible for Input Support Matching Grant Financing The following user groups' activities will not be eligible for input matching grant support under the Project: (a) Use of fertilizer and agro-chemicals that would affect human health and encroach upon critical ecosystems, including riverbanks and residential and public houses. (b) Input supporting farming activities that would have a high risk of disturbing fragile ecosystems, including agricultural expansion into or the pollution of fragile ecosystems; (c) Input support for agro-processing facilities close to a water body and without acceptable mitigation measures; (d) Input support for farm activities that would violate traditional and cultural norms and beliefs. 31

41 Table 3: Potential Advisory Service and Input Support Providers in Different Agricultural Activities Agricultural Activities Food crop production Commercial seed production Specialized horticultural crop (and fruit tree) production Seedling production Crop protection IPM Potential Advisory Service and Input Support Providers ADPs, private producers, research institutes Private seed companies and producers, NSS, IFDC/DAIMINA Private producers, research institutes, horticultural unit of FDA Private producers State MANR, pesticide companies, private consultants, private spraying gangs NGOs, research institutes Livestock production Large ruminants Veterinary care Livestock (and fish) feed Fish production (aquaculture) Fingerling production Special production (wild life domestication, beekeeping, snailery, cheese making etc) Agro-forestry production Seedling production Soil and water conservation, soil fertility enhancements, and improved land management techniques Irrigation Water management Water conveyance systems Input supply linkages Credit supply linkages Storage, processing Marketing Market information (prices) Business management, record keeping, accounting Management & leadership for groups and associations Savings and credit Nutritional health NLPD, ADP, private producers Private producers, research institutes Private veterinarians, Para-vets Feed companies, private producers Private producers, State MANR, ADP Private producers, research institutes Private producers, NGOs, research institutes State MANR, private producers Private producers, State MANR Forestry, Soil and Water Resources departments of State MANR, research institutes Private producers, ADP Private producers, NGOs Input supply companies, RID of ADP, fabricators, NCAM IFDC/DAIMINA, input dealers SCAs, RID of ADP, banks. Private processors, research institutes, farmers organizations, Agroindustry Development Unit Trade associations, NEPC, consultants, PrOpCom, IFDC/DAIMINA, producer organizations, marketing and export enterprises, local traders, private business development service (BDS) providers, research institutions ADP, trade associations, marketing and export enterprises Private BDS providers, MFIs, cooperatives, RID of ADP, NGOs, IFDC/DAIMINA, PrOpCom Private consultants, RID of ADPs, NGOs MFIs, cooperatives, RID of ADP, private BDS providers, banks ADPs, NGOs, FDA, research institutions 32

42 Appendix 1: FUG INPUT REQUEST SUMMARY FORM (FORM G2) NAME OF FUG... S/N Name of Economic Activity 1 1 Types of input Size of Activity (eg. No. of Ha or livestock Quantity required Amount (Naira) Project contributions Beneficiary contributions Total Total FUG SECRETARY FUG CHAIRMAN DATE DATE 33

43 Appendix 2: FCA INPUT REQUEST SUMMARY FORM (FORM G1) NAME OF FCA... S/N Name of FUG Types of input 1 1 Quantity required Amount (Naira) Project contributions Beneficiary contributions Total Total FCA SECRETARY FCA CHAIRMAN DATE DATE 34

44 Appendix 3: FADAMA USER GROUP SUB-PROJECT (INPUT SUPPORT) FINANCING AGREEMENT This agreement is made on day of Between (. State Fadama Coordination Office of the Third National Fadama Development Project) of (address). Acting by its Training and Technical Assistance Officer,.... Hereinafter called (SFCO) on the one hand, and the ( Fadama User Group of the Fadama Community Association) in the (Location) in (LGA), hereinafter called The Beneficiary a c t i n g t h e c h a i r p e r s o n o f t h e F a d a m a U s e r G r o u p. M r. / M r s. / M i s s WHEREAS THE: 1. Group will be responsible for the purchase of agricultural inputs from accredited inputs supplier, monitor and distribute to benefiting members as and when due; 2. SFCO will be responsible for the overall coordination, supervision and monitoring of Agricultural Inputs Support in the State NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:- i. Input will be supported for only improved technology and on risk sharing basis. ii. Beneficiary of input support should have access to and would have prepared their land. iii. Beneficiary of input support must agree on group purchase to avoid diversion of funds. iv. Beneficiary will contribute 50% of the total cost of the inputs to qualify for support. v. That input support will be administered only on members listed on the summary sheet. vi. That the acquired inputs will be used for the purpose specified in the application form. vii. Beneficiary shall keep records of all expenditures and transactions involved in the implementation of the sub-project. viii. Beneficiary shall allow the above record to be verified by the representative of the SFCO or any Mission. ix. Input support will be for a maximum of two years and renewable based on performance in the previous year. IN WITNESS whereof the said parties hereto executed this deed the day and year above written FCA Representative Date State Training and Technical Assistance Officer Date... 35

45 4.4 COMPONENT 4: SUPPORT TO THE ADPS, SPONSORED RESEARCH AND ON-FARM DEMONSTRATION (US$37.43M) The Project will provide support to the ADPs to carry out the following specific and limited functions: i. Support to Advisory Service Providers: The Project would provide specialized technical assistance, training, experience-sharing and knowledge-exchange opportunities to service providers, with emphasis on improving the quality, effectiveness, availability, affordability and timeliness of advisory services. The beneficiaries will be established public and/or private sector service providers, with a proven record certified by the ADP. The training menu will include specific agricultural technologies, such as new varieties and cultivation methods, participatory methodologies and facilitation skills, marketing and enterprise management, improved cultural practices, soil fertility management, sound use of agro-chemicals, soil conservation practices, rational water management and sustainable pasture management as well as sustainable ecosystem management. The Project will finance the cost of training and mentoring activities, including contracting consultant services in areas in which the ADPs lack the necessary expertise, and production and provision of training materials. ii. Quality Assurance of Advisory Services: The project will fund the incremental operating costs to allow the ADPs to certify service providers and provide technical quality control to ensure that the advisory services delivered to project beneficiaries meet established quality standards;. iii.training of Facilitators: The project will provide periodic support to the facilitators, including training, workshops on formulation of demand for advisory services, and participatory implementation and supervision of such activities, as well as to perform quality control functions in order to ensure that the subprojects emanating from the FCAs meet minimum technical standards. iv.sponsored Research and On-farm Demonstrations: The project will undertake, through entering into a Performance-based Contract (PC) with public and private research centers, including centers of excellence such as CGIAR centers, sponsored research to develop technical propositions/ recommendations on crop, livestock and other activities, and also respond to problems and constraints identified by farmers. Research institutions will be encouraged to form partnerships in order to bid for these contracts. The research centers will team with the ADP extension agents to conduct on-farm demonstrations. The main objectives of this activity are to test new crop varieties and management methods for crops, agro-forestry, livestock and fisheries. v. Training of Extension Staff: The project will fund focused training of extension staff. This activity will be contracted out by the NFRA to public/private research/extension centers and/or specialized institutions, under a PC. Limited external training will be provided in selected disciplines of high priority. The training menu will include new methods of instruction and information dissemination for the ADPs, workshops/retreats and study visits designed to up-grade skills and acquire new ones to support demanddriven community investments. vi.development of a Research Laboratory. The project will finance the setting up of a small research laboratory consisting of between 5 and 10 computers with full internet connectivity. The provision of this equipped laboratory is to assist operations of ADPs in data coding, analysis and monitoring of farmers adoption of innovative project interventions. It will also allow access to new information and an update of techniques relevant for the training of FDF and the Service providers under the project. The component specialists at the ADPs now have opportunities for knowledge update and tracking of developments in their fields. Furthermore the M&E of the ADP is expected to be strengthened through data bank and a programmatic MIS to be facilitated through this provision. 36

46 The Project would finance: contracting with third parties; minor civil works for ADP office renovations; vehicles, goods, and equipment for ADP and NFRA zonal office operations; staff training; support to service providers and Facilitators; support to ADPs to conduct selected on-farm demonstrations; and operating costs for the ADPs and NFRA's central and zonal offices; ass well as program monitoring and evaluation. The incremental operating costs of the ADPs and NFRA's zonal offices would be 100% funded by government counterpart contributions. The Head of Unit of the NFRA would use their zonal offices to coordinate the implementation of the Component in all states, drawing upon the critical mass of trained manpower resources available in the various departments of the Ministry of Agriculture and Water Resources (agriculture, irrigation, forestry, livestock and fisheries, etc.). A separate Special Account will be established for the implementation of Component 4 of the Project. Implementation: A Senior Agricultural Advisor (SASA) will be recruited by the NFRA under procedures satisfactory to the Bank. The NFRA will establish a small core team under the supervision of the SASA-- to be responsible for the day-to-day implementation coordination of this component, including a specialist in contract management and an operational specialist, with background in monitoring and evaluation. The SASA will be responsible for the overall coordination of this component, including conducting the initial screening, against an agreed check-list, of all ADP-requests for release of funds under this component. All such requests will be articulated in the Annual Work Program. A Program Evaluation Committee (PEC) will be set up to appraise, review and approve the annual work program for this component. The committee will be under the chairmanship of the Head of Unit, NFRA. Other members of the committee will include the NFRA Programme Leader in charge of the ADPs, the NFCO, the Department Directors of the participating Federal Ministries, one representative each from the Farmers Association of Nigeria, the private sector and civil society. These members will be appointed by the FMA&WR, in consultations with the Bank. Once duly approved, the annual work program for this component will be integrated into the Annual Work Program of the project as a whole. The ADP will adopt the CDD approach in changing the extension service from the traditional top-down supply-push service by the government to a demand-pull private sector service. This will entail the establishment of model extension programs customized for meeting the requirements of particular communities, based on contributory funds provided by the federal, state and local governments. The activities of such extension programs would be channeled through the ADPs. Instrument to enhance support to the extension function of the ADPs: Train ADP staff on the CDD principles and practices. Restructure the ADP to accommodate some enduring structure of FADAMA notably the place of the facilitator, FCA, FUG and service providers. Enhance the capacity of ADP to develop data bank of service providers (extension and input providers). Establish a research computer laboratory in each participating ADP to enhance research works. Adaptive Technology Development and Transfer Support: This sub-component did not feature in Fadama II resulting in the weak technical support experienced in the project Activities in this sub-component is presently provided by the public extension system. Instruments to Enhance Adaptive Technology Development and Transfer: a) Research should be based on the needs of the Fadama users; b) Agro-inputs should be sourced from locally available material; and c) Strengthen Research- Extension-Farmer-Input Linkage System(REFIL). Generally, the extension and research arm of the ADP works are characterized with inadequate productive infrastructure; an agricultural research and extension systems that is unable to respond to the increasingly diversified advisory/extension services needs of the rural clients; and an inefficient input distribution systems due mainly to poor public funding, inappropriate orientation and lack of community participation in maintaining the installed infrastructure, In order to improve the competitiveness of Nigerian agriculture and achieve the stated agricultural growth objective, the instruments relating to advisory services and input support need to be addressed. 37

47 The capability of ADP to deliver extension service has over the years been weakened particularly after the end of World Bank financial support. Federal and state government financial support to ADP has been very inadequate. In the recent past more than 60% of field extension agents left the services of ADP due to poor conditions of service. Unfortunately, the reform of extension service delivery initiated by Fadama II did not include the ADP. The Fadama III project will strengthen the capacity of the ADPs of the participating states to provide knowledge and technology to meet the goals of improving quality and value added and increase market access, in a manner that is consistent with the demand-and community-driven principles and participatory approach of the Project. This support is designed to enhance the efficiency and effectiveness of the ADPs in the carrying out their statutory mandate of supporting agricultural development in their respective state of jurisdictions through the provision of extension services to the farming community, including pastoralists and fisher folks. It will focus on improving the capacity of the ADPs to continue to deliver essential technical support services, while capacity for demand-driven advisory services is being developed both at the community level and in the private sector; as well as help improve internal efficiency and cost effectiveness of agricultural extension through a better use of available human, physical and financial resources. The project also seeks to contribute to the government's effort to rehabilitate and equip the ADPs and NFRA's zonal centers to become professional centers of technology diffusion. The involvement of the ADPs will be coordinated by the NFRA an agency that already has the mandate to supervise the national extension system. An MOU will be entered into between the NFRA and the NFCO with respect to on-farm trials related to the economic activities of the FCAs nation-wide (i.e. demand-responsive trials).the NFCO will be responsible for contract management. Adaptive Technology Development and Transfer Support Subcomponent: Adaptive technology development is the procedure used to generate new technologies in a farming system. (See Appendix 1: Procedure for Adaptive Research). As it relates to agricultural development, it is that process of identifying and modifying a prototype technology or components of it developed during onstation research (up-stream research) to solve problems of a specific agro-ecological area and/or socio economic or socio-cultural group referred to as the recommendation domain. Technology in this context is used in a broad sense to mean any or combination of physical factors of production employed in farming, namely, cropping techniques, animal husbandry practices, use of agro chemicals, farm implements, crop or animal varieties, etc As a process of technology generation adaptive technology development can be categorized into: On-Farm Research (OFR); and On Farm Adaptive Research (OFAR). While OFR is researcher managed and may entail more variables (treatments) under investigation, the OFAR is largely managed by the farmer himself as guided by a trained Staff (SMS and EA). Thus, OFAR entails multi location trials to further validate (prove) the practical utility(application) under farmer's management, socio economic and resource base of only a few(at most 3nos.) proven technologies at a time with the active participation of the farmers in the recommendation domain. Where the results from OFAR trials proved satisfactory from the farmer's point of view, these results are then reduced to extension messages. Description of Adaptive Technology Development and Transfer Support subcomponent: A program of on-farm adaptive research and demonstrations of technologies available in-country or in neighboring countries will be supported as well as the implementation of the recommendations. Under this project, a competitive grant would be available for which public and private research institutions and centers will compete to provide problem-solving oriented research and technology transfer services to Fadama users. These contracts would consist of a program of adaptive research trials and demonstrations to develop technical propositions/recommendations on crop, livestock and other non-crop diversification (upstream and downstream of production), and also respond to problems and constraints identified by farmers. 38

48 The main objectives are to improve efficiency and raise productivity through testing of new crop varieties, variety improvement and on-farm crop management. Farmers participating in the project would be assisted through adaptive trials, verification, and up-scaling of production practices for production of high value fresh produce. The grants would be used for new crop varieties, improved crop and animal husbandry practices, including fisheries and social forestry; higher yields, improved quality, reduced transaction costs, and value-adding strategies for existing and new products and markets. The subcontracted grants would also support technology demonstrations on farmers' fields and in the assembly markets and processing industries to test or transfer new and adapted technology linked to defined market opportunities. Demonstrations to test or transfer new and adapted technology would be managed by farmer-groups on members' fields under the guidance of an agricultural advisor from the ADP. Demonstrations on processing would also be done in participating processing plants or institutions in the project zone. In support of the extension function of the ADPs, the project will fund: a) training of ADP staff on the principles of CDD; b) training that will provide SMS with skill for working with rural farmers and enhancing demand driven research; c) transport support for NFRA and ADP staff providing services to the Fadama users and project; and d) procurement of essential equipment to enhance technical support services In support of the adaptive technology development and transfers the project will fund: a) Collation demand driven technology needs of the members of FUG for the attention of research; b) Organizing for the research by identifying competent personnel and institutions that will find solution to identified problem; c) Training of ADP staff on the application of the identified solution; and d) Conducting demonstration of result on farmers fields, market or industry Implementation of Support for the Extension Function of the Agricultural Development Programme (ADP): To access the support of extension function each state ADP will: Identify specific extension service activities of the state ADP demanded by the Fadama Users; Identify specific technical support services demanded by the Fadama Users; Evidence of user demand will come from FCA and LFDC; For each identified extension activity, indicate existing capacity within the state ADP and the capacities that need to be strengthened in order to effectively and efficiently implement the activity; For each identified technical support service, indicate existing capacity within the state ADP and capacities that need to be improved for the state ADP to continue to deliver such essential support service; For each identified capacity to be improved, articulate the method of improvement, indicate detailed cost of human and material resources needed (cost of travel, equipment etc); Each ADP shall submit request for support to the coordinating NFRA's Zonal Office; Each NFRA zonal office shall vet the request from ADPs within the zone; 39

49 Each NFRA zonal office shall identify activities common to two or more ADPs that may be jointly handled as cross State/ADP support activities; Each NFRA zonal office shall supervise the implementation of the support in the State ADP; Each NFRA zonal office shall follow the procedure specified for ADPs above in identifying and costing the needed capacity and capability to serve as professional centers of technology diffusion; The NFRA headquarters shall collate the submissions from NFRA's zonal offices (i.e. ADP request and NFRA's zonal office request) FUG/FCA Demand for ADP extension Services & Technical Support Services STATE ADP Capability of ADP to meet the demands of the FUG/FCA Available or Existing Lacking or Needed Method & cost of providing the needed capability NFRA ZONAL OFFICES Vet request from ADPs Identify cross ADP support activities Identify and cost zonal office needs Collated ADP & zonal office need NFCO MOU on funding and execution NFRA HQS Figure 3: Procedure for Implementing Support for the Extension Function of ADPs 40

50 Implementation of the Adaptive Technology Development and Transfer Support: In implementing the Adaptive Technology Development and Transfer Support facility the following procedure shall be followed: The ADP VEW in the Fadama participating area with the support of the facilitator receive and categorize problems emanating from the existing or planned IGA of users The problem is transmitted through the Zonal SMS and the technical unit at the state ADP headquarters to the NFRA regional office The NFRA Regional Office shall forward the identified problem to the NFRA headquarters for collation The NFRA Regional Office shall cause the farmer-identified problems to be publicised for the attention of competent researchers (public and private) requesting for proposal on how to address the problem Problems that cut across NFRA regional boundaries shall be handled by the NFRA headquarters The NFCO shall be responsible for administering the contract and payment An Adaptive Technology Development and Transfer Committee shall be constituted in each NFRA regional office. Membership of the committee shall be multidisciplinary representing different speciality in agriculture. The Committee shall consist of the following members: a. Head NFRA regional office (Chair) b. Director Technical, ADP of each participating state in the zone c. Each SFC of the participating state d. Two persons representing the agro-research institutions in the region e. Two persons representing the University's faculty of agriculture in the region f. Two private persons with training in agriculture, representing the private sector. g. Two representative of FCA (preferably from communities demanding or will benefit from the research) It shall be the responsibility of the committee to: Screen the proposals and select those for presentation conduct a competitive presentation of proposals select the best proposals for each problem recommend recipients for the research grant and supervise the research process In order to ensure proper implementation of OFAR trials, the following is recommended. The Head of Technical Services sub programme through his/her Component Heads, must budget properly in details for inputs, field visits, record keeping, etc. for each OFAR, taking cognizance of the increased number of locations. The Head of Extension Sub-Programme must also include in his/her budget an incentive allowance per OFAR trial to be paid to each EA who successfully conducts the OFAR trials under the technical guide of the SMS. The Head of Extension Sub-Programme should also include in his budget the farmer compensation fee. Procedure for Adaptive Research: OFR a) The OFR team is drawn from Research Institutes and Universities closest to each ADP. The core members of the team are expected to be researchers who maintain some on station work in support of the on farm research activities. b) All OFR trials should address only priority problems of each ADP. OFAR a) The ADP SMSs are directly in charge of OFAR for their respective disciplines. In collaboration with the EA, therefore several members of the FUGs/FCAs sites are chosen. b) Choose sites and farmers within the recommendation domain that are as much as possible representative of the target groups. In particular, choose farmers who correspond to the age, wealth and sex of farmers in the study area, but avoid inaccessible farms. c) OFAR is wholly executed by the farmer under the guide of the SMS. 41

51 d) The prototype technology is super imposed on each farmer's practice, using each farmer as a replicate or block e) Simple experimental designs are used and one or two at most three variables tested at a time. The farmer's practice is one of the treatments and forms the control. f) The SMS guides the farmer to ensure that treatments are applied, records kept by the farmer and feed back mechanism ensured. g) Apart from the variables ( treatments) under investigation, the farmer is free to manage the plots as he wishes, because his normal practice without treatments is usually the control plot. In this way, a vital process of technology adaptation, that is, the interplay of the variables and the farmers' micro environment and resources base is fulfilled. h) In OFAR, the farmer uses essentially his own inputs (including crop variety or breed of animal) except when these are completely new ideas in the farming system of too expensive for the farmer to provide at the point in time. Guideline on the involvement and Active Participation of ADP Extension Agents in OFAR Trials: a) As much as possible, the collaborating farmer should provide the inputs for the OFAR. Therefore any technology to be adapted in the recommendation domain must be seen to be relevant and has a chance of succeeding. However, in the event of the trial failing (that means loss of resources to the farmer) the ADP has to budget a compensation fee of up to 50 70% of the anticipated revenue derivable by the farmer from each plot of trial. b) Under the guidance of the relevant SMS in the zone, the EA with his Farmers establish the OFAR accordingly. The EA also keeps all records and observations made by the Farmer and eventually hands over these data to the SMS for analysis. c) The SMS on his part establishes the same OFAR on one or two other farmers' farms in the same way he (the SMS) has guided the EA. That means in practice for example, if there are 60 fadama user in an agricultural Zone, there will be 60 replications plus 1 or 2 ( i.e. total of 61 or 62) of that OFAR trial in the zone if the technology cuts across the zone. Advantages of the EA's Involvement in OFAR Trials The EA gains firsthand experience in the performance of the technology and are likely to be more confident when disseminating the technology through SPAT in the following season. There is a more functional interaction between the Farmer, EA and SMS and thus fulfilling the requirements of an effective Research Extension- Farmer Linkage System. A truly multi location application of the treatment in all the zones is achieved, and when analyzed gives a good picture of adaptation or non-adaptation. If results prove positive then the chances of mass adoption are increased. Categorizing Adaptive research Needs The constraints may be categorized into physical, biological, economic and social constraints Physical constraints: soil and rainfall issues. These are constraints the research team cannot change in the short run. In the long run, however, the farming system can be manipulated to adjust positively to physical factors. Biological constraints: Crop varieties, livestock and fish types, pests and disease control, fertilizer and feeding types. Economic Constraints: Farmer's capital labour management and marketing opportunities. How can he ensure optimum use of factors of production at his disposal? Social Constraints: Tastes and preferences of the target communities in terms of crop livestock and fish types or enterprise combinations Having categorized the constraints, the next question to ask is which of these constraints can the on-farm research team tackle at any particular time, given the limited resources (time, money, personnel, etc) available? Following are five criteria to guide answers to the questions above: Choose those that do not contradict national or regional objectives. Choose those that will increase farmer's output and income. Choose those that are within farmer's management and financial capabilities. 42

52 Choose those that do not suddenly drastically alter the farming culture of the farmer. e.g. Optimum plant population should be such that allows the farmer to practice some level of mixed cropping if he is traditionally a mixed cropper. In other words let the innovation be flexible but show possible advantage over the farmer's practice. Choose those that reduce farmer's labour demands and costs, either by distributing his labour more evenly (especially at peak and slack periods) or eliminating certain areas of labour stress in order to increase farm size 4.5 COMPONENT 5: ASSET ACQUISITION FOR INDIVIDUAL FUGS/EIGS (US$ M) Innovative interventions to improve local level productivity and generate income and wage employment, especially in agriculture the largest non-oil sector of the Nigerian economy, remains a high government priority. This Project will especially focus on creation of sustainable non-farm employment opportunities, such as agro-processing, social forestry, smallholder fisheries production and/or aquaculture, livestock development, and other value addition to farm produce and trading. Building on the success of the Fadama II Project, this component will include a matching grant fund to: (a) facilitate access to the assets which the beneficiary and economically-active rural poor will require for their various income-generating activities; the matching grant will be used as seed money to empower smallholder and poor farmers (who will be assisted to form viable economic interest groups) to acquire capital assets which they would use to undertake a wide range of small-scale income-generating activities; and (b) improve farmers' access to markets and complementary support that add value to farm produce Under this component, the Project will scale up the matching grant approach that was successfully piloted under Fadama II, to support common interest groups (FUGs) and their apex associations (FCAs) to undertake initiatives which would assist them to increase value added from the products produced by their members and diversify their sources of livelihood. The matching grant will be targeted to the FCA, which is the apex organization of the beneficiary: - Fadama user groups (FUGs)/ economic interest groups (EIGs), including FUGs/EIGs for the disadvantaged/vulnerable groups (such as, the handicap, widows, the sick and economically-inactive members of the community). These targeted beneficiary groups do not currently have access to either subsidized or market rate credit and, as individuals, are too costly to be served by financial institutions due to the perceived high risk, lack of information and high transaction costs. A differentiated approach will be adopted to make the matching grant resources accessible to the vulnerable groups, who represent the poorest of the poor. For the regular (economically active) FUGs, who constitute the overwhelming majority of the beneficiaries, the project will contribute up to 70% of the total cost of the demanded subproject, while the beneficiary will make up-front cash payment of up to 30 per cent of the subproject cost. The up-front cash counterpart payment will be deposited in an approved commercial bank/financial institution. In addition, it is recommended that these FUGs establish a cost recovery and savings mechanism in order to promote community-level capitalization as well as to ensure sustainability of the investment activities funded through this component. The savings will be in the form of a withholding of a recommended 10 percent of the value of net revenues annually or any other amount to be agreed internally by the FUGs/EIGs/FCAs from the sale of the produce/products from their grant-funded income generating investments. The design of this capitalization fund and the Matching Grant draws from good practice cases in LAC, particularly Mexico and Colombia (see design information below). The vulnerable groups will receive a one-time grant equivalent to the full cost of their asset subproject to assist them to constitute an asset base for their income-generating activities. Additional support will be provided to their FUGs under the capacity building component (component 1) to enhance their entrepreneurial skills and their organizational capacity to engage in profitable livelihood activities and to build a savings culture. This capacity building support and the grant provided to build the start-up capital base will permit the FUGs of the vulnerable groups to become economically-active, thereby helping them to graduate from grant dependency. To safeguard against possible abuse and deter elite capture, a subproject for this group would have a ceiling 43

53 of the equivalent of N400,000, and each FCA will be limited to have two FUGs of vulnerable groups. Verification and certification of the designation of vulnerable FUG by the SPC will be required before the release of funds. The SFCO and the Facilitators assigned to the FCA will assist in produce marketing and dues collection. Demonstration of compliance with the established criteria to access the matching grant, including approval of the on-lending terms and conditions by the Project (if the required amount is borrowed from a duly certified lender) is necessary for release of funds to pay the provider of the goods/services, subject to proper certification of satisfactory delivery in accordance with the terms of the contract. As in the community-owned infrastructure component, the exact type of asset to be acquired is not identified ex ante since a demand-driven planning approach will be used during implementation. Based on the experience in Fadama II, however, the menu of subprojects to acquire assets includes: (a) water lifting and distribution equipment, (b) agro-processing equipment/machinery; (c) equipment for smallholder fishing, livestock, dairy production, bee-keeping and mixed farming; (d) irrigation and drainage infrastructure (e.g., wells, small dams, ponds, surface water management systems); (e) improved storage, preservation and conservation infrastructure (e.g., improved handling, storage, preservation/conservation facilities, collection centers, etc.); and (f) other non-farm income-generation activities. A limit on the total cost of any asset subproject has been set from $100 - $10,000 per FUG, though in general the scale of the income-generating activities on which they will be used is expected to be small. The LG or the state government may elect to expand their counterpart contributions in order to assist a beneficiary FCAs/FUGs to expand the established threshold for this component. Capital assets for non-productive needs and priorities not allowed in this Project will be studied and forwarded to other community development projects in the state for necessary action. The eligibility and selection criteria shall ensure that subprojects financed from the grant are demand-driven, meet community preferences, and are responsive to essential technical, economic, financial, environmental and social criteria which are set out in the applicable manual. Simple and user-friendly set of criteria will be developed to establish cost, benefits and technical feasibility. The majority of the subprojects are expected to be small and well within the technical and management capacity of the community. A short negative list of subproject types ineligible for both IDA credit and Project financing will be enforced, with particular emphasis on the application of rigorous eligibility criteria for productive subprojects to ensure proper targeting, and financial sustainability of this form of investment. As safeguard against potential elite capture and/or abuse, including collusion and complicity to defraud the project or the FCAs/FUGs, the Project will enforce severe penalties as deterrent. These deterrents would include black-listing of a service provider, cessation of FUG/FCA participation in the project, loss of employment, and judicial action. The Fadama Users' Equity Fund [FUEF] While the use of matching grants to finance productive livelihood rural investment activities may be considered as a third best approach to facilitating access to financial services, it was chosen for the Fadama projects due to the low performance of rural financial markets in Nigeria, which are particularly deficient and limited in terms of outreach in the rural areas. International experience has shown that directed credit has low repayment rates and high administrative costs. Under the proposed Project such costs would not be an issue as fiscal recuperation of the bulk of the funds (70 percent) is not envisaged. Rather, in addition to the 30 per cent up-front beneficiary contribution to the cost of the demanded subproject/capital asset to be mobilized from a formally recognized and certified lender and under terms and conditions satisfactory to the Government, a cost recovery mechanism would be promoted at the FUG level, whereby, a userfee/charge would be levied for the utilization of the purchased asset/s by an FUG, or individual private operator. The exact amount of the user charge, which ideally should not be less than 10 per cent of the replacement value asset, will be determined by the members of the FUG, during LDP preparation, as this is strictly an internal arrangement of the farmer organizations. The FUEF would build on internal management practices, peer pressure and applicable local control systems and operating guidelines. These would be outlined in an Operational Manual. 5 Fewer than 2 percent of rural households have access to any sort of institutional finance (Draft 2008 World Bank ESW on Microfinance in Nigeria/Central Bank of Nigeria, 2005) The FUEF will be from the user charges and withholdings from sales of produce/products are owned by the 44

54 FUGs. Agreement on the set of guidelines for the operations of the FUEF, including the provision for transparent, albeit simple mechanisms for funds utilization and management as outlined in the relevant operational manual will be a condition for disbursement under this component. A full-time rural finance specialist at the SFCO-level will be responsible for supervising the implementation of this facility, and will use NGOs, private consultants and other qualified service providers to ensure that the implementation of this facility is properly managed. Linkages with established financial institutions/intermediaries will be sought from the outset to ensure the safe handling of funds and transparency and accountability in funds management. The FUEFs (as second-generation funds) would be invested by the FUGs at the community level according to priorities and mechanisms defined by them as the sole owners of the funds. The recovered amounts would thus remain as financial capital circulating in the community, or may take the form of physical capital depending on the investment decision made by the FUG/private individual. This would constitute the basis for the development of a sustainable savings and loan schemes. In addition, it would gradually evolve towards or link with existing financial intermediation systems (such as: savings and loan associations/institutions, credit unions and commercial banks, thereby, contributing to deepening of financial experience) COMPONENT 6: PROJECT MANAGEMENT, MONITORING AND EVALUATION (US$39.3M) The institutional arrangements proposed for the Project rely on the existing framework for the implementation of the Fadama II Project both at the national and local levels rather than create new structures for the Project. This would ensure that the activities and approach under the Project would get mainstreamed within the overall program of the supervising ministry of agriculture and water resources at both the Federal and State levels. Each of the participating states has already identified a core team for the State Fadama Coordination Office (SFCO), in compliance with a key eligibility criterion to participate as a beneficiary state. Establishment of the new SFCOs and recruitment and/or secondment of l personnel to the NFCO and the SFCOs would be a condition of Negotiations. The Project will finance costs (excluding salaries of reassigned/seconded active civil servants) for project management and coordination, including supervision, monitoring and impact evaluation as well as contracting of specific implementation tasks. In addition, the Project will finance technical assistance, training and equipment to strengthen the operational capacity and effectiveness of the NFRA in the carrying out of its principal mission of coordination of all agricultural sector projects and in providing services to this Project. This component breaks down to the following main subcomponents: Technical Assistance Support (to the national and state level implementation coordination function (US$2.4M) Given the importance of procurement operations, and the observed lapses in the processing of project preparation-related procurement, 24 person months of an externally recruited Procurement Advisor to the NFCO will be provided, initially, over a two-year period to: (a) develop and implement a program designed to improve the management of procurement operations at both the national and local levels and (b) to advice the NFC on all matters related to procurement and the implementation of the financial architecture of the Project in general. In order to ensure adequate technical quality control, especially on equipment and services provided under the Project, 48 person months of short-term international and local consultant services will be funded over the entire duration of the Project. These consultancies will be deployed to reinforce the technical supervision functions of the SFCOs. In addition, approximately 80 person months of mostly local or short-term international consultancies will be provided be provided over a two to three year period to reinforce the skills mix and enhance the technical efficiency of the NFCO and SFCO teams. The areas in need of improvements will include but not limited to: institutional strengthening through improved procedures for project implementation, review and update of operational manuals, and monitoring and evaluation system, including process monitoring; refining the PIM to reflect implementation progress and outcome of periodic performance and impact evaluations; providing technical and capacity building advice on technology adoption, on management, social and community development issues, training and human resource development, and in refining and developing userfriendly participatory tools and local development planning kits, and audio-visual programs, which would be produced and distributed for use by the Facilitators and the FCAs. Project Coordination Support Function (US$44.8 M) 45

55 The Project will support the operational activities of the National Fadama coordination office supported by 36 state Fadama coordination offices nationwide plus the FCT Fadama coordination office. The NFCO will be responsible for overall project implementation coordination, while the SFCOs, which are all located in the project zone and closer to the communities will carry the lion's share of the coordination tasks, with the following specific duties: (a) to review community subproject proposals for consistency with state development strategy and compliance with project guidelines and eligibility criteria as stipulated in the PIM; (b) assess the quality and integrity of the LDP preparation process as well as supervise the work of the Facilitators and other service providers, including technical assistance and training support to the local government, the facilitators and the communities; (c) supervise LG involvement in the Project; implement public information campaigns to disseminate information about the Project; (d) implement introductory sensitization and training and technical assistance programs for facilitators, for the community associations, (e) to monitor and apply performance incentives to reward efficiency, transparency and inclusiveness of FCAs and LGCs, and also to sanction poor performance/misappropriation (e.g. legal action for misallocation or clear case of elite capture/ abuse of trust/office; (f) to monitor project performance through the MIS and to periodically report progress related to performance indicators; (g) to prepare annual implementation and physical performance reviews; and (h) to submit project Annual Operating Plans to the Bank (through the NFCO) for review and approval. The Project will support these and other project management and coordination activities at the federal and local levels as well as recurrent and operating costs. This will include: (i) administrative and overhead costs of federal, state, local government and district offices, vehicle rental and loaned (mainly motorbikes to Facilitators), and travel allowances; (ii) equipment and vehicle including the purchase and rental of vehicle, furniture, and fixtures for both state and LG-level offices. In addition, the Project will finance information technology, including computer equipment, and requisite software and multimedia equipment as well as the costs of the support to the overall coordination mission and function of the NFRA, estimated at $1 M. In addition, the Project will finance the cost of the establishment and operations of a suitably equipped office complex (approximate budget of $1.5 M) to be known as Fadama House for the administration of the Fadama program and for use as venue for project related training, retreats, seminars and other project-related events. This investment will pay-off handsomely in terms of the significant savings from frequently rising office rental costs in Abuja and conference, retreat and workshop venue rentals. It will also enhance the coordination capabilities of the NFRA, since all its key coordination departments and teams will be housed under one roof and, thus, easily accessible. Additional and incremental staff: costs to support staffing arrangements at federal, state and local government levels through hiring of contract staff. Compensation includes salaries and benefits for this category of staff. Staff on Secondment or reassignment to the Project will receive performance-based allowances as a supplement to their salaries. Unsatisfactory performance may, however, result in suspension of this allowance. Finally, the Project will finance the facilitation, coordination, financial management and reporting, financial auditing, financial flows, and contract management of the Project. Project Monitoring and Evaluation Function (US$11.6 M) This Project would also finance the establishment and operations of a results-based monitoring and evaluation system (M&E), including the maintenance and use of a Management Information System (MIS). To function as an efficient management tool, the MIS for the Fadama II Project would be improved and made more user-friendly and results-oriented. It would be migrated on-line to allow state offices to enter data and monitor real time flow of subprojects. The Project would finance the costs for M&E activities as well as finance experts in information technology and project management: (a) to improve the MIS and (b) to collect and analyze data on cost indicators and physical parameters from the most frequently approved types of subprojects, so as to calculate a range of values for the indicators and to adjust subproject eligibility criteria accordingly. These adjustments would then be incorporated in the PIM. In addition, the Project will finance consultant services to develop and implement studies to evaluate the impact of the subprojects and to provide feedback to improve project operations, including the following: (i) annual physical performance reviews to assess the quality and sustainability of common types of productive investment subprojects financed by the Project, including reviews of community-based procurement; (ii) an implementation review, carried out at the mid-term, to include beneficiary consultations so as to generate an evaluation of project performance and impact as perceived by the ultimate beneficiaries; and (iii) a comprehensive impact evaluation, which would include a baseline evaluation to establish indicators of socio-economic impact and a follow-on final evaluation of the Project at project completion, using these 46

56 indicators to measure aggregate project impact on social indicators; cost-benefit of demand-driven versus conventional approaches to rural development. Finally, the Project will finance the implementation of the Monitoring of the Environmental Management Plan (EMP) (see Chapter 5 for further details). The EMP that was designed under the Third Fadama development project will be adapted to the 19 incoming eligible states under the Fadama III Project. In accordance with Nigerian regulations, monitoring and periodic environmental auditing will take place at every institutional level of the Project. The major variables, such as, wetland integrity, soil quality and water quality and quantity will be continuously monitored, using cost-effective and efficient monitoring approaches. The Project will establish a feedback mechanism for monitoring results from subprojects, leading to revised implementation activities in order to properly reflect sound environmental management as would be required by the EMP. For subprojects that do not require EIAs, the SFCO will periodically select a certain number of these from some of the participating communities within the state and audit the LFDC. The Project would finance limited civil works, equipment needed for implementing the various monitoring systems, international and national consultant services, training and incremental operating costs. The NFCO will, to the extent possible, contract out the implementation of all or part of the EMP to agencies and/or other service providers which have the required capacity, experience and outreach Coordination and Implementation at the National level The scheduling of the main activities in coordinating and facilitating the Project's activities is discussed below. Detailed coordination activities will be given in the NFCO annual work plans and budgets to be prepared during each year of Project implementation. Staff Recruitment In order to have a smooth take off of Project activities, recruitment of additional staff should be completed by April 2008, under terms and conditions satisfactory to IDA. Annual Work Plans and Budgets NFCO will prepare an annual work plan and budget each project year to be submitted to NFTC for approval, subject to review and non-objection by IDA. Monitoring and Evaluation Database Development and Maintenance The main function of the NFCO will be to coordinate and monitor the project. It will be responsible for ensuring consistency, accuracy and timeliness of all reporting undertaken under the Project. The required monitoring data will be obtained from the relevant participating agencies. The NFCO will not directly conduct impact studies for the evaluation of the Project, since these are better performed at the SFCO level. It will, however, play a coordinating role and provide a source of technical expertise for the conduct of these studies/surveys. The NFCO will aggregate the findings obtained by the SFCOs in order to provide a Project perspective of evaluation survey results and present them in consolidated summary reports. Generally, the overall quality control for routine monitoring of implementation of the various activities carried out under the Project will be the responsibility of the NFCO. The evaluation studies to be done by external consultants will be managed by the NFCO. A monitoring and evaluation database will be developed in PY1. The database will have an interface to link with the Financial MIS for tracking down cost related indicators. Updating of the database will be necessary to capture data and information about all participating states. This will be done annually during the extended PRA exercises. 47

57 Figure 4: Organogram NFCO FMAWR C.I.T ADMIN PERM. SEC FDA RID M&E PDP ADAP-RESEARCH NFRA NFCO National Coordinator ARDCO FADPEC NFTC PRSD F&A LIVESTOCK ALR RURAL DEV. ENG FINANCE REGIONAL OFFICE Senior M&E Advisor Procurement Officer FISHERIES AGRIC. SCIENCE Senior Community Dev. & Gender Officer Accountant Senior Operations Officer M&E SERVICES 48

58 4.6.2 Coordination and Implementation at the State Level Scheduling of main activities in coordinating and facilitating the Project's activities are discussed below. Detailed coordination activities will be given in the SFCO annual work plans and budgets to be prepared during each year of Project implementation. Staff Recruitment Recruitment of additional SFCO staff should be completed by April 2008, under terms and conditions satisfactory to IDA. Development of Training Modules Training of FCAs is necessary for adequate preparation and effective implementation of investment subprojects. This will be done using training modules on PRA methodologies, subprojects write-up and appraisal, community-based procurement, communications education, environmental screening, conflict management and participatory monitoring and evaluation. These modules will be developed during the first quarter of PY1. Coordination of Planning and Implementation of FCA Activities SFCO will coordinate participatory planning and the implementation process of the FCAs development initiatives. Local Fadama Desk Training, Sensitization Workshops and Seminars Training on community-driven development, participatory and socially-inclusive local development planning, sensitization seminars and workshops involving FUGs will be carried out during Project implementation. 49

59 Figure 5: Organogram: SFCO & LFD * Procurement Officer: Seconded or services to be rendered by ADP * Finance Officer: Seconded by the Accountant General Office ENGINEERING RID Zonal Office Zonal Ext. Officer ADMIN FINANCE PME TS & R & EXT State Ministry of Agriculture & Water Resources Permanent Secretary Block Ext. Officer M&E Officer Procurement Officer* ADP SFCO State Coordiantor ADPEC SFTC Rural Finance & livelihood Services Comm. Dev.Officer Project Accountant Training and Technical Assistance Officer Environment Officer Communications Officer Local Government LFD LFDC CD/Gender Agent Ag. Extension Agent 50

60 4.6.3 Monitoring and Evaluation The Fadama Monitoring and Evaluation (M&E) system sub-component will measure performance at different Project milestones. The system will benefit from a Management Information System (MIS) that collects project administration functions, results monitoring and impact evaluations and beneficiary assessments, and a technical knowledge base. This sub-component will finance the establishment of M&E mechanisms in the NFCO and SFCOs, including up-grading the existing MIS to monitor and evaluate implementation of the Project. The MIS will be expanded to contain key technical, financial and socio-economic information on subprojects, as well as costs and other physical indicators, and quantitative variables for impact monitoring. The MIS generated reports will include periodic Project progress reports such as monthly disbursement and semi-annual reports to track implementation. The Project will also finance operating costs for monitoring activities such as (i) collecting and analyzing data on physical parameters of local development plans (LDPs) and subprojects; (ii) gathering, aggregating and analyzing information on cropped area and yield via surveys; (iii) complementary quantified tracking of biophysical results where possible to add rigor to the surveys; (iv) conducting thematic and market surveys and generating data for impact evaluation. The Project will also finance operating costs for capacity development for M&E implementation, paying attention not to duplicate efforts carried out under Project Component 1. Lastly, the Project will finance the establishment of a technical Knowledge Base designed to (a) consolidate the currently fragmented knowledge on productive practices that FUGs could undertake, (b) identify and transfer best practice across settings in the country, (c) provide a common point of reference for project stakeholders to contribute to and benefit from a shared storehouse of operational knowledge. The Project will guide the FCAs in carrying out participatory monitoring and evaluation of their activities as well as finance expertise in information technology to maintain the MIS. The Project will finance specialized studies, including an impact assessment at midterm and at the end of the Project. In addition, annual implementation/performance reviews of Project qualitative and quantitative achievements, including assessing the level of beneficiaries' satisfaction, will be conducted in advance of the approval of the following year's annual operating plan and the budget of the Project. The results of these evaluations will be used to identify areas of improvements during the course of Project implementation in order to increase the impact of Fadama activities. The performance/impact evaluation surveys will be conducted by experienced investigators from independent Nigerian institutions which will be competitively selected by the NFCO. These surveys and evaluations will be used to assess project impact on (a) Fadama user household welfare; (b) social capital formation at the community level; (c) improved governance at the local government level; (d) cost-effectiveness of demand-responsive infrastructure investments subprojects compared to the conventional public delivery mechanisms; (e) cost-benefit of productive smallholder investment activities funded under the asset acquisition component, and (f) the environmental performance of productive activities. In addition, local government and community leaders will be surveyed for the analysis of social capital and governance impacts. The first baseline survey will be conducted within one year of Project effectiveness, followed by another survey a few months before the Project mid-term review and a final survey for the implementation completion report. Project M&E Objectives Monitoring and Evaluation (M&E) activities will do the following: Generate Project specific information on progress, processes and performance. Analyze and aggregate data generated at various levels to track progress, process quality and Project sustainability. Document and disseminate feedback and key lessons learnt to relevant users and stakeholders. 51

61 Key Users of the M&E System The key users of the outcomes of the data generated by the M&E system include the Project management, sponsors, the general public, Project planners and the Fadama users. The results are vital to Project managers, as they are the first-hand users in terms of need of the information for day-to-day management of the Project. In the case of the Project sponsors, the results offer guidance in making policies and decisions. To the FCAs and other resource users, the results/information are relevant as they can assess their progress in the activities. The outcomes are important to Project planners, as the information is useful for redesigning the Project or planning future ones. The methodology for carrying out M&E procedures will have a built-in flexibility to allow for a range of attributes, types of data and data collection tools with regard to the level of implementation and the type of Fadama intervention. The end result shall constitute various sets of data that are location specific. However, at the NFCO level, all data collected should be aggregated into related items/sets to enable quick tracking of the Project's progress and performance. Moreover, the system will provide for qualitative data collection in seeking to explain changes occurring as a result of interventions on the ground. These could later be quantified into a scientific mode for special studies. The Logical Framework The M&E tasks will be guided by the performance indicators developed in the Project Results Framework (PAD-Annexes 1 and 3). All indicators used will need to be socially and gender sensitive (i.e., information on beneficiaries should be disaggregated according to gender and socio-economic status). This is very important in terms of establishing whether the Project is indeed reaching its intended target beneficiaries and avoiding capture by those people who are relatively better off. Monitoring and Evaluation System Requirements The requirements for M&E include the development and use of monitoring indicators that measure the Project objectives. The indicators include quantitative, qualitative, direct, and proxy metrics for monitoring progress, processes and performance. Baseline data collected will derive from the identified monitoring indicators. An MIS will be put in place to store and disseminate information, ensuring that M&E information can be used to guide adaptive management by the Project and feed experience from project activities into methodical knowledge exchange to support better implementation and targeting. 52

62 Figure 6: Organogram: SFCO & LFD Figure 1: Production mechanism & Information Chain for the Quarterly M&E Report Federal Quarterly M&E Report Tools Federal Level PCU/NFCO weeks prior to the end of the quarter collect of data and reports 2 weeks after the end of the quarter processing/analysis of data and reports 4 weeks after the end of the quarter Production and dissemination of the national M&E report Data base M&E Software Accounting software Excel Data collection forms State Level SFCO (M&E) weeks prior to the end of the quarter collect of data End of the quarter processing and analysis of data 2 weeks after the end of the quarter production of regional M&E reports Data base M&E Software Accounting software Excel Data collection forms Local Level Local Fadama Desk FCA Management Committee M&E Sub -Committee weeks prior to the end of the quarter collect of data. At the end of the quarter transmittal of data to LFD Data collection forms Excel FUGs /Facilitators Collect data and information Data collection forms 53

63 Types of Activities, Timeline and Key Milestones: The Table below shows the types of M&E activities to be undertaken and by whom, how and when. Table 4: Types of M&E Activities to be undertaken S/N Activity/Sub-activity Who does it How When 1 Collection/collation of socioeconomic data on Project indicators concerning the target beneficiaries 2 Collection/collation of baseline and other data measuring impact on the environment, gender and incidences of conflict 3 Monitoring pace of delivery of Project input and output 4 Collection/collation of data on yield levels for crops, livestock, fish and agro-forestry in Project areas 5 Collection/collation of data on prices and marketing of inputs and outputs to be disseminated in a marketing information system 6 Specialized studies for data on adoption rates of Project interventions and thematic issues to be disseminated in a management information system NFCO and SFCO and Consultants NFCO consultants NFCO and SFCO SFCO and NFCO including FCAs, Facilitators and local independent institutions SFCO and NFCO SFCO and NFCO and Consultants 7 Mid-term review of Project NFCO and all stakeholders 8 Implementation Completion Review NFCO and all of Project stakeholders Participatory involvement using checklist and questionnaire Field and laboratory investigations Participatory involvement using progress report formats Participatory involvement using checklist, formats and questionnaires Participatory involvement using checklist, formats and questionnaires Participatory involvement using checklist, formats and questionnaires Participatory involvement Participatory involvement PY1, PY3 and PY6 PY1, PY3 and PY6 PY1 to End of Project. Quarterly, half-yearly and annually PY1 to End of Project. Annually PY1 to End of Project. Annually PY2 to End of Project. Annually PY3 PY6 Specific Types of Data to be collected: As identified from the log frame, the specific types of data include: Economic Impact Indicators Prices and price indices; Level of production and productivity; Real income of the farmers etc Component 1 Capacity Building: Number of trainings (disaggregated by type of training); Number of requests for participatory processes, etc Number of reported cases of conflict; Number of conflict resolution instruments; Number of conflict resolution committees; Number of conflict cases resolved; etc. 54

64 Number of FCAs formed; Number of FCAs registered; Number of FCAs trained; Number of LDPs developed; Number of LDPs effectively implemented; etc. Component 2: Rural Infrastructure Investment: Number of subprojects by types and sizes initiated; Number of subprojects by types and sizes, completed etc; Component 3: Demand-driven Advisory Services: Amount of public funds (Naira) spent on non-adp service providers; Number of FCAs receiving advisory services from non-adp service providers etc; Component 4: Pilot Asset Acquisition Number of various assets acquired by types, prices and groups; Number of eligible FCA members that received marching grant; Number of eligible FCA members that did not receive marching grant etc; Component 5: Project Management Number of Project reports of good quality; Number of Project reports rendered timely; Number of impact reports of good quality; Number of impact reports rendered timely etc; Market Information: Every month, the facilitators will collect prices of the outputs (for crops, livestock and fisheries products) as well as the inputs prices. The data disaggregated by location (for outputs) and sources (for inputs) will be fed into the computer and disseminated by the MIS to all stakeholders. Production Data Every year, the SFCOs will aggregate production and productivity (i.e., yield) figures for crops, livestock and fisheries for the state. Relevant participatory and objective methodologies should be adapted for effectiveness and sustainability. Household Sample Surveys To complement the data gathered through the community groups, some household surveys will be undertaken. The household surveys will include: (a) (b) (c) Initial Baseline Survey to be conducted in PY1; Mid-Term Impact Survey at the end of PY3; and Terminal Impact Survey in PY6 (conducted before the ICR). The surveys will focus on aspects relating to the Project development objectives, as established in the Log frame, where Project impact is expected to emerge. The surveys will be household-based and record information on food consumption and nutrition, general living conditions, farming characteristics, processing and marketing practices, and measures of income. The aim of these surveys will be to establish key socio-economic characteristics of the targeted farming households in order to determine the changes that have occurred during the life of the Project. The implementation and management of the surveys will include supervision of fieldwork, spot-checking, data cleaning, computer entry, analysis and final report writing. The SFCOs that may have limited capacity in survey implementation will contract the work to external consultants. 55

65 The following Evaluation Studies are recommended for the Project: Assessment of Poverty Status of Farmers. Assessment of agricultural constraints. Environmental impact assessment. Financial viability of selected interventions Assessment of farmers' access to credit. Consumption patterns and Nutrition effects. Gender integration level. The terms of reference for these and other studies will be developed. Key Components of M&E The key components of M&E for the Project will include the following: Process Monitoring This aims to monitor the quality, effectiveness and efficiency of participatory processes among the FCAs and FUGs. The aspects include mobilization of communities, decision-making processes, inclusiveness (involvement of all), transparency, equity and representation. Both qualitative and quantitative indicators will be used to measure process outputs and judge the effectiveness of a particular process. Progress Monitoring This will be the responsibility of the Monitoring officer and involves monitoring physical and financial progress of the implementation activities of the Project by FCAs, SFCOs and NFCO. Appropriate formats for monthly, quarterly and annual report rendition will be used through the Project MIS Performance Monitoring This involves measuring Project performance based on benchmarks set for implementation. The benchmarks include indicators on process, progress, output and outcome. Actual achievements are assessed against targets. Evaluation This aims to assess performance, outcomes and impact of Project intervention through external consultants (i.e., outside of the Project implementing agencies). Data Aggregation and Analysis Software recommended for use in the M&E data analysis tasks include spreadsheets (Excel, Lotus, etc.) and statistical packages like the SPSS. Clear procedures for aggregating data must be established by the NFCO M&E staff in order to ensure data comparability for State and national level reporting. Learning and Dissemination Component: This captures and documents lessons learned in the Project processes. The lessons are communicated through circulated reports, workshops and meetings and in the establishment of a comprehensive technical Knowledge Base attached to the upgraded MIS. The use of the community in identifying how they view and judge the Project will be a valuable strategy and learning exercise. It will help the community to better understand Project and it will help the Project to better understand the community needs and expectations. It will also provide a foundation for a participatory approach to reviewing progress and learning from successes and failures in Project implementation. Each time a study is completed by external consultants, a workshop should be held with all stakeholders as participants to discuss the findings and lessons learnt. 56

66 Training and Capacity Building: For both Project staff and farmers, conduct of follow-up training will be a regular practice after skill-gap analysis has been done. The NFCO will identify a suitable trainer to conduct an intensive practically oriented training workshop on participatory M&E approaches and methodologies. The workshop will aim at: a) promoting understanding of the role of participatory M&E approaches among staff involved in the implementation of the Project (including enumerators and extension agents); and b) developing practical skills in the use of participatory methods in data collection and analysis. Other areas for training, apart from data collection, will include data analysis and output. Reports and Communication: Information Communication The NFCO, SFCOs and LFDCs/LFD will utilize a series of regular formal and informal meetings/sessions, at various levels, in order to provide the forum for collective reflection. The meetings should bring together participating agency employees and beneficiaries to exchange ideas, insights and knowledge, analyze problems and agree upon improved actions. The upgraded MIS and an attached technical knowledge base to be established will support this effort with regard to diffusing best practice productive activities and other subproject lessons. The Project M&E system will follow the channels of information flow between the various agencies involved and the communication modalities established for the MIS. Specifically, information will flow from FCAs/FUGs to LFDs, to SFCOs, to the NFCO and finally to Project sponsors and others. Project Reporting Formal time-bound reports that should be made include monthly, quarterly, bi-annual and annual progress reports. Others are midterm and implementation completion reports. The various progress reports will address the following common themes: quantitative and qualitative progress made in delivery of Project inputs and outputs; as well as problems experienced during the reporting period, steps taken or proposed to be taken to remedy the problems, and the proposed activities during the next reporting period. Qualitative information will include changes in farmers' knowledge, their attitudes and their abilities. Reports from groups self-monitoring activities over time will be recorded in the reports, highlighting expressed needs, priorities and emerging problems to be addressed by the Project. The groups perceptions of the Project services and their suggestions for changes will be reported in a section dealing specifically with beneficiaries' constraints and recommendations. Important developments, constraints and ideas for improvements as expressed by the community groups will be included in the quarterly monitoring reports of the SFCOs. The component heads at NFCO will meet by the first week of each succeeding month, quarter and year to consider the progress and problems faced during the preceding month, quarter and year. The summarized report for the period using a specified format will be stored in a computer databank, posted on the website and copied to all stakeholders. Informal reporting will also play an important role in the Project. A system will be put in place to record useful information captured by front line staff at the field level. A unified format for the Project monitoring reports will be prepared by the NFCO. The format will be discussed and agreed upon by the stakeholders. Management Information System The Management Information System (MIS) is a computer based information management system that will be used to track all activities of the Project. The primary objective of the MIS system will be to assist in the processing and tracking of investments to subprojects, capacity building, studies and institutional support, etc. The MIS will be the most important tool for management, monitoring and evaluation, learning, and reporting. Standard data management procedures and processes will be developed and agreed but reporting will be flexible enough for different needs. 57

67 Specifically, the MIS will be a tool to: track the process of subproject and study applications; manage finances, budgets and procurement; design and cost potential projects, studies and other investments; monitor the implementation of the subprojects, studies; record justifications of Project expenditures; and provide all the necessary reports disseminate knowledge and best practice General Requirement of the MIS: Record and report on the process of identifying, investigating and funding subprojects, and other subproject activities; Record all quantifiable data collected and report on any data item or combination of items in a variety of textual, numerical and graphical reports; Record all financial transactions and monitor and report on investments to subprojects, studies and other Project activities; Record quantifiable information relating to Project progress, both material and financial; Store Project descriptive data, comments and recommendations, local government and state reports supervisors comments on individual reports, comments on specific subprojects, FCAs or user groups involved with subprojects, reviews, comments or studies. Record and transfer data via the best available media. This should be, in descending order, telecommunications, electronic media and paper. There will be tools associated with the system which will be able to contribute to the data stored, but are not necessarily integral parts of the system. These will include: i) Accounting system: To enable the NFCO/SFCO accounting unit to retain a full set of accounting data in standard accounting format, including the ledgers, payroll, double entry bookkeeping and other standard accounting tasks. The accounting package should be able to store data in the Project database and retrieve information for reporting purposes. ii) Geographic Information System: (GIS) Able to accept maps of Nigeria and to identify boundaries of political importance such as regions and states boundaries but also accept geographical area templates, population area templates, economic area templates and other area templates as they are devised. The data from which the templates are derived should be in a format which can be stored on the Project database. This will enable mapping investment and performance against baseline data. iii) Project Planning System: To integrate with the database to enable data to be stored during the life of sub projects and studies as progress is made. This will enable the comparison of the projected life of a Project with the actual life of a Project. Storing data from the Project planning system as the Project plan is updated will also enable the identification of milestones which become sticking points on projects and allow reporting on this data on a regional or national basis. 58

68 iv) Costing and Estimate System: To enable templates for a range of different types of subprojects to be built up. It will also give sufficient functionality to allow all work to be done in the system. An external costing system that will store data within the database will have the ability to be upgraded and can be changed. There is a wide range of products available and some web based estimating systems can be linked to the web sites of suppliers and retrieve real time data. The data for projects from the costing and estimating system should be stored as part of the Project information. v) Report preparation Tools: There will be a standard set of reports but the importance of ad hoc reporting is apparent. Report preparation tools will enable data from the tables to be extracted and formatted in a range of different report types, textual, graphical or numerical. Technical Knowledge base: Will be developed and attached to the MIS. It will consolidate best practice on productive activities in the project and in Nigeria to support a methodical approach for the project to transfer knowledge vertically and horizontally across the country. It would include among other things, stocktaking, existing studies, and distillation of M&E findings and other relevant studies undertaken within and outside the project, including experience from other parts of the world that might be relevant for Nigeria. This information would be used for the capacity and awareness raising described in Project Component 1. The supplemental GEF SLM financing would support a needs analysis to define better the scope of the Knowledge Base and develop it over the course of the first two years of the project. Information Flows Inputs and Outputs I. Data Inputs Data entry, analysis and reporting will take place at national, state and local government levels. Eventually the data base will also be available to FCAs. The data sources for the Application and Monitoring and Evaluation modules will be provided by application, appraisal, monitoring and evaluation forms; reports from FUGs, LFD, SFCO and Fadama Committees; justification reports and original receipts. Most of the information will be entered by SFCO. The data will be entered and replicated at agreed intervals. The data sources for the Financial Management module will be provided and entered by the Finance Officer of the SFCO and will include transfer letters, payment orders, bank statements, budgets, procurement plans etc. All transactions will be coded by type and location of expenditure. The data sources of the Costing Module will be provided by the technical appraisal forms and the proposed costing and estimating package, design package and historical provincial price lists. The SFCO will initially enter this data until relevant capacity is built in the LGCs. ii. Reports Generated Some of the standard reports which will be generated by the MIS will be as follows: Finances and Procurement U.S. dollar and Naira commitments and actual expenditures total by year and cumulative by donor; U.S. dollar and Naira commitments: Actual expenditures of the donor and of the State or Local Government; stated by donor, component, type of Sub-projects, (capacity building, subproject, study etc). Also, it has to be stated by State, Local Government, FCAs, and by FUGs (type of beneficiary). 59

69 Annual Work Plan and Budget (AWPB) Annual Procurement Plan and Monitoring of Procurement Plan the method of procurement will be entered at Project costing and validated at justification. Progress against AWPB Summary of Expenditures by Expenditure Item Percentage Administration: Investment Costs Application Report Application Report showing number, name and type of application, stage of application, numbers and types of beneficiaries, by sector, by state, local government, FCAs, by date Average time taken between application stages by local government, by state Percentage subprojects applied: subprojects approved by state, local government, by type of beneficiary Numbers and types of beneficiaries by State, by type of subproject, by State, by Local Government, by FCAs, by FUGs Desk Appraisal report one page summary per Project Desk Appraisal Local Government summary report Field Appraisal Report one page summary per Project Field Appraisal Summary Report Appraisal and Costing Module Project Summary (one page profile) Summary of New Subprojects Schedules and Bills of Quantities for each target Drawings for each target Budget summaries Monitoring and Evaluation Reports (please make sure that the content is consistent with the detailed supervision plan for Fadama III) Project Launch Workshop report one page summary per Project. Project Cycle activities numbers by state, in given time periods. These include: numbers of applications received, desk appraisal meetings, State and Local Development Committee meetings, field appraisal, and subprojects, approved, monitored, launched, ongoing, completed and evaluated. Cumulative status of projects by donor (there is only one donor lazy job here), by state, by Local Government, FCAs and FUGs. Status of projects includes: completed, complete under-justified, complete with reduced targets, closed, on hold, cancelled, ongoing, complete and evaluated. Physical and financial status of ongoing subprojects (0-36%, 37 60%, 61 84%, 85 98%, 100%). Status of ongoing targets includes percentages completed for each target by state, by local government, FCAs, FUGs. (0-36%, 37 60%, 61 84%, 85 98%, 100%). Status of state and local government according to levels. Transaction and justification ledgers. Summary of actual expenditures versus budget of expenditure items for each Project. 60

70 Project Monitoring Reports Projects by state, by local government, by sub-sector, amount advanced : amount justified in U.S. dollars and Naira. Number of problem subprojects by state, local government, etc., by category of problem. Evaluation Report Sub-sector specific percentage change in use of and access to infrastructure and trained personnel Sub-sector specific percentage change in availability and distance to service Numbers of beneficiaries by type Change in maintenance Other development activities Beneficiaries by Local Government and by poverty levels Investments per Local Government and by poverty levels 5. ENVIRONMENTAL MANAGEMENT PLAN Environnemental Management Plan Nigeria, in general, and its Fadama areas in particular, is endowed with a rich natural resource. The resources in Fadama space constitute an ecosystem upon which depends the existence and welfare of a majority of the rural poor who derive their livelihood from the Fadama areas. This ecosystem is the pillar of Nigeria's economy and includes agriculture, livestock, water supply, forests, and fisheries. The links between poverty and faulty natural resource management are clear. With the different economic groups, such as farmers, pastoralists and fishermen, competing for access to the same resource base, a huge environmental and social challenge is inevitable for Nigeria. The Project is a response to these challenges by attempting to change the economic and social interaction between the various interest groups who have a legitimate claim over the right of access to the scarce land and water resources. An Environmental and Social Management Framework (ESMF) was commissioned for this Project to identify the potential negative environmental and social impacts which may result from the Project and to define measures to mitigate these impacts. Within the ESMF there is an environmental and social screening checklist that will be used to screen sub-projects for their potential adverse environmental and social impacts. Depending on the results of the screening, the decision to undertake EIA or RAP will be taken. At the community level and during the sub project planning, the FCAs will use the screening checklist to screen all sub-projects for potential adverse environmental and social impacts if any. The Environmental Management Plan (EMP) of the ESMF consists of five main parts: i) management; ii) detailed mitigation activities of impact; iii) institutional capacity strengthening program; iv) monitoring; and v) budgets, schedules and responsibilities. An environmental and social management framework (ESMF) detailing the implementation of the EMP is 6 provided as a component of the ESIA documentation. 6 Environment and Social Assessment Framework for SNFDP 2. February

71 5.1 MANAGEMENT The National Food Reserve Agency (NFRA) under the Ministry of Agriculture and Water Resources (FM&WR) will be the implementing agency of the Project and, as such, will be responsible for implementation of the EMP. The implementation arrangement, particularly reporting responsibilities, delegation of responsibilities to relevant government institutions and the flow of information, is as defined for the overall the Project Sub-Project Activities: Activities most likely to be considered for subproject financing could be divided into community and individual levels Community Development Sub-Project Activities These include land preparation, grazing reserve improvements and stock route development, provision for cooling facilities, rehabilitation of irrigation systems and construction of access roads and tracks. Others are construction of market centers, watering points, rehabilitation of wells and construction of new wells Individual Development Sub-Project Activities The focus for such subproject activities will be on seed, pedigree seed, fertilizer, pesticides, pedigree livestock, land purchase and purchase of tractors, farm implements and small equipment. Other activities include acquisition of irrigation equipment, farm buildings for stock, machinery and chemicals, primary processing and fuel, lubricants etc. Similarly, veterinary services, fishing nets, boats, motors and dairy activities will also be amenable to funding. 5.2 MITIGATION Much of the mitigation for addressing the impacts will be conducted through the application of best practices indicated in the following table: 62

72 Table 5: Mitigation and Application of Best Practices Sub-Project Activity Land clearing Cultivation Irrigation Pesticide use Chemical fertilizer use Livestock rearing Agro- Processing Access roads and tracks Watering points General Impact Best Practice Mitigation Required natural habitat loss wildlife/biodiversity loss soil erosion reduction of diverse food and income sources and risk amelioration systems carbon emissions reduced fuel wood availability (location specific) reduced watershed function (location specific) soil erosion air pollution salinization water-logging water-borne diseases malaria carrying mosquitoes reduction of groundwater and / or surface water surface water contamination worker illness surface water nutrient loading loss of soil moisture holding capacity Surface water contamination Soil Erosion. follow LDP don t clear in wet season plough on the contour crop rotations maintenance of crop residue ban on burning residue planning to include proper drainage follow LDP re: areas to be irrigated (partially based on health threats) follow LDP applied only within the framework of an IPM; apply only internationally approved chemicals and recommended doses follow application advice of extension officers follow LDP and place more reliance on organic fertilizers reduce concentrations of livestock LDP process to include land-use decisions such as identification of important areas of vegetation to be conserved Extension (Advisory) services to demonstrate contour-ploughing and other conservation methods. Effective drainage design and implementation Inventory of other water users; preparation of a water sharing plan as part of LDP. IPM approaches to be adopted and where chemicals required only in prescribed limited amounts and of pesticides internationally approved. Organic fertilizers and green manure along with incorporation of legumes to reduce reliance on chemical inputs; application of optimum quantities and correct timing of application through advisory (extension) services. Effective range management described in LDP and implemented. Regulation for numbers of animals to be concentrated Effluent restrictions based on water quality standards Surface water contamination Adhere to effluent disposal standards Soil Erosion Follow LDP Best practices applied for road and track construction Loss of vegetation Follow LDP Groundwater contamination Location of watering points in areas of vegetation and of low ecological importance; regulations to control number of animals and length of stay at watering points 63

73 Fishing equipment Wells Construction (e.g. market centres) Tractors, vehicles and small machinery Over fishing Follow LDP Regulate and enforce net mesh sizes, harvest rates and season of capture. reduction of groundwater soil erosion gastro-illnesses soil and surface water contamination from spilled fuels and lubricants, and discarded lubricants follow LDP follow construction guidelines to be developed proper personal hygiene to be followed proper handling and storage of fuels, lubricants and wastes Inventory of other water users; preparation of a water plan as part of LDP. Control and daily cleaning at construction sites. Provision of adequate waste disposal services Proper disposal of used engine oil, waste and other hazardous materials. 5.3 CAPACITY STRENGTHENING The institutional capacity of the State Environmental Protection Agency (SEPA) to undertake EIAs is generally very weak. Local Government agencies generally do not have any environmental protection unit or process to conduct environmental assessments. In order for State and Local government agencies to carry out the environmental assessment responsibilities required by both Nigerian law and the World Bank safeguards for the Project subprojects, institutional strengthening will be required at several levels. An institutional capacity strengthening program is described in the following table. 64

74 5.3.1 Institutional Capacity Strengthening Program Table 6: Institutional Capacity Strengthening Program Target Audience Description Application FME/State Ministries Experience with monitoring EMPs with a These organizations are expected to be of Environment or focus on empowering the communities to involved in the monitoring of the Project SEPAs/FMWR/ also monitor the EMP themselves is at EMP. They would therefore require an FDALR/NFCO rudimentary levels. understanding of the peculiar monitoring (Environment/Social indices for the Project as it relates to its Officer) CDD approach, especially as it relates to devolving some level of monitoring SFCO staff 10/State General environmental awareness seminar that will include ecological and social science principles (Including soil conservation and agro forestry principles), legal responsibilities, consequences of nonsustainable development, costs of poor environmental decisions, and introduction to the EIA process. responsibility to the FCAs/Communities. The Unit staff requires an understanding of the Bank and FGN environmental requirements, as well as the need to support environmentally sustainable development. State Environmental and Social Specialists 2/State Facilitator / Consultant groups staff 1/FCA 10/state An in-depth comprehensive course on environmental management, including legal requirements, EIA methodology, impact determination (methods) and mitigation analysis, public involvement methods, EMP preparation, Soil conservation, monitoring techniques (including soil and water), preparation of EIA TORs, and others. Course will include field visits and classroom exercises. There is limited understanding of multiple resource use, especially with regards to conflict resolution dynamics, including types, resolution mechanisms, conflict mapping and critical incidence analysis. Gender issues would also be part of this agenda. In-depth course on aspects of environmental management appropriate to the tasks for which they will be responsible. Course will include identification of important ecosystems, sustainable resource use, identification of projects of different Bank and FGN categories, and identification of projects triggering Bank safeguard policies. In addition they will learn how to conduct public involvement programs, particularly as these relate to participatory community development planning. To also include indepth training on planning processes and methodologies. The target audience will be responsible for EA review at the state level and for preparing TORs for EIA consultants as well as monitoring consultants work and final approval of EIAs. Target audience will also be responsible for conducting environmental audits on selected subprojects and for periodic monitoring of subproject implementation to ensure compliance. Understanding key issues involved in multiple resource management, conflict resolution and creating a network of stakeholders would considerably reduce conflict, especially if these people have a good understanding of conflict dynamics. Although these individuals will be drawn from the consultant and NGO ranks for their skills, they will still require intensive training in environmental management, particularly as it relates to identifying potential impacts, FGN and Bank requirements. They will need training in determining category of subproject and in recognizing the triggering of Bank safeguard policies. This target audience will have a significant role to play in the community planning process and developing the community plan. 65

75 Facilitator Groups LGC 2/LG i.e. 20/State LFD Staff 2/LG i.e. 20/State FCAs 5/FCA i.e. 50/State SFCO, LFD, Facilitator groups There are serious resource user conflicts in the Fadama areas, particularly amongst stockmen, cultivators and fishermen. The facilitator groups need an intensive training course in conflict resolution and management. General environmental awareness seminar that will include ecological and social science principles, legal responsibilities, consequences of non-sustainable development, costs of poor environmental decisions, and introduction to the EIA process. The module would also include skills in addressing conflict and its resolution. These workshops will focus on environmental management processes, but will include background in sustainable resource management, and specific discussions on the various probable subprojects and the impacts that they are likely to have on the environment. Discussions will also focus on mitigation, cumulative effects and the components of the EMP, with particular emphasis on monitoring. Relationship between planning and the environmental analysis process will also be discussed. A workshop that will focus on sustainable resource management and the need to heed environmental requirements. A focus will be placed on the economic and social importance of aspects of the community environment. Planning processes will be discussed in detail. This workshop will focus on appropriate conflict resolution mechanisms at the community levels, especially as it relates to farmer-pastoralists and other user groups. An Environmental Assessment Procedures Handbook will be prepared to provide SFDU, LGFCC and the facilitator groups with all of the material needed for the training workshops, and specific processes and responsibilities for carrying out EAs in the subproject cycle, including checklists and forms. Facilitator groups will be the closest noncommunity group in contact with the communities and they will be responsible for working with the CDA on a continuous basis. They are the logical groups to receive such training and are in a good position to put this training to good use to help resolve these serious conflict issues. The Unit staff requires an appreciation for the Bank and FGN environmental requirements, as well as an appreciation for the need to support environmentally sustainable development. Since this committee would serve as the multidisciplinary committee at the LGA level, they would also be required to address some conflict issues that might arise. These Staff have an important environmental review function and must have a suitable background in order to review projects and EAs, in a professional manner. The FCAs will have ultimate responsibility financed. They must have knowledge of the consequences of any subproject for which they will be requesting funds, as well as the costs involved for conducting EIAs and implementing mitigation measures. Reduced user conflicts, resulting from appropriate understanding of issues involved and effective resolution mechanisms. Each of these three groups has various responsibilities re: identification of important environmental parameters, categorization of subprojects, identification of likely impacts and practical mitigative solutions, and in the case of the SFDU, a full understanding of the EIA process and the EMP. All groups are required to conduct monitoring at various stages throughout the program implementation schedule. 66

76 All FMARD/FMWR/ FME/NFRA (NFCO Environment and Social Officer) Review of environment legislation in Nigeria. Study tour to a country-in-transition, where devolution of responsibilities to lower levels of governance has achieved appreciable success. Similarly, experience with the community driven development approach of the Project would ensure buy-in at this level. Before any capacity building activities of the Project are initiated, it will be necessary to clearly specify state and local government agency roles and mandates for each step of the EA process. This review will provide any recommendations necessary for revisions or additions to current Nigerian regulations. Federal level agencies are statutorily responsible for policy formulation in their areas of responsibility. However, the global trend of decentralization requires that the Federal level be seen to be ready to imbibe the paradigm shift. 5.4 EMP MONITORING In accordance with Nigerian regulations, monitoring and periodic environmental auditing will take place at every institutional level of the Project. Monitoring will be cost effective and the major variables such as wetland integrity, soil quality and water quality and quantity will all require cost effective and efficient monitoring approaches. 67

77 The following Table provides a monitoring schedule, indicating monitoring purposes, responsibilities and indicative costs. Table 7: EMP Monitoring Monitoring Purpose Responsibility Schedule To ensure that individual subprojects are following the EMP and that no unforeseen environmental issues are occurring Regular Surface and Groundwater quality monitoring Construction of Monitoring wells and Hydrological stations Procurement and installation of solid state loggers Procurement of water quality sampling equipment and reagents Routine data retrieval from monitoring wells, hydro stations and interpretation including water sample collection and analysis (twice annually) FME/SEPAs or state ME and NFCO FMWR Three times per annum Year 1 only Year 1 only Yrs 2 5 Yrs 2 5 Soil monitoring to conduct field tests, soil physical properties and soil fertility parameters (Yrs 3 & 5). Also carry out soil microbiological measurements (Yrs 1 & 5) Procurement of 24 Nos. Soil quality Kit FDALR Years 1, 3 &5. Yr 1. To ensure that the cumulative effects at the FCA level do not become significant SFCO verification but for Post Commissioning (Project Completion) Environmental Audit Additional independent check on the EMP. Will be done on a sample basis. NFCO/FME/ Consultant World Bank End of Project Bi-annually Monitoring of stock route rehabilitation and technical support NFCO/NLPD Quarterly Monitor grazing reserve rehabilitation and demarcation, especially with regard to protected areas. NFCO/NLPD/FME/State ME Quarterly Monitoring is only useful if there is an effective feedback mechanism that addresses monitoring results. Such a mechanism must be able to act upon monitoring findings where such findings indicate that there are shortfalls in the environmental management program. The following figure indicates the feedback mechanism for monitoring results, leading to revised implementation activities to properly reflect sound environmental management as would be intended by the environmental management plan. 68

78 Figure 7: Monitoring Feedback Mechanisms Tracking of annual audits by SFCO FME SFCO Recommendations as a result of monitoring results discussed with SFCO Monitoring results from all subprojects in the state examined to ensure no adverse cumulative effects Facilitator Group (on behalf of PFMU) PFM Monitoring results for response PFMU instructs FCA to make appropriate EMP/implementation changes based on monitoring results FCA Subproject 1 Subproject 2 Monitoring of EMP implementation semiannually If monitoring the monitoring results of individual subprojects across the state indicates that cumulative effects are becoming significant, then the state will have to pass down instructions to LFDs and on to FCAs that subproject activities will have to be modified in order to avoid excessive cumulative effects. The SFCO will also monitor the EIA process to ensure that the terms of reference are being met and that the consultants are thorough, particularly, with the identification of impacts and the preparation of a realistic environmental management plan. 69

79 6 FINANCIAL MANAGEMENT ARRANGEMENTS 6.1 OBJECTIVE OF THE FM SYSTEM The objective of the Financial Management systems is to support the implementing units in deploying Project resources to produce the required outputs and with attention to economy, efficiency and effectiveness. Specifically, the FM systems will be capable of producing timely, understandable, relevant and reliable financial information that will enable the implementing units to plan, coordinate, monitor and appraise the Project's overall progress towards the achievement of its objectives, as well as ensuring that funds provided will be used for the purposes intended. 6.2 PLANNING AND BUDGETING Cash budget preparation will follow the government procedures. Financial projections or forecasts for the life of the Project (analyzed by year) will be prepared. On an annual basis, the Project Accountant in FEM/PCU, FMD/NFCO, and PFMUs (in consultation with key members of the implementing unit) will prepare the cash budget for the coming period based on the work program. The cash budget should include the figures for the year analyzed by quarter. The cash budget for each quarter will reflect the detailed specifications for project activities, schedules (including procurement plan), and expenditure on project activities scheduled respectively for the quarter. All annual cash budget will be sent to the TTL at least two months before the beginning of the project fiscal year. Detailed procedures for planning and budgeting have been documented in the FPM. 6.3 INTERNAL CONTROL AND INTERNAL AUDITING Internal control comprises the whole system of control, financial, or otherwise established by PCU, NFCO and SFCO in order to: (i) carry out the project activities in an orderly and efficient manner; (ii) ensure adherence to policies and procedures; (iii) safeguard the assets of the Project; and (iv) secure the completeness and accuracy of the financial and other records. The key elements to ensure a sound internal control system will include: Internal control environment; Objective setting; Event identification; Risk assessment; Risk response; Control activities; Information and communication; and Monitoring Project activities will also be periodically reviewed by the Internal Audit Unit (IAU) of PFMU, PCU and NFCO. The Head of Internal Audit Unit in PFMU will report to the Project Manager, the Head of IAU in PCU will report to the Director PCU and the Head of IAU in NFCO will report to the NFC. At a minimum they will: (i) carry out periodic reviews of project activities, records, accounts and systems; (ii) ensure effectiveness of financial and accounting policies and procedures as well as compliance with internal control mechanisms; (iii) review SOEs; (iv) physically verify purchases and assets; and (v) carry out other functions as stated in the their approved charter. The internal auditors in the PFMU, PCU and at NFCO are accountants. They will undergo training on the Bank's financial management and disbursement procedures as well as training on risk-based auditing. 70

80 6.4 ACCOUNTING IDA and counterpart funds will be accounted for by the Project on a cash basis, augmented with appropriate records and procedures to track commitments and to safeguard assets. Accounting records will be maintained in dual currencies (i.e., Naira and USD). The Chart of Accounts will facilitate the preparation of relevant monthly, quarterly, and annual financial statements, including information on the following: Total project expenditures; Total financial contribution from each financier; Total expenditure on each project component/activity; and Analysis of total expenditure under civil works, various categories of goods, training, consultants and other procurement and disbursement categories. Annual financial statements will be prepared in accordance with relevant International Public Sector Accounting Standards. All accounting and control procedures will be documented in the FPM and regularly updated by the Project Accountants and approved by PCU, SFCO and NFCO and shared with IDA and the Government. 6.5 FINANCIAL REPORTING: Within NFCO and SFCO, the project managers will ensure that the Project accountant prepares Interim Financial Reports (IFR), i.e., monthly, quarterly and Annual Financial Statements, on a timely basis to be submitted by FEM/PCU, FMD/NFCO, and PFMU. In compliance with government reporting requirements, monthly returns will be made to the Federal and States Accountants General for incorporation in the government accounts as described in the FPM. These reports and financial statements are outlined below. Quarterly and Annual reports are to be submitted respectively to: (i) PCU, NFTC, NFCO, SFCO, SFTC, SMOF, SMOA, FMAWR and FMOF; and (ii) IDA for the purpose of monitoring project implementation Monthly Submissions: Monthly Reports: On a monthly basis, FEM, FMD, and PFMUs will prepare and submit the following reports to the Project Coordinators: A Bank Reconciliation Statement for each bank account; A Monthly Statement of Cash Position for project funds from all sources, taking into consideration significant reconciling items; A Monthly Statement of Expenditures classified by project components, disbursement categories, and comparison with budgets, or a variance analysis; and A Statement of Sources and Uses of funds (by Credit Category/Activity showing IDA and Counterpart Funds separately) Quarterly Submissions Quarterly Reports: The following interim financial reports (IFRs) will be prepared by FEM, FMD, and PFMUs on a quarterly basis and submitted to IDA and the Project coordinators: Financial Reports: which include a statement showing for the period and cumulatively (project life or year to date) inflows by sources and outflows by main expenditure classifications; opening and closing cash balances of the Project; and supporting schedules comparing actual and budgeted expenditures. The reports will also include cash forecast for the following two quarters as well as analysis of disbursements against contracts. 71

81 SOE withdrawal schedule: listing individual withdrawal applications relating to disbursements by the SOE method, by reference number, date and amount; and Designated account statement reconciliation: showing deposits and replenishments received, payments supported by withdrawal applications, interest earned on the account and the balance at the end of the reporting period. Each PFMU will submit a copy of the quarterly Project IFR to SFTC. Also, it will forward a copy of the reports to FMD/NFCO for consolidation. NFCO will submit consolidated quarterly reports to NFTC. Indicative formats for the reports are available in a Bank guideline called Financial Monitoring Reports: Guidelines to Borrowers. The format of IFRs will be agreed at Negotiations Annual Submissions Annual Financial Statements: The annual Project Financial Statements, which will be prepared by FEM, FMD, and PFMUs will include the following: A Statement of Sources and Uses of Funds (by Credit Category and Activity showing IDA and Parallel Funds separately); A Statement of Cash Position for Project Funds from all sources; Statements reconciling the balances on the various bank accounts (including IDA Designated Account) to the bank balances shown on the Statement of Sources and Uses of Funds; SOE Withdrawal Schedules listing individual withdrawal applications relating to disbursements by the SOE Method, by reference number, date and amount; Notes to the Financial Statements. Each PFMU will submit a copy of the Project Financial Statement to SFTC. Also, PCU and PFMU will forward copy of PFS to NFCO for consolidation. NFCO will submit consolidated financial statements to NFTC. 6.6 AUDITING: The IDA Financing Agreement will require the submission of audited Annual Financial Statements for the Project within six months after year end. Relevantly qualified, experienced, and independent external auditor appointed for PFMU and PCU will audit the project activities based on TOR acceptable to IDA. The auditor will express an opinion on the Annual Financial Statements in compliance with International Standards on Auditing. In addition to the audit report, the external auditors will prepare a Management Letter giving observations and comments, and providing recommendations for improvements in accounting records, systems, controls and compliance with financial covenants in the Financing Agreement. Government will have appointed an independent auditor including provision for audits of the Federal and State Special Accounts, including terms of reference, on terms and conditions satisfactory to IDA will be a condition of Negotiations. 6.7 FINANCIAL MANAGEMENT SUPERVISION PLAN FM supervision will be consistent with a risk-based approach and will involve a collaborative approach with the TTL, LOA, and procurement. The first FM review will be carried out after 6 months of project implementation by the FMS. This detailed review will cover all aspects of FM including internal control systems, the overall fiduciary control environment, and tracing transactions from the bidding process to 72

82 disbursements as well as SOE review. Supervision intensity will be based on risk, initially on the PAD FM risk rating and subsequently on the updated FM risk rating during implementation. Reviews will be as follows: FM supervision visits based on risk; review of quarterly IFRs; review of audited Annual Financial Statements and management letter as well as timely follow up of issues arising; annual SOE review which will be jointly done with the post audit review by the procurement unit; participation in project supervision missions as appropriate; and updating the financial management rating in the Implementation Status Report (ISR). Bank's project team will play a key role in monitoring timely implementation of the action plan. Project activities will also be periodically reviewed by the Internal Audit Unit (IAU) in the PFMUs and the Internal Auditors at the NFDO and PCU, respectively, and will at a minimum involve: (i) periodic reviews of project activities, records, accounts and systems; (ii) ensuring effectiveness of financial and accounting policies and procedures as well as compliance with internal control mechanisms; (iii) review of transactions; (iv) physical verification of purchases and assets, and of community micro projects; (v) carry out other functions as stated in the their approved charter. The internal auditors will undergo further training in the Bank's financial management and disbursement procedures as well as updated training on risk-based auditing. 6.8 FUND FLOWS AND DISBURSEMENT ARRANGEMENTS Bank and IDA Accounts The overall project funding will consist of IDA credit, counterpart funds from the three tiers of government, and contributions from local communities including the private sector and civil society. IDA will disburse the credit through US$ Designated Accounts (DA) consisting of: (a) one DA for the federal component, Part B only managed by FEM/PCU; (b) one DA for the federal component managed by FMD/NFCO; and (c) one DA for each participating state which will be managed by PFMUs. The PFMUs will disburse directly to the bank account of the FCAs through LDPs and SPAs. Specific funding, banking and accounting arrangements are as follows: A US$ DA with a commercial bank acceptable to IDA to which the initial deposit and replenishments from IDA funds will be lodged; A Current (US$ Interest) Account with a commercial bank acceptable to IDA to which interest on the DA will be credited; A Current (Draw-down) Account in Naira with a commercial bank acceptable to IDA to which draw-downs from the DA will be credited once or twice per month in respect of incurred eligible expenditures, maintaining balances on this account as close to zero as possible after payments; A Current (Project) account in Naira with a commercial bank acceptable to IDA to which Counterpart Funds will be deposited; A Current (Naira Interest) Account in Naira with a commercial bank acceptable to IDA to which interest on Counterpart Funds will be credited. All bank accounts will be reconciled with bank statements on a monthly basis by FEM/PCU, FMD/NFCO, and PFMUs. A copy of each bank reconciliation statement together with a copy of the relevant bank statement will be reviewed monthly by the Project Accountant who will expeditiously investigate identified differences. Detailed banking arrangements including control procedures over all bank transactions (e.g., check signatories, transfers, etc.) will be documented in the FPM. Additionally, they will each maintain an IDA Ledger Loan Account in US Dollars/Naira/SDR to keep track of withdrawals from the IDA credit. The account will show: (i) deposits made by IDA (ii) direct payments by IDA (iii) opening and closing balances. 73

83 FEM/PCU, FMD/NFCO, and PFMUs will maintain a cumulative record of drawdown from the IDA credit that will be reconciled monthly with the Disbursement Summary provided by the Bank. Communities contributions for components 2, 3, and 5 (Small-Scale Community-owned Infrastructure; Advisory Services and Input Support; and Asset Acquisition and Market Systems Development, respectively) will be defined in the subproject agreement between SFCO and FCA. The contribution will be valued and regarded as part of the counterpart contribution for the Project. Simple records will be maintained by the FCA Management Committee to record contributions in cash, materials, labor and will be subject to both internal and external audit. The format will be documented in the PIM. FEM/PCU, FMD/NFCO, and PFMUs will be responsible for preparing and submitting to the Bank consolidated applications for withdrawal as appropriate. Appropriate procedures and controls, which will be documented in the FPM, will be instituted to ensure disbursements, and flow of funds will be carried out in an efficient and effective manner Funds Flow Diagram Figure 8: Funds Flow Diagram IDA Government Budget Designated Accounts ($) NFCO Designated Account ($) SFCO Draw-down (zero balance) Naira A/C Draw-down (zero balance) Naira A/C Project (Naira Counterpart Funds) A/C Designated Accounts ($) PCU Draw-down (zero balance) Naira A/C 74

84 6.9 DISBURSEMENT METHODS By Effectiveness the Project will use the Transaction-based Disbursement Procedures (as described in the World Bank Disbursement Handbook), i.e., replenishment, direct payment, reimbursement, and special commitments. When project implementation begins, the quarterly IFRs produced by the Project will be reviewed. Where the reports are found adequate and produced on a timely basis, and the borrower requests conversion to report-based disbursements, a review will be undertaken by the Bank project team to determine if the Project is eligible for report-based disbursement. The adoption of report-based disbursements by the Project will enable it to move away from time-consuming voucher-by-voucher (transaction based) disbursement methods to quarterly disbursements to the Project's Designated Account based on IFRs. Detailed disbursement procedures are documented in the FPM Minimum Value of Applications The Minimum Value of Applications for reimbursement, direct payment and special commitment is 20 percent of outstanding advance made to the Designated Account Reporting on Use of Credit Proceeds The supporting documentation for reporting eligible expenditures paid from the DA should be a summary report of the Statement of Expenditures and records evidencing eligible expenditures for payments against contracts valued at US $200,000 for goods and works, US $200,000 for consulting firms, and US $50,000 for individual consultants and a list of payments against contracts that are subject to Bank's prior review. The supporting documentation for requests for direct payment should be records evidencing eligible expenditures (copies of receipt, supplier's invoices, etc). All supporting documentation for SOEs will be retained by PFMU, FEM/PCU, and FMD/NFCO and must be made available for review by periodic World Bank missions and internal and external auditors Designated Account The currency for DA will be United States Dollar. The allocation ceilings of the DA will be US $ for the FEM/PCU; FMD/NFCO and each SFCO, respectively. The DAs will be segregated. The above ceilings are calculated based on an implementation period of 5 years for the FEM/PCU; FMD/NFCO and each SFCO Counterpart Funding Government must make all necessary arrangements to ensure timely mobilization of the counterpart funds needed for project implementation Monthly Replenishment Applications The DAs will be replenished through the submission of Withdrawal Applications on a monthly basis by PFMUs, FEM/PCU, and FMD/NFCO and will include reconciled bank statements and other documents as may be required until such time as the Borrower may choose to convert to report-based disbursement Disbursements by Category Table 8 below sets out the expenditure categories, and percentages to be financed out of the credit proceeds. Allocations to disbursement categories have been made based on the Project's work plans. Disbursements will be based on the work plans agreed annually with the Bank. In order to provide maximum flexibility and disbursement based on implementation performance, about US $10,318, Project funds will remain in the unallocated category until the mid-term review when funds can be allocated as needed to each category under the Project. 7 Refer to the PAD for details 75

85 Table 8: Disbursement Categories Amount of the Credit Allocated (expressed in SDR) Percentage of Expenditures to be Financed (1) Civil Works 430, % (2)Goods & Equipment 7,350, % (3) Training Workshops 11,950, % (4) Consultant Services 15,700, % (5) Grants 171,000, % (6) Incremental Operating Costs (7) Refinancing of Project Preparation Advance (8) Unallocated 10,318,000 Total Amount 250,000,000 30,480, % 2,772,000 Amount payable pursuant to the General Conditions Disbursement under Project Component 5, i.e., Asset Acquisition, will be subject to agreement on a set of guidelines for the operation of the FUEF, including the provision for transparent albeit simple mechanisms for funds utilization and management. A full-time rural finance specialist at the SFCO level will be responsible for supervising the implementation of the facility, and will use NGOs, private consultants and other qualified service providers to ensure that the implementation of this facility is properly managed. Linkages with established financial institutions/intermediaries will be sought from the outset to ensure the safe handling of funds and transparency and accountability in funds management. The FUEFs (as second-generation funds) will be invested by the FCA or the individual beneficiary at the community level according to priorities and mechanisms defined by the owner/s of the funds. 76

86 7. PROCUREMENT ARRANGEMENTS A. GENERAL Country Environment 7.1 Before 2000, public procurement in Nigeria was in fact unregulated and non-transparent, and represented a huge cost to the Treasury because of widespread fraud and corruptive practices. Since FY2001, Nigeria has been implementing slowly a procurement reform program based on the recommendations of the 2000 CPAR. A review of the implementation of the 2000 CPAR recommendations, as reflected in the recent PEMFAR, shows that implementation of the procurement reform program has brought about improvements in obtaining value for money in public sector expenditures and in introducing some level of transparency into the procurement process. Many CPAR recommendations have been implemented or are being carried out. In this regard, the CPAR of 2000 has been a positive catalyst, because it supported the agenda of financial sanitation of the current Government. The FGN took a number of steps to advance the procurement reform. 7.2 The Federal Ministry of Finance (FMOF) circulated Guidelines for Due Process Certification of Contracts, contained in Circular No.F15775 of June 27, 2001, on New Policy Guidelines for Procurement and Award of Contracts in Government Ministries and Parastatals. (copy in project file). The guidelines included a number of critical measures such as: (i) the abolition of Federal and Departmental Tender Boards and their replacement with Ministerial Tender Boards; (ii) the requirement for the preparation of quarterly procurement plans; (iii) the application of open competitive tendering procedures and the making of contract splitting to circumvent this principle a serious offence; (iv) the nationwide advertising of public contracts above 10 million Naira; (v) the creation of clearly defined and transparent tender and proposal evaluation criteria; (vi) the requirement to submit tender and performance securities, public tender openings, and award contracts to the lowest evaluated bidder; and (vii) the publication of tender awards in the national press, and the carrying out of procurement audits and inspections. 7.3 The Government created the Budget Monitoring and Price Intelligence Unit (BMPIU) around December, 2002 as a Due Process Unit located within the Presidency, to ensure that provisions of the Circular were adhered to. The BMPIU provides due process certificates for award of contract after review of the procurement documents prepared by the MDAs. The BMPIU also carries out due process reviews for the certification of contract payments (this function has now been outlawed by the new Procurement Act). Market prices are reviewed for adequate guidance ( the right cost of the contract ); if proposed contracts are too costly compared with this price analysis, the BMPIU may not certify the proposed award of the contract and may request that the price be adjusted to the market level. The recent PEMFAR report indicated that contract prices were reduced substantially and reportedly have saved the Treasury substantial amount. Since the 2000 CPAR, collaboration between procurement and financial management has been strengthened considerably. A Cash Management Team chaired by the Federal Minister of Finance, of which the BMPIU (now Bureau of Public Procurement) is a member, ensures that payments are made only when certified by the BMPIU. 7.4 A Public Procurement Act has been enacted by the Government in June The Act adheres to the principles of the UNCITRAL model law, and outlines the principles of open competition, transparent procurement procedures, clear evaluation criteria, award of contract to the lowest evaluated tender, and contract signature. The legislative framework is applicable to all procurement categories (suppliers, contractors, consultants) and must be applied for all public funds regardless of value. The Act has provisions for exceptions to competitive tendering, which are the exception rather than the rule. Also, the Government has already prepare draft implementation Regulations, Standard Bidding Documents and Manuals for the Procurement of Goods, Works and Consulting Services, which describes the minimum contents of the tender and proposal documents. The essential elements of these documents are in line with internationally acceptable procurement standards. The Procurement Act also presents the need for a complaints and appeals mechanism to be established. 77

87 7.5 Procurement Risk at the Country level: Substantial progress in procurement reforms has recently been made at the Federal Government level. The contract administration in the public sector, however, still suffers from some inefficiencies and delays in contract payments. Meanwhile, the current practice in which BMPIU has the authority to request contract price adjustments when they exceed market levels (i.e. negotiation of contract prices) is against the spirit of competition and allows potential abuses. Assurances will be requested during project negotiations that this practice will not be applicable to contracts financed with the Credit fund. Also Government will be encouraged to discontinue this practice which may turn out to be counterproductive. For projects in Nigeria, in general, the key procurement issues and risks during implementation of projects that uses the national system include: (i) the absence of appropriate regulation (bidding documents, Standard Evaluation formats, etc.); (ii) the lack of National Procurement Manuals; (iii) the lack of adequate record keeping; and (iv) inefficient contract management systems and techniques that are common in the public sector. These issues will be eliminated as soon as the draft Implementation, Regulations, Procurement Manual and the Standard Bidding Documents already prepared by Government are finalized and made operational. 7.6 Currently, the Government Procurement reform program is being supported by an IDA Credit ERGP with a substantial component focusing on procurement reforms and an IDF Grant, to assist Government address the weak procurement capacity in the public sector and to build appropriate partnership with the private sector. The project instrument has been used by government to prepare the relevant procurement tools mentioned above. On the other hand, Government is also reforming the Custom practices to modernize them and make them more effective. Though there has been improvement in obtaining value for money in public sector expenditures as well as increased levels of transparency in the procurement process, substantial steps are still being taken by Government to reform its procurement policy and practices to make them more efficient, effective and transparent. Therefore, until the Procurement Act is fully operational and institutionalized, hopefully in the next one year, the procurement risk in the country will remain substantial. 7.7 Procurement risk at the Agricultural Sector at Federal State level: The Agricultural sector has a long history of implementing various Bank-financed projects in Nigeria that dates back to 1971 when the Bank assisted the Western Cocoa Project. It is recently implementing the Fadama II Project in 12 States in the Country. During the implementation of the previous Agricultural projects and ongoing Fadama II projects, weaknesses were identified in the area of insufficient procurement capacity at both federal and state Ministry of Agriculture, Post-procurement reviews of the on-going Fadama II projects also identified weak capacity particularly in the procedures for consultancy services. The lack of capacity is brought about by frequent movement of trained procurement personnel from the agency to other government and international organizations due to low level of remuneration in the public service. The other reason is because government procurement practices are still below the internationally accepted practices. However, as mentioned previously above, a lot of effort is been put in place by government to address this. Other weaknesses identified includes poor documentation and in some cases, the contract prices are above market range for some item procured using shopping procedures and non adherence to procurement scheduling causing delays in project implementation. There also exist lack contract management skills and sometimes political influences. 7.8 While the procurement capacity of the 12 States implementing Fadama II has been built by addressing the weaknesses identified above, the remaining 24 States joining Fadama III will require technical assistance to establish appropriate procurement management capacity. Overall, procurement management capacity in the participating State except the 12 FADAMA II States is still generally weak and is rated substantial. 7.9 To mitigate above identified weak capacity, under the proposed Project, each State MOA will assigned a qualified Procurement Officer (PO) among the key PSU staff, who will also receive additional procurement training on Bank financed procurement procedures from relevant training Institutions such as Lagos Business School, GIMPA, ESAMI etc. by appraisal. The CVs of these Procurement Officers will be reviewed and cleared by the Bank by appraisal. Inter-State staff exchanges among the 12 FADAMA II States and the new 24 FADAMA III States will be encouraged. The States Procurement Officers capacity will also be strengthened and supported by well experienced National Procurement Specialist who shall be recruited before negotiations by FCDO to coordinate the activities of the States POs 78

88 B. IMPLEMENTATION ARRANGEMENTS The Federal Ministry of Agriculture and Water Resources (FMAWR) will have overall responsibility for execution of the Project through the Project Coordinating Unit (NFRA) a Department entrusted with responsibility for coordinating the implementation of all agricultural sector projects, including those that are externally-funded. The NFRA will delegate the functions and responsibilities of day-to-day implementation coordination to a strengthened NFCO, which will now be called the National Fadama Coordination Office (NFCO). This is because, most of the Project's administrative, financial and implementation arrangements will be decentralized and demand-driven, and critical decisions will take place at the community level, within the FCAs and the various EIGs which constitute them. Therefore the FMAWR and NFRA will have no procurement responsibility but will provide overall project oversight functions. i) National Fadama Coordination Office (NFCO): The detail project implementation arrangements are presented in Annex 6 of the PAD. National Fadama Coordination Office (NFCO) with the assistance of the National Procurement Specialist will be responsible for ensuring that Bank's procurement guidelines and procedures are followed at both Federal and State levels. ii) State Fadama Coordination Office (SFCO): At the State level, the State Fadama Coordination Office (SFCO) will be responsible for the coordination and implementation of the Project including procurement while the State Fadama Technical Committee (SFTC) will perform the oversight, policy and strategic orientation functions. The detail project implementation at this level are as presented in Para 6 of Annex 6 of the PAD. iii) Local Government Level: A Local Fadama Desk (LFD) and Local Fadama Development Committee (LFDC) will be established by the Project. The LFD will be responsible for local level review and approval of subprojects while the LFDC will provide the oversight function. There will be no procurement activities at this level. iv) Community Level: The FCAs/ FUGs which are smaller economic groups will be responsible for identifying, preparing, implementing, operating, and, maintaining micro projects. During the execution, various procurement activities will be carried out at these levels. Therefore, the FCAs/FUGs will be responsible for procurement activities with appropriate support from facilitators and technical specialists, whom they will contract either through the State Fadama Coordination Office or directly, and by technical assistance and training made available by the SFCO. The detail arrangements are as presented in Annex 6 of the PAD. Disbursements to the FCAs would occur through LDPs and Subproject Agreements (SPAs), as described in the PIM. C. GUIDELINES Procurement for the proposed Project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004 and revised in October, 2006; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 and revised in October, 2006, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loan/Credit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame will be agreed between the Borrower 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. 79

89 i) Procurement of Works Major works procurement under this will take place at each State FCO. The works procured in the Project will include: feeder roads, Fadama access roads, culverts, small bridges, stocks routes, pastures and watering points community water supply est. Procurement will be carried out using the Bank's Standard Bidding Documents (SBD) for all International Competitive Bidding (ICB) contracts and National SBD agreed with or satisfactory to the Bank. Minor civil works estimated to cost less than US $50,000 equivalent per contract, which are labor intensive, spread over time, and which do not lend themselves to grouping and therefore are unlikely to attract foreign bidders, may be procured under shopping procedures as detailed in paragraph 3.5 of the Guidelines: Procurement under IBRD Loans and IDA Credits May, 2004 and June 9, 2000 Memorandum Guidance on shopping issued by the Bank. Also minor civil works may be implemented by the FCAs using procedures based on the Africa Region's Guidelines - Simplified Procurement and Disbursement Procedures for Community-Based Investments. ii) Procurement of Goods Goods procured under this Project would include furniture, EMIS, project vehicles, computers and accessories, software, communication and office equipment, etc. The procurement will be done using the Bank's SBD for all ICB and National SBD agreed with or satisfactory to IDA. Procurement for readily available off-the-shelf goods that cannot be grouped, or standard specification commodities for individual contracts of less than US $50,000 equivalent, may be procured under shopping procedures as detailed in paragraph 3.5 of the "Guidelines: Procurement under IBRD Loans and IDA Credits" May, 2004, and the Guidance on Shopping Memorandum" issued by IDA, June 9, iii) Selection of Consultants: Consultancy Services which includes: advisory services, technical assistance, Procurement Specialist to NFCO etc, will be available for which public and private research institutions and centers will compete to provide problem-solving oriented research and technology transfer services to Fadama users. These services will be selected through Request for Expressions of Interest, short-lists and the Bank's Standard Requests for Proposal, where required by the Bank's Guidelines. Short-lists of consultants for services estimated to cost less than US $200,000 equivalent per contract may be composed entirely of national or indigenous consultants in accordance with the provisions of paragraphs 2.7 through 2.8 of the Consultant Guidelines. Research Institutes, public training institutions and NGOs may be hired to carry out specific researches, training, distribution and monitoring services in accordance with paragraph 1.11 (b d) and 3.16 of the Consultant Guidelines. iv) Operating Costs: The operating costs shall include staff, travel expenditures and other travel-related allowances with prior clearance from IDA; equipment rental and maintenance; vehicle operation, maintenance and repair; office rental and maintenance, materials and supplies; utilities and communication expenses; and bank charges. Operating Costs financed by the project will be procured using the implementing agency's administrative procedures that shall be acceptable to the Bank. D. ASSESSMENT OF THE AGENCY'S CAPACITY TO IMPLEMENT PROCUREMENT i) An assessment of the capacity of the Implementing Agency to implement procurement actions for the project has been carried out in accordance with Procurement Services Policy Group (OCSPR) guidelines dated August 11, The assessment reviewed the organizational structure for implementing the project and the roles of the key actors in the project implementation. The detailed assessment is in the project files. ii) The key issues and risks concerning procurement in the implementation of the Project and action plan to address them were discussed with the project teams. 80

90 E. PROCUREMENT PLAN The Borrower will finalize at appraisal, the procurement plan for project implementation which will provide the basis for the procurement methods for each participating States. This plan will be reviewed and agreed upon by the Bank and the Project Team at appraisal and negotiations respectively, and will be made available to the participating State Ministry of Agriculture. It will also be available in the Project's database and in 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. F. FREQUENCY OF PROCUREMENT SUPERVISION In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended three supervision missions to visit the field in order to carry out post procurement review every year. An Independent Procurement Audit will be conducted to contribute to the mid-term review exercise of the project. G. PUBLICATION OF RESULTS AND DEBRIEFING. On-line (DG Market, UN Development Business, and/or Client Connection) publication of contract awards will be required for all ICB, NCB, Direct Contracting and the Selection of Consultants for contracts exceeding a value of USD 200,000. In addition, where prequalification has taken place, the list of prequalified bidders will be published. With regard to ICB, and large-value consulting contracts, the Borrower will be required to assure publication of contract awards as soon as IDA has issued its 'no objection' notice to the recommended award. With regard to Direct Contracting and NCB, publication of contract awards could be in aggregate form on a quarterly basis and in local news papers. All consultants competing for an assignment involving the submission of separate technical and financial proposals, irrespective of its estimated contract value, should be informed of the result of the technical evaluation (number of points that each firm received), before the opening of the financial proposals. The PSU will be required to offer debriefings to unsuccessful bidders and consultants should the individual firms request such a debriefing. Goods, Works, and Non Consulting Services (a) List of contract packages to be procured following NCB and direct contracting: Ref. No. Contract (Description) Estimated Cost Procurement Method P-Q Domestic Preference (yes/no) Review by Bank (Prior / Post) Expected Bid- Opening Date Comments (b) NCB contracts estimated to cost above USD 200,000 per contract and all direct contracting will be subject to prior review by the Bank. 81

91 Consulting Services List of consulting assignments with short-list of international firms Ref. No. Description of Assignment Estimated Cost Selection Method Review by Bank (Prior / Post) Expected Proposals Submission Date Comments (b) Consultancy services estimated to cost above USD 200,000 per contract and single source selection of consultants (firms) for assignments estimated to cost above USD 200,000 will be subject to prior review by the Bank. (c) Short lists composed entirely of national consultants: Short lists of consultants for services estimated to cost less than USD 200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 82

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