Document of The World Bank Report No:59714-ML RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF AGRICULTURAL COMPETITIVENESS AND DIVERSIFICATION PROJECT CR. 40940 - MLI 07/05/2005 TO THE REPUBLIC OF MALI February 10, 2011 Agriculture and Rural Development Unit (AFTAR) Sustainable Development Department Country Department AFCW3 Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. 1 ABBREVIATIONS AND ACRONYMS CDDP Centre de Démonstration et Diffusion de la Production (Demonstration Centers) CNPO Comité National de Pilotage et d'Orientation (National Steering Committee) CRPO Comités Régionaux de Pilotage et d'Orientation (Regional Steering Committees) V/C Value Chain KPI Project Key Indicators GoM Government of Mali IDA International Development Association MTR Mid-Term Review PDO Project Development Objective PIM Project Implementation Manual SDR Special Drawing Rights Regional Vice President: Obiageli Katryn Ezekwesili Acting Country Director: Marie Kathryn Hollifield Sector Manager / Director: Karen Mcconnell Brooks Task Team Leader: Yeyande Kasse Sangho 2 MALI AGRICULTURAL COMPETITIVENESS AND DIVERSIFICATION PROJECT P081704 CONTENTS Page A. SUMMARY................................................................................................................ 4 B. PROJECT STATUS.................................................................................................. 4 C. PROPOSED CHANGES .......................................................................................... 5 ANNEX1............................................................................................................................. 8 RESULTS FRAMEWORK AND MONITORING........................................................ 8 3 PROJECT NAME: AGRICULTURAL COMPETITIVENESS AND DIVERSIFICATION PROJECT RESTRUCTURING PAPER SUMMARY 1. This Project Paper seeks the approval of the Country Director to introduce the following changes in the Mali Agricultural Competitiveness and Diversification Project (Cr. IDA 4094-MLI, P081704) and any accompanying amendments to the project legal documents. 2. The proposed changes relate to a Level Two restructuring of the project that entails the modification of the project's intermediate result indicators, a first reallocation of the credit proceeds, and a six-month extension of the project closing date. Indeed, although the project is performing satisfactorily, its outcomes would be enhanced through that modification of indicators that has become a necessity and through the transfer of funds from some categories to others in needs of supplemental funds to deliver expected results. Furthermore, the proposed 6 month-extension of the closing date will permit to reach the results indicators as the project has recorded delays in the procurement process of the renewal of the operators' contract which started just after the Project's MTR in May 2009. The new operators will only be on board in February 2011. 3. These modifications will allow to update the expected Intermediate Results Indicators (to make the deliverables more realistic than planned), to deliver important results of the project as there will be more funding for beneficiaries' subprojects and reinforced support to the commercialization of targeted agricultural products. PROJECT STATUS 4. The project was approved on July 5, 2005. It became effective on April 4, 2006. The initial credit (Cr.40940-MLI) will close on June 30, 2012. There are no outstanding audit reports for this project. As of February 8, 2010, SDR 17.97 million have been disbursed out of the total credit amount of SDR 30.70 million. 5. The project is designed to support the GoM in its strategy to reduce poverty and the specific PDO is that the project aims at fostering improvements in the performances of supply chains for a range of agricultural, livestock, fishery and gathering products, in which Mali has a strong comparative advantage. 6. The project has four components: (1) Demonstration and dissemination of irrigation, Post-harvest and value-added technologies (US$10.35 million); (2) Improvement of 4 agricultural supply chains (US$7.07 million); (3) Access to financing (US$2.93 million), Market-oriented infrastructure (US$21.49 million); and (4) Project Management, Monitoring and Evaluation (US$5.61 million). Key achievements so far on each component are: 7. Component 1 set up 4 demonstration and training centers (CDDPs); 2 CDDPs have been already transferred to the National Research Institute (IER) and two are `centers of excellence' for irrigation and processing activities. The project delivered 8 farm budgets as planned and prepared commercial mango and papaya orchards studies for Sikasso, Bamako and Segou. Regarding support to value chains (V/C) organization, the regional mango committees, as well as the national potato committee have been established; the shallot/onion and livestock V/C regional committees are being set up. 8. Component 2 finalized the preparation of methodological tools for the main V/Cs. It positioned Mali mango on the international market (5000T in 2005 and 11000 T in 2011) and national/regional marketed volume were 22,600 tons for shallots and 29,000 tons for potatoes. The market information system has been operational for mango since last agricultural campaign. 9. Component 3: To date, 277 sub-projects were approved, 144 sub-projects financed (32% for women), and 22 tool kits corresponding to typical farm budgets and processing activities underlying sub-projects prepared and validated. The sub-project operational manual has been reviewed and retrofitted. With sub-projects already approved and financed, the total number of sub-projects is expected to be well over the results framework target of 350. 10. Component 4 delivered all rural tracks programmed under the project. The fruit processing terminal (Plaza) has become a modern platform for mangoes export operations. The design of other marketing facilities has been completed. Monitoring and Evaluation activities are on track delivering a report on a quarterly basis. 11. While awaiting to resolve procurement issues, the project put in the field a technical team to allow the project to continue its implementation. Delays that occurred in procurement and the renewal of the joint international-Malian technical assistance (TA) are being resolved. The TA will start during the month of February. Implementation of the project will now pick up sharply since the technical team in the field will now benefit from the TA. 12. Based on the above, the implementation of the project is deemed satisfactory and its project objectives continue to be achievable. PROPOSED CHANGES 5 13. The proposed changes concern: (i) adjustments of intermediate results; (ii) a re-allocation of funds among the expenditure categories of the project; and (iii) a 6-month extension of the project's Closing Date. The first change is due to larger subprojects funded by the project than originally envisaged and the repartition of technologies delivered by the project. The second change stems from the necessity to transfer more fund to the target categories in order to deliver results and the last is explained by the need to extend the project for reasons explained earlier. The new closing date will be December 31, 2012. This will permit to complete the activities as well as the extended contracts. 14. In conclusion, the proposed changes will bear on the intermediate results, the reallocation of proceeds of the Credit and the duration of the project are as follows: Intermediate results changes Component 1: Innovation and diffusion of technologies Indicator 1: Producers and processors who have adopted the new technologies 15. Since any changes are foreseen on the total number of the technologies adopted (1800) including irrigation technologies (900 planned), some changes will be made on discharge height technologies and on livestock/fishing processing technologies for reasons linked to users demand. Therefore, manual discharge height technologies will be 200 instead of 400, mechanic pumps will be 400 instead of 300, other discharge height technologies will be 100 instead of 200; and livestock/fishing technologies will be 200. Indicator 2: Sub-projects implemented and financed under the innovation fund 16. The number of sub-projects will be 350 instead of 900 based on the recommendation of the MTR mission to implement larger sub-projects than originally planned. In fact, the project planned to support sub-projects of US$2,000 on irrigation and of US$3,000 on agricultural products processing. Already the experience on the ground showed that the producers are not interested by this level of investment. The average of subprojects funded is around US$12,000 with around 50 percent of subsidies. The MTR recommended increasing the level of the investment on irrigation and transformation in order to boost the diffusion of demonstrated technologies and to increase incomes in the sector. Since the MTR, the target is medium commercial plantations on irrigation (5-50 ha) and semi-industrial units for processing in view to show real transformation made by the project in the sector. Component 2: Improvement of economic performance of agricultural supply chains Indicator 1: interprofessional organizations 17. The interprofessional organizations are directly linked to the number of supported supply chains which target changed from 8 to 6; therefore the target will be 6 interprofessional 6 organizations. This change is explained by the fact that the original target of 8 supply chains is too high for a six-year project. Indicator 2: increase of value of commercialized products 18. The initial target called for an increase of 40 percent for quantity of targeted products on commercialized national, sub-regional and international markets, but not for the increase of the value of these products; the updated result framework plans an indicator of an increase of 5 percent of the value of these products (mango, shallots/onions, and potatoes), which is a much more realistic increase than the highly optimistic assumption at appraisal. Extension of the closing date 19. Furthermore, the proposed 6 month-extension of the closing date will allow to reach the results indicators as the project has recorded delays in the procurement process of the renewal of the operators contract which started just after the May 2009 MTR. The new operators will be on board this month. The 6 month-extension request is also in line with the remaining funds available to carry out the project. SCHEDULE 1 Withdrawal of the Proceeds of the Credit Projected Reallocation of Project Credit Proceeds, in currency (SDR) Category Specification Original Revised Difference % Difference in % total of credit allocated 1 Category I. Demonstration and 6,500,000 8,976,630 2,476,630 38% 8.07% dissemination of irrigation, post-harvest and value adding technologies 2 Category II. Improvement of 4,500,000 5,886,058 1,386,058 31% 4.51% performance of agricultural supply chains 3 Category III. Access to 1,200,000 2,044,817 844,817 70% 2.75% financing 4 Category IV. Market-oriented 13,000,000 9,038,932 -3,961,068 -30% -12.90% infrastructure 5 Category V. Project 2,700,000 4,231,268 1,531,268 57% 4.99% management and Monitoring and Evaluation 6 Program preparation 800,000 522,295 -277,705 -35% -0.90% 7 Non allocated 2,000,000 0 -2,000,000 -100% -6.51% Total 30,700,000 30,700.000 0 0% 0.00% 7 Annex1 Results Framework and Monitoring MALI: AGRICULTURAL COMPETITIVENESS AND DIVERSIFICATION PROJECT Annex1: Results Framework and Monitoring Project development objectives: The project aims at fostering improvements in the performances o f supply chains for a range of agricultural, livestock, fishery and gathering products, for which Mali has a strong comparative advantage. The proposed investment is expected to reinforce the competitiveness of both traditional (cotton, rice) and non-traditional (fruit, horticulture products, oil seeds, Arabic gum, cashews, etc.) agricultural products through targeted investment to remove critical constraints, improve productivity and efficiency and build organizational and institutional capacities, both private and public, along the supply chains. In the long run, the project should contribute to increasing and diversifying rural household incomes and economic opportunities. It supports the development of a vibrant and diversified commercial agriculture as a means to move away from subsistence agriculture, which is often synonymous to poverty for the majority of rural households. Revised Project development Objectives: No change Cor e PDO Level Results D=Dropped Unit of Baseline Cumulative Target Values** Frequen Data 8 Indicators* D=Dropped Measure cy Source/ Responsibili Methodolo ty for Data C=Continue gy Collection N= New 2006 2007 2008 2009 2010 2011 2012 R=Revised Indicator One: C Tons Mango : 57000 - 8 400 18 480 30 072 42 823 57 000 70 000 Annual M&E Project Volume of products marketed on the domestic, regional and/ or international Shallots : 220 000 - - 139 000 292 000 460 000 645 000 795 000 market. Potatoes : 52 000 - - 46 200 97 020 152 922 215 000 265 000 Indicator Two: C In Mango : 6 800 - 4 050 8 910 14 310 20 250 27 000 32 400 Annual M&E Project Value of products marketed millions on the domestic, regional de and/ or international. F.CFA Shallots : 32 000 - - 18 270 39 150 61 800 87 000 107 000 Potatoes : 7 000 - - 7 980 17 100 26 980 38 000 47 000 Indicator three: Supply R Number Annual M&E Project chains with improved 0 0 0 2 4 6 6 6 performances (Number) Intermediate Result (Component One): Innovation and dissemination of technologies Revised Intermediate Result (Component One): Innovation and dissemination of technologies Intermediate Result R Number Trimester M&E Project indicator One: 0 0 0 70 150 210 280 350 Sub-projects implemented and financed under the Innovation Fund (KPI) (Number, break down in irrigation, agro-processing, fish, livestock) 9 Intermediate Result indicator two C Number 1129 0 0 100 300 600 1200 1800 Trimester M&E External Producers and processors Expertise /Project who have adopted one of the new technologies (KPI) Intermediate Result indicator three C Number 0 0 80 100 120 150 180 200 Trimester M&E Project Artisans and private service providers trained (KPI) Intermediate Result indicator four C Number 0 0 0 0 10 20 30 40 Trimester M&E Project Artisans newly installed for the dissemination and the maintenance of equipment and technologies (KPI) (Number) Intermediate Result indicator five C Number 0 0 4 4 4 4 4 4 Annual M&E Project Set-up and functioning of demonstration centers (CDDP) (Number) Intermediate Result indicator six C Number 0 0 0 4 8 12 20 24 Annual M&E Project Technical-economic references (data sheet) for producers and processors available (Number) Intermediate Result (Component Two): Improvement of agricultural supply chains Revised Intermediate Result (Component Two): Improvement of agricultural supply chains Intermediate Result indicator One: C Number 0 0 0 0 0 1 3 4 Annual Statistics Project from the Department Sizeable private investment of Commerce projects (foreign, joint- And M&E ventures, etc.) generated and/or supported in the selected supply cha ins (KPI) (Number) 10 Intermediate Result indicator Two: R Number 0 0 0 0 0 0 3 6 Annual M&E Project Inter-professional organizations created and operational in the selected supply chains (KPI) (Number) Intermediate Result indicator Three C Number 0 0 0 0 1 2 3 4 Annual M&E Project Sets of technical specifications prepared & adopted by privy economic operators in the sell supply chains (KPI) (Number Intermediate Result indicator four C Number 0 0 4 8 12 16 18 20 Annual M&E Project Market information bulletins disseminated (to private sector) (Number) 11 Intermediate Result (Component Three): Access to financing Revised Intermediate Result (Component Three): Access to financing Intermediate Result indicator One: C Number 0 0 0 5 15 20 30 40 Annual financial Project Loans granted to private institution economic operators in M&E the selected supply chains (KPI) (Number) Intermediate Result indicator Two: C CFA 0 0 0 300 500 800 1000 1100 Annual financial Project Amount of credits million institution guaranteed to private M&E operators by guarantee facility (in CFA million) (Number) Intermediate Result indicator Three C % 70 0 0 90 90 90 90 90 Annual financial Project Recovery rate of institution guaranteed credits M&E (Percentage) Intermediate Result (Component Four): Availability and functionality of commercial infrastructures and rural roads (Component 4) Revised Intermediate Result (Component Four): Availability and functionality of commercial infrastructures and rural roads (Component 4) Intermediate Result indicator One: Roads rehabilitated, Kilomete 0 0 472 896 1101 1101 1101 1101 Annual National Roads Project Directory rate Rural (Kilometers) ­ C r CORE Indicator Intermediate Result indicator Two: C Number 0 0 1 1 2 4 6 8 Annual M&E Project Commercial facilities built / rehabilitated (KPI) (Number) 12 Intermediate Result indicator Three C % 0 0 0 0 0 4 6 8 Annual M&E Project Facilities managed under management agreements signed between the state and private economic operators (KPI) (Percentage Intermediate Result (Component Five): Functioning of project steering committees(Component 5) Revised Intermediate Result (Component Five): Functioning of project steering committees(Component 5) Intermediate Result indicator One: C Number Annuel M/E Project Regular meetings of the Comité National de Pilotage et d'Orientation (CNPO) and of the Comités Régionaux de Pilotage et d'Orientation (CRPO) in accordance with the PIM (KPI) (Text Description, break down in Regional and National Steering Committees) 0 8 16 24 32 40 48 56 CRPO CNPO 0 1 2 3 4 5 6 7 13 Annex 2: Reallocation of proceeds 1. The reallocation is underpinned by technical decisions taken during the MTR that concluded for a need to: (i) increase the level of the sub-projects in order to boost the diffusion of technologies and increase incomes of sector producers/processors; (ii) increase/deepen the results of component 2 - Improvement of economic performance of agricultural supply chains) that is the pillar of this project and the component 3 - Access to financing that represents the main component for the delivery of the outcomes of the project; and (iii) increase the budget of the component 5 - Management of the project in view to take in account the main technical audits and impacts studies recommended by the MTR. 2. The reallocated funds (SDR 6,238,774) will come from: (i) category 4 - Market- oriented infrastructure for SDR 3,961,068; (ii) category 6 - Project preparation fund for SDR 277,705; and non-allocated funds for SDR 2,000,000. 3. The funds will be transferred to: (i) category 1 - Demonstration and dissemination of irrigation, post-harvest and value adding technologies for SDR 2,476,631; (ii) category 2 - Improvement of performances of agricultural supply chains for SDR 1,386,058; category 3 - Access to financing for SDR 844,817; and (v) category 5 - Project management and monitoring and evaluation for SDR 1,531, 268. 14