Document of The World Bank Report No: 81555 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF AGRICULTURAL COMPETITIVENESS PROJECT PROPOSED CREDIT IN THE AMOUNT OF SDR 40.3 MILLION (US$ 60 MILLION EQUIVALENT) APPROVED ON JUNE 18, 2009 TO THE REPUBLIC OF CAMEROON September 20, 2013 1 SUMMARY The restructuring of the Agricultural Competitiveness Project (Projet d’Appui à la Competivité Agricole - PACA) is justified for the following reasons: (i) the Mid-Term Review (MTR) mission and the Government jointly decided to scale down the rehabilitation of rice irrigated perimeters (RRIP) and reallocate funds to the institutional support of the ''Société d’Expansion et de Modernisation de la Riziculture de Yagoua'' (SEMRY) and the Upper Nun Valley Development Authority (UNVDA); and (ii) certain categories of expenditures will soon be fully disbursed. The restructuring will entail two changes: (i) adjustment of the Results Framework by the removal of the RRIP sub- component from the Project and cancellation of the activities on palm oil, since no sub- project has been submitted for that value chain; and (ii) increasing by SDR 2,115,000 the budget allocated to Category 4 “Sub-grants under Part B.2 of the Project” (to complete the financing of sub-projects that have already been identified) and by SDR 1,500,000 the budget allocated to Category 6 “Goods, Operating Costs, Training and Services for Part D of the Project” (to strengthen data collection, monitoring and evaluation, internal audit, financial management, training, operational equipment, as well as to increase support to producers on the ground as per the recommendations of the MTR). PROJECT STATUS At the time of the MTR, the Project was judged to be firmly on track to achieve its Outcome Indicators (OIs) and Intermediate Outcome Indicators (IOIs) by the scheduled closing date of November 30, 2015. Out of five OIs, one had been achieved at 130%, and the others had been achieved at 80-93% of the final targets. Five IOIs had been achieved at 100-180% of the final targets, and five others have been achieved at 50-90% of the final targets. Through Sub-component 2.1 “Support to economic partnerships” and Sub-component 2.2 “Co-financing of producer organizations sub-projects,” the Project provides direct financing and support to the rice producers (and rice production) in the SEMRY zone. The support consists in provision of training, improved seeds, fertilizers and other inputs, equipment, and support to marketing. Even after the restructuring and the removal of RRIP, “Increasing average rice yields” will continue to be one of the OIs of the Project. This outcome has already been achieved at 93% of the final target: producers who have been supported in the SEMRY zone are currently achieving average yields of 5.7 tons/ha, as against and end-of-Project target of 6.1 tons/ha. PROPOSED CHANGES  Results/indicators Changes in the Results Framework (RF): One out of the three crops specified under Outcome Indicator “Increase in crop yields for three other targeted crop value chains” has been dropped following the cancellation of the activities on palm oil. At the time of the MTR, no sub-project had been submitted by producers for that value chain, despite the implementation by the Project team of sensitization and awareness campaigns. The other two crops specified under that Outcome Indicator (maize and plantain) are maintained. 2 Two IOIs “Increase in rice production in rehabilitated perimeters” and “Irrigation area rehabilitated” have been dropped, reflecting the scaling back of the RRIP sub-component. The funds initially allocated to RRIP have been reallocated to strengthen institutional support of SEMRY and UNVDA, as recommended by the MTR mission. Apart from these changes, the RF remains the same. (For complete details, see Annex 1.)  Reallocations The Project became effective on January 29, 2010. The financing for the Project totals US$ 82 million, of which US$ 60 million consist of IDA funds and US$ 22 million equivalent consist of internal funds. At the time of the MTR in December 2012, about US$18.2 million of IDA funds had been disbursed, leaving US$41.8 million in IDA funds undisbursed. Based on the results achieved to date and the amount of funds available, an extension of the closing date will not be necessary. However, the exhaustion of certain categories of expenditure and the low remaining balance of funds in other categories makes necessary a reallocation of credit proceeds (see table below). The scope of the reallocation has been agreed by the MTR mission and the Government. The main objective of the reallocation is to increase: (i) Category 4 “Sub-grants under Part B.2 of the Project” by SDR2,115,000 (to complete the financing of the sub-projects), and (ii) Category 6 “Goods, Operating Costs, Training and services for Part D of the Project” by SDR1,500,000 (to strengthen data collection, monitoring and evaluation, internal audit, financial management, training, operational equipment, as well as to support to producers on the ground as per the recommendations of the MTR). Following this reallocation, the Project Coordination Unit (PCU) of PACA will be able to support implementation of the newly approved Cameroon Flood Emergency Project (P143940) until the latter’s coordination unit is established, as well as preparation and early implementation of the Cameroon Agriculture Investment and Market Development Project (P143417). The PCU of PACA will implement both of these projects until their own PCUs are functional. The reallocated funds will come from Category #3 “Goods, Works, Operating Costs, Training and Services for Part B. 1 of the Project” (SDR 403,000), Category # 5 “Goods, Operating Costs, Training and Services for Part C of the Project” (SDR 1,612,000), and Category # 8 “Unallocated” (SDR 1,600,000). The proposed changes will not significantly affect the Project design, scope, or expected outcome. 3 Category of Expenditure Allocation (in SDR) % of Financing Current Revised Current Revised Current Revised Rehabilitation NO 8 600 000 8 600 000 21% 21% of rural roads Institutional support of NO 5 800 000 5 800 000 14% 14% SEMRY and UNVDA Support to economic YES 1 400 000 997 000 3% 2% partnerships Co-financing YES 13 800 000 15 915 000 34% 39% of Sub-projects Support to Institutional & YES 3 400 000 1 788 000 8% 4% Capacity Building Coordination, YES 5 000 000 6 500 000 12% 15% M&E PPF NO 700 000 700 000 2% 2% Unallocated YES 1 600 000 0 4% 0% Grand Total 40 300 000 40 300 000 100% 100% 4 ANNEX 1: Results Framework and Monitoring CAMEROON: AGRICULTURAL COMPETITIVENESS PROJECT D=Dropped Baseline (actual at time of Cumulative Target Values* C=Continued restructuring) Project Outcome Indicators Core N= New YR 1 YR2 YR 3 YR4 YR5 R=Revised UoM Value Increase in the value of selected marketed/traded products in targeted C % 0 0 5 10 15 20 area Reduction of post harvest losses from supported Pos with access to C % 0 0 5 10 15 20 the new transport infrastructures Increase in average rice yields in the C tons/ha 5.2 5.2 5.2 5.5 5.8 6.1 rehabilitated irrigated areas Maize: 2.5: C 2.5 2.5 2.75 2.8 3.0 Increase in crop yields for three C tons/ha Plantain: 6.5: C 6.5 6.5 6.8 7.0 7.5 other targeted crop value chains Palm oil: 1.5: D 1.5 1.5 1.7 1.9 2.1 Intermediate Results Intermediate Result (Component 1): Removal of Key Infrastructure Bottlenecks Revised Intermediate Result (Component one): Reduction in transportation time to C % 0 0 0 10 15 20 closest market Increase in rice production in D ton 45,000 45,000 50,000 65,000 75,000 90,000 rehabilitated perimeters (tons) Roads rehabilitated C Km 0 0 100 250 400 500 Irrigation area rehabilitated x D ha 0 2,000 5,000 8,000 10,000 11,500 Intermediate Result (Component 2): Economic Partnership Revised Intermediate Result (Component Two): Sub-projects profitable (positive C % 0 0 80 80 80 80 Gross Profit) 1 year after completion Unqualified technical and safeguard C % 0 0 80 80 80 80 audits 5 POs adopting business plans C % 0 0 20 40 70 70 POs engaged in economic C # 0 100 400 700 1,000 1,000 partnerships (number) Sub-projects presented (number) C # 0 300 900 1,500 2,000 2,000 Sub-projects approved (number) C # 0 100 400 700 1,000 1,000 Intermediate Result (Component 3): Institutional Support and Capacity Development POs in targeted areas satisfied with support services received from C % 0 40 60 80 80 80 APEX organizations POs receiving support services through apex organizations C # 0 100 200 350 500 500 (number) POs managed effectively (hold regular meeting, record their decision, open and manage a bank C % 0 40 60 80 80 80 account and have regularly elected officials Incremental volume of annual C tons 0 0 200 300 400 500 certified seeds produced 6 ANNEX 2: Reallocation of Proceeds: Revised of Expenditure Categories of the Project (in SDR) Amount Amount of the Percentage of to be Credit Allocated Category Expenditures reallocated (expressed in to be Financed (4) SDR) (1) Goods, works, Operating Costs, 100% Training and services for Part A.1 of NO 8 600 000 (exclusive of Taxes) the Project (2) Goods, works, Operating Costs, 100% Training and services for Part A.2 of NO 5 800 000 (exclusive of Taxes) the Project (3) Goods, works, Operating Costs, 100% Training and services for Part B. 1 of YES 997 000 (exclusive of Taxes) the Project 100% of amounts (4) Sub-grants under Part B.2 of the YES 15 915 000 disbursed Project (inclusive of Taxes) (5) Goods, Operating Costs, Training 100% YES 1 788 000 and services for Part C of the Project (exclusive of Taxes) (6) Goods, Operating Costs, Training 100% YES 6 500 000 and services for Part D of the Project (exclusive of Taxes) Amount payable pursuant (7) Refund of Project Preparation NO 700 000 to Section 2.07 of the Advance General Conditions (8) Unallocated YES 0 0 TOTAL AMOUNT 40 300 000 1 SDR=CFA750. 7