The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) REPORT NO.: RES46839 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF SMALLHOLDER IRRIGATED AGRICULTURE AND MARKET ACCESS PROJECT- IRRIGA 1 APPROVED ON JUNE 29, 2018 TO MINISTRY OF FINANCE AND ECONOMY AGRICULTURE AND FOOD AFRICA EAST Regional Vice President: Hafez M. H. Ghanem Country Director: Idah Z. Pswarayi-Riddihough Regional Director: Mark R. Lundell Practice Manager/Manager: Shobha Shetty Task Team Leader(s): Aniceto Timoteo Bila The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) ABBREVIATIONS AND ACRONYMS AIMU Agriculture Investment Management Unit FNDS National Sustainable Development Fund/Fundo Nacional de Desenvolvimento Sustentável IRRIGA Smallholder Irrigated Agriculture and Market Access Project MADER Ministry of Agriculture and Rural Development/Ministério da Agricultura e Desenvolvimento Rural MASA Ministry of Agriculture and Food Security/ Ministério da Agricultura e Segurança Alimentar PDO Project Development Objective PEDSA Strategic Plan for Development of Agriculture Sector/Plano Estratégico de Desenvolvimento do Sector Agrário PNISA National Agriculture Investment Plan/ Plano Nacional de Investimentos do Sector Agrário SOPs Serie of Projects BASIC DATA Product Information Project ID Financing Instrument P164431 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 29-Jun-2018 31-Dec-2024 Organizations Borrower Responsible Agency Ministry of Finance and Economy Ministry Of Agriculture and Food Security The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) Project Development Objective (PDO) Original PDO The proposed Project Development Objective (PDO) is to improve smallholder agriculture productivity and market access in the project areas developed with irrigation and provide immediate and effective response to an eligible crisis or emergency. The Program objective of the Series of Projects (SOP) is to increase farmers' productivity and improve rural livelihoods through increased access to irrigation and markets. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-D3510 29-Jun-2018 31-Aug-2018 28-Dec-2018 31-Dec-2024 55.00 15.41 38.92 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No 1. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The Smallholder Irrigated Agriculture and Market Access Project (IRRIGA) in the Grant amount of US$55 million equivalent was approved by the Board on June 29, 2018, became effective on December 28, 2018, and is scheduled to close on December 31, 2024. The project development objective (PDO) is to improve smallholder agriculture productivity and market access in the project areas developed with irrigation and provide immediate and effective response to an eligible crisis or emergency. This is the first operation in Series of Projects (SOP). The program objective is to increase farmer’s productivity and improve rural livelihoods through increased access to irrigation and markets. 2. The implementation experienced initial delays due to the inability of the project to process payment advances through the Designated Project Account due to lapsed loans in the Mozambique portfolio. This was resolved in January 2020 by amending the Disbursement Letter. This affected all project activities mainly the recruitment of consultants and service providers for the development of irrigation systems and assistance to producers to intensify agricultural production. Other delays experienced by the project were caused by Cyclone Idai in 2019 which caused small to moderate damages to about 1,900 hectares out of the 2,500 hectares rehabilitated by the The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) predecessor Sustainable Irrigation and Sustainable Irrigation Development Project (PROIRRI), reducing the baseline irrigated area to about 600 hectares. 3. Despite initial delays the project implementation is now picking up and the main achievements to date include: (i) pre-identification of 8,000 hectares with potential for development of irrigation; (ii) completion of detailed designs in over 1,500 hectares; (iii) construction initiated in 811 hectares; (iv) support agricultural intensification in more than 1,000 hectares; (v) support to complete the integrated agriculture survey, aimed to assess the current situation of the agricultural sector and establish a baseline to support the planning process for the interventions in the sector for the next five years; and (vi) support to the preparation of the Agriculture Strategic Plan (PEDSA) for 2021-30 and its Investment Plan (PNISA) scheduled for August approval by the Council of Ministers. 4. The PDO remains relevant and achievable. In terms of progress towards achieving the PDO. The project has four PDO indicators: (i) Average crop yield- the project has been able to report only on rice out of the five crops supported by the project. It was not possible to collect other indicators as the interventions on other crops started in the middle of the agricultural season in November 2020. The rice productivity is 4.5 tons per hectare above the target of 4 tons per hectare; (ii) Average crop intensity – the project has reached 1.2 out of the target of 1.5 harvests per year; (iii) Proportion of agriculture production sold-the project is on target and reports 85 percent of the total production sold out of 90 out of the 75 percent target; (iv) Direct beneficiaries - the project has thus far only benefited 1,200 farmers out of the planned 3,000 for this period. The results framework will be readjusted to reflect the initial delays. 5. In terms of disbursement about US$11.37 million corresponding to 20 percent of the Grant amount has been disbursed to date. In terms of commitments, the project has about US$20 million committed corresponding to 36 percent of the Grant amount. 6. The project is in compliance with all its legal covenants. In terms of social and environmental safeguards, the project is Category B, and the project’s safeguards performance has been rated Moderately Satisfactory, and the overall risk is rated as Moderate in terms of compliance with safeguards policies. B. Rationale for restructuring and the proposed changes 7. The rationale for restructuring is to align the project with the new structures of the Ministry of Agriculture and Rural Development (MADER) established with the creation of the new Government in February 2020. With the creation of MADER the role and functions of the Agriculture Investment Management Unit (AIMU/UGISA in Portuguese), an entity that was created under the Ministry of Agriculture and Food Security (MASA) to managed projects with donor funding, including IRRIGA, is being discontinued. Its role will be performed by the National Sustainable Development Fund (FNDS). In addition, there is need to adjust the project activities to rehabilitate the irrigation schemes damaged by Cyclone Idai in 2019. This will result in small reduction of the rehabilitation under new areas but the overall the total area rehabilitated by the project will be more than anticipated since the unit cost under the areas damaged areas by the cyclone is estimated to be lower than in the new areas. 8. As per the request of the Ministry of Economy and Finance submitted to the Bank on March 9, 2021, the proposed Restructuring Paper seeks approval of Level Two restructuring by the Country Director for the following changes: The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) (i) Change the project implementation entity within MADER from AIMU to FNDS. The FNDS will have full responsibility for the management of the project daily including technical aspects. The National Irrigation Institute (INIR) will maintain a planning, regulatory and coordination role. FNDS to enter as the lead implementing institution, will need to enter into a subsidiary agreement, since FNDS has a separate legal personality from the government. (ii) Reallocate the Grant proceeds among components and categories to make resources available to: (a) rehabilitate about 1,900 hectares with small to moderate damages caused by Cyclone Idai. The evaluation of the damages indicated the need for a total of US$4.75 million to meet the total rehabilitation costs. This will imply a reduction of 500 ha in the target of new areas planned under the project (from 3,000 hectares to 2,500 hectares), but the total area rehabilitated by the project will increased from 3,000 hectares to 4,400 hectares (1,900 hectares rehabilitation of damages from Cyclone Idai plus 2,500 hectares of new areas) as the unit cost of rehabilitation of schemes damaged by cyclone is estimated to be low (US$2,500/ha) compared to US$8,000 in new areas; (b) meet the cost of the undertaking the agricultural survey, designed to be representative at the district level, to assess the current situation of the sector, and set the baseline indicators to be used for planning interventions in the next five years. The Government requested about 2.8 million Meticias (equivalent to US$4.45million) to fully meet the cost of the survey. The project requires to reallocate equivalent about US$2.5 Million to component one to meet this cost. This will be deducted from component three (agriculture intensification) since the initial activities were delayed in 1,900 hectares damaged by the cyclone Idai; and (iii) Revise the targets in the results framework, and the disbursement estimates to reflect the initial delays in the implementation. The are no overdue audits and associated amendment of the Project's legal documents would also be made as warranted. 2. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Institutional Arrangements ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) Loan Closing Date(s) ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Financial Management ✔ Procurement ✔ Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1-Institutional Component 1-Institutional 8.00 Revised 10.50 Capacity Building Capacity Building Component 2-Smallholder Component 2-Smallholder Irrigation Development and 28.00 No Change Irrigation Development and 28.00 Management Management Component 3-Agriculture Component 3-Agriculture Intensification and Market 15.00 Revised Intensification and Market 12.50 Linkages Linkages Component 4- Project Component 4- Project Management and Monitoring 6.00 No Change Management and Monitoring 6.00 and Evaluation and Evaluation Component 5-Contingency Component 5-Contingency 0.00 No Change 0.00 Emergency Response Emergency Response The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) TOTAL 57.00 57.00 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-D3510-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: GDS,WK,NCS,CS,WSP,TRG, IC, OC 12,500,000.00 2,880,019.58 13,800,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: GDS,WK,NCS,CS,WSP,TRG, IC, OC 18,100,000.00 1,259,604.98 18,100,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: GDS,NCS,CS,MCT GRT 7,700,000.00 0.00 6,400,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: CERC part 5 0.00 0.00 0.00 100.00 100.00 Total 38,300,000.00 4,139,624.56 38,300,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2018 0.00 0.00 2019 3,092,540.00 70,344.00 2020 7,474,610.00 4,395,367.00 The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) 2021 11,324,060.00 6,973,476.00 2022 12,995,180.00 12,500,000.00 2023 11,891,770.00 17,500,000.00 2024 8,221,840.00 13,631,157.00 . The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) . Results framework COUNTRY: Mozambique Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 Project Development Objectives(s) The proposed Project Development Objective (PDO) is to improve smallholder agriculture productivity and market access in the project areas developed with irrigation and provide immediate and effective response to an eligible crisis or emergency. The Program objective of the Series of Projects (SOP) is to increase farmers' productivity and improve rural livelihoods through increased access to irrigation and markets. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Measure the productivity of selected commodities under smallholder irrigated production systems Average crop yield of selected commodities in irrigated 0.00 0.00 production systems (Metric tons/year) Rice (Metric tons/year) 1.00 4.00 Onion (Metric tons/year) 10.00 20.00 Cabbage (Metric tons/year) 12.00 32.00 To measure the proportion of total agricultural production marketed for selected commodities Proportion of total agricultural production marketed for selected 0.00 0.00 commodities (Percentage) Rice farming system (Percentage) 0.00 75.00 Cabbage (Percentage) 0.00 80.00 Onion (Percentage) 0.00 80.00 Farmers reached with agricultural assets or services The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target Farmers reached with agricultural assets or services (CRI, 0.00 9,000.00 Number) Farmers reached with agricultural assets or services - Female 0.00 4,500.00 (CRI, Number) Beneficiaries of the project (disagregated by gender) Project beneficiaries (Number) 0.00 45,300.00 Project beneficiaries - Female (Number) 0.00 22,650.00 PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Institutional Capacity Building Improved irrigation related policies, standards and regulations 0.00 4.00 are in place (Number) Rationale: Considering the actual implementation capacity and the time left for the project implementation, the number of policy instruments to be prepared by the project will be reduced from five (5) to four (4) considered relevant, namely: (i) rules for Action: This indicator has been Revised the design and supervising irrigation schemes and water storages for irrigation (small dams); (ii) rules for the construction of irrigation and small dams and water reservoirs for irrigation; (iii) national monitoring system for the irrigation subsector; and (iv) Action Plan (or operational) of the National Irrigation Program. Agricuture Investment Management Unit (AIMU) established and No Yes is performing satisfactorily (Yes/No) Action: This indicator has been Revised Rationale: The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Role of Agriculture Investment and Management Unit replaced by FNDS National Irrigation Water Use Monitoring System (NIWUMS) No Yes (Yes/No) Satelite-based irrigation monitoring system developed No Yes (Yes/No) Smallholder Irrigation Development and Management Area completed with detailed design (Hectare(Ha)) 0.00 5,824.00 Action: This indicator has been Revised Area provided with new/improved irrigation or drainage services 600.00 5,000.00 (CRI, Hectare(Ha)) Rationale: The targets of this indicator was revised as follows: 1. Baseline decreased from 3,000 hectares to 600 hectares. At appraisal it was expected that the predecessor project, PROIRRI would complete construction in 3,000 hectares but at the end only 2,500 hectares we completed. Out of the 2,500 hectares completed by PROIRRI about 1,900 hectares suffered small to Action: This indicator has been Revised moderated damages by cyclone IDAI in December/ January 2019. With these only 600 hectare were left operational and this was the baseline for this operation; 2. Reduce the end target from 6,000 hectares to 5,000 hectares. The project is expected to rehabilitate a total of 4,400 hectares and including the baseline of 600 hectares, the total area provided with irrigation systems will be 5,000 hectares. Area provided with improved irrigation or drainage services 0.00 4,400.00 (CRI, Hectare(Ha)) The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline End Target Rationale: Action: This indicator has been Revised The target increased from 3,000 to 4,400 hectares. This includes 1,900 hectares damaged by IDAI and 2,500 new areas. WUGs and WUAs with women in the management committees 0.00 90.00 (Percentage) Beneficiaries satisfied with the quality of services and technical 0.00 70.00 assistance provided by the project (Percentage) Agriculture Intensification and Market Linkages Farmers adopting improved agricultural technology (CRI, 0.00 9,000.00 Number) Farmers adopting improved agricultural technology - Female 1,700.00 4,500.00 (CRI, Number) Average crop intensity (Number) 0.00 0.00 Rice System (Number) 1.00 1.50 Vegetable system (Number) 1.00 3.00 Farmers graduating from farmer field schools and adopting the 0.00 6,000.00 practices learnt (Disagregated by gender) (Number) Female farmers graduating from Farmer Field Schools and 0.00 3,000.00 adopting the practices learned (Number) Total area under irrigated agriculture production during the most 0.00 6,000.00 recent dry season (Hectare(Ha)) Rationale: Reduced from 6,000 hectares to 3,500 hectares to take account of the new targets and the water scarcity during the dry Action: This indicator has been Revised season. The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431) IO Table SPACE The World Bank Smallholder Irrigated Agriculture and Market Access Project- IRRIGA 1 (P164431)