The World Bank Cocoa Sector Development Project (P172850) Project Information Document (PID) Concept Stage | Date Prepared/Updated: 14-May-2021 | Report No: PIDC30428 May 11, 2021 Page 1 of 11 The World Bank Cocoa Sector Development Project (P172850) BASIC INFORMATION A. Basic Project Data OPS TABLE Country Project ID Parent Project ID (if any) Project Name Ghana P172850 Cocoa Sector Development Project (P172850) Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) AFRICA WEST Jan 24, 2022 Sep 22, 2022 Agriculture and Food Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Ministry of Finance COCOBOD Proposed Development Objective(s) The proposed project development objective is to improve the economic, environmental and social sustainability of cocoa production in project targeted areas. PROJECT FINANCING DATA (US$, Millions) SUMMARY-NewFin1 Total Project Cost 200.00 Total Financing 200.00 of which IBRD/IDA 200.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 200.00 IDA Credit 200.00 Environmental and Social Risk Classification Concept Review Decision Substantial Track II-The review did authorize the preparation to continue May 11, 2021 Page 2 of 11 The World Bank Cocoa Sector Development Project (P172850) Other Decision (as needed) B. Introduction and Context Country Context 1. Since the mid-2010s, Ghana has been among the fastest growing economies in Africa and at the forefront of poverty reduction. The Republic of Ghana is classified as a lower-middle income country with a per capita income of US$5,413 in 2019. It achieved lower middle-income status in 2011 and was the first country in Sub-Saharan Africa (SSA) to meet the Millennium Development Goal (MDG) target of halving extreme poverty by 2015 with much progress in human capital and social service delivery. In 2017, Ghana was the second-fastest growing economy in Africa with a growth rate of 8.1 percent, driven by the mining and oil sectors. GDP Growth slowed to 6.3 percent in 2018 and 6.1 percent in 2019, on the backdrop of a slowdown in industry and lower mining and quarrying output. In 1991, Ghana's poverty rate was 47.4 percent. By 2012, it had dropped to 12.0 percent, which is not only lower than the mean poverty rate for Sub-Saharan Africa, but also below the mean poverty rate of lower-middle income countries. Before the onslaught of the COVID 19 pandemic, the Government of Ghana (GoG) aspired to double per capita income by 2024 and to place the economy on a path where every Ghanaian had the opportunity to live a long, productive and meaningful life, while achieving greater national autonomy in development financing. 2. Starting in 2017, the country has embarked on an ambitious plan of economic transformation aiming to accelerate growth through an agricultural modernization and industrialization drive . To accelerate diversification and address poverty and inequality, GoG has launched the “Ghana beyond Aid� reform agenda that relies on expanding and exploiting Ghana’s perceived comparative advantages in agro-processing and heavy industries (like aluminum, steel and petrochemicals), improving agriculture productivity, fostering human capital accumulation, and improving efficiency through digitalization. 3. The disruption caused by COVID-19 pandemic has hit Ghana hard and exacerbated inequalities in the country. Following the COVID-19 pandemic shock, the macroeconomic environment has deteriorated rapidly. Commodity prices for Ghana’s three main exports (gold, crude petroleum, and cocoa) have been volatile. Specific to cocoa, prices rose earlier in 2020, from US$2,300 to US$2,448, due to concerns about global supply but have sharply dropped following the COVID- 19 pandemic and have remained volatile at lower levels since mid-2020. COVID-19 is estimated to have increased the poverty rate by 14.2 percentage points (an additional 1.2 million Ghanaians sliding to poverty) and lowered the GDP by 3.7 percentage points in 2020. Female poverty is expected to rise due to the loss of income in sectors such as agriculture and services which employ a high ratio of women, including in the informal economy where job losses were more widespread. In response to COVID-19 pandemic, GoG has developed a package of support amounting to about US$266 million with a focus on health spending, an economic stimulus for the promotion of selected sectors Sectoral and Institutional Context 4. Agriculture has been, and is still, key to Ghana’s economic development. Although Ghana’s economy is undergoing a structural transformation towards industry and services, the agricultural sector continues to be essential for reducing poverty and boosting shared prosperity. The sector accounts for one-fifth of Ghana’s GDP, employs nearly half of the country’s workforce and is the main source of livelihood for most of the poorest households. Two-thirds of all non- oil manufacturing depends on agriculture for raw materials. Over the past decades, the sector has registered robust average growth rate in part because of favorable agro-climatic conditions, availability of immigrant labor from Sahelian May 11, 2021 Page 3 of 11 The World Bank Cocoa Sector Development Project (P172850) countries (Burkina Faso, Mali), and relatively liberal economic policies. Ghana’s annual agricultural growth rate between 2008 – 2016 has averaged around 4.3 percent. This increased to 4.8 percent in 2018, making the sector second highest in sectoral growth rate for that year. While the economy contracted because of the impact of COVID-19 in the third quarters of 2020, agriculture had the highest annual growth rate of 8.3 percent. 5. Although the country excels in the production of many commercial crops including rubber, palm oil, pineapples, copra, and, more recently, cashew, cocoa is still the single most important crop in the country. Ghana is the world’s second largest cocoa producer (producing 20 percent of the world’s output), and cocoa continues to be one of the main drivers of Ghana’s economy - accounting for 9 percent of GDP and 20-25 percent of the country’s total foreign exchange earnings. The crop is currently cultivated on an estimated 1.91 million hectares (i.e. 14 percent of the country’s farmland). It supports the livelihoods of more than 800,000 producer households, 25-30 percent of whom are women, with small landholdings averaging two to three hectares. In 2018-19, Ghana produced 811,746 tons of cocoa (up from 400,000 tons in 1999-2000), generating over US$1.8 billion in foreign exchange. Ghana has an international reputation for high quality cocoa beans (which command a 3-5 percent price premium in the market). The country processes about 30 percent of its cocoa beans, but plans are underway to increase this to 50 percent to capture more value-added. 6. Following impressive growth over the past two decades, the cocoa subsector now faces challenges to its performance and sustainability. Among others, key challenges include: (i) weak sector governance: COCOBOD has registered commendable success, including increasing the share of the export price received by farmers,, ensuring quality of Ghanaian cocoa, and protecting buyers against price and exchange-rate risks, but it still faces challenges such as strengthening its organizational efficiency, enhancing transparency and accountability in the governance of the value chain, and stabilizing farm-gate prices at levels that permit farmers to earn a decent living; in addition, Cocoa farmer- based organizations (FBOs) are weakly structured, not adequately representative, and, hence, inefficient interlocutors to other industry stakeholders; (ii) low and declining productivity: tree ageing, increasing Cocoa Swollen Shoot Virus Disease (CSSVD) pressure, and declining soil fertility due to poor farming practices - either acting alone or in concert, have led to declines in cocoa productivity; (iii) encroachment on natural forests: shifting cultivation as a response to soil fertility decline, limited intensification, absence of clear land and tree tenure regime, the continued shrinking of land that is suitable for cocoa production, as well as the advent and adoption of full-sun varieties which compete directly with standing forests, have led to encroachment of cocoa production on forest land, occasioning deforestation and attendant biodiversity loss; (iv) climate change: since the 1960s, average annual and decadal precipitation has been declining, while temperatures have been increasing in the cocoa growing areas; (iv) concerns with child labor: mainly because of low household incomes, lack of access to quality education, limited access to finance, labor shortage, as well as a host of socio- cultural traditions, there is large use of child labor in cocoa production; and (vii) gender inequities: these are mainly fostered by cultural norms and practices; women are estimated to contribute up to 45 percent of labor input, but they largely work on their husband’s land as unpaid family labor. 7. GoG recognizes these challenges, and, through a comprehensive scenario planning approach, has developed a strategy for their redress. Tagged “Ghana Cocoa Sector Development Strategy – II� (CSDS-II), the strategy mainly focuses on productivity enhancement through smallholder farmer empowerment for modern technology adoption, and positioning the cocoa industry to operate efficiently and effectively in a sustainable manner within a modern business environment. Among others, CSDS-II proposes improvements in extension, soil fertility management, rehabilitation/ replanting, disease and pest control, innovative strategies aimed at raising productivity of cocoa farms in the face of a changing climate, research and development, as well as in marketing and pricing of cocoa produce. The proposed project would support the implementation of Ghana’s CSDS - II, with a focus on: (i) strengthening selected institutions for improved sector governance, enhancing smallholder productivity and incomes, and strengthening the national system for prevention of child labor. May 11, 2021 Page 4 of 11 The World Bank Cocoa Sector Development Project (P172850) Relationship to CPF 8. The proposed operation is aligned with the Country Partnership Framework (CPF, FY21-26, still under preparation). In general, the project is aligned with the CPF’s Focus Area 2 (Enhancing Conditions for Diversified Growth and Job Creation) and Focus Area 3 (Promoting Resilient Development). Specifically, the project would contribute to objective 2.1 of improved access to market and increased productivity underpinned by sustainable and traceable cocoa production system. The project’s support for zero deforestation and promotion of cocoa agroforestry which has both adaptation and mitigation climate co-benefits and diversification of livelihoods, would also contribute to resilient development (Objective 3.2 (Improved natural resource and environmental management). Investments in market information, digital agrometeorology and climate services would contribute to improving household and community preparedness to shocks. In that sense, the project would also promote readiness and response to emergencies under the umbrella of initiatives such as Social Response Framework (SRF) for COVID-19. The proposed operation would respond to Pillars 3 and 4 of the SRF COVID-19. Pillar 3 focuses on ensuring Sustainable Business Growth and Job Creation while Pillar 4 focuses on Strengthening Policies, Institutions and Investments for Rebuilding Better. 9. The proposed project is consistent with Ghana’s overall medium -term strategy framework, as well as its CSDS II and Intended Nationally Determined Contribution (INDC). The proposed operation will directly contribute to GoG’s priorities for economic and social development laid out in the Coordinated Program of Economic and Social Development Policies (2017-2024), and the Ghana Beyond Aid (2019) strategy. The project is fully aligned with the 2nd Ghana Cocoa Sector Development Strategy (2017-2027) that aims to address the main challenges faced by the cocoa value chain with the objective of deploying productivity enhancing interventions, simultaneously addressing climate change, deforestation, child labor and gender-based issues. C. Proposed Development Objective 10. The proposed project development objective is “to improve the economic, environmental and social sustainability of cocoa production in project targeted areas.� Key Results (From PCN) 11. The preliminary PDO-level indicators (to be finalized during project preparation) include: • Average yield of cocoa per ha in project targeted areas. • Increased income of members of registered Farmer Based Organizations or cooperatives in the project target areas (cocoa revenues and other revenues, disaggregated by gender). • Increase in share of certified (socially and environmentally) and traceable cocoa production (percent of total production). • Reduction in child labor (percent of baseline). • Farmers reached with agricultural assets or services (number) of which female beneficiaries (percentage). D. Concept Description 12. The project seeks primarily to improve the livelihoods of cocoa farmers, while also ensuring the environmental and social sustainability of cocoa-based production systems. All these objectives mostly hinge on improvements in the low farmer incomes. Based on an accumulated body of evidence both in Ghana and elsewhere, it is hypothesized that the pathway to improved incomes lies in enhancing governance of the cocoa sector, increasing on-farm productivity, diversifying into other on-farm and off-farm activities, and improving access to niche markets increasingly predicated on acceptable environmental and social standards (e.g., those markets providing a premium for ethically produced cocoa). Producers with better incomes are often expected to have limited incentives to expand production into forests and to rely May 11, 2021 Page 5 of 11 The World Bank Cocoa Sector Development Project (P172850) on child labor for production, as they can afford to hire labour and send their children to school. The conceptual framework underlying the proposed design therefore links efforts to improve productivity (through improved incentives for disease control, replanting, soil fertility management, and zero deforestation etc.), diversification and value-capture along the value chain, with improvements in the overall governance of the sector. 13. The project design explicitly acknowledges the key role of the private sector, and the required partnerships and coordination with other institutions in sustaining the development of the cocoa sector. The project will support private sector solutions where they can help achieve development goals along with the financing of public goods and services. Enhancing the sector governance under the project relies in great part on improving effectiveness of operations and service provision and creating more room for the private sector to expand operations side by side COCOBOD all along the value chain. Also, the project recognizes the need to coordinate with other interventions financed by external donors, in particular the African Development Bank (AfDB), to achieve a critical level of support for the sector, avoid duplication and ensure complementarity. The project will collaborate closely with IFC, as much as possible. While IFC will not co-finance the project neither will it fund financial institutions to on-lend to project beneficiaries, the project design has been informed by findings from IFC’s studies, and IFC will continue to be a part of the World Bank Group (WBG) policy dialogue in the cocoa sector. At this stage, IFC is planning a stand-alone, blended Rehabilitation and Replanting (R&R) operation for smallholder cocoa farmers with potential investment in the cocoa byproduct value chain which would complement the proposed project funding. 14. The project’s direct beneficiaries would be individual farmers (both men and women farmers) and farmers’ associations who benefit from production support activities, including the replanting of cocoa farms affected by CSSVD and options to diversify into other cropping systems. Additionally, rural MSMEs which would be providing technical and operational services to farmers during the period of replanting/ rejuvenation would also be beneficiaries. Other project beneficiaries would be Licensed Buying Companies (LBCs), and other private sector stakeholders who would benefit from sustainable production and sourcing of cocoa beans through better value chain coordination. COCOBOD, Cocoa Research Institute of Ghana (CRIG), Forestry Commission, Tree Crop Development Authority (TCDA), Child Labor Unit (CLU) of the Ministry of Employment and Labor Relations (MELR), Ministry of Gender, Lands Commission, Office of the Administrator of Stool Lands, Ministry of Food and agriculture (MOFA), Ministry of Land and Natural Resources (MLNR) and Ministry of Trade are among the public institutions which would also stand to benefit from the project’s capacity building interventions. 15. The overall project cost would be US$200 million. The project would be implemented over a period of seven years with results-based activities that will be defined during preparation. The project design includes three interrelated technical components: (i) Institutional Strengthening and Value Chain Governance (US$20 million); (ii) Sustainable Cocoa Intensification (US$130 million); and (iii) Socially and Environmentally Responsible Diversification (US$30 million). The fourth component would focus on Project management and M&E (US$20 million), and the fifth component on a zero allocation Contingency Emergency Response Component (CERC). The preliminary project description is presented below. 16. Component 1 – Institutional Strengthening and Value Chain Governance (US$20 million). Component 1 would finance the following sets of activities: (i) COCOBOD capacity building: (a) general organizational development and leadership for coordinating activities in the cocoa sector; this would include digitizing COCOBOD’s management systems and procedures, and attendant staff training to monitor operational programs; (b) operationalization of the cocoa farmer database (Cocoa Management System-CMS) for better planning and forecasting production and its integration with existing digital platforms for supplying inputs, as well as paying for cocoa beans and the Living Income Differential (LID); (c) Climate Change Desk on zero deforestation and monitoring of the greening of the cocoa landscape through the use of remote sensing technology for detecting land-use changes, and measuring carbon footprint, and impact of climate change; and (d) responsible management and mainstreaming of implementation modalities for conducting child labor and gender gap closing interventions; (ii) Organizational support for Farmer-Based Organizations (FBOs), including the legal May 11, 2021 Page 6 of 11 The World Bank Cocoa Sector Development Project (P172850) registration of such organizations, and technical and managerial training for their officials in areas such as good governance, operational management, business development, group dynamics, service provision, marketing plans, and creditworthiness; the project would support the Ghana Cocoa Platform (GCP) and other public-private partnerships and initiatives, to enable FBOs to participate in the multi-stakeholder value chain policy dialogue; (iii) Support to national capacity to address child labor and deforestation: this activity would include monitoring and reporting of child labor issues, mapping of child labor interventions and developing communication programs regarding child labor awareness and behavioral change, and strengthening the Forestry Commission’s capacity to coordinate forest protection and zero deforestation activities. The project would establish linkages with GoG’s National Plan of Action for the Elimination of the Worst Forms of Child Labor under the MELR, the Cocoa Forest Initiative (CFI), the Emission Reduction Program and other cocoa landscape restoration interventions; and (iv) Implementation of regional standard and traceability system: this activity would cover the launching and operationalization of the Regional Cocoa Sustainability Standard with Cote d’Ivoire, the design and development of a traceability system (barcoding of cocoa bag tag and its integration to the Content Management System-CMS) that will complement the regional standard, and support for south-south collaboration on knowledge exchange and technologies for post-harvest management. 17. Component 2 – Sustainable Cocoa Intensification (US$130 million). Component 2 will support the following sets of activities: (i) Renovation and replanting (R&R) of cocoa farms: The project would support GoG’s program on about 80,000 ha of CSSVD infested farms in the intensive cocoa growing areas of the Western, North, and Eastern regions of Ghana at an estimated cost of US$1,385 per hectare, regarding the survey and mapping of CSSVD disease incidence to identify and prioritize hotspots; the cutting out and proper disposal of diseased plants; provision of disease-tolerant seedlings, as well as the package of inputs required for replanting; and sanitary barriers and other complementary measures to prevent disease transmission into replanted areas. The project would also provide one-off cash grants to farmers and cocoa landowners participating in the R&R program, as compensation for the potential income forgone until replanted trees reach maturity and full production; (ii) Advisory services, and research and development: The project would provide advisory services targeting disease surveillance/ early detection, management, and reporting; the adoption of climate-smart practices on replanted areas; improved soil fertility management; as well as other Good Agricultural Practices (GAPs), including the reestablishment of optimum-shade cultivation practices (cocoa agroforestry). The project would also (i) pilot, and scale up if successful, a payment for environmental services scheme to encourage farmers to keep shade trees on their farm, and (ii) support the Cocoa Research Institute of Ghana (CRIG) and other institutions to pursue collaborative applied research in disease management as well as other research and development activities relevant to cocoa production. The research program would be implemented in collaboration with IITA, ICCO, World Forestry Centers, and private sector (such as Mars, Cargill and Nestle which have active R&D programs); and (iii) Land and tree tenure arrangements: The project would finance the documentation of land and tree tenure for an estimated 40,000 farmers. The documentation process would include consultations with customary authorities, chiefs and other local level institutions, sensitization of farmers on the benefits of recording tenure arrangements, mapping of the farms boundaries, geotagging of trees, as well as the related conflict management which would be embedded into the project Grievance Redress Mechanism (GRM). The project would support the ongoing dialogue with other donors on land and tree tenure policy in Ghana, working closely with the WB Urban Resilience and Land (URL) practice. To ensure that project activities does not infringe on protected, marginal or fragile areas, the project would rely on the support of the Cocoa and Forests Initiative (CFI) and Resource Management Support Centre (RMSC) of the Forestry Commission to identify and geotag such areas, which will then be ineligible for support. 18. Component 3 – Socially and Environmentally Responsible Diversification (US$30 million). Eligible activities under Component 3 would include: (i) Market-oriented diversification into profitable alternative tree crops, resilient to climate change, in locations not suitable for cocoa, or into off-farm income opportunities along innovating financial models: activities to be financed would be in areas such as green enterprises (post-harvest quality management, organic cocoa and cocoa byproduct value chain development), agroforestry, high value shade loving crops (ginger/alligator pepper), May 11, 2021 Page 7 of 11 The World Bank Cocoa Sector Development Project (P172850) commercially viable service-provision (mechanization of key operations, e.g., spraying, pod breaking, and pulp extraction); these activities would target Small and Medium Enterprises (SMEs) with priority given to youth and women enterprises; the project diversification programs would be aligned with the Planting For Export and Rural Development (PERD) initiative, through the Tree Crop Development Authority (TCDA); and (ii) Last mile, climate proof infrastructures to improve the living conditions in the communities and access to market and services, such as access roads, transport equipment, storage facilities, power/green energy, water supply, etc. The selected infrastructures would consider the needs expressed in the Cocoa Farm development and the Child Labor Community Action Plan (CAP). Under this component, farmers participating in the project R&R program would be targeted for labor intensive programs or cash for work activities to mitigate the impact of their expected shortfall in income. The project would explore synergies with World Bank operations in the transport and social sector (education, safety net, water, and sanitation) to complement the infrastructure activities under (ii). 19. Component 4 - Project Management, Monitoring and Evaluation (M&E), and safeguards (US$20 million). Component 4 would finance: (i) the project day-to-day administrative, technical and fiduciary management, under the oversight of the project inter-ministerial steering committee; (ii) the setting up of the project implementation unit and the coordination of project activities across the whole scope of project execution; (iii) the establishment and implementation of a robust Monitoring and Evaluation (M&E) framework that relies on modern IT and will continue as a dynamic system to support the operations of the relevant institutions beyond the project, including baseline, mid-term and final evaluation of the project; and (iv) the implementation of environmental and social safeguard policies, citizen and stakeholder engagement, and the project’s grievance redress mechanism. 20. Component 5 - Contingent Emergency Response (US$0 million). This zero-cost, Contingent Emergency Response Component (CERC) would finance eligible expenditures meant to respond to emergencies and covariates shocks. The conditions for triggering the CERC would be discussed and agreed during preparation. Implementation of this component would follow a detailed Contingent Emergency Response Implementation Plan (CERIP) satisfactory to the World Bank to be prepared for each eligible crisis. Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts . The project will be implemented in the High Forest and Transition Zone (HFZ) which continue to experience deforestation and forest degradation with negative environmental and social impact. The project will be implemented in the cocoa growing areas of Western North, Eastern, Bono, and Ahafo Regions, and Bono East, all within the High Forest and Transition Zone (HFZ) of Ghana. Historically, the HFZ has experienced deforestation and forest degradation mainly driven by agricultural expansion, wood harvesting, population and development pressures, and mining and mineral exploitation. These drivers continue to threaten the livelihood of the poor, disrupt ecosystem services, and exacerbate pre-existing vulnerability to climate change. May 11, 2021 Page 8 of 11 The World Bank Cocoa Sector Development Project (P172850) The Environmental Risk Rating proposed for the project is substantial. The classification is based on the potential environmental risks and impacts as well as the capacity of the implementing agencies to manage the risks and impacts. The rehabilitation of diseased cocoa farms and the associated farming activities to support livelihood will entail land clearing (weeding), pruning, thinning etc. which could expose farmlands to erosion. The use of agrochemicals, e.g., arboricides for treatment of CSSVD infested trees and spray drift from pesticides could contaminate surface and ground water, pose health and safety risks to farmers and project communities, and could contribute to biodiversity loss. While the project would generally contribute to a net gain in biodiversity as a result of the agroforestry practices and poly-cropping systems which favor proliferation of biodiversity, any inadvertent introduction of invasive tree species in the agroforestry system could trigger competition and allelopathy on cocoa fields. There may be littering of farmlands with plastics including empty agrochemical containers. The proposed support to off-farm enterprises as avenues for diversifying farmers’ income could involve activities such as soap making, pomade production, detergent making, composting, animal rearing, etc. These activities could produce effluents or waste (liquid, solid and gases) which could be polluting to the environment including water bodies. The support for the rehabilitation of last mile connecting roads could produce dust, fumes, noise, vibration, dangerous pits, wastes, degradation of farmlands and destruction of habitats through land clearing and sand winning activities. Also, road rehabilitation works could pose occupational health and safety risks to workers and project communities. While these risks are generally localized, the potential risks associated with agrochemical use including impacts on human, biodiversity and potential water contamination could transcend communities or go beyond the immediate project environment. These risks and impacts can be predicted with readily available mitigations. The Social Risk Rating proposed for the project is substantial. This classification is based on the potential social risks and impacts as well as the capacity of the implementing agencies to manage the risks and impacts. Child labor is a pressing social issue for the cocoa sector in Ghana. In the last few years, the incidence of child labor in the cocoa sector has risen in Ghana due to various reasons, including weak enforcement of existing laws, plans and measures for preventing the use and incidence of child labor in cocoa plantation, poverty in the cocoa families and, introduction of high-yielding and/or disease- resistant cocoa varieties that require more labor to maintain, harvest and process cocoa. Addressing child labor in the cocoa farm communities has proven challenging because of the multiplicity of its underlying causes. The proposed project activities are also likely to generate some localized social conflicts arising from a complex array of interests present on land uses, in particular the rehabilitation and rejuvenation (R&R) of CSSVD cocoa farms, and, the establishment of nurseries and tree crop diversification. These activities can alter the land tenure arrangement, with potential adverse risk on the rights of tenant farmers and their economic displacement. This can pose risks to the project by presenting difficulty to ascertain what the landowner characterizes as a voluntary land donation; impeding the ability of farmers to gain access to land rights for expansion; and increasing the vulnerability of existing land users to displacement, particularly settler farmers and women farmers. Further, there is risk of exclusion given the broad array of affected and interested stakeholders along the cocoa value-chain particularly farmers, women, local communities. Mitigating the risk of exclusion would require robust mechanisms for meaningful community and stakeholders’ consultation, gender mainstreaming and social inclusion along the entire value-chain. There is also a likelihood of employment of large number of migrant workers in cocoa plantations. This could lead to instances of SEA/H and gender-based violence (GBV), HIV/AIDS and sexually transmitted diseases/infections (STD/I). The potential presence of migrant labor can also pose a risk of social conflict. The migrant worker performing hand pollination tasks and related activities on cocoa farms will themselves be faced with the risk of working in unsafe working and living conditions. Further, likely activities of illegal small-scale miners might create security risk and increase the possibility for conflict in the project area. The project activities such as R&R of CSSVD cocoa farms, area-based development interventions, last mile road connections, intermediate transport equipment, and those leading to the development of Micro Medium and Small Scale Enterprises may pose community health and safety concerns. The risks for SEA/H, HIV/AIDS etc. on vulnerable people may get enhanced due to project activities requiring specific prevention and mitigation strategies during project implementation. May 11, 2021 Page 9 of 11 The World Bank Cocoa Sector Development Project (P172850) The project will strengthen the capacity of COCOBOD and other collaborating institutions to address environmental and social issues. The Ministry of Food and Agriculture (MoFA) through the Ghana Cocoa Board (COCOBOD) will have the overall responsibility for the project. MoFA has had some experience implementing World Bank funded projects including the Ghana Commercial Agriculture Project and West Africa Agricultural Productivity Program (WAAPP). The COCOBOD is currently an implementing agency in the ongoing World Bank funded project ‘Forest Investment Program (FIP) Enhancing Natural Forest and Agroforest Landscape’ where it leads cocoa landscape restoration interventions. COCOBOD has over the years built some internal capacities to respond to some specific environmental and social issues, but these are still limited. Project implementation would involve several other institutions, including (i) for environmental issues: the Environmental Protection Agency (EPA), the Water Resources Commission (WRC), and the Ministry of Environment, Science, Technology and Innovation (MESTI), and (ii) for social issues: the Ministry of Employment & Labor Relations (MELR) and the Ministry of Gender, Children and Social Protection. Major challenges include inadequate enforcement of regulations due to limited capacity and resources with the enforcement agencies (including the EPA, MELR). There appears to be weak institutional coordination, sometimes segmented with crisscrossing mandates among the various institutions. Given that the World Bank Environmental and Social Framework (WB-ESF) is relatively new to most projects in Ghana and will be applied for the first time in the cocoa sector, there will be a need to strengthen the capacity of COCOBOD and other collaborating institutions in implementing WB environmental and social standards (ESSs). MoFA will be required to appoint separate dedicated environmental and social safeguard (E&S) specialists to ensure adequate risks identification, management, and reporting. Prior to project appraisal, MoFA will prepare an Environmental and Social Management Framework (ESMF), a SEP, a Process Framework, and a Resettlement Framework (RF) to provide guidance for assessing and managing notable E&S risks. The ESMF will provide a general impact identification framework to assist the implementing agencies to screen project activities and institute measures to address adverse E&S impacts. During project implementation, project sites and activities will be screened, and the Environmental and Social Impact Assessments (ESIAs), Environmental and Social Management Plans (ESMPs), Resettlement Action Plan (RAP), Abbreviated Resettlement Action Plan (ARAP), as required, will be prepared. Gender-Based Violence (GBV) and Sexual Exploitation and Abuse (SEA) risks will be assessed prior to appraisal. The GBV Action Plan and ESMP will include measures for addressing such risks. Prior to appraisal, MoFA will also prepare an Integrated Pest Management Plan (IPMP) that will assess the risk of pest and provide appropriate mitigations. MoFA will also prepare an Environmental and Social Commitment Plan (ESCP) which will outline commitments to prepare and implement safeguard instruments throughout the life cycle of the project. As part of the ESMF and SEP, the Borrower will maintain and disclose stakeholder engagement records, including a description of the stakeholders consulted, a summary of the feedback received and a brief explanation on how stakeholder concerns were considered in the risks assessment and planning. The SEP will incorporate a grievance redress mechanism. . CONTACT POINT World Bank Sheu Salau Senior Agriculture Economist Borrower/Client/Recipient May 11, 2021 Page 10 of 11 The World Bank Cocoa Sector Development Project (P172850) Ministry of Finance Yvone Quansah Director yodoi@mofep.gov.gh Implementing Agencies COCOBOD Wahab Suleman Principal Research Officer sulemanwahab@gmail.com FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Task Team Leader(s): Sheu Salau Approved By APPROVALTBL Country Director: Agata E. Pawlowska 08-Jun-2021 May 11, 2021 Page 11 of 11