$ Report No: RES00371 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF Valorization of Investments in the Valley of the Logone APPROVED ON 30-Nov-2021 TO Republic of Cameroon Water Western And Central Africa Regional Vice President: Ousmane Diagana Regional Director: Chakib Jenane Country Director: Cheick Fantamady Kante Practice Manager: Anna Cestari Task Team Leader(s): Thierry Davy The World Bank Valorization of Investments in the Valley of the Logone (P168772) ABBREVIATIONS AND ACRONYMS AFW VP Africa West Vice Presidency GoC Government of Cameroon IDA International Development Association IP Implementation Progress MINADER Ministry of Agriculture and Rural Development PAP Project-Affected Person PDO Project Development Objective PIU Project Implementation Unit RAP Resettlement Action Plan SEMRY Société pour l’Expansion et la Modernisation de la Riziculture a Yagoua TPM Third-party monitoring WUA Water Users Association The World Bank Valorization of Investments in the Valley of the Logone (P168772) @#&OPS~Doctype~OPS^dynamics@restrhybridbasicdata#doctemplate BASIC DATA Product Information Operation ID Operation Name P168772 Valorization of Investments in the Valley of the Logone Product/Financing Instrument Geographical Identifier Investment Project Financing (IPF) Cameroon Approval Date Current Closing Date 30-Nov-2021 30-Jun-2029 Original EA Category Full Assessment (A) (PAD Approval Package-30 Nov 2021) Organizations Borrower Responsible Agency Ministry of Agriculture and Rural Development (MINADER), Republic of Cameroon Société d’Expansion et Modernisation de la Riziculture de Yagoua (SEMRY) @#&OPS~Doctype~OPS^dynamics@restrhybridoperationstatus#doctemplate OPERATION STATUS Project Development Objective (DO) Original Development Objective To improve irrigation and drainage services and agricultural production in the irrigated areas of the Logone Valley Disbursement Summary (in USD million) Source of Funds Net Commitment Disbursed Undisbursed % Disbursed IBRD -- -- -- 0 i The World Bank Valorization of Investments in the Valley of the Logone (P168772) IDA 200.00 44.91 145.87 22.46 Grants -- -- -- 0 Policy Waivers Does this restructuring trigger the need for any policy waiver(s)? No @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate @#&OPS~Doctype~OPS^dynamics@restrhybridmpa#doctemplate ii The World Bank Valorization of Investments in the Valley of the Logone (P168772) TABLE OF CONTENTS I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING ........................................................................................1 II. DESCRIPTION OF PROPOSED CHANGES ....................................................................................................................3 III. PROPOSED CHANGES ................................................................................................................................................3 IV. DETAILED CHANGE(S) ...............................................................................................................................................4 The World Bank Valorization of Investments in the Valley of the Logone (P168772) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Status: 1. The Project Development Objective (PDO) is to improve irrigation and drainage services and agricultural production in the irrigated areas of the Logone Valley. The Project was approved by the Board on December 30, 2021, the financing agreement for the IDA Credit No. 70030-CM; it was signed on October 26, 2022, and became effective on November 28, 2022. The closing date is June 30, 2029. The Project was prepared applying the World Bank Safeguards Policies prior to April 24, 2018. 2. Twenty-one (21) months into implementation, disbursement of the IDA credit has reached about 23 percent. US$ 43,91 million have been disbursed including the advanced payment of for the large works contracts signed on May 31, 2024. Despite this latest progress, pace of implementation has been slower than planned. Currently, the PDO and IP ratings are Moderately Satisfactory and Moderately Unsatisfactory, respectively, due to delays with the implementation of activities under component 1 (the procurement of large works which has delayed the start of these works compared to originally planned). However, the recent launching of the two large works contracts should enable the achievement of the PDO within the project timeline. If execution of works remains on track and the PDO and IP rating will be upgraded in the next ISR in February 2025. Additionally, the team is working closely with the counterpart to support them with improving the management of the project. The Project consists of three components (and a CERC) and the status is as follows: 3. Component 1: Improvement of Infrastructure and Water Management (US$153.4 million equivalent from IDA). This component is organized in three subcomponents: (i) upstream water resources monitoring and coordination as well as security and operation of main hydraulic infrastructures; (ii) rehabilitation of the eight irrigation and drainage infrastructure and Resettlement Action Plans (RAP) and Environmental and Social Impact Assessment (ESIA) activities and (iii) irrigation and drainage management. The core part of this component will be the rehabilitation 12,210 irrigated hectares to enhance water use efficiency and enable private sector-led land preparation and mechanized rice cultivation operations. The primary goal of this component is to contribute to an improved irrigation development in the Logone valley, building upon the work done within the recently closed emergency PULCI Project (P143940 Flood Emergency Project). 4. Maintenance on the hydrometeorological network installed by PULCI is ongoing to ensure stations are operational for the future rainy seasons. The contract for hydraulic and hydrological studies have been signed and have started on in April 2024 and are scheduled by end of December 2024. Two contracts for large infrastructures have been signed, advanced payment disbursed, and works will start at the end of the rainy season (November 2024). 5. Component 2: Production and Support to Agriculture Services (US$27.1 million equivalent, of which US$16.2 million from IDA and US$10.9 million from beneficiaries). This component is focused on progressively promoting a more prominent private sector role to improve production, markets, and support services with an emphasis on improving efficiency along the value chain. It will do so mainly by supporting: (i) the demand side for land preparation, through e-vouchers (ii) the supply side of goods and services through Matching Grants for business proposals, (iii) the development of a network of management support centers and, (iv) technological innovation. 6. A firm has been contracted to support the implementation of matching grants. Implementation of this activity has started in July 2024. Two calls for expressions of interest for e-vouchers and matching grants service providers Page 1 The World Bank Valorization of Investments in the Valley of the Logone (P168772) were launched in early 2024. The next stage will be the preparation and signing of agreements and framework agreements with the partners scheduled for December 2024. The renewal of the executives of the Water Users Association (WUA) offices is underway in the field. Data collection for the creation of a Geographic Information System (GIS) for irrigated areas in Yagoua and Maga has begun in FY24 and was completed by end of August2024. The electronic voucher management platform is also being finalized. 7. Component 3: Support to Sector Development and Implementation (US$37.4 million equivalent, of which US$30.4 million from IDA and US$7.0 million from the GoC). The activities consist of (i) achieving more sustainable and equitable regional water resources management in addition to an improved irrigation development in the Logone valley, combining infrastructure, institutional, and informational activities so that SEMRY becomes a modern water institution; (ii) strengthening SEMRY and sectoral administrations and promoting Subgrants (for US$4.9 million) with local actors for improving irrigated agriculture in the Logone Valley. 8. Technical Assistance is on board since August 2023 to support SEMRY’s restructuring. The main constraint is the non-promulgation of the decree on the new statute of SEMRY, which is still waiting for its signature by the President of the Republic. The draft version of the manual of procedures for the management of PBC funds is finalized and will be transmitted by end of August 2024 to the Bank for no-objection. The Irrigated Perimeter Management Code has been approved by the Ministry of Agriculture and Rural Development (MINADER) decision N°00226/CAB/MINADER of April 16th, 2024, after the “visa” was obtained from the Prime Minister. The next step is to disseminate it to the water users. The first external audit was finalized and sent to the Bank on May 30, 2024. The audit report was reviewed by the Bank FM team and was evaluated as conform. The disbursement rate of Component 3 is high compared to the time left till the end of the project. The team with the support of FM has put in place mitigation measures to ensure efficiency in the operating costs of the PIU by strengthening the monitoring of all expenses, raising awareness of the Government (mission, AM, meetings), cost cutting on the 2025 “Plan de Travail et Budget Annuel” (PTBA). Rationale for restructuring: 9. Following a fiscal consolidation between 2016 and 2019, the budget deficit of the Republic of Cameroon deteriorated in 2020, due to a decline in revenues stemming from the COVID-19 pandemic and falling oil prices. Recipient revenues declined to 14.2 percent of GDP in 2021, from 15.7 percent of GDP in 2019. Significant additional expenditures linked to the major socio-economic, security and health crises in recent years have impacted the country's budget. These include among others: (i) the security situation in the North-West, South-West and Far-North regions of the country and (ii) the Recipient’s response to the health crisis caused by COVID-19. 10. Considered these budget challenges, with a letter dated April 26, 2024, the Borrower requested that expenditures related to the implementation of the Resettlement Action Plan (RAP) under the project, including payment of compensation expenditures to Project Affected People (PAPs) be covered by the IDA credit. Accordingly, a memo was prepared and approved by the RVP on August 16,2024. The request of the Borrowers is justified by the current financial situation which could delay payments and therefore the implementation of the project. VIVA Logone’s investments are considered critical to improve irrigation and drainage services for agricultural production and to mitigate floods and drought damage, for an enhancement of climate resilience in the targeted areas. These investments are also critical to improve the livelihood of the beneficiaries of the project (small farmer 0,5 hectares) in the Far North where the poverty rate exceeds 56%. Page 2 The World Bank Valorization of Investments in the Valley of the Logone (P168772) 11. To ensure adequate implementation and monitoring of the compensation’s payment process, the PIU will hire a Third-Party Monitoring (TPM, an independent consultant) consultant to verify the RAPs as well as the amounts due to the project affected persons (PAPs) by the project prior to payment, and confirm payments have occurred. II. DESCRIPTION OF PROPOSED CHANGES 12. The purpose of this restructuring is to finance the Resettlement Action Plans (RAPs) for an amount of US$10.28 million equivalent through IDA proceeds (XAF 6,168,750,000). This amount will finance expenditures for economic and physical displacement under the above captioned project. Such financing will enable the Republic of Cameroon to meet the requirements associated with the implementation of the RAPs under the Project. Accordingly, a new disbursement category (9) was introduced to finance “Resettlement Assistance”. 13. The RAP has been disclosed in Cameroon June 9, 2021, and on the World Bank’s website on June 9, 2021. Considering that the RAP was prepared more than three years prior to this restructuring, the Census update as RAP addendum has been completed by the client and the revised evaluation submitted to the Bank on April 26, 2024. Client’s request for Approval to Finance Land Expenditures and Resettlement Compensation and RVP memo are based on the revised RAP database as of April 2024. RVP memo authorizing the use of IDA credit to finance Land Expenditures and Resettlement compensation was approved by RVP office on August 16, 2024. RAP implementation has not yet started. As recommended by RVP memo, prior to compensation payment, the revised RAP database will be verified by a Third-Party Monitoring Agent. The recruitment process of the TPM is ongoing and is expected to be completed by September 30, 2024. @#&OPS~Doctype~OPS^dynamics@restrhybridsummarychanges#doctemplate Summary changes III. PROPOSED CHANGES Operation Information Proposed Changes Operation Information Proposed Changes Development Objective No Reallocations Yes Safeguard Policies Triggered No Loan Closing Date Extension No ISDS No Loan Cancellations No MFD/PCE No Financial Management No Results No Procurement No Risks No Institutional Arrangement No Legal Covenants No Implementation Schedule No Conditions No Implementation Modalities No Disbursements Estimates No Page 3 The World Bank Valorization of Investments in the Valley of the Logone (P168772) Disbursements Arrangements No DDO No Clients No Appraisal Summary No Components No @#&OPS~Doctype~OPS^dynamics@restrhybriddetailedchanges-disclose#doctemplate IV. DETAILED CHANGE(S) COSTS & FINANCING Private Capital Facilitation Is this an MFD-Enabling Project (MFD-EP)? Is this project Private Capital Enabling (PCE)? LOANS Reallocations IDA-70030-001 Cancellations (if any): New Allocation: Currency: EUR 0.00 0.00 Financing % (Type Total) Category Expenditure Current Actuals + Proposed No. Category Allocation Committed Allocation Current Proposed 1 G,W,N/CS,T,OC 24,000,000.00 5,304,072.67 15,043,620.24 100.00 100.00 P1.1,1.2ii,1.3,ref FA; 2 Works P 1.2 of the 122,300,000.0 26,470,345.65 122,300,000.0 100.00 100.00 Project; 0 0 3 E-vouchers P 2.1 of 7,300,000.00 0.00 7,300,000.00 100.00 100.00 the Project; 4 Matching grants P2.2 4,500,000.00 0.00 4,500,000.00 100.00 100.00 (a); 5 Sub-grants P 3.2 (a); 4,200,000.00 0.00 4,200,000.00 100.00 100.00 6 G,N/CS,PBCs OC,T for 5,200,000.00 231,315.92 5,200,000.00 100.00 100.00 PBCs P 3.1; Page 4 The World Bank Valorization of Investments in the Valley of the Logone (P168772) 7 Emergency exp Part 0.00 0.00 0.00 0.00 0.00 4; 8 Refund of PPA; 5,400,000.00 5,131,769.92 5,131,769.92 0.00 0.00 9 resettlement 0.00 0.00 9,224,609.84 0.00 100.00 assistance; Total 172,900,000.0 172,900,000.0 0 0 Page 5