Distribution: Restricted Original: English Agenda Item 12 ... · Original: English Agenda Item 12 English IFAD INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT Executive Board –

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Distribution: Restricted EB 2001/72/R.29 28 March 2001

Original: English Agenda Item 12 English

IFADINTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT

Executive Board – Seventy-Second Session

Rome, 25-26 April 2001

FEDERAL REPUBLIC OF NIGERIA

COUNTRY STRATEGIC OPPORTUNITIES PAPER (COSOP)

A FRAMEWORK FOR PARTNERSHIP FOR RURAL POVERTY REDUCTIONBETWEEN NIGERIA AND IFAD

AI N T E R N A T I O N A L F U N D F O R A G R I C U L T U R A L D E V E L O P M E N T

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TABLE OF CONTENTS

CURRENCY EQUIVALENTS iii

WEIGHTS AND MEASURES iii

ABBREVIATIONS AND ACRONYMS iii

COUNTRY MAP: LOCATION OF IFAD-FUNDED OPERATIONS iv

IFAD PORTFOLIO OVERVIEW v

EXECUTIVE SUMMARY vi

I. INTRODUCTION 1

II. ECONOMIC, SECTORAL AND RURAL-POVERTY CONTEXT 2

A. Country Economic Background 2B. Agricultural Sector 3C. Rural Poverty 4D. Constraints on and Opportunities for Rural Poverty Alleviation 5E. National Strategy for Rural Poverty Reduction 6

III. LESSONS FROM IFAD’ S EXPERIENCE IN NIGERIA 8

IV. STRATEGIC FRAMEWORK FOR IFAD 9

A. IFAD’s Strategic Niche and Proposed Thrusts 9B. Main Opportunities for Innovations and Project Interventions 10C. Outreach and Partnership Possibilities with NGOs and the Private Sector 11D. Opportunities for Linkages with other Donors and Institutions 12E. Areas for Policy Dialogue 13F. Action Areas for Improving Portfolio Management 14G. Tentative Lending Framework and Rolling Programme of Work 14


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APPENDIXES

I. COUNTRY DATA 1

II. LOGICAL FRAMEWORK 2

III. STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT) ANALYSIS 3

IV. IFAD’S CORPORATE THRUSTS AS RELATED TO THEPROPOSED NIGERIA PROGRAMME 4

V. ACTIVITIES OF OTHER PARTNERS IN DEVELOPMENT – ONGOING AND PLANNED 5

VI. IMPACT ASSESSMENT OF KATSINA AND SOKOTO STATES AGRICULTURAL ANDCOMMUNITY DEVELOPMENT PROJECTS 7


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CURRENCY EQUIVALENTS

Currency Unit = Nigerian naira (NGN)USD 1.00 = NGN 104.00NGN 1.00 = USD 0.096

WEIGHTS AND MEASURES

1 kilogram (kg) = 2.204 pounds (lb)1000 kg = 1 metric tonne (t)1 kilometre (km) = 0.62 miles (mi)1 metre (m) = 1.09 yards (yd)1 square metre (m2) = 10.76 square feet (ft2)1 acre (ac) = 0.405 ha1 hectare (ha) = 2.47 acres

ABBREVIATIONS AND ACRONYMS

ACDPs Agricultural and Community Development ProjectsAfDB African Development BankCBO Community-Based OrganizationCMP Cassava Multiplication ProgrammeDFID Department for International Development (United Kingdom)FAO Food and Agriculture Organization of the United NationsFMARD Federal Ministry of Agriculture and Rural DevelopmentHIV/AIDS Human Immunodeficiency Virus/Acquired Immune Deficiency SyndromeICRAF International Centre for Research in AgroforestryIITA International Institute of Tropical AgricultureKSACDP Katsina State Agricultural and Community Development ProjectLGA Local Government AreaNACB Nigerian Agricultural and Credit BankNGO Non-Governmental OrganizationPBN People’s Bank of NigeriaRTEP Roots and Tubers Expansion ProgrammeSACDP Sokoto State Agricultural and Community Development ProjectUSAID United States Agency for International Development

GOVERNMENT OF THE FEDERAL REPUBLIC OF NIGERIAFiscal Year

1 January – 31 December


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Country Map: Location of IFAD-Funded Operations

Source: IFADThe designations employed and the presentation of the material in this map do not imply the expression of anyopinion whatsoever on the part of IFAD concerning the delimitation of the frontiers or boundaries, or theauthorities thereof.

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IFAD PORTFOLIO OVERVIEW

Project NameInitiatingInstitution

CooperatingInstitution

BoardApproval

LoanEffectiveness

ClosingDate

Loan/GrantAcronym

DenominatedCurrency

ApprovedLoan/Grant

Amount(’000)

% ofDisburse-

ment

Multi-State Agricultural DevelopmentProject

IFAD World Bank 05 Dec 85 25 Sept 87 30 Jun 97 L - I - 177 - NR SDR 12050 97

Artisanal Fisheries Development Project IFAD UNOPS 30 Nov 88 05 Apr 91 30 Sep 97 G - I - 33 - NG USD 100 65Artisanal Fisheries Development Project IFAD UNOPS 30 Nov 88 05 Apr 91 30 Sep 97 L - I - 236 - NR SDR 11150 56Katsina State Agricultural andCommunity Development Project

IFAD World Bank 12 Dec 90 08 Jul 93 30 Jun 01 L - I - 273 - NR SDR 8550 95

Sokoto State Agricultural and Community Development Project IFAD World Bank 08 Sep 92 04 Nov 94 30 Jun 01 L - I - 307 - NR SDR 6500 98Benue and Niger States Agricultural Support Project IFAD AfDB 02 Dec 93 cancelled 31 Dec 02 L - I - 339 - NG SDR 20000Roots and Tubers Expansion Programme IFAD World Bank 09 Dec 99 G - I - 22 - NG USD 40 100Roots and Tubers Expansion Programme IFAD World Bank 09 Dec 99 G - I - 22 - NG USD 50Roots and Tubers Expansion Programme IFAD World Bank 09 Dec 99 L - I - 525 - NG SDR 16700

Note: AfDB = African Development BankUNOPS = United Nations Office for Project Services


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EXECUTIVE SUMMARY

The newly established, democratic Federal Government of Nigeria is committed to pursuingeconomic and social reforms, and the recently released Economic Policy (1999-2003) places povertyreduction and revitalization of the agricultural sector, together with the fight against corruption, as itsprincipal strategic priorities. The Government has started a process of deepening democracy in thecountry through the devolution of power to the states, local governments and communityorganizations. It is promoting transparency and accountability and revising the system of budgetaryallocations, fiscal transfers and revenue collection within the various tiers of governments.

IFAD has financed five projects in Nigeria since 1985, with a total loan commitment of aboutUSD 72 million. The first two projects are closed and the fifth is about to become effective. Thepoverty-alleviation and rural-development assistance strategy of IFAD has followed three differentapproaches, namely: (a) a food-security and commodity approach, as exemplified by the Multi-StateAgricultural Development Project (Cassava Multiplication Programme) and the recent Roots andTubers Expansion Programme; (b) a subsectoral and natural-resource management approach,represented by the Artisanal Fisheries Development Project; and (c) an area-based community-demand-driven rural development approach, represented by projects in Katsina and Sokoto States.

All projects have been directed towards the needs of rural poor communities and focused onsmallholder farmers or artisanal fishermen, the rural landless and women. They are contributing to:commodity development and food security (a threefold increase in the national production of cassavaand a halt in the decline of artisanal fisheries); technology generation and transfer (treadle pumps, andcassava and fish processing); successful approaches to rural and community development that targetwomen and emphasize training, access to credit and rural infrastructure; soil conservation andenvironmental management; and demand-driven, participatory approaches to the provision ofagricultural support services.

A major achievement has been the establishment of partnership arrangements with and betweencivil-society organizations (including between farmers’ organizations and non-governmentalorganizations (NGOs), key government institutions and donors, in particular the World Bank. Despitethe difficulties associated with fieldwork in Nigeria, the impact on poverty reduction andenvironmental conservation of IFAD-funded projects has been positive and has been validated in aparticipatory impact assessment completed in 2000. The performance and approach of these projectshave encouraged the Government to: (a) revive and expand collaboration with IFAD; (b) adoptIFAD’s approaches to rural and community development; (c) request IFAD support of its rural-development and poverty-alleviation objectives; and (d) emphasize the replication of successfulexperiences nationally, in collaboration with other financing and donor institutions.

Preparation of the COSOP is a first step in the response to the Government’s request for IFADsupport. The process of strategy development involved working very closely with a national teamdesignated by the Government. The team was composed of representatives from the Federal Ministryof Agriculture and Rural Development, the Ministry of Finance and the project coordinators of thefour IFAD-funded projects. Extensive discussions were held with representatives of the externaldevelopment partners operating in the country, NGOs, the private sector, smallholders and rural poorcommunities. Discussions were supported by a country portfolio review (CPR) (April 1998), followedby a CPR workshop (May 1999), a preliminary-phase COSOP mission (November 1999), and a seriesof sectoral studies undertaken by the World Bank in partnership with IFAD and the Food andAgriculture Organization of the United Nations (FAO) to update the institutional knowledge base.The proposed framework for partnership between Nigeria and IFAD was agreed upon during theCOSOP Validation Workshop of May 2000 involving federal states, local government areas (LGAs),representatives of rural communities, NGOs, and private-sector and development partners, includingthe World Bank, United Nations Development Programme (UNDP), FAO, Department forInternational Development (DFID) (United Kingdom) and United States Agency for InternationalDevelopment (USAID).


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The COSOP draws heavily on IFAD’s experiences in Nigeria, the lessons learned and dialoguewith the various stakeholders. Its workshop discussions were summarized and consensus reached withthe Government that IFAD should continue support to rural development for poverty alleviation andimproved food security. Addressing constraints faced by the rural poor will be the focus of new IFADinterventions. Promotion and replication of successful innovative approaches will build on, deepenand broaden the experience gained in past projects, while at the same time giving greaterconsideration to areas that have not been adequately covered.

Poverty is widespread throughout all states and is largely a rural phenomenon. HIV/AIDS hasalso become a full-blown development crisis with serious social and economic consequences. As moststates have different agro-ecological environments, ethnic populations and implementation capacities,IFAD’s future lending operations must be flexible and aim at national coverage. A well-structuredmultisectoral, phased approach will be necessary for effective implementation. Implementationperformance, local capacities and the commitment of the states, LGAs and stakeholders to theinvestment will guide geographical coverage and the intensity of interventions at the field level.

There is an urgent need to address rural poverty alleviation, and opportunities need to be seizedin a coherent and mutually reinforcing manner. Consequently, management of the IFAD portfolio inNigeria will emphasize strategic alliances with the World Bank. Partnership with other donors, inparticular DFID and USAID, and other stakeholders will also be strengthened in order to mobilizeneeded resources, share experiences and strengthen policy dialogue with the Government.Collaboration with FAO, the International Institute of Tropical Agriculture (IITA) and otherinternational institutions will build on existing cooperation agreements. Greater involvement isexpected in IFAD programmes by NGOs, community-based organizations (CBOs) and the privatesector. In order to maximize synergies, closer and more explicit links between loans and grants will beinstituted.

The main area of policy dialogue with the Government will be the removal of constraints toeconomic and social development in rural areas. Ongoing concerns over governance andaccountability, further decentralization of the administration, liberalization of the financial system andstrategies to overcome environmental degradation will be other areas of dialogue. To ensure effectiveparticipation and a fair assessment of the developments taking place, policy dialogue will be all-inclusive, with particular attention placed on the involvement of NGOs and CBOs.

The major strategic thrusts will be empowerment of the rural poor, particularly women, accessto and management of resources, infrastructure and services. IFAD’s efforts in Nigeria will involve:(a) empowering target smallholder farmers, the landless, rural women, CBOs and civil-societyorganizations in order to generate sustainable incomes from on and off-farm activities; (b) supportingpro-poor reforms and local governance in order to expand access to information and communication,village infrastructures and technologies; and (c) improving access of the poor to financial as well associal services. Future operations should also include activities that address environmentaldegradation and soil loss, as well as coastal-zone natural resource management. The consensus as tothe means of achieving the stated goals is that the target clientele be empowered to demand, receiveand manage their own development. To accelerate this demand-driven and participatory process,NGOs will act as partners as well as implementers at the field level.

Two areas that previously were not covered adequately concern, on the one hand, thepromotion of regional cooperation for sustainable food-crop development and food security, and onthe other, more effective donor collaboration in achieving rural poverty reduction and sustainabledevelopment. As a result, a regional network of Benin, Ghana, and Nigeria – three countries whereIFAD is financing national programmes on roots and tubers crops – is being consolidated to expeditecollaboration, advocacy and exchange of information on best practices. At the same time, a jointinitiative has been launched by IFAD, the World Bank, African Development Bank (AfDB) and FAOfor closer collaboration and harmonization of donor efforts in Nigeria.


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To implement the above strategic thrusts, three programme interventions have been identified:

• Community-based rural development and demand-driven support services. This nationalprogramme will initially focus in the northern states, where IFAD’s experiences in Sokotoand Katsina will be consolidated and replicated.

• Rural financial services development, including rural finance policy, microenterprisedevelopment and informal microfinance linkages with the formal sector.

• Community access to and management of land, water and common-property resources forsocio-economic development and environmental protection. The focus will be in those areasmost vulnerable to climatic and population pressure or intensive economic activity. Theprogramme will address desertification in the north as well as coastal erosion in the south.


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FEDERAL REPUBLIC OF NIGERIA

COUNTRY STRATEGIC OPPORTUNITIES PAPER (COSOP)

A FRAMEWORK FOR PARTNERSHIP FOR RURAL POVERTY REDUCTION BETWEENNIGERIA AND IFAD

I. INTRODUCTION

1. Nigeria has, since IFAD’s inception, been a strong supporter and partner in rural povertyreduction. Although Nigeria is eligible for highly concessional loans, it has contributed more thanUSD 80 million towards IFAD’s initial resources and subsequent replenishments. It is the largestcountry in West Africa, with about 120 million people (47% of West Africa’s population) and with agross domestic product (GDP) of USD 38 billion (41% of West Africa’s GDP). Despite Nigeria’spolitical and economic weight, with 20% of sub-Saharan Africa’s population, and its importance inWest and Central Africa, the country has received 7.3% (or the 22nd ranking) of IFAD’s financing.Lending operations have totalled less than the resources contributed by the country.

2. From 1993 to 1998, the military Federal Government of Nigeria instituted a freeze on all newborrowing from multilateral and bilateral sources. During that period Nigeria received very littleexternal grant assistance. The result is that in many respects the country has lagged behind in theintroduction of new initiatives in economic and social development. The performance and approach ofongoing IFAD-funded projects during the freeze on new loans have encouraged the Government toseek continued collaboration with IFAD. The Government favours the adoption of IFAD’s approachesto rural and community development and is emphasizing the importance and urgency of replication ofsuccessful experiences nationally, in collaboration with other financing and donor institutions.

3. This COSOP is coinciding with the recently released Economic Policy (1999-2003) of thenewly established democratic Federal Government. The Government is committed to pursuingeconomic and social reforms and places poverty reduction and revitalization of the agricultural sector,together with the fight against corruption, as its principal strategic priorities. It has started a process ofdeepening democracy in the country through the devolution of power to the states, local governmentsand community organizations. It is promoting transparency and accountability and revising the systemof budgetary allocations, fiscal transfers and revenue collection within the various tiers ofgovernment.

4. The new government policies are compatible with the framework of IFAD interventions. ThisCOSOP responds to the positive evolution of national policies and builds on experiences and lessonsfrom IFAD’s previous lending and non-lending operations. For poverty-alleviation opportunities to beseized in a timely, coherent and mutually reinforcing manner, the COSOP emphasizes IFADcollaboration with the World Bank.

5. The COSOP report has been developed through a participatory process involving Governmentand stakeholders and through discussions with government and civil-society organizations at large.There is broad agreement and commitment to the COSOP, which matches the Government’sdevelopment priorities with IFAD’s strategic thrusts. The participatory approach to developing thestrategy has been an essential step towards a common understanding of the key issues in reducingrural poverty.

6. The economic opportunities and potential of the agricultural sector and rural development havebeen reviewed. Particular attention has been placed on understanding poverty and highlighting itscauses and consequences. The strategies and programmes that require priority attention are discussed.


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The processes that increase the access of IFAD’s target groups (rural women, small and resource-poorfarmers and the landless and minority groups) to support services and resources are given priorityattention. Finally, a medium-term lending framework for IFAD funding is suggested.

II. ECONOMIC, SECTORAL AND RURAL-POVERTY CONTEXT

A. Country Economic Background

7. The country covers 924 000 km2 and comprises 36 states and the Capital Federal Territory(Abuja), making up 774 local government areas (LGAs). State governments have considerableautonomy and jurisdiction over activities within their boundaries.

8. Three large and highly developed ethnic communities make up Nigeria. The Muslim Hausa andFulani are predominant in the north, where they maintain ancient ties with the Arab world. TheYaruba, who are mainly from the west, have an elaborate political and religious system with armycourts and trading networks across the West African coast. The Ibo – an egalitarian people withoutchiefs – are the main ethnic group in the east and south.

9. Nigeria is endowed with good agricultural land and natural resources. It is the world’s seventhlargest oil producer and ranks fifth in natural gas reserves. Apart from oil, gas and a variety of solidminerals, the country has a well-developed industrial base, an extensive banking system, a largelabour force and a vibrant private sector and domestic market.

10. The current economic situation reflects Nigeria’s dependence on oil revenues, which providedhuge financial resources (USD 200 billion) from 1973 to 1993. Oil still accounts for about 90% and70% of total exports and government revenues, respectively. Increased earnings from oil exportsduring 1975-80 prompted high rates of economic growth, public spending and private investment.Sharp oil price rises and revenues have also encouraged wasteful public expenditure and economicmismanagement and corruption.

11. As petro dollars flooded the cities during the past two decades, so did rural Nigerians. Thecountry is one of the most urbanized countries in Africa – more than 45% of the population. Urbanpopulation growth doubled during that period from 15% to 30% and the number of cities with morethan half a million people jumped from two to nine. Lagos became Africa’s biggest city. Itspopulation exploded from 700 000 to over 10 million. The pull of many more-secondary cities such asIbadan was also important. While there are signs that such high growth rates of cities will probablynot be sustained, the trend towards continued swelling of Lagos and more large secondary cities willundoubtedly continue. Nigeria also has some of the most densely populated rural areas, especiallyaround Owerri in the east of the country, where population densities reach 600 persons/km2.

12. When oil prices collapsed in the early 1980s, GDP contracted and the economy faced an acutecrisis: unserviceable foreign debt, significant revenue shortfalls, with current account deficits, andcutbacks in public expenditure programmes and social development. A structural adjustmentprogramme (SAP) had to be launched in the 1980s. Despite the recent recovery in oil prices and thedecrease in inflation from 11.9% at the end of 1998 to 6.8% by the end of 1999, the short-termeconomic outlook remains poor.

13. Oil production is constrained by unrest in the Niger Delta and by international productionquotas of the Organization of the Petroleum Exporting Countries (OPEC). The GDP growth rate for1998 remained below the population growth rate of 2.8%. The external debt stock of the countrycontinues in an upward trend and stands at close to USD 30 billion. At the end of 1999, arrears wereestimated at USD 25 billion, due mainly to the Paris Club. Manufacturing production is 30% below


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installed capacity, with its contribution to real GDP averaging 3.3% in the recent past. It is estimatedthat the GDP growth rate in 1999 improved slightly to 2.7% but was still below the population growthrate.

B. Agricultural Sector

14. Nigeria has a wide range of agro-ecological zones (rainforest, Guinea savannah, Sudansavannah, and Sahelian vegetation), which allows for a diversity of crop and livestock productionactivities. The dry northern savannah is suitable for sorghum, millet, maize, groundnut and cotton.The main food crops in the middle belt and the south are cassava, yam, plantain, maize and sorghum.Low-lying and seasonally flooded areas are increasingly producing rice. The main cash crops in thesouth are oil palm, cocoa and rubber.

15. Despite years of neglect and declining terms of trade that have decimated its traditional exports(cocoa and palm oil), Nigeria remains one of the world’s most important producers of cassava and thesecond largest of palm kernel. It is also Africa’s largest yam and cowpea producer. In 1989 it had thethird largest harvest area of cocoa, after Ghana and Côte d’Ivoire, but it ranked fifth in production dueto low yields. Agriculture is, despite a steady decline, the single largest contributor to the well-beingof the rural poor, sustaining 90% and 70% of the rural and total labour force, respectively. The sectorcontributes 30% of GDP, with 90% of the output coming from the smallholder sector.

16. Farming systems are mainly smallholder-based and rainfed. They employ simple, low-inputtechnology, resulting in low-output labour productivity. Women play an important role in foodproduction, processing and marketing. Only half of the 71 million ha of total cultivable area is undercultivation. About 31 million ha are under rainfed crops and of this 54%, 17% and 29% are undercereal grains, roots and tubers, and pulses and industrial crops, respectively. Nationally, subsistencefarming is very limited and food crops are de facto cash crops. Average cultivated area per farminghousehold ranges from 0.5 ha in the high-rainfall, densely populated south to 4 ha in the arid north.Traditionally each farm has double or more of the cultivated area as fallow. However, increasingpopulation pressure is reducing the fallow area and duration, with a decline in soil fertility and yields.

17. Cattle-raising is predominantly a northern activity and is associated largely with transhumants.Sheep and goats are widespread, particularly in the middle belt and north. Village poultry are keptmostly on an extensive scavenging system. Use of work oxen is confined to the non-tsetse-infestedareas of the north, as the tsetse fly had introduced trypanosomiasis further south. In some parts of thecountry, mainly in the south, labour constraints are an increasing problem, as many young men haveleft the land in search of urban employment.

18. Forests and woodlands occupy 17 million ha, but primary forests and most of the wildlife isdisappearing. Forest resources are diminishing and the current demand for wood has outstripped itssupply. With more than 350 000 ha being deforested annually, there is growing environmentaldegradation, desertification and soil erosion in the north, as well as loss of biodiversity.

19. There are three major drainage systems in Nigeria: the River of Niger and Benue, coastal andLake Chad. The total area of inland water bodies is estimated to be slightly over 12 million ha.Although inland fisheries resources are rich, precise knowledge of the state of the resources is lacking.However, production is understood to have increased significantly. Nigeria is a leading fish-producingcountry, with 366 000 t per annum after Senegal and Ghana. It also has an important marine resourcepotential of 270 000 t. Nigeria has the highest concentration in Africa of artisanal marine fishermen(272 000 in 1997) and is a major source of employment. In addition to the full-time operators, thereare also many part-time fishermen that cultivate the land or embark on non-fishing income-generatingactivities outside the fishing season.


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20. With respect to agro-processing, there are large private-sector firms producing alcohol fromcassava starch, a large fertilizer company, and several companies producing hybrid maize and otherseeds. The potential from agro-processing is large, given the size of the market and rapid urbanizationin Lagos, Ibadan, Kano and Port Harcourt.

21. The Government’s approach to rural finance has historically been to promote targeted,subsidized credit to agriculture through state-owned banks. The most important include the NigerianAgricultural and Credit Bank (NACB) and the People’s Bank of Nigeria (PBN). Inappropriatemacropolicies, political interference and government controls on interest rates have made it difficultto turn a profit, and as a result NACB and PBN are both in serious financial trouble, with manynonperforming loans. It has been proposed that these two banks be merged and privatized. A networkof locally-owned community banks also exists, with over 1 000 branches, but it is estimated that only25% are solvent. On the positive side, the large number of branches in cities and towns throughout thecountry are a resource that could be exploited to build significant outreach if appropriate policies,governance structures, greater professionalism, and proven microfinance technologies wereintroduced.

22. The commercial banking sector has recently begun to invest in microfinance. While thecommercial banks are minor actors in this area, they may be more advanced in providingmicrofinance services than is the case in most other West African countries. Indeed, some commercialbanks have expressed keen interest in acquiring the merged, privatized NACB/PBN. Microfinanceservices are most commonly provided through informal self-help groups such as rotating savings andcredit associations and traditional esusu or adashi moneylenders.

23. Apart from the Federal and State Ministries of Agriculture and Rural Development (FMARD),a number of federal and state institutions support the agricultural and rural sectors. These include theFederal Ministries and State Commissions of Environment, Water Resources and Lands. The longperiod of military rule has undermined these key civil-service institutions and other training andresearch institutions, which formerly had a high reputation for academic achievement or scientificpursuit.

C. Rural Poverty

24. Poverty has worsened during the 1980s and 1990s, and 72% of the population is now classifiedas poor, with more than 35% of the population living below the USD 1 poverty level. Real incomeand consumption per capita are as low as at independence 40 years ago. Per capita income isestimated at about USD 310 today, which is below the USD 370 obtained in 1985. Poverty isparticularly widespread in rural areas, where 40% of the population lives below the poverty line.

25. It is generally recognized that poverty is not only a matter of income and expenditure shortfalls,but that other factors contribute to the phenomenon. More than 50% of the population does not haveaccess to safe water and 10% (or 12 million people) is undernourished. Of the under-five-year olds,35% and 42% are underweight or with stunting, respectively, compared to 30% and 41% in sub-Saharan Africa. The problems of malnutrition are compounded by the fact that more than 5% of therural population is affected by HIV/AIDS, and more than 50 million Nigerians suffer from acombination of diseases of protein-energy malnutrition, vitamin A deficiency, irondeficiency anaemiaand iodine deficiency. The majority of the latter are women and children. The social and economicconsequences of HIV/AIDS and malnutrition are felt widely, not only in the health subsector, but alsoin education, agriculture, services and human resources.


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26. Limited education and poor health are often mentioned as the most relevant causes of ruralpoverty. Other causes identified during a participatory analysis revealed that:

• The poor tend to be located in isolated villages with poor road and communicationlinkages. Most goods and produce transport is done through head loading. With about 70%of the rural road network in poor or very poor conditions, and with 1.1 km per 1 000population, Nigeria’s rural road density is one of the lowest in sub-Saharan Africa,compared to Cameroon (6.5), Côte d’Ivoire (4.8), Ghana (2.3) and Malawi (1.9).

• Poverty is associated with the cropping of small areas, mainly with food crops and usingsimple tools. Household labour is more than that required on a small farm and oftenhousehold members work on other people’s farms. Little or no cash crops are produced invery poor areas, and where trees are owned, they are often pledged as security againstdebts. Smallholders have to cope with diminishing soil fertility and yields and they cannotafford inputs such as fertilizer.

• Most of the food produced by the poorest is for home consumption and often it is notenough. Food insecurity during the pre-harvest period is often combined with a starch-based diet and sometimes stale food. Where there is a post-harvest marketable surplus, itcannot be efficiently disposed of; hence most farmers have little incentive to adoptimproved technologies.

• Poor households are characterized by lack of access to influential persons or urbanopportunities. They depend largely on income-generating activities with low productivity,have little access to savings and credit or village or community infrastructures and own fewor no valuable assets.

• External signs of poverty are, among others, absence of a corrugated tin roof on the house,wearing one set of clothes continuously and, for women, working in the field rather thanengaging in activities such as crop trading or fish marketing.

27. Women in Nigeria remain one of the most disadvantaged groups, and gender is an importantdimension of rural poverty. Although women play significant roles in rural economic activities, theycontinue to shoulder a high burden of rural poverty because of their vulnerable socio-economicposition. Currently, the incidence of poverty in female-headed households is 58.5%, more than doublethe level of 27.0% recorded in 1980. At the local level, poor women have little education and limitedtraining in childcare and health practices. Poverty and violence in rural Nigeria have also contributedto the unravelling of the social fabric and to undernutrition.

D. Constraints on and Opportunities for Rural Poverty Alleviation

28. While recognizing the relatively greater economic importance of the oil sector, theagricultural/rural sector has the potential to play a vital role in improving food security, substitutingimported raw materials, creating productive employment, maximizing foreign-exchange earnings andprotecting the environment. Understanding the constraints on broad-based agricultural and ruralgrowth is pivotal to reducing poverty in rural areas.

29. The most important constraint on agricultural development and rural poverty reduction hasbeen a lack of appropriate macroeconomic and sectoral policy frameworks. Domestic traderestrictions and policies have been major disincentives to producing or adopting improvedtechnologies. Technology-based agriculture has not come to Nigeria on a significant scale. What littlegrowth there has been in the agricultural sector has come from expansion of land under cultivationrather than from increased productivity. The previous Government’s controls on agricultural prices


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and the overvalued naira during the 1980-90s adversely affected agricultural exports. They alsoresulted in rapid growth of food and manufactured imports. Moreover, neglect of the ruralinfrastructure and the fact that producer prices were low relative to input costs reduced theprofitability of producing for the market. The extensive smallholder Nigerian farming and livestocksystems, which use much land and little capital and labour, have been a rational farmer response to thenatural resource base and government-induced constraints. As a result, however, risk-averse farmershave not exploited the huge potential of producing for the market.

30. Food as well as cash-crop agricultural marketing is characterized by high marketing marginsand lack of innovation. Inefficient agricultural marketing systems, especially for food products, andlack of adequate storage, preservation, processing and marketing facilities suggest that the futureshould put greater emphasis on the private sector, since it is demonstrably more effective at carryingout these activities under competition. World prices of Nigeria’s traditional export crops have alsobeen at historically low levels, with no sign that there will be significant improvement. Low worldprices are translating into relatively low profitability for Nigerian farmers and for agriculturalmarketing and processing enterprises. Since experience thus far in attracting significant private-sectorinvestment in Nigerian agriculture and agriculture-related industry has been poor, many more far-reaching interventions will be necessary.

31. Neglect of roads connecting rural areas to towns and the prevailing focus of governmentinfrastructure investments in the mega cities have cut the agricultural sector off from urban and exportmarkets. They have also cut farmers off from the source of improved inputs, equipment andtechnology. It is from secondary towns that most services are provided to farming and ruralcommunities and that collection of agricultural produce is found. Similarly, the focus of governmenton health, education, and water investment in the larger cities, neglecting the rural areas, has resultedin the appalling health and educational status of rural populations. The rapidly growing number ofunhealthy, uneducated rural people living in poverty will make revival of the agricultural sectorunlikely. Expanded physical and social infrastructure investment in rural areas is therefore one acorner-stone of rural poverty alleviation.

32. Land degradation as a result of extensive agriculture, deforestation and overgrazing is alreadyalarming. This environmental degradation also has implications for biodiversity of flora and fauna,where the losses are often irreplaceable. There is an urgent need to reverse the degradation, breakdown the vicious degradation-and-poverty cycle and introduce more-sustainable farming systems.

33. More than 40 years after independence, with three-quarters of that time spent under militaryregimes, there is now an urgent movement for greater democracy and decentralization of decision-making to LGAs, community-based organizations and farmers’ groups. Expansion of community-based organizations and farmers’ groups not only contributes to democratization but is an effectivemechanism for marketing and processing produce, providing services to members and defending theinterests of farmers and livestock owners.

E. National Strategy for Rural Poverty Reduction

34. The Government is developing an enabling policy environment conducive to the promotion ofeconomic, social, political, cultural and natural resource development. Furthermore, through theNational Planning Commission, the Government has produced a draft national poverty-reductionpolicy document. The World Bank (with support from the Food and Agriculture Organization of theUnited Nations (FAO) and the United States Agency for International Development (USAID)) iscurrently assisting the Government in the finalization of a comprehensive, multisectoral ruraldevelopment strategy. IFAD has contributed actively to the strategy-formulation process and iscollaborating with the Government and other development partners in the finalization of thedocument.


7

35. With democratization, the Government has adopted community-based and demand-drivenapproaches to rural development, devolving the responsibilities to the states, LGAs and localcommunities. The Government is committed to the Community Action Programme for PovertyAlleviation (CAPPA), adopted in 1996, which combines social funds with a social action strategy.The CAPPA document drew largely on past experiences of poverty-reduction efforts in the countryand on several success stories from other African countries. The Government is also concerned aboutthe need to accelerate the adoption of new approaches to rural development.

36. The emerging rural development strategy summarized below is guided by the future objectivesof the Government, past performance, current opportunities and constraints.

37. The agricultural production systems in Nigeria are diverse, with high potential. Creating anappropriate policy environment for agriculture, marketing and rural finance is an important aspect ofrural poverty reduction. With low foreign external reserves, farmers are being called upon to feed thegrowing cities using increasingly land-intensive technologies. Agriculture, agro-industry and relatedservices need to be profitable, and profitability will be the main element in stimulating the privatesector (including small farmers). Unlike in the past, the incentives to intensify are more pronounceddue to the increasingly strong pull of urban markets, now larger and closer to some production areas,and emphasis will be on a combination of value added (through processing) and productionexpansion. Liberalized markets and exchange-rate regimes and growing urban demand will result in astrong supply response. However, this will not be enough to stimulate private-sector development.Proactive efforts to link agriculture to industry through processing of agricultural products and supplyof inputs and consumer goods to farmers must emphasize the private sector. Financing of private-sector investments will require enlarged and appropriate rural financial intermediation.

38. Rural communities and farmers’ participation and empowerment in their own development anddecision-making are consistent with increasing democratization. The individual as well as collectivecapacity of informal groups will be further developed to enable them to efficiently undertake cropmarketing, processing, input supply, informal savings and lending, land conservation and naturalresource management, infrastructure maintenance, and management of many agricultural services atthe field level. NGOs have an important role to play in the development and assistance of communitygroups and associations. Training and capacity-building will be very important.

39. The development of physical, economic and social infrastructure in rural areas shouldcontribute to improving the well-being of rural communities. Roads, water supply, education andhealth will contribute to redressing the excessive urban bias of the past. With greater decision-makingat the LGA level, investment resources directed to rural areas will be put to more-effective use.However, because of overwhelming demand and urgency from rural areas and given governmentcapacity constraints, local communities and the private sector will have to become partners in theconstruction and maintenance of rural infrastructure. In most cases, rural communities are keen tofinance the development (at least partially) and maintenance of their infrastructure needs.

40. Better natural resource management is needed to preserve the productivity of land, water,forest, plant and animal life in the face of widespread environmental degradation in Nigeria. Ingeneral, the problems of natural resource management stem from markets that have not developed in amanner favouring individual decisions consistent with economically, socially and environmentallydesirable outcomes. Access to and management by local communities of land, water and common-property resources is a priority through which communities are empowered to influence theexploitation as well as the regeneration of the resource base.


8

III. LESSONS FROM IFAD’S EXPERIENCE IN NIGERIA

41. IFAD’s portfolio in Nigeria has involved five loans approved from 1985 to 1995 for a totalamount of USD 72 million. One loan, the Benue and Niger States Agricultural Support Project, wasapproved by IFAD in 1993 and subsequently cancelled by the military government when a freeze onall new borrowings was introduced.

42. Two IFAD-funded projects have been completed, the Multi-State Agricultural DevelopmentProject (Cassava Multiplication Programme (CMP)) and the Artisanal Fisheries Development Project;two projects are ongoing, the Katsina State Agricultural and Community Development Project(KSACDP) and the Sokoto State Agricultural and Community Development Project (SACDP). TheExecutive Board subsequently approved the Roots and Tubers Expansion Programme (RTEP) in 1999and the loan agreement was signed in May 2000.

43. The main lessons learned from fifteen years of project implementation in different agro-ecological zones of Nigeria have been summarized and documented in a number of reviews andsupervision missions. These include the strategic portfolio review (April 1998), the implementationcompletion evaluation (ICE) of the CMP (April 1999), the Country Portfolio Review Workshop(May 1999), the COSOP Validation Workshop (May 2000), and the impact assessment of the Sokotoand Katsina States Agricultural and Community Development Projects (November 2000). The mainlessons are the following.

44. Rural people remain vulnerable to the hazards and damage associated with a diminishingresource base. Implementation of the natural resource management components in SACDP andKSACDP was partially successful. The problem of identifying and implementing appropriate naturalresource management systems is difficult and complex. Design of appropriate interventions is sitespecific and depends on many factors that are often beyond the control of the stakeholders. Yetexperience in Nigeria and elsewhere suggests a number of promising opportunities that include waterand soil conservation, soil-fertility maintenance, prevention of wind erosion, agroforestry, anddevelopment and extension of fuel-efficient stoves. However, these technologies need to respond topriority needs of beneficiary communities, complement existing local practices and yield visible,short-term benefits. This is especially important where there is little room for error given the fragilityof the environment in semi-arid and marginal zones, or because resource-poor farmers areunderstandably risk averse and have little latitude to invest in uncertain deferred benefits. A learningand partnership approach to natural resource management is therefore desirable.

45. In promoting productivity increases in food production, the development and application ofagricultural techniques for poor farming households needs to present alternatives to intensificationthrough external inputs only. The technologies proposed should be readily disseminated through cost-effective demand-driven institutions, and greater linkages with marketing should be instituted. TheCMP was successful in increasing the production of cassava in the country. From less than14 million t in 1987, Nigeria produced over 30 million in 1998, thus becoming the world’s largestproducer of cassava. However, limited attention to processing, product diversification and marketinfrastructure did not allow farmers to take sufficient advantage of value added through processing.Local gluts led to lower prices and reduced incomes. The recently approved RTEP will ensure verticalintegration of production, processing, product and market diversification as a means of increasing andstabilizing incomes.

46. The KSACDP and SACDP experiences have shown that appropriate rural credit (and savings)operations, based on group lending and demand-driven microcredit, can have a major impact onincreasing the production and incomes of smallholders and microentrepreneurs. Rural financialservices can stimulate agricultural and rural-sector growth and provide opportunities to build onstrong entrepreneurial spirit to support trading patterns in the various states. Women are prominent


9

participants in small commerce and active in food processing and marketing. The rural poor have thecapacity to save and can manage credit risks. Sustainable rural financial systems depend on a macro-economic framework that favours lending (and savings) from rural areas. Lower inflation, higherefficiency of the banking system and supervision can contribute to reducing transaction costs.

47. IFAD-assisted projects have forged strong linkages with NGO initiatives in the country. TheIFAD/NGO Extended Cooperation Programme (ECP) grants have promoted NGO involvement incertain critical areas of portfolio implementation. During military rule, the Government did not trustlocal associations and civil-society organizations and, as a result, NGOs evolved as disparate groupswith no platform for collaboration and advocacy. The joint grant to the Nigerian Integrated RuralAccelerated Development Organization (NIRADO), the Leventis Foundation and the FarmerDevelopment Union (FADU) was a successful attempt to bring NGOs together to provide technicalassistance through a partnership arrangement among farmers, artisans and the private sector. Thesuccess of this initiative is now well recognized by FMARD. Future projects should strengthen andbroaden these partnerships with NGO communities.

48. Field-level partnership, with the World Bank acting as the cooperating institution, has beensuccessful in developing a collaborative framework for the development of responsive strategies inagriculture and rural development as well as a greater understanding of the field-level implications oflarge-scale project financing. As the World Bank and other donors have been absent from thefinancing of field-level operations and as the IFAD-funded KSACDP and SACDP have been the mainlarge-scale ongoing operations, it has allowed IFAD and the World Bank to use the experiences ofthese two projects to shape the design of new operations in the country. Another example of the fieldpartnership was the joint IFAD/UNICEF Nutrition Workshop, which was held in 1997 to work outmodalities for incorporating nutritional dimensions into project activities. A number of IFADinterventions in Nigeria were formulated under the FAO/IFAD cooperation programme. Activecollaboration with FAO on the development of a regional strategy on cassava should also serve toforge and strengthen such strategic alliances.

49. Given the relatively modest size of IFAD’s portfolio in Nigeria, and that IFAD does not havepolicy-based lending instruments, policy dialogue remains limited to microlevel interventions.Nevertheless, these microlevel initiatives can be very powerful in empowering rural people, therebyimproving awareness of poverty as well as offering solutions to rural development, agriculturalproduction and natural resource management. Allocation of one country portfolio manager to beresponsible only for Nigeria should facilitate and intensify policy dialogue with the Government,other donors and rural communities.

50. There have been a number of project implementation difficulties in Nigeria. There werenoticeable delays in project start-up as a result of slow or non-compliance with loan agreements bythe Government. Project management has often neglected the importance of adequate records,accounts and operational procedures. Counterpart funds were either at inadequate levels and/oruntimely, thereby frustrating prompt delivery of services. While there is a need to ensure greaterawareness of conditions of procurement and disbursement, future projects should also seek morerealistic commitments and budgets from states and LGAs.

IV. STRATEGIC FRAMEWORK FOR IFAD

A. IFAD’s Strategic Niche and Proposed Thrusts

51. IFAD’s new strategy is very different from the approach followed during most of the past twodecades. It is based on an analysis of IFAD’s experiences in Nigeria and other countries, andinterventions focus on priority areas, with a major shift towards broadening the range of implementingpartners. The strategy also emphasizes the complementarity of investments of other donors, NGOs


10

and the private sector, with much more attention being given to innovative, cost-effective andreplicable programmes with sustainable impact and to reflecting the expectations of rural poorNigerians. Through this approach, IFAD will be able to lead the way and galvanize energies toeradicate rural poverty and hunger and unleash the capacities of its clients: the rural poor.

52. The first element of the strategy relates to policy advocacy in agriculture and ruraldevelopment, especially as it affects microlevel development in rural areas. Supporting pro-poorreforms in local governance in order to expand access of the rural poor to resources, villageinfrastructures, technology and services will be a powerful instrument in rural poverty alleviation.

53. In order to deepen and broaden the access of the rural poor to resources, the second element isbased on the development of effective rural institutions. Support will be provided to financial andsocial, public and private institutions that are responsive to the needs of a rural poor client base. Theexperiences and lessons learned from the large investments in agricultural development projects(ADPs) during the past twenty years will be internalized in order to improve effectiveness indeveloping, extending and disseminating technologies that respond adequately to farmers’ needs.

54. The third element concerns productivity and natural resource management, which as a result ofthe concentration of populations in urban areas will require increases in food production from ruralareas and productivity gains from a diminishing rural resource base. National social science researchefforts have had limited impact. This has inhibited the adaptation of technologies to local conditions.Future operations will specifically include activities that favour participatory technology developmentand include farmer perceptions of the problems and solutions proposed. Areas of particular interestinclude environmental degradation and soil loss, as well as coastal and riverine zone erosion.

55. Learning from experience will also be favoured, capturing and synthesizing IFAD’s and otherinstitutions’ knowledge, with emphasis on innovative aspects. Empowerment of target smallholderfarmers, the landless, rural women and community-based organizations to generate sustainableincomes from on and off-farm activities will receive greater weight than in the past. Increasedagricultural productivity will also call for access to safe water and health facilities, which could savewomen as much as 2-3 hours a day in time spent hauling water. Informal training in nutrition (andhealth-care and feeding practices), currently minimal, would reduce malnutrition. Given the impactand expansion of HIV/AIDS in rural areas, the programme should also contribute to the mobilizationof supplementary resources to address this area of increasing concern to the rural poor.

56. The design of future programmes should adopt a gender and development (GAD) approach,which would enable systematic analysis of the roles of men and women and the way in which theseroles positively or negatively affect their respective capacities to participate in rural development.This approach should ensure equitable distribution of rural development benefits. GAD usesparticipatory methods to empower women by raising their consciousness and their ability to articulatetheir needs, rights and capabilities so as to involve men in a positive way.

B. Main Opportunities for Innovation and Project Interventions

57. IFAD’s strategy in Nigeria has evolved and new directions and refinements have beenintroduced in order to increase impact at local and national levels. A combination of nationalinstitutions and area-based and location-specific partners will be sought. The opportunities andinnovations proposed are based on the understanding that poverty is a rural phenomenon across allstates, the needs are pressing and – as most states have varied agro-ecological environments andethnic populations – the solutions and intensity of activities will vary.

58. IFAD’s future lending operations will aim at national coverage but, in order to be effective andefficient, they need to match and complement other donor resources. Inter-agency initiatives in thesame geographical areas, such as the Soil Fertility Initiative, the World Bank’s future Fadama project,


11

its prospective natural resources management programme and FAO’s special programme for foodsecurity, can benefit from closer linkages and sharing of knowledge on common issues (seeAppendix V). A well-structured and phased approach is necessary for effective implementation.Implementation performance, local capacities and the commitment of the states, LGAs andstakeholders to the investment will guide the geographical coverage and the intensity of interventionsat the field level.

59. To maximize synergies between the different types of IFAD financing, closer and more-explicitlinks between loans and grants will be developed. The International Institute of Tropical Agriculture(IITA) has rendered particular support to technological improvements in Nigerian agriculture throughIFAD’s Technical Assistance Grant Programme. New grants to IITA and other regional researchcentres (West Africa Rice Development Association (WARDA), International Crops ResearchInstitute for the Semi-Arid Tropics (ICRISAT), International Centre for Research in Agroforestry(ICRAF)) for agricultural research should be linked to technology development needs of ongoing andfuture IFAD loan projects. The Roots and Tuber Expansion Programme, cowpea and soybeanimprovement, and plantain and yam disease control, which have contributed to the agriculturalknowledge base, should be integrated to obtain maximum benefit from the knowledge base.

60. In many respects, the main opportunities for project design will benefit from the experiences ofrural and community development in Ghana and other countries in the region, but Nigeria may alsoprovide clues to the future evolution of agricultural intensification and natural resource managementfor other parts of the subregion.

61. New directions that will facilitate the introduction of innovative interventions include departurefrom previous supply-driven technologies, and top-down, credit-led activities. Other key features,which are pivotal in addressing rural poverty-alleviation programmes in Nigeria, include:

• full appreciation that IFAD ideas and resources can only catalyse localized solutions;

• development of the whole project cycle, starting from problem analysis at the grass-rootslevel, should be handled in a participatory manner, properly coordinated and withefficiency from start to finish; the role of governments, community groups and the privatesector in strategy development for constructive change should be valued so as to seekrealistic and sustainable solutions to problems;

• greater commitment to problem-solving should be emphasized and the processes andmethods should evidence a high degree of collegiality and teamwork among associates(donors), clients and counterparts – this will lead to an integrated approach to planning,design, implementation and evaluation of projects; and

• the emphasis on addressing gender issues and involvement of rural youth in developmentshould be vigorously pursued.

62. As consultants form an integral part of the day-to-day project cycle and portfolio management,the identification of younger professionals and an increasing involvement of women as well as localresource persons with strong academic preparation and field experience will be pursued in support ofIFAD’s strategy in Nigeria.

C. Outreach and Partnership Possibilities with NGOs and the Private Sector

63. Outreach to civil society represents a formidable challenge in Nigeria, as the prolonged periodof military rule has undermined the democratic processes and the rule of law. Many institutions ofcivil governance, including the civil service and judiciary, have become moribund and would require


12

significant efforts, resources and time to be revived. The Government has already started the process,introducing reforms in the civil service and adjustments to the remuneration of public services toprovide incentives for efficient service delivery and output. It has opened up to collaboration withNGOs and civil-society organizations, allowing them to participate in the process of reform. IFADhas had successful experiences with NGOs and farmers’ organizations; these should encourageIFAD’s non-lending operations to continue with selective rural-based NGO cooperative activities.

64. Future efforts will be directed towards strengthening these organizations as well as those oflocal governments and civil-society institutions at the state level, and towards facilitating informationdissemination and networking (including greater sharing of knowledge from the region). Financingcapacity-building of NGOs and civil-society organizations in the country can result in significantgains in improvements of operational and financial management. It can contribute greatly to theirempowerment and thus to the democratization process and the fight against corruption.

65. Positive dialogue has started with private-sector institutions, in particular with the oilcompanies (Shell and AGIP) on their participation in funding rural development operations designedby IFAD and favouring poverty alleviation. These multinational private-sector institutions haveconfirmed their willingness to sign a memorandum of understanding that will define the modalitiesfor their participation in future IFAD operations, particularly in the Niger Delta region.

D. Opportunities for Linkages with other Donors and Institutions

66. IFAD and World Bank collaboration has been established since 1985 and is an importantfeature of the two institutions’ programmes in Nigeria. This collaboration, based initially on WorldBank supervision and a role as cooperating institution for KSACDP and SACDP, is being expanded.The World Bank was recently the appraising institution for the RTEP. More collaboration will besought with the African Development Bank (AfDB) and other bilateral programmes.

67. A number of joint studies have been initiated. This active collaboration has made it easier toattract other donors’ interest, notably the Department for International Development (DFID) (UnitedKingdom) and USAID. The long-standing close collaboration with FAO on project design andexpertise in specific technical fields such as cassava production and small-scale irrigation willcontinue. Also, a framework that includes a revised approach to the support provided from the FAOInvestment Centre to the World Bank, AfDB, and IFAD has been endorsed by all parties. Thisapproach calls for the development of strategies focusing on the interests of the country and theintegration of donor support. This should contribute to better planning of activities and will avoidoverlapping and duplication of efforts in future interventions.

68. Future non-lending operations in the country will seize opportunities to support IITA andICRAF in selective strategic research to introduce low-cost technologies – technologies that can bringsmallholder production systems into line with the new horizons of sustainable agriculture. TheInternational Centre of Insect Physiology and Ecology (ICIPE) has also made important contributionsto Nigeria through development of pest-management options for vegetable production and controlmeasures for African fruit flies. New opportunities will be considered for soil-fertility management,promotion of non-forest products (bamboo and rattan) and aquaculture in support of Nigeria’s needfor technological improvement of the sector.

69. One area that previously was not covered adequately concerns the promotion of regionalcooperation in sustainable food-crop development. A regional network of Benin, Ghana and Nigeria –three countries where IFAD is financing national programmes on root and tuber crops – needs to beconsolidated so as to expedite collaboration, advocacy and exchange of information on best practicesin achieving food security and sustainable development. Ongoing collaboration with FAO and IITA inthese activities will be strengthened. Another regional cooperation initiative that will be promotedfurther is the Chad/Niger/Nigeria coordination on the management of water and other natural


13

resources in shared river basins. In this context, IFAD collaboration with the Global Mechanism ofthe United Nations Convention to Combat Desertification (CCD) (housed in IFAD) and the GlobalEnvironmental Facility-United Nations Environment Programme (GEF-UNEP) would facilitatediscussions and promote linkages among the strategic plans for Chad/Niger/Nigeria.

E. Areas for Policy Dialogue

70. The COSOP Validation Workshop of May 2000 was a major entry point for strengtheningpolicy dialogue with the Government and other external donors, in particular the World Bank. IFADalso participated in the Workshop on Rural Financial Services and the Rural Development StrategyWorkshop held in September 2000 and January 2001, respectively, in Abuja. These venues haveprovided a forum in which to share ideas and confirm the relevance of policies and strategies of well-targeted interventions in the rural sector.

71. Policy dialogue can be a powerful tool for inducing change and promoting greater impact ofinvestment programmes. IFAD’s comparative advantage and experience are in micro-aspects of ruralpoverty policy, especially practical approaches to agricultural and rural community development,field-level natural resource management strategies and rural finance development. The entry point fordialogue between IFAD and the Government will be through the FMARD and state governments. Theexisting collaborative framework with the World Bank will also be an important platform for a more-cohesive and concerted approach to rural poverty-alleviation policy dialogue. Policy dialogue withFAO, DFID and USAID would also be useful on sectoral issues and their impact on rural poverty.

72. While the Government has confirmed that appropriate policies and implementation of well-targeted projects should improve the impact on rural poverty reduction, government support servicesshould also be more cost-effective if they are to be sustainable. The process of empowerment of localcommunities and the involvement of NGOs and civil-society organizations is starting to producetangible results. Further progress will be sought through frequent dialogue, consultation anddiscussion. Other specific areas that will be taken up with the Government within the framework ofIFAD’s prospective plan of operations are the following.

73. Rural financial policies and regulatory framework. The vast majority of rural micro andsmall-scale entrepreneurs do not have adequate access to credit, savings, and insurance services.While the government has taken impressive steps to improve the policy framework and create anenabling environment for the development of rural financial markets, some policy instruments are notconducive to a sustainable rural financial market. Policies on interest-rate regulation, mandatorycharging of concessional-lending interest rates and low interest rates on savings are inconsistent withefficient financial-sector practices and, as a result, the coverage of financial institutions in rural areasremains limited and weak. This, coupled with the poor state of infrastructure in rural areas, leads toincreases in unit transaction costs and in the marginalization of the rural poor. The technical capacityof the rural financial institutions is weak, and the legal and regulatory framework of the Central Bankof Nigeria needs to be strengthened before the flow of financial services to the rural areas can besustainably increased.

74. Decentralization policies and local government budgetary reforms. Although Nigeria is afederal state, military rule over a long period of time weakened the decentralization process in thecountry. The return of democracy offers an opportunity to strengthen democratic forms of governancethat can broaden the decentralization process and improve the performance of state and localgovernments. Nigeria’s physical infrastructure has deteriorated drastically in the past two decades.Power outages, poor telecommunications services, and inadequate ports, roads, rail systems and watersupply have severely constrained economic growth and rural development. Pursuit of decentralizationprocesses, both in terms of local planning and revenue collection and expenditure systems, wouldmake local governments more responsive to the demands of local communities. Apart fromimprovements to intergovernmental transfer procedures and the revenue base, which are needed for


14

investments in rural infrastructure, user associations are needed to operate and maintain village-levelinfrastructure in order to reduce the cost of operation and ensure sustainability of the investments.

75. Governance and accountability. The government has declared a fight against corruption, andspecific measures aimed at improving governance have been initiated. The first bill submitted by theGovernment to the National Assembly was an anti-corruption bill. It instituted commissions to reviewpast awards of public-sector contracts and conducted reorientation workshops for senior civil servants,while requiring ministers to take integrity pledges. The Government also reviewed and made moretransparent its procedures for awarding contracts for the export of the country’s oil. It initiated thedevelopment of transparent procurement processes for the public sector. With more responsibilitygiven to the states, local governments and community organizations, it should be possible to monitormore closely and effectively the performance of programmes and projects. Policy dialogue will beactively pursued, emphasizing adequate accounting and financial control of funds as well ascompliance with loan-agreement provisions for audits, procurement and disbursement.

F. Action Areas for Improving Portfolio Management

76. The action areas and different approaches to portfolio management will mean striking a balancebetween ‘wholesale’ sector work and ‘retail’ field-level activities. As a result, IFAD’s efforts in thecountry will be more intense, with a combination of both federal-level advocacy and application oftechnology experience at the field level. This will also, therefore, involve more fieldwork at state andLGA government levels. Under current circumstances, with difficult issues to address such as goodgovernance and democratization, collaboration with Nigeria may not always be easy. Given thecomplexity, urgency, difficulties and sheer size of the country, and in order to foster commitment toIFAD’s portfolio, one country portfolio manager will have Nigeria as primary managementresponsibility.

77. IFAD portfolio management in the country will have to be less rigid in applying traditionallending instruments; costs of cooperating-institution supervision charges will have to reflect thereality of field conditions; and IFAD will have to be more willing to work with and be moreresponsive to local initiatives. To accelerate demand-driven and participatory processes, NGOs willact as partners as well as implementers at the field level. The strategy calls for expanding andincreasing work through NGOs and community-based organizations (CBOs), the private sector andlocal communities, while maintaining the traditional government and World Bank partnership toensure implementation facilitation and supervision, respectively.

78. Operational aspects of portfolio management call for improvements in work planning,disbursement, procurement, internal audit and monitoring and evaluation (M&E) of projects. Demandfor capacity-building will increase as the portfolio is expanded and will be determined bymultisectoral, demand-driven community participation processes. The capacities of communities andlocal governments will be strengthened considerably. Development of guidelines, best practices, andoperational manuals will support capacity-building efforts, and will be essential to assisting theGovernment in the transparent procedures that can clarify the role and responsibilities of the states,LGAs and rural communities. Effective M&E systems will place more emphasis on participation ofbeneficiaries and all stakeholders. The Government has recognized this weakness and has taken stepsto overhaul the central M&E unit in the FMARD by merging the Federal Agricultural CoordinationUnit with the Agricultural Projects Monitoring and Evaluation Unit into a new Project CoordinationUnit. Further support to the process is required.

G. Tentative Lending Framework and Rolling Programme of Work

79. To implement IFAD’s strategic thrusts in Nigeria, three programme interventions have beenidentified for financing over the next three to four years, depending on the economic and politicalevolution in the country. They will receive 30-40% of the regional annual lending programme. Recent


15

democratization and the request from the Government for support to the country’s developmentefforts offer a valuable opportunity to IFAD and other donors to urgently address the pressing issuesof poor economic performance and worsening poverty.

Community-Based Rural Development Programme (see Appendix VI)

80. The Government has adopted the community-based demand-driven approaches to ruraldevelopment implemented under the IFAD-supported agricultural and community developmentprojects (ACDPs) in Sokoto and Katsina in northern Nigeria. The development objectives of thesetwo projects, which ended in December 2000, included the involvement of rural communities and thepoor in the design as well as the implementation of field activities. The rural poor, being keystakeholders, are being progressively empowered to demand and receive support services andagricultural technologies, and they have been trained to prioritize rural infrastructure developmentsand effectively maintain the facilities provided. To further promote this approach, the Government hasrequested support from IFAD and other donors in helping achieve the Government’s rural-development and poverty-alleviation objectives.

81. Poverty is widespread in the northern states of Nigeria and there is a very high degree ofhousehold food insecurity among the rural population. Furthermore, in areas of high and increasingpopulation density, farm sizes are shrinking and soil fertility is declining, making it difficult for ruralfamilies to eke out an existence without recourse to seasonal or even permanent urban migration insearch of wage employment.

82. The ACDPs addressed these issues by providing valuable investment opportunities for thedevelopment of improved cropping and livestock production practices. Due to the flexible approachof experimenting with various methodologies for intervention, the outreach of the projects startedrelatively slowly but then accelerated. Despite this growth, there is still considerable room for futureexpansion, both within the existing geographic areas of the ACDPs and in contiguous and non-contiguous areas, thereby capitalizing on the success achieved to date. The LGAs involved are willingto cooperate in a follow-up programme. Moreover, by implementing some suggested improvements,the programme would be able to obtain a high degree of leverage from the capital investments thathave been, or will be, made by other donors/practitioners in potential project areas.

83. The new programme focuses on providing comprehensive support to national community-basedrural development and to demand-driven support services. Initially, the focus will be in northernstates, where IFAD experiences in Sokoto and Katsina will be consolidated and replicated. The focuswill be in those areas most vulnerable to climatic and population pressures or intensive economicactivity. Support will be provided for delivery of advisory and capacity-building services bygovernment, pioneering CBOs, NGOs and the private sector. Areas such as land rehabilitation or soil-erosion control will be supported.

84. It is proposed that this long-term programme will eventually pave the way for and be integratedwith a rapid expansion of investments in sustainable growth of agricultural output and productivity,combined with non-agricultural activities, natural resource management, rural infrastructure andsocial services.

Rural Financial Services Programme

85. This programme will contribute to overcoming one of the major constraints on improvement ofthe well-being of the rural poor by improving access to financial capital for financing income-generating agricultural and off-farm opportunities. Lack of rural financial services limits ruralproducers’ ability to adopt improved technologies, increase their productivity, pay school fees anddeal with emergencies and important social functions. Financial markets in Nigeria are fragmented


16

and are inadequate to the demands of micro and rural finance services operators; hinder sustainablerural development; and restrict entrepreneurship and innovation. As credit-led operations are notsustainable, the provision of appropriately designed financial services – readily accessible andprovided promptly to take advantage of market and investment opportunities – will be promotedthrough a national rural financial services programme.

86. The Micro and Rural Finance Conference in September 2000 in Abuja assembledrepresentatives of government, NGOs, the private sector (including commercial banks), state-ownedbanks, farmers’ organizations, academics and donor agencies.1 Building on the consensus achieved atthe conference, a multi-donor programme would probably include the following elements:

• a legal and regulatory framework: assistance to the development of appropriate policies andprocedures; and capacity-strengthening within the Central Bank of Nigeria and the Ministryof Finance;

• restructuring and cleaning up of balance sheets, privatizing (in some cases) and/orstrengthening publicly owned agricultural and rural financial institutions. This wouldinclude assistance to the planned merger of the NACB and PBN, as well as rationalizationand strengthening of the community banks; and

• capacity-building of selected NGO microfinance institutions, for example establishing afund to finance innovative training and pilot activities (such as linking informalmechanisms – esusu – with more formal institutions).

Natural Resource Management Programme

87. This national programme developed to empower communities to access and manage land,water and common-property resources for socio-economic development and environmental protectionwill contribute to rural poverty alleviation. Environmental degradation and desertification areincreasingly threatening the quality of human life and the production base of the rural economy.Activities addressing desertification in the north and coastal erosion in the south will be supported.

1 The conference was jointly sponsored by USAID, the World Bank, DFID, UNDP, the Ford Foundation

and IFAD.


APPENDIX I

1

COUNTRY DATANIGERIA

Land area (km2 thousand) 1997 1/ 911 GNP per capita (USD) 1998 2/ 300Total population (million) 1998 1/ 120.8 Average annual real rate of growth of GNP per

capita, 1990-98 2/0.4

Population density (people per km2) 1998 1/ 133 Average annual rate of inflation, 1990-98 2/ 38.7Local currency Naira (NGN) Exchange rate: USD 1 = NGN 104.00

Social Indicators Economic IndicatorsPopulation (average annual population growth rate)1980-98 1/

2.9 GDP (USD million) 1998 1/ 41 353

Crude birth rate (per thousand people) 1998 1/ 40 Average annual rate of growth of GDP 1/Crude death rate (per thousand people) 1998 1/ 12 1980-90 1.6Infant mortality rate (per thousand live births) 1998 1/ 76 1990-98 2.6Life expectancy at birth (years) 1998 1/ 53

Sectoral distribution of GDP, 1998 1/Number of rural poor (million) (approximate) 1/ 25.4 % agriculture 31.7Poor as % of total rural population 1/ 36.4 % industry 41Total labour force (million) 1998 1/ 48.3 % manufacturing 4.8Female labour force as % of total, 1998 1/ 36.3 % services 27.3

Education Consumption, 1998 1/Primary school gross enrolment (% of relevant agegroup) 1997 1/

98 General government consumption (as % of GDP) 10.7

Adult literacy rate (% of total population) 1997 3/ 59.5 Private consumption (as % of GDP) 77.5Gross domestic savings (as % of GDP) 11.8

NutritionDaily calorie supply per capita, 1996 3/ 2 609 Balance of Payments (USD million)Prevalence of child malnutrition (height for age % ofchildren under 5) 1992-98 1/

37.7 Merchandise exports, 1998 1/ 8 971

Prevalence of child malnutrition (weight for age % ofchildren under 5) 1992-98 1/

39.1 Merchandise imports, 1998 1/ 9 211

Balance of merchandise trade - 240HealthHealth expenditure, total (as % of GDP) 1990-98 1/ 0.7 Current account balances (USD million)Physicians (per thousand people) 1990-98 1/ 0.19 Before official transfers, 1998 1/ -5 813Percentage population without access to safe water1990-97 3/

51 after official transfers, 1998 1/ -4 244

Percentage population without access to health services1981-92 3/

33 Foreign direct investment, 1998 1/ 1 051

Percentage population without access to sanitation1990-97 3/

59

Government FinanceAgriculture and Food Overall budget surplus/deficit (including grants) (as %

of GDP) 1997 1/n.a.

Food imports as percentage of total merchandiseimports 1998 1/

n.a. Total expenditure (% of GDP) 1997 1/ n.a.

Fertilizer consumption (hundreds of grams per ha ofarable land) 1995-97 1/

56 Total external debt (USD million) 1998 1/ 30 315

Food production index (1989-91=100) 1996-98 1/ 142.5 Present value of debt (as % of GNP) 1998 1/ 76.5Total debt service (% of exports of goods and services)1998 1/

11.2

Land UseArable land as % of land area, 1997 1/ 31 Nominal lending rate of banks, 1998 1/ 20.4Forest area (km2 thousand) 1995 1/ 137.8 Nominal deposit rate of banks, 1998 1/ 7.3Forest area as % of total land area, 1995 1/ 15.1Irrigated land as % of cropland, 1995-97 1/ 0.7

n.a. not available.Figures in italics indicate data that are for years or periods other than those specified.

1/ World Bank, World Development Report, 20002/ World Bank, Atlas, 20003/ UNDP, Human Development Report, 1999

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IX II

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LOGICAL FRAMEWORK

Narrative Summary Objectively verifiable indicators Sources of verification AssumptionsGOAL

To reduce the incidence of povertyand household food insecurity inrural Nigeria (with particularemphasis on the needs of womenand youth).

Per cent increase in per capita GDP of ruraleconomies;

Percentage reduction in rural households below thepoverty line;

Number of employed rural youth and women.

Core welfare indicator survey;FOS poverty profile surveys;National accounts.

Government policy and macroeconomic reformsconducive to rural development;Stable political and macroeconomic environmentexists;Commitment of all stakeholders to participate in ruraldevelopment to improve their living conditions andquality of life.

PURPOSETo develop sustainable ruralinfrastructures and services,agricultural production, naturalresource systems, and off-farmrural enterprises in Nigeria

Percentage of community-based subprojectsimplemented;

Sustained increases in farm and off-farm per capitarural production;

Number of employment opportunities generated forrural women and youth;

Number of viable community-based institutions,management and maintenance structures established.

Quarterly reports;Annual review workshops bybeneficiaries;Programme supervision reports.

Communities have been assisted by a range ofimplementation partners to undertake participatoryidentification, planning implementation, andmonitoring and evaluation of rural development,agricultural as well as natural resource managementactivities;

Local governments and community organizationshave been committed to programme objectives;

Rural communities, especially rural women andyouth accept methods and activities to be employedfor the reduction of poverty and food insecurity.

OUTPUTS Productive capacity (on and off-farm) sustainably increased.

Communities and ruraldevelopment institutions developedand accessible to rural poor.

Agricultural and rural developmentpolicy reforms incorporated intothe policy dialogue.

Database gender disaggregated forthe incidence of rural poverty andhousehold food insecurity.

Percentage of the population in targeted rural areashas adopted integrated approaches to management ofagricultural and natural resources within strengthenedinstitutional framework at the local, state and federallevels;

Enhanced effectiveness and service delivery to, andadoption by, communities;

Enabling policy and regulatory environment relatedto NRM is established to provide incentive for theadoption of sustainable NR and environmentalmanagement.

Quarterly reports;Annual review;Review workshopsby beneficiaries;Programme M&E reports.

Macroeconomic and policy environment is conducivefor economic returns to investments in agriculturaland natural resources management;

Efficiency gains will be sufficient to provideincentives for environmental management andintegrated rural development;

HIV/AIDS and malnutrition are not worsening thesocial and economic environment beyondmanageable levels;

Administrative capacity and institutional set-up isconsistent with a coherent policy framework;

Rural infrastructures (social, economic) andagricultural services (best practices, inputs) have beenput in place and/or improved.

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IX III

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STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT) ANALYSIS

Strengths Weaknesses

• Nigeria is a very large country with over 120 million inhabitants.• Good agricultural land and natural resources.• The world’s seventh largest oil producer.• One of the most urbanized countries in Africa—more than 45% of the

population.• Newly established democratic government committed to economic and social

reforms, and strong interest by state and local government in an efficientmanagement.

• Strong and dynamic private sector, women very active in rural development.• A strong supporter and partner of IFAD.

• Poverty is rampant and social development is at a low level.• Economic and social adjustments have created a disruptive vacuum; the Government is still finding

its way from the past military control modes and large debt-service burden. Nigeria has lagged behindothers in the region in the introduction of new initiatives.

• Corruption is still widespread; poor administrative systems, as well as limited democratic processes inplace make it difficult to gain private-sector confidence.

• Poor physical, social infrastructure and agricultural services, environmental degradation and adiminishing resource base, and gender bias limit the effectiveness of development interventions.

• Civil society and the NGO community are weak, given prolonged military government and the lack ofdemocratic processes. Private-sector development does not depend only on the macroeconomic andpolicy environment, but greater political and social stability is required.

Opportunities Threats

• The Government places poverty reduction and revitalization of agriculture andthe fight against corruption as principal strategic objectives.

• The rural poor and rural women of Nigeria have high expectations forgovernment efforts towards gender balanced development and improvement inthe economy as a democracy dividend.

• Fiscal reforms are already underway that give the states and LGAs more powerto raise revenue. Rural financial market reforms are being promoted and sectoralpolicy and a regulatory framework being developed.

• Agriculture is pivotal to rural development. Despite years of neglect anddeclining terms of trade that have decimated the traditional exports of cocoa andpalm oil, Nigeria remains one of the world’s most important producers ofcassava and the second largest of palm kernel. It is Africa’s largest agriculturalproducer.

• Political instability in the Delta region and religious and ethnic violence in the northern states couldcompromise implementation of reforms and delivery of the much-needed economic infrastructure fordevelopment.

• The private sector perpetuates corruptive practices.• With weak state and local governments, civil society and CBOs do not continue to support the

government strategy for poverty reduction because current efforts to improve governance do not takeroot and corruption is not reduced.

• Overcoming environmental degradation, soil and coastal erosion, and the overwhelming developmentchallenge could take a long time and result in reduced community interest.

• Increasing HIV/AIDS and malnutrition consequences affect the social, productive and economicsectors, reducing the impact of development support.

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IX IV

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4

IFAD’S CORPORATE THRUSTS AS RELATED TO THE PROPOSED NIGERIA PROGRAMME

Federal Government of NigeriaDevelopment Programmes

IFAD Corporate Thrusts West and Central Africa Regional OperatingStrategy Proposed Programmes in Nigeria

Nigeria’s economic and social developmentfocuses on economic recovery, reducingrural poverty and increasing employmentfor women and youth.

Issues: The future depends on the mannerand speed with which the Government canovercome its development challenges.

The key assumptions are:

That a stable political and macroeconomicenvironment exists. That the Governmentpursues policy reforms in particular goodgovernance. The devolution ofresponsibilities to the states, LGAs andCBOs are promoted and instituted.

State, LGAs and CBOs are committed andhave the capacity to support theGovernment’s development focus.Communities respond to assistance providedby states, LGAs, NGOs and civil-societyorganizations to initiate, design, implementand monitor their own local development.

Intergovernmental transfers and reformsresult in more efficient, transparent andequitable rural development institutions.Community management of naturalresources is effective in arrestingdesertification, degradation and erosion ofthe land and coastal environment.

Thrust A:Support to projects andprogrammes driven bybeneficiary participation inboth design andimplementation.

Thrust B:Effective portfoliomanagement.

Thrust C:Ensuring an effectivepresence and impact bymaintaining a crediblelevel of lending andexpanding IFAD’soutreach.

Thrust D:Expansion and use ofknowledge networks forthe development of therural poor.

Thrust E:Efficient human resourceand management system.

The WCA Regional Operating Strategy for 2001-2003 places highest priority on initiatives in thefollowing areas:

(i) Improvement of food security, with particularemphasis on the needs of women and youth;

(ii) Development of rural financial services thatreach isolated populations, without previous accessto financial markets, and that are well-integratedinto the national financial-sector framework;

(iii) Natural resource management and theenvironment, with an emphasis on supporting anti-desertification and coastal and riverine erosioninitiatives; and

(iv) Capacity-building in support of decentralizeddecision-making processes for participatory ruraldevelopment.

To achieve these objectives, the strategy willrequire gender-differentiated target-groupparticipation in defining project objectives andpriority activities. The use of local knowledge andexperience will be maximized.

Strengthened collaboration with governments, civilsociety and other donors will be pursued to ensurethat interventions fit within overall economic andsectoral development strategies.

IFAD’s proposed support to the National Strategy forRural Poverty Reduction, good governance, andrevitalization of rural-sector growth is based on thefollowing three national programmes.

First Programme:Support to a community-based, demand-driven ruraldevelopment programme that will rationalize theinvolvement of state Government’s rural developmentagencies and empower rural communities to demand anduse rural infrastructure, social services and agriculturaltechnologies and to manage their own development.

Second Programme:Rural Financial Development. This national programme willcontribute to overcoming one of the major constraints to theimprovement of the wellbeing of the rural poor byimproving access to financial capital for income-generating,agricultural and off-farm productive opportunities in ruralareas.

Third Programme:A national programme whereby communities areempowered to access and manage land, water and common-property resources for socio-economic development andenvironmental protection. Focus will be in areas mostvulnerable to climatic and human pressures or intensiveeconomic activities. Areas that suffer from desertification inthe north or coastal erosion in the south will also besupported.


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ACTIVITIES OF OTHER PARTNERS IN DEVELOPMENT – ONGOING ANDPLANNED

The World Bank

1. The World Bank has had a substantial presence in Nigerian agriculture. Recent projects havesupported research, extension, technology development and simple pump irrigation systems forsmallholders farming in lowlands called fadamas. Outside the agricultural sector, the thrust of theWorld Bank has been on primary education, health and population. The focus on poverty alleviationand rural development is a more recent effort whose strategies are yet to be finalized. The outcome ofthe World Bank’s agricultural portfolio is summarized below:

2. The agricultural development projects (ADPs), created with World Bank assistance, started inthe mid-1970s as enclave “integrated area development” projects. The 36 states each have an ADPoperating a unified agricultural extension service. After project completion, very limited funding hasbeen allocated to operations and qualified local researchers and extension specialists have receivedfew incentives to maintain existing work programmes. Also, for support services, the sustainability offrequent village visits by the large number of village extension agents in the training-and-visitextension system is questionable. The Livestock II project (1987-1995) aimed to raise livestockproductivity and assist pastoralists in settling on grazing reserves. Implementation faced severalproblems, including delays in procurement, staff recruitment, take up of credit by farmers andunhealthy institutional relationships with ADPs. The Forestry II project (1988-1996) helpedstrengthen the policy institutional structure of the sector, stabilize soil conditions in threatened areasmainly in the north of the country, and increase the supply of industrial wood. The lessons were thatfuture interventions need to clarify the roles of the public and private sectors, and incentives have tobe provided for meaningful private investment. The Tree Crops Project (1989-1996), which aimed toincrease oil palm and rubber production, faced serious implementation problems. A large part of theloan had to be cancelled because of delays in the take-off of the credit component (involvingparticipating banks) as well as procurement and management problems. The EnvironmentalManagement Project (1993-1998) helped strengthen environmental organizations in addressingpriority environmental issues. The National Seed and Quarantine Project (1990-1996) helped reformseed policy and institutions, and increased the participation of the private sector and researchinstitutions in commercial seed and breeder seed production, respectively. Public-sector agencies,including the ADPs, have not, however, completely ceased direct seed production. The NationalAgricultural Research Project (1992-1999) provided assistance to improve the institutional frameworkand management of research and research-extension linkages. A research strategy plan has beendeveloped as well as a number of improved varieties of cereals, legumes, rubber and fish, amongothers. Assistance was also given to the ADPs for technology dissemination. The NationalAgricultural Technology Support Project (1993-1999) assisted the ADPs in adapting anddisseminating agricultural technologies. A major achievement is the unification of extension services,but the challenge is the sustainability of these services. The National Fadama Development Project(1993-1999) has helped accelerate small-scale irrigation development, in spite of delays in pumpprocurement and well-drilling in some states. The implementation experience demonstrates thepossibility of reducing public-sector investments and the need for clearer definition of the roles of thepublic and private sector in the provision of irrigation facilities, improved market access andenvironmental sustainability, including the resolution of farmer-pastoralist conflicts.

3. The World Bank, with other partners, is currently supporting the government in analytical workfor sector strategy and on rural finance issues. It is also preparing a follow-up Fadama II project and aDecentralized Technology Development and Dissemination programme, a Community-Based PovertyReduction Programme, and a Microwatershed and Environmental Management Programme. TheWorld Bank ex-post audit conducted recently on six projects in Nigeria has uncovered instances ofsignificant irregularities in procurement in three projects, all in agriculture. Concurrent with the ex-


APPENDIX V

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post audit, an investigation ordered by the World Bank’s Oversight Committee on Fraud and Anti-Corruption was conducted of the three agricultural projects. The results of both the audit andinvestigation have been discussed with the Government. The latter has been very responsive,deploying very high officers in the police and the National Security service to continue theinvestigation, using evidence supplied by the World Bank. The Minister of Agriculture has also set upa task force to study the report of the audits. A mission by a World Bank procurement expert inOctober 1999 agreed on a draft Action Plan with the task force for presentation to the Government.Presentation of new agricultural projects to the World Bank Board will be contingent on satisfactoryprogress by the Government in implementing the changes agreed in the Action Plan.

United Nations Development Programme (UNDP)

4. UNDP assistance has covered projects on agricultural statistics, extension, seed production,livestock and fisheries development, range management, rural water supply and sanitation, post-harvest food loss prevention, cooperatives, promotion of rural employment and off-farm activities,and participatory approaches. The 5th Country Programme (1998-2001), which is expected to costUSD 16.8 million aims at reducing poverty among the rural poor by improving access to productiveassets and services, reducing production constraints of women and supporting land and environmentalmanagement. The thrust of UNDP activities is focused on three programmes:

• Sustainable Agriculture, Environment and Rural Development Programme aims atsupporting national efforts in attaining food security and environmental sustainability.

• National Management of Socio-Economic Development Programme aims at supportinggovernment efforts to tackle a number of management problems that have compounded thedevelopment process in the country.

• Social Development Programme aims at integrated support of national programmes onhealth, education and gender in development.

European Union (EU)

5. The EU has financed projects for environmental conservation and forestry, tea and oil palmproduction, integrated community development and manpower training. Future funding is expected tofocus on the Delta region in the context of poverty reduction and environmental management.

USAID, DFID, French Development Agency

6. USAID is currently funding a series of studies on technology development and transfer,microenterprise development and private sector/agribusiness, and the proposed rural finance seminarsupported by USAID and DFID. DFID is currently involved in the preparation of the rural financeseminar, participation in the poverty-reduction programme and natural resource management in theDelta region. AFD will soon establish its offices in Abuja and is contemplating support for poverty-reduction programmes and participation in the rural finance seminar.

Food and Agriculture Organization of the United Nations (FAO)

7. FAO had several small projects in the area of food security, marketing and education. Recently,the Government has signed a unilateral trust fund agreement by which it provided FAO withUSD 34 million. FAO has begun with an irrigation-sector review and an assessment of 11 dams.Additional work, not yet defined, is envisaged in the food-security area.


APPENDIX VI

7

IMPACT ASSESSMENT OF KATSINA AND SOKOTO STATES AGRICULTURALAND COMMUNITY DEVELOPMENT PROJECTS

1. The IFAD-assisted Katsina and Sokoto States Agricultural and Community Developmentprojects became operational in 1994 and 1995, respectively. Both projects are due to close in June2001. Their objective has been to improve resource management through participatory processes,mainly in mobilization of groups and joint action against the land degradation that is threatening theagricultural productivity of the northern states. Economic benefits were to be consolidated bymeasures to improve returns from farming, and by a range of investments in village infrastructure andin off-farm income-generating activities for groups of poor and landless households, with emphasis onhouseholds headed by women. The Federal Government and participating state governments highlyvalue the pioneering participatory and integrated approach supported by the Katsina and Sokotoprojects and have expressed strong interest in applying the underlying principles more extensively. Toprovide government, IFAD and other interested parties, with an analysis that could be used to informplanning of a framework for future investment in community-based rural development in Nigeria, arapid participatory impact assessment of the Katsina and Sokoto projects was completed by PCU inOctober 2000. The impact assessment and an FAO/IFAD pre-formulation mission in November 2000confirmed that the projects have provided quantifiable economic and social benefits as well assignificant qualitative improvements in the well-being of the rural poor who participated in theprojects:

• Incomes and food security of beneficiaries improved, though higher incomes did notnecessarily translate into improvement in poverty indicators. The projects raised awarenessand demonstrated the importance of local perceptions and attitudes. To some extent,community organizations and interest groups have been empowered to take responsibilityin demanding, receiving and maintaining development-supported initiatives.

• Environmental degradation is being reversed by the communities and farmers directlyserved by the projects. Their limited water resources are being used more effectively. Andthe vulnerability of the poor to the hazards associated with continued exploitation ofcommon property and diminishing natural resources has been reduced.

• Village-level infrastructure such as feeder roads facilitated access to rural markets forfarm outputs and inputs. Improved village water supply and sanitation reduced theincidence of water-borne diseases and increased economic productivity.

• Development of a local institutional framework was initiated, building on thedecentralized administrative system and favouring partnerships among implementingagencies, local governments and communities. This has facilitated demand and access toresources by the poor.

2. The impact assessment and the FAO/IFAD pre-formulation mission also brought out a numberof lessons in the areas of community development, natural resource management (NRM) andinstitutional performance:

Community Development

• Building capacity and sustainability of grass-roots institutions requires a substantial, long-term commitment. The number of beneficiaries reached was small relative to the overallrural population and had limited impact on poverty in the participating states as a whole.

• In general, new groups that formed for the purpose of accessing assistance were notcohesive. Working with existing common-interest groups tended to be more sustainable.


APPENDIX VI

8

• Greater attention to including the poorest is required. Over-reliance on existing socialstructures can exclude women from decision-making. Insufficient attention to genderanalysis/ mainstreaming leads to marginalization of women.

• High priority needs to be given to non-formal education in order to address the lack of asanitation and maintenance culture, the spread of HIV/AIDS and spiralling populationgrowth.

Natural Resource Management

• The area covered by the improved NRM activities supported by the projects was a smallpercentage of the total area affected by land degradation in the project areas and in eachstate.

• It is widely perceived that the Sahara advancing southwards threatens agriculturalproduction in the northern states of Nigeria. In reality, land degradation is caused by on-farm and rangeland degradation. Individual farmers and communities need support toidentify site-specific solutions.

• The primary limiting factor is soil moisture, exacerbated by crusting of the soil surface,which leads to poor rainfall infiltration and high rates of surface runoff. Greater emphasis isneeded on improving rainfall infiltration through improved tillage practices.

• Most of the farming systems suffer from a negative nutrient balance. Little attention hasbeen paid to addressing soil-fertility decline through more efficient use of manure andinorganic fertilizers, improved crop-residue management and the growing of nitrogen-fixing crops, shrubs and trees.

• Emphasis has been on delivering packages to achieve targets rather than understanding andpromoting the principles behind the package.

Institutional Performance

• Establishment of enclave project management units with parallel implementationarrangements and high dependence on external financing is not sustainable due to lack offull integration within the existing institutional and domestic financing framework.

• In the absence of a coherent policy, strategic and institutional framework for ruraldevelopment, there was little or no synergy with other development interventions. Planningand the provision of rural development services at all three levels of government ispredominantly top-down, supply-driven and compartmentalized. There is a need foragreement on a framework that will be more responsive and relevant to the social andeconomic priorities of the rural poor.

• Financial management and supervision and technical guidance of field staff were poor.Inefficient management led to delayed procurement and implementation. Service providershave to be made more accountable to their clients.

• Service providers and clients need to be better educated in problem analysis andresolutions, so as to plan, implement, monitor and evaluate activities in a moreparticipatory and effective manner.


APPENDIX VI

9

• Poor credit recovery establishes bad habits and poses problems of sustainability.Government agencies should not deliver and collect credit or assume all of the risk;however, they can facilitate access to credit. Promotion of a savings culture, group liability,capacity-building of groups and feasibility analysis of enterprises are required to make ruralfinance more sustainable.

• Supervision missions gave priority attention to financial management issues. Projectimplementers received inadequate guidance in participatory processes and innovativeapproaches to community development, natural resource management and promotion ofrural enterprises. Greater attention should be given to capacity-building in such approachesat all levels. Since quality experience in these approaches is limited in both the public andprivate/NGO sectors in Nigeria, recourse to some short-term international assistance andexposure of key staff to best practices in other countries is necessary.

Proposed New Programme: Programme Area and Rural Poverty

3. The Programme Area. The proposals for a new programme build on lessons learned from theKatsina and Sokoto projects. The programme would be launched in up to eight far-northern states: thenorth-western states of Katsina, Kano, Kebbi, Jigawa, Sokoto and Zamfara, and the north-easternstates of Borno and Yobe. These states cover about 286 500 km2, 31% of the national territory. Theirtotal population was estimated at 29 million in 2000, increasing by 2.5% annually. About two thirds isrural, some 20 million people or 3.5 million households. Average population density is nearly100/km2, ranging from over 600/km2 in the heavily settled zones of the northwest to less than 40/km2

in the sparsely populated northeast.

4. Virtually all rural people in the programme area depend on agriculture. The climate is semi-aridwith an average of 500-800mm of rain falling from late May to early October. In the high-population-density areas, almost no grazing is left. Animal feeding is based on crop residues. In the lower-population-density areas, the availability of grazing attracts large numbers of nomadic pastoralists.Increasing the intensity of farming and fadama development has resulted in frequent conflictsbetween farmers and herders. At the same time, land degradation is reducing the capacity of thenatural resources to sustain agricultural production. Poor land-use management has adversely affectedsoil properties (reduced organic matter content, declining nutrient levels, loss of topsoil structure andreduced soil moisture availability), which has increased vulnerability to accelerated soil loss throughwater and wind erosion. Land clearing for cultivation, overgrazing of rangelands and unsustainableexploitation of trees, shrubs and grasses for fuel, shelter and forage has reduced the quantity andquality of the natural biomass and ground cover. Similarly, the quantity and quality of surface andground-water resources have declined, as poor land-use practices have increased the quantity ofrainfall lost as surface runoff. Expansion of irrigated crop production in the fadama lands has led to alowering of the water table in some areas. Loss of protective vegetative cover is also believed to havean adverse effect on microclimatic conditions. In particular, higher surface soil temperatures andmore-rapid loss of moisture from the topsoil through evaporation have increased risk of crop failure.

5. Rural Poverty. The states in the programme area are among the poorest in Nigeria. Lifeexpectancy at birth is around 50 years. Infant mortality is about 100 per 1000 live births, and under-five mortality 230 per 1000 live births. Over two thirds of the rural population in these states livesbelow the dollar-a-day poverty line. In addition to low incomes, many factors contribute to ruralpoverty:

• At least two thirds of the rural population does not have access to safe water.

• Over half of all children are undernourished.


APPENDIX VI

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• HIV/AIDS affects at least 5% of the rural population and is on the increase.

• The poor tend to be located in isolated villages with limited access, and head loading is themost common means of transporting goods and produce. 70% of rural roads are in poorcondition. Marketing constraints reduce incentives to produce surpluses and adoptimproved technologies.

• Poverty is associated with cropping of small areas, mainly food crops, using hand tools.Median farm size is about 4 ha in the northeast and 1 ha in the more-densely populatednorthwest. Where economic trees are owned, they are often pledged as security againstdebts.

• Poor households have no connections with influential persons or urban opportunities. Thepoor depend largely on income-generating activities with low returns, and have little or noaccess to savings, credit and community infrastructures. They own few or no valuableassets.

• Up to 90% of adults are illiterate.

• Women play a significant role in the rural economy, but share a higher burden of povertybecause of their vulnerable socio-economic position and low levels of education comparedto men. Of female-headed households 60% are poor, more than double the level estimatedin 1980.

• Poverty and also rising violence have helped unravel the social fabric.

Policy and Institutional Framework

6. The military government imposed a centralized form of development, but for ease ofadministration did not disband the decentralized mode of governance involving state and localgovernments. This dualism has led to parallel institutional support services for rural development. Theoverlapping roles of rural institutions have been compounded by promotion by external developmentagencies of enclave project management units, which have often become institutionalized after projecttermination but have had problems in securing adequate government financing to sustain theiroperations. In particular, the ADPs have achieved a national dimension, and in some states havebecome legally constituted agricultural and rural development authorities (ARDAs) with a state-widemandate. In each state the ADPs/ARDAs have overlapping roles with the Ministry of Agriculture,financing institutions, and local government administrations. This has led to duplication of efforts,wasteful use of resources and conflicts in policy approaches

7. While the various agricultural and rural development institutions have had some positiveimpact on agricultural production and rural poverty alleviation, their outreach activities have beenaccessed mainly by better-off rural families, estimated at not more than 25% of the small-to-medium-scale farmers. These farmers are generally producing substantial marketable surpluses.

8. Except for the Katsina and Sokoto projects, no other institutions have emphasized sustainableagricultural development, poverty alleviation through support to diverse economic activities, andpromotion of collaboration among public services, the private sector, NGOs and CBOs.

9. The new federal government policy is to disengage from commercial production activities andfocus on technical support services to enhance rural productivity. Reorientation of rural developmentinstitutions to respond to this policy will need to be assured. In practice, this will translate into


APPENDIX VI

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emphasizing organization and training of producer groups in order to better access services and inputsfrom the market; enhancing management capacity of rural communities and producers to makeinformed decisions and undertake desired socio-economic activities; and providing credit supportservices to mitigate some of the risk of financial intermediaries and rural farming, rather thanundertaking credit operations by themselves.

Public Spending for Rural Development

10. With the return to a civilian administration and the tripling of oil revenues, resource flows tostate and local government levels has increased significantly. In 2000, the statutory allocation fromthe federation account after deductions amounted to NGN 58.5 billion (USD 585 million) to the eightstate governments and NGN 42.5 billion (USD 425 million) to the 204 local governments in theproposed programme area, a total of NGN 101 billion (USD 1.0 billion). On average each statereceived NGN 7.3 billion (USD 73 million) and each local government NGN 208 million(USD 2.1 million). Taking into account receipts from value added tax, internally generated revenues,grants, loans, and the stabilization account, total public revenues accumulated by the eight stategovernments and their local governments amounted to at least NGN 120 billion (USD 1.2 billion). In2001, this figure is likely to exceed NGN 150 billion1 (USD 1.5 billion) or an average of NGN 18.8billion (USD 188 million) per state and its constituent local governments.

11. Resource allocations at state and local government levels are driven by a number ofimperatives. Stated aims give priority to reducing poverty, particularly rural poverty, and the ruralpoor comprise the majority of constituents to whom the governments will be held accountable at thenext elections. On the other hand, powerful countervailing forces prevent resources reaching themajority of the rural poor, including inappropriate government interventions, inconsistent policies, thehigh cost of maintaining large and inefficient bureaucracies and the perceived political costs ofdownsizing, lobbying by elites, inadequate participation of the poor in planning, weak financialmanagement and implementation capacity of service providers, and rent seeking. Each level ofgovernment is searching for a strategy and processes that will result in near-term impact on poverty.Rationalization and reorientation of the current supply-driven provision of services in line withdecentralized governance and the federal government’s emerging rural development strategy andempowerment of the poor to demand and obtain services are key to a more-efficient and responsiveuse of resources.

Relevant Development Partner Initiatives

12. A number of development-partner-supported interventions are in the pipeline. The World Bankis focusing on a five-year community-based poverty reduction project covering 12 states includingKebbi, Yobe and Zamfara. Total estimated cost is USD 96 million, with the World Bank and ADBcontributing 90%, the federal and state governments 4% and communities 6%. No funding is requiredfrom local governments. The allocation per state is about USD 1 million per year, equivalent to halfthe revenues of one local government. The project has two components: capacity-building managedby the National Planning Commission, including policy formulation and capacity-building at state andlocal government levels; and community-based initiatives in basic social and economic infrastructure.An autonomous board and poverty alleviation agency is being established in each state to oversee andmanage implementation, with staff competitively recruited from the private sector. Following anawareness-raising campaign, communities will be expected to submit subproject proposals forappraisal by the agency. A poverty-mapping exercise is being conducted to facilitate selection of

1 By far the most important source of total revenues is oil exports. While oil prices have declined from recent

highs, the Federal Government’s revenue projections for 2001 are based on a conservative price estimate ofUSD 18/barrel compared to current prices of around USD 25/barrel.


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poorer village areas in each local government, but a strategy for ensuring inclusion of the poorergroups within communities has not been developed. Relevant sector ministries and local governmentswill participate in the appraisals and be provided with some training in community mobilization. Theceiling for each village area is about USD 40 000 annually, equivalent to USD 25 per household. Onthis basis, the maximum coverage will be less than 10% of the village areas in each state2. Eachcommunity will be expected to manage its own account and procurement of materials and services,including contracting of NGO/private service providers. In most poor communities there is little or nocapacity to effectively manage accounts and procurement.

13. Using a community demand-driven approach as a platform, the World Bank also aims tofinance small-scale irrigation, decentralized technology development and dissemination,microwatershed and environmental management, and rural microfinance. ADB, DFID, IFAD andUSAID are also contemplating support for rural finance and have started working with theGovernment and the World Bank on a policy and institutional framework that could guide allassistance to the rural finance sector.

14. Since 1997, DFID has supported capacity-building of NGOs. In line with DFID’s new countrystrategy, which aims at improving governance, the project’s emphasis is shifting to building thecapacity of community-based organizations to advocate for and demand better services. As part of thisstrategy DFID aims to support strategy development and service provision in four focal states,including Jigawa in the north. In Jigawa the focus will be mainly on facilitating coordination ofexisting institutions and on conflict resolution among competing natural resource users – farmers,pastoralists and fishermen – in the wetlands.

15. Clearly, numerous uncoordinated government and external initiatives are converging on ruralcommunities. Probable external financing is small in terms of reaching the majority of the rural poorand in comparison with the high level of funds available to the states and local governments. Thechallenge before government and its partners is to maximize synergy and impact by buildingconsensus at all levels on the basic principles that should guide development expenditure and theimplementation-support framework. The work currently underway by the Federal Government on arural development strategy could provide a broad framework within which support for rural povertyalleviation could be coordinated. On the other hand, each state and local government now has theopportunity to prepare, finance and implement its own strategy. It follows that development partnerswill need to focus more on dialogue and collaboration at the state and lower levels.

The Programme

16. Objectives and Approach. The development objective will be to improve the livelihoods andliving conditions of rural communities in the programme area, with special emphasis on women andother vulnerable groups. This objective will be pursued by empowerment of the rural poor to criticallyanalyse their constraints, opportunities and support requirements, and to increasingly manage theirown development; and by supporting institutionalization of the policies, processes and capacity-building through which public resources and service providers become more relevant and responsiveto the rural poor.

2 On average, each of the northern states comprises about 280 village areas.


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17. Guiding Principles. The following list of general principles is proposed to underpinprogramme design:

• Strive for stakeholder consensus in each state and local government on a commonframework, principles and implementation support procedures that will guide all financingof community-based rural development, thereby eliminating the existing piecemeal patternof support with its attendant duplication and fragmentation of effort.

• Include stakeholder representation at all levels of decision-making.

• Put in place a strategy to encourage full participation by women, the landless and ruralpoor.

• Promote reorganization rural development institutions to avoid duplication of services andcreate a management culture and capacity that can enhance response to client demands.

• Discourage multiplicity of rural development agencies and encourage channelling ofassistance through established institutional mechanisms at the local government level.

• Work to dispel the dependency syndrome of staff and rural communities and to enhanceself-reliance for sustainable development.

• Discourage supply-driven development that uses unsustainable subsidized or free supply ofgoods and services.

• State-level government agencies increasingly concentrate on policy-making, technicalassistance to local governments, supervision, monitoring and evaluation.

• Further decentralization of responsibility for the management and implementation ofservices to local governments and communities.

• Develop management capacity in governmental and non-governmental service providers.

• Where advantageous, promote and contract implementation and technical assistance toprivate/NGO service providers. This will promote competition and open up the programmeto a broader range of service providers.

• Support community capacity to prepare simple broad-based plans that can be used to tapand integrate diverse sources of assistance.

• Communities largely determine the allocation of resources. This will ensure communityownership, thereby increasing the relevance and accountability of services.

• Non-formal education and training for sustainable livelihoods as a core aspect of promotingempowerment of the rural poor to make informed decisions about their own developmentand the delivery of supporting services.

• Local governments and communities pay a gradually increasing part of the cost of support,thereby increasing ownership. Over time, this will move the programme in the direction ofgreater sustainability.


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18. These general principles will need to be further developed by stakeholders includingarticulation of more-specific principles for different types of intervention.

19. Target Groups and Targeting Strategy. The overwhelming majority of rural inhabitants arepoor and will constitute the target group. Nevertheless, the benefits of past interventions have rarelyreached the extremely poor. Special attention will be paid to stratifying the poor, gender analysis andto ensure that the extremely poor are included in planning and targeted with appropriate support.Women are among the most vulnerable groups. Experience in diverse countries shows that supporttargeted to women is more likely to benefit the family as a whole.

20. Components. IFAD’s support for the programme will have two main orientations. First, it willbe process-oriented and will contribute to development of the enabling institutional, financing andpolicy framework for community-based rural development. Second, it will be activity-based,supporting interventions demanded by the rural poor, especially women and other vulnerable groups.These orientations will be supported through two flexible financing mechanisms: a capacity buildingfund and a community development fund.

Capacity Building Fund

21. This fund will support two main types of activities:

• As an entry point for planning, service provision, capacity-building and skill development,the fund will support awareness-raising, participatory needs assessments, group andcommunity organization development, basic non-formal education and training (functionalliteracy, numeracy, HIV/AIDS prevention) and monitoring and evaluation.

• Facilitation of the policy development to rationalize and decentralize public ruraldevelopment institutions, and strengthening of their capacities through training to identifyand respond to demand for services from rural communities on a sustainable basis. Eligibleactivities could include support for defining the roles and commensurate restructuring ofexisting rural development institutions, including decentralizing services and lower leveltechnical staff to the local governments while maintaining middle and higher leveltechnical staff at the state level for technical assistance, supervision, monitoring andcoordination; reviewing departmental arrangements of the agricultural and ruraldevelopment agencies with a view to improving operational efficiencies; strengthening thecapability of service providers through intensive and structured training needed to respondto the challenges faced by and demand of rural communities, producers and theirorganizations, and rehabilitation of training centres; preparation of technical guidelines,training manuals and other training/promotional materials.

Community Development Fund

22. It is anticipated that this fund will support three main types of activity in response to demandarising from the participatory needs assessment and planning process:

• Sustainable Agricultural Development. Where communities have undertaken aparticipatory assessment of their land management problems and farm production, it isanticipated that support will be provided for follow up activities focused on assisting farmhouseholds to investigate, develop, and adopt several locally appropriate, improved landhusbandry practices within their individual farm holdings (both upland and wetland),communal grazing and woodland areas, and settlement areas, including practices aimed atbetter integration and intensification of crop and livestock production and resolution ofconflicts between farmers and herders.


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• Rural Enterprise Development and Credit Support Services. Assistance in identifyingthe constraints and needs of interested enterprise groups and formulation of developmentplans, including assistance in group formation, market analysis and linkages and in theassessment of financial viability, organizational sustainability and training and creditrequirements; facilitating linkages between rural enterprises, including farmer groups, andfinancial institutions; provision of technical assistance and capacity-building for thegrouping and transformation of traditional savings and credit groups into registeredfinancial associations having a greater financial mobilization capacity; and identificationand implementation of mechanisms for the inclusion of the poorest into viable enterprises.

• Community Infrastructure. Requirements are expected to include safe water supplies,water for livestock, irrigation, community access and transport, health facilities, educationfacilities, housing for health and education workers, on-farm storage and processing; and atthe multi-village level, priorities may include inter-community access roads, health, andoff-farm storage and processing facilities. In addition, support will be provided to ensurecommunity commitment and capacity in operation and maintenance.

23. Costs and Financing. Given the process and demand-driven approach, the existing financingof development services and the potential for making more-effective use of the high level of existingpublic expenditure, indicative costs for the capacity-building component will be prepared, as well as atypology of models combining a range of expected demands across a village area as a basis for anindicative budget ceiling for each community. Assumptions will also be made in order to demonstratehow the programme might unfold. Total cost, however, will depend on absorption capacity and theextent to which the process is adopted and financed by the three tiers of government, communities andother development partners. IFAD’s contribution will amount to about USD 30 million over five tosix years and will be onlent by the Federal Government to the participating states. It is intended tolaunch a process approach and catalyse better use of available domestic resources.

24. Unlike in past projects, it is envisaged that the IFAD contribution will gradually become only asmall part of the overall resource envelope accessed by the programme.

Implementation Arrangements

25. Institutional Responsibilities. At the federal level the Ministry of Finance will be responsiblefor managing the IFAD USD-denominated special account, checking budgets and plans to ensure thatcounterpart contributions are in line with the loan agreement, transferring funds to subsidiary accountsin the states, expenditure control, and follow up of the annual audit requirement. The NationalPlanning Commission will be responsible for coordinating policy dialogue and monitoring. The IFADunit under FMARD’s Project Coordinating Unit will be responsible for facilitating provision oftechnical assistance and supervision missions by the World Bank (IFAD’s cooperating institution).

26. At the state level, the Ministry of Finance will be responsible for coordinating resource flows tothe implementing state-level institutions. As with the World Bank-supported Community PovertyReduction Project, one option will be for each participating state to operate its own USD-denominatedspecial account. In that case, funds will flow directly from IFAD to the states. The ADPs/ARDAs willoperate subsidiary project accounts for the provision of technical assistance and capacity-building ofstate and local government service providers. The Ministry of Local Government will also manage aproject account to channel resource flows to participating local governments and communities and forcoordination of planning, monitoring and auditing of performance at the local government level.


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27. Participating local governments will be responsible for coordinating community-level needsassessments, planning, budgeting, mobilization of matching resources, provision and procurement ofservices in response to demand, and monitoring of activities.

28. Participating communities will be responsible for identifying their priorities, organizing labourand matching funds, implementing community-level activities, establishing and operating an accountinto which they will deposit their contributions for operation and maintenance of infrastructure, andmonitoring and evaluation of activities and service providers.

29. Initial Intervention Phase. At the start of the programme, national- and state-level communitydevelopment orientation and awareness workshops will be organized. Upon request from interestedlocal governments a participatory community-development training needs assessment will beorganized and they will be helped to develop proposals requesting assistance for whatever trainingmay be necessary. However, a special effort will be made to target disadvantaged local governments.A neutral committee will screen proposals and select three local governments in each state ascommunity “incubation” centres. Each of these centres will be used as incubators for two other localgovernments. Multi-disciplinary teams from the incubator and two other local governments, identifiedduring the training needs assessment, will be trained in the incubator local government inparticipatory needs assessment, planning and M&E, starting with a small number of communities.Each subsequent year, the trained local government teams will “incubate and hatch” two other trainedlocal government teams. In this way the planning process will gradually work in parallel andhorizontal movement across the eight states.

Documents

Distribution: Restricted Original: English Agenda Item 12 ... · Original: English Agenda Item 12 English IFAD INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT Executive Board –