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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 54486-KE
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 23.8 MILLION
(US$35.0 MILLION EQUIVALENT)
AND ON A
PROPOSED GRANT FROM THE
GLOBAL ENVIRONMENT FACILITY TRUST FUND
IN THE AMOUNT OF US$5.0 MILLION
TO THE
REPUBLIC OF KENYA
FOR A
COASTAL DEVELOPMENT PROJECT
June 30, 2010
Environment and Natural Resources
Kenya Country Department
Africa Region
This document has as restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents my not otherwise be disclosed without World
Bank authorization.
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CURRENCY EQUIVALENTS
(Exchange Rate Effective May 31, 2010)
Currency Unit = Kenya Shillings (Kshs)
Kshs75 = US$1
US$1.48945 = SDR1
FISCAL YEAR
July 1 – June 30
ABBREVIATIONS AND ACRONYMS
AfDB African Development Bank LL Long-liner
ALRMP Arid Lands Resource Management Project LME Large Marine Ecosystem
ASCLME Agulhas and Somali Current Large Marine
Ecosystem
M&E Monitoring and Evaluation
AU African Union MCS Monitoring, control and surveillance
BDS Business Development Services MDG Millennium Development Goal
BMU Beach Management Unit MENR Ministry of Environment and Natural
Resources
CADC Coastal Area Development Committee MoFD Ministry of Fisheries Development
CAS Country Assistance Strategy MOF Ministry of Finance
CBA Cost-Benefit Analysis MOU Memorandum of Understanding
CBD Convention on Biodiversity MPA Marine Protected Area
CBO Community Based Organization MSME Micro, Medium Small and Medium
Micro Enterprises
CDA Coast Development Authority NCB National Competitive Bidding
CDD Community Driven Development NCCRS National Climate Change Response
Strategy
CFAs Community Forest Associations NDF Nordic Development Fund
CPIA Country Policy and Institutional Assessment NEMA National Environment Management
Authority
CPS Country Partnership Strategy NGOs Non-governmental Organizations
CQ Consultants Qualifications NPV Net Present Value
CVF Coastal Village Fund NRM Natural Resource Management
DSG District Steering Group NPSC
NWFP
National Project Steering Committee
Non-Wood Forests Product
DWFN Distant Water Fishing Nations PC Project Coordinator
EA Environmental Audit PCM Project Component Manager
EEZ Exclusive Economic Zone PCU Project Coordination Unit
EIA Environmental Impact Assessment PDO Project Development Objective
EMCA Environmental Management and Coordination Act PES Payment for Environmental Services
EMP Environmental Management Plan PFM Participatory Forest Management
EOP End of Project PHRD Policy and Human Resources
Development Grant
EPZA Kenya Export Processing Zones Authority PIM Project Implementation Manual
ERS Economic Recovery Strategy PMT Project Management Team
ESMF Environmental and Social Management Framework PPOA Public Procurement Oversight
Authority
FAD Fish Aggregating Device PPP Public Private Partnership
FAO Food and Agriculture Organization PRA Participatory Rural Appraisal
FCPF Forest Carbon Partnership Facility PS Permanent Secretary
FI Financial Institution PS Purse-Seiner
FiD Fisheries Department
FMR Financial Monitoring Report QCBS Quality and Cost Based Selection
GDP Gross Domestic Product RAC Regional Advisory Council
GEF Global Environment Fund RAP Resettlement Action Plan
GIS Geographical Information System RBM Results-Based Management
GoK Government of Kenya RFP Request for Proposals
ICA Incremental Cost Analysis RPF Resettlement Policy Framework
ICB International Competitive Bidding SAP Strategic Action Plan
ICZM Integrated Coastal Zone Management SBD Standard Bidding Documents
ICR Implementation Completion Report SIL Sector Investment Loan
IDA International Development Association SOC State of the Coast Report
IFC International Finance Corporation SOE Statement o f Expenditure
IFMIS Integrated Financial Management and Information
System
SSC Small, Medium Enterprise Solution
Center
IP Indigenous Peoples SWIOFC South West Indian Ocean Fisheries
Commission
IPPF Indigenous Peoples Planning Framework SWIOFP South West Indian Ocean Fisheries
Project
IRR Internal Rate of Return TC Technical Committee
KCDP Kenya Coastal Development Project TDA Transboundary Diagnostic Analysis
KEFRI Kenya Forestry Research Institute UNCLOS United Nations Convention on the
Law of the Sea
KENAO Kenya National Audit Office UNDP United Nations Development Program
KFS Kenya Forest Service UNEP United Nations Environmental
Program
KIRDI Kenya Industrial Research Institute UNFCC United Nations Framework
Convention on Climate Change
KMFRI Kenya Marine Fisheries Research Institute VMS Vessel Monitoring System
KPI Key Performance Indicator WKCDDFM Western Kenya Community Driven
Development and Flood Mitigation
KWS Kenya Wildlife Service WKIEMP Western Kenya Integrated Ecosystem
Management Project
WWF World Wildlife Fund
Vice President: Obiageli Ezekwesili
Country Manager/Director: Johannes Zutt
Sector Director: Inger Andersen
Sector Manager: Idah Z. Pswarayi-Riddihough
Task Team Leader: William Leeds Lane
KENYA
Coastal Development Project
TABLE OF CONTENTS
Page
I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1
A. Country Context and Issues ................................................................................................ 1
B. Sector Issues........................................................................................................................ 2
C. Rationale for bank involvement .......................................................................................... 3
D. Higher-level objectives to which the project contributes ................................................... 5
II. PROJECT DESCRIPTION ................................................................................................. 6
A. Lending instrument ............................................................................................................. 6
B. The Project Development Objective (PDO) and Key Indicators ........................................ 7
C. Project Components ............................................................................................................ 8
D. Lessons learned and incorporated in the project design ................................................... 11
E. Alternatives considered and reasons for rejection ............................................................ 12
III. IMPLEMENTATION .................................................................................................... 12
A. Partnership Arrangements ................................................................................................. 12
B. Institutional and Implementation Arrangements .............................................................. 13
C. Monitoring and Evaluation (M&E) of Outcomes and Results ......................................... 15
D. Sustainability..................................................................................................................... 16
E. Critical risks and possible controversial aspects ............................................................... 17
F. Loan/credit conditions and covenants ............................................................................... 24
IV. APPRAISAL SUMMARY ............................................................................................. 25
A. Economic and financial analysis ....................................................................................... 25
B. Technical ........................................................................................................................... 29
C. Fiduciary ........................................................................................................................... 29
D. Social................................................................................................................................. 31
E. Environment ...................................................................................................................... 31
F. Safeguard Policies ............................................................................................................. 32
G. Policy Exceptions and READINESS ................................................................................ 34
ANNEXES
Annex 1: Country and Sector Background ................................................................................ 35 Annex 2: Major Related Projects financed by the Bank and/or other agencies ......................... 46
Annex 3: Results Framework and Monitoring........................................................................... 48 Annex 4: Detailed Project Description ...................................................................................... 57 Annex 5: Project Costs and Financing ....................................................................................... 69 Annex 6: Implementation Arrangements ................................................................................... 76 Annex 7: Financial Management and Disbursement Arrangements ......................................... 92
Annex 8: Procurement Arrangements ...................................................................................... 110 Annex 9: Financial and Economic Analysis ............................................................................ 122
Annex 10: Incremental Cost Analysis ....................................................................................... 135 Annex 11: Safeguard Policy Issues ............................................................................................ 142 Annex 12: Project Preparation and Supervision ........................................................................ 154 Annex 13: Documents in the Project File .................................................................................. 157
Annex 14: Statement of Loans and Credits ............................................................................... 159 Annex 15: Stakeholder Consultations ........................................................................................ 160 Annex 16: Kenya at a Glance .................................................................................................... 164
Annex 17: Governance .............................................................................................................. 166 Annex 18: Maps ......................................................................................................................... 173
i
KENYA
COASTAL DEVELOPMENT PROJECT
PROJECT APPRAISAL DOCUMENT
AFTEN
Date: June 30, 2010
Country Director: Johannes Zutt
Sector Manager: Idah Z. Pswarayi-Riddihough
Sector Director: Inger Andersen
Project ID: P094692
Environmental Assessment: Partial
Assessment
Lending Instrument: Sector Investment Loan
Team Leader: William Leeds Lane
Sectors: General agriculture, fishing and
forestry sector (100%)
Themes: Other environment and natural
resources management (67%); Environmental
policies and institutions (33%)
Joint IFC:
Joint Level:
Global Supplemental ID: P108845
Lending Instrument: Sector Investment Loan
Focal Area: I-International waters
Environmental Assessment: Category B;
Partial Assessment
Supplement Fully Blended?: Yes
Team Leader: William Leeds Lane
Sectors: General agriculture, fishing and
forestry sector (100%)
Themes: Other environment and natural
resources management (67%); Environmental
policies and institutions (33%)
Project Financing Data
[ ] Loan [X] Credit [X] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others:
Total Bank financing (US$m): 35.00
Proposed terms: Standard
Financing Plan (US$m)
Source Local Foreign Total
BORROWER/RECIPIENT 1.44 0.03 1.47
International Development Association
(IDA)
26.40 8.60 35.00
Global Environment Facility (GEF) 3.20 1.80 5.00
Total: 31.04 10.43 41.47
Borrower: Republic of Kenya
Responsible Agencies:
Ministry of Fisheries Development; Ministry of Regional Development Authorities; Ministry of
Forestry and Wildlife; Ministry of Lands; Ministry of State for the Development of Northern
Kenya and other Arid Lands (for Arid Lands Resource Management Project as implementer for
Community Village Fund - CVF)
Estimated disbursements (Bank FY/US$m)
FY 2011 2012 2013 2014 2015 2016 2017
Annual 1 7 10 9 4 3 1
Cumulative 1 8 18 27 31 34 35
ii
GEF Estimated disbursements (Bank FY/US$m)
FY 2011 2012 2013 2014 2015 2016 2017
Annual 0.5 1 1 1 0.5 0.5 0.5
Cumulative 0.5 1.5 2.5 3.5 4.0 4.5 5.0
Project implementation period: Start: October 29, 2010; End: October 29, 2016
Expected effectiveness date: October 29, 2010
Expected closing date: October 29, 2016
Does the project depart from the CPS in content or other significant respects?
Ref. PAD I.C. [ ]Yes [X] No
Does the project require any exceptions from Bank policies?
Ref. PAD IV.G. Have these been approved by Bank management?
Is approval for any policy exception sought from the Board?
[ ]Yes [X] No
[ ]Yes [ ] No
[ ]Yes [X] No
Does the project include any critical risks rated “substantial” or “high”?
Ref. PAD III.E. [X]Yes [ ] No
Does the project meet the Regional criteria for readiness for implementation?
Ref. PAD IV.G. [X]Yes [ ] No
Project development objective (PDO) Ref. PAD.C
The project development objective is to promote an environmentally sustainable management of
Kenya‟s coastal and marine resources by strengthening the capacity of existing relevant
government agencies and by enhancing the capacity of rural micro, small and medium-sized
enterprises in selected coastal communities. The general outcome of achieving the PDO would
be that the Coast Province is better able to assimilate and effectively use future, more broadly
focused, development assistance.
Global environment objective Ref. PAD.C
The global environmental objective is to strengthen conservation and sustainable use of marine
and coastal biodiversity. The Kenya Coastal Development Project (KCDP) is the first of what is
expected to be a series of investments in the Coast by the Bank or other donors. The KCDP will
be implemented through its four inter-related components.
Project description Ref. PAD-D
Component 1: Sustainable Management of Fisheries Resources. The Project will support
governance reform of fisheries management in the Kenyan EEZ. The support will include
legislation and regulatory review, capacity building and the strengthening of monitoring, control
and surveillance (MCS) of fishing activities. In addition, this component will also promote
research on near-shore fish stocks, and improve the use of near-shore fisheries, including
providing assistance to develop more sustainable and profitable fishing practices.
Component 2: Sound Management of Natural Resources. This component aims to improve
the sound management and regeneration of natural resources and biodiversity in the coastal and
marine environments. A related goal is identifying biodiversity products and markets that will
help promote eco-tourism and associated spin-off industries. Vision 2030 articulates the value
and future role of natural resources as an economic growth pole in Kenya‟s future development.
Component 3: Support for Alternative Livelihoods. This component aims to promote
iii
sustainable livelihoods within a sound governance framework that includes: i) spatial planning
and land capability mapping to identify environmentally and socially sensitive areas; ii)
Integrated Coastal Management (ICM); and iii) compliance with environmental regulations and
safeguards. Within this institutional framework, the component aims to support sustainable rural
development in geographically focused pilot areas in coastal districts.
Component 4: Capacity Building, Monitoring & Evaluation System, Project Management,
Communication and Coastal Village Fund. This component aims to build the project
coordination and implementation teams‟ capacity, promote dialogue amongst national partners
and regional stakeholders, develop a communication strategy for development outreach and
implement a Coastal Village Fund.
Which safeguard policies are triggered, if any? Ref. PAD- G
Environmental Assessment (OP 4.01, BP 4.01, GP 4.01); Indigenous Peoples (OP/BP 4.10),
Natural Habitats (OP/BP 4.04) Cultural Property (OP 4.11); Involuntary Resettlement (OP/BP
4.12); and Forests (OP/BP 4.36) apply to the Project, which has been designated as a Category B
project. Kenya prepared and reviewed an Environmental and Social Management Framework
(ESMF) and an Indigenous Peoples Planning Framework (IPPF), as well as a Process
Framework (PF) dated April 30, 2010, which were disclosed on February 5, 2010 and on May 7,
2010, respectively. The Bank disclosed the documents on Info Shop on the same respective
dates.
Significant, non-standard conditions, if any, for:
Board Presentation: None
Loan/credit effectiveness:
The Recipient has prepared and adopted a Project Implementation Manual satisfactory to
the Association.
Subsidiary Agreements have been executed on behalf of the MoFD and the Project
Implementing Agencies.
The Recipient has designated procurement staff to MoFD, KEFRI, CDA, NEMA, and
KWS with qualifications and experience satisfactory to the Association.
The IDA Financing Agreement has been executed and delivered and all conditions
precedent to its effectiveness or to the right of the Recipient to make withdrawals under it
(other than the effectiveness of this Agreement) has been fulfilled.
Other Covenants
KMFRI will, not later than February 15, 2011, computerize its accounting functions
The Recipient shall carry out on an annual basis, a post procurement review of all Micro-
Project Grants.
The Recipient shall appoint the Project Coordinator and the Project Component
Managers and set up the Project Coordination Unit by November 1, 2010
The Recipient shall appoint the Coastal Area Development Committee, Regional
Coordinators and Mobile Extension Teams by February 15, 2011
1
I. STRATEGIC CONTEXT AND RATIONALE
A. COUNTRY CONTEXT AND ISSUES
1. After independence, Kenya was the most prosperous country in East Africa, with its GDP
per capita rising by 38 percent between 1960 and 1980. However, the following two decades
recorded a zero increase in per capita GDP. Currently, poverty in Kenya is widespread, with 46
percent (Central Bureau of Statistics, 2008) of the country's population living below the poverty
line. Rising income inequity - with exclusion reflecting stratification by class, gender, and
region - is a serious concern. Kenya‟s Gini index of 45.2 (2005-06) is similar to Rwanda‟s and
Uganda‟s, but higher than Tanzania‟s and Ethiopia‟s (see Annex 1).
2. The World Bank‟s recent Country Partnership Strategy (CPS) for Kenya (2010-2013)
notes that the country‟s governance record is mixed. On the positive side, the public financial
management has been improved, the government‟s audit capacity has been strengthened, the
macroeconomic framework has been linked to fiscal planning, and an integrated payroll and
personnel database has been introduced. Regarding public sector reform, Kenya‟s Reform
Program (2004) has introduced results-based management (RBM) into the public service and has
contributed to significantly more openness and transparency. Compared to its neighbors, Kenya
has performed well with fiscal stabilization, budget management, financial sector reforms and
openness to the private sector. Kenya is one of the strongest macroeconomic performers in the
region.
3. On the negative side, Kenya scores lower than its peers in terms of property rights,
gender equality and public resources allocated to support pro-poor programs. The CPS notes
that governance and transparency remain issues for Kenya, as they are for most of the countries
in the region. Overall, Kenya scores better than its peers because it has a growing structure of
laws and institutions designed to enhance government accountability. The report notes that
many of these programs have yet to show results and that an independent media and a strong
civil society are important partners in developing a culture of accountability.
4. The Kenya Vision 2030, the government‟s ambitious development blueprint, covers the
2008 to 2030 period and aims to “transform Kenya into a newly industrializing middle-income
country providing a high quality life to all its citizens by 2030”. To achieve this vision, all
sectors need to make significant efforts to bring the governance issues under control, address
social inequities and provide the poor with sound opportunity to improve their income and
standard of living.
5. Of particular relevance is the focus on the Coast and, particularly, on tourism as a
driver of future national growth. While tourism is undoubtedly a vital element in Vision
2030 and while the Coast is the major contributor to national levels of tourism revenue, there is
little guidance in Vision 2030 upon which to base a sustainable development strategy.
2
B. Sector Issues
6. The Coast province covers an area of 83,603 km² and, according to the 1999 census, has
a population of 2,487,264. About 62 percent of the coastal population lives below the poverty
line, making this the second poorest of Kenya‟s eight provinces. Key reasons for this situation
include the inequitable land tenure regimes, weak institutionalization and lack of proper
integration of urban and rural planning into the development agenda. According to Kenya‟s
National Climate Change Response Strategy (NCCRS), climate variations have had adverse
effects on various sectors of the coastal economies. Prolonged droughts have caused low
agricultural yields thus compromising food security, while intense precipitation has caused
severe erosion upstream and massive sedimentation downstream leading to the degradation of
mangroves. Elevation in sea surface temperatures has caused widespread coral reef bleaching
and death. Reef and mangrove mortality has resulted in reduced fish productivity, loss of an
array of ecosystem goods and services, and reduced tourism.
7. Kenya‟s coastline is approximately 600 km long, extending from the border with Somalia
at Ishakani in the north (Longitude 1°41‟S) to the border with Tanzania at Vanga in the south
(Longitude 4°40‟S). Kenya‟s coast includes thirteen districts, seven of which are initially targets
of the Project: Kilifi, Kwale, Lamu, Malindi, Mombasa, Taita-Taveta and Tana River. The
Coastal region extends 150 km inland from the seafront, covering an area of 67,500 km2 and
constituting about 11.5 percent of the total area of the Republic of Kenya. A fringing coral reef
runs parallel to the coastline, from Vanga to Malindi Bay. Other unique features include: a) the
Lamu archipelago with its extensive mangrove forests and cultural sites; b) Mombasa Island; c)
the southern complex of Gazi Bay; d) Chale Island; e) Funzi Bay and Wasini Island; f) the Tana
and Sabaki Rivers that drain into the Indian Ocean. Kenya has about 500 km2 of mangrove
forest, a vital part of the coastal ecosystem and one that provides economic development,
environmental services and social and cultural values.
8. The fishery sub-sector is an important contributor to the GDP and provides livelihoods to
many coastal and inland lake residents. In 2007, the average fish production was 156,000 metric
tons, with inland fisheries contributing up to 95 percent of the total, followed by marine fisheries
(4%) and aquaculture (1%). Development options in the sub-sector include: promotion of
aquaculture, coastal fisheries, value addition and the sound management of Kenya‟s 200 nautical
miles Exclusive Economic Zone (EEZ)1 where high value commercial fisheries are exploited by
Distant Water Fishing Nations (DWFN) (Kenya‟s claim to extend its EEZ to 350 nautical miles
has yet to be examined). Kenya has four marine parks and six marine reserves that incorporate
important marine habitats including coral reefs, seagrass beds and mangrove forests.
Decentralization of management to the local level, which is insufficiently equipped to address
multiple issues, and balancing the needs of a healthy ecosystem with the needs of communities
living adjacent to the parks are two of the challenges the sub-sector faces. Key goals include:
a) improving biodiversity and wildlife conservation; b) attaining financial stability; c)
strengthening partnerships with clients, communities and the private sector, d) enhancing service
delivery; and e) strengthening and modernizing institutional quality.
1 Under the United Nations Convention on the Law of the Sea (UNCLOS), the EEZ is an area beyond and adjacent
to the territorial sea over which a coastal state has sovereign rights for the exploration and use of marine resources. It
stretches 200 nautical miles from the baseline of the state's territorial sea.
3
9. Vision 2030 points to promoting tourism as a primary engine of growth, job creation,
poverty reduction and wealth generation. However, promoting tourism must integrate
environmental and social values in order to be sustainable. Coastal tourism generates directly and
indirectly about 24 percent of the GDP. About 70 percent of the per capita economic activity of
the Coast region comes from tourism-related activities, placing tourism at the center of
development. Contradictory regulatory and legal frameworks, a weak institutional framework,
inadequate infrastructure, undervaluation of the tourism product, poor packaging of products,
poor coordination and marketing, only moderate levels of domestic tourism, turbulent global
tourism, and poor circuit development are some of the challenges facing tourism development.
Furthermore, poor organizational capacity and inadequate local levy retention schemes
contribute to widespread poverty across the Coast despite its rich tourism base. Tourism needs to
urgently diversify in order to spread risks, ensure sustainability and increase product value. It is
also necessary to enhance local tourism through creative product pricing that will ensure year-
round tourism and increase participation of coastal people in the sector‟s development.
C. RATIONALE FOR BANK INVOLVEMENT
10. Given the Bank‟s poverty alleviation agenda, the following are the key development
issues that form the basis and justification for its involvement in the Project:
The people living in the coastal area are amongst the poorest in the country. They are
culturally unique and largely of the Islamic faith. Approximately 34 per cent of the
Coast‟s 2.5 million inhabitants reside in urban areas along the coastline. Migration from
rural to urban areas of the Coast and from across the international border between
Somalia and Tanzania is increasing. New immigrants compete for coastal livelihoods,
which leads to unsustainable and illegal use of natural resources and the environment.
The resulting deterioration of the natural resource base further aggravates the vicious
cycle of poverty and decline in environmental quality.
The implementation of Kenya’s new National Land Policy will contribute to the
project’s success. The Bank has a comparative advantage in supporting the
implementation of the law with new tools, resources and experience. The new land
policy aims to redress many discriminatory practices of the past and to develop a
framework to address: i) regulation of property rights; ii) restoration and conservation of
land quality; iii) conservation and sustainable use of land-based natural resources; iv)
ecosystem management and protection; v) use of environmental assessment and audits as
land management tools; vi) land surveying, mapping and cadastral principles; and vii)
land issues particular to the Coast region, to displaced persons, vulnerable and minority
communities. KCDP activities will support the implementation of the Land Policy
through its land use planning, spatial planning and ICM. Support for co-management,
Beach Management Units (BMUs) and Public Private Partnerships (PPP) will help the
poor become partners in livelihood and/or business ventures on the Coast.
Long-term neglect, resource overuse, and poor management and planning have an
inevitable negative impact on coastal environment. Overuse of fragile coral reefs by
4
local residents and tourists, excessive fishing pressure in the inshore areas, inappropriate
land use in coastal districts, and poor development management over a long period have
severely degraded the value of coastal resources. In addition, organic pollution from
human and solid waste produced by the major urban areas and tourist hotels also affects
the natural resources upon which the coastal economy is based. The KCDP will
strengthen relevant agencies‟ monitoring and enforcement capacities.
The lack of proper management also means that the benefits of exploiting valuable
existing resources do not fully accrue to coastal residents or the national economy.
Little domestic fishing occurs beyond territorial waters – most fishing occurs within or
close to the fringing coral reefs. Kenyans do not fish the area extending from the
territorial waters out to the EEZ limit. Kenya does, however, license foreign vessels to
fish in these offshore waters. These fishers mostly seek tuna and other commercially
valuable species. There is a high prevalence of illegal fishing due to inadequate
Government capacity to monitor and control fishing. The offshore fleets do not operate
from Kenya‟s ports and do not generate local revenues, apart from license fees.
To reverse the degradation of natural resources and to shift resource use to a more
sustainable pattern will require re-development of the coastal areas. Such a strategy
will increasingly involve capture fisheries, particularly in the deeper near-shore areas
currently poorly exploited by artisanal fishermen; increasing mariculture; reducing illegal
offshore fishing; better understanding of land capability and land use, infrastructure
improvements, capacity building, assessment of markets, and improving technology for
value addition.
11. Given that the Coast Province is one of the poorest in the country (Overall rural poverty
by region in Kenya: Coast 62.1%, Central 31.4%, Eastern 58.6%, Nyanza 63.1%, Rift Valley
50.1%, Western 58.8% Source: Ministry of Finance and Planning, 2nd
report of poverty in
Kenya Vol. I, Incidence and depth of poverty, 2001) , the central and local government agencies
operating in there are currently ill-equipped to handle the investment needed to reduce poverty
and improve environmental conditions, and that in spite of these hindrances, the Government‟s
development vision assumes that a large part of new growth will come from the Coast, the
rationale for Bank involvement is:
Poverty alleviation agenda: The Bank has significant experience addressing poverty
and development issues in Africa‟s coastal zones (the KCDP is the latest in a series of
marine and freshwater projects developed in the coastal zones of Mozambique, Malawi,
Uganda, Tanzania, Senegal, Guinea-Bissau, and Kenya). While many technical and
NGO groups have experience in developing local programs of ICM, the Bank has the
ability to help integrate smaller and more focused activities into the design of larger
provincial-level investments in sustainable use of coastal resources, and to provide the
funding needed to implement those programs;
Convening function: Because the Bank has both a technical and financing capacity, it
very often serves as a “magnet” for other donors and technical organizations,
consolidating their involvement in the Coast. This strengthens the implementing
agencies‟ capacity and harmonizes community outreach and development assistance
5
financing from other groups, minimizing waste. In this specific case, KCDP preparation
activities have already laid the foundations of an environment in which other donors can
link with or support development efforts in the Coast Province. The Project is partnering
with the Arid Lands Resource Management Project (ALRMP) for implementation for the
Community Village Fund (CVF) and the International Finance Corporation (IFC) for
micro, small and medium-sized enterprise (MSME) capacity building. The Nordic
Development Fund (NDF) expects to provide parallel support using KCDP project
management structure as its implementing agency. Danida has expressed interest in
activities that parallel KCDP‟s to increase private sector investment in the Coast, and
other donors such as the African Development Bank have initiated discussions with the
Government of Kenya (GoK) to identify other development assistance opportunities
Practical experience: The Bank is knowledgeable about the benefits and potential issues
inherent to a poverty alleviation agenda in an area where the land and water interface, and
overlapping and conflicting management responsibilities require a multisectoral
approach. The Bank has considerable experience in development of coastal zone projects
in Africa and elsewhere.
D. HIGHER-LEVEL OBJECTIVES TO WHICH THE PROJECT CONTRIBUTES
12. The Coast Province is rich in natural resources and the GoK has identified it as being
a main contributor to future national growth. The CPS notes that high levels of inequality are
the reasons why Kenya‟s growth translates into limited poverty reduction. Kenya is expected to
grow by about 3.5 percent in 2010, continuing its recovery since 2008. This growth should result
in a modest increase in per capita income. According to the CPS, recovery will be driven by
services: transport, communication, tourism and trade and, to a lesser degree, industry, and
agriculture, although the latter is dependent on rainfall. The report also notes that tourism
performance will be boosted by aggressive market diversification and is expected to grow by 6
percent in 2011 and by 8 percent in 2012.
13. The KCDP will put in place an enabling environment and build capacity and physical
infrastructure to achieve growth along Kenya‟s coastal margin. Investments made under the
KCDP will lay the groundwork for future investments that will yield significant results. As noted
in the CPS, “sustainable growth calls for policies that address the economic, environmental and
social principles of development. These policies need to be agreed and implemented on a cross-
sectoral basis, with a spatial focus where possible”. This is the basis of the KCDP, which looks
to spatial-focused interventions to promote growth that is environmentally sustainable and
socially inclusive. Finally, the CPS notes that growth with equity and environmental
sustainability will require good governance. The KCDP is investing in environmental
governance, and investing in people, both in institutions and in communities, who are engaged in
promoting growth, livelihoods and value addition.
14. The KCDP is in line with the government‟s Vision 2030, which aims to transform Kenya
into a middle income country within two decades. The Vision is based on three pillars:
economic, social and political. The economic pillar aims to improve economic development to
achieve a GDP growth rate of 10 per cent per annum. The social pillar seeks to build a just and
cohesive society with social equity. The political pillar aims to put in place a democratic political
6
system founded on issue-based politics that respects the rule of law and protects the rights and
freedoms of every individual. The KCDP focuses on one of the poorest regions, supports
institutional strengthening in key sectors, and promotes MSMEs and a business environment that
leverage growth.
II. PROJECT DESCRIPTION
A. LENDING INSTRUMENT
15. The KCDP is a Sector Investment Loan (SIL). It provides the initial investment needed
to build management capacity and an understanding of rural, natural resource-based,
development potential in the Coast Province that enables local institutions to effectively utilize
the expected significant increase in future Government and donor development investment.
The project follows the accepted
multisectoral approach to ICZM
implemented by governments and agencies
around the globe (see text box). The
lending instrument comprises a US$35
million IDA (International Development
Association) credit and US$5 million GEF
grant. The GEF co-financing portion comes
from the Strategic Partnership for a
Sustainable Fisheries Investment Fund for
Sub-Saharan Africa, which was approved
by the GEF Council in November 2005.
This Fund is guided by a Regional
Advisory Council (RAC) composed of
stakeholders, is chaired by the African
Union (AU) and is supported by the United
Nations Food and Agriculture Organization
(FAO) and the World Wildlife Fund
(WWF). The KMFRI submitted the project
concept note to the RAC in August 2006.
Comments were received and incorporated
into the Project Concept and the GEF‟s
CEO agreed to include the KCDP into the
GEF pipeline on March 13, 2007.
16. The NDF and the African
Development Bank (AfDB) are also
interested in supporting associated activities
pertaining to adaptation to climate change
and priority infrastructure related to natural
resource use. Talks are being held to assess whether there is a convergence of interest between
the partners on the activities that will be supported. Depending on the timing of this agreement,
the financing will be categorized either as co-financing or as parallel financing. The expectation
Integrated Coastal Zone Management (ICZM) is
defined as a continuous and dynamic process by
which decisions are made for sustainable use,
development and protection of coastal and
marine areas and resources. The process is
designed to overcome the fragmentation inherent
in the sectoral management approach and the
splits in government jurisdictions at the land-
water interface. This is done by ensuring that
decisions in all sectors (fisheries, oil and gas
production, water quality, and so on) and at all
levels of government is harmonized and are
consistent with the country‟s coastal policies. A
key element in ICZM is the design of
institutional processes, life support systems, and
biological diversity in coastal and marine areas.
The goals of ICZMare to achieve sustainable
development of coastal and marine areas, to
reduce the vulnerability of coastal areas and their
inhabitants to natural hazards, and to maintain
essential ecological processes, life support
systems, and biological diversity in coastal and
marine areas
from: Managing the Marine and Coastal
Environment of Sub-Saharan Africa, Strategic
Directions for Sustainable Development, World
Bank Directions in Development Publication,
2002
7
is that KCDP will be the first of a series of investments, each building on the lessons of the other.
IDA or other donors may make the subsequent investments.
B. THE PROJECT DEVELOPMENT OBJECTIVE (PDO) AND KEY INDICATORS
17. Given the Project’s emphasis on structured implementation of Vision 2030’s
development agenda, the Project has a defined geographic point of entry that complements
capacity building with pilot interventions. The PDO is to promote the environmentally
sustainable management of Kenya‟s coastal and marine resources by strengthening the capacity
of existing relevant government agencies and by enhancing the capacity of rural micro, small and
medium-sized enterprises in selected coastal communities.
18. The Global environmental objective is to strengthen conservation and sustainable use of
marine and coastal biodiversity. The Project would target at least 15 villages in seven coastal
districts that have natural resource-based economies related to three geographic areas of the
coastal and marine environment: i) inshore areas beyond the reef and offshore fishery resources
extending to the outer EEZ limits; ii) inshore areas including coral reefs, beaches, mariculture
areas, and mangroves; and iii) land areas of the coastal districts, particularly where use of
terrestrial resources impacts on marine resources. Selection criteria will be in the PIM.
19. Since the KCDP focuses on a specific and, initially, limited number of villages along
the entire Coast, the knowledge and experiences of each of the five core ministries can help
identify where the Project will begin its work. The Project will thus be able to identify the
most progressive and socially organized villages to serve as the pilot areas for the initial project
support, creating the best opportunity to showcase its initial results by creating real-life examples
for other coastal stakeholders to see and follow. It is expected that, as was the case in Tanzania,
the positive repercussions will be so strong that the KCDP will be able to include more villages
and create demand in surrounding areas.
20. The preparation of the project has also established the principle that Government
staff working as part of the KCDP must also live in the Coast Province. This entails
relocating to the Coast staff and management offices responsible for coastal resources. While
this seems obvious, the Kenya system is highly centralized and staff often live and have offices
in areas other than where the bulk of their work is concentrated. The Ministry of Environment
and Mineral Resources and the Ministry of Forestry and Wildlife have already made
commitments to relocate staff to the Coast Province where they will be working mainly on the
KCDP. Central Government functions, such as management of the fishery in the EEZ will move
from the Ministry office in Nairobi to an office in the Fisheries Department in Mombasa.
21. The Key Performance Indicators (KPIs) for the PDO are: a) a 50 percent increase in
revenue generated to GoK from licensing of fishing vessels to operate in the Kenyan EEZ by
End of Project (EOP); b) a 15 percent increase in cost recovery of MPAs; and c) a 20 percent
increase in micro, small and medium-sized enterprise startups and business expansions directly
related to project interventions in pilot villages.
8
22. Key Indicators for the Global Environment Objective are: a) Improve quality of data,
data coverage and reporting frequency of catch and effort (the frame); and b) improve database
management associated with catch statistics to include up to 15,000 new entries/year by EOP.
C. PROJECT COMPONENTS
23. The Project will be implemented using the following components, for a cost of US$40
million (including US$3.21 million for contingencies), and an additional $1.47 million in
Government contributions. See Annex 4 for details of the components.
Component 1: Sustainable Management of Fisheries Resources (US$8.88m.)
24. Though the fishery resources of the Coast are poorly understood and underutilized,
they could create opportunities for improved livelihoods and economic growth. For example,
current local catches are insufficient to meet domestic demand in the Coast Province, and fish is
imported for local consumption. The KCDP aims to increase the benefits and revenue
generation derived from coastal fisheries through a) improving governance, including
monitoring, control and surveillance of the fishery in the EEZ; b) advancing research on coastal,
and nearshore fish stocks, promoting alternative fishing technologies, and supporting linkages
between fishermen, processors and fishmongers; and c) increasing fish production through
aquaculture, which will have national implications given the falling revenue from the Lake
Victoria Nile Perch fishery.
25. This component invests in research and development of unexploited and largely
undefined near-shore fisheries that coastal fishermen could develop and access. It also supports
improved licensing arrangements to ensure revenue increase derived from foreign fishing vessels
in Kenya‟s EEZ is maximized, and identifies commercially viable and environmentally
sustainable aquaculture opportunities along the Coast. These investments should, over time, lead
to improved livelihoods for coastal communities and improved revenue from the fishing sector to
compensate for the falling fishing revenue from Lake Victoria.
26. The Component‟s investment in the management of the EEZ fishery will produce almost
immediate benefits. Project funding in this sector will cover: a) operating costs to identify the
source and location of unlicensed vessels exploiting fisheries in the Kenyan EEZ; b) costs of
Government capacity-building to negotiate fair and transparent rights of access license
agreements with DWFN and vessels; c) costs of organizing and implementing a vessel
monitoring system of licensed fishing boats so they can be differentiated from those operating
without a license. These costs will be offset by the additional revenue accrued to the country
from the total value of the license agreements (inexistent at present) and from associated use of
port facilities if license agreements contain provisions that require licensed vessels to come into a
Kenya port to pick up a fisheries “observer”. Increases in fish landing will also reduce fish
imports currently supplying the local market and help identify profitable regional and
international markets for locally caught fish.
27. Improved management and sustainable development of the nearshore fishery industry
will also bring both immediate and longer-term benefits. Even modest diversification of the
near-shore fishery into relatively underutilized areas outside the fringing coral reef will rapidly
9
benefit the country. KCDP support for fishery management and aquaculture along the Coast will
steadily improve the amount of fish available in the domestic and regional markets.
Component 2: Sound Management of Natural Resources. (US$9.04m.)
28. There is a direct link between the quality of natural resources and economic growth
through tourism. Coastal tourism relies on clean beaches, good water quality, and healthy
marine ecosystems, all of which are in decline in Kenya. This component aims to (a) improve
sound management and regeneration of natural resources and biodiversity; and (b) identify
biodiversity products and markets that will assist in promoting eco-tourism and spin-off
industries. A coastal biodiversity information system will be developed to catalogue the state of
the Coast‟s natural resources, ecological threats, economic valuation and resource use patterns.
No new MPAs will be created but pilot community conservancies and co-management activities
will be supported as examples for future projects throughout the entire Coast. KCDP will finance
(a) the development of management plans, guidelines and strategies for sound management of
biodiversity and natural resources; (b) capacity enhancement in government institutions and in
communities that manage these resources; (c) the identification of options for financial
sustainability of the MPAs and co-managed conservation areas; and (d) improved management
of transboundary fisheries through joint monitoring and surveillance (e) Carrying out specific
coastal and marine research for promoting sustainable management of natural resources..
29. This component establishes an institutional platform in a targeted area to promote a
number of initiatives that create a direct link with tourism, which, according to Vision 2030, is
the engine of growth along the Coast. Investment in a limited geographic area promotes hands-
on learning and minimizes implementation risk. GEF support focuses on strengthening MPA
management and establishing co-managed resource management areas, which in turn leads to (i)
maintaining existing resource values; and (ii) paving the way for regeneration of the resource
base upon which the tourism sector depends. This process creates a direct link between the user
of the resource (tourism industry), the resource managers, local stakeholders, and the private
sector to develop a long-term plan for sustainable implementation of Vision 2030 in the Coast.
The project promotes and facilitates future government and other investment by developing
working pilots that can be scaled up in the future.
Component 3: Support for Alternative Livelihoods (US$12.20m.)
30. Equitable sharing of benefits that accrue from the sustainable use of local natural
resources requires careful planning, legislative support, and a local population both willing
and able to participate effectively in the use and management of those resources. The
objective of promoting sustainable livelihoods within a sound governance framework includes:
(i) spatial planning and land capability mapping that also integrates the identification of
environmentally and socially sensitive areas into a locally based, transparent and participatory
planning framework; (ii) promotion of village-level ICM; and (iii) strengthening of compliance
with environmental regulations and safeguards.
31. Component 3 also supports examples of how investment in infrastructure and livelihood
development at the village level can create opportunities for rural economic growth that would
10
only occur very slowly without project intervention. The Project actively promotes greater
investment and partnering by the Kenyan private sector with locally based micro, small and
medium-sized enterprises. The KCDP seeks to leverage investment by the private sector in
improved production techniques through partnerships whereby investors provide extension
services and market access to MSMEs. In this model, more direct accesses to markets illustrate
the benefits of improved production techniques and improvement in quality, quantity and
reliability of supply from MSMEs.
Component 4: Capacity building, Monitoring and Evaluation System, Project
Management, Communication and Coastal Village Fund (US$11.35m.)
32. The management of coastal, natural resource-based, development is a multisectoral
activity that requires the involvement and close interaction of several core government
ministries to guarantee truly sustainable results. The implementation arrangements for the
KCDP reflect these realities and are based upon the principle of central coordination and
sector-level implementation. This Component‟s objective is to increase capacity of the project
coordination and implementation teams, foster dialogue amongst national partners and regional
stakeholders, and elaborate a communication strategy for development outreach. Capacity
building activities will be coordinated by KMFRI, whereas a Project Coordinator (PC) within a
Project Coordination Unit (PCU) will coordinate the various component activities in order to
minimize overlaps and harmonize interaction between the Project and the villages/stakeholders,
and to provide project outreach and measure implementation progress. This person will also be
responsible for all major procurement and consolidated project financial management. The PCU
will also supervise public investment through the Community Village Fund (CVF). The
members of the PCU will report to the Permanent Secretary of the MoFD who has, for the period
of one year, delegated this responsibility to the Director of KMFRI, who will provide required
government due diligence control and oversight of the seconded PCU civil servants (the Project
Coordinator, the Component Coordinators, government procurement and financial managers,
etc.). Thereafter the PCU financial management capacity will be assessed and with the
agreement of the Association will operate autonomously.
33. The Project Component Managers (PCMs), one for each project component, seconded to
the PCU from the core ministries (MoFd, CDA, KEFRI/KWS and KMFRI), will support the PC.
The PCMs will be responsible for coordinating the technical implementation of each component.
The PC and PCMs will comprise the Project Management Team (PMT). The PMT, through the
PC, will provide technical and project information to the National Project Steering Committee,
comprising the Permanent Secretaries of the respective Ministries, Directors of the implementing
agencies, and technical Directors in the ministries for policy matters and to provide guidance as
appropriate. A Monitoring and Evaluation System (M&E) will monitor the indicators of each
component and link the Project to regional initiatives in order to share information and lessons
learned. The GEF Tracking Tool, which includes process, stress reduction, and environmental
status indicators relevant to GEF International Waters projects, will be incorporated in the
detailed M&E Plan. In turn, the M&E Plan will be part of the Project Implementation Manual
(PIM) and adopted by all participating agencies. In addition, budgetary provisions are included
in the Project to allow the project staff to participate in the bi-annual GEF International Waters
11
Program conference and to attend occasional regional coordination meetings necessary to link
KCDP more closely with other relevant GEF projects.
34. This component establishes a multisectoral mechanism for efficiently implementing the
KCDP according to accepted ICZM best practices. Because it is mainstreamed into the
government structure, the mechanism could, if necessary and so desired, eventually evolve into a
permanent coastal coordinating body with broader mandate. This multisectoral body would
greatly improve the efficiency of government implementation of an overall development agenda
for the Coast, as it could coordinate all donor efforts into a harmonized series of investments to
achieve the Coast‟s portion of Vision 2030.
35. The KCDP support of a community village fund is included in this component to
accelerate desired changes in resource use and management at the village level. Although
the KCDP supports livelihood development that is sustainable and profitable, experience has
shown that changes at the village level are slow. What is needed is a transition period where the
Project intervenes directly to create examples at the local level. A CVF is included in the KCDP
to induce the changes in natural resource use that are promoted in Components 1 (fisheries) and
2 (natural resource and protected areas management) by focusing on investment in village
infrastructure and profitable alternative and sustainable livelihoods. The CVF is a facility that
provides a grant of up to 70 percent of a micro-project‟s cost, with the remaining cost financed
by the community beneficiary. Implementation of the CVF will also follow the successful
example set in the Tanzanian coastal zone where an effective and financially efficient
partnership was organized between two complementary projects (MACEMP and TASAF
in Tanzania and KCDP and ARLMP in Kenya, under the Ministry of State for the
Development of Northern Kenya and other Arid Lands). Communities will be empowered to
identify their own micro-projects with support coming from Components 1, 2 and 3 of the
KCDP. The disbursement of funds will be monitored by the internal mechanisms of the Ministry
of State for the Development of Northern Kenya and other Arid Lands (ALRMP), by the KCDP
Project Coordinating Unit, and through an independent and ongoing evaluation of progress by
the Coastal Area Development Committee.
D. LESSONS LEARNED AND INCORPORATED IN THE PROJECT DESIGN
36. There is nothing new and untested in the design of the KCDP. Its technical design and
implementation management arrangements are based on similar, successful, coastal and
natural resource management operations in Kenya, other countries in East and West Africa,
and elsewhere. Lessons from the region and around the world (Tanzania Marine and Coastal
Environmental Management Project; South West Indian Ocean Fisheries; Lake Victoria
Environmental Management Project; Coral Triangle Initiative in East Asia, Coastal Resources
Management Project in Sri Lanka) have been incorporated into the KCDP design. They range
from how an effective fisheries Monitoring, Control and Surveillance System (MCS) can lead to
an increase in revenue generation and resource sustainability, to how spatial planning and
identification of sensitive areas within an integrated coastal management strategy can reduce
negative impacts of resource exploitation. Other lessons include the fact that: (a) a network or
system of protected and managed areas is generally more sustainable and better able to withstand
external shocks such as reduced tourism, is more ecologically resilient and will contribute to
12
poverty reduction in near-shore areas; (b) alternative livelihood schemes that promote
sustainable resource use will decrease poverty; (c) identification of micro-projects should be a
highly participatory process in order to ensure social inclusiveness; (d) public-private
partnerships help sustain the investment in poor communities with limited capacity and access to
markets; (e) a decentralized model of implementation is successful in both national and regional
multi-sectoral projects; and f) expectations need to be managed. Replication and scaling up need
to be carefully managed to avoid elites‟ takeovers to ensure availability of sufficient funds and
capacity on the ground to implement the activities. See Annex 4 for other lessons learned that
are reflected in the project design.
E. ALTERNATIVES CONSIDERED AND REASONS FOR REJECTION
37. Alternatives considered in the project design included a more exclusive focus on the
marine environment, in particular fisheries. Given the degradation of the inshore environment,
unplanned development along the Coast, inequities and poverty, it was decided to include other
sectors with a mandate for activities along the Coast. A spatial planning approach and a land
capability mapping initiative, combined with strengthened environmental governance and ICZM
planning, should contribute to sustainable planning of coastal interventions and lead to reduced
poverty and vulnerability and to increased incomes and livelihoods. Several options for
implementing the CVF were also considered, including: a) placing CVF within one of the
implementing agencies; b) placing resources for communities in different GoK funds such as the
Youth and Women funds and the Constituency Development Fund; and d) merging the CVF
with the MSME program implemented by CDA. Assessments of these modalities revealed
limited experience with these approaches as well as transparency and governance problems. It
was concluded that the World Bank-supported ALRMP had on-the-ground capacity and a strong
implementation record in the delivery of services to communities, and as such should implement
the CVF, under the guidance of the KCDP sectors, who will leverage community goodwill in the
implementation of their sectoral activities. Community goodwill and involvement, and project
transparency are also the basis upon which the Project will manage governance within
implementation. This is described in Annex 17.
III. IMPLEMENTATION
A. PARTNERSHIP ARRANGEMENTS
38. The KCDP was prepared by five core government ministries and through close
collaboration with all central and local government agencies active in the Coast, even if only
marginally. These agencies have, in turn, sought and incorporated feedback from coastal
stakeholders in the project design. The five core Government ministries involved in the design
and implementation of the KCDP include: the Ministry of Fisheries Development, the Ministry
of Forestry and Wildlife, the Ministry of Regional Development Authorities, the Ministry of
Environment and Mineral Resources and the Ministry of Lands. At the international level, the
KCDP is supported by IDA (US$35 million), the GEF (US$5 million) and possibly NDF. KCDP
has a number of regional and global partners. These are described in Annex 6.
13
B. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS
39. KCDP implementation will be highly decentralized through the five core ministries, all
of which have a major role in the use and management of resources in the marine and coastal
areas of Kenya. Following the SWIOFP model, KCDP will have a Project Coordinator who
plays a coordination and harmonization role. The PC will be a civil servant seconded by a core
ministry agency. The technical implementation is at the national and local levels (all
Government staff with significant involvement in project implementation must be based in the
Coast Province; in some cases, this requires relocation of staff from other parts of the country).
KCDP has four components and each has a component manager responsible for implementing
activities. The component coordinating agency is also its project manager and is responsible for
bringing together all government agencies involved in the component to develop annual work
plans and for fortnightly coordination meetings. This will ensure effective interaction and avoid a
large number of implementing agencies that could place an excessive burden on communities.
The component coordinators are: Component 1 (Fisheries Dept.); Component 2 (Kenya Forest
Research Institute – KEFRI with KWS being the component representative at the PCU);
Component 3 (Coast Development Authority-CDA), and Component 4 (Kenya Marine Fisheries
Institute - KMFRI). All Kenyan civil servants now work under a Government “performance
contract”. Seconded PCM staff will have performance contracts that reflect their new roles in
the KCDP. The Ministry of Fisheries Development, through the KMFRI, will coordinate overall
implementation of the proposed project.
40. Of the four components, three are technical and one focuses on project management. Of
the four component coordinators, three are parastatal entities and one is a government
department (Fisheries). The advantage of parastatal entities is that they are semi-autonomous;
they have their own boards and can therefore operate with a considerable degree of autonomy. A
lesson learned from the Lake Victoria Environmental Management Project (LVEMP 1) in Kenya
was that when project management was moved from the Ministry of Natural Resources to the
Kenya Agricultural Research Institute, a parastatal, disbursements and the speed of
implementation improved.
41. The PCU, staffed by seconded civil servants and therefore mainstreamed into the Kenyan
government structure, is responsible for project coordination and management. The KMFRI will
host the PCU in its offices in Mombasa and, under the Subsidiary, through PCU, to undertake
within the first year of Project implementation, the day-to-day coordination of the Project
including financial oversight.
42. KMFRI is an implementing partner under one of the five core ministries and will have
additional duties that include: a) providing due diligence and oversight control of the way the
PCU runs the main project account from which disbursements to all other implementing agency
project accounts are made; b) processing major project procurement through the KMFRI Tender
Board; and c) PC will evaluate the staff under the PCU and the PC will be evaluated by the PS
as part of their annual performance-based contract evaluation. This review will then go to
his/her home ministry. KMFRI received these temporary oversight duties with the agreement of
the Permanent Secretary MoFD and all five core ministries, and it also has the support of the
14
Bank Financial and Procurement assessments of all the agencies. KMFRI has been rated as the
most apt for this PCU oversight role.
43. At the national level, a National Project Steering Committee (NPSC), composed of
Permanent Secretaries of the relevant implementing agencies, directors of the parastatals
involved, relevant technical directors in the ministries, and the Project Coordinator, who will
guide policy, institutional and regulatory reform as well as implementation strategies. The role of
the NPSC will be to: a) provide strategic focus for the Project; b) facilitate coordination and
linkages between the different ministries to ensure consistency with sector policies and
adherence to established norms and standards; c) adopt the annual work plan and corresponding
budget in line with the Project‟s objectives; and d) provide guidance on disputes or political
issues that may impact KCDP. The NPSC will meet on a bi-annual basis or under exceptional
circumstances, as needed.
44. The Ministry of State for the Development of Northern Kenya and other Arid Lands,
through its ALRMP, will disburse, through the District Steering Group (DSG) and on behalf
of the KCDP, the CVF grants at district level. The DSG includes key sector actors who will
ensure that the proposed micro–projects are in line with KCDP objectives. The ALRMP will
also provide necessary technical training to communities during project implementation. The
KCDP will use established ALRMP structures at district and community levels to identify and
implement projects and disburse funds under the CVF. The KCDP PMT will evaluate decisions
made by the DSG on areas and activities to be supported by the CVF. Based on these decisions,
KCDP will transfer funds to ALRMP semi-annually, according to an agreed work plan which
will use existing mechanisms to disburse funds to qualifying community groups. The CVF, as
with all other activities under the KCDP, is geographically focused and designed to test how this
type of fund can influence positive change in resource use, and how best to deliver the support to
the community. Roll out of the project to other areas is dependent on successful implementation
of the project in pilot areas, demand from other coastal communities and the Projects ability to
develop capacity in new areas to take advantage of KCDP investment.
45. In implementing Part 4(a) of the Project, the Recipient shall:
Maintain at all times during the implementation of the Project, the ALRMP Project
Coordination Unit (ALRMP PCU) under the Ministry of State for the Development of the
Northern Kenya and Other Arid Lands with mandate, staffing, and resources satisfactory
to the Association with the overall responsibility for overseeing the implementation of the
Coastal Village Fund.
Not later than February 15, 2011 appoint and thereafter maintain at all times during the
implementation of the Project, Regional Coordinators with qualifications, experience,
mandate and resources satisfactory to the Association with the responsibility of
coordinating the implementation of the Coastal Village Fund activities in the District
Clusters and liaising with the District Steering Groups (DSGs) in each District in the
District Cluster.
Maintain at all times during the implementation of the Project, a DSG in each
Participating District, with mandate, staffing and resources satisfactory to the Association
with the responsibility of recommending for approval activities for support under the
Coastal Village Fund.
15
Not later than February 15, 2011 appoint and thereafter maintain at all times during the
implementation of the Project, Mobile Extension Teams METs) with mandate and
resources satisfactory to the Association with the responsibility of building the capacity
of communities to implement Project activities and monitoring the implementation of
Community Action Plans.
Maintain at all times during the implementation of the Project, Community Development
Committees in each community group with the responsibility of mobilizing community
involvement in the Project activities.
46. The Coastal Area Development Committee (CADC) will play a major role in ensuring
good governance and function as a project implementation watchdog. In its advisory and
advocacy role, it will serve as a link between the PCU and local communities in project sites. It
will inform the community of what the Project is doing in their area and will receive feedback
from communities regarding project performance. In addition to providing governance, the
CADC will promote community sub-projects and ensure economic benefits to the communities
from these activities in order to encourage sustainable utilization of natural resources. Annex 4
contains more details on implementation arrangements.
Financial Management arrangements
47. The following salient features weaken the project‟s financial management:
The Financial Management procedures manual in KMFRI that is used for the regional
SWIOFP and upon which the manual to be developed for the PCU will be initially based
is inadequate to ensure the accountability of funds amongst the sub implementing entities
over the long run;
Risk of delays in disbursements to KMFRI through the Government system, and slow
disbursements to, and accountability from, sub implementing entities;
The accounting units of the Fisheries Department and Physical Planning Department
have capacity problems, which lead to difficulties in the accounting of project funds
disbursed to these departments;
The PCU needs to computerize its accounting system to be adequate for the project;
Internal Audit Manual should be developed to ensure that the Internal Audit Unit does the
risk-based auditing for the Project; and
The KMFRI internal control systems need to be improved, as noted in the management
letter issued by the Controller and Auditor General e.g. in regard to dealing with
unsurrendered imprest.
48. The Financial Management (FM) action plan outlined in Annex 7 presents acceptable
mitigating measures, which, if implemented, would strengthen the FM arrangements.
C. MONITORING AND EVALUATION (M&E) OF OUTCOMES AND RESULTS
49. A long-term M&E strategy is needed to detect project-related changes in coastal areas,
identify the likely causes of these changes and the lessons learned, and recommend interim
16
and long-term adaptive and management responses applicable to KCDP implementation and
future interventions in the Coast. Actions needed for the effective implementation of an M&E
system include: a) site-level baseline assessments of coastal biodiversity, ecosystems and
livelihoods, including assessment of risk and vulnerability; b) support to existing national and
geographical information systems (GIS) centers in accessing and sharing relevant data regarding
coastal ecosystems; and c) development and associated training in the use of common protocols
for community-based and scientific monitoring of coastal ecosystem health and socio-economic
indicators.
50. Participating agencies, communities, district administrations, the private sector, NGOs
and the World Bank need to take part in Project monitoring. The PCU will develop an M&E
strategy and action plan over the next few months. The PCU will maintain an information
database linked to the Results Framework. This will allow the agencies to assess and report on
the quality and quantity of work at each level. Including M&E elements into all the components‟
training activities will promote specific capacity strengthening. The PCU will hire an M&E
Specialist, as needed, to assist in the design and implementation of the baseline surveys, the
M&E strategy implementation, the annual M&E reporting, the annual safeguards reporting to
assist with the MTR, the annual audits and the Project Completion Report. While some training
will definitely be required, all participating agencies carry out monitoring and evaluation as a
systemic routine activity within the department or ministry concerned. The findings of these
evaluations are incorporated into the performance contracts of individual staff responsible for the
activities or projects.
51. The annual report will need to reflect the key performance indicators and related
management indicators. The annual report will be part of routine reporting requirements that
involve the project steering committee and technical committee. Information relating to KCDP
sub-projects executed through the ALRMP in the Ministry of State for the Development of
Northern Kenya and other Arid Lands will be integrated into both KCDP and monitoring reports
and communication strategies.
D. SUSTAINABILITY
52. Critical factors for the project‟s sustainability are outlined below:
a. Borrower‟s commitment to and ownership of the Project. The KCDP is well in keeping
with the main pillars of the Government‟s Vision 2030 and supports key themes in the
sectoral policies and legislation. As such, the Project is well regarded at high levels in
government. The KCDP supports all of the pillars of the Vision 2030 by promoting growth
in the coastal areas through MSME development, providing access to markets, technology
and finance, training and capacity building.
b. Support of demonstration projects in carefully selected geographic areas. This enables
hands-on learning and minimizes risk. On the other hand, it promotes replication and scaling
up of the successful experiences.
c. Financing of productive activities at the community level with a well-defined exit
strategy. The exit strategy comprises: i) the facilitation of joint ventures with the private
sector, where equipment procured by the KCDP will be invested in registered community
17
organizations as equity for joint ventures; ii) capacity building, outreach and training for
community organizations including business development services and financial
management.
d. Support to GoK to strengthen Monitoring, Control and Surveillance in the offshore
areas where commercial fishing is carried out by Distant Water Fishing Nations
(DWFN). This activity will lead to increases in revenue through an increase in the number of
licenses granted. While KCDP will finance the cost of equipment, training and operational
costs, once the levels of revenue increase, the operational costs will be borne by the
government.
e. Consistency with the MDGs, Policies of GoK and Regional and International
Obligations. The Project supports poverty reduction, environmental sustainability and
financial sustainability. The project also supports the Coastal East Africa Initiative by
promoting dialogue and investigating the potential for a Marine Cooperative Area between
mainland Tanzania, Zanzibar and Kenya.
f. The project design is sustainable since it supports key government priorities, at the macro
level, within sectors and the priorities of the people of the Coast. A multi-pronged strategy of
direct investment in the community, provision of services, capacity enhancing, promoting
MSMEs, facilitating affordable credit, technology and access to markets should show some
positive results by the end of the project. A sister project, the Tanzania Marine and Coastal
Environmental Management Project (MACEMP) has already achieved most of its
development objectives and is about to prepare a second phase.
E. CRITICAL RISKS AND POSSIBLE CONTROVERSIAL ASPECTS
53. The table below shows the critical financial management and procurement risks the
project management may face in achieving project objectives and provides a basis for
determining how management should address these risks. Generally, however, the project is
geographically focused so that Government and Bank supervision resources can be concentrated
into an area small enough to ensure implementation success and compliance with the contents of
this PAD. Project implementation will also phase work in the 15 villages that are the focus of
the pilot work funded under the KCDP. Initially, project input will focus on only those villages
ready at Project Effectiveness to work with the GoK implementing agencies. Selection criteria
will be in the PIM. While activities begin in these initial villages, the remaining villages will
receive training needed to ensure they are ready to be a part of KCDP development work and are
in compliance with the requirements of Annex 17 (Governance). Roll out of the project to
villages other than those in the initial pilot areas is dependent on successful implementation of
the project in pilot areas, demand from other coastal communities and the Projects ability to
develop capacity in new areas to take advantage of KCDP investment.
18
Type of Risk Risk
Rating
Risk Risk mitigating measures incorporated into
project design
Condition of
Effectiveness
(Y/N)?
Residual
Risk
Rating
Financial Management
- Accounting Risks
S There is no adequate Financial Management (FM)
manual to ensure the accountability of funds amongst
the sub-implementing entities.
The project‟s accounting system is manual hence
prone to having errors.
Capacity challenges for Fisheries Department,
Physical Planning Department, accounting section.
KCDP FM Manual to be prepared by KMFRI and
agreed with IDA and included in the PIM which
is circulated to the sub-implementing entities.
PCU will, not later than February 15, 2011,
computerize its accounting functions
Training of staff in Fisheries and Physical
Planning Departments to be conducted during
implementation to ensure accountability of
project funds.
Effectiveness
Condition as part
of PIM
Dated covenant to
be met within six
months after
effectivess
No
S
Financial Management
- Funds Flow Risk
S Delays in disbursements to KMFRI
Slow disbursements to the sub implementing entities
due to delays in receiving accountabilities of funds
disbursed.
MoFD to sign a subsidiary agreement with the
other line Ministry - Fisheries Development to
have overall fiduciary responsibility over the
project. This will speed up disbursements.
Opening of the project accounts in commercial
banks acceptable to the Bank in Mombasa and
account for the funds disbursed to KMFRI such
that there are no delays in replenishing
disbursements to the sub-implementing entities.
All project accountants of the sub implementing
entities will be trained to have an efficient
accounting system.
Yes, Effectiveness
condition
M
Financial Management
- Internal controls &
Internal Audit Risks
S Lack of an internal audit manual
Some of the internal and external audit
reports/management letters for 30 June 2009
indicated that Bank reconciliations are not up to date,
there are cases of unsurrendered imprests and the
vote book does not capture all the information.
PCU to prepare internal audit manual and agree it
with IDA within six months after effectiveness.
The manual will adopt the use of risk based
auditing and give KMFRI internal auditors the
mandate to audit the sub implementing entities
project accounts. The audit manual will form part
of the PIM.
KMFRI internal control issues are being followed
up by the management under the Bank‟s
supervision to ensure they are addressed.
Effeciveness
condition as part of
PIM
No
S
19
Type of Risk Risk
Rating
Risk Risk mitigating measures incorporated into
project design
Condition of
Effectiveness
(Y/N)?
Residual
Risk
Rating
Procurement H Inadequate procurement capacity at KWS, KEFRI,
CDA, MoFD, and NEMA
Secondment of procurement staff with relevant
experience and conversant with the Bank‟s
procurement procedures.
Procurement training to be provided.
During
Implementation
S
COUNTRY RISKS 2 Risk that macroeconomic achievements will be
reversed, particularly as new elections approach in
2012.
With an economy that is relatively integrated into the
EAC and the global economy, Kenya is vulnerable to
external shocks.
Kenya is vulnerable to climate change, due in
particular to its reliance on rainfall both for
agricultural growth and energy production.
Another external shock that may impact Kenya is
terrorism.
SECTOR SPECIFIC
RISKS
M Major new uses of the coastal marine resource likely
to be supported under the Project will be seaweed
farming and other mariculture activities. The
farming methods used for some seaweed species
might not be compatible with other uses such as
tourism and in some conservation zones.
Land capability assessment that is the base of the
spatial development planning process supported
by the project will include the near shore marine
environment. Zones for seaweed farming and
other mariculture activities will be identified at
the district level during preparation and at the
village planning level during implementation
N M
2 Country Risks extracted from the Country Partnership Strategy for the Republic of Kenya for the Period FY2010-13. See pp. 36-38 for full description of Country Risk.
20
Type of Risk Risk
Rating
Risk Risk mitigating measures incorporated into
project design
Condition of
Effectiveness
(Y/N)?
Residual
Risk
Rating
S The CDD sector in Kenya has experienced significant
governance issues which have affected many
projects. Key issues relate in particular to the use and
maintenance of purchased assets, including vehicles
and fuel; and ensuring that capacity building that has
been programmed actually takes place with intended
participants. As the PIU for Arid Lands will be
“contracted” to implement Component 4 (CDD
component) there is a risk of replicating these issues
under the project.
The CDD activities have now been moved under
Component 4 (project management) for
implementation. They will therefore be subject to
the same scrutiny as the rest of the project;
including audit and supervision oversight by the
PCU embedded in KMFRI directly under the PS
Min. of Fisheries after passing Bank FM and
procurement reviews (making the PCU a more
independent body).
The CDD activities will be implemented through
an agreed annual work program between the PCU
and the Arid Lands PIU. The work plan will be
the basis on which financing would be released.
In addition, The Annual Work Plan for
component 4 will be publicized throughout
participating communities (postings, project
website, radio, publications and direct
dissemination through faith-based NGO) (see
Annex 17) for transparency purposes while also
serving as a deterrent to the mis-use of funds.
This should serve to clarify the project branding
and prevent the risk of “double dipping,”
particularly since the Project will be coordinated
with other national and donor programs.
With respect to the inventory, the Bank will agree
with KMFRI on the type of inventory
supervisions that will form part of the missions
and a report would be prepared to record findings.
Furthermore, mis-use would be curtailed through
strict management of budget, once allowed
amounts in the work plans are exhausted
increases would be subject to Bank‟s concurrence
with adequate justification.
The Project has set specific controls in place with
regard to fuel and fleet management. (See Annex
17) In particular the Coastal Area Development
Committee (CADC) will be briefed on the Work
Plan to assist local communities in monitoring.
N M
21
Type of Risk Risk
Rating
Risk Risk mitigating measures incorporated into
project design
Condition of
Effectiveness
(Y/N)?
Residual
Risk
Rating
S The CDD sector in Kenya has experienced significant
issues, particularly with regard to financial
management and procurement, including in the Arid
Lands project. As the Coastal project relies on the
PIU for Arid Lands there is a risk of replicating these
issues under the project.
The Project follows a “phased approach” working
with lower risk areas first and allowing capacity
of the PCU for supervision to be strengthened
over the first year.
Arid Lands will be subject to 3 levels of
supervision with regard to financial management
and procurement. First, its own internal audit
procedures. Second, the auditing requirements of
the PCU. Third, the twice yearly supervision of
the project task team.
Following the example set in the MACEMP
project, the project task team will complete full
financial and procurement assessment at each
supervision mission (i.e., every 6 months)
A supervision plan will be put in place that
identifies specific risks with regard to the CDD
component to allow for clear follow up on PIU
actions and results. Supervision missions will
randomly choose CDD ventures from the Annual
Work Plan to verify results physically or through
interviews with participants.
N M
M While annual work plans may be made public, there
is a risk that grievances will not be reported due to: a)
access to a timely and straight forward grievance
process and/or b) difficulties or fears with regard to
reporting to government bodies.
The Project design incorporates several
mitigation steps. (See Annex 17)
The CADC will host a toll-free line where
stakeholders can report issues with regard to
performance of the project.
In addition, the Project has established a key role
for the Coastal Inter-faith Council of Clerics,
such that community members will both be
informed of project issues/progress and can also
pass on grievances to the Council on a weekly
basis (e.g., at their mosque, temple or church.)
N L
22
Type of Risk Risk
Rating
Risk Risk mitigating measures incorporated into
project design
Condition of
Effectiveness
(Y/N)?
Residual
Risk
Rating
OPERATION-
SPECIFIC RISKS
H Technical design Project implementation must be locally based and
focus largely on stakeholders. Technical sectors
will need to answer to the needs and demands of
local government and local government must
respond to its constituents. This process of
accountability and service delivery will be
developed (beginning with preparation) through a
participatory process that links stakeholders at the
village level (through the NGO Coastal Interfaith
Council of Clerics) to Government service
providers. Project implementation will also be
decentralized, with relevant line ministries
responsible for coordination of each component.
The objective is to link coordination of a
sector/theme to the correct ministry, empower
that ministry to convene others to implement the
work of the component and to set performance
indicators that will be regularly monitored by the
Project Manager.
N M
H Implementation Capacity And Sustainability There is over US$800,000 in preparation grants.
A significant part of these grants will be used to
provide the knowledge base needed to start
implementation as soon as the project is declared
"effective". Likewise, the amount of money
available to the GoK is large enough to provide
working experience in the type of work covered
by the Project without being so large as to
overwhelm the local implementation agencies.
N H
M Social And Environmental Safeguards The Coast is already highly degraded through
inappropriate development. The Project will be
designed to leverage more appropriate rural
development based on land capability assessment
(use and non use) and then translating these land
use studies into a locally based, participatory,
spatial development planning process. District
and village-level plans will incorporate social and
environmental safeguards in a process that
requires the vetting of all development by local
stakeholders before authorization to implement an
activity is granted.
N M
23
Type of Risk Risk
Rating
Risk Risk mitigating measures incorporated into
project design
Condition of
Effectiveness
(Y/N)?
Residual
Risk
Rating
OVERALL RISK
(INCLUDING
REPUTATIONAL
RISKS)
H High implementation risk associated with cash flow
to various groups implementing the project through
the Treasury system. There is also a capacity risk of
equal magnitude associated with local
implementation by groups that have not seen or
participated in such a large and multisectoral project
and the ability of sectors to work harmoniously
together for a common purpose. Corruption risk is
moderate and mitigated by inclusion of a faith-based
monitoring element in the project.
See above H
H = High; S = Substantial; M = Moderate; L = Low.
24
Governance is of particular concern and the Project includes special elements to manage
corruption and funds-leakage risks. The KCDP will be subjected to standard Bank supervision,
but there are three major aspects of the project that require specific “governance controls and
feedback” to minimize the high risk of funds misuse. These are: i) the operation of the
Community Village Fund under Component 4; ii) the co-management of terrestrial and aquatic
resources supported under Components 1 and 2 (with special focus on development and
implementation of a transparent licensing process of commercial foreign fishing vessels and for
sharing of revenue from entrance and concession fees and other levees related to use of
managed and protected areas); and iii) fiduciary and procurement management. The KCDP-
enhanced governance program relies on additional formal supervision related to monitoring and
evaluation, audit controls, and on an independent program that targets improved transparency
over project activities allowing stakeholders more direct input into project performance
evaluation. The Governance plan included in KCDP design is described in Annex 17.
F. LOAN/CREDIT CONDITIONS AND COVENANTS
54. There are no significant, non-standard conditions for negotiations.
55. Effectiveness Conditions:
The Recipient has prepared and adopted a Project Implementation Manual satisfactory to
the Association.
Subsidiary Agreements have been executed on behalf of the MoFD and the Project
Implementing Agencies.
The Recipient has designated procurement staff to MoFD, KEFRI, CDA, NEMA and
KWS with qualifications and experience satisfactory to the Association.
The IDA Financing Agreement has been executed and delivered and all conditions
precedent to its effectiveness or to the right of the Recipient to make withdrawals under it
(other than the effectiveness of this Agreement) has been fulfilled.
56. Other Covenants
KMFRI has not later than February 15, 2011 computerized its accounting functions
The Recipient shall carry out on an annual basis, a post procurement review of all Micro-
Project Grants.
The Recipient shall appoint the Project Coordinator and the Project Component
Managers and set up the Project Coordination Unit by November 1, 2010.
The Recipient shall appoint the Coastal Area Development Committee, Regional
Coordinators and Mobile Extension Teams by February 15, 2011.
25
IV. APPRAISAL SUMMARY
A. ECONOMIC AND FINANCIAL ANALYSIS
57. Background and Limitations of analysis: Some of the analysis limitations are due to:
a) the large number of activities whose assessment is difficult because of limited time and
resource constraints; and b) all Project Components include a significant amount of critical
public and community capacity strengthening, direct stakeholder technical and managerial
support, research and pilot demonstration outputs. To estimate the benefits of these activities,
especially when the services provided are directed at stakeholders that are not well-established
market participants, is a challenge. Many ex-post analyses have shown the high rates of return to
investments in institutional strengthening and particularly to extension-related activity linked to
improved technologies. All Components of the Project strengthen the stakeholder institutions
that are central to technology transfer in the respective sector in Kenya. Therefore, our current
analysis is conservative. Selected micro-economic analyses were conducted to ensure that the
chosen structures were economically efficient and financially sustainable over the long-term.
Annex 5 provides further details.
58. Exclusive Economic Zone (EEZ) and Fishery Economics: Project investments such as
MCS and the Vessel Monitoring System (VMS) will allow the government to improve the
regime for monitoring fishing licenses in the Kenyan EEZ. This will result in a reduction in
fiscal and biological losses due to illegal and unregulated fishing activity, which is conducted
mostly by foreign vessels and therefore is of no value to the Kenyan economy. By the End of the
Project (EOP), increased vessel licensing revenue is expected to reach approximately US$2.1
million (around Kshs159 million) compared to US$0.8 million in 2008 (baseline of the analysis).
The region may also enter into joint offshore patrols with Tanzania and other countries,
including interlinking VMS to enhance regional collaboration (Fisheries observers, VMS and
Joint patrols etc).
59. License fee value per vessel should increase to US$30,000 for Purse Seiners (PS);
licenses fees for these vessels had already been increased successfully in 2009, but not for Long
Liners (LL)3. Current license fees are too low and not commensurate with the potential returns
from the fishery sector. Fee values per vessel should increase gradually and reach a maximum of
US$40,000 for PS and US$20,000 for LL by EOP (starting in project year 5 - PY5). The
resulting annual total revenues from license fees in the „with project scenario‟ would increase
from US$1.1 million (Ksh82.8 million) in the first year of the project (PY1), to USD2.1 million
(Kshs159.3 million) by project year four (PY4). This would translate into an increase over the
“without project” situation from zero in PY1 to approximately US$1 million (Kshs71.6 million)
by PY4. The Net Present Value (NPV) at 12 percent rate is US$1.3 million (Kshs98.7 million)
and the Internal Rate of Return (IRR) is 31 percent.
3 License fees for distant fishing were already set to increase, but due to the pirate problem, the Ministry of Fisheries negotiated
with the fishing fleets to hold the increase until the security situation in the Kenyan EEZ improved. However, the parties agreed
on December 2010 as the date for the increment to resume/be effected.
26
60. Marine Protected Areas System: The financial revenue sources of Kenya MPAs
management are: i) own-revenue generation, which represents only 80% of their recurrent costs;
ii) a central kitty that finances their annual operations; and 3) donors and assistance organizations
(mainly NGOs). Funding limitations pose a threat to the sustainability of Kenya MPAs operation
as innovative and sustainable funding generation is very limited. Because sustained funding is
crucial to MPA management, diversity of activities and thereby increasing the number of funding
sources and the number of supporters of MPAs should be maximized. Toward this end, Project
activities will allow cost reduction through support for building capacity for improved and more
efficient KWS management, and also through the establishment of a more efficient system of
administering MPAs, MMAs, and other environmentally sensitive areas. These include co-
management models that feature partnerships among government, communities, and private
sector. The cost recovery from MPAs and MMAs should improve by 10 percent by the end of
the Project.
61. Micro-projects: Component 4 of the project will support community-identified and
implemented micro-projects. These will mainly focus on small scale livelihood-enhancing
interventions. These micro-projects are designed to work with other parts of the project to help
leverage restoration of degraded environments over time, and to improve sustainability of
natural resource use. The CVF is expected to cover up to 840 micro-projects or small grants
having an average value of US$10,000 each over the six year period.
62. Groups receiving grants will be expected to contribute in cash or “in kind” (about 30% of
the total costs for each micro-project). Communities will receive training before the
implementation of priority micro-projects. These micro-projects will be designed to maximize
returns on the community‟s input of labor, time, materials and cash. Much of the returns on CVF
investments will be in the form of social capital and sustainability of community assets.
Measures such as providing costed design options and a unit cost databank, encouraging local
competition in goods and services procurement, and involving ALRMP staff at appraisal to
ensure that sector norms and standards are met, will enhance the cost-effectiveness of micro-
projects.
63. Micro, Small and Medium Enterprises (MSMEs) investments: KCDP will also assist
in establishing a limited number of examples of joint ventures between a community and a
CVF LINKAGES WITH THE OBJECTIVES OF COMPONENT 1 (FISHERIES), 2 (NATURAL
RESOURCE MANAGEMENT), 3 (ALTERNATIVE LIVELIHOODS)
Components 1, 2, and 3 set the stage for improving overall management of marine and coastal resources in
the Coast Province. They promote sustainable planning and will support mechanisms that encourage
community and private sector participation in how development should occur. These KCDP components
have the further intent of impacting positively on poverty reduction in coastal areas, and this is best
facilitated (based on experience from many examples, including the MACEMP in Tanzania) through
leveraging the uptake of new and more sustainable alternative income generating activities among the
coastal poor. The leverage within the KCDP that supports this change comes from Component 4, the CVF.
To have a lasting impact, the CVF will include assistance to communities in identifying and piloting those
activities that promote sustainable resource use, and that have the potential for replicability in other coastal
areas. To prevent the proliferation of micro-project delivery mechanisms, this component takes advantage
of the presence and skills of the Arid Lands Project offices in the Coast to facilitate CVF delivery
27
private investor, thus creating a basis for ramping up public/private linkages in future
investments by the Bank or other donors. These pilot efforts to involve the private sector tie in
with other Bank support activities for the private sector. They are examples to be used as tools
to demonstrate the potential for business ventures in rural areas of the Coast- ventures that are
currently stalled due to their perceived high risk. Limited and selected private sector
entrepreneurs with established market linkages and technical expertise will be sourced to offer
managerial services, specialized extension services and market linkages at their own cost,
whereas the KCDP will source for required processing equipment and mobilize the community
to participate in the identified enterprises.
64. These arrangements will be facilitated by setting up pilot investments within the Project
(US$ 1.3 million) and by supporting up to five of these community/private sector initiatives. At
the end of the project period, if the two parties (the private investors and the communities) want
to formalize their arrangements through a joint venture agreement, the KCDP Project will turn
over the processing equipment or other capital investment to the community where it will be
used as the communities‟ equity in the joint venture. Since the KCDP would be over at this
stage, the private investors would need to make their own investment in the enterprise. The
International Finance Corporation (IFC) will play a role in the implementation of this activity
65. The KCDP expects to utilize IFC‟s unique expertise by linking to its Small, Medium
Enterprise Solution Center (SSC), which is active throughout Africa, including Kenya. The
Project seeks to address coastal poverty using interventions that are environmentally and socially
inclusive. For the project outcomes to be sustainable, it is critical that the private sector is part of
the implementation of the project and that spatial planning underlies the government‟s decisions
on areas for growth interventions. The use of Public Private Partnerships (PPPs) is one of the
mechanisms for significant private sector engagement and will benefit from IFC assistance as
detailed below. Micro, small and medium enterprises in promising sectors will also benefit from
specific capacity building interventions.
66. KCDP engagement with micro and small enterprises can build on lessons learned from or
links with existing World Bank and IFC projects. The Micro, Small and Medium Enterprise
Competitiveness Project has been successful in bringing together stakeholders from both the
public and private sectors in a given value chain to provide “overall project policy direction and
guidance, as well as approval of annual workplan and budget”. These Apex committees meet
regularly and, using the skills of Business Development Service (BDS) providers, have
somewhat succeeded in bringing about needed policy changes in the sub-sectors, as well as in
building the capacity of players in the value chain. This dialogue and implementation mechanism
will be critical for bringing together stakeholders at the Coast, where interventions have not been
effectively coordinated to address economic growth opportunities.
67. The Project is well placed to work with the IFC and the SSC, focusing as it does on
serving the needs of small and medium enterprises across various product lines. These include
the following: access to MSME Finance; technical assistance to support MSME Management
Solutions based on copyrighted Business Edge and MSME Toolkit products; access to market
information/databases; investment climate enhancement; PPP. The SSC has detailed the specific
collaboration that it envisions with the KCDP as follows:
28
Access to MSME Finance
SSC can help viable MSMEs indentified by KCDP to access financing via local risk-
capital funds or other financial institutions (FIs). Support could take the form of
screening, development of business plans and financing proposals, referral to fund
managers and FIs.
Advisory services/ Technical assistance
SSC‟s advisory services can support KCDP‟s MSMEs by means of a cluster approach;
strengthening value chains and market linkages in agri-business, transport,
communications, tourism, hospitality, trade, distribution etc; enhancing bankability by
upgrading management capacity, systems and processes. This includes the development
of BDS/Consulting skills.
Access to market information/databases
SSC provides the MSME Toolkit on-line free and can help design outreach programs to
reach KCDP‟s SMEs and train them on how to access and use the Toolkit. The Toolkit is
also available as a CD for MSMEs who have no internet access. Additionally, SSC can
train trainers and associations in the region to ensure SMEs have arm‟s-reach access to
the Toolkit.
Investment climate enhancement
SSC can support KCDA in developing an enabling business environment to MSMEs in
the Coast region by providing advice on how to establish business incubators, by linking
KCDP to the Kenya Export Processing Zones Authority (EPZA) and the Kenya Industrial
Research Institute (KIRDI) for incubation services, linking business associations in the
Coast region to the Business Advocacy Fund for training and advocacy capacity-building.
PPP support
SSC Kenya is the technical implementation partner for the Ministry of Industrialization‟s
US$4 million MSME competitiveness technical assistance fund. SSC assists fund
managers and viable SMEs in identifying BDS providers, draw up RFP/TORs, and
oversee implementation of designated TA to the satisfaction of all stakeholders.
Specifically, SSC can assist KCDP increase the flow of private equity/financing to viable
MSMEs in the Coast region by linking fund managers and SMEs to the IDA/IFC/GoK
TA funds, and facilitating the actual TA implementation to motivate fund managers to
increase investment in said MSMEs.
68. Incremental cost analysis: In addition to the financial and economic analyses
completed for the Project, an incremental cost analysis (ICA) assessed the incremental costs that
would be eligible for GEF financing (US$5 million). The incremental cost is associated with the
GEF Focal Area Strategy for International Waters (GEF 4) and supports the GEF CEO‟s
endorsement of the KCDP. Annex 9 contains the ICA.
29
B. TECHNICAL
69. As a general trend, poverty among coastal populations leads to over-use and destruction
of the natural resources upon which they depend. Poverty is a driver in the pursuit of short-term
livelihood gains at the expense of long-term sustainability and viability of the marine and coastal
ecosystems. Poverty in the coastal community is addressed through a sub-component (CVF) that
will support micro-projects, which the communities will prioritize and procure. The same sub-
component also promotes MSMEs, providing technology support, facilitating affordable credit,
access to markets and to public private partnerships. The CVF and MSME directly target poverty
reduction and reducing vulnerability among the coastal poor.
70. The KCDP also conforms to international standards in that it allows EEZ issues to be
addressed within an international or regional framework that considers proper management of
the resource, consistent with international codes of conduct and best practices. The KCDP also
provides the basis for clearly monitoring the effectiveness of revenue generation efforts through
improved MCS. The Project complements the South West Indian Ocean Fisheries Project
(SWIOFP) which will supply valuable data from stock assessments and other research on
migratory and straddling stocks.
71. While no new MPAs will be established, the KCDP will follow international best practice
in promoting a network, or a system, of MPAs. This will include: i) existing MPAs and new co-
management initiatives where communities as well as the private sector may play a role; ii)
community conservancies such as those being implemented successfully in South Africa; and
iii) transfrontier cooperative areas between Kenya and Tanzania. These measures will lead to
improved financial sustainability, improved resilience in the ecosystem, improved tourism
potential and reduced vulnerability and poverty in the user communities.
72. The technical elements described above should lead to sustainability, social acceptability
and efficiency of delivery of resources to beneficiaries.
C. FIDUCIARY
PROCUREMENT
73. In February 2010, the Bank carried out a reassessment to update the implementing
agencies‟ capacity to undertake procurement. The reassessment focused on the organizational
structure and functions of the institutions, past experience, staff skills, quality and adequacy of
supporting and control systems, and legal and regulatory framework. Kenya has a Procurement
Law that was enacted in 2005, and has subsequently established the necessary oversight,
advisory and dispute resolution institutions and operations committees. The Law is generally
consistent with the IDA procurement guidelines, with the exception of some provisions specified
in Annex 8. The main risk to public procurement in the country is lack of compliance to and the
enforcement of the procurement laws. The overall risk for procurement (prior to proposed
mitigation measures) is considered as “High” because the implementing agencies and their
procurement units have inadequate procurement capacity and limited or no experience with
procurement under Bank-financed projects. In order to strengthen the agencies‟ procurement
30
capacity, the Bank review team recommends a number of actions to the Borrower (detailed in
Annex 8). The agreed procurement action plan will seek to mitigate the procurement risk to
“Substantial”.
FINANCIAL MANAGEMENT
74. The Bank‟s Kenya Country Department conducted a Financial Management Assessment
of the Kenya Marine and Fisheries Research Institute (KMFRI) which will be the primary
implementing entity for the project for one year until a PCU is formed by the Ministry of
Fisheries Development (MoFD). This PCU at the MoFD will undergo a financial management
assessment before project funds are transferred to it in order to ensure that there is adequate
financial management systems in place to ensure project funds are utilized for purposes intended.
This financial management assessment was also done on the following sub implementing entities
that will receive funding from KMFRI and the MoFD PCU. These are: the Kenya Wildlife
Service (KWS) and the Kenya Forest Research Institute (KEFRI) (Ministry of Forest and
Wildlife), the Coastal Development Authority (CDA) (Ministry of Regional Development), the
Coast Province Office of the Arid Lands Resource Management Project (Ministry of State for the
Development of Northern Kenya and Other Arid Lands), the Fisheries Department (Ministry of
Fisheries Development), Physical Planning Department (Ministry of Lands) and the National
Environment Management Authority (NEMA) under the Ministry of Environment and Mineral
Resources.
75. A Public Expenditure and Financial Accountability (PEFA) assessment for Kenya was
completed in March 25, 2009. Details about the strength and risks faced at project level are listed
below, under Country issues. The Government of Kenya‟s Public Financial Management Reform
Program, under the Institutional Reform and Capacity Building Project, is helping address these
risks.
76. The Financial Management arrangements can be strengthened by:
Building capacity in participating entities that have not handled Banks projects in the past
and particularly the Fisheries and Physical Panning Department accounting sections.
The PCU‟s computerization of its accounting functions. This will be a dated covenant to
be completed within six months after effectiveness.
The signing of a subsidiary agreement between KMFRI, MoFD and the permanent
secretaries of line ministries of the sub-implementing entities/Head of institution that will
include the financial management arrangements of the project such as the sub-
implementing entities opening project accounts in commercial banks that are acceptable
to the Bank at the Coast and ensuring the have adequate staff to account for the funds
disbursed to them by KMFRI. This is a condition of effectiveness.
Including the financial management and internal audit procedures in the Project
Implementation Manual agreeable to the Bank as an effectiveness condition.
77. MoFD and the sub-implementing entities will have to ensure that appropriate accounting
staffing arrangements are maintained throughout the project life.
31
78. The conclusion of the assessment is that the financial management arrangements meet the
Bank‟s minimum requirements under OP/BP10.02. The overall residual risk rating is
substantial. The FM action plan under Annex 7 outlines the mitigating measures, which, if
implemented, would strengthen the FM arrangements.
D. SOCIAL
79. The KCDP should have many positive social impacts, because communities and their
institutions are involved in the decision making process of all activities that will be financed
through KCDP. A social assessment carried out during implementation will inform the Project
on ways of managing the social dynamics and opportunities to improve livelihoods in coastal
communities. The Coast in general has some social development challenges related to
landlessness, increased migration of communities in coastal regions, unemployment, conflicts,
poor social infrastructure, unprotected cultural assets, vulnerable communities, and
disempowered women and youth. KCDP addresses these issues through co-management of
coastal resources, conservation of cultural resources and the promotion of business opportunities
and income generation activities. Land use planning and settlement management will resolve
some of the land issues; these activities will not involve land acquisition. Investments and
employment generation should mitigate religious tensions. The Project will target all
communities through consultations and provide equitable access to project resources. A strong
participatory approach will be adopted to involve communities in planning, implementation
monitoring and deriving benefits from their engagement.
80. To track social development outcomes, this Project will use, among others, the following
indicators: a) the number of women participating actively in and benefiting from project
activities; b) the community assets procured through CVF micro-projects that are owned and
maintained by the communities themselves; c) the conflict reduction in areas where the KCDP
will be operating; d) the number of indigenous and vulnerable members of the coastal
communities benefiting from the KCDP resources; e) the number of faith-based organizations
that are actively involved in community support programs; and f) the number of young men and
women participating in project activities and utilizing funds marked for youth.
E. ENVIRONMENT
81. KCDP should bring several positive environmental benefits, including habitat restoration,
protection and sound management through improved environmental governance and capacity
development for resource managers and users. With sound management of EEZ fisheries, it is
expected that by-catch, including sea-birds and endangered sea turtles, as well as unwanted
fishery, will be reduced. These benefits will be monitored through MCS and stock assessments.
While most negative environmental impacts will be site-specific, there will also be cumulative
environmental impacts from the increased number of development activities promoted by the
Project. The project design incorporates several mitigation measures, including spatial plans and
land capability maps, as well as an ICZM framework that will guide these activities. Increased
capacity for environmental governance, increased skills for monitoring including MCS, and a
greater awareness within the coastal communities through co-management will help mitigate the
32
negative impacts. An evaluation of the existing legal framework and institutional structure for
monitoring and controlling impacts indicates that the framework is adequate.
82. In the transfrontier area between Kenya and Tanzania, enhanced cooperation across many
fronts from fisheries to coral reef monitoring, tourism, conservation of mangroves and sea-
grasses should lead to reduced incidence of illegal fishing, increased tourism, enhanced
environmental quality and increased biodiversity quality. Dialogue is ongoing through the
Tanzania MACEMP. Likewise, the Regional Executive Secretary for the regional SWIOFP,
based in Mombasa, supports this collaboration through the South West Indian Ocean Fisheries
Commission (SWIOFC).
F. SAFEGUARD POLICIES
Safeguard Policies Triggered (please explain why) Yes No OP/BP 4.00
Environmental Assessment (OP/BP 4.01) X
Natural Habitats (OP/BP 4.04) X
Forests (OP/BP 4.36) X
Pest Management (OP 4.09) X
Physical Cultural Resources (OP/BP 4.11) X
Indigenous Peoples (OP/BP 4.10). X
Involuntary Resettlement (OP/BP 4.12) X
Safety of Dams (OP/BP 4.37) X
Projects on International Waterways (OP/BP 7.50) X
Projects in Disputed Areas (OP/BP 7.60) X
Environmental Category B – Partial Assessment.
83. Environmental Assessment (OP/BP 4.01): This Project is rated Category B and an
Environmental and Social Management Framework (ESMF) has been prepared and disclosed
before appraisal, although an EA is not required as the Project is designed to institute a
participatory policy and planning framework at the local government level. KCDP will support
spatial planning, sensitivity mapping and land capability mapping to include use and non-use
associated with environmental, social and cultural values. Larger investments, such as coastal
infrastructure, which may be supported by the Project, will be carried out after a full EA. The
CVF will be handled through environmental screening processes of the ALRMP. Natural
Habitats (OP/BP 4.04) is triggered given that there are national parks, mangroves, forests,
fringing reefs and sandy beaches within the targeted areas. The Project will facilitate a
sustainable and participatory approach to improve, with community participation, the
management of the protected areas. The preservation of unique natural habitat is a priority
because tourism is expected to be the engine of growth in Kenya over the next 20 years. Pest
Management (OP 4.09) is not triggered since the project would not support agricultural
development that requires widespread use of pesticides and herbicides. Forestry (OP/BP 4.36)
is triggered. The Project will have positive impacts on existing primary or mature secondary
forest areas through improved land use planning, enhanced monitoring and enforcement,
including community co-management of forested areas. The expansion of agriculture, livestock
projects and charcoal making could cause negative impacts. Careful monitoring will be needed to
ensure that localized and site-specific impacts do not lead to significant cumulative impacts. The
33
District level will be sensitized to the KCDP tools of spatial planning, land capability mapping,
and ICZM planning in order to manage the type, scope, coverage, land use.
84. Under OP/BP4.12 (involuntary resettlement), KCDP activities should not entail
relocation or resettlement of households; in fact, the Project supports community-based and
participatory co-management approaches. However, some of the KCDP activities may restrict or
control access to marine and fisheries resources if the co-management and community rules for
access and use of resources are not carefully monitored. Cooperation of residents to assist in
managing coastal protected areas has worked and will be increased to ensure that community-
based rules for access to resources will be applied- However, in some cases these will need
clarification and codification. Additionally, while KCDP should not create new protected areas,
some coastal areas may be set aside for exclusive community management. As a result, these
areas may have restricted access if the conditions for co-management of coastal and marine
resources are not well defined. In this connection, a Process Framework (PF), reviewed by the
World Bank, was made public on May 7, 2010. The PF defines the guidelines for co-
management and use of resources, including a public consultation and disclosure plan, and a
grievance mechanism. The PF will strengthen the role of communities regarding co-management
and protection. Once completed, a Management Plan for addressing right-of-access and use of
resources issues will be developed by applying a participatory approach.
85. Cultural Resources (OP/BP 4.11) will be triggered because the Kenya coast is rich in
historical and archaeological sites. The ruins of mosques and other buildings reflect different
ensembles of Islamic architecture. The Project‟s spatial planning and land capability framework
will be used to identify and prioritize sites that are urgently in need of rehabilitation. Indigenous
Peoples (OP/BP 4.10) may be triggered depending on the project sites. The Government of
Kenya has prepared an IPPF that provides information about these communities, their
livelihoods and guidance in the event of impacts by project activities. Projects on International
Waterways (OP/BP 7.50) is not triggered as the Project‟s activities do not meet the definition
of projects on international waterways. Nevertheless, it is important to note that there are some
issues related to management of migratory and transboundary fish stocks between Kenya and
Tanzania, which are mainly related to the migration patterns of large pelagic fish such as tuna,
billfish and shark. In addition, there may be opportunities to create transfrontier terrestrial
conservation areas between Tanzania and Kenya. A planned formal Memorandum of
Understanding between the two governments will cover the scope and areas of cooperation
regarding assessment, monitoring and management of transboundary issues.
86. Borrower‟s capacity to implement the safeguard policies. The ESMF and IPPF have
been published according to the standard procedures in Kenya. The documents have also been
published in the Info Shop on February 5, 2010. A summary of the main findings of the ESMF
are contained in Annex 10: Safeguard Policy Issues.
87. Participating agencies have a mandate to ensure sound management of natural resources
and the environment. Most of the agencies have environmental impact assessment units and EIA
officers. However, their capacities for monitoring safeguard policies will need to be enhanced
through training. Environmental assessments, environmental audits and environmental
management plans will be overseen by the National Environment Management Authority
34
(NEMA), also an implementing agency in KCDP. Safeguard policies will be addressed as part of
the planning processes in the ESMF and IPPF. The spatial development planning framework,
sensitive mapping and land capability assessments, as well as the social assessment will provide
broad guidance for all KCDP activities.
G. POLICY EXCEPTIONS AND READINESS
None. The project meets the Region‟s readiness for implementation. The procurement plan for
the first 18 months has been prepared and was agreed on between the Borrower and the Project
Team on June 4, 2010 (see Annex 8 C).
35
Annex 1: Country and Sector Background
1. Country Background: After independence, Kenya was the most prosperous country in
East Africa, with its GDP per capita rising by 38 percent between 1960 and 1980. However, the
following two decades recorded a zero increase in per capita GDP. Reform picked up speed
after donors tightened aid on governance grounds and the GoK‟s attempt to re-establish
credibility. However, tangible results in terms of a growth increase took a decade to materialize.
The peaceful presidential election and transfer of power in December 2002 was central to the
economic upswing afterwards.
2. Kenya began its economic liberalization in 1993 when investors noted the decline in
political risk as a significant development. However, the December 2007 elections highlighted
other aspects of political risk – inequality-driven ethnic and social tensions, and post election
violence that left more than a thousand dead and 350,000 displaced. A fragile peace and stability
exists with the coalition government. Challenges still exist for Kenya and the process of
economic policy and institutional reform is likely to be difficult and lengthy.
3. The Country Partnership Strategy (CPS), which has recently been finalized by the Board,
notes that the challenges that Kenya faces are comprehensive and its politics complex. Political
tension has often disturbed elections, as the widespread violence of the December 2007 elections
clearly demonstrated. According to the CPS, progress in achieving the MDGs is mixed (Kenya
will miss the poverty and health MDGs, but may reach the education one). The fact that about 50
percent of the population lives in poverty is a very serious matter; inequality is high and access
to services varies widely by region. The CPS further notes that gender inequality, poverty, and
social exclusion have fueled crime and violence. The following table (Table 1.1) compares the
Gini index in Kenya with those of neighboring countries (source CPS).
Table 1.1: Poverty and inequality in selected countries Country (years) Population <$1/day Gini coefficient Kenya (2005-06) n/a 45.2 Ethiopia (1999-2000) 23 30 Malawi (2004-05) 20.8 39 Rwanda (2000) 60.3 46.8 Tanzania (2000-01) 57.8 34.6 Uganda (2002) n/a 45.7 Source: KPIA Staff estimates based on KIHBS 2005-2006 data and WDI 2007.
4. According to the CPS analysis, governance remains a key challenge, although Kenya has
a good rating on public voice and accountability, regulatory quality, revenue mobilization, public
administration, and macroeconomic management. Kenya rates very poorly on rule of law and
control of corruption. Table 1.2 (source: CPS) ranks selected governance indicators for EAC
countries.
36
Table 1.2: Selected governance indicators for EAC countries
Measure Burundi Kenya Rwanda Tanzania Uganda LICs
CPIA 3.0 3.6 3.7 3.9 3.8
TI CPI 1.8/168 2.2/146 3.3/89 2.6/126 2.5/130
WGI
Voice and Accountability 28 44 13 45 33 28
Regulatory Quality 12 51 33 38 50
Control of Corruption 16 14 59 36 23 23
Open Budget n/a 57 0 35 51 24
Doing Business 176 95 67 131 112
5. According to the CPS, Kenya‟s governance record is mixed. On the positive side: a)
public financial management has been improved; b) the government‟s audit capacity has been
strengthened; c) the macroeconomic framework has been linked to fiscal planning; d) an
integrated payroll and personnel database has been introduced; e) Results-based management
(RBM) has been introduced into the public service, leading to more openness and transparency
in the public sector and improved results through performance contracts and rapid results
initiatives; f) Kenya continues to make progress in macroeconomic policy; g) compared to its
neighbors, Kenya‟s fiscal stabilization, budget management, financial sector reforms and
openness to the private sector are all performing well; and h) Kenya is one of the strongest
macroeconomic performers in the region. Other positive elements include the implementation of
recommendations from the National Dialogue and Reconciliation Process, which has created
opportunity and some momentum for needed governance reforms and for the passage of relevant
legislation, including an Anti-Money Laundering Law. Administrative reforms to outlaw
political fundraising, improve tax administration, and simplify business licensing have been
implemented.
6. However, the glass seems both half-empty and half full. Kenya faces challenges with: a)
property rights; b) gender inequality; c) pro-poor programs; and d) governance and transparency.
In the Country Policy and Institutional Assessment (CPIA), Kenya scores better than its peers
because it has a growing structure of laws and institutions designed to enhance government
accountability. While many of these programs have yet to show results, the independent media
and strong civil society are important partners in developing a culture of accountability.
7. On the governance front, Kenya‟s priorities are anchored around three pillars: i)
transparency and accountability; ii) core public financial management; and iii) strengthening
governance in various sectors, particularly the health, education, agriculture, and roads sectors.
Corruption is considered to be endemic in some sectors (e.g. in the police force), with some
observers complaining that a "culture of impunity" has been allowed to persist. As outlined
above, the current government has attempted to implement various anti-corruption measures, but
strong and sustained leadership in this area will be required, across all levels of government and
for a considerable period of time, to reverse past practices and make meaningful gains.
8. The Kenyan Vision 2030 is the country‟s development blueprint covering the period
2008 to 2030. It aims to “transform Kenya into a newly industrializing middle income country
providing a high quality of life to all citizens by 2030”. The Vision is based on three pillars:
37
economic, social and political. The economic pillar aims to improve the prosperity through an
economic development program covering all the regions of Kenya and aiming to achieve an
average GDP growth rate of 10 percent per annum beginning in 2012. The social pillar seeks to
build a just and cohesive society with social equity in a clean and secure environment. The
political pillar aims to put in place a democratic political system founded on issue-based politics
that respects the rule of law and protects the rights and freedoms of every individual in society.
The pillars are anchored on: a) macroeconomic stability; b) continued governance reforms; c)
enhanced equity and wealth creation opportunities for the poor; d) infrastructure development
and improvement, e) adequate energy policies; f) investment in science, technology and
innovation; g) land reform; h) human resources development; i) security improvement and public
sector reform. The Vision is ambitious and the serious issues of weak governance, inadequate
capacity for compliance and enforcement, and other tensions described earlier will pose
significant challenges to attaining and sustaining a 10 percent annual economic growth rate.
9. The economic growth envisaged in Vision 2030 places significant expectations on the
ability to increase tourism revenues, and the Coast is expected to generate the majority of
the hoped-for increase in tourism. Likewise, agriculture is also expected to be a growth pole
within Vision 2030 and the initial land capability assessment carried out during KCDP
preparation suggests that there are opportunities in this sector in the Coast. Vision 2030 also
broadly indicates how to achieve the desired growth, and, unfortunately, plans for enhanced
income generation from the tourism sector appear to be focusing on more “beds on the beach” as
the way forward. This approach could have disastrous consequences for the country and its
ability to reach the hoped-for future level of growth. The current level of tourism development
in the Coast has led to environmental degradation of the resources upon which tourism is based
and the type of tourism the Coast currently attracts also has significant social consequences for
the local inhabitants.
The Sectoral Setting and Issues
10. The marine and coastal area of Kenya has unique natural resources, which form the
economic basis of various activities, especially those based on tourism, fisheries and
maritime transport. These activities are vital to Kenya‟s national and regional growth and
development. For example, coastal tourism represents 60 percent of total national tourism.
However, too many tourist hotels over-use of fragile coral reefs by local residents and tourists,
excessive fishing pressure in inshore areas, inappropriate land use in coastal districts, and poor
management of development over a long period have severely degraded the value of coastal
resources. In addition, organic pollution from human and solid waste produced by the major
urban areas and tourist hotels also affects the natural resources upon which the coastal economy
is based. The lack of proper management also means the benefits of exploiting valuable existing
resources do not fully accrue to coastal residents or to the national economy.
11. The coastal and marine areas in Kenya are endowed with a rich diversity of tropical
marine and coastal systems, including coral reefs, seagrass beds, mangroves, offshore and
nearshore marine species and cultural heritage. However, these coastal areas are characterized by
extreme poverty and inequality. The poor communities rely primarily on the sea for their food
and income. The resource base is heavily degraded due to population pressures, unsustainable
38
exploitation methods and weak governance. Finding solutions to the issues associated with the
small-scale, sustainable use of coastal resources is critical to poverty eradication and allowing
rural to urban migration. Figure 4.1 depicts the principal activities and their contribution to
livelihoods and income of coastal populations.
12. The economy of coastal communities depends mainly on smallholder farming,
subsistence forestry, traditional fishing, livestock husbandry and small-scale trade. Coastal
and marine resources, if well managed, can contribute substantially to growth and poverty
reduction. Poor management of those same resources will lead to their degradation, which in turn
could: a) threaten public health, including the incidence of HIV/AIDS; b) undermine the
attainment of MDGs, especially in terms of reducing poverty, reducing malnutrition and
protection of the environment; and c) put at a risk marine and coastal biodiversity that is
important at the national, regional and global levels.
13. The coastal and marine resources in Kenya face a number of threats including: a)
overexploitation due to open access to marine fisheries; b) insufficient skills, knowledge,
and institutions to guarantee sustainable use and management of coastal and offshore
fisheries; c) unregulated coastal development, which poses serious problems of access to
fishers; d) inadequate scientific understanding of the state of the fisheries (in particular, the
offshore fishery resources) and biodiversity in general, and factors affecting them. Many of
the problems, opportunities and linkages of marine and coastal activities in Kenya have regional
implications, particularly the exploitation of fisheries, tourism and management of marine
ecosystems, and the exploitation of coastal mineral and offshore energy resources. The Coast
has the potential to support significant local and national economic growth and the
Figure 4.1: Economic activities and
their contribution to livelihoods and
income for coastal communities.
Source: McLanahan et al. (2005)
39
Government‟s Vision 2030 relies so heavily on a coastal contribution for its fulfillment that it is
difficult to see how this can be achieved without a resurgence of economic activity in the region.
14. Natural Resources and Water: Kenya is one of the most degraded areas in the
region; about 70 percent of the population lives in the 12 percent of total land area (581,679
km2) that is classified as having a medium to high agriculture and livestock production
potential. The growing population and the resulting increase in demand for land, energy and
water are placing tremendous pressure on the natural resource base. Kenya is a water-scarce
country, and is subject to frequent climate variations that cause serious hardship, particularly for
the poor. Management of water along the coastal margin is particularly challenging because of
salt intrusion and dramatic changes in the water table due to climate variations.
15. Forestry: Forests, including mangrove forests, are a vital part of the coastal
ecosystem but are under threat there, as elsewhere in Kenya. Kenya has about 500 km2 of
mangrove forest. The largest areas are in Lamu district, where lush forests cover of more than
300 km2. Other important areas are in the Tana River delta and the area north of Ngomeni. The
oceanic coast between Ungwana Bay and Gazi is too steep and too exposed, and only the creeks
of Mida, Kilifi and Mombasa hold significant mangrove stands. In the south, the bays of Gazi,
Shimoni and Vanga also have large and important mangrove areas. They are an important source
of economic development, environmental services, social and cultural values. Increasing
populations and unsustainable policies and practices of the past have placed unprecedented
pressures on the forests, affecting water resources, agricultural activities and biodiversity.
Clearing woodlands for agriculture and charcoal production cause serious degradation of forests.
Since 1968, the country has experienced a major decrease in forest cover, which has resulted in
reduced water catchment, biodiversity, supply of forest products and habitats for wildlife. At the
same time, the sector has suffered greatly through serious conflict over access to forest resources
between forest management and communities living adjacent to the reserves. The goal of the
new forest policy (1995-2020) is to enhance the forestry sector‟s contribution to the provision of
economic, social and environmental goods and services. Specifically, the forest policy aims to
contribute to poverty reduction, employment creation and improved livelihood through
sustainable use, conservation and management of forests and trees. Key strategies include
promoting farm forestry, engaging private sector and communities in forest management,
mangrove conservation and processing of forest products.
16. Fisheries: The fishery sector contributes about 4.7 % of the national Gross Domestic
Product (GDP) and it is an important foreign exchange earner. However, the Coast
contributes very little, and revenue from the large Lake Victoria fishery is declining. The
Government recognizes that fishing is a productive sector and has emphasized the need to
promote capture fisheries and aquaculture in order to improve food security, nutritional status
and increase income. The marine fisheries sector lands about 10,000 tons of fish, accounting for
about 10 percent of the total fish landed in Kenya. Marine fisheries concentrate on a small
number of species, the most important of which are demersal, caught by traditional fishermen
operating between the shoreline and the reef. Freshwater fish landings in Kenya have always
been higher than coastal water ones.
40
17. Along the Kenyan coast, rich inshore marine fishing grounds are located in and around
Lamu Archipelago, Ungwana Bay, North Kenya Bank, and Malindi Bank. The areas where the
two major Kenyan rivers (Tana and Sabaki) empty into the sea are also very productive. Prawn
trawling in the rich inshore fishing grounds within the Malindi-Ungwana Bay area has been
carried out since the 1970s. A comprehensive scientific research undertaken by KMFRI on the
Malindi- Ungwana Bay prawn fishery revealed that the prawn fishery is not properly regulated
and managed. The study noted the existence of conflicts between prawn and traditional fisheries
and that the greatest ones due to the destruction of traditional fishing nets, competition for
common resources, distrust between the semi-industrial prawn industry and the local fishermen,
and the rampant resources wastage because due to excessive bycatch and discards from prawn
trawlers. . According to fish landing records, Mombasa District accounted for 46.6 % of the
mean fish catch between 1988 and 1992, followed by Tana River, Lamu, Kwale and Kilifi,
respectively. There are only about 5,000 coastal fishermen compared to well over 27,000
fishermen engaged in inland fisheries. Of the 5,000 fishermen, around 4,000 are traditional
fishermen and the rest are marine industrial fishermen.
18. The Lamu Archipelago is the most productive fishing area in Kenya. The area‟s
remoteness and its proximity to Somalia present many challenges. The two key issues center on
the sustainability of the area‟s resources and the Fisheries department‟s ability to maintain
monitoring control and surveillance (MCS) in the area. In both cases, co-management between
fishers, communities, FiD and NGOs in the area will be instrumental in stabilizing fisheries and
their control in the Archipelago. KCDP will therefore aim to strengthen MCS in the area
(fisheries patrols, capacity development, VMS), promote research and surveys to better
understand the state of fish stocks in the area and promote social projects to support community
involvement in fish processing and value addition. The Project will also finance initiatives to
create opportunities for exporting of fish products through eco-labeling. The Kiunga district
marine reserve already has an established and financed co-management regime that will be a
useful example of marine resources management of in the Lamu Archipelago. Plans for
establishing a new deep-water port in the Archipelago have still not found an investor. If this
initiative gets the requisite financing, it will be subject to the EIA regulations. The KCDP aims to
strengthen capacity for implementing and enforcing EIA, EMP and Environmental Audits and to
pilot the concept of payment for ecosystem services. The problem of the Somali pirates is indeed
an matter of concern; while this issue goes beyond the scope of this Project, the KCDP aims to
strengthen inshore fisheries, co-management structures (such a Beach Management Units) and
MCS to help monitor, report and minimize illegal fishing activities in the area.
19. Wildlife and Marine Biodiversity: Tourism in Kenya relies heavily on its natural
resources, including terrestrial wildlife, and there are national parks and terrestrial
conservation areas in the Coast that could be utilized more. The Strategic Plan (2008-2012)
of the Kenya Wildlife Service (KWS) helped design the 2009 Wildlife Bill, which is awaiting
parliamentary approval. The strategy recognizes the challenge of conserving Kenya‟s wildlife
heritage and habitat across a multiplicity of sectors. KWS manages about 8 percent of the total
landmass of the country, including 22 national parks, 28 national reserves, five national
sanctuaries, four marine national parks and six marine national reserves in addition to 125
stations outside protected areas. Coral reef communities in Kenya stretch from about mean sea
level to a depth of 20-25 m. and are among the most diverse ecosystems in the sea. While corals
41
are the keystone species, the rich diversity includes almost all groups of marine flora and fauna,
such as macroalgae, fish, molluscs, crustaceans etc. The extent, size, and diversity of the coral
reef communities decrease northwards along the Kenyan coast due to discharge of sediments
from the large rivers and to influence from the Somali current. The high abundance of fish and
invertebrates on the reef is an important source of food and income for the local communities.
20. In order keep up with the increasing pressure on the marine resources, and to conserve
and manage the most important ecosystems along the Coast, the Government of Kenya has
created a system of protected areas managed by the Kenya Wildlife Service (KWS). The level of
protection is two-tiered. Strictly protected marine parks, where extraction of resources is
forbidden, are placed in the highest level. Marine reserves, where limited exploitation like
traditional fishing is allowed but closely managed, belong in the second level. Kenya has five
MPAs, each comprising one or more marine park(s) or reserves:
a) Kisite Marine Parks and Mpunguti Marine Reserve is located on the south coast off
Shimoni and south of Wasini Island in Kwale District. The complex covers a marine area that
includes four small islands surrounded by coral reef and is not connected to the mainland.
b) Kiunga Marine Reserve incorporates about 60 km of the northern coast of Kenya south of
the Somali border. The reserve is designated as a UNESCO Biosphere Reserve.
c) Malindi and Watamu Marine National Reserves encompass the Malindi and Watamu
Marine National Parks and include Mida Creek. These protected areas are also UNESCO
Biosphere Reserves.
d) Mombasa Marine Park and Reserve, including reefs and reef flats north of Mombasa, is
the most utilized Kenyan MPA because of its proximity to the city centre. The coastline is
heavily developed with tourist facilities and is also heavily fished.
e) Diani and Chale Marine National Park and Reserve is the most recent MPA. It includes
reefs, fishing grounds, and mangrove forest, and is heavily used by tourists.
21. Key goals of KWS include strengthening wildlife conservation; attaining financial
stability; enhancing partnerships with clients, communities and the private sector, enhancing
service delivery; and strengthening and modernizing institutional quality.
22. Coastal tourism and Cultural Heritage: Coastal tourism constitutes about 24
percent of the total national GDP. About 70 percent of the per capita economic activity of
the Coast region relates to tourism, placing it at the center of development. However,
tourism and cultural heritage opportunities of the Coast face many challenges, including a poor
regulatory and legal framework, poor infrastructural development, under-valuation of the tourism
product, poor marketing and circuit development. Furthermore, poor organizational capacities
and inadequate local levy retention schemes contribute to widespread poverty across the Coast
despite the rich tourism base. Tourism needs to diversify urgently in order to spread risks, ensure
sustainability and increase product value. It is also necessary to enhance local tourism through
creative product pricing that will ensure year-round tourism. The sector also provides 270,000
jobs both directly and indirectly. In some areas, such as the coastal strip around Mombasa, the
rapid development of tourism has put pressure on the sustainable use of coastal resources such as
the coral reef. Demand for seafood, shells and coral souvenirs has risen sharply as local supplies
42
have depleted. The pressure on the coastal ecosystem extends further and further from the
resorts, spreading the impact.
23. Coastal Populations, Resource degradation in a Changing Climate: The Coastal
Province along the Indian Ocean is one of Kenya‟s seven administrative provinces. It covers an
area of 83,603km² and has a population of 2,487,264 inhabitants according to the 1999 census.
Apart from Mombasa, the capital, other important towns on the coastal strip include Diani in the
south, and Malindi, Watamu and Lamu in the north. The restructuring of administrative districts
in 2007 created several new districts in the Coastal Province. Currently there are nine districts:
Kaloleni, Kilfi, Kilindini, Kinango, Kwale, Lamu, Malindi, and Mombasa, The people living in
the coastal area are amongst the poorest in the country. Sixty-two percent of the region‟s
population lives below the poverty line, and the Coast is the second poorest of Kenya‟s eight
provinces. About 34 percent of the population resides in urban areas along the coastline.
Additionally, migration from rural to urban areas of the Coast is increasing. Refugees fleeing
poverty and instability in Somalia also add to population pressures along the north coast.
Increased human concentrations heavily affect the marine resources and environment. The
resulting deterioration of the natural resource base further aggravates the vicious cycle of poverty
and associated decline in environmental quality.
Authorized
24. Kenya‟s National Climate Change Response Strategy (NCCRS) notes that climate
variations have had adverse effects on various sectors of the coastal economies, thus jeopardizing
the livelihoods of dependent communities. Prolonged droughts have caused low agricultural
yields thus compromising food security, while intense precipitation has caused severe erosion
upstream and massive sedimentation downstream, leading to the degradation of mangroves.
Elevation in sea surface temperatures has caused widespread coral reef bleaching and death. Reef
and mangrove mortality has resulted in reduced fish productivity, loss of an array of other
ecosystem good and services and reduced tourism. The goals of the strategy are: i) put in place
robust adaptation and mitigation measures needed in order to minimize risks associated with
climate change while maximizing opportunities; ii) enhance the understanding of climate change
and its national , regional and local impact; iii) provide a conducive and enabling policy
framework and a concerted program of action to combat climate change effects; iv) strengthen
Kenya‟s participation in global climate change negotiations; v) enhance understanding of
international agreements, policies and processes and the positions Kenya needs to maximize
beneficial effects; and vi) provide a coordinated approach and overall guidance to the
implementation of programs.
Policy, Strategy and Legal Framework
25. A wide array of laws regulates activities in the Coast but there are overlaps and
weaknesses in both the current structure and implementation of natural resource
management acts and regulations. Relevant legislation includes the Continental Shelf Act, the
Merchant Shipping Act, the Maritime Zones Act, the Petroleum Exploration and Production Act,
the Water Act, the Forest Act, the Mining Act, the Agriculture Act, the Kenya Ports Authority
Act, the Coast Development Authority Act, the Wildlife Conservation and Management Act, the
Environmental Management and Coordination Act, the Physical Planning Act, and the Fisheries
Act. However, many of the laws need reviewing to ensure harmonization and reduce overlap.
43
Furthermore, there are many obstacles hampering the implementation of the applicable statutes,
including: a) lack of appropriate regulations in support of the legislation, b) inadequate capacity
and governance, c) inadequate information and lack of human resources, skills and equipment
for monitoring, control and surveillance. Some of the laws that are most relevant to KCDP are
outlined briefly below.
26. The Coast Development Authority Act provides for the establishment of the Coast
Development Authority to plan and coordinate the implementation of development projects in
the whole of Coast Province and the EEZ. The Act gives broad powers to the Authority
including the power to: a) plan the development of the area and undertake project activities; b)
elaborate up-to-date, long-range development plans; c) initiate studies and surveys to identify
alternative demands and uses for the area and resources; d) coordinate the different sectoral
activities to ensure their best utilization; e) initiate a monitoring and evaluation program to assess
the progress and improve future planning; f) coordinate natural resources and, in particular,
water use; g) order the construction of water conservation works; h) ensure that landowners take
measures to conserve land and water; i) collate all data related to the use of resources in the area;
j) encourage liaising between the government and the private sector to ensure the best use of the
resources; k) examine hydrological effects and ecological changes; l) promote socio-economic
development in the Coast Province; and m) liaise, as needed, with the relevant authorities in the
exploration and exploitation of fisheries and marine resources in the EEZ.
27. Fisheries Act. The Fisheries Act is implemented by the Ministry of Fisheries
Development in conjunction with other state organizations and has provisions for the control and
management of certain coastal and marine species such as the pearl oyster, and other resources
that are threatened with depletion through commercial exploitation. The Act aims to protect
coastal fisheries from over-exploitation and unsustainable fishing practices. The prevalence of
illegal fishing both by Kenyan and by illegal fishers from across the borders poses significant
challenges to the achievement of the goals.
28. Beach Management Units. The Fisheries Act (Cap 378) establishes Beach Management
Units (MBUs) for each fish landing station. Each BMU will have jurisdiction over its area. The
Act requires that the BMU Director, in consultation with other relevant agencies, have the
relevant land area of a fish landing station surveyed and has its boundaries clearly delineated and
marked. A BMU is authorized under the Act to issue by-laws, which shall be binding upon its
members and any persons present at or using the beach. A BMU is authorized, among other
things, to a) ensure the orderly, safe and effective management and operation of the fish landing
sites; b) gather, analyze, use and transmit information and data regarding the fishery products; c)
provide financial support to cooperatives and self-help groups; d) promote investments in fish
landing sites; e) support alternative livelihood strategies to reduce pressure on fishery resources;
f) promote savings and credit facilities for members; g) designate closed areas and closed
seasons and the control sustainable management of the fishery; and h) promote co-management
areas.
29. The Forest Act of 2005 aims to “provide for the establishment, development and
sustainable management, including conservation and rational utilization, of forest resources for
the socio-economic development of the country”. The Act defines “sustainable use” as the use of
44
a forest and any of its natural resources in a manner and to an extent which does not compromise
the forest and its use by future generations, and does not degrade the carrying capacity of
supporting ecosystems.
30. The National Environmental Management Authority (NEMA) was established under
the Environmental Management and Coordination Act (EMCA), and the Environmental Impact
Assessment (EIA) regulations were developed under the same Act. The Regulations stipulate
that the provisions apply to all policies, programs, projects and activities and that no proponent
shall initiate an activity unless an EIA has been completed and approved. The Regulations
further provide that no licensing authority under any law in force in Kenya shall issue a trading,
commercial or development permit or license for any micro-project activity likely to have a
cumulative significant negative environmental impact before ensuring that a strategic
environmental plan encompassing mitigation measures and approved by the Authority is in
place. The regulations stipulate the procedure for review of the EIA and environmental audits
(EA), the clearance, approval and disclosure.
31. Overlap of institutional mandates: The coastal ecosystems of Kenya fall under the
jurisdiction of several government departments, making enforcement of regulations a challenge.
While the marine parks and reserves are under the governance of KWS, the Fisheries
Department has jurisdiction over fishing activities, and the issuance of licenses. The Forestry
Department manages the mangrove resources, while the Tourism Department licenses all tourism
activities. The CDA has the mandate to plan all activities along the Coast and to monitor and
collect data. Inadequate consultation between the departments leads to user conflicts in MPAs.
There are overlapping mandates between a) KWS and Fisheries Department in the marine
reserves; b) KWS and the Forestry Department in the mangrove forests within marine reserves;
c) KWS and the Tourism Department over licensing of tourism activities. Some mechanisms
have been developed to address these problems, mainly consultations at the time of licensing to
minimize conflict,
32. Need for Harmonization: There are many issues related to these laws that need to be
resolved, including: a) lack of adequate awareness; b) inadequate regulations; c) low fines
resulting in inefficient enforcement; d) lack of a formal program to involve communities in
enforcement (although wardens often depend on information from community elders). Muthiga
and Ndirangu (2003) emphasize that the level of compliance depends on the livelihoods and
awareness of communities. Stakeholders who depend mostly on tourism are highly compliant
mainly because they understand the benefits of a managed system and improved habitats to their
livelihood. On the other hand, fisher groups show a lower level of compliance due to a) poverty
and the need for a daily income, b) the perception that fishers from outside do not follow the
rules, c) poor regulation enforcement in the marine reserve because concentration is on the
marine parks where most revenue is collected, d) lack of understanding of the regulations and of
the connection between a closed area as a potential seeding ground and benefits. There may also
be a potential conflict of interest between KWS and the Fisheries Department whose mandate is
to license all fishing activities in Kenya regardless of the status of protection. Increased
consultation between KWS and Fisheries Department and between KWS and fisher communities
has led to improved resource management. The MPAs currently rely on many different
stakeholders to help with enforcement including a) hotels; b) boat operators who ferry visitors to
45
the MPA, c) NGOs like the Coral Reef Conservation Project (CRCP), WWF and KMFRI, who
assist with scientific expertise; and d) the collaboration of fishers and recreational users who
comply with MPA regulations.
46
Annex 2: Major Related Projects financed by the Bank and/or other agencies
Sector Issue Addressed Project Latest Supervision
Ratings (PSF)
World Bank/IDA Impl.
Progress
(IP)
Dev,
Objective
(DO)
Cross cutting Natural Resources
Management
MU MU
Rural Development Arid Lands Resources
Management phase I
S S
Rural Development Arid Lands Resources
Management phase II
S S
Rural Development KE-GEF Western Kenya
Integrated Ecosystem Mgmt
S S
Fisheries SWIOFP S S
Environment Lake Victoria Environment
Management Project I
S S
Rural Development Western Kenya CDD/Flood
Mitigation
MS MS
Infrastructure/Water Water and Sanitation Services
Improvement
S S
Agriculture Kenya Agric Productivity &
Agribusiness
S MU
Finance/Rural Development MSME Competitiveness MS MS
*Data from the last Project Supervision Rating
Other Agencies
Ministry of Lands, Physical Planning
Department and Ministry of Tourism
Resort City Planning-
towards the Vision 2030
S
Ministry of Lands, Physical Planning
Department and Ministry of Tourism
Land use plans for Lamu
Regional Plan, Kwale/
Mombasa Mainland South
S
UNEP/ FAO/PAP/CDA 2000
East Africa Regional Seas Technical
Reports
Progress in Integrated Coastal
Management for Sustainable
Development of Kenya's
Coast
S
GoK 2001. Government of Kenya (GoK),
Ministry of Finance and Planning,
Nairobi
Poverty Reduction Strategy
Paper
S
GoK 2003. (2003-2007). GoK,
Ministry for Planning and
National Development
Economic Recovery Strategy
for Wealth and Employment
Creation
S
Addressing land-based activities in the GEF/UNEP S
47
Western Indian Ocean (Wiolab)
Kwale landscape ecological project WWFEARPO S
Capacity Building for Mangrove
Assessment Restoration and Valuation
(CAMARV)
KMFRI
Regional Programme for the
Sustainable Management of the
Coastal Zones of the Countries of the
Indian Ocean (ReCoMaP)
Indian Ocean Commission S
Impacts of Climate change to Coastal and
Marine Resources in East Africa
KMFRI, EAWLS S
GoK 2003. GoK, Ministry of
Planning and National Development
Kenya's Millennium
Development Goals Progress
Report
S
Kenya ICZM 1996, USAID, FAO,
UNEP, PAP and CRC University of
Rhode Island; Kenya Marine and
Fisheries Research Institute, Wildlife
Service, Fisheries Department, Mombasa
Municipal Council, Kenya Association of
Hotelkeepers and Caterers
Towards Integrated
Management and Sustainable
Development
S
48
Annex 3: Results Framework and Monitoring4
1. The results framework will be used to track progress towards the PDO and GEO to make
any necessary changes in the Project, during its implementation. The PDO is to promote
environmentally sustainable management of Kenya‟s coastal and marine resources by
strengthening the capacity of existing relevant government agencies and by enhancing the
capacity of rural micro, small and medium-sized enterprises in selected coastal communities.
PDO Outcomes Project Outcome Indicators Use of Project Outcome Information
These indicators will help to:
Proportion of increased revenue
generated to GoK from vessel
licensing in 200 mile EEZ and
from near shore fisheries
development
Improved cost recovery from
management of MPAs leading
to increase in proportion of
operational costs of MPAs
covered by own-revenues
through realistic access fees and
tourist use.
Enhanced support to selected
rural micro, small and medium
sized enterprises in pilot
villages
50% increased revenue generated
to GoK from vessel licensing in
200 mile EEZ and from nearshore
fisheries development
10% increase in cost recovery of
MPAs
Evaluate the capacity of Fisheries
Department to leverage revenue
generation through development of new
fisheries outside the coral reef, and to
document the level of re-investment of
revenue into the fisheries sector.
Improved ability to negotiate fishing
license agreement in 200 mile EEZ,
reduction in illegal, unlicensed and
unregulated fishing in 200 mile EEZ
20% increase in micro, small and
medium sized enterprise startups and
business expansions directly related
to project interventions in pilot
villages
Assess the capacity of MPAs and MMAs
system as managed by KWS to generate
revenue from tourism, increase user fees
to realistic levels, reduce operational
costs of management, and document its
financial and institutional sustainability
Assess the capacity of the CDA to work
effectively with MSME‟s
Environmental Global
Objective (EGO):
Daily observations of vessel
catch and effort entered into, ,
including resulting by-catch
estimates and impacts of project
by-catch control measures
Existing conservation areas and
co-managed conservation areas
brought under active
management
Quality of data, data coverage and
reporting frequency of catch and
effort (the frame) (15,000 records by
EOP) improved. and associated with
by-catch management measures
At least three of the more important
existing conservation areas brought
under effective management
(including co-management) by EOP)
Assess management regimes in project
target areas and document project
effectiveness in organizing Beach
Management and other similar co-
management arrangements in forests and
other ecosystems to improve conservation
and sustainable use by stakeholders in
those areas.
4 The GEF Tracking Tool, including process, stress reduction, and environmental status indicators relevant to International
Waters projects of the GEF will also be included in the detailed M&E Plan prepared as part of the PIM and adopted by all
participating agencies
49
Intermediate Outcomes Intermediate Outcomes indicators Use of Project intermediate Outcome
indicators
Outcome 1: Sustainable management of fisheries resources
(1.1.) Installation of VMS on
all licensed fishing vessels in
the EEZ by the end of year 6
Installation of VMS on all licensed
fishing vessels in the EEZ by the end
of year 6 leading to less illegal and
more legally licensed fishing when
combined with a strong MCS
*Assess operational performance of EEZ
fishing vessel licensing and identify any
policy and training gaps
*Review sustainability strategies for EEZ
and marine ecosystem management
regarding catch
(1.2) Two fishery management
plans and
One co-management plan
developed and fully
implemented
Number of Fishery management
plans
Number of stock assessment (5
priority species and others)
Assess the implementation progress and
performance for Fisheries Implementation
Unit
Outcome 2: Sound management of natural resources
Direct Beneficiaries % of
which are female
Number of individuals assisted
through CVF, PPP, MSME activities
in the sector
(2.1.) GIS developed and
populated to establish baseline
information and improve
management
Three Integrated Conservation
Management Plans developed and
implemented
Assessment of baseline information and
monitoring of management targets.
Improves operational capacity of KWS
and KEFRI
(2.3.) Integrated Environmental
Management Plans established
in project areas
Improved sustainability and
profitability in use of natural
resources
Reduction in destructive activities
such as dynamite fishing, cutting
mangroves, charcoal manufacturing,
etc.
Number of communities engaged in
activities to preserve and sustainably
use the coastal and marine resources
Number of resource based enterprises
established at community level
Review and document coverage and
performance of coastal communities
empowered to manage sustainable the
coastal resource on which their
livelihoods depend and its involvement
and participation in NRM
Outcome 3: More sustainable resource use through alternative livelihoods in the coastal zones that reduce impact
on the environment
(3.1.) Spatial Planning and land
capability maps prepared and
adopted in order to promote
sustainable and best economic
use of the coastal natural
resources
Spatial Development Plans prepared
in 1 Coast Province; 2 Districts; 8
action areas combined plans
developed
Regulate the use of natural resources for
sustainable development and provide a
proven approach other Kenyan provinces
and districts can use
(3.2.) Environmental
governance is enhanced through
increased compliance with
environmental regulations,
promotion of ICZM and
recognition of best practices
Number of officers from lead
agencies trained on EIA/EA review
process
Three environmental audits for
KCDP community-based projects
undertaken
Review and document environmental
governance in the Project area and
provide a proven approach for replication
in others areas
Monitor compliance with environmental
regulations in the Coast region
(3.3.) Enhanced livelihoods of
entrepreneurs tested through
limited pilots that increased
market competitiveness and
promotion of PPPs
Number of PPP funded and still in
operation at EOP
Assess conditions, eligibility criteria and
modalities of PPP investments
Review gained experiences and
sustainability and provide proven
approach for replication in other areas
50
Intermediate Outcomes Intermediate Outcomes indicators Use of Project intermediate Outcome
indicators
(3.4.) Coastal communities
demand, implement and
monitor services, and access
opportunities to improve
livelihood
Number of sub-projects (community
demand-driven social and income
generation) through CVF completed
and operational
*Assess impact of assets created on
improved services towards the attainment
of MDG indicators coastal communities
*Assess the implementation progress of
income generating subprojects and its
sustainability
Outcome 4: Capacity Building, M&E, Efficient Project Coordination and Communication
(4.1) An effectively managed
Project that achieves its stated
objectives and outcomes and
measures them properly
M&E Reports produced
Number of staff trained from
participating institutions
Assess the effectiveness of the Project by
determining Project deliverables
Review efficiency of involved Ministries
and agencies to implement project
activities.
(4.2) Increased awareness of
project activities and enhanced
participation of relevant
stakeholders in the project
Communication strategy prepared by
end of PY1 and accomplished by
EOP
Implement necessary changes to improve
the performance of the project
Arrangements for Results Monitoring
2. Introduction: The monitoring the overall implementation of the KCDP according to
KPIs and targets, objectives and impact hypothesis is crucial to the application and revision of
the design of the Project, as well as to the strategic orientation and success of activities.
Continuous monitoring by participating entities will assist in making course corrections and
adaptive management. The understanding gained during the monitoring and evaluation may lead
to a reassessment of the situation, new questions, and new options to be considered, in a
continual cycle of improvement. The lessons learned from monitoring and evaluation should be
shared with all participating agencies, thereby creating an exchange of experiences that will
facilitate the replication and the scaling-up of existing initiatives.
3. Project implementation will be guided by a Results Framework. KMFRI/PCU will be
responsible for developing a Monitoring and Evaluation System (M&E) (including M&E
strategy and action plan) over the first quarter of PY1. An overall Results Framework was
prepared during project formulation and will be incorporated into the PCU Information
Database, which will form the basis for tracking key implementation progress indicators. The
M&E System will be based on the Results Framework presented above5. Particular attention is
being paid to establishing realistic and useful indicators that can be regularly collected and
maintained in the Information Database.
4. The PCU is responsible for implementing the KCDP M&E framework and a full time
M&E Specialist will be recruited/staff for the KCDP project. S/he will be responsible for:
5 The project results monitoring indicators presented here were identified during the Pre-appraisal phase. They will be gathered
from a subset taken from this list, as agreed with AFTQK.
51
strengthening the monitoring system to ensure sound output, process and outcome
monitoring using realistic and useful indicators;
developing the M&E strategy and action plan;
maintaining the overall M&E framework including implementation procedures, tools, the
data flow chart and the budget;
assisting in the design and implementation of the various KCDP baseline surveys;
validating data through random sampling recording and aggregating process;
quarterly and annual M&E reporting, annual safeguards reporting;
promoting demand for M&E;
assisting with annual audits, MTR and ICR;
5. The M&E Specialist will maintain the information database, producing reliable
information in a timely manner. This database will include basic physical and financial records,
details of inputs and services provided to the beneficiaries (for example funding and training),
data obtained from surveys and other recording mechanisms designed especially to collect
information from CVF sub-projects and the very limited PPP initiatives.
6. The PCU will monitor each KCDP Component and its sub-components through
component documentation, reporting and field visits. However, monitoring must be undertaken
by all participating agencies (FiD, KMFRI, KWS, KEFRI, Planning Department, NEMA, CDA
and Tourism Department). Each agency will provide baseline information of the proposed
interventions, objectives and measurable monitoring indicators.
KCDP Reporting on M&E
7. The data contained in the field reports will be reviewed by the M&E Specialist and
entered into the PCU Information Database. The KCDP PCU will issue quarterly and annual
reports on the overall status of the KCDP Components for examination by Mid-term review and
Implementation Completion Report (ICR). Reports will reflect the key performance indicators
and related management indicators.
8. The KCDP agency will prepare bi-monthly reports on the implementation of activities,
indicating the milestones achieved (according to plan) and the difficulties encountered. Where
possible, the reports will also provide the degree of achievement of the measurable targets. The
report will also contain red flags requiring attention from the Project Management Team. A draft
report template for M&E of KCDP components will be annex to the Operation Manual.
KCDP Mid-term and Final Evaluation
9. The KCDP PCU will coordinate with an outside consultant to execute an external
independent Mid-term evaluation at the end of the second year of implementation. The Mid-term
evaluation will determine progress being made towards achievement of the planned outcomes
and allow the project manager to identify appropriate adjustments to be discussed with the Bank
Task Team. Final evaluation: a similar evaluation will take place towards the end of the final
year of funding. This final external independent evaluation will focus on the same issues as the
52
mid-term evaluation and will examine relevance, effectiveness, efficiency, impact and
sustainability of results and provide recommendations for follow-up activities. The final
evaluation will be an input into preparation of the Borrower‟s ICR.
53
Arrangements for results monitoring
Target Values Data Collection and Reporting
Project Outcome
Indicators Baseli
ne YR1 YR2 YR3 YR4 YR5 YR6 EOP Frequency and
Reports
Data Collection
Instruments
Responsibility
for Data
Collection
PDO: Achieve greater value and improved livelihood from sustainable management of marine and coastal resources
50% increased
revenue generated to
GoK from vessel
licensing
0%
5%
5%
5%
15 %
10% 10% 50%
Baseline; Monthly;
Quarterly and Annual
Reports; Mid-Term
Review and ICR
Accounting
records from
FiD Fisheries MIS
FiD and
KMFRI
15% increase in cost
recovery from
management of
MPA‟s.
0% 0% 0% 5% 5% 5% 0% 15% Baseline; Quarterly
and Annual Reports;
Mid-Term Review and
ICR
Accounting record
of MPAs
benefiting from
the Project; GIS
KWS; KEFRI;
NEMA;
20% increase in
MSME startups and
business expansion
directly related to the
project
0% 0% 5% 5% 5% 5% 0% 20% Baseline; Quarterly
and Annual Reports;
Mid-Term Review and
ICR
Household
surveys, business
registration
CDA
GEO: Strengthen conservation and sustainable use of marine and coastal biodiversity
Quality of data, data
coverage and reporting
frequency of catch and
effort (the frame,
15,000 records by
EOP) improved and
associated with by-
catch management
measures
1,000 2,000 5,000 5,000 10,000 15,000 15,000 15,000 Daily; Monthly and
Annual Reports; Mid-
Term Review and ICR
Logbooks,
Surveys and
Fisheries MIS
FiD
At least three of the
more important
existing conservation
areas brought under
effective management
(including co-
management) by EOP)
0 0 0 1 1 1 0 3 Quarterly and Annual
Reports; Mid-Term
Review and ICR
Baselines;
Surveys and
Monitoring
Reports of Project
areas of
intervention
KWS; KEFRI;
NEMA
54
COMPONENT 1: Sustainable management of fisheries resources
Installation of VMS
on all licensed fishing
vessels in the EEZ by
the end of PY4,
leading to less illegal
and more legally
licensed fishing when
combined with a
strong MCS
0 completed Quarterly and Annual
Reports; Mid-Term
Review and ICR
Surveys and
Fisheries MIS
FiD and KMFRI
Number of Fishery
management plans
0 0 1 1 0 1 0 3 Quarterly and Annual
Reports; Mid-Term
Review and ICR
Surveys and
Monitoring
Reports
FiD and KMFRI
Number of stock
assessment (five
priority species and
others)
0 `0 1 1 2 1 5 Quarterly & Annual
Reports; Mid-Term
Review and ICR
Surveys and
Monitoring
Reports
FiD and KMFRI
COMPONENT 2: Sound management of natural resources
Number of Direct
Beneficiaries,
including percentage
of female beneficiaries
500 1,000 3,000 3,500 1,000 1,000 10,000
35%
women
Quarterly and Annual
Reports; Mid-Term
Review and ICR
Surveys, GIS
progress reports,
evaluated against
basis data needs
identified at outset
KWS; NEMA;
KEFRI Spatial
Planning
Three Integrated
Conservation
Management Plans
developed and
implemented
0 1 1 1 3 Quarterly and Annual
Reports; Mid-Term
Review and ICR
Surveys, GIS
progress reports,
evaluated against
basis data needs
identified at outset
KWS; NEMA;
KEFRI Spatial
Planning
Reduction in
destructive activities
such as dynamite
fishing, cutting
mangroves, charcoal
manufacturing, etc.
0 0 5% 5% 5% 0 15% Quarterly and Annual
Reports; Mid-Term
Review and ICR
Policy studies and
Monitoring
Reports
KWS; NEMA;
KEFRI Spatial
Planning
55
Number of
communities engaged
in activities to preserve
and use sustainably the
coastal and marine
resources
0 1 1 1 1 1 5 Quarterly and Annual
Reports; Mid-Term
Review and ICR
Policy studies and
Monitoring
Reports
KWS, KEFRI
Number of community
level resource-based
businesses established
0 0 1 1 1 3 Quarterly and Annual
Reports; Mid-Term
Review and ICR
Field visits and
monitoring
reports
KWS; KEFRI;
NEMA
COMPONENT 3: Sustainable livelihoods
Land Capability and
Spatial Development
Plans prepared in 1
Coast Province; 2
Districts; 8 combined
action plans developed
1Prov 1 dist 1dist 3
action
plans
3 action
plans
2
action
plans
1 Prov
2 Dist
8 actn plns
Quarterly and Annual
Reports; Mid-Term
Review and ICR
surveys, GIS
progress reports
Physical
Planning
Department
Number of officers
from lead agencies
trained on EIA/EA
review process
0 15 15 20 25 10 0 85 Training reports NEMA reports NEMA
Number of
environmental audits
for KCDP community-
based projects
undertaken
0 0 1 1 1 0 0 3 Environmental Audit
reports for KCDP
projects
NEMA reports NEMA
Number of PPPs
funded and still in
operation at EOP
0 0 1 2 1 1 0 5 Quarterly and Annual
Reports; Mid-Term
Review and ICR
CDA records and
CDA monitoring
reports
CDA
Number of CVF sub-
projects (community
demand-driven, social,
and income
generating) completed
and operational6
0 100 120 120 100 60 0 500 Quarterly and Annual
Reports; Mid-Term
Review and ICR
Sub-project
preparation
proposals
ALRMP; M&E
6 Actual numbers of women benefiting from the CVF are hard to determine accurately. In other, similar and similarly funded projects groups seeking assistance
have on average about eight members. Groups can be all men, all women or a mix of men and women. The Project aims to award 35% of CVF projects to
women and youth groups. If half of these “minority” CVF awards go to all-women‟s groups, then 1,400 women would be directly assisted. Assuming that the
56
COMPONENT 4: Capacity building, Monitoring & Evaluation System, Project Management , Communication and Coastal Village Fund
M&E reports produced 0 YES YES YES YES YES YES YES Quarterly and Annual
Reports; Mid-Term
Review and ICR
M&E reports
from the KCDP
implementing
agencies:
M&E Officer in
collaboration
with KCDP
Number of staff from
participating
institutions trained
0 10 10 10 10 10 10 60 Bi-annual training
courses
Training reports,
certification
provided
PMT; M&E
Officer
Communication
strategy prepared by
end of PY1 and
accomplished by EOP
0 YES YES YES YES YES Quarterly and Annual
Reports; Mid-Term
Review and ICR
PMT
remaining 325 CVF projects have, on average, two women in each group (again, based on experience and a conservative estimate), another 700 women would be
directly assisted, for a total of 2100 women.
57
Annex 4: Detailed Project Description
1. Background: The KCDP is a six-year project designed as a first phase of a longer-term
program, where subsequent phases may be supported by IDA or by other donors. KCDP focuses
on promoting growth and reducing poverty in one of the poorest provinces in Kenya, the Coast
Province. The project design internalizes a framework for environmental-friendly and
sustainable utilization of natural resources within which all activities of the project will be
implemented. The project focuses on the marine, inshore and coastal environment and promotes
policy, legislative and institutional reform geared at increasing revenue, productivity, incomes
and quality of life for the poor. The project also has a strong focus on the Exclusive Economic
Zone (EEZ) of Kenya, the 200 nautical miles zone adjacent to the Coast that is under Kenyan
jurisdiction under the UN Law of the Sea Convention (UNCLOS). Kenya has made an
application to the UNCLOS to extend its EEZ to 350 nautical miles from the baseline and is
awaiting a decision. The project promotes direct investment in: i) increasing revenue from
improving licensing of commercial fishing vessels in the EEZ; ii) supporting a network of
protected marine areas to conserve and sustainably manage the unique marine and coastal
resource base upon which livelihoods, productivity and growth in sectors such as tourism are
based. The network will include community-managed areas and co-managed areas as well as
existing government-managed areas. The project will promote, technology, training, facilitated
access to affordable credit and markets to achieve value addition and a greater share of the value
from natural resource exploitation. The project also promotes a few public/private partnerships to
ensure the economic viability and sustainability of the investments. These partnerships will be
carried out with the collaboration and support of IFC. The project emphasizes the establishment
of an effective regulatory and institutional framework and participatory processes for spatial
planning, land capability mapping, integrated coastal management and private investment.
2. Beneficiaries: The population living on the coastal margin, one of the poorest in Kenya,
is one of the main target beneficiaries. However, sound management of the EEZ fishery
resources will benefit all citizens of Kenya since the revenue from improved licensing will
accrue to the National Treasury. Similarly, sound management of natural resources along the
Coast and in wildlife areas will lead to greater productivity, wealth creation, and increased
livelihoods very much in line with GoK goals outlined in the Vision 2030. Given the lack of
employment opportunities, particularly for coastal youth and women, there is a critical need to
identify and invest in micro, small and medium-sized enterprises, in skills development, and in
public/private partnerships if the local population is to participate effectively and benefit from
this tourism-based growth. The KCDP will support a range of specialized assessments to be
carried out in areas with tourism potential. These assessments will identify new biodiversity
products, economic opportunities, tourism circuits and markets.
3. Regional Cooperation: Improved cooperation with regional neighbors, in line with the
East African Cooperation initiative, will reduce costs of marine resource exploitation
surveillance and promote new and larger tourism circuits. On the Northern border, serious threat
of piracy requires a coordinated response by a number of institutions in Kenya, to protect marine
resources and the security of Kenyans living near the border. Improved governance of coastal
resources, including strengthened enforcement and compliance of environmental and other
legislation, will be the first step of a long-term strategy.
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4. The Project development objective is to promote the environmentally sustainable
management of Kenya‟s coastal and marine resources by strengthening the capacity of existing
relevant government agencies and by enhancing the capacity of rural micro, small and medium-
sized enterprises in selected coastal communities. Achieving the PDO would result in the Coast
Province‟s improved assimilation and effective use of future, more broadly focused,
development assistance. The Global Project objective is to strengthen conservation and
sustainable use of marine and coastal biodiversity. The KCDP is the first of what is expected to
be a series of investments in the Coast by the Bank or other donors. The KCDP will be
implemented through four inter-related components.
5. Basis for Selection of Components: Firstly, fisheries in Kenya‟s EEZ are exploited only
by Distant Water Fishing Nations (DWFN). Vessel licensing is Kenya‟s only revenue from this
business. Kenya does not earn revenue from this activity because of inadequate capacity, lack of
equipment and monitoring. The nearshore is mostly overfished and traditional fishers produce
very little production, as they do not have the capacity to go offshore or even beyond the fringing
reef. Given these serious issues, the sector requires reform and capacity building to avoid the
collapse of the offshore fishery and lost opportunities for higher productivity of the nearshore
fishery. Secondly, Vision 2030 identifies tourism as an engine of growth. This tourism is
dependent on sound management of coastal natural resources including wildlife areas. Therefore,
managing the resource base in a more sustainable manner is critical. Thirdly, the poor need to
participate in the growth agenda. The current inequalities in the population are a serious concern
to the GoK. In order for the poor to participate, they need training, skills, technology, and easier
access to credit and markets. Identifying and investing in microprojects, micro, small and
medium-sized enterprises, and promoting public/private partnerships is critical. Promoting value
addition of the products of fishermen and farmers is also significantly needed. These are the key
elements in the KCDP design.
6. Lessons Learned and Incorporated in the Project Design. There is nothing new and
untested in the KCDP. Its technical design and implementation management arrangements are
based on similar, successful, coastal and natural resource management operations in Kenya, and
elsewhere within and outside of Africa. Lessons from the region and around the world (Tanzania
Marine and Coastal Environmental Management Project; South West Indian Ocean Fisheries;
Lake Victoria Environmental Management Project; Coral Triangle Initiative in East Asia,
Coastal Resources Management Project in Sri Lanka) have been incorporated into the KCDP
design. They range from how an effective MCS program can lead to an increase in revenue
generation and resource sustainability, to how spatial planning and identification of sensitive
areas within the context of an integrated coastal management strategy can reduce the negative
impacts of resource exploitation. Lessons from the sub-sectors are:
Fisheries:
a) Effective MCSs can increase revenue generation and resource sustainability while also
reducing illegal fishing;
b) Long-term sustainable harvesting of resources prevents stock collapses;
c) Optimal resource management reduces ecosystem impacts and improves tourism
potential;
d) Improved economic benefits enhance the quality management of fish harvested;
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e) Partnerships at all levels (including local communities and neighboring countries) can
enhance the effectiveness of fisheries.
Sound NRM Management:
a. Spatial planning and identification of sensitive areas within the context of an integrated
coastal management strategy can reduce negative impacts of resource exploitation;
b. A network or system of protected and managed areas is generally more sustainable and able
to withstand external shocks such as reduced tourism. A comprehensive and representative
system is ecologically more resilient and will contribute to poverty reduction in nearshore
areas while also providing ecosystem support for deep sea fisheries;
c. Adaptive management models of management that reflects local needs and capacity have
proved to be more viable;
d. Co-management models improve cost-effectiveness and implementation efficiency. Private
sector involvement and public/private partnerships are particularly cost-efficient;
e. Inshore and offshore MPAs and transboundary conservation areas are being increasingly
used globally as not only a biodiversity and conservation tool but also as a fisheries
management tool. MPAs have been predominantly focused on inshore areas where they are
relatively easy to manage and control. Offshore MPAs present a somewhat different
challenge. For example, a fishing industry-based initiative to manage a fishery has declared
an area the southern Indian Ocean closed to trawling. High seas operators that collaborate in
targeting deepwater stocks (Orange Roughy, Alfonsino and other deepwater species) have
formed the Southern Indian Ocean Deepwater Fishers Association (SIODFA), effectively
creating a deepwater offshore protected area. In contrast, established inshore MPAs are no-
take zones or they can permit controlled fishing through collaborative co-management
arrangements with fishers. On the east coast of South Africa for example, the World
Heritage site Isimangaliso was declared an MPA. It is contiguous with the Maputaland MPA
that extends to Mozambique, effectively forming a transboundary protected area. These
MPAs have two types of zones, either Sanctuary Areas (core area) or Restricted Areas
(buffer zone). The seaward extent of both the Isimagaliso and Maputaland MPAs is three
nautical miles, combining both limited fishing and sanctuary areas. These two MPAs have a
successful balance between no-take and controlled exploitation and are useful examples of
how MPAs on the East African Coast can add value from both a fisheries management and
conservation perspective (From Japp D., 2010).
Provision of resources and service delivery to communities:
a. Alternative livelihoods schemes that promote sustainable resource use are consistent with
decreasing income poverty and improving local empowerment;
b. The identification of micro-projects needs to be carried out in a highly participatory manner,
ensuring social inclusiveness;
c. Microprojects should be identified, designed and implemented within an environmental
framework that internalizes or mitigates localized and/or cumulative environmental impacts;
d. Partnership with an ongoing project that already has a successful record in providing
resources and service delivery to communities is an efficient model. The ALRMP II has this
experience and the Tanzania Marine and Coastal Environmental Management Project
(MACEMP) has also successfully disbursed resources to the communities through a partner
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project, the Tanzania Social Action Fund (TASAF) set up to provide direct support to
communities.
e. Reports of success in limited geographical areas spread widely. Political pressure can mount
quickly to spread the project and its resources to other localities. Replication and scaling up
needs to considered carefully bearing in mind the needs, availability of resources and
capacity on the ground.
Biodiversity-based microenterprise development:
a. Ensure the implementation of sound projects that deliver clear and measurable benefits to
community as well as to private stakeholders;
b. Ensure the exchange and transfer of knowledge relating to business as well as biodiversity
and natural resource management expertise to communities and individual entrepreneurs;
c. Ensure that the involved communities and entrepreneurs achieve significant livelihood and
quality of life improvements;
d. Define innovative businesses along the supply-chain of multinational corporations;
e. Create sustainable microenterprises that may be multiplied;
f. Identify new and innovative business ideas and benefit streams
g. Ensure added value;
h. Endure biodiversity conservation, sustainable use and benefit sharing;
i. “Revitalize” products and services based on traditional and/or indigenous knowledge, such as
medicinal plants;
j. Improve value and management of biodiversity at a local level.
Project Components
7. Component 1: Sustainable management of fisheries resources. Though the fishery
resources of the Coast are poorly understood and underutilized, they could create opportunities
for improved livelihoods and economic growth. Local catches are insufficient to meet domestic
demand in the Coast Province, and fish is imported for local consumption. The KCDP aims to
increase benefits and revenue generation derived from coastal fisheries through: a) improving
governance including monitoring, control and surveillance of the fishery in the EEZ; b)
advancing research on coastal and nearshore fish stocks, promoting alternative fishing
technologies, and supporting linkages between fishermen and processors and fishmongers; and c)
increasing fish production through aquaculture, which will have national implications given the
falling revenue from the Lake Victoria Nile Perch fishery.
8. Sub-component 1.1: Governance and management of offshore and coastal fisheries
resources. Investment in the management of the EEZ fishery will produce almost immediate
benefits. Three outcomes should emerge from this sub-component: a) improved fisheries
governance, including adoption of appropriate legislation; b) increased fisheries management
capacity; and c) cost-effective monitoring control and surveillance (MCS) structures for the EEZ.
The MCS strategy is based on the development of both deterrence and regional collaboration
through increases in penalties and in surveillance.
9. Improving intelligence gathering and exchange of information will increase familiarity
with the fishing patterns of the vessels operating in the region and patrols will work in the areas
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and during the seasons of main fishing activity. Because of the improved regional data exchange,
offenders will be more easily identified. Kenyan and Tanzanian fisheries administrations are
already discussing the possibility of jointly hiring patrol vessels used in the region under an
adaptive surveillance strategy, although there are no plans to acquire a patrol vessel as the costs
are prohibitive. Ultimately, the project strategy will demonstrate the trade-off between in the
costs of generating license fees and the potential revenue gains through an improved MCS and
management regime for offshore fisheries. Tuna fisheries will be targeted for management as
part of offshore fisheries resources. However, the Project will not undertake any value addition
(processing) of this fishery and, as previously stated, value added increases will mainly be
generated by improved licensing. There might be interest for a fishing agreement with the EU,
since all EU vessels are currently licensed individually, and a fishing agreement would reduce
transaction costs, generate more stable revenue for Kenya and eventually increase revenue.
However, this is not an objective of this Project, since conditions and capacities are currently not
available to enter into negotiations with EU. The project intends to create these conditions and
capacities.
10. The KCDP will invest in (a) increased licensing of DWFN vessels; (b) improved MCS
and capacity building, which will lead to increased revenues, reduced illegal fishing and reduced
by-catch and waste; (c) routine monitoring of vessels, licenses, fish landings and reporting of
vessel activity on a daily or seasonal basis to develop a transparent fisheries management
information system and related activities.
11. Sub-component 1.2: Research on fish stocks and fisheries, fish value addition and
market chain enhancement. This sub-component invests in research and development of
unexploited and largely undefined nearshore fisheries that coastal fishermen could be develop
and access. It supports improved licensing arrangements and resulting revenue derived from
foreign fishing vessels accessing deeper water fish stocks in the Kenya‟s EEZ, and identifies
commercially viable and environmentally sustainable aquaculture opportunities in the Coast.
These investments should, over time, lead to improved livelihoods for coastal communities and
improved revenue from the fishing sector to compensate for the falling revenue from fishing in
Lake Victoria.
12. Expected outcomes include (a) improved understanding and management of Kenya‟s fish
resources; (b) improved value addition of fish caught and landed in Kenya by traditional, semi-
industrial and offshore industrial sectors through research focusing on a Quality Control (QC)
and Value addition Systems. This will strengthen the existing QC systems in Kenya fisheries,
improve fish quality and increase the financial benefits derived from harvesting these stocks, and
improve value and market chain infrastructure, including eco-labeling benefits, product value
enhancement and optimization strategies; (c) development of Public Private Partnerships (PPPs);
and (d) enhanced market chains.
13. The Project will invest in (a) developing fishery-specific co-management plans; (b)
spatial mapping of fisheries and related oceanographic and environmental parameters; (c)
research to support stock assessments for 10 priority species; (d) research on by-catch and tools
for reducing mortality of turtles, seabirds, mammals and other protected or endangered species.
Once baseline knowledge on fish stocks in Kenyan waters is acquired, the best available
62
assessment methodologies will be used to support management of these resources. These could
include commercial fishing statistics or independent (research cruises) assessment methods that
utilize as far as possible collaboration with fishers, and both local and international knowledge.
In this regard, the Project will develop synergies with SWIOFP to avoid overlapping and cost
inefficiency.
14. Sub-component 1.3: Fish production through sustainable aquaculture development. The sub-component expected outcome is the sustainable development of aquaculture and
opportunities. The role of the public sector will be to establish an enabling environment for
investment in this area, conduct research, strengthen management and promote PPPs. The
KCDP will invest in (a) demand-driven research for aquaculture; (b) rehabilitation and
construction of hatcheries; (c) artemia production; (d) quality assurance and pilot projects to
build capacity and awareness in fishing communities. The KCDP will also invest in developing
the policy framework to include: (i) zoning–site selection; (ii) safe (no chemicals) and
sustainable processing; (iii) participatory planning and equity support; and (iv) clarity in the
fiscal regime. Several agencies will be involved in this activity. Spatial planning will identify
appropriate areas for aquaculture. Spatial Planning is the responsibility of the Ministry of Lands
(Physical Planning) and the Ministry of State for Planning, National Development and Vision
2030 (Economic Development Planning). The Fisheries Department will identify areas where
aquaculture is possible. The Ministry of Lands will refer to the Spatial Plan to authorize
aquaculture locations. NEMA is responsible for EIA requirements and review.
.
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Table 1.1: COAST REGION MARINE FISH PRODUCTION (IN Kgs) BY DISTRICT AND BY SPECIES
MOMBASA
LAMU
MALINDI
KWALE
KILIF
I TANA RIVER
TOTALS
Kgs KSHH Kgs KSHS Kgs KSHS Kgs KSHS Kgs KSHS Kgs KSHS Kgs KSHS
DEMERSALS: Rabbit Fish, Snappers, Parrot Fish, Surgeon Fish, Unicorn fish, Grunters, Pouters, Rock Cod, Cat Fish etc.
Sub Total 260,084 24,570,831 1,685,923 605,12,102 366,514 22,312,911 852,880 458,22,388 154,903 1,039,4024 77,079 45,87,063 3,397,383 168,199,319
PELAGICS: Crevalle Jack, Mullets, Little Mack, Barracuda, Milk fish, King Fish, Sail fish, Tunny, Dolphin fish etc.
Sub Total 116,357 8,082,649 287,643 1,1642,406 378,635 24,590,237 978,400 6,2061,782 147,750 100,55,293 28,720 2,189,669 1,937,505 118,622,036
Sharks, Rays, Sardines and Mixed fish
Sub Total 133,648 8,246,972 60,643 3,535,738 147,446 9,194,078 186,853 18,050,131 132,620 6,240,554 242,66 1,856,207 685,476 47,123,680
CRUSTACEA: Lobsters, Prawns, Crabs
Sub Total 109,294 20,242,933 122,487 56,482,670 74,641 1,0816,636 896,47 19,907,535 17,983 3,541,946 21,029 12,114,218 435,081 123,105,938
MOLLUSKS: Oysters, sea cucumbers, octopus, squids.
Sub Total 44,165 3,134,659 68,486 7,544,826 21,156 1,820,979 291,049 21,724,250 66,478 3,829,868 7,403 438,633 498,737 38,493,215
GRAND TOTAL 663,860 64,313,930 2,498,911 146,930,577 988,392 68,734,841 2,398,829 167,566,086 519,734 34,061,685 564,524 47,605,565 7,634,250 529,212,684
Source: Department of
Fisheries
2006 Data
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15. Component 2: Sound Management of Natural Resources. There is a direct link
between the quality of natural resources and economic growth through tourism. Coastal
tourism relies on clean beaches, good water quality, and healthy marine ecosystems, all of
which are in decline in Kenya. The component objectives are to (a) improve sound
management and regeneration of natural resources and biodiversity; and (b) identify
biodiversity products and markets that will assist in promoting eco-tourism and spin-off
industries. A coastal biodiversity information system will be developed to catalogue the state
of the Coast‟s natural resources, ecological threats, economic valuation and resource use
patterns. No new MPAs will be established but pilot community conservancies and co-
management activities will be supported as examples for future projects throughout the entire
coast. KCDP will finance: (a) the development of management plans, guidelines and
strategies for sound management of biodiversity and natural resources; (b) capacity
enhancement in government institutions and in communities that manage these resources; (c)
the identification of options for financial sustainability of the MPAs and Co-managed
conservation areas; and (d) improved management of transboundary fisheries and other
resources through greater collaboration with Tanzania and joint monitoring and surveillance
(e) Carrying out specific coastal and marine research for promoting sustainable management
of natural resources.
16. This component establishes an institutional platform in a geographically targeted area
to promote a number of initiatives that create a direct link with tourism. Investment in a
limited geographic area promotes hands-on learning and replication with community
participation, and minimizes implementation risk. Strengthening the management of MPAs
and other aquatic and terrestrial protected areas leads to (i) maintaining existing resource
values; (ii) paving the way for regeneration of the resource base upon which the tourism
sector depends; (iii) creating jobs; and (iv) increasing the productivity of new biodiversity
products. This process creates a direct link between the user of the resource (tourism
industry), the resource managers, local stakeholders, and the private sector to develop a long-
term plan for the sustainable implementation of Vision 2030 in the Coast. The Project
promotes and facilitates future investment by the Government and others by developing
working pilots that can be scaled up in the future.
17. Sub-component 2.1: Biodiversity & natural resources assessed and an integrated
information system developed. GEF funds will target in particular: (i) the creation of a
coastal biodiversity information management system; (ii) the accomplishment of specialized
surveys on flora and fauna in Arabuko-Sokoke, Boni-Dodori and Kiunga forests; of
biodiversity assessments in Kisite-Mpunguti, Shimba Hills and Mombasa Marine National
Park, and in Shimoni, Marereni, Assakone conservation areas, and of economic valuations for
Shimba Hills and Malindi - Watamu Marine Protected Areas (MPA). Other programs that
will receive KCDP GEF support include (a) development of management plans for Coastal
Mangrove ecosystems and Boni Dondori N.R., Witu, Assakone and Marereni terrestrial and
community conservancies; (b) promotion of community conservancies or co-managed
conservancies; (c) development of guidelines for management of critical habitats in the Tana
Delta; (d) development of key transboundary initiatives at Kisite Mpunguti and Shimba Hills,
and between South Coast in Kenya and Tanga, Pangani, Zanzibar and Pemba in Tanzania; (e)
development of conservation strategies for endangered species and habitats (i.e. sea turtles,
coral reefs and Dugong) supported; and (f) creation and securing creation of an elephant
corridor linking Arabuko Sokoke to Tsavo East National Park. Activities with the United
Republic of Tanzania are complementary and KCDP support is limited to harmonization of
65
programs rather than specific shared investments. No KCDP funds will be disbursed for
activities in Tanzania.
18. Sub-component 2.1 will also promote tourism, increase revenue generation and help
the marine protected area network achieve financial sustainability. The sources of revenue
will include increased visiting, improved marketing, development of tourism products, and
increased charges for scuba diving and park entry. The sub-components aim to strengthen
existing priority areas based on specialized assessments and to establish new co-managed
areas where user communities will have a management role. This departure from the old
“command and control” style of management regime should change the coastal communities‟
negative perception of MPAs. Specific links to the CVF in Component 4 will also be made to
support alternative livelihoods.
19. Sub-component 2.2: Capacity building, Research, Extension and Tourism
Enhancement. The KCDP will support: (a) capacity building, training and sharing of best
practice for institutional staff and local community members; (b) strengthening of extension
services for cottage industries; and (c) identification and roll out of 10 appropriate
technologies and products.
20. KCDP will support: (a) the compilation of information on existing tourism
infrastructure, assets and activities along the coast; (b) the identification and development of
tourism circuits in Kiunga/Lamu, Mombasa, Malindi/Watamu/Arabuko-Sokoke and South
Coast Kenya, Tanga, Pangani and Zanzibar and Pemba; (c) the strengthening of tourist circuit
and identification of markets; and (d) assist in reducing poverty by analyzing how income
from different segments of tourism is distributed. The components will also link with the CVF
and the MSME activities of the CDA to provide alternative tourism-related livelihoods. Other
benefits for the poor will include the provision of services, access to infrastructure and
ecosystem services.
21. Component 3: Support for Alternative Livelihoods. Equitable sharing of benefits
that accrue from the sustainable use of local natural resources requires careful planning,
legislative support, and a local population able to participate effectively in the use and
management of those resources. The Component‟s objective is to promote sustainable
livelihoods within a sound governance framework that includes: (i) spatial planning and land
capability mapping that also integrates the identification of environmentally and socially
sensitive areas into a locally based, transparent and participatory planning framework that is;
(ii) promotion of village-level ICM; and (iii) strengthening of compliance with environmental
regulations and safeguards.
22. KCDP will support: (a) the development of Spatial Development Plans; (b) linkages
between local stakeholders and the private sector through targeted research, technological
support, extension services, training for business development and identification of specific,
pilot-level opportunities for joint venture; (c) scaling up of existing government and donor
programs that build capacity, and support development of micro, small and medium-sized
enterprises (MSMEs) in promising sectors; (d) necessary analytic work on a limited number
of value chains in promising subsectors.
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23. Sub-component 3.1: Spatial Planning. the KCDP will support the preparation of
Land Use Plans (a Coast Province Land Use Plan at a scale of 1:100,000; four
District/Regional Land Use Plans at a scale of 1: 50,000 and 16 Area Action Land Use Plans
at Ward Level at a scale of 1:5,000) and Land Capability Plans (a Coast Province land
Capability Plan at a scale of 1:100, 000; four District/Regional Land Capability Plans at a
scale of 1: 50,000 and 16 Area Action Land Capability Plans at Ward Level at a scale of
1:5,000) and related capacity building. It is expected that the Land Capability maps will be
ready by Credit effectiveness.
24. Sub-component 3.2: Environmental Governance. The KCDP will support (a)
strengthening of the National Environment Management Authority (NEMA) to implement the
Integrated Coastal Zone Management (ICZM) framework; (b) harmonization of the legislative
and regulatory environmental framework; (c) development and implementation of an ICZM
awareness strategy; and (d) development and implementation of incentives for environmental
governance and conservation.
25. Sub-component 3.3: Microenterprise Development. Traditional fishermen and
subsistence farmers compose most coastal communities. Due to inefficient and rudimentary
production techniques and equipment, and inadequate alternative livelihood opportunities, the
production systems generate considerable inefficiency and waste. Lack of access to markets
for products and to value addition and product development technologies further exacerbate
this situation. Additionally, the implementing agencies lack enough support to deliver the
extension services needed to promote technology adoption and best practice application.
26. The KCDP will support (a) capacity building of the Coast Development Authority
(CDA) (b) Business Development Services (BDS) for small businesses and BDS Resource
Centers; (c) flow of private and public equity/financing to viable MSMEs in promising
sectors (Mango, Cashew, Jatropha and Fishing); (d) value addition of viable cottage level
activities in five subsectors; and provide demonstration PPPs between local investors and
coastal MSMEs. IFC will support this activity, which will provide small holders, artisanal
fishermen with assistance to develop a partnership agreement, a simple business plan,
extension service and assistance through the business licensing process.
27. Component 4: Capacity building, Monitoring & Evaluation System, Project
Management, Communication and Coastal Village Fund. The management of coastal,
natural resource-based, development is a multisectoral activity that requires the involvement
and close interaction of several core government ministries to guarantee truly sustainable
results. The implementation arrangements for the KCDP reflect these realities and are based
How is Spatial Planning applied in KCDP
The purpose of spatial planning is to help operationalize ecosystem-based management by
finding space for biodiversity conservation and sustainable economic development in marine and
coastal environments. One way to do this is through a locally based participatory process that
identifies, through technical evaluation, what the land and marine units are “capable” of supporting
and then determines what “should” be done by seeking input from local stakeholders and users of
the resource.
Spatial planning is a public process of analyzing and allocating the spatial and temporal
distribution of human activities in coastal and marine areas to achieve ecological, economic and
social objectives specified through a political process.
67
upon the principle of central coordination and sector-level implementation. This
Component‟s objective is to increase capacity of the project coordination and implementation
teams, foster dialogue amongst national partners and regional stakeholders, and elaborate a
communication strategy for development outreach. It also, through the CVF, supports village-
based economic development activities. A Project Coordinator (PC) within a Project
Coordination Unit (PCU) will coordinate the activities amongst the various components in
order to minimize overlaps and excessive interactions between the project and
villages/stakeholders; provide project outreach and measure implementation progress. This
person will also be responsible for all major procurement and consolidated project financial
management. The members of the PCU will report to the Permanent Secretary of the MoFD
who has, for the period of one year, delegated this responsibility to the Director of KMFRI,
who will provide required government due diligence control and oversight of the seconded
PCU civil servants (the Project Coordinator, the Component Coordinators, government
procurement and financial managers, etc.). Thereafter the PCU financial management
capacity will be assessed and with the agreement of the Association will operate
autonomously.
28. Subcomponent 4.1- Project Management, Capacity building, and Monitoring and
evaluation. The Project Component Managers (PCMs), one for each project component and
seconded to the PCU (MoFD, KWS, CDA and KMFRI) will support the PC. The PCMs will
be responsible for coordinating the technical implementation of each component. The PC and
PCMs will comprise the Project Management Team (PMT). The PMT, through the PC, will
provide technical and project information to the National Project Steering Committee,
Composed of Permanent Secretaries from relevant ministries including finance, directors of
the implementing agencies and Directors responsible for the participating sectors.
29. The PCU will also include a Monitoring and Evaluation System (M&E) specialist to
monitor the indicators of each component and link the Project to regional initiatives in order
to share information and learning lessons. In addition, budgetary provisions are included in the
Project to allow the project staff to participate in the bi-annual GEF International Waters
Program conference and to attend occasional regional coordination meetings necessary to link
KCDP more closely with other relevant GEF projects.
30. This component establishes a multisectoral mechanism for efficiently implementing
the KCDP that follows accepted ICZM best practice. Because it is mainstreamed into the
government structure, the mechanism could, if necessary and so desired, eventually evolve
into a permanent coastal coordinating body with broader mandate. This multisecoral body
would greatly improve efficiency of governmental implementation of an overall development
agenda for the Coast, as it could coordinate all donor efforts into a harmonized series of
investment to achieve the Coast‟s portion of Vision 2030.
31. The KCDP will support (a) the establishment and strengthening of the Project
Coordination Unit and its staff; (b) the development of an information and communication
strategy to increase public awareness of project goals and activities at the local and regional
levels; (c) the capacity enhancement of all implementing partners; and (d) the development of
an effective Monitoring and Evaluation System (M&E).
32. Subcomponent 4.2- CVF. The KCDP Coastal Village Fund (CVF) will support the
objectives of Components 1, 2 and 3 relating to the promotion of sustainable use of natural
resources by focusing on investment in village infrastructure and profitable alternative and
68
sustainable livelihoods. Implementation of the CVF will also follow the successful example
set in Tanzania where an effective and financially efficient partnership was organized
between two complementary projects (MACEMP and TASAF) was developed. The KCDP
Components 1, 2 and 3 will work with communities to identify CVF appropriate subprojects.
The World Bank-supported Arid Lands Resources Management Project (ALRMP) will
support building the capacity of communities to implement micro-projects and manage the
actual disbursement of funds to selected target groups. The internal mechanisms of the
ALRMP, the KCDP Project Coordinating Unit, and an independent and ongoing evaluation of
progress by the Coastal Area Development Committee will monitor the disbursement of
funds.
33. The CVF will not be a stand-alone activity. The Fund is closely linked to Component
1, 2 and Component 3 of the KCDP for activities ranging from tourism to forestry, fisheries
and conservation areas, leveraging change in ecosystem management and providing
incentives for communities to participate in the program. Component managers and the
District Steering Group (DSG), which includes sectoral representatives, will ensure the CVF
will support the priorities of Components 1, 2 and 3 and the findings of specialized
assessments.
34. Identification of an efficient and transparent delivery mechanism for such a large part
of the KCDP is critical. This will require building a partnership with ALRMP through district
and community structures to implement CVF; establishing a “window” within ALRMP to
receive KCDP funds to finance priority programs identified by communities; working closely
with other KCDP participating agencies, the DSGs and multisectoral agencies which
represent all development partners in the districts, to select CVF-funded projects.
Implementation will follow established and successful ALRMP processes, including its
established relationship with district development actors and its established working
relationship with communities. This cooperation mirrors the process set up in the Tanzania
Marine and Environmental Management Project in partnership with the Tanzania Social
Action Fund 2. The Agreement that will be signed between MoFD and the Ministry of State
for the Development of Northern Kenya and Other Arid Lands (which holds ALRMP
accountable to the PCU for financial management) will spell out the guidelines for CVF
management. The DSG structure, where all sectors and development partners are engaged in
priority setting, will make decisions. Other frameworks for the CVF were considered
including the GoK, Youth Enterprise Fund, GOK Women Enterprise Fund, GoK
Constituency Development Fund as well as the CDA‟s community programs. These were not
selected due to the lack of experience and associated risks.
69
Annex 5: Project Costs and Financing
1. Introduction. This Annex provides information on the methodology and assumptions
made to estimate project costs and present a summary of the project costs. The World Bank
COSTAB software was used and the detailed costs of the Project by component are presented
in a series of annexes. The Annex includes a preliminary financing plan, identifying the
finance sources from the World Bank, the Global Environmental Facility and the Government
of Kenya.
Methodology and Assumptions
2. Start and duration of the Project. The Kenya Coastal Development Project (KCDP)
should start in October 2010 (PY1) and last six (6) years.
3. Components and outputs of the Project. The costs were broken down by the
Project‟s four major components: Component 1: Sustainable Management of Fisheries
Resources; Component 2: Sound Management of Natural Resources; Component 3: Support
for Alternative Livelihoods; and Component 4: Capacity building, Monitoring & Evaluation
System, Project Management , Communication and Coastal Village Fund. Each component
has been split into sub-components, which are further sub-divided into a number of outputs
and its sequenced activities.
4. Basic costing information. Project costs were estimated by the National Project
Preparation Team (see Table 1) whose members interacted among themselves and with
project beneficiaries during KCDP preparation to ensure consistency and coordination
between the different Project activities. Costs estimation was based in unit costs in Kenyan
Shilling (Kshs) derive from official data available in June 2009.
Table 1: KCDP National Project Preparation Team and Project Component and Areas
National Project Preparation
Team
Relevant
Institution/Ministry
KCDP
Component
Project Area (Districts)
Arid Land Management Project WB Project 3 Kilifi, Kwale, Lamu,
Malindi, Taita-Taveta
Coast Development Authority Ministry of Regional
Development
Authorities
3 Kilifi, Lamu, , Malindi,
Kwale, Taita-Taveta
Fisheries Department Ministry of Fisheries
Development
1 Lamu, Malindi, Tana
River
Kenya Marine Fisheries
Research Institute
Ministry of Fisheries
Development
1 and 4 Lamu, Malindi, Tana
River
Kenya Wildlife Service Ministry of Forestry
and Wildlife
2 Kwale, Lamu, Malindi
Tana River
Kenya Forest Research Institute Ministry of Forestry
and Wildlife
2 Lamu, Tana River,
Arabuko Mida
National Environment
Management Agency
Ministry of
Environment and
Mineral Resources
3 Lamu, Tana River
Spatial Planning Ministry of Lands 3 Kilifi, Lamu, Malindi
Taita–Taveta, Tana River
70
5. Project costs were estimated based on the June 2009 prevailing conditions as reflected
in COSTAB and are subdivided into investment cost and recurrent costs (or incremental
operating costs). These costs were updated during the November 2009 mission and reflect
more current costs through a revision of unit costs used in COSTAB.
6. Investment costs include the following categories (i) civil works; (ii) vehicles and
boats; (iii) goods and equipment, (iv) specific supplies (fisheries, agriculture, environmental);
(v) consultant services, including technical assistance (national and international); (vi) surveys
and studies; (vii) lease services (non-consulting services); (viii) training and workshops (ix)
Departmental Project costs (operating and supervision costs necessary to implement project
activities during project life such as allowances for government staff, travel costs, stationary,
maintenance of vehicles and equipment, etc.); (x) provision of Funds, i.e. Coastal Village
Fund (CVF) and demonstration Public-Private Partnerships.
7. Recurrent costs include: (i) salaries (GoK counterpart costs, which will not be
financed from the IDA or GEF funds); (ii) allowances for programme staff and Government
staff; and (iii) operation and maintenance costs, i.e. cost of the vehicles and equipment
purchased, office running costs.
8. During the life of the Project, financing will cover the investment and recurrent cost
listed above. However, it is expected that after the life of the project the Government will
ensure the Project‟s sustainability and will set aside funds to cover the recurrent costs and any
other additional investment requirements.
9. The main COSTAB parameters and assumptions are summarized in Table 2 as
follows:
Price Contingencies have been estimated using an annual rate of 7 percent and 2 percent
for domestic and international inflation, respectively.
The Exchange Rate is calculated in constant purchasing power parity from the base of
US$ 1 = Kshs 75, to adjust for differences in domestic and international inflation and keep
the real exchange constant.
Physical Contingencies have been applied to civil works (7%); vehicles and boats (5%);
goods and equipment (5%); specific supplies such as fisheries, agricultural and
environment (7%); Project Departmental costs (7%); and Operation and Maintenance
(7%).
Taxes are included in the project budget. It is not likely that the project will receive a
general tax waiver, and the individual reimbursement of the tax of each and every
purchase would raise transaction cost substantially (except for large contracts). The VAT
is the most important tax that the Project would have pay. The project budget includes the
VAT for those expenses that the Project is likely to incur in Kenya. Vehicles, goods and
equipment also include import taxes and excise.
Foreign Exchange: the percentage of the total sale prices that represent direct and indirect
imported inputs embodied in the costs are show in Table 2 for each expenditure account.
71
Table 2: Physical Contingencies, Taxes and Duties, and Foreign Exchange
Expenditure Account Physical
Contingencies
Tax content of
total cost
Foreign
Exchange
Investment Costs
Civil works 7% 16% 40%
Vehicles and boats 5% 25% (a) 70%
Goods and equipment 5% 28% (b) 60%
Fisheries supplies 7% 16% 60%
Environmental supplies 7% 16% 60%
Agricultural inputs 7% 16% 60%
International technical assistance: 0% 10% 90%
National/Reg. technical assistance 0% 5% 20%
Training, workshops and meetings 0% 16% 10%
Survey and studies 0% 16% 10%
Coastal Village Fund (CVF) 0% 16% 10%
Public-Private Partnerships (PPP) 0% 16% 10%
Lease services 0% 16% 10%
Project Departmental costs (c) 7% 16% 10%
Recurrent costs
Salaries 0% 30% 0%
Allowances 0% 0% 0%
Operation and maintenance (OM) 7% 16% 60%
Project costs
10. Costs summary. The total investment and recurrent costs, including physical and
price contingencies, are estimated at US$ 41.47 million, broken down as follows: US$ 36.57
million in base costs, USD 878,463 in physical contingencies and US$ 4 million in price
contingencies, respectively about 2 percent and 11percent of total costs. The foreign exchange
component is estimated at US$ 10.3 million, or about 25 percent of total project costs. Taxes
and duties amount to US$ 6.5 million, or 15.8 percent of total costs. Project costs by
component and expenditure category are summarized in Tables 3 and 4 respectively.
72
Table 3: Summary Project Costs by Component
%
Foreign Exchange
%
Total
Base Cost
A SUSTAINABLE MANAGEMENT OF FISHERIES RESOURCES
Local
(US$ 000)
Foreign
Total
1. Improved governance including control & surveillance 1309 1169 2478 47 7
2. Advanced research on coastal, near-shore, fish stocks & technologies 3175 897 4072 22 11 3. Increased fish production through aquaculture 1017 399 1416 28 4
subtotal 5501 2465 7966 31 22
B. SOUND MANAGEMENT OF NATURAL RESOURCES 1. Coastal biodiversity information system developed 992 267 1259 21 3
2. Improved management plans, guidelines and biodiversity strategies 1079 377 1455 25 4
3. Capacity building & institutional support 1737 1201 2938 41 8 4. Improved research & technology for extension services /a 852 478 1330 36 4
5. Enhanced tourism and cultural heritage 713 193 905 21 2
subtotal 5372 2515 7888 32 22
C. SUPPORT FOR ALTERNATIVE LIVELIHOODS
1. Integrated spatial planning and land capability 2097 601 2697 22 7
2. Promoted governance and integrated Coastal Management (ICM) 1343 624 1967 32 5 3. Developed Micro, Small and Medium Enterprises (MSME) investments 3543 1457 5000 29 14
subtotal 6981 2675 9664 8 26
D. CAPACITY BUILDING, M&E, MANAGEMENT AND CVF
1. National Coordination Unit strengthened to manage and coordinate KCDP supported activities 800 81 881 9 2
2. Increased institutional capacity 499 571 1070 53 3
3. Increased skill of project leaders to handle project implementation 126 14 140 10 - 4. Information & commun. Strategy developed 113 106 219 48 1
5. Enhanced M&E systems developed 263 37 299 12 1
4. Supported Community Demand Driven (CDD) micro-projects 7321 1131 8452 13 23
subtotal 9121 809 11056 43 30
TOTAL BASELINE COSTS 26977 9601 36578 26 100
Physical contingencies 469 409 878 47 2
Price contingencies 3659 358 4017 9 11
TOTAL PROJECT COSTS 31106 10368 41474 25 113
11. Costs by sector: The financial intervention is split between the different components
as follows: Fisheries Component (22% of base costs); Natural Resources Component (22% of
base costs); Livelihood Component (50% of base cost), of which Coast Village Fund is the
biggest subcomponent with 23 percent. Project Coordination and Management makes up 7
percent of base costs.
12. Costs by expenditure accounts: Investment costs represent 89 percent of base costs
and recurrent cost less than 11 percent. The two main expenditure categories are „Training,
workshops and meeting‟ (25%), because of the considerable amount of money invested in
capacity building in this first phase of development of the Kenya Coast. The Coast Village
Fund represents the second bigger expenditure account with an important 17 percent of the
base cost.
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Table 4: Summary Project Cost by Expenditure Account
Financing Plan
13. Tables 5, 6 and 7 below provide a summary of the Project‟s financing plan
14. Financing and disbursement arrangements have been kept simple to facilitate project
implementation, record keeping, and disbursement administration by the borrower. Therefore,
the numbers of disbursement categories have been kept to a minimum, using broad category
descriptions as follows:
Civil works;
Goods (including vehicles and boats; equipment, machinery and furniture;
fisheries supplies; environmental supplies; agricultural inputs) ;
Services (including technical assistance, both international and national; training,
workshops and meetings; surveys and studies, and lease services) ;
Departmental costs (project operation and supervision costs) ;
Recurrent costs (including salaries, allowances, operation and maintenance).
a. As a major financier, the World Bank would contribute a total amount of
US$ 35 million, equivalent to 84.4 percent of total cost; GEF will finance US$ 5 million (12%
of total costs), mainly in activities under Components 1 and 2. The Government‟s
contribution of US$ 1.47 million (3.6% of total Project costs) is made up by some goods and
equipment, salaries and allowances for the staff that will be required to spend time on
program activities.
% % Total (KSh '000) (US$ '000) Foreign Base
Local Foreign Total Local Foreign Total Exchange Costs I. Investment Costs
A. Civil works
Construction 188,295 125,530 313,825 2,511 1,674 4,184 40 11
B. Vehicles and boats 22,514 67,286 89,800 300 897 1,197 75 3
C. Goods and equipment 54,052 81,079 135,131 721 1,081 1,802 60 5
D. Fisheries supplies 12,345 14,177 26,522 165 189 354 53 1
E. Environmental supplies 31,347 47,021 78,368 418 627 1,045 60 3
F. Agricultural inputs 1,648 1,272 2,920 22 17 39 44 -
G. Technical assistance
International technical assistance 1,441 12,968 14,409 19 173 192 90 1
National technical assistance 109,204 27,301 136,505 1,456 364 1,820 20 5
Subtotal 110,645 40,269 150,914 1,475 537 2,012 27 6
H. Training, workshops and meetings 628,436 69,826 698,262 8,379 931 9,310 10 25
I. Surveys and studies 77,897 8,655 86,552 1,039 115 1,154 10 3
J. Lease services 34,653 61,647 96,300 462 822 1,284 64 4
K. Departmental Project costs 181,170 1,723 182,894 2,416 23 2,439 1 7
L. Public-Private Partnership (PPP) Fund 90,000 10,000 100,000 1,200 133 1,333 10 4
M. Coastal Village Fund 438,750 48,750 487,500 5,850 650 6,500 10 18
Total Investment Costs 1,871,753 577,235 2,448,988 24,957 7,696 32,653 24 89
II. Recurrent Costs
A. Salaries 34,525 - 34,525 460 - 460 - 1
B. Allowances 19,762 - 19,762 263 - 263 - 1
C. Operation and maintenance 97,232 142,848 240,079 1,296 1,905 3,201 60 9
Total Recurrent Costs 151,518 142,848 294,366 2,020 1,905 3,925 49 11
Total BASELINE COSTS 2,023,272 720,083 2,743,354 26,977 9,601 36,578 26 100
Physical Contingencies 35,206 30,679 65,885 469 409 878 47 2
Price Contingencies 274,451 26,830 301,280 3,659 358 4,017 9 11
Total PROJECT COSTS 2,332,928 777,592 3,110,520 31,106 10,368 41,474 25 113
74
Table 5: Summary Project Cost by Financiers (US$)
Global Environmental
World Bank Facility Government of Kenya Total
Amount % Amount % Amount % Amount %
A. SUSTAINABLE MANAGEMENT OF FISHERIES RESOURCES
1. Improved governance including monitoring, control & surveillance 440,335 16.2 2,172,389 80.0 101,402 3.7 2,714,125 6.5
2. Advanced research on coastal, near-shore, fish stocks & technologies 2,588,767 56.8 592,955 13.0 1,372,193 30.1 4,553,915 11.0
3. Increased fish production through aquaculture 1,610,903 100.0 - - 0 - 1,610,903 3.9
Subtotal 4,640,006 52.3 2,765,344 31.1 1,473,595 16.6 8,878,944 21.4
B. SOUND MANAGEMENT OF NATURAL RESOURCES
1. Coastal biodiversity information system developed 867,166 60.0 578,110 40.0 0 - 1,445,276 3.5
2. Improved management plans, guidelines and biodiversity strategies - - 1,656,546 100.0 0 - 1,656,546 4.0
3. Capacity building & institutional support 3,374,421 100.0 - - 0 - 3,374,421 8.1
4. Improved research & technology for extension services /a 1,512,017 100.0 - - 0 - 1,512,017 3.6
5. Enhanced tourism and cultural heritage 1,057,471 100.0 - - 0 - 1,057,471 2.5
Subtotal 6,811,074 75.3 2,234,656 24.7 0 - 9,045,731 21.8
C. SUPPORT FOR ALTERNATIVE LIVELIHOODS
1. Integrated spatial planning and land capability 3,000,996 100.0 - - 0 - 3,000,996 7.2
2. Promoted governance and Integrated Coastal Management (ICM) 2,210,648 100.0 - - 0 - 2,210,648 5.3
3. Developed Micro, Small and Medium Enterprise (MSME) investments 5,639,523 100.0 - - 0 - 5,639,523 13.6
4. Supported Community Demand Driven (CDD) micro-projects 9,793,506 100.0 - - 0 - 9,793,506 23.6
Subtotal 20,644,673 100.0 - - 0 - 20,644,673 49.8
D. CAPACITY BUILDING, M&E, MANAGEMENT & COMMUNICATION
1. National Coordination Unit strengthened to manage and coordinate
KCDP supported activities 995,418 100.0 - - 0 - 995,418 2.4
2. Increased institutional capacity 1,175,966 100.0 - - 0 - 1,175,966 2.8
3. Increased skill of project leaders to handle project implementation 149,340 100.0 - - 0 - 149,340 0.4
4. Information & communication strategy developed and implemented
to increase environmental education and public awareness at local and regional levels 249,220 100.0 - - 0 - 249,220 0.6
5. Effective M&E System developed 334,302 100.0 - - 0 - 334,302 0.8
Subtotal 2,904,247 100.0 - - 0 - 2,904,247 7.0
Total PROJECT COSTS 35,000,000 84.4 5,000,000 12.1 1,473,595 3.6 41,473,595 100.0
_________________________________
\a and development of cottage industries
Table 6: Summary of Financing by Disbursement Accounts (US$)
Global Environmental
World Bank Facility Government of Kenya Total
Amount % Amount % Amount % Amount %
1. Civil w orks 4,547,126 93.7 83,928 1.7 223,679 4.6 4,854,733 11.7
2. Goods 4,318,293 89.2 507,869 10.5 15,149 0.3 4,841,311 11.7
3. Services 2,895,203 63.1 1,640,612 35.7 55,227 1.2 4,591,042 11.1
4. Training 8,195,020 78.6 1,214,158 11.6 1,017,832 9.8 10,427,009 25.1
5. Departmental costs 2,289,935 73.5 693,575 22.3 133,107 4.3 3,116,617 7.5
6. Coastal Village Fund 7,567,581 100.0 - - 0 - 7,567,581 18.2
7. Public Private Partnership Fund /a 1,503,315 100.0 - - 0 - 1,503,315 3.6
8. Recurrent Costs 3,683,526 80.6 859,859 18.8 28,601 0.6 4,571,986 11.0
Total PROJECT COSTS 35,000,000 84.4 5,000,000 12.1 1,473,595 3.6 41,473,595 100.0
_________________________________
\a Public-Private Partnership Fund
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Table 7: Financing of Investment Recurrent Costs by Year *US$)
76
Annex 6: Implementation Arrangements
1. The role of the KCDP is to (a) promote harmonization of sectoral laws and policies and
enhance capacity for minimizing negative effects that the use or misuse of resources in one sector may
have on another; (b) promote good governance of coastal and marine resources, improved transparency
in decision making and greater participation of the end users in the decisions regarding the resources
upon which their livelihoods depend; (c) promote integrated planning, whether ICZM or Integrated
Forestry, where decisions on resources will be shared between user communities and resources
managers; (d) promote spatial planning and land capability mapping to identify sensitive areas and share
these findings widely to influence the type of use or conservation of the resource or area; (e) promote
and facilitate MSMEs by providing access to technology, affordable credit, markets and private sector
linkages; and (f) invest directly in the community through ALRMP using the participatory and demand-
driven approach that ALRMP successfully implemented over two phases of a programmatic approach.
The Project will also have close linkages to regional projects such as (a) SWIOFP; (b) ASLME; and (c)
WIO-LaB with regard to fisheries in the EEZ, transboundary resources management, and land-based
sources of pollution in the marine environment.
2. Partners. Table 6.1 outlines the range of partners along with their roles in KCDP. The Ministry
of Fisheries Development will coordinate the implementation of Component 1 with the participation of
the Department of Fisheries and KMFRI, while the Ministry of Forestry and Wildlife through KEFRI
will lead and coordinate Component 2, with the support of the Kenya Wildlife Service (KWS), the
Museums Department, and the Tourism Department. The districts concerned (under the guidance of the
District Steering Group (DSG) and Ministry of Local Government) will coordinate Component 3
through direct interaction with the community development committees, CDA and ALRMP. The
Department of Lands will undertake spatial planning and land capability activities under Component 3.
NEMA will lead the Coastal Governance activities that will be carried out in partnership with other
stakeholders. NEMA, along with other partners, will also implement ICZM activities. During
preparation, all the implementing partners participated in developing draft Terms of Reference. Table
6.3 and Table 6.4 outline a summary of their roles and responsibilities in the KCDP. The roles and
responsibilities will be transformed into final TORs during appraisal and incorporated into the PIM prior
to effectiveness. With respect to Public Private Partnerships (PPP), the Project will assist in the
establishment of joint ventures between the community and the private sector through PPPs aimed at
creating a favorable business environment to foster more investment for Micro, Small and Medium
Enterprise development. The SME Solution Centre (SSC), an affiliate of the International Finance
Corporation (IFC), will help the Government manage the sub-component. The SSC will leverage IFC‟s
vast experience in supporting sustainable private sector development in the region, and will provide a
one-stop shop that would combine SME investments, advisory services, technical assistance and other
private sector initiatives. Details of the implementation arrangements will be in the Project
Implementation Manual. Subsidiary agreements between relevant Government agencies will outline the
linkages, duties and obligations of the specific agencies and will be submitted to IDA prior to the
coming into effect of the Credit and Grant. Figure 6.1 depicts the reporting, feedback and coordination
mechanisms among the participating agencies.
3. The National Project Steering Committee (NPSC). This body is composed of Permanent
Secretaries and Directors responsible for fisheries, natural resources, finance and local administration
and will guide policy, institutional and regulatory reform planning as well as implementation strategies.
77
The role of the NPSC will be to meet twice a year or as needed, and shall be responsible for: (i)
providing overall policy guidance on all issues relating to the Project; (ii) facilitating coordination
among the Relevant Ministries; and (iii) reviewing and approving annual work plans and budgets.
4. The NPSC will meet on a semi-annual basis or as needed should a significant issue arise. For
minor decisions that do not affect the KCDP development objectives (mainly housekeeping), a “no
objection” system will operate whereby the PCU sends the details of the action needed and associated
justification to the NPSC members and seeks “no objection” from them by email, requiring action within
a two-week period or the “no objection” will be deemed to have been given.
5. Coastal Area Development Committee (CADC). The Committee will operate under the
District Administrative structure and connect with the provincial administration. It will (a)
independently monitor Arid Lands implementation of community sub-projects; (b) provide a “real time”
outreach to the coastal community by providing a mechanism to deliver information and to obtain
feedback from coastal stakeholders on project performance; (c) promote Community sub-projects and
ensure economic benefits to the communities from these activities so as to encourage sustainable
utilization of natural resources; (d) promote a culture of wealth and job creation through appropriate
education and awareness campaigns as a way of reducing poverty and inequities; (e) promote the use of
modern technological advances to enhance productivity and conservation. CADC membership will
include: opinion leaders in the coastal area, members of Beach Management Units, representatives of
identified community sub-projects; members of an interfaith Islamic- and Christian-based organization
(the Project will closely interact with the Coast Interfaith Council of Clerics, a registered NGO, to
participate and provide the outreach between the CADC and the community); members of a human
health-based Community Based Organization (CBO) to address HIV/AIDS; members of a tourism-
based NGO or CBO; members of a forestry-based NGO or CBO; and members of an agriculture-based
NGO or CBO.
6. The Project Coordinator (PC). The PC will oversee the operation of the PCU, have overall
responsibility for the day-to-day administration of the main Project Account, for financial management
arrangements, for procurement processing, and for the preparation of annual work plans and budgets.
The PC will also be responsible for consolidating work plans and budgets of the four components,
compiling semi-annual progress reports and organizing the NPSC. He/she will liaise, through the
Component Coordinators, with all participating agencies and the World Bank on a regular basis. The PC
will coordinate and ensure the effective implementation of all activities of the PCU, which are the
responsibility of Component 4, including oversight of the M&E, Communication and Outreach and
capacity building of the teams. Since the PC is a seconded civil servant, he/she will report to the
Director of KMFRI, who will have delegated powers from all four participating core ministries to act as
a “due diligence” supervisor. Table 6.2 provides further details. The PCU can procure specialized
consultants as needed, to assist in implementing the activities under Component 4. Particularly, the
PCU shall undertake the day-to-day administration of the Project including financial management,
consolidation of procurement plans, procurement processing, preparation of annual work plans and
budgets and compilation and consolidation of progress reports, financial management and monitoring
and evaluation reports.
7. Linkage with ALRMP. The link between the ALRMP and KCDP promotes financial efficiency
of service delivery and brings existing ALRMP capacity to provide relevant training in sub-project
78
implementation to the KCDP. The ALRMP is supported by the World Bank and other partners and
builds on the existing ALRMP implementation infrastructure and capacity-building experience of local
communities in implementing locally identified sub-projects. It currently operates in marginalized
communities in 28 arid and semiarid districts, including all the coastal districts.
8. The KCDP Components 1 (fisheries) and 2 (natural resource management) will work directly
with their relevant village counterparts to help these communities and community groups identify local
priority activities for support under Component 3 and 4 (which includes CVF). Identification of sub-
projects is made through these two Components because the CVF is designed to link and support the
actions and objectives of the project to negotiate more profitable and more environmentally and socially
sustainable use of natural resources.
9. Once sub-projects that are compatible with KCDP objectives are identified, and approved, the
PCU will transfer funds for CVF implementation to the ALRMP, which will set up a special ring fenced
window to disburse these funds on behalf of KCDP. This arrangement will facilitate sound record
keeping, greater transparency and accountability, and more efficient implementation of Component 3.
10. Specifically, sub-projects eligible for funding under the CVF will be financed according to the
ALRMP procedures and rules. This will be based on an Agreement between the ALRMP and the KCDP
PCU detailing implementation, reporting and feedback processes. The draft Agreement will be
submitted to IDA for clearance as a Condition of Disbursement for CVF activities under KCDP.
ALRMP will implement the CVF at district level through the District Steering Group (DSG), which
includes key sectors such as forestry, fisheries, MPAs, CDA and tourism. The KCDP will use
established ALRMP structures at district and community level to identify and implement projects and
disburse funds under the CVF. The KCDP PCU will vet decisions made by the DSG in terms of areas
and activities to be supported by the CVF. Based on these decisions, KCDP will transfer funds on the
basis of an agreed work plan, semi-annually, to ALRMP which will use its existing mechanisms to
disburse the funds to the community groups identified in the Annual Work Plans for implementation.
Specific implementation arrangements between the ALRMP and the KCDP for the CVF are described in the
following text box.
79
11. Partnerships with Regional and Global Projects. The KCDP has linkages with a range of
regional and global projects. They include:
a. Linkage to SWIOFP. Kenya‟s EEZ has the potential to provide sustenance, revenue and job
opportunities to an ever-increasing population, but most East African countries lack the capacity to draw
appropriate benefits from these resources. Recognizing the challenges they face, countries of the region
have developed a collaborative project that embraces their own fishery-related needs and expectations in
a regional and transboundary context. Known as the South West Indian Ocean Fisheries Project
(SWIOFP), implemented by the World Bank, it is one of a trio of linked GEF-supported projects. The
other two projects are the West Indian Ocean Land Based Sources of Pollution (WIOLaB), implemented
by United Nations Environment Program (UNEP), and the Agulhas and Somali Current LME Project
(ASCLME), implemented by the United Nations Development Program (UNDP). All are linked to
KCDP activities. The KCDP, and in particular the Department of Fisheries and KMFRI, will liaise
closely with SWIOFP in implementing Component 1. Figure 6.1 depicts the West Indian Ocean (WIO)
region and the countries participating in SWIOFP, SWIOFC, ASCLME and WIOLaB.
Given that Kenya is a member of the South West Indian Ocean Fisheries Commission (SWIOC),
which promotes the sustainable utilization of the living marine resources of the South West Indian
Ocean region, KCDP will also link with the programs of the SWIOFC for: (a) improvement of fisheries
governance; (b) increased cooperation with riparian nations (particularly Tanzania, Madagascar and
Seychelles); (c) promotion of sustainable fisheries; (d) sharing of information on the state of the fishery
resources in the area and related industries; (d) promotion of scientific data and information (through
SWIOFP); and (e) promoting joint MCS.
(a) The Recipient will maintain at all times during the implementation of the Project, the ALRMP Project
Coordination Unit (ALRMP PCU) under the Ministry of State for the Development of the Northern Kenya
and Other Arid Lands with mandate, staffing, and resources satisfactory to the Association with the overall
responsibility for overseeing the implementation of the Coastal Village Fund.
(b) The Recipient will maintain at all times during the implementation of the Project, Regional Coordinators
(RC) with mandate, staffing and resources satisfactory to the Association with the responsibility of
coordinating the implementation of the Coastal Village Fund activities in the District Cluster and liaising
with the District Steering Groups (DSGs) in each District in the District Cluster.
(c) The Recipient will maintain at all times during the implementation of the Project, a District Steering Group
(DSG) in each Participating District, with mandate, staffing and resources satisfactory to the Association
with the responsibility of approving activities for support under the Coastal Village Fund.
(d) The Recipient will maintain at all times during the implementation of the Project, Mobile Extension Teams
(METs) with mandate, staffing and resources satisfactory to the Association with the responsibility of
building the capacity of communities to implement Project activities and monitoring the implementation of
Community Action Plans.
(e) The Recipient will maintain at all times during the implementation of the Project, Community Development
Committees (CDC) in each community group with the responsibility of mobilizing community involvement
in the Project activities.
(a) The recipient shall not assign, amend, abrogate or waive any Micro-Project Grant Agreement or any of its
provisions.
80
b. Linkage with Agulhas and Somali Current LME Project (ASCLME). The goal of the
ASCLME project is to ensure the long-term sustainability of the living resources of the ASCLME region
through ecosystem–based approach to management. Specifically, the project aims to (a) acquire
sufficient baseline data to support an ecosystem-based approach to the management of the Agulhas and
Somali Current LMEs; (b) produce a Transboundary Diagnostic Analysis (TDA) and a Strategic Action
Plan (SAP) for both the Agulhas Current and Somali Current LMEs. The Agulhas and Somali currents
have a major influence on the societies and economies of the Western Indian Ocean region but there are
large gaps in the understanding of their oceanographic processes, biodiversity and other fundamentals.
Linking with the ASCLME helps KCDP benefit from the existing scientific data on key marine and
coastal resources.
c. Linkage to Addressing Land Based Activities in the Western Indian Ocean (WIOLaB). This linkage is also advantageous to KCDP because WIOLaB tackles some of the major environmental
problems and issues related to the degradation of the marine and coastal environment resulting from
land-based activities (LBA) in the Western Indian Ocean (WIO). The WIOLaB project aims to improve
the knowledge base; establish regional guidelines for the reduction of stress to the marine and coastal
ecosystem by improving water and sediment quality; strengthen the regional legal basis for preventing
land-based sources of pollution; and develop regional capacity and strengthen institutions for
sustainable, less polluting development. The three projects represent a strong partnership between the
countries of the WIO Region, the Norwegian Government, UNEP, and the GEF.
d. The Tanzania Marine and Coastal Environmental Management Project (MACEMP). This
Project is considered a sister project to the KCDP with synergies built into both Projects‟ PADs. The
MACEMP has a similar focus on sound governance of near shore and offshore marine resources, near
shore coastal management, spatial development planning, land capability assessments, a Coastal
Village Fund and PPPs to promote sustainability in community enterprises. The Governments of
Tanzania and Kenya are discussing a proposed transborder cooperative arrangement on fisheries,
tourism, security, forestry, marine biodiversity, trade etc., in keeping with the Eastern Africa
Cooperation Agreement. The goal is to reduce costs and promote efficiency through joint near shore
and offshore patrols, cost reduction through joint marketing for tourism circuits, promoting trade and
ensuring security.
e. Global Coral Reef Targeted Research and Capacity Building for Management Project. This
global project focuses on conducting research on coral reef ecosystem health that can inform policy and
management decisions. It supports capacity building for science-based management of coral reefs in
developing countries.
f. Other partners/projects. These include: (i) the Western Indian Ocean Marine Science
Association; The Trust fund for Coral and Climate Change (TFESSD); (iii) the World Bank-supported
Seychelles project for Technical assistance on tuna industry management; (iv) the European
Commission (EC)-supported Indian Ocean Commission MCS project; (v) the EC-supported Indian
Ocean Commission regional fisheries project covering all the West Indian Ocean; (vi) the EC-supported
ReCoMap; and (vii) the IMO-supported marine contingency planning initiatives.
g. Additionally, GoK has subscribed to the various regional processes. These including (i) the
Nairobi Convention; (ii) the South Western Indian Ocean Fisheries Commission; (iii) the Indian Ocean
81
Tuna Commission; and (iv) the Southern Indian Ocean Fisheries Agreement. These partnerships call on
KCDP to support regional and international obligations.
82
Figure 6.1: The Western Indian Ocean and the Member Countries participating in SWIOFP,
SWIOFC, ASCLME, WIOLaB
Map #33426 (cleared Feb 16, 2010
83
Table 6.1: KCDP - Key Stakeholders and Their Roles in Project Implementation
Ministry Department/s Role in KCDP
Ministry of Fisheries
Development
Fisheries Department and
KMFRI
Fisheries, Fisheries Research,
hosting the PCU and supervising
staff
Ministry of Environment
and Mineral Resources
NEMA Not a component implementation
leader but has a major role in
environmental and natural
resources governance
Ministry of Forestry and
Wildlife
KWS, KEFRI Sound management of natural
resources, including forests ,
wildlife and biodiversity
Ministry of State for the
Development of Northern
Kenya and other Arid Lands
ALRMP, which will
implement the CVF in
partnership with KCDP
sectoral agencies at DSG level
Not a component implementation
leader but responsible for
disbursement of CVF under
Component 4. The ALRMP will
report to the PCU which reports
to the Ministry of Fisheries
Development
Ministry of Lands Department of Physical
Planning
Spatial planning and land
capability sub-components
Ministry of Regional
Development Authorities
Coast Development Authority Active role in mainstreaming
project activities
84
Figure 6.2 Implementation Arrangements
COASTAL AREA
DEVELOPMENT
COMMITTEE (CADC)
Component 1:
Ministry of Fisheries -
Comp. Coord. Fish.
Dept.NEMA
Component 2:
Ministry of Forestry
and Wildlife - Comp.
Coord. KEFRI,
NEMA
Component 4:
KMFRI, ALRMP
(CVF)
Communities
World Bank MoFD
Component 3:
Min. of Regional
Development
Authorities -Comp.
Coord. CDA, NEMA
PCU. Comprises: Project Coordinator (PC reports to PS MoFD but this
function has for the time being been delegated to the Director KMFRI), Project
Component Managers (MoFd, CDA, KWs and KMFRI), M&E Specialist,
Communications Specialist, Procurement Specialist, Financial Specialist,
Secretary.
NB: these specialists will be hired for a limited period. The PCU also includes
government officers. See definition in the Financing Agreement- at page 29
Responsible for: Annual Work Plan, Procurement Plan, Financial Management
Reports, Audit reports, Monitoring & Evaluation reports, Communication and
outreach material
National Project Steering
Committee
85
Table 6.2: Detailed Roles and Responsibilities of the Project Coordinator and the PCU
Project Coordinator PCU
Head of Project Coordination Unit (PCU)
Report to the PS MoFD. The PS may delegate this function to
the Director of KMFRI
Shall be the Secretary to the National Project Steering
Committee
Liaise with the World Bank.
Provide guidance on World Bank processes
Liaise with and Coordinate with the Project management
teams.
Manage project coordination in all matters relating to
administrative procedures, procurement, financial
management, information, education and outreach monitoring
and evaluation reporting.
Ensure that the Work plans are prepared by partner agencies
for consolidation into a work plan.
Foster collaboration with other relevant institutions and
stakeholder participation both in private and NGO sectors.
Oversee implementation of contracts by consultants.
Ensure appropriate participation and review of project
activities, tendering and service deliverables.
Participate in the Coastal Area Development Committee.
Consult regularly with Project Managers who lead the
components.
Responsible for day-to-day implementation, financial
management, procurement, preparation of annual work
plans, reporting for consolidation by PCU.
Project Managers from implementing agencies prepare
annual work plans, procurement plans and financial
statements for each component.
Liaise with the private sector, ALRMP II and the
Community Development Committee.
PCU will include Project Component Managers from
MoFd, CDA, KWs and KMFRI, an accountant, a
procurement officer, a Monitoring and Evaluation
specialist, a communication specialist and a secretary.
86
Table 6.3: Detailed Roles of the National Project Steering Committee and the CADC
National Project Steering Committee Coastal Area Development Committee
1. Composed of Permanent Secretaries from
relevant ministries including finance, directors
of the implementing agencies and Directors
responsible for the participating sectors.
2. Provide guidance in policy-oriented
coordination and linkages between sectors.
3. Ensure consistency and compliance with sector
policies.
4. Review and adopt the annual work plan.
5. Review and approve budgets.
6. Review and adopt financial reports.
7. Address political issues pertaining to project
activities.
8. Assist in dispute resolution.
9. Promote Community sub-projects and ensure economic benefits to
the communities from these activities to encourage sustainable
utilization of natural resources.
10. Promote a culture of wealth and job creation through appropriate
education and awareness campaigns as a way of reducing poverty and
inequities.
11. Promote the use of modern technological advances to enhance
productivity and conservation.
12. Periodically monitor community sub-projects and provide feedback
to the PCU.
13. Representatives will include: members of Beach Management Units,
representatives of identified Community opinion leaders, Sub-
Projects representatives; members of interfaith an Islamic- and
Christian-based organization, (Coast Interfaith Council of Clerics);
members of a human health-based CBO to address HIV/AIDSs;
members of a tourism-based NGO or CBO; members of a forestry-
based NGO or CBO; and members of an agriculture--based NGO or
CBO.
87
Table 6.4: Key Roles and Responsibilities of Lead Participating Agencies
CDA Fisheries Dept.
(within MoFD)
KWS and KEFRI NEMA (a cross-
cutting
institution)
KMFRI (within MoFD)
-Promote economic
diversification, reduce
conflicts, and create
employment and wealth.
-Leverage private sector
investment within coastal
districts to work with
micro and small
businesses.
-Facilitate affordable
credit and promote
linkages between Kenyan
Equity Investors and
micro, small and medium-
sized enterprises
(MSMEs) in the coastal
districts.
-Link and support existing
government and NGO
micro-finance activities,
capacity building on skills
of conducting a chosen
enterprises, and help
interested stakeholders
form or strengthen
cooperatives.
-Work with micro-lenders
to develop capacity and
products appropriate to
-Policy and institution
reforms for
environmentally
sustainable and
commercially viable
coastal and marine
fisheries management.
-Implementation of
Fisheries Act,
Aquaculture Act,
Ocean policy, ICZM
policy, UNCLOS,
FAO code of
Responsible Fisheries.
-Promote co-
management plans
centered on fisheries
management.
Identify suitable
aquaculture sites and
species.
-Undertake stock
assessments and
conduct fisheries
frame surveys.
-Oversee expanded
Fisheries
Development,
-Determine tourism use limits,
fishery no- take zones and
conservation to re-establish and
protect important biodiversity,
ecologically and socially sensitive
areas.
-Promote natural resource
management, levy retention scheme
from levies accruing from license
and royalties from coastal and
marine resources - e.g. timber,
fisheries mining, tourism -, and
implement a management scheme
for the retained funds.
-Identify suitable agricultural and
livestock development, suitable
semi- arid crop farming (e.g.
Jatropha), silviculture and animal
husbandry.
-Survey and map ecologically
sensitive areas and develop an
inventory of environmentally
sensitive areas (ESA) upon which
important species depend.
-produce a GIS-based “threat
matrix” that identifies important
biodiversity (associated with an
ESA) in the coastal marine zone.
Promote institutional
strengthening and
harmonization of
laws and regulations
to achieve good
governance of
coastal and marine
resources.
-Strengthen capacity
for review and
monitoring of EIA,
Environmental
Audit,
Environmental
Management Plans
and Mitigation.
-Support stakeholder
participation on
District Development
Planning in use of
coastal land area and
coastal zones by
promoting ICM.
- Environmental
indicators will be
used to measure the
reduction in habitat
degradation and
over-exploitation of
-Host the PCU
-Provide oversight and due
diligence on PCU operation of
the main project account and
financial management
procedures.
-Provide oversight and due
diligence on implementation
of M&E and Information,
Education and
Communication functions of
the PCU.
-Provide a work plan and a
budget and procurement plan
for research led by KMFRI.
- provide support for cross-
cutting capacity building at
different levels in
government, NGOs and CBOs
including the inter-faith
council of Clerics.
-Coordinate and undertake
research activities in
collaboration with the Project
components to guide
management initiatives
-Undertake (along with other
partners) stakeholder
88
rural MSMEs and to
undertake capacity
building for borrowers.
-Responsible for setting up
a multisectoral and
multidisciplinary working
group involving various
stakeholders, including
NGOs and CBOs for this
Component.
licensing, monitoring
and management of
fisheries in the EEZ.
-Undertake market
survey for selected
marine products.
-Undertake promotion,
extension services and
training of aquaculture
of selected species
especially seaweed,
oyster, tilapia, crab
and milkfish.
-Establish an action plan (including
financial incentives/disincentives
and legal imperatives) to rationalize
existing and proposed tourist
development.
-Assessment and monitoring of
existing and potential threats to
ecosystems
resources.
awareness, communication
and education through
technical extension services
and religious institutions by
use of relevant R and D from
scientific and traditional
knowledge to raise awareness
on sound management of
marine resources.
-Undertake, along with the
M&E specialist in PCU,
Monitoring and Evaluation
and GIS management by
providing suitable indicators
that ensure systematic
measurability, accuracy,
reliability and timeliness
89
12. During preparation, the Ministry of Finance assigned the Ministry of Fisheries
Development, through the Kenya Marine and Fisheries Research Institute (KMFRI), to
coordinate overall preparation of the proposed project. This model of centralized coordination
was piloted by several Bank natural resource management projects in East and Southern Africa
and was found to be particularly efficient. The resulting success of preparation (the KCDP was
prepared and the first draft of the PAD produced in less than 16 months) supports the approach
taken in developing an implementation structure for the Project.
13. The implementation package for the KCDP is meant to i) be a decentralized system
where coordination occurs centrally and technical implementation at the sector ministry level; ii)
operate in a cost-effective and efficient manner that leaves as much of the project funds for
technical implementation as possible; iii) be a structure that is mainstreamed into the existing
government structure; and iv) be able to transform easily and efficiently into a multisectoral
regional coordination body (if so desired) that can coordinate all Vision 2030 aspects in the
Coast Province. If the management structure for the KCDP is to achieve all the above, it needs
to be composed mainly of government civil servants with staff that work under a performance-
based contract. Likewise, public servants working in the PCU should be on an “administrative
civil service scale” that recognizes managerial achievement within a performance contract.
Finally, the management structure of the KCDP should be sufficiently strong, both in managerial
capacity and in physical support infrastructure, to be able to manage both the KCDP and any
other donor project that might ensue to augment the work of the project. For example, the
Nordic Development Fund has expressed interest in parallel financing activities associated with
the KCDP and expects that the KCDP implementation structure would also be able to
accommodate its project activities.
14. The KCDP decentralized model of management, where the PCU is a coordinator and
facilitator rather than a technical implementer, follows the successful model applied in the
regional SWIOFP. In this model, a Project Coordinator mainly plays a harmonization and
administrative support role. A core of civil servants seconded into a Project Coordination Unit
from each of the core implementing ministries will support the Project Coordinator. Each sector
staff seconded into the PCU is responsible for PCU outreach to his/her own ministry and for the
smooth operation of that Component.
15. While the PCU is designed to be “self-sufficient”, civil servants in the government
system must report to a “manager” as defined by the Civil Service Commission. The
relationship between the civil service-defined manager and the staff of the PCU is limited to
performance and due diligence to ensure that accountabilities linked to each member of the PCU
are being met. This is purely a bureaucratic process and not related to project implementation.
All GoK civil servants are under performance contracts and the performance contracts of the
staff of the PCU are linked to their performance in the KCDP. The ultimate objective is to have
the PCU operate as independently as possible. However, during the initial year of operation, it is
likely that close supervision of the PCU will be needed until its operational procedures become
fully established. KMFRI will, for the first year of operation of the PCU, have the following
responsibilities under Project: (a) provide oversight of the way the PCU runs the main project
account; (b) prepare an evaluation of each member of the PCU which will then go to his/her
home ministry as part of their performance contract review; (c) oversee the M&E activities; (d)
90
organize the annual workplan meetings and the NPSC Meetings; and (e) interface between the
Project and Bank and other stakeholders. KMFRI was chosen by all core ministries to fulfill this
due diligence role due to its (i) performance managing the project preparation process; (ii) ability
to house the PCU, provide information technology and administrative support; and iii) its proven
capacity to implement a large, multisectoral project based on its successful role in providing due
diligence oversight of the Project Management Unit for the regional SWIOFP7. The Bank‟s
financial and procurement assessments of all four participating core ministries clearly support the
identification of KMFRI as the best group in the Coast to provide this due diligence oversight of
the PCU. After the first year of operation, an assessment will be made by IDA of the ability of
the PCU to act independently of KMFRI. Upon a positive outcome of this review, the PCU will
then report solely to the PS of the MoFD.
16. Since technical implementation is at the component level, supervision of project
implementation is inherently more efficient as progress can be linked directly to a sector and to
specific groups within a sector. The KCDP has four components with each component manager
being responsible for managing implementing the component‟s activities. The component
coordinating agency is effectively the project manager for that component and is responsible for
bringing together all government agencies in the component (and other non-governmental groups
that support implementation) to develop the annual work plan and for fortnightly coordination
meetings. This ensures effective interaction and avoids a large number of agencies placing an
excessive burden on communities. The component coordinators are: Component 1 (Fisheries
department - Ministry of Fisheries Development.); Component 2 (Kenya Forest Research
Institute and the KWS being responsible for seconding one of its staff to the PCU to represent
the component - Ministry of Forests and Wildlife); Component 3 (Coast Development Authority
- Ministry of Regional Development), and Component 4 (KMFRI).
17. Although project implementation is through five core ministries, other Government and
NGO groups might be involved in implementation from time to time, and for specific activities.
These “non-core”, or supporting, agencies are incremental to project success but generally do not
play a significant role in implementation and are not represented in the implementation structure.
18. In the Kenyan system, parastatals have advantages over a ministry department regarding
flexibility in staffing and financial management. As outlined above, there are three technical
components and one project management component. Of the four component coordinators, three
are parastatal entities. The only component coordinator that is not a parastatal entity is the
Fisheries Department. Under the Kenyan system, parastatal entities have the advantage of being
semi-autonomous and of having their own boards that allow them to operate with a considerable
7 Additionally, KMFRI has significant experience with donor-supported projects. The following are projects
focused on the marine environment: (a) Kenya/Belgium Project in Marine Sciences: Donor – Belgian Government;
(b) Kenya/Netherlands Ocean Research Program: Donor – Netherlands Government; (c) Assessment of mangrove
dynamics: Donor – European Union (EU); (d) Groundwater/Anthropogenic input in coastal ecosystems: Donor –
EU; (e) Western Indian Ocean Satellite Altimetry Program (WIOSAP) for Tuna-like fisheries: Donor – EU; (f)
Earthwatch Institute Mangrove Project for Kenya: Donor – Earthwatch Europe; (g) South Western Indian Ocean
Fisheries Project (SWIOFP) covering nine countries of the WIO Region: Donor – World Bank (the Regional and
National Coordination Units are hosted at KMFRI ); (h) Agullhas-Somali Current Large Marine Ecosystems
(ASCLME) Project: Donor – UNDP.
91
degree of freedom. A lesson learned from the Lake Victoria Environmental Management Project
(LVEMP 1) in Kenya: moving the project from the Ministry of Natural Resources to the Kenya
Agricultural Research Institute, a parastatal entity, helped implementation. While the Fisheries
Department does not have the same independence as a parastatal entity, the only other alternative
would have been to appoint KMFRI as the component manager of Component 1, which would
not have been acceptable given its research mandate. It is hoped that with requisite technical
assistance, the Fisheries Department will be able lead the component satisfactorily.
92
Annex 7: Financial Management and Disbursement Arrangements
Background
1. The FM team conducted a Financial Management assessment of the Kenya Marine and
Fisheries Research Institute (KMFRI), the overall entity responsible for implementing the
proposed Kenya Coastal Development Project (KCDP) in the first year of implementation under
the Ministry of Fisheries Development and of the following sub implementing entities: the
Kenya Wildlife Service (KWS) and the Kenya Forest Research Institute (KEFRI) (both under
Ministry of Forest and Wildlife), the Coastal Development Authority (CDA) (under Ministry of
Regional Development), the Coast Province Office of the Arid Lands Project (under Ministry for
Northern Kenya and other Arid Lands), the Fisheries Department (under Ministry of Fisheries
Development), the Physical Planning Department (under Ministry of Lands) and the National
Environment Management Authority (NEMA) (under the Ministry of Environment and Mineral
Resources). KMFRI is to hand over the implementation of the project after one year to the
MoFD PCU. The PCU will undergo a financial management assessment to ensure that there are
adequate systems in place to ensure project funds are utilized for purposes intended.
2. The objective of the Financial Management assessment is to determine whether (a) the
entities have adequate Financial Management (FM) arrangements to ensure the funds will be
used for the intended purposes in an efficient and economical manner; (b) the Project‟s financial
reports will be prepared in an accurate, reliable and timely manner; and (c) the entity‟s assets
will be safely guarded. The FM assessment was carried out in accordance with the Financial
Management Manual for World Bank-financed investment operations, which became effective
from 1 March 2010.
Country issues
3. The most recent piece of diagnostic work that provides up to date information on the
country‟s public financial management system (PFM) is the Public Expenditure and Financial
Accountability (PEFA) (2009). Although the PEFA assessment rated highly the credibility of the
budget, key risks related to project implementation were identified in the areas of budget
classification; orderliness and participation of the budget process; Effectiveness of internal audit
especially in regard to the extent of management response to internal audit findings; timeliness
and regularity of accounts reconciliation; quality and timeliness of annual financial statements
where risks were mainly due to difficulties in using the Integrated Financial Management
Information System (IFMIS); scope, nature and follow up of external audit issues and legislative
scrutiny of external audit reports and budget law.
4. Other country-level FM risks arise from the country‟s overall governance environment
and corruption concerns. Strengthening management oversight through ministerial audit
committees, enhancing social accountability mechanisms, and building the capacity of integrity
assurance agencies, particularly Kenya Anti-Corruption Commission (KACC), KENAO and
IAD, are some activities that can address these concerns.
93
5. Through its Public Financial Management Reform Strategy, the GoK remains committed
to strengthening fiduciary safeguards with a view to achieving economy, efficiency and
Effectiveness in the use of public funds. With the support of a number of development partner-
assisted initiatives, including the IDA-funded Institutional Reform and Capacity Building Project
(IRCBP), the GoK is seeking to rapidly enhance the financial accountability framework,
particularly through strengthening legislation related to public financial accounting and audit.
6. The government has initiated far-reaching portfolio-level FM reforms with the Bank‟s
support to address identified fiduciary weaknesses in management of donor projects and
devolved funds. On the Bank-financed portfolio, constraints in the flow of resources and limited
absorptive capacity have generally slowed down Project implementation. Effective FY08, the
government has also adopted the International Public Sector Accounting Standards (IPSAS) cash
basis of accounting for Bank-financed projects. The GoK also issued Treasury Circular No.
3/2009 on development and implementation of Institutional Risk Management Policy
Framework (IRMPF), which makes it mandatory for all public institutions including line
ministries, state corporations and local authorities, to adopt a risk framework. The IRMPF
provides for elaborate social accountability mechanisms, including public reporting, and
corruption prevention mechanisms. On implementation, the IRMPF will mitigate the risks
associated with the management if public resources.
7. The GoK has also agreed to conduct annual risk-based Fiduciary and Funds Flow
Reviews and IAD Treasury in-depth/forensic audit reviews. The first review was conducted
during 2009. The Ministry of Finance (MoF) and the relevant implementing agencies are
implementing the reviews‟ findings and recommendations.
94
8. Risk Assessment and Mitigation
Type of Risk Risk
Rating
Risk Risk-mitigating measures
incorporated into project
design
Condition of
Effectiveness/
Disbursement
/Negotiation
(Y/N)?
Residual
Risk
Rating
INHERENT
RISKS
Country Level S This rating is based on the Country
Public Financial Management
environment and it takes into
consideration relevant country
governance issues (e.g. corruption
concerns and current political crisis
arising from the general election in
December 2007). The rating is
derived from the country ratings for
CPIA Question 13 (Quality of
Budgetary and Financial
Management) and Question 16
(Transparency, Accountability and
Corruption in the Public Sector).
Issues are being addressed
at the country level through
the country‟s governance
action plan, strengthening of
the public financial
management system
(supported by the Bank
through the Institutional
Reform and Capacity
Building Project).
No S
Entity Level S KMFRI is an old institution with
elaborate operational and financial
management and project
implementation experience.
However, the success of KMFRI is
entirely dependent on the
effectiveness of the other
government bodies and departments
in implementing the project
components. The coordination
effort to achieve the project‟s
objectives will be very challenging.
An overall project
coordinating unit to be in
place, made up of
Government civil servants
seconded to the PCU from
participating ministries and
parastatal entities.
Development of mini PCUs
at the sub-implementing
entities level. The PCU will
help ease any coordination
challenge.
No M
Project Level S With so many ministries and
stakeholders involved, the Project is
complex in design and
implementation arrangements.
As above No M
OVERALL
INHERENT
RISK
S M
CONTROL
RISKS
95
Type of Risk Risk
Rating
Risk Risk-mitigating measures
incorporated into project
design
Condition of
Effectiveness/
Disbursement
/Negotiation
(Y/N)?
Residual
Risk
Rating
Budgeting S KMFRI FM procedures manual is
inadequate for budgeting as it does
not enable budget process
coordination among sub-
implementing entities.
KMFRI should develop a
KCDP-specific FM
procedures manual to
ensure that its enforcement
of FM arrangements,
including budgeting in all
the sub implementing
entities, is captured and
linked to the individual FM
manuals of these entities.
Yes,
Effectiveness
Condition as
part of PIM
M
Accounting S There is no adequate Financial
Management (FM) manual to ensure
the accountability of funds amongst
the sub-implementing entities.
The project‟s accounting system is
manual hence prone to having
errors.
Capacity challenges for Fisheries
Department, Physical Planning
Department, accounting section.
KCDP FM Manual to be
prepared by KMFRI and
agreed with IDA and
included in the PIM which
is circulated to the sub-
implementing entities.
PCU will, not later than
February 15, 2011,
computerize its accounting
functions
Training of staff in
Fisheries and Physical
Planning Departments to be
conducted during
implementation to ensure
accountability of project
funds.
Effectiveness
Condition as
part of PIM
Dated
covenant to be
met within six
months after
effectivess
No
S
96
Type of Risk Risk
Rating
Risk Risk-mitigating measures
incorporated into project
design
Condition of
Effectiveness/
Disbursement
/Negotiation
(Y/N)?
Residual
Risk
Rating
Internal controls
and internal
audit
arrangements
S Though adequately staffed, KMFRI
still undertakes pre-audits and its
annual work plan is not risk-based.
Some of the internal and external
audit reports/management letters for
June 30, 2009 indicate that Bank
reconciliations are not up to date,
there are cases of unsurrendered
imprests and vote-book does not
capture all the information.
CDA has a weak internal audit
department that requires capacity
building.
Fisheries Department, Physical
Planning Department and KEFRI
rely on their line ministry and on
Treasury internal auditors. Like all
ministries, they are faced with
ineffective audit committees and
audit teams that require capacity
building.
KEFRI is yet to finalize tagging its
assets but Bank reconciliations are
up to date.
Arid Lands also use the Ministry‟s
internal auditors and there are no
reports available to show what
audits have been done so far. There
is limited segregation of duties due
to lack of staff. Imprest regulations
are also not enforced.
KMFRI should develop an
internal audit manual
defining the use of risk-
based auditing and
mandating KMFRI internal
auditors to audit the project
accounts of sub-
implementing entities. This
will address the gaps in the
Fisheries Department,
Physical Planning
Department, KEFRI,
NEMA, and Arid Lands, as
KMFRI internal auditors
will conduct project audits
in these institutions and
report back to their audit
committee. KMFRI internal
auditors will also build
capacity to overcome weak
internal audit functions, e.g.
in CDA, in order to rely on
their work on the project
audits.
KMFRI internal control
issues are being followed up
by the management under
the Bank‟s supervision.
Effectiveness
condition as
part of PIM
No
S
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Type of Risk Risk
Rating
Risk Risk-mitigating measures
incorporated into project
design
Condition of
Effectiveness/
Disbursement
/Negotiation
(Y/N)?
Residual
Risk
Rating
Funds Flow S In the past, there have been cases of
slow processing of withdrawal
applications and disbursements of
funds by the Ministry of Fisheries
Development that could affect this
project.
MoFD will sign a
subsidiary agreement with
the other core line
Ministries to have overall
fiduciary responsibility over
the Project. This will speed
up disbursements.
Opening of the project
accounts in commercial
banks in Mombasa that are
acceptable to the Bank, and
account for the funds
disbursed to them by
KMFRI so that there are no
delays in replenishing
disbursements to the sub-
implementing entities.
Yes,
Effectiveness
condition
M
Financial
Reporting
M There could be delays in obtaining
accountability information from the
sub-implementing entities, which
could delay the submission of
Interim Financial Reports to the
Bank.
Sub implementing entities
will receive training to
ensure there are no
bottlenecks in financial
reporting. In addition, the
IFR format for the project
has been modified and
agreed with IDA.
M
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Type of Risk Risk
Rating
Risk Risk-mitigating measures
incorporated into project
design
Condition of
Effectiveness/
Disbursement
/Negotiation
(Y/N)?
Residual
Risk
Rating
Auditing S The first audit report and
management letter for the project
was received on November 27,
2009, which is within the
submission deadline of December
31, 2009 for the financial year that
ended on June 30, 2009 for GEF
preparation Fund. The auditor
issued a qualified opinion on the
financial statements: The project
account statement as at June 30,
2009 reflects a balance of
US$99,000 under amounts drawn
but not yet claimed. According to
the information available, as at June
30, 2009, the implementing ministry
had not provided the relevant
documentation to support the claim.
Risk of limited scope in the audit
terms of reference to cover the sub
implementing entities.
Address the qualification
issue and submit to the
Bank a clearance certificate
from KENAO.
The KMFRI Finance
Deputy Director has already
communicated with
KENAO and is waiting for
the clearance certificate on
the audit qualification. The
Bank has also established
that this qualification was
issued as a result of sending
a different auditor to audit
the designated account who
did not coordinate with the
auditor auditing the funds
disbursed to the project
account hence the „amounts‟
drawn and not claimed‟ are
actually funds that were
either in the project account
or recorded as expenditure
which were audited by
KENAO and an unqualified
audit opinion issued.
Modify the KENAO TORs
to ensure the scope covers
audit of disbursements to all
the levels including the sub-
implementing entities. The
TORs have been agreed
with the Bank.
No
M
OVERALL
CONTROL
RISK
S S
OVERALL
RISK
S S
H = High; S = Substantial; M = Moderate; L = Low.
Note: According to the Financial Management Sector Board‟s Financial Management Manual,
the residual risk takes into account mitigation measures that have been completed or will be
completed by Effectiveness. If a mitigation measure is put in place but achieved during
implementation, the residual risk rating will remain the same as the initial risk rating.
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9. Strengths
KMFRI has been implementing donor-funded projects with the Bank such as the
South West Indian Ocean Fisheries Project. It therefore has the experience
required to handle the KCDP. Most of the financial management arrangements for
this Project at KMFRI are in place or have been strengthened according to
mitigation measures documented in the above-mentioned risk assessment and
mitigation table. There is adequate staffing at the Institute‟s accounting and
auditing department. KMFRI has also been submitting the IFRs and Audited
reports in time.
Kenya Wildlife Services has adequate staffing capacity both in the accounting
and the auditing departments and has been implementing donor-funded projects.
Coastal Development Authority is currently undertaking 15 donor-funded
projects and has adequate accounting capacity.
NEMA has adequate and qualified staff both at accounting and auditing
departments. The audit committee meets on a quarterly basis and the accounting
operations are computerized. NEMA has a special unit that deals with project
accounts.
10. Weaknesses
Significant
Weaknesses/Risk
Action/Risk Mitigation Measure Responsible
Person
Completion Date
Capacity challenges
for the Accounting
section of Fisheries
Department, the
Physical Planning
Department
Capacity building training will be
conducted before and during project
implementation.
Capacity building will also be
provided to participants not exposed
to procedures on Bank Funded
projects
KMFRI/PCU During
implementation
The FM procedures
manual is inadequate
to ensure the
accountability of funds
amongst the sub
implementing entities
KMFRI will develop a KCDP
specific FM procedures manual to
ensure that its enforcement of FM
arrangements in all these sub
implementing entities is captured
and linked to individual FM manuals
of these entities.
KMFRI Effectiveness
condition as part of
the PIM
Inadequate Internal
audit manual
KMFRI will develop an internal
audit manual defining the use of
risk-based auditing and mandating
its internal auditors to audit the sub-
implementing entities project
accounts.
KMFRI Effectiveness
condition as part of
the PIM
Delays in
disbursements to
KMFRI in the past
MoFD will sign a subsidiary
agreement with the other core line
ministries to have overall fiduciary
responsibility over the project. This
Ministry of
Fisheries
Development and
other core line
Effectiveness
Condition
100
will speed up disbursements. ministries
Internal control issues,
e.g. unsurrendered
imprest, need to be
resolved by
management.
KMFRI internal control issues are
being followed up by the
management under the Bank‟s
supervision.
KMFRI Followed up during
project
implementation
Implementing and Institutional Arrangements
11. The Ministry of Fisheries Development, through the KMFRI, will coordinate overall
implementation of the proposed project. There will be a Project Coordinating Unit (PCU) that
will comprise a Project Coordinator who will coordinate with all project managers from all sub-
implementing agencies. The project co-coordinator will report to Director KMFRI (who is also
the Head of the Institution) for day-to-day matters.
Component 1: Sustainable management of offshore fisheries resources will be
handled by the Fisheries Department and KMFRI who will open project accounts.
Component 2: KEFRI will coordinate Sound Management of Natural Resources,
and KWS, KEFRI and NEMA will open project accounts. Tourism project payments
will be made at KMFRI.
Component 3: The Arid Lands Office, the Department of Physical Planning,
CDA, and private sector community organization will handle support for alternative
livelihoods. The Arid Lands coastal office, the CDA and the Department of Physical
Planning will open project accounts. KMFRI will make private sector community
organization payments.
Component 4: PCU and KMFRI will handle Capacity building, Monitoring and
Evaluation System, Project Management, CVF and Communication.
12. The Permanent Secretary Ministry of Fisheries Development will be the accounting
officer.
13. During project execution, the PCU will implement and manage:
procurement, including purchases of goods, works, and consulting services;
project monitoring, reporting and evaluation;
contractual relationships with IDA and other co-financiers; and
Financial management and record keeping, accounts and disbursements.
14. KMFRI will define these FM arrangements with sub-implementing entities in the KCDP-
FM manual. KMFRI will play an oversight role on fiduciary aspects before project
implementation is passed on to the MoFD PCU.
15. The mandatory eligibility criteria for the sub-implementing entities to receive funds will
be:
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Open project accounts in commercial banks in Mombasa that are acceptable to the Bank,
and account for the funds disbursed.
The sub-implementing entities will also assign an accountant to the Project and open up
their books of accounts for audit by both the Project‟s internal and external auditors.
16. All financial management arrangements will be documented in the subsidiary agreement.
The signing of the agreement between KMFRI, MoFD and the sub-implementing entity will be
an effectiveness condition.
FINANCIAL MANAGEMENT ARRANGEMENTS
Budgeting arrangements
17. Budgeting for KMFRI will be done under the Ministry of Fisheries Development and
included in the printed Estimates.
18. KMFRI has adequate qualified staff to do the budgeting. The designated Accountant has
completed the final section of Certified Public Accountant of Kenya (CPA) examinations, which
is considered adequate for purposes of accounting for the project funds. He reports to the Chief
accountant of KMFRI who reports to the Deputy Director Finance.
19. KMFRI intended to use its own procedures manual for the project entitled “KMFRI
Financial Regulations Book”, The manual summarizes how the budgeting will be done under an
„estimates section‟ and submitted through the Ministry to Treasury for approval. However, in
view of the fact that there are many sub-implementing entities, KMFRI FM procedures are
inadequate for the project in terms of coordinating the budget preparation and monitoring
process. The FM manual should give KMFRI the mandate to demand budget information from
the sub-implementing entities and also link the KCDP manual to the FM manuals of individual
sub-implementing entities.
KCDP 18-month work plans for the KCDP are the basis on which procurement plans will be
developed and budgets devolved to sub- implementing entities.
20. The budgets are calculated using excel and will be monitored through quarterly Interim
Financial Reports.
21. For KEFRI, the Fisheries Department, the Arid Lands and the Physical planning
Departments, budgeting follows the GoK‟s financial procedures entitled “Government Financial
Regulations and Procedures” which are considered adequate.
KWS uses the “Kenya Wild Life Service Accounting Procedures Manual
KWS/ACC/001” and has well-articulated budgeting procedures.
CDA‟s financial management manual is in draft format and is being updated. It should be
submitted to the Board at the next quarterly meeting.
102
NEMA uses „Financial management and procurement manual‟ which has adequate
budgeting procedures that also borrow from the GoK Financial Regulations and
procedures manual.
Accounting arrangements
22. As stated above under budgeting, KMFRI‟s FM procedures manual is inadequate for
accounting for the project funds including the sub-implementing entities; a project-specific
manual should be put in place. This manual will ensure the coordination of the accountability of
funds amongst the sub-implementing entities and the links to established manuals for the sub-
implementing entities as documented below. This will be an effectiveness condition.
23. The project accounting system is manual, consisting mainly of a cashbook. This was
deemed sufficient for the PPF but for the main project, an information accounting system will be
necessary.
24. A qualified accountant has been designated.
25. At the sub-implementing entities‟ level, KWS, CDA, NEMA and KEFRI have
designated accountants whose qualifications and experience are considered adequate for
accounting for the funds. However, the Fisheries Department has no capacity, as the designated
accountant who is an Accounts Clerk National Certificate finalist has been dealing with Revenue
licensing only.
26. The Physical Planning Department also has no capacity. The Department has
designated a clerical officer with over 15 years of experience. For these two departments, the
designated accountants will receive training on the accounting of receipts and payments by the
overall project accountant with assistance from the Bank.
27. KWS is currently using a manual system of accounting. However, plans are under way to
decentralize the SUN system of accounting that is in use at KWS headquarters in Nairobi. The
previously mentioned KWS accounting procedures mentioned are considered adequate.
28. KEFRI is using a manual system of accounting and following the GoK procedures
manual, which is considered adequate.
29. CDA is using the QuickBooks information system, which is considered adequate for
accounting, though Excel is used for budgeting.
30. Arid Lands use manual bookkeeping complemented by Excel and uses the GOK
procedures. The accounting staff is experienced.
31. NEMA accounting system is centralized in Nairobi. The accounting system in use is
integrated Microsoft Dynamics NAV. The accountants designated for the project are graduates
and are certified public accountants of Kenya which is deemed adequate for the project. NEMA
uses the FM and procurement manual mentioned above under budgeting and it‟s adequate.
103
Internal Controls and Internal Audit Arrangements
32. Three staff members who have adequate qualifications and experience make up
KMFRI‟s internal audit department.
33. The audit committee is effective and meets quarterly to discuss the internal audit reports,
among other things. However, the audit committee still undertakes pre-audits and its annual
work plan is not risk based. Some of the internal audit reports indicate that Bank reconciliations
are not up to date, cases of unsurrendered imprests and vote book not capturing all the
information. KMFRI maintains a fixed assets register that is updated.
34. KMFRI should develop an audit manual that will focus on the use of a risk-based audit
approach and give the KMFRI internal auditors the mandate to audit the project funds both at
KMFRI and at the sub-implementing agencies. However, where the internal audit of the sub-
implementing entity is strong, KMFRI auditors can rely on their reports. The manual will also
document the necessary internal control systems required for achieving the Project‟s objectives.
KMFRI internal auditors will also participate in strengthening the capacity of institutions with
weak internal audit functions, e.g. CDA, in order to conduct reliable project audits.
35. KWS has a strong internal audit department and audit committee. The internal audit
department discusses audit findings and indicates follow up dates for implementation of findings.
Pre audits were phased out.
36. CDA has two internal audit staffers, which is considered weak and would require
capacity building. It has a newly-constituted Audit Committee that has no charter. The audit
reports reviewed focus on projects status of completion. The audits are not risk based.
37. The Fisheries Department, the Arid Lands and the Physical Planning Departments
and KEFRI rely on the internal auditors of their line ministry and of Treasury. Like all
ministries, they have to deal with ineffective audit committees and audit teams that require
capacity building. KEFRI is yet to finalize tagging its assets but the Bank reconciliations are up
to date. It is important to note that audit issues for the Project will be submitted to the KMFRI
audit committee to be followed up and resolved, hence mitigating the risk of the weak audit
committees in the ministries.
38. NEMA has one internal auditor in the organization who is a graduate. There is an Audit
risk and Governance committee of the Board that meets on a quarterly basis. The internal
auditor uses annual work plans that are approved by the Audit committee annually. No pre
audits are carried out.
Funds Flow Arrangements
39. KCDP has been on the SOE disbursement method for the PPF but will shift to report-
based for the main project.
40. The World Bank and the Global Environment Facility (GEF) will provide the main
funding. KMFRI will open, through Treasury, two designated accounts in United States Dollars
104
(US$) for IDA and GEF funding and two project accounts in Kenya Shillings (Kshs) in a local
commercial bank acceptable to IDA in Kenya. KMFRI will operate the project account until it is
transferred to the MoFD PCU.
41. The participating sub-implementing entities will also open project accounts with the
authority from the Permanent Secretaries of their respective ministries/Heads of the institutions.
Evidence to this effect should be submitted to the Bank ahead of project disbursement, together
with the signatories to the accounts in accordance with the agreements between MoFD and the
sub-implementing entities, and the Financing Agreement.
42. Accounts opened by KEFRI, CDA, the Physical Planning Department, NEMA, and the
Fisheries Department will have a deposit threshold of US$ 100,000 or Kenya Shillings
equivalence. The Arid Lands Project Account will have a deposit threshold of US$ 250,000 or
Kenya Shillings equivalence. KMFRI will make payments to tourism entities, private-sector
community organizations and any other institutions subsequently engaged in the Project.
43. The funds will flow from the World Bank to the Designated Account, to the project
account, from where funds will be transferred to the sub-implementing project accounts.
Replenishments to the sub-implementing accounts will only be made when funds are accounted
for. Payments relating to project activities can be made from the Designated Account, the
project account or the sub-implementing entity bank accounts, based on agreed work plans and
budgets. The existence of a subsidiary agreement between MoFD and the sub-implementing
entities documenting the FM arrangements will be an effectiveness condition.
44. In the past, there have been cases of slow withdrawal applications processing and
disbursements of funds by the Ministry of Fisheries Development. To resolve this problem
KMFRI and MOFD need to sign a subsidiary agreement with the other core line Ministries to
have overall fiduciary responsibility over the Project. This will speed up disbursements.
Furthermore, this will be an Effectiveness condition.
105
45. The funds flow diagram is outlined below.
WORLD BANK (IDA)
Two Designated Accounts for IDA and GEF in USD at Treasury
Two Main Project Accounts for IDA and GEF in Kshs in a local commercial Bank
acceptable to IDA- Operated by KMFRI before the transfer to the MoFD PCU
PROJECT ACCOUNTS in Kshs for each of the participating agencies in a local Commercial
Bank acceptable to IDA- With authority from Permanent Secretary of their respective line
Ministries
Payment for project activities and to any other partners for the 4 components like
Tourism and private sector community organizations
Component 1:
MoFD
Component 2:
KWS
KE FRI
NEMA
Component 3:
CDA
MOL
Arid Lands
Component 4:
KMFRI
106
IDA Disbursement Methods
46. Report-based Disbursements. IDA will make and initial disbursement to the Project
after receiving a withdrawal application with a six-month cash flow forecast. This
withdrawal application should be prepared within one month after project Effectiveness.
Thereafter, IDA disbursements will be made into the respective Designated Accounts, based on
quarterly IFRs, which would provide actual expenditure for the preceding quarter (three months)
and cash flow projections for the next two quarters (six months). The IFR, together with the
Withdrawal Application (WA), will be reviewed by the Bank‟s Financial Management Specialist
(FMS) and approved by the Task Team Leader (TTL) before the request for disbursement is
processed by the Bank‟s Loan Department. Disbursements from KMFRI and later on MoFD
PCU to the sub-implementing entities‟ project accounts will be done quarterly, based on annual
work plans approved by a Permanent Secretary-level Policy and Steering Committee made up of
representatives of all ministries implementing the Project.
47. Other Methods. In addition, the direct payment method of disbursement, involving
direct payments to suppliers for works, goods and services upon the borrower‟s request, may be
used whenever needed. Payments for expenditures against pre-agreed special commitments may
be made to a commercial bank. Reimbursements can be made to the Designated Account. These
payments will be reported in quarterly IFRs. The IDA Disbursement Letter will stipulate the
minimum application value for direct payments and special commitment procedures as well as
detailed procedures under which these disbursement arrangements can be made.
Financial Reporting Arrangements
48. KMFRI has been submitting to the Bank, quarterly consolidated FMR/IFR within 45
days of the end of each quarter, and will continue to do so. It is also supposed to prepare and
submit annual audited financial statements within six months of the end of the financial year.
The MoFD PCU will take over this role after one year transition.
49. The project is up to date with quarterly FMR/IFR submissions. However, this will require
modification in view of the revised project design. The revised project IFR has been agreed with
the Bank. The sub-implementing entities will prepare and submit IFRs to KMFRI and later on
MoFD PCU for consolidation on a monthly basis by 5th
of the following month. The contents of
the IFR will include a section to report on the accountability of funds utilized and a section to
access funds using the report based method of disbursement.
The Reporting Section includes:
Statement of Sources and Uses of Funds; and
Statement of Uses of Funds by Project Activity/Component.
The Disbursement Section includes:
Designated Account (DA) Activity Statement;
Bank Statements for both the Designated and Project Account;
Summary Statement of DA Expenditures for Contracts subject to Prior Review; and
Summary Statement of DA Expenditures not subject to Prior Review.
107
50. The Project will also prepare the projects annual accounts in accordance with
International Public Sector Accounting Standards.
Auditing Arrangements
51. The Kenya National Audit Office (KENAO), which is assessed as sufficiently
independent and effective, will be responsible for the audit of this project. . However, there it is
necessary to modify the TORs to ensure the scope covers audit of disbursements to all the levels
including sub-implementing entities. The audit TORs have been agreed with the Bank.
52. The first audit report and management letter for the Kenya Coastal Development Project
was received on November 27, 2009, which is within the submission deadline of December 31,
2009 in respect of the financial year ending on June 30, 2009 for GEF preparation Fund. The
auditor issued a qualified opinion on the financial statements: The project account statement as
at June 30, 2009 reflects a balance of US$ 99,000 under amounts drawn but not yet claimed. This
qualification is not a substantive qualification and it was a result of KENAO sending two
different auditors to the Treasury (Ministry of Finance) who maintain the designated account for
the project and another auditor to KMFRI to audit the project account. These two auditors did
not coordinate as the qualified „amounts drawn but not claimed‟ were actually transferred to the
project account which was also audited by KENAO and an unqualified audit opinion issued.
Nevertheless, the management of KMFRI has pursued the matter with KENAO to provide a
letter of clearance which will be submitted to the Bank. This issue of KENAO providing audit
qualifications on „amounts drawn but not claimed‟ is a generic issue in the portfolio that the
Bank is addressing with KENAO and Ministry of Finance to ensure it is not repeated in
subsequent audits of Bank-financed projects. However, the Management Letter highlighted the
following issues:
unsurrendered imprest of Kshs 248,400 for a cancelled trip;
failure to conduct a cash count at year end to verify Kshs 131,187 included in the
financial statement;
getting a loan from TF 090633 of Kshs 1,000,000 without a loan agreement. The sum has
since been refunded.
53. Management has been addressing these issues and the Bank will continue monitoring the
progress in order to fully address all management letter issues. The audit will be carried out in
accordance with International Auditing Standards. The audit report will be submitted to the Bank
within six months after the end of each fiscal year. The Bank encourages the project‟s audit
report to be publically disclosed.
108
54. The audit reports that will be required to be submitted by KMFRI/MoFD PCU and the
due dates for submission are:
Audit Report Due Date
Project-Specific Financial Statements, i.e., Kenya Coastal
Development Project annual audited financial statements
(including Designated Accounts with appropriate notes and
disclosures) and Management Letter
Submitted within six months after the
end of each fiscal/financial year.
55. The Financial Statements will be prepared on the cash basis method of financial reporting, using
appropriate accounting policies in accordance with the International Public Sector Accounting Standards
(IPSAS).
Financial management (FM) action plan
56. The following action plan indicates the actions to be taken and their completion dates, as well as
the person(s)/entities responsible for the specific actions. The FM Action Plan has been discussed and
agreed with the Project management.
Action Date due by Responsible
1. KMFRI to sign a subsidiary agreement with the
Ministry of Fisheries Development to have
overall fiduciary responsibility over the project
and with the sub-implementing entities to
ensure adequate financial management
arrangements to account for the project funds.
Effectiveness Condition KMFRI
2 KMFRI to develop a project-specific FM
manual that will cover the sub-implementing
entities.
Effectiveness Condition as part of
the PIM
KMFRI
3. Capacity building training to be conducted to
strengthen the accounting units of the Fisheries
Department and Physical Planning Department.
Capacity building will also provided to
participants not exposed to Financial
Management procedures on Bank Funded
projects.
During Implementation. IDA and
KMFRI/MoFD
PCU
4. KMFRI to develop an Internal Audit manual to
adopt a risk-based audit approach covering its
operations and the sub-implementing entities
for the Project.
Effectiveness condition as part of
the PIM
KMFRI and
Ministry of
Fisheries
Development
5. KMFRI to computerize its accounting systems Dated covenant six months after
Effectiveness
KMFRI
109
Conditionality:
57. Effectiveness Conditions: i) KMFRI and MoFD will sign a subsidiary agreement with
the other core line Ministries to have overall fiduciary responsibility over the project; ii) KMFRI
to come up with a project specific FM manual that will cover the sub implementing entities. iii) KMFRI to develop an Internal Audit manual to adopt a risk-based audit approach covering its operations
and the sub-implementing entities for the Project. Condition (ii) and (iii) will be included in the Project
implementation Manual (PIM) which is a condition of effectiveness.
58. Other Covenants: i) KMFRI to computerize its accounting systems six months after
Effectiveness.
59. Financial Covenants: Financial covenants are the standard ones as stated in the
Financing Agreement Schedule 2, Section II (B) on Financial Management, Financial Reports
and Audits and Section 4.09 of the General Conditions.
60. Implementation Support Plan: Based on the outcome of the FM risk assessment, the
following implementation support plan is proposed:
FM Activity Frequency
Desk reviews
Interim financial reports review Quarterly
Audit report review of the program Annually
Review of other relevant information such as interim
internal control systems reports.
Continuous as they become
available
On site visits
Review of overall operation of the FM system Bi-Annually (Implementation
Support Mission)
Monitoring of actions taken on issues highlighted in audit
reports, auditors‟ management letters, internal audit and
other reports
As needed
Transaction reviews (if needed) As needed
Fiduciary Review by IAD treasury Annually
Capacity building support
FM training sessions Before Project start and thereafter
as needed
61. The objectives of the above implementation support plan are to ensure the project
maintains a satisfactory financial management system throughout the project‟s life.
Conclusion
62. The conclusion of the assessment is that the financial management arrangements meet the
Bank‟s minimum requirements under OP/BP10.02. The overall residual risk rating is substantial.
The FM action plan outlines the mitigating measures which if implemented would strengthen the
FM arrangements.
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Annex 8: Procurement Arrangements
A. General
1. Procurement for the proposed Project will be carried out in accordance with the World
Bank‟s "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004 , and its
Corrigendum of May 01, 2010; and "Guidelines: Selection and Employment of Consultants by
World Bank Borrowers" dated May 2004 (revised October 2006), and its Corrigendum of May
01, 2010; and the provisions stipulated in the Legal Agreement. A general description of the
various items under different expenditure categories follows below. In the Procurement Plan, the
Borrower and the Bank agree on the different procurement methods or consultant selection
methods, the need for pre-qualification, estimated costs, prior review requirements, and time-
frame for each contract financed by the Loan/Credit. The Procurement Plan will be updated at
least annually or as required to reflect the actual Project implementation needs and
improvements in institutional capacity. The procurement entities as well as suppliers, services
providers, and consultants (including NGOs) will observe the highest standard of ethics during
procurement and execution of contracts financed under this project. Furthermore, the Project
will carry out implementation in accordance with the “Guidelines on preventing and combating
Fraud and Corruption in Projects financed by IBRD Loans and IDA Grants” dated October 15,
2006 (the Anti-Corruption Guidelines).
2. Procurement Environment. The public procurement system in Kenya covers all
government entities: the central government, local authorities, state corporations, education
institutions and other government agencies that purchase goods, works and services using public
resources in accordance with the provisions of the public procurement law (i.e., the Public
Procurement and Disposal Act of 2005 (PPDA)), which came into effect in January 2007,
replacing the Exchequer and Audit Act (Public Procurement), the Regulations (2001).
Section 8 (1) of the Act establishes a central Public Procurement Oversight Authority (PPOA) in
addition to the Public Procurement Department established under the Regulations (2001) in the
MoF. The PPOA was officially launched in June 2008, but to date it has not finalized recruiting
its permanent staff. Currently, PPOA‟s staffers seconded from the Ministry of Finance. The Act
sets out the rules, procedures and institutional arrangements that public entities should follow in
managing public procurement. The Act also provides law enforcement mechanisms. The PPOA
provides oversight function in monitoring compliance with the Act‟s rules and procedures.
However, the Act contains critical provisions that impede transparency and efficiency.
Corruption in procurement is not yet controlled. Capacity building is underway, but compliance
to and enforcement of the Act to ensure value for money remains very weak.
3. Procurement Implementation Arrangements. The Project comprises four components
to be implemented by the Ministry of Fisheries Development (MoFD), Kenya Forest Research
Institute (KEFRI) and Kenya Wildlife Service (KWS), National Environmental Management
Authority (NEMA), Coast Development Authority (CDA), the Kenya Marine and Fisheries
Research Institute (KMFRI). Other implementing agencies include the Ministry of Lands,
Ministry of State for the Development of Northern Kenya and other Arid Lands. A Project
Coordination Unit (PCU) comprising key administrative staff selected competitively from the
civil service and components technical staff will be established to carry out the overall
111
coordination of the Project activities. The PCU will be supported by a pool of short-term
consultants who will include a procurement specialist conversant with Bank financed operations.
In addition to the procurement of its own requirements and overall coordination of project
activities, the PCU will be responsible for the procurement of non-specialized and/or component
specific large value contracts for goods, works and consultant services and the consolidation and
updating of procurement plans.
4. Component 1. This Component establishes sustainable management of offshore fisheries
resources. Credit allocations will finance the construction of an MCS facility, procurement of
VMS and MCS equipment, technical assistance on rights of access, sustainable fishing practices,
mariculture, and improvements to the Fisheries Act and related implementation regulations. The
allocations will also finance short courses and formal training on VMS equipment setup,
operation and maintenance, MCS and Observer Corps.
5. Component 2. This Component focuses on the sustainable management and regeneration
of natural resources and biodiversity in the near shore coastal marine environment. Credit
allocations will finance the rehabilitation of existing infrastructure, procurement of equipment,
technical assistance and consulting services for baseline studies, ecosystem management
interventions, capacity building for the Implementing Agency, sub-Agencies, inter-country
treaties, workshops, study tours, trade and tourism fairs, entrepreneurial skills, etc.
6. Component 3. This Component will support alternative livelihoods in the Coastal Zone.
Credit allocations will finance procurement of equipment, office furniture and related equipment,
technical assistance and consultant services on legal and regulatory frameworks, entrepreneurial
and business management skills and training.
7. Component 4. This component covers capacity building, monitoring and evaluation,
project management and communication. It will provide capacity in the project coordination and
implementation teams, promote dialogue among national partners and regional stakeholders, and
develop a communication strategy for development outreach. Credit allocations will finance
procurement of office equipment, motor vehicles, technical assistance and consulting services
and works. The CVF implementation is overseen by the PCU which means that it is also
included in Component 4.
8. Use of World Bank Standard Bidding Documents and Request for Proposals. All
contracts to be procured on an ICB basis shall use the Bank‟s Standard Bidding Documents
(SBD) and the related Standard Form of Evaluation. All consulting services shall use the Bank‟s
Standard Request for Proposals (SFP) and the related Form of Evaluation for selection of
consultants.
9. Scope of Procurement and Applicable Procurement Methods. The implementation of
the Project entails procurement of: (a) goods (motor vehicles, boats and boat engines, computers
and associated equipment, computer software, laboratory and field equipment, office furniture
and equipment, etc), (b) works (construction and rehabilitation of offices, tourism facilities, fish
handling and breeding facilities, resources centers, etc), (c) consulting services (technical
assistance, works design and supervision, tourism marketing and development, environmental
112
management, biodiversity management, monitoring and evaluation, audits etc.); (d) training and
workshops, and (e) study tours. MoFD, KEFRI, CDA and KMFRI will be responsible for the
implementation of Components 1, 2, 3, and 4 respectively. In addition to coordinating the
implementation of component 4, KMFRI will oversee the overall implementation of the Project
in the first year of implementation before the PCU becomes fully operational. Procurement of
Goods. Goods procured under this project will include motor vehicles, computers, computer
software, MIS, office furniture and equipment, VMS and MCS equipment, etc. Goods estimated
to cost the equivalent of US$ 500,000 per contract or more will be procured on the basis of
International Competitive Bidding (ICB) procedures. Goods estimated to cost less than the
equivalent of US$ 500,000 per contract will be procured on the basis of National Competitive
Bidding (NCB) procedures, subject to the exceptions described in paragraph 7 above. Goods
estimated to cost less than US$ 80,000 equivalent per contract may be procured through
shopping procedures. As a rule, a qualified supplier who offers goods or materials that meet the
specifications at the lowest price shall be recommended for award of the contract.
10. Procurement of Works. The Project does not envisage major works contracts. Minor
works to be undertaken under the Project includes the construction of an MCS facility and the
rehabilitation of existing infrastructure (offices, stores, laboratories, etc.). Works with an
estimated contract value of less than the equivalent of US$ 5,000,000 per contract will be
procured through National Competitive Bidding (NCB) procedures (subject to the exceptions
described in paragraph 7 above), and those below the equivalent of US$ 80,000 per contract,
through Shopping procedures.
11. Direct contracting for goods: Direct contracting may be an appropriate method when it
can be justified, after consultation with the Bank, that a competitive bidding is not advantageous
and meets the requirements of paragraph 3.6 of the procurement Guidelines. In particular, Direct
Contracting may be used under the following circumstances:
(a) An existing contract for goods, awarded in accordance with procedures acceptable to the
Bank, may be extended for additional goods of a similar nature. The Bank shall be
satisfied in such cases that no advantage could be obtained by further competition and
that the prices on the extended contract are reasonable.
(b) Standardization of equipment or spare parts, to be compatible with existing equipment,
may justify additional purchases from the original Supplier. For such purchases to be
justified, the original equipment shall be suitable, the number of new items shall
generally be less than the existing number, the price shall be reasonable, and the
advantages of another make or source of equipment shall have been considered and
rejected on grounds acceptable to the Bank.
(c) The required equipment is proprietary and obtainable only from one source.
(d) A contractor responsible for a process design requires the purchase of critical items from
a particular supplier as a condition of a performance guarantee.
(e) In exceptional cases, such as in response to natural disaster.
12. Procurement of non-consulting services. Non-consulting services are services that are
not of intellectual or advisory in nature. The procurement of non-consulting services shall follow
113
the existing SBDs with appropriate modifications. The applicable thresholds will be as per
paragraph 9 above.
13. Selection of Consultants. Consulting services under the Project will include but not be
limited to: (i) technical assistance, (ii) monitoring and evaluation, (iii) audits, etc. All consulting
services will be procured following the procedures set forth in the Guidelines for the Selection
and Employment of Consultants by World Bank Borrowers. Consulting contracts will as far as
possible be awarded under Quality and Cost Based Selection (QCBS) procedures. Other
methods of selection will be determined for each assignment depending on its nature and the
provisions of the Consultants Guidelines, and will be indicated in the procurement plan. Quality
Based Selection (QBS) would be followed for assignments, which meet the requirements of
paragraph 3.2 of the Consultants Guidelines. Assignments of standard and routine nature such as
audits and other repetitive services will be selected through the Least-Cost Selection (LCS)
method in accordance with paragraph 3.6 of the Consultants Guidelines. Consulting services by
firms used for assignments estimated to cost less than US$ 200,000 equivalent per contract and
for which the cost of a full-fledged selection process would not be justified, may be selected on
the basis of Consultant Qualifications (CQS) in accordance with paragraphs 3.7 and 3.8 of the
Consultants Guidelines. Fixed Budget (FBS) would be followed for assignments, which meet
the requirements of paragraph 3.5 of the Consultants Guidelines. Single-Source Selection (SSS)
would be followed for assignments, which meet the requirements of paragraph 3.9–3.12 of the
Consultants Guidelines, and will be subject to the Bank‟s prior review regardless of the amount.
Specifically, SSS would be applied only in exceptional cases if it presents a clear advantage over
competition when selection through a competitive process is not practical or appropriate. It
would be authorized on the basis of strong justifications and upon the Bank‟s concurrence: (a)
for tasks that represent a natural continuation of previous work carried out by the firm, (b) in
emergency cases, such as in response to disasters and for consulting services required during the
period of time immediately following the emergency, (c) for very small assignments, or (d) when
only one firm is qualified or has experience of exceptional worth for the assignment. Short List
of Consultants for services estimated to cost less than the equivalent of US$ 200,000 per
contract may be comprised entirely of national consultants in accordance with the provisions of
paragraph 2.7 of the Consultant Guidelines. Individual Consultants (IC) will be selected on the
basis of their qualifications by comparison of CVs of at least three candidates from those
expressing interest in the assignment or those approached directly by the Implementing Agency
in accordance with the provisions of Section V of the Consultants Guidelines.
14. Community Participation in Procurement. A Coastal Village Fund (CVF) will be
established under Component 4 of the project to finance the preparation and implementation of
Community demand-driven micro-projects that focus on livelihood enhancing interventions and
improvement of the natural resource base. The CVF fund will be managed through the ongoing
Bank-financed Arid Land Resources Management Project (ALRMP) CDD component and will
target the coastal districts of (i) Kilifi, (ii) Kwale, (iii) Lamu, (iv) Malindi and (v) Taita-Taveta.
Procurement under this component will be carried out in accordance with the applicable
provisions of the Bank‟s Guidelines for Goods, Works and Consulting Services, as further
simplified and elaborated in the ALRMP‟s Project Implementation Manual.
114
15. Public Private Partnerships (PPP). The Project will assist in the establishment of joint
ventures between the community and the private sector through PPPs aimed at creating a
favorable business environment to foster more investment for Micro, Small and Medium
Enterprise development. The SME Solution Centre (SSC), an affiliate of the International
Finance Corporation (IFC), will help the Government manage the sub-component. The SSC will
leverage IFC‟s vast experience in supporting sustainable private sector development in the
region, and will provide a one-stop shop that would combine SME investments, advisory
services, technical assistance and other private sector initiatives.
16. Training and Workshops. All consulting and non-consulting services identified under
the training program will be procured using the appropriate methods described in this document.
Where applicable, the Implementing Agencies will prepare an annual training plan and budget,
which will be submitted to the Bank for review and approval. The annual training plan would
include: (i) training envisaged; (ii) justifications for training; (iii) personnel or group of people to
be trained; (iv) methods of selection training institutions; (v) institutions that will conduct
training; (vi) duration; and (vii) estimated cost.
17. Operating Costs. Incremental operating costs include expenditures for maintaining
equipment and vehicles, fuel, office supplies, utilities, consumables, travel per diems and
allowances, travel and accommodation, workshop venues and materials (excluding salaries).
These will be procured using the Borrower's administrative procedures, acceptable to the Bank.
18. The Bank‟s Review Thresholds. The Borrower shall seek World Bank prior review in
accordance with Appendix 1 of both the Procurement and the Consultant Guidelines for
contracts above the thresholds, as agreed in the Procurement Plan. For the purposes of the initial
Procurement Plan, the Borrower shall seek Bank prior review for (i) works contracts estimated to
cost the equivalent of US$ 5,000,000 per contract or more, (ii) goods estimated to cost the
equivalent of US$ 500,000 per contract or more; (iii) consulting services to be provided by
consulting firms estimated to cost the equivalent of US$ 200,000 per contract or more; (iv) for
individual consultants contracts estimated to cost the equivalent of US$ 100,000 per contract or
more; (v) all direct contracting and single source selection contracts, regardless of their value;
and (vi) annual training plan. In addition, three contracts to be identified in the Procurement Plan
for the procurement of works and goods below the ICB threshold will also be subject to prior
review. These prior review thresholds may be reviewed annually and any revisions based on
reassessment of the implementing agency‟s capacity will be agreed with the Borrower and
included in an updated Procurement Plan.
B. Assessment of the Agencies‟ capacity to implement procurement
19. The Procurement Specialist in the Kenya Country Office conducted an assessment of
procurement capacity of the four Implementing Agencies between February 22 and 24, 2010.
The findings and recommendations of the assessment are enumerated in the following
paragraphs.
115
Procurement Capacity of the Implementing Agencies
20. The Kenya Marine and Fisheries Research Institute (KMFRI). Like all other public
Institutions, KMFRI has a Procurement Unit (PU) and has established a Tender Committee (TC),
a Procurement Committee (PC) and an Inspection and Acceptance Committee (I&AC) entrusted
with clear procurement responsibilities as set out in the Public Procurement and Disposal Act,
2005. The PU will be responsible for the day-to-day procurement management of the Project. It
is staffed with nine procurement officers that are relatively well trained in procurement process
management: an Acting Chief Procurement Officer, two Supplies Officers, a Supplies Assistant
and five Stores officers. KMFRI is currently involved in the implementation of two Bank
financed projects namely, (i) the South West Indian Ocean Fisheries Project (SWIOFP) a
regional based project, and (ii) GEF and PHRD Grants for the preparation of the Kenya Coastal
Development Project. In addition, one of the Supplies Officers was involved in the
implementation of the Lake Victoria Environmental Management Project I, which was also
financed by the Bank.
21. The Procurement Unit has ample and well-equipped office space with access to
computers, internet and shared printing and photocopying facilities. Procurement record keeping
is well structured with a clear procurement filing system and limited access to procurement
records by non-procurement staff. The Bank has conducted procurement clinics and related
training for KMFRI staff under SWIOFP and KCDP projects before. However, as the working
knowledge, experience and formal training in Bank procurement procedures is still limited, the
procurement team would require further training and capacity building in Bank‟s procurement
requirements. Additional office equipment and operating software would be required to make the
Procurement Unit more efficient and self-reliant.
22. It is envisaged that in addition to providing the overall coordination of the project‟s
implementation during the first year, KMFRI will be responsible for the implementation of
procurement activities under Component 4 and for procurement activities that are not specialized
or component specific to be procured centrally and distributed on need basis to other
implementing agencies or sub-agencies.
23. Kenya Wildlife Service (KWS). KWS together with KEFRI will be responsible for the
implementation of procurement activities under Component 2 (management of Natural
Resources). KWS is a semi-autonomous body corporate established under an act of parliament
and responsible for conservation management and protection of National Parks and Reserves in
the country. The KWS Coast Regional Office will be responsible for the day-to-day
implementation of procurement activities under the Project. Although not anticipated under the
Project, KWS HQ would provide additional procurement support for large value contracts.
24. KWS has established Procurement Units for all its Cost Centers, a Tender Committee at
the HQ and Procurement and Inspections and Acceptance Committees at the HQ and all other
Cost Centers. The Procurement Unit at Coast Regional Office has three procurement staff,
comprising a Procurement Officer and two Supplies Assistants. The Procurement Officer has
attended procurement training on Bank‟s procurement procedures conducted by the Bank‟s
116
country office. The Procurement Unit has inadequate office facilities, limited office equipment
and internet access. Record keeping is not dedicated to procurement.
25. In the 1990s, KWS as an institution was involved in the implementation of a Bank-
financed project, the Protected Areas and Wildlife Service Project (PAWS). However, KWS‟s
procurement capacity in the context of Bank-financed operations is now inadequate because of
staff turnover over the years. No high value contracts are however envisaged under this
Component. Additional office equipment, operating software and training on Bank‟s
procurement procedures would be required to make the Procurement Unit more efficient and
self-reliant.
26. Coast Development Authority (CDA). CDA is a government parastatal organization
responsible for development activities in the Coastal Region. The Authority will be responsible
for the implementation of procurement activities under Component 3 (Support for Alternative
Livelihoods). The Authority has a Procurement Unit staffed with three procurement officers,
comprising a Supplies Officer, a Senior Assistant Supplies Officer and a Supplies Clerk. The
Authority has established a Tender Committee that is responsible for the adjudication of all
procurement activities. However, the Authority has not established Procurement and Inspection
and Acceptance Committees as required by law. Noncompliance with the law would largely slow
down procurement of low value contracts and further compromise oversight mechanisms
intended to ensure that the right quantity and quality of goods, works and services procured by
the agency are as specified.
27. Offices for housing the Procurement Unit and the requisite storage facilities are currently
under construction. The Unit does not yet have office facilities, nor access to computers and
other related office equipment and the internet connectivity. Apart from the Supplies Officer,
other procurement staffs are not computer literate.
28. The Authority and its procurement staff have never implemented a Bank-financed project.
The institution lacks experience and working knowledge on Bank‟s procurement procedures and
the procurement capacity is therefore inadequate. Office space, equipment, operating software
and training on Bank‟s procurement procedures would be required to make the Procurement Unit
more efficient and self-reliant.
29. The Department of Fisheries (FiD) in the Ministry of Fisheries Development
(MoFD). The Department of Fisheries in the Ministry of Fisheries Development will be
responsible, at the district level, for implementation of procurement activities under Component
1 (sustainable management of fisheries resources). Like in all other government line ministries,
the Department has a Procurement Unit and a Procurement Committee that is responsible for all
procurement activities in the District. Procurement activities above the department‟s threshold
are handled by the District Treasury. However, the Department does not have an Inspection and
Acceptance Committee as required by law.
30. The Procurement Unit is staffed with a Procurement Assistant/Senior Stores officer who is
responsible for all aspects of procurement and stores management. The Unit has no access to
computers, no internet connection, and has limited office space and storage for procurement
117
record keeping. However, the Procurement Assistant has attended procurement training on Bank
financing conducted by the Bank‟s country office and other supplies-related courses.
31. The MoFD is a new ministry and has never implemented a Bank financed project, and
therefore lacks the experience and working knowledge on Bank‟s procurement procedures. To be
able to implement Component 1 satisfactorily, the Department requires increasing its
procurement capacity, undergoing procurement training and providing requisite office equipment
and IT connectivity.
32. National Environmental Management Authority (NEMA). NEMA is a parastatal
organization established under the Environmental Management and Coordination Act (EMCA)
and is responsible for the management and monitoring of environment impact assessments,
environmental audits, Environmental Management Plans, their clearance, approval and
disclosure. NEMA‟s role in the Project will include (i) promoting institutional strengthening and
harmonization of laws and regulations governing coastal and marine resources; (ii) strengthening
capacity for monitoring EIA, Audits, Management Plans and Mitigation; (iii) supporting
stakeholder participation in district development planning, and (iv) through environmental
indicators, advising on habitat reduction and degradation and over-exploitation of resources. The
NEMA Coast Office will oversee the implementation of the environmental sub-component of the
Project.
33. Procurement in NEMA is centralized and all procurement activities exceeding the low
value procurement threshold of the equivalent of US$ 380 are dealt with at the Head Office in
Nairobi. The field offices do not therefore have a procurement unit. NEMA at its Head Office
has a Procurement Unit and it has established the necessary procurement oversight committees,
the Tender, Procurement and Inspection and Acceptance Committees as required by law. The
Procurement Unit is staffed with a Senior Procurement Officer, assisted by three Stores officers.
The procurement team has adequate office space, office equipment, and has access to internet
facilities. However, it has limited or no experience and working knowledge of Bank‟s
procurement procedures. To be able to implement the project satisfactorily, NEMA would
require establishing a procurement unit and the relevant committees at the Coast Office staffed
with a procurement officer conversant with Bank‟s procurement procedures.
34. The overall procurement risk is therefore considered as “High”. It is noted that most of
the large value contracts would be procured centrally through PCU/KMFRI and therefore the
other agencies and sub-agencies‟ procurement responsibilities will be limited and confined to
component-specific procurements and low-value transactions. However, the low-value
transactions in this instance could be numerous, depending on the activities being undertaken by
each agency. To reduce the risk to “Substantial”, it is proposed that the following mitigation
measures be adopted:
118
Risk Action Timeframe Responsi
bility
Inadequate
procurement capacity
at KWS, KEFRI,
CDA, NEMA and
MoFD
1. CDA sets up a Project Coordination Unit
to be staffed with a qualified procurement
officer conversant with Bank‟s
procurement procedures
2. KWS seconds to the Project a senior
procurement officer conversant with
Bank‟s procurement procedures
3. KEFRI seconds to the Project a senior
procurement officer conversant with
Bank‟s procurement procedures
4. NEMA establishes a Procurement Unit
and the relevant committees at the
Mombasa Office, staffed with a
procurement officer conversant with
Bank‟s procurement procedures
5. Ministry of Finance (MoF) seconds a
senior procurement officer to the
Department of Fisheries in the MoFD,
conversant with Bank‟s procurement
procedures
6. Develop and follow up plan on formal
training program for all procurement staff
7. Conduct procurement clinics/training on
Bank‟s procurement procedures
Before credit
Effectiveness
Recipient will
designate
procurement
staff to MoFD,
KEFRI, CDA,
NEMA, KWS
and KMFRI
with
qualifications
and experience
satisfactory to
the Association
Sustainability of
existing capacity
MoF to ensure that procurement officers
seconded to the ministries are retained for
the duration of the project
During Project
implementation
Borrower
National procurement
procedures
Exceptions to the National procurement
procedures to be included in the Financing
Agreement
Agreed during
negotiations
Borrower
SBD for NCB
contracts
Use of Bank‟s Standard Bidding
Documents and Evaluation Forms where
applicable
During Project
implementation
Borrower
Procurement planning Each Agency to develop Procurement
Plans specific to the Project; PCU/KMFRI
to consolidate and update them regularly
During negotiations Borrower
Procurement audit Public Procurement Authority (PPOA) or
other Independent Procurement Agency
acceptable to the Association to conduct
procurement post reviews for sub-projects
in addition to Bank‟s PPRs
Throughout Project
implementation period
Borrower
Inadequate record
keeping and filing
system
Create a procurement filing system on a
contract-by-contract basis
Within three months
of Project
Effectiveness
Borrower
Procurement oversight Establish all the relevant procurement
oversight committees in accordance with
the provisions of the law
Within three months
of Project
Effectiveness
Borrower
Office space Provide adequate office and storage space,
equipment and access to internet facilities
Within three months
of Project
Effectiveness
Borrower
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C. Procurement Plan
35. At appraisal, the Borrower developed a procurement plan for Project implementation,
which provides the basis for the procurement methods. This plan has been agreed between the
Borrower and the Project Team on June 04, 2010 and is available at the KMFRI head office in
Mombasa, Kenya. It will also be available in the Project‟s database and in the Bank‟s external
website. The Procurement Plan will be updated annually or as required in agreement with the
Project Team to reflect the actual Project implementation needs and improvements in
institutional capacity. Major procurement for the first 18 months of the Project are as follows:
1. Goods and Non-Consulting Services
1 2 3 4 5 6 7 8 9
Ref.
No.
Contract
Description
Estimated
Cost in
US$
Procurement
Method
P-Q Domestic
Preference
(Yes/No)
Review
by Bank
(Prior/Post)
Expected
Bid –
Opening
Date
Comments/
Implementi
ng Agency
1 Motor Vehicles 875,000 ICB N N Y November
2010
PCU
2 Office Equipment 680,000
ICB N N Y November
2010
PCU
3 Boats and
Associated
Equipment
330,000 NCB N N Y March 2011 PCU
4 Laboratory
Equipment
445,000
NCB N N Y July 2011 PCU
5 Field Equipment 390,000
NCB N N Y July 2011 PCU
6 ICT Software 180,000 NCB N N Y July 2011 PCU
7 Resource and
Communication
Materials
235,000
NCB N N Y November
2010
PCU
2. Works 1 2 3 4 5 6 7 8 9
Ref.
No.
Contract
Description
Estimated
Cost in
US$
Procurement
Method
P-Q Domestic
Preference
(Yes/No)
Review
by Bank
(Prior/Post)
Expected
Bid –
Opening
Date
Comments
1 Construction of
Office Facilities
and Associated
Services
2,784,267
NCB N N Y March 2011 PCU
2 Construction of
Business, Tourism
and Fish Processing
Centers
868,000 NCB N N Y March 2011 PCU
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3. Consulting Services (a) List of consulting assignments to be undertaken under the Project:
1 2 3 4 5 6 7
Ref.
No.
Description of Assignment
Estimated
Cost in US$
Selection Method
Review by Bank
(Prior/Post)
Expected Proposals
Submission Date
Comments
1 Design and Supervision of
Civil Works
547,840.00
QCBS Y March 2011
PCU
(b) TOR for all contracts shall be cleared by the Bank.
(c) Short lists composed entirely of national consultants: Short lists of consultants for services
estimated to cost less than US$200,000 equivalent per contract may be composed entirely
of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant
Guidelines.
D Frequency of Procurement Supervision
36. In addition to the prior review supervision to the Bank offices will carry out, the capacity
assessment of the Implementing Agencies has recommended field supervision missions once a
year to carry out post-review of procurement actions.
37. General Procurement Notice (GPN) and Contract Award Disclosure Requirements.
The Borrower will prepare a General Procurement Notice based on the formats discussed during
appraisal mission, and the GPN will be advertised in the dgMarket and the UNDB online, in
addition to local newspapers of wide circulation prior to proposed Project Effectiveness. For
each contract procured through ICB and large-value consultant assignments above the defined
thresholds, a Specific Procurement Notice (SPN) will be placed in the dgMarket, UNDB online
and local newspapers of wide national circulation.
38. During appraisal in preparation for implementation of the procurement function and
implementation, the World Bank and the Implementing Agencies have agreed on the following
actions for Implementation Readiness:
(a) The Capacity Assessment of the Implementing Agencies was carried out, key risks
identified and appropriate mitigation measures proposed.
(b) The consolidated Draft Procurement Plan was reviewed and discussed with all the
Implementing Agencies and input provided for further refinement.
The World Bank provided guidance the Implementing Agencies‟ procurement
representatives in the Bank‟s procurement procedures and governance issues. Training on
Bank‟s procurement procedures has been proposed to address capacity gaps.
121
E. Details of the Procurement Arrangements. Procurement thresholds for prior review of
goods and works by the Bank are as follows:
Expenditure
Category
Contract Value
Threshold
(US$)
Procurement /
Selection
Method
Contracts
Subject to Prior
Review
Works Above or equal
to 5,000,000
ICB All
Below
5,000,000
NCB To be specified
in the PP
Below 80,0000 Shopping None
All Values Direct
contracting
All
Goods Above or equal
to 500,000
ICB All
Below 500,000 NCB To be specified
in the PP
Below 80,000 Shopping None
All Values Direct
Contracting
All
Consulting
Services
(Firms)
Above or equal
to 200,000
QCBS/LCS
International
Shortlist
All
Below 200,000 QCBS/CQS/LCS
National
Shortlist
None
All Values SSS All
Consulting
Services
(Individuals)
Above 100,000 Individual
Consultant‟s
Qualification
All
Below 100,000 Individual
Consultant‟s
Qualification
None
All Values SSS All
122
Annex 9: Financial and Economic Analysis
1. The economic and financial analysis of the KCDP is not able to capture all the diverse
activities of the project due to time and resources constraint. Additionally, all Project
Components include a significant amount of critical public and community capacity
strengthening and direct stakeholder technical and managerial support, as well as research and
pilot demonstration outputs. Estimating the benefits of these activities, especially when the
services provided are directed at stakeholders that are not well-established market participants, is
difficult. Many ex-post analyses have shown the high rates of return to investments in
institutional strengthening and particularly to extension-related activity linked to improved
technologies. All Components of the Project strengthen the stakeholder institutions that are
central to technology transfer in the respective sector in Kenya.
2. Based on discussions with Government officials and the National Project Preparation
Team (NPPT) and on the data provided, selected micro-economic analyses were conducted to
ensure that the chosen structures were economically efficient and financially sustainable over the
long-term. This annex summarizes the findings of these analyses.
COMPONENT 1: SUSTAINABLE MANAGEMENT OF FISHERIES RESOURCES
Fisheries Sector in Kenya8
3. Kenya‟s fisheries sub-sector contributes about 0,3 percent of Kenya‟s GDP, and is source
of employment and income to about 55,000 fishers and 600,000 fish traders, and source of
indirect livelihood and nutrition for up to 7 million people. Both inland-fresh-water and marine
water are fished, but the bulk of fish landings (ca 95%) comes from inland fisheries, of which
Lake Victoria contributes about 92 percent9. Marine capture fisheries provide only 4 percent and
aquaculture 1 percent of total national fish production. Fishing in Kenya, until the discovery of
Nile perch as an export commodity in the early 1990s, was basically a subsistence occupation for
the lake and coastal communities. The government also did not recognize the importance of
fisheries as a contributor to the macro-economy and therefore did not pay much attention in
terms of resource allocation for the development of the sector.
4. Traditional and off-shore commercial fisheries constitute Kenya‟s marine fisheries and
spread over the 12 nautical miles territorial waters and the 200 nautical miles of the Exclusive
Economic Zone (EEZ). The territorial waters, including creeks and reef, are traditionally fished
by artisanal fisher, and commercial prawn trawlers. However, due to persistent conflict between
trawlers and artisanal fisher, trawling has been banned in the inshore waters.
5. Typically, districts on the Coast are dominated by small fishing communities largely
dependent on fishing. Use of these marine resources is intensive with exploitation predominating
in areas accessible to fishers. This access depends in many instances on rudimentary landing
8 This section is based on Fishery Country Profile, FAO, April 2007; Value chain market assessment for marine fish sub-sector in Kenya‟s coast region, Final Report, April 12, 2007, Market Economies Development LTD on behalf of Coast Development Authority and Marine Waters Frame
Survey 2004, FiD. 9 The Lake Victoria fishery has high productivity and a well-developed marketing structure dominated by exports of Nile perch to First World countries.
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sites located between developments along the coast, often from the shelter of inner reefs. There
were about 141 fish landing sites in 200710
, a considerable increase by twenty-six since 2005.
The number of artisanal fisher stood at 12,077 (including 2,536 foot fishers), up from 10,254 in
2005, while fishing craft were 2,687 compared to 2,368 in 2005 (Department of Fisheries 2007).
Kwale, Lamu and Malindi districts had the highest numbers of fishers while Kwale and
Mombasa has the largest number of traditional fishing vessels. Fishing beyond the reef is limited
not only by access to the beach, but also by the limitations of vessels and also the seasonality
associated with the monsoons11
. The isolation and poor infrastructure makes it difficult for
fishers to develop export markets similar to Lake Victoria. Fishers along the coast are
desperately poor and lack basic technology and skills needed to improve fishing skills, and also
need entrepreneurial mentoring. Because the fishing intensity inside and around the fringing
reefs is so strong, reef deterioration is ongoing, catches of fish have declined systematically and
fishers are increasingly unable to support the communities that depend on them. Furthermore,
ecosystem impacts from anthropological influences will continue to exacerbate the problem of
poverty, as will the global impact of climate change. The coastal communities will become
increasingly poorer, ecosystem degradation will escalate and fish resources will continue to be
overexploited to sub-economic levels. Fish stocks in and around the reef areas are unlikely to be
sustained, depriving fishers of their basic means of food and income.
6. Due to lack of stock assessment data, the actual stock levels of marine fisheries in
Kenya‟s EEZ, including species composition, distribution and abundance and inter-relationship
with the environment are unknown. However, Kenya‟s marine waters have the potential to
produce up to 150,000 tons of fisheries annually in the inshore and offshore waters (FiD 2006a).
Currently catch data is only available for the inshore artisanal fishery, which has been estimated
at an average of 7,400 tons per year between 2002 and 2005, with an estimated landing value of
Kshs 518 million (FiD, 2005).
7. Kenya‟s offshore fisheries zone outside the territorial waters is mainly exploited by
vessels from Distant Waters Fishing Nations (DWFN) through a licensing system. However,
only some of the vessels are licensed, while others operate illegally. The most valuable and
largest offshore fisheries are exploited by European and East Asian DWFN and the greatest part
of catches are landed and processed outside of the region. The actual amount harvested by
DWFNs is not known because (i) their activities are not monitored due to poor MCS, and (ii)
access arrangements are poorly organized and so distant-water operators do little to report
catches to the government. The main species sought in the area are the highly migratory tunas
and tuna-like species including skipjack, yellow fin and big eye tuna. Some of the fish are
landed in Kenya and transshipped overseas while other are taken out directly by the fishing
vessels. Only a small quantity of catch from the EEZ is landed in Kenya, primarily tuna loins for
export processing. As a result, there is hardly any information on species composition or
quantities being taken in commercial catches. The interest shown by foreign fishing vessels in
Kenya‟s offshore waters indicates that periodically there are large stocks of pelagic species such
as tuna, billfish and large oceanic shark, which underline the potential to expand fishing capacity
in the EEZ.
10 Forty percent of the landing sites, around 56, are on privately-owned land. 11 The North East monsoon (Kaskasi) from October to April, with calm warm weather, moderate winds and increased fishing activity, add the South East monsoon, from May to September, with strong winds rough seas and low productivity.
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8. The offshore fish stocks are relatively under-exploited, with the main benefits from these
resources (mostly tuna-like species) going to the DWFN that contribute little to the Kenyan
economy, apart from licensing fees that are in all likelihood disproportionate to the value of the
resource extracted. Even though there is incomplete information about stocks, there is a strong
indication of good potential to increase the fishing capacity in offshore marine waters, while
fishing effort in the inshore coast should decrease. Enhancing data collection systems,
particularly in the offshore zone would help develop marine fisheries. This can be done by
making it compulsory for fishing vessels to provide data on catches as a condition for obtaining a
license.
General legal framework for government revenues
9. The government has been putting in place an enabling environment to promote
investment activities in order to achieve economic recovery. The government‟s policy of
maintaining a stable macroeconomic framework while carrying out wealth and employment-
creating structural reforms, guides the agenda for creating an enabling environment The
Department of Fisheries, which falls under the Ministry of Fisheries Development, is the
institution with overall responsibility for fisheries sub-sector. The legal basis for the various
charges in the sector is the Fisheries Act (Cap. 378 of the Laws of Kenya), which is currently
under review. Principle fiscal instruments accruing to the central government include:
Licensing of industrial, mostly foreign vessels, i.e. Purse seiners (PS) and Longliners
(LL) and of semi-industrial (shrimps vessel) and artisanal vessels. The annual license
fees per foreign PS cost US$ 20,000 and will increase to US$ 30,000 starting in 2010.
The LL licenses can be monthly (US$ 5,000), quarterly (US$ 7,000) or annual
(US$ 12,000). Charge rates for national vessels amount to about US$ 1,300, but this
sum is currently under review.
Export licenses (so far only generated from fresh water fishery).
Table 1: Numbers of EEZ-licensed vessel and governmental revenues
Year
2005 2006 2007 2008 2009
Nr. Purse seiners (PS) 30 34 47 28 7
Nr. Long liners (LL) -
annually
36 28 20 22 7
Fees per PS (US$) 20,000 20,000 20,000 20,000 30,000
Fees per LL – annual
(US$)
12,000 12,000 12,000 12,000 12,000
Revenues Grand Total
(US$)
1,032,000 1,016,000 1,180,000 824,000 294,000
Source of information- Fisheries Department
10. The offshore fishing operations in 2005, 2006 and 2007 in Kenya‟s EEZ involved an
average of DWFN vessels, 37 PS and 30 LL. All were foreign vessels licensed by the GoK. The
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number of licensed vessels (mainly PS) has increased steadily since 2003, when the Government
took a keen interest in illegal fishing and occasionally used the Kenya Navy to patrol the EEZ.
The increase in number of vessels applying for EEZ licenses can be also attributed to the recent
efforts through the SADC-EU MCS Program for the emerging management of the EEZ fishery.
11. The annual average revenue earned by the GoK from EEZ licenses during the period
2005 to 2007 was around US$ 1 million, compared to US$ 824,000 and US$ 294,000 in 2008
and 2009, respectively, as the number of licenses decreased drastically due to piracy problems
off the coast of Somalia.
Potential increased benefits from the marine fisheries sector:
12. Despite the generally negative view on the future marine fisheries in Kenya, the full
potential of the Coast is not being realized. Fundamentally, increases in benefits from the marine
resources are constrained by generally inadequate governance, limited research on fish stocks
and poor quality control linked to marketing opportunities. The KCDP fisheries component aims
to address these issues in three areas: (a) governance (that includes management and monitoring
control and surveillance); (b) research on fish stocks, value addition, quality control and
technology, and (c) aquaculture. The activities under the fisheries component show produce the
following main direct and indirect benefits:
13. Direct benefits
The investments under the Project such as the Monitoring, Control and Surveillance
System (MCS) and the Vessel Monitoring System (VMS) will allow the GoK to improve
its regime for monitoring of fishing licenses in the EEZ. This will result first in a
reduction in losses due to illegal fishing activity, which is mostly conducted by foreign
vessels and provides little value addition to the Kenyan economy. Increased revenue
generation to GOK from vessel licensing by the End of the Project (EOP) will reach to
approximately US$ 2.1 million (around Kshs 159 million) compared to US$ 0.8 million
in 2008 (baseline of the analysis).
Additionally, 5 to 10 years after the Project‟s inception, the MCS strategy will probably
have to be adapted to the new status as well as any new MCS technologies. Costs will
probably be lower, while new innovative licensing schemes might generate more
revenue, e.g. taxation based on output, catch value rather than inputs, and vessels
numbers and obligations of DWFNs to establish economical links with Kenya that will
generate increased domestic value addition. The benefits from such improved efficiency
have not been factored into the present analysis.
There will also be direct benefits derived from investments in appropriate institutions and
capacity building such as the establishment of a common governance regime and further
development of management mechanisms, building human resource capacity to fisheries
inspections and sea-based observers, use of technology (VMS) in both sea and air patrols.
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14. Indirect benefits
The MCS/VCS systems will enhance sustainability in fishing activity, enable greater
knowledge of catch potential and, in the future, improve control over yearly catch
allowances thereby leading to more sustainability in fishing activities. However, due to
lack of data, the benefits of greater sustainability due to improved controls have not been
accounted for in this analysis.
The indirect benefits of good governance include maintenance of ecosystems, poverty
alleviation, community uplifting, reduction in corruption, and generally better coastal
zone management. However, these indirect benefits have not been included in the
financial and economic analysis.
Detailed calculations:
15. The “without” and “with” Project benefits situations of the KCDP Project have been
constructed on the basis of a scenario developed with Kenya‟s Fisheries Administration to model
the impact of improvement of MCS on licenses fees collection from offshore fleet, the number of
licenses and ultimately the increase in value of such licenses.
16. The “without project situation” is based on a continuation of the current situation of
illegal fishing with potential value added to the economy being lost to foreign nations. It uses the
following assumptions:
The cost-benefit model for the MCS was developed for a ten-year period on the following
hypothesis: (a) nonexistent piracy level (even though piracy is current potential risk); (b)
absence of licensed national fleet vessels; (c) absence of other sources of revenues, such
as fines.
Number of licenses are of 28 tuna PS and 22 tuna LL based on the 2008 figures. These
are below the historical average numbers of vessels that have been licensed in Kenya (35
PS and 30 LL; as many as 35 PS and 90 LL have been licensed)12
. Year 2009 was not
considered as baseline due to the drastic decrease in the number of licenses.
License fees value per vessel are of US$ 20,000 and US$ 12,000 for PS and LL,
respectively, based on 2008 values. DWFN license fees increases were already set to
increase to US$ 30,000 for PS as shown in the analysis from PY 1 (2010), and to
US$ 15,000 for LL, applicable from PY2 (2011). The historical average values per
license fee are slightly lower.
The resulting annual total revenues from license fees in 2008 as baseline “without project
scenario” amount to US$ 0.8 million (Kshs 61.8 million), approximately 11 percent
lower than the historical average for the period 2000-2008.
The total size of tuna fleets (legal and illegal) cruising in Kenya's waters is estimated at
around 60 PS and between 100-150 LL, which represent just around 50 percent of the PS
fleets and between 15 and 22 percent of the LL fleets.
12
Department of Fisheries figures, based on averages before the piracy problem (September 2009), which has affected very seriously the entire
region.
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17. The “with project situation” uses the following assumptions:
Due to a more efficient system, the number of licenses would gradually increase from
the 2008 level (without project scenario) to reach 35 tuna PS and 45 tuna LL by PY4.
This would translate in an additional seven PS and 23 LL licenses. With improved
MCS and more offshore patrols, the number of Illegal Unreported Unregulated
vessels (IUUs) might decrease and IUUs may consider buying licenses. The region
may also enter into joint offshore patrols including interlinking the Vessel Monitoring
Systems (VMS) in what may be referred to as regional collaboration (Fisheries
observers, VMS and Joint patrols etc).
License fee value per vessel would start immediately at a higher level of US$ 30,000
for PS (PS licenses fees were increased successfully in 2009, but not for LL)13
, while
the value for LL would stay constant at US$ 15,000 as of PY2.
Due to a strategic approach consisting in a gradual increase in licenses, fee values per
vessel are expected to increase gradually and reach a maximum of US$ 40,000 for PS
and US$20,000 for LL by EOP (starting in PY5).
The resulting annual total revenues from license fees in the “with project scenario”
would increase from US$ 1.1 million (Kshs 82.8 million) in PY1 to US$ 2.1 million
(Kshs 159.3 million) by PY4. This would translate in an increase over the “without”
project situation of zero in PY1 and approximately US$ 1 million (Kshs 71.6 million)
by PY4.
The Net Present Value (NPV) at 12 percent rate is US$ 1.3 million (Kshs 98.7 million) and the
Internal Rate of Return (IRR) is 31 percent.
A) Research
18. Presently, although many fish and other marine resources are extracted, the dynamics of
these stocks are poorly known. The investment in research, which will be conducted mostly
under the Kenya Marine Fisheries Research Institute, will contribute directly to acquiring
knowledge in this domain and ultimately contributing to its management, while at the same time
building the research and management capacity of Kenyans. This component will address quality
control issues, focusing on value addition, value chains and marketing. Private/public
partnerships will be developed in areas such as the use of community-based fish ovens, quality
control management, and export quality product development, exploiting, for example, eco-
labeling potential benefits.
19. Research will also focus on innovations currently under-exploited by Kenyans that can
increase yields of fish. These include Fish Aggregating Devices (FADs) that have been
demonstrably profitable in other Indian Ocean countries. The KCDP investment will explore, in
a controlled way, the feasibility of developing and deploying these technologies in Kenyan
waters. The Project will support two FADs, mainly through investment in (1) site surveys; (2)
construction; (3) deployment; (4) monitoring and maintenance; and (5) vessel deployment. The
13 License fees for distant fishing were already set to increase, but due to the piracy problem the Ministry of Fisheries negotiated with the fishing
fleets to freeze the increase until the security situation in the Kenyan EEZ improved. However, the parties agreed on Dec 2010 as the date for the
increment to resume/be effected.
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IRR was estimated at 26 percent and the NPV at US$ 108,040. Investment in FADs, like any
other investment, has an element of risk. The various scenarios analyzed demonstrate that, even
if the returns expected from a FAD are significant, large losses of revenue can occur when the
project is neglected, and in particular when fishing operations are affected because lost FADs are
not quickly replaced.
20. The Table 2 outlines the main outputs of a typical FAD Program, and indicates how these
outputs may interact with the national economy.
Table 2: Economic and social benefits and costs of FAD
BENEFITS
Project outputs
Benefit to the economy
Increased sustainable yields More comprehensive exploitation of the nation‟s
stock of natural resources
Improved catch rates More efficient use of fishing industry capital
(vessels, etc)
Improved revenue and stability of fishery
revenue
Improved income for fishermen; greater national
wealth
Reduced fuel consumption Greater efficiency in the fishery; reduced operation
costs for fishermen; environmental benefit (less
pollution)
Improved stability of catches from fishery More secure income for fishermen
Market development (local and non-local)
through improved reliability of catches
Development of export industry; reduction of imports
Employment through secondary fishing
developments on reliability of catches
Decreased unemployment because of marketing and
fish process activity
Reduced search time More efficient use of capital; reduced opportunity
costs for fishermen
Diversification of marine resources
consumption
Lessens dependence on one particular resource and
vulnerability to fluctuations
Reduced pressure on inshore fisheries More sustainable use of current fisheries; improved
prospect of introducing management measures to
return stocks to optimal level
Reduced pressure on reef Preservation of variable habitat and reef fisheries;
reduction in physical destruction
Increased supplies of affordable dietary
portion
Improved health in population; reduced health costs;
increased labor productivity
Safety at sea Reduces mortality; reduces search and rescue costs
COSTS
Project outputs
Cost to the economy
Increased number of industry participants Crowding; conflict; sabotage; excess capacity in the
fishing fleet
Increased catches Reduced prices due to local glut (price dynamic will
be contingent on individual market circumstances).
Decreasing prices will benefit consumers – one of the
main objective of FAD - but may harm fishermen
who have invested in the industry. Source: Planning FAD Programs
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B) Aquaculture (includes mariculture and fresh-water farming).
21. Kenya already has established aquaculture initiatives. Many of these are fresh-water
directed, while the mariculture activities are still in pilot stages. Crustacean farming (mangrove
crabs and shrimps) are established mariculture activities in other parts of the West Indian Ocean
region. KCDP funding will support the development of trial basis/pilot farms of key aquaculture
activities such as (i) shrimp production, (ii) aquaculture seaweed, (iii) milkfish ponds, and (iv)
artemia hatcheries. The direct benefits include the creation of alternative sources of income at the
community level and of jobs for coastal communities. Indirect benefits include the alleviation of
fishing pressure on the sensitive inner reef areas. Milkfish ponds associated with coastal inertial
impoundments have proven to be a successful aquaculture activity in East Africa, with relatively
low ecosystem impacts and fast growth rates.
22. The aquaculture initiatives analyzed include selection and construction of ponds;
technical assistance, and studies and provision of productive goods such as feed, small-scale
packaging, etc. The estimated IRR of selected aquaculture interventions should between 21 and
30 percent. These figures indicate that the selected aquaculture practices would meet the
community‟s necessary financial profitability conditions. It is important to note that the adoption
of these practices would imply high initial investment costs, which could constitute a barrier for
adoption.
COMPONENT 2: SOUND MANAGEMENT OF NATURAL RESOURCES
Management of Marine Protected Areas (MPAs/MMAs): financing, coastal governance
and sustainability
23. Kenya‟s coral reefs are part of the northern end of the East African Fringing Reef
System. Recognizing that these important ecosystems are a critical element of the coastal tourism
industry, as well as the basis of productivity of coastal fisheries, the Government of Kenya
established a system of marine parks and reserves, managed by the Kenya Wildlife Service
(KWS). Kenya has four marine parks including (from north to south) Malindi (6.3 Km2),
Watamu (32 Km), Mombasa (10 Km) and Kisite (28 Km) and six marine reserves including
Kiunga (600 Km2), Malindi-Watamu (177 Km), Mombasa (10 Km), Diani-Chale (75 Km) and
Mpunguti marine reserves (11 Km). All these marine protected areas extend over an estimated
8.7 per cent of the entire 600 Km Kenyan coastline and encompass important marine habitats
including coral reefs, seagrass beds and mangrove forests. However, the coral reefs generally
surpass economic and ecological values of these protected areas. The Kenya MPAs operate as
network of interconnected sites with linkages between them.
24. The financial sources of Kenya MPAs/MMAs management are: (i) own-revenues
generation, which represents only 80 percent of their recurrent costs and; (ii) a central kitty that
finances their operations annually; and (iii) donors and assisting organizations (i.e. NGOs).
Funding limitations pose a threat to the operational sustainability of the Kenya MPAs, as
innovative and sustainable funding generation is still very limited. Because sustained funding is
crucial to MPA management, diversity of activities and funding sources, and the number of
supporters of MPAs should be maximized. Toward this end, it is necessary to explore the
following measures:
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Tapping more effectively donor and GoK support to MPAs.
Including private sector partners and communities within the overall management framework
will reduce overall costs, while also achieving ecological and social equity goals. Private
sector attraction could support MPAs as part of its corporate social responsibility.
Collaboration among local communities in the management of MPAs seems a good strategy
for defraying the costs of local resources conservation and for promoting the value of shared
environmental stewardship. Communities contribute significantly to MPA management
through their unpaid labor. They should receive tangible benefits from improved
management of MPAs to sustain their interest and cooperation.
More diversified revenue generation is another step in achieving financial sustainability. At
present, tourism revenue remains the principle target for covering operational costs.
Community-based ecotourism has been identified as an effective tool to generate income.
However, it requires substantial investment and has high transaction costs. Few projects are
viable without long-term support. The KCDP project will support diversification and value
addition for tourism products and marketing of tourist circuits in the MPAs.
Revision of tourism tariff regimes for MPAs (currently tourists pay an average of US$ 15 fee
to enter MPAs). The tariff is relatively low, compared to the incurred operational product and
covering costs.
Marine Protected Areas as an Investment
25. Calculating expected net returns from MPAs is not simple. Like most public investments,
the expected benefits of MPAs will be realized at some future date whereas the majority of the
costs are incurred initially, implying that closing off areas also results in an inter-temporal
tradeoff, perhaps even across generations (Peezzey et al., 2000). Difficulties also stem from the
complexity, and the corresponding degree of imprecision, of trying to predict the impact of
policy changes on the biological and economic systems. Along with inter-temporal tradeoffs and
uncertainties, MPAs could potentially affect one user group disproportionately, implying that
there are potential distributional issues among stakeholders. Quantifying the potential non-
consumptive use values associated with the MPAs is another KCDP-related challenge. . It is
generally understood that these values are an important factor in resource allocation decisions. In
fact, many recent calls for MPAs have cited the potentially large returns from ecotourism
activities (e.g. scuba, snorkeling) and conservation values associated with biodiversity
preservation. Current research has shown that the magnitude of the impacts from protected areas
depends upon the location, scale, and number of areas, further complicating matters.
26. Based on estimated Total Economic Value (TEV) of the MPAs, the potential benefits
from managing MPAs are disproportionately large relative to the costs. It has been estimated that
the annual management costs of one MPA represents only 10 percent of the annualized TEV of
the resource (Butardo-Toribio). This suggests that protecting marine habitats is worth the
investment.
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Table 3: Expected benefits in the Protected Areas
Expected benefits in the Protected Areas
Expected costs
MPAs improve broadly the health of the
ecosystem within their boundaries, including
increases in stock abundance, age/size
composition, spawning stock biomass, yield per
recruit, and restoration of healthy tropic levels
MPAs provide in situ conservation of marine
biodiversity
MPAs provide opportunities for increased non-
consumptive use values (such as diving and
photography)
MPAs provide “undisturbed” areas for scientific
research
MPAs provide positive biological spillovers
into the remaining non-protected areas
MPA increase aggregate catch levels in fisheries
MPAs enhance market value by diversifying the
composition of the catch
MPAs increase congestion on the
remaining open grounds
MPAs increase the variable costs
associated with the choice of fishing
location
COMPONENT 3: SUPPORT FOR ALTERNATIVE LIVELIHOODS
Micro, Small and Medium Enterprises (MSMEs) investments
27. The KCDP project will assist in establishing joint ventures between the community and
the private investor, thus creating a business environment that attracts more investment. This will
be facilitated through Private and Public Partnerships (PPP) as a tool for creating business
incentives and will demonstrate the potential for business ventures in rural areas of the Coast,
ventures that are currently stalled due to perceived high risk. Private sector entrepreneurs with
established market linkages and technical expertise will be sourced to offer managerial services,
specialized extension services and market linkages at their own cost; whereas the KCDP will
source for required processing equipments and mobilize the community to engage in the
identified enterprises (the KCDP can fund any community-associated costs). The arrangement
will be facilitated by setting up pilot investments in PPPs (US$ 1.3 million) and supporting five
PPP initiatives. This will link the private investors to local producers, provide a relatively low
capital cost market entry, and develop capacity of both the local entrepreneurs and local villagers
utilizing natural resources to undertake similar ventures after the KCDP project period is over.
28. At the end of the project period, if the two parties (the private investor and the
community) want to formalize their arrangements through a joint venture agreement, the KCDP
will turn over the processing equipments or other capital investments to the community where it
will be used as the latter‟s equity in the joint venture. Since the KCDP Project would be over at
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this stage, the private investors will have to make their own investment in the enterprise if they
deem it profitable.
29. The KCDP is geographically focused by can be expanded if conditions and demand
warrant and the Association agrees that this is possible without threatening Project
objectives. Role out of the project to other areas is dependent on successful implementation of the
project in pilot areas, demand from other coastal communities and the Project's ability to develop capacity
in new areas to take advantage of KCDP investment.
COMPONENT 4: SUPPORT FOR ALTERNATIVE
Community-demand driven (CDD) micro-projects
30. The KCDP will establish a Coastal Village Fund (CVF) to support the preparation and
implementation of CDD micro-projects, which will focus on livelihood-enhancing interventions
and simultaneously will improve the condition of natural resource base development. The CVF,
implemented by the Arid Land Resources Management Project (ALRMP)14
, will target the
following coastal districts15
: (1) Kilifi, (2) Kwale, (3) Lamu, (4) Malindi, (6) Taita-Taveta. It is
expected to cover 80 communities over a period of four years as stipulated below:
Table 4: Communities covered by CVF
District Total
communities
Year 1 Year 2 Year 3 Year 4 Year 5/6
Kilifi 16 2 8 12 14 16
Kwale 16 2 8 12 14 16
Lamu 16 2 8 12 14 16
Malindi 16 2 8 12 14 16
Taita Taveta 16 2 8 12 14 16
80 10 40 60 7 0 80
31. The CVF will target community groups, namely. (i) common-interest groups, (ii) women
and youth groups, (iii) able-bodied people who have irregular access to food; and (iv) vulnerable
and marginalized men and women.
32. The identified communities are expected to implement a maximum of up to
16 community demand-driven micro-projects over a four-year span. This will translate into a
maximum of 840 of micro-projects of an average value of US$ 10,000 each. Groups receiving
grants will be expected to contribute in cash or “in-kind” (about 30% of the total costs for each
microproject) to the objective of the grant.
14 The Arid Lands Resource Management Project (ALRMP) is under the Ministry of State for Development of Northern Kenya and other Arid Lands, in the Office of the Prime Minister, and is committed to uplifting the living standards of the vulnerable communities in the 28 districts in
which it operates. 15 ALRMP is not currently working in Mombasa. Currently, Tana River is covered by the ALRM‟s CDD Program.
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Table 5: Micro-projects supported by CVF
District Total micro-
projects per
district
Year 1 Year 2 Year 3 Year 4 Year 5/6
Kilifi 168 8 40 62 48 10
Kwale 168 8 40 62 48 10
Lamu 168 8 40 62 48 10
Malindi 168 8 40 62 48 10
Taita-Taveta 168 8 40 62 48 10
840 40 200 310 240 50
33. The supported sub-projects could belong to the following areas: (1) social infrastructure
and service delivery, i.e. micro-projects that produce benefits for the whole community or a large
section of the community. Priorities will be in water development, animal and human health, and
education provision; (2) Safety nets, i.e. mechanism targeted and managed by the community to
support and protect the most vulnerable community members (these may include restocking and
shelter projects) and (3) income-generating activities (IGAs), i.e. micro-projects that generate
income or other direct benefits to the participants. Likely activities include fishing, agriculture,
trading activities, agro-processing food for sale, production.
34. Investments under social infrastructure and safety nets would basically support public
goods, which would benefit one or several communities. By contrast, productive investments
would include income-generating activities in the form of matching grants that will enable the
poorest and most vulnerable sections of the community to engage in economic activities.
35. Communities will be trained first in order to improve planning and implementation of
priority micro-projects. These sub-projects will be designed to make the greatest return to the
community‟s input of labor, time, materials and cash. Most of the returns on CVF investments
will be social capital and sustainability of community assets. The assets created through the CVF
will initially be identified through the involvement of district structures in place to service
coastal CDD under the ALMRP, local development plans (e.g. villages development plans)
where they exist, or based on participatory rural appraisal and planning exercises and
communities themselves, through the Districts Committees.
36. The economic rationale for CVFs is based on the following principles:
CVF funds are mainly public funds and the activities financed by KCDP represent the
highest priority use of public resources.
CVF funds will be channeled through community accounts. CVF and micro-projects will be
managed through the district structures already in place to service coastal CDD under the
ALRMP.
Measures such as providing costed design options and of a unit cost databank, encouraging
local competition in procurement of goods and services, and involving ALRMP staff in
appraisals to ensure that sector norms and standards are met, will facilitate the cost-
effectiveness of sub-projects.
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Savings from the poor will be available for on-lending and investment through community
and commercial micro-financing institutions.
CVF also has a number of externalities such as building community skills, strengthening
decentralization of service delivery in the long term, and community capacities to prevent,
mitigate, and manage risks/shocks.
Community priorities will be strictly those set in the community action plans through by the
community deliberation. They will receive technical input from the various governmental
technical departments. The deliberation will further be vetted for concurrence by the District
Steering team, who will give additional guidance.
The community investments will be implemented by the community; before benefiting from
the project grant, the community members are expected to gather the community‟s 30 percent
contribution, 5 percent of which must be in cash.
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Annex 10: Incremental Cost Analysis
OVERVIEW
1. The GEF has recognized the importance of preventing degradation of fisheries and other
coastal natural resources in Africa, including Kenya. In an effort to address these important
coastal issues, GEF approved a Strategic Partnership for a Sustainable Fisheries Investment Fund
in the Large Marine Ecosystems of Sub-Saharan Africa. The Kenyan Coastal Development
Project (KCDP) is developed and supported under this strategic partnership framework. The
KCDP promotes fishery management and sustainable development of the coastal area through a
multi-sectoral approach. The KCDP is an “IDA” project, fully integrated into the Bank-
supported Country Assistance Strategy (CAS) and has four components: (i) Sustainable
Management of Fisheries Resources, (ii) Sound Management of Natural Resources, (iii) Support
for Alternative Livelihoods and (iv) Capacity Building, Monitoring and Evaluation System,
Project Management, and Communication. The IDA will provide USD$35 million to finance all
four Project Components, while GEF financing (US$5 million) will support activities within
Components 1 and 2 of the KCDP.
2. The value-added of GEF involvement in the Project is demonstrated through
INCREMENTAL REASONING following the Operational Guidelines for the application of the
incremental cost principle (GEF/C.31/12):
PRESENTATION OF „BUSINESS-AS-USUAL”
3. The proposed „business-as-usual‟, previously called Baseline Scenario16
(or: what
would happen without the GEF) uses selected components and activities identified and
supported under the Kenya Vision 2030, the Kenya‟s new long-term national planning strategy,
and the State of the Coast Report 2008, the foundation for the development of an Integrated
Coastal Zone Management (ICZM) Plan for Kenya. The business-as usual-scenario takes into
account the on-going South West Indian Ocean Fisheries Partnership (SWIOFP) implemented in
nine countries in the South West Indian Ocean17
. The business-as-usual scenario in the areas
where GEF will provide the incremental cost is as follow:
Sustainable Management of Fisheries Resources. The “business-as-usual” scenario will
partially address some of the issues raised in Section A of the PAD. These include activities
that deal with support for implementing the Fisheries Competent Authority, which is the lead
agency in harmonizing EEZ management, policy improvement, support for a control and
surveillance system, capacity building and management systems improvement, and
promotion of capacity in aquaculture.
16
The “business as usual” was previously called “baseline”. However, it has been changed in order to avoid the
confusion that between “baseline scenario” and “baseline situation” (value of indicators prior to the start of the
project). 17
SWIOFP: a regional project worth US$12 million in GEF grants (under OP8) plus US$15 million in co-financing.
In Kenya, this project is implemented by KMFRI.
136
Activities under the “business-as-usual” scenario will produce predominantly national
benefits in the form of increases in economic efficiencies, reductions in loss and rejections in
the fish market, and the piloting of production system in a new fishery sub-sector for Kenya
(aquaculture). The Monitoring, Control and Surveillance System (MCS) will increase
government revenues through improved monitoring of fishing licenses (including foreign
fleets) in its EEZ. The system will both enable the country to reduce illegal fishing (and the
licenses fees foregone) and control its yearly catch allowance. Together, these investments
are likely to contribute significantly to increasing export earnings and income for a number
of (industrial) fishers. Through such an approach, the “business-as-usual” scenario would
also contribute to achieving some global benefits through a reduction of pressure on the
ecosystem and of biodiversity loss. Most likely, the baseline activities supporting
improvements in existing laws and regulations, increased efficiencies in enforcement that in
turn would provide sufficient disincentives that reduction in the quantities of illegal by-catch
and bottom trawling would generate these benefits.
Sound Management of Natural Resources. Vision 2030 articulates the value and future
role of Kenyan natural resources in socio-economic development. The “business-as-usual”
scenario focuses on overcoming the deterioration of coastal natural resources and alleviating
the level of poverty. The baseline also supports maintaining the country‟s commitment to
parts of its existing system of Marine Protected Areas (MPA) and Marine Managed Areas
(MMA) and bringing together the private sector and other co-management partners in order
to improve the cost-effectiveness of this management. Basing itself on research and
monitoring of biodiversity and ecosystems in the near shore, outside coral reef and deep-sea
zones, the GoK expects to determine the limits to use of biodiversity-critical habitats by
tourism, fishery exploitation, and other uses of key coastal areas. . Activities in the “business-
as-usual” scenario include support for surveys of fishery and the state of biodiversity in
terrestrial, near shore and coral reef areas, the continental shelf and the 200-mile EEZ;
strengthening the national system of community managed areas, marine managed areas and
marine protected areas; establishing a plan to rationalize existing tourism and resource
exploitation in the coastal zone (linking with Component 3); promoting eco-tourism options
through education, public awareness and stakeholder participation.
Activities under the “business-as-usual” scenario will produce modest global benefits by
permitting the identification of core areas of significance to biodiversity based on an
ecological and socio-economic systems assessment, and supporting sustainable exploitation
of transboundary fish.
Support for Alternative Livelihoods. The main activities identified as contributing to the
“business-as-usual” scenario focus on realizing domestic benefits through promoting
sustainable livelihoods. These activities are associated with spatial planning and land
capability mapping with a view to identifying sensitive areas, integrating coastal
management, and complying with environmental regulations and safeguards. The “business-
as-usual” scenario upholds maintaining the country‟s support to communities in coastal areas
through a Coastal Village Fund (CVF) and Public Private Partnership (PPP) investments. The
CVF involves financing community demand-driven sub-projects and associated capacity
enhancement at the community level. The sub-projects focus on the Government of Kenya‟s
137
priorities to address income poverty of vulnerable groups; they will decrease unsustainable
harvesting pressures on living coastal resources and will permit communities to take
advantage of income generating opportunities afforded by sound resource management. The
PPP will support specific district investments for community partnerships initiatives (for
example reduce fishing post-harvest losses; value addition and marketing initiatives; micro
processing).
Activities under the “business-as-usual” scenario will produce predominantly national
benefits in the form of intensified income-generating activities (i.e. agricultural and livestock
production) complemented with support for social infrastructure and development (health,
education, clean domestic water supplies). Together, these investments should contribute
significantly to increasing rural household income, targeting primarily women and youth and
socio-economic well-being. It is hoped, that through such an approach, the “business-as-
usual” scenario would also contribute to producing some global benefits through a reduction
of pressure on the ecosystem and loss of biodiversity. Most likely, baseline activities
supporting an albeit small shift away from extensive land use in project sites, a pattern
characterized by non-sustainable production practices and/or their utilization in fragile lands
not suitable for this type of production system would generate these benefits.
GLOBAL ENVIRONMENTAL BENEFITS AND STRATEGIC FIT
4. The KCDP is expected to contribute to the improvement of the long-term sustainability
of the Agulhas and Somali Current Large Marine Ecosystem (LME)18
, which posses a wealth of
globally significant marine biodiversity and habitats that provide numerous ecosystem services
(including provisioning, regulating, cultural and supporting services) and uses.
5. The KCDP activities will contribute to the global understanding of the fisheries resource
of this LME and the environment upon which it depends through scientific research on coastal
watersheds, marine ecological research and fishery exploitation in Kenyan EEZ. These activities
are expected to contribute to reaching the global targets for sustainable fisheries and poverty
reduction set by the World Summit on Sustainable Development, as well as supports monitoring,
surveillance and enforcement of national and international laws and regulations with regard to
fisheries and the ecosystems that support them in Kenya waters.
6. The Project Development Objective aims to promote environmentally sustainable
management of Kenya‟s coastal and marine resources by strengthening the capacity of existing
relevant government agencies and by enhancing the capacity of rural micro, small and medium-
sized enterprises in selected coastal communities.
7. The Project Global Environmental Objective aims to strengthen conservation and
sustainable use of marine and coastal biodiversity.
8. The KCDP is consistent with the GEF Focal Area Strategy for International Waters
(GEF 4) and with the following strategic objectives: 1) catalyze implementation of agreed
18
One of the five targeted LMEs of the Strategic Partnership for a Sustainable Fisheries Investment Fund in the
LME of Sub-Saharan Africa.
138
reforms and on-the-ground stress reduction investments to address transboundary water
concerns; and 2) to expand foundational capacity building to a limited number of new
transboundarry systems through integrated approaches and targeted learning for the IW portfolio.
9. The KCDP will help to reduce stress on fishery stocks through component activities
related to sustainable management of fisheries resources and EEZ, biodiversity conservation and
coastal land resources management and development. The on-the-ground action brought by
KCDP will enable Kenya to contribute to the conservation of fisheries within the Somali
Current. Kenya will further gain through strengthening its institutional capacity to coordinate and
manage protected areas and monitor and control illegal fishing activities.
INCREMENTAL REASONING AND GEF‟S ROLE
10. Under the GEF Alternative, the scope of the Project‟s biodiversity aspects are expanded
to better protect and manage globally significant biodiversity, including the genetic resource
value of that biodiversity as follow:
Component 1: Sustainable Management of Fisheries Resources
11. Under the GEF Alternative, the scope of the investment concentrates on managing the
EEZ though improved monitoring, compliance and surveillance. KCDP will address policy
priorities (i.e. licensing arrangements) and build institutional capacity to effectively increase
revenue throughout the EEZ, and in so doing, contribute to long-term financial sustainability.
Within the EEZ, the scope is expanded to include sound management of scientific information
and by-catch management associated with near shore fisheries. KCDP will focus on monitoring
and compliance efforts associated with the near shore areas, the territorial seas which include all
the continental shelf and a part of the continental slope. This area has been associated with
conflicts between commercial foreign fisheries and domestic traditional pelagic fisheries. GEF
resources under KCDP will also include research and patrolling activities for this area, while
SWIOFP will be operating in deeper waters.
12. Key GEF activities under KCDP include under component 1, Sustainable Management of
Fisheries Resources:
Promoting sustainable management of fisheries resources and enhancing the benefits and
revenue generation derived from coastal fisheries through:
Developing and implementing a cost effective monitoring control and surveillance
strategy in Kenya's Exclusive Economic Zone.
Developing the Recipient's capacity to negotiate fair and transparent license agreements
with distant water fishing nations and vessels through training and technical advisory
services.
Developing and implementing a vessel monitoring system for licensed fishing vessels.
Carrying out routine monitoring of vessels, licenses, fish landings and developing a
fisheries management information system.
Carrying out research to support stock assessments for ten (10) agreed priority fish
species.
139
Carrying out demand-driven research for aquaculture.
Rehabilitating and constructing hatcheries.
Promoting aquaculture production through technical assistance, training and provision of
necessary equipment.
Undertaking quality assurance and building capacity and awareness of fishing
communities through training and dissemination of information.
Developing the legal and policy framework for sustainable aquaculture development.
Undertaking spatial mapping of fisheries and related oceanographic and environmental
parameters.
Promoting ecosystem-based management of fish resources.
Developing fishery specific co-management plans
Carrying out research on by-catch management and control.
Sound Management of Natural Resources
13. Under GEF Alternative, the identification and promotion of integrated ecosystem
management approaches will contribute towards strengthening the system of coastal and marine
managed areas in Kenya and linking existing protected and co-managed areas. With GEF
resources, the KCDP will further expand coverage of this system by creating new conservation
areas of high global and regional biodiversity value in the marine and coastal zone. Linkages
between existing transboundary marine protected areas across will be also strengthened. The
Alternative responds to the GEF principles of prioritizing participation of communities residing
in and around marine protected areas in co-management; addressing sustainability aspects (i.e.
ecological, institutional and financial) of the proposed network of marine protected and marine
managed areas and facilitating partnership with the private sector through marketing initiatives.
GEF expanded activities and investments include
Setting up of a coastal biodiversity information management system.
Carrying out specialized surveys on flora and fauna in the Arabuko-Sokoke, BoniDodori
and Kiunga forests areas and any other areas agreed with the Association.
Carrying out of biodiversity assessments in the Mombasa Marine National Park and
Kisite-Mpunguti, Shimba Hills, Shimoni, Marereni and Assakone community
conservation areas and any other areas agreed with the Association.
Developing and implementing guidelines for management of environmentally and
socially critical habitats in the Tana Delta.
Developing and implementing conservation strategies for endangered species/ecosystems
such as sea turtles, coral reefs and dugong and other critical habitats.
Promoting co-management of conservancies by facilitating partnership between the
Recipient and local communities and implementing management plans for conservation
and sustainable use of coastal mangrove and other forest ecosystems.
Creating and securing an elephant corridor linking Arabuko-Sokoke forest to Tsavo East
National Park.
140
Building the capacity of institutional staff and local community members in conservation
management through training and sharing of best practices.
Carrying out of economic valuation for Shimba Hills and the Malindi -Watamu Marine
Protected Area.
Supporting greater collaboration, harmonization, monitoring and surveillance of shared
fisheries and other resources at Kisite-Mpunguti and Shimba Hills, and between South
Coast in Kenya and Tanga, Pangani, Zanzibar and Pemba in Tanzania so that individual
national budgets in the two countries are more effective.
Strengthening extension services for village based investment activities through training,
information sharing and technical advice.
Developing and disseminating information on ten (10) appropriate technologies for
village based investment activities.
Compiling information on existing tourism infrastructure, assets and activities along the
Kenya coast.
Developing new tourism circuits in Kiunga, Lamu, Mombasa, Malindi, Watamu,
Arabuko-Sokoke and South Coast, by facilitating partnerships amongst the local industry
players and local communities; and carrying out activities to develop and promote
markets for the new circuits.
Undertaking a study on tourism income distribution to identify opportunities for local
communities to exploit and building their capacity to exploit these opportunities in
sustainable manner.
Carrying out specific coastal and marine research for promoting sustainable management
of natural resources.
INCREMENTAL COSTS
14. GEF is requested to finance the US$5 million incremental costs necessary to support
activities under the KCDP Components 1 and 2, as described above. The non-GEF project
resources that are essential for meeting the GEF project objectives, and directly contribute to the
outcomes will be financed with IDA resources.
141
Table 6: Summary Project Costs by Expenditure Account (US$)
World Bank
Amount %
GEF
Amount %
Gov. of Kenya
Amount % % Total
A SUSTAINABLE MANAGEMENT OF FISHERIES RESOURCES
4. Improved governance including control & surveillance 440335 16.2 2172389 80 101402 3.7 6.5 5. Advanced research on coastal, near-shore, fish stocks &
technologies
2588787 56.8 592955 13 1372193 30.1 11
6. Increased fish production through aquaculture 1610903 100 3.9
subtotal 4640006 52.3 2765344 31.1 1473595 16.4 21.4
B. SOUND MANAGEMENT OF NATURAL RESOURCES
6. Coastal biodiversity information system developed 867166 43 578110 40 0 3.5 7. Improved management plans, guidelines and biodiversity
strategies
-
1656546 100 0 4.0
8. Capacity building & institutional support 3374421 100 0 8.1 9. Improved research & technology for extension services /a 1512017 100 0 3.6
10. Enhanced tourism and cultural heritage 1057471 100 0 2.5
subtotal 6811074 70 2713719 24.7 0 21.8
C. SUPPORT FOR ALTERNATIVE LIVELIHOODS 5. Integrated spatial planning and land capability 3000996 100 0 7.2
6. Promoted governance and integrated Coastal Management (ICM) 2210648 100 0 5.3
7. Developed Micro, Small and Medium Enterprises (MSME) investments
5639523 100 0 13.6
subtotal 10851167 100 0
D. CAPACITY BUILDING, M&E, MANAGEMENT AND CVF 0 6. National Coordination Unit strengthened to manage and
coordinate
995418 0
KCDP supported activities 7. Increased institutional capacity 1175966 0
8. Increased skill of project leaders to handle project implementation 149340 0
9. Information & commun. Strategy developed 249220 0 10. Enhanced M&E systems developed 334302 0
8. Supported Community Demand Driven (CDD) micro-projects 9793506 0
subtotal 12697752 0
TOTAL PROJECT COSTS 35000000 84.4 5000000 12.1 1473595 3.6 100
Total Project Costs including GoK contribution = US$41,473,595
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Annex 11: Safeguard Policy Issues
1. The project‟s potential environmental and social impacts should be few and site-specific.
The potential negative impacts include: (i) development impacts from sub-project investments
from CVF (ii) potential cumulative impact of many new micro, small, medium-size enterprises
near environmentally sensitive areas that are undertaking similar activities; (iii) possible
restriction of access to fisheries under improved management of the marine conservation areas;
and (iv) short-term reduction in income to traditional fisheries engaged in illegal or unsustainable
fishing activities due to strengthened MCS.
2. The project will yield a range of positive environmental impacts through improved
governance of natural resources, improved capacity for MCS, improved capacity for science and
monitoring, strengthening of the management and monitoring of protected areas and improved
collaboration at the regional, sub-regional, national, provincial and local levels. Other
environmental benefits include habitat restoration including in coastal forests, coral reefs and the
marine environment as described in the ESMF. With sound management of EEZ fisheries, by-
catch including sea birds and endangered sea turtles as well as unwanted fishery should decrease.
Monitoring of these benefits will be through MCS and stock assessments. Environmental
benefits associated with marine parks will lead to improved biodiversity and the quality of the
marine environment. This will be monitored through the M&E strategy which will involve
community monitoring and reporting by public/private partnerships.
3. All KCDP investments will be carried out in accordance with the recommendations of the
Environment and Social Management Framework (ESMF), the Process Framework (PF), and the
Indigenous Peoples Policy Framework (IPPF). These are “living” documents in that the KCDP
includes significant investment in their continual refinement. As such the Project supports
developing capacity of all stakeholders at the local level to prepare and enforce environmentally
and socially sustainable spatial plans. The increasing level of detail in spatial planning (refining
the ESMF and PF) and land capability mapping and integrated coastal zone management
planning would be supported by the KCDP. This mapping exercises and planning framework
will guide the KCDP investments.
4. In the transfrontier area between Kenya and Tanzania, enhanced cooperation across
many fronts, from fisheries to coral reef monitoring, tourism, conservation of mangroves and
seagrasses should lead to reduced incidence of illegal fishing, increased tourism, enhanced
environmental quality and increased biodiversity quality. The cooperation was emphasized by
high levels of government, e.g. by the Vice President of Tanzania during his recent trip to Kenya.
Contacts between the Tanzanian agencies involved in implementation of the Tanzania
MACEMP and counterpart agencies involved in the design and future implementation of KCDP
have already occurred and will continue through the rest of preparation and into implementation.
Likewise, the Regional Executive Secretary for the regional SWIOFP, based in Mombasa, is
participating in project preparation activities and will continue to provide input into the KCDP
implementation.
Kenya‟s Framework Environmental Law, the Environmental Management and Co-ordination
Act (EMCA) and other sector-based laws described earlier in this report have numerous
143
provisions to safeguard the coastal and marine environment. Kenya is also a signatory to various
international and regional instruments related to coastal and marine environment. While Kenya
has an impressive policy and legislative framework, there are some issues of overlap and
redundancy, and inadequate capacity for enforcement and compliance. Improving environmental
governance is a sub-component of this Project. Under this sub-component, KCDP aims to (a)
empower local communities to sustainably manage local resources for improved livelihoods and
economic growth; (b) strengthen governance structures and public private/partnerships to
promote sound resource use; (c) review and strengthen the regulatory framework pertaining to
sound management of resources; and (d) improve compliance and enforcement of environmental
standards, land use guidelines, and formulate EIA sector guidelines and restoration of degraded
sites. KCDP will provide support to achieve these goals. The Environment Safeguard Policies
triggered include OP/BP4.01 (Environment Assessment); OP/BP4.04 (Natural Habitats);
OP/BP4.36 (Forests); and OP/BP 4.11 (Physical Cultural Resources). The project also triggers
two social safeguards policies – OP/BP 4.10 (Indigenous Peoples) and OP/BP 4.12 (Involuntary
Resettlement). The project is classified as Environmental Category B – Partial Assessment
5. Environmental Assessment (OP/BP 4.01). The Project is rated as “Category B” and
safeguard clearance has been delegated to AFTEN. An ESMF has been prepared. The Project is
designed to institute a participatory policy and planning framework at the local government level
to develop and oversee local development planning; any environmental impacts will be
moderate. The KCDP supports rural economic development through assistance to MSMEs and a
community-driven development (CDD) program to respond to basic needs of coastal
communities. These projects may have site-specific negative environmental impacts as well
significant cumulative impacts if the process is not well managed. These potential negative
impacts could reduce the overall benefits of the investment. In view of this risk, a design feature
has been built into the KCDP to support spatial planning at the district level (at 1:20,000 or
better) that is participatory and environmentally and socially based. Building on a sensitivity
mapping initiative undertaken a few years ago by KMFRI, KCDP will support a province-level
land capability mapping exercise (to include use and non-use associated with environmental,
social and cultural values). Additionally, under the leadership of NEMA, Integrated Coastal
Management Planning will be carried out as a closely related endeavor to ensure that potential
negative environmental and social impacts are addressed and mitigated.
6. The CDD activities of the KCDP will be handled through the existing processes as
currently implemented by the ALRMP II district groups that are implementing CDD operations
for that Project. The ALRMP is in its second phase and has an established record of efficiently
including evaluation of social, cultural and environmental issues in the selection of proposals
submitted for CDD funding. This minimizes the risk that a new and separate evaluation system
might have. Conditionality in the KCDP legal agreements will include how CDD operations will
be implemented in the unlikely event that the ALRMP II closes before the KCDP. Legal
agreements for the KCDP will also cross-reference relevant sections of agreements between the
Bank and the Government of Kenya, and include an Agreement between the two projects that
address transfer of funds to cover any additional costs and responsibilities incurred by ALRMP.
7. Natural Habitats (OP/BP 4.04). About 50 percent of the marine coastal area is under
some form of protection. There are also national parks within coastal districts. Only a few of the
144
marine protected areas are under any form of active management or monitoring, and many of
these protected areas are severely degraded. The Project will undertake a review of these
gazetted areas to determine whether the current status should be maintained. Where continued
protection is needed, the Project will facilitate a sustainable and participatory approach to
improve management. The assessment of the current status of marine protected areas will consist
of collection of existing data for a data gap analysis under preparation grant support. The
indicated gaps in data (coral reef quality, no-fish zones and their justification, etc.) would then
help in the design of studies and management efforts in a rationalized protected area program
funded during implementation. The protected areas may be included in a network that comprises
existing MPAs, MPA with partial protection, co-managed areas, privately managed areas and
transfrontier cooperative areas. Given that tourism is expected to be the engine of growth in
Kenya over the next 20 years, the preservation of a unique natural habitat, which is the basis for
tourism, is a priority. This preservation however, needs to be balanced with the needs of the
coastal communities and how they share in the growth along the coast.
8. Forestry (OP/BP 4.36). The Project is very unlikely to have negative impacts on any
existing primary or mature secondary forest areas. There is, however, potential for positive
environmental impacts through improved land use planning, and enhanced monitoring and
enforcement including community co-management of forested areas. There is also a likelihood
that degraded or poorly producing agricultural land may be converted to forest crops (along with
intercropping). The integrated forest planning will conform to the participatory spatial planning
process to be instituted under the Project at the local government level (including off-site
environmental and social impact). There is, however, some potential for negative impacts
through the expansion of agriculture and livestock projects and charcoal making if demanded
and approved by the CVF. Careful monitoring will be needed to ensure that localized and site-
specific impacts do not lead to significant cumulative impacts. The District level will need to be
sensitized to the KCDP tools of spatial planning, land capability mapping and ICZM planning in
order to manage the type, scope, coverage, land use in Component 3.
9. Cultural Resources (OP/BP 4.11). The Kenya coast is rich in historical and
archaeological sites, a reminder of centuries of Swahili culture. The ruins of mosques and other
buildings reflect different ensembles of Islamic architecture using lime, coral stone and timber.
The sites include mosques, groups of tombs located inside or outside city walls, mounds and
house walls representing the old city houses. The Project will be implemented within a
framework of spatial planning and land capability and this information will be used to gather
sufficient information about cultural sites to enable prioritization of the areas to be restored or
rehabilitated under KCDP. The Project will provide the needed support (legal and physical in
terms of works and services) to the Kenya Museum and other relevant authorities for the
protection and restoration of important cultural heritage sites. In undertaking this task, the
Project needs to ensure adherence to both the national and international (UNESCO) guidelines
for restoration of valuable cultural sites.
10. Indigenous Peoples (OP/BP 4.10). KCDP involves promotion of economic growth in
the coastal areas through improved governance of coastal and marine resources; better revenue
generation through sound monitoring, control and surveillance; enhanced equity and reduced
poverty through the promotion of alternative income generating activities and MSMEs, and
145
through provision of access to credit, technology and services. The Project should generate
potential benefits to vulnerable and marginalized Indigenous Peoples and may also lead to some
impact on these groups. In this context, an Indigenous Peoples Policy Framework (IPPF) has
been developed to guide interventions that may affect their livelihoods and social conditions. The
purpose of the IPPF is to ensure that the development process fully respects the dignity, rights,
economies, and cultures of these communities and that the project is able to gain broad
community support of affected indigenous peoples and other vulnerable marginalized groups.
11. KCDP will involve both
positive and negative impacts for
indigenous peoples. Sub-projects
to be financed under KCDP will
be screened and if Indigenous
Peoples are involved, a sub-
project specific Indigenous
Peoples Plans (IPPs) will be
prepared in a free, fair, and
culturally appropriate manner, as
defined in the IPPF. The IPPF
contains guidelines for
preparation of the IPP, including
a Social Assessment (SA) prior to
all interventions with indigenous
communities. The SA will
provide information on practical
measures in which indigenous
peoples can be enabled to benefit
from the project activities.
Gender considerations will be
factored into the project
implementation processes to
ensure gender-based inclusion
and participation. The SA will
also identify best mechanisms
that can be adopted to address
any grievances that may arise
through project implementation. An analysis of project activities, their possible impacts and
mitigation measures are presented in the table below.
Indigenous Peoples of the Coast
Watha Community The Watha people are mostly found
in the rural arid and semi arid lands of the country. A
minority of them live in thick forests scattered all over
the country. The people are traditionally hunters and
gatherers. In Malindi District, a Watha community is
found in four divisions (i.e. Malindi, Langobaya, Marafa
and Magarini). In Tana River district the Watha are
found in Sombo and Laza divisions, while in Mandera
the Watha are found in Central division. The population
of Watha community in the districts is estimated at
approximately 30,000 persons. The Watha people now
live in permanent settlements, some of them along the
river and where there are forests, mainly in the mixed
farming and livestock farming zones.
Boni Community The Boni people are known for their
unique tradition of whistling to birds that guide them to
honey. They inhabit the Northeastern Kenya districts of
Ijara and Lamu district. They are a nomadic hunter-
gatherer tribe of mainly Cushitic origin with a unique
characteristic. The Boni live in forested areas of the
district, i.e. within the Witu and Boni forests. Their
population is about 4,000, compared to 25,000 half a
century ago (Source: Organization for the Development
of Lamu Communities (ODLC).
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Potential impacts of KCDP Activities on Indigenous Peoples
Component Project Activity as
outlined in the PAD
Possible impacts on the
indigenous peoples
Mitigation measures
1. Sustainable
management of
offshore fisheries
resources
Policy and institution
reforms needed for
instituting sustainable
coastal and EEZ fisheries
management
Promotion of sustainable
and profitable fishing
practices and mariculture
and value addition
(+) Empowerment of IPs
depending on fisheries for
greater economic
opportunities from the
sector
Indigenous practices and
innovations that can be
harnessed and improved,
maximizing local technical
knowledge
Capacity building for
knowledge on sustainable
use and culturally
appropriate participation
Identifying innovations
and protecting culturally
sensitive knowledge and
innovations
2. Sound
management of
natural resources
in the coastal and
near shore marine
environment
Assessment of
biodiversity and natural
resources, and
development of an
integrated information
system
Conservation of the
unique coastal
biodiversity and its
natural resources
Development of
management plans,
guidelines and strategies
for sound management of
biodiversity and natural
resources
Capacity building and
institutional Support
Conduct research and
provide technology for
extension services and
development of cottage
industries
(-) Areas identified as ESAs
and proposed for
conservation may cover
areas currently
utilized/inhabited by
indigenous communities.
This may affect their
livelihoods, as follows:
(-) Conservation goals may
conflict with current
livelihood activities
(-) Likely loss of cultural
values if and when new
livelihood opportunities are
introduced
(+) Livelihood enhancement
and diversification by giving
support to increased
adoption of livelihood
diversification opportunities
(+) Better appreciation of the
value of indigenous
ecosystems, thus providing a
stronger case for their
conservation
Indigenous peoples to be
involved comprehensively
in the spatial planning
process and areas of
conflict consultatively
identified and options
explored and agreed on
Capacity building of
representatives of
indigenous communities to
take advantage of new
livelihood opportunities
that are promoted by this
project
Construction of cultural
centers
Apply suitable limits or
carrying capacities of
fragile eco-tourism in
indigenous sites in a
culturally acceptable
manner
3. Support for
alternative
livelihoods in the
Coastal Zone
Development of a
locally based,
participatory, spatial
planning process
Conduct research and
(-)there are risks that
marginalized indigenous
communities are not invited
to participate in the spatial
planning process which may
further aggravate their
Involvement of indigenous
peoples in all stages of the
spatial planning process
enhanced in the form of
free, prior and informed
consultations with the
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provide technological
support for extension
services for the
development of
MSME
Development and
adoption of
appropriate
technologies to boost
production, reduce
post harvest wastage
and promote value-
addition of products
Developing better
and more financially
sound local micro,
small and medium-
size enterprises
(MSME) through
provision of business
service advice and
support
economic marginalization
(-) IPs may be influenced to
change from their customary
livelihood sources and this
may dilute cohesion among
them and may result in loss
of cultural values
(-) New livelihood
opportunities may conflict
with current options or
preferences of indigenous
communities
(-) As the IP are
marginalized in the decision
making process and their
specific needs unknown to
decision makers, there is a
risk, that the CDD projects
thy propos do not receive
funding
affected indigenous
peoples
Deliberate efforts should
be made to ensure that IPs
customary livelihood
sources are strengthened
The affected indigenous
peoples should be
consulted through free,
prior and informed
consultations when
developing appropriate
technologies so that these
technologies take the
interests of IPs into
consideration
4. Capacity
building,
Monitoring and
Evaluation
System, Project
Management and
Communication
Construction of
offices to house the
project management
team and staff
training
(+) Efficiency in delivery of
services
Indicators to monitor
benefits to IPs as result of
project interventions to be
included in the M&E
Framework
12. Involuntary Resettlement (OP/BP 4.12). KCDP activities should not involve household
relocation or resettlement. In fact, the project supports community-based and participatory co-
management approaches. However, some of the KCDP activities may restrict or control access to
marine and fisheries resources if the co-management and community rules for access and use of
resources are not carefully monitored. Cooperation of residents to assist in managing coastal
protected areas has worked and will be enhanced to ensure that community-based rules for
access to resources will be applied, but in some cases, these will need to be clarified and
codified. Additionally, while no new protected areas are expected to be created because of the
KCDP, some areas in the Coast could be identified for some exclusive community management.
As a result, these may restrict access if the conditions for co-management of coastal and marine
resources are not well defined. In this connection, a Process Framework (PF) has been
developed, reviewed by the World Bank, and publicly disclosed. The PF defines the guidelines
for co-management and use of resources, including a public consultation and disclosure plan and
a grievance mechanism. The PF will strengthen the role of communities regarding co-
management and protection. Once completed, a detailed action plan for access and use of
resources will be developed by applying a participatory approach.
148
13. As mentioned above, villagers would remain in the coastal areas and participate in Park
management and protection (co-management), and there would be an agreed action plan that
they will help draft, which would include procedures for conflict resolution, as covered in the PF.
Furthermore, the Project Implementation Manual will incorporate the principles and actions
defined in the PF for addressing access, use-rights, and conflicts in coastal protected areas,
including responsible agencies, involvement of local community leaders and NGOs, and an
agreed budget for carrying out any necessary mitigation measures.
14. Projects on International Waterways (OP/BP 7.50). OP/BP 7.50 is not triggered, as
the project does not involve international waterways. However, there are some issues related to
management of migratory and transboundary fish stocks between Kenya and Tanzania, which
are mainly related to the migration patterns of large pelagic fish such as tuna, bill-fish and shark.
In addition, there may be opportunities to create transfrontier terrestrial conservation areas
between Tanzania and Kenya. Cooperation and joint monitoring possibilities are already being
explored and facilitated between the two countries with support from MACEMP and KCDP
(through preparation grants). These issues are dealt with under OP4.01 in relation to the
environmental assessment (ESMF). In addition, a planned formal Memorandum of
Understanding between the two governments will cover the scope and areas of cooperation
regarding assessment, monitoring and management of transboundary issues. The issues may
include offshore, inshore and terrestrial resource use (including "non-use") and protection. The
200-mile EEZ cooperation issues are being facilitated by SWIOFP, which is the regional project
that includes both Tanzania and Kenya. SWIOFP oversight at the “government” level is through
the legally constituted Southwest Indian Ocean Fisheries Commission (SWIOFC), and Kenya,
Tanzania and all other countries of the South West Indian Ocean are members of the
Commission. Regular meetings at SWIOFC debate transboundary issues in general and
migratory fisheries in particular and therefore provide a forum for sharing KCDP information to
other riparian‟s.
15. Gender and Youth. Gender and youth issues in the Coast are manifested in the
demographic profile in terms of early marriages for young girls, failure to complete basic
education, and prostitution. KCDP covers these issues, including impacts on young boys and
girls who are drawn into prostitution, drug abuse, and alcohol. Groups of young men and women
are vulnerable as they are also exposed to Sexual Transmissible Diseases (STDs), early
pregnancies and HIV/AIDS. The Project addresses these issues through its CVF activities and by
providing opportunities that will protect young people and vulnerable women, while also
enhancing their livelihood skills. Project committees at the local level will have at least
30percent women representatives. There will also be resources earmarked for youth
development.
16. The ESMF, PF, and IPPF have been disclosed according to the standard procedures in
Kenya. The documents have also been disclosed in the Info Shop. A summary of the main
findings of the ESMF are contained in Table 11.1. Table 11.2 contains information regarding
historical and archaeological sites on the Coast. Figure 11.1 depicts a map of the Kenyan coast
showing the coastal districts and marine and terrestrial protected areas.
149
17. Conclusions and Recommendations from the ESMF. As noted in the ESMF, there are
several types of environmental impacts: (a) clearly positive environmental impacts; (b)
environmental impacts of a transboundary nature; (c) localized minor environmental impacts
from micro-projects; (d) cumulative environmental impacts from a large numbers of those
projects concentrated in an area; and (e) clearly negative environmental impacts or social
impacts that need to be mitigated. Table 11.1 below, provides a summary of the potential
positive and negative impacts of project activities and possible mitigation measures.
Table 11.1: Summary of Findings of ESMF
Type of
Environmental
Impact
Examples of Potential Impacts Safeguard Policies that
may be triggered
Positive Reduction of the threat of collapse of valuable
migratory fisheries from improved vessel
monitoring systems (VMS) and monitoring,
control and surveillance (MCS) and more
efficient licensing system for the commercial
fisheries in Kenya‟s EEZ;
Improved legislative and institutional
framework for marine and coastal and terrestrial
areas and biodiversity resources management;
Reduction of post harvest loss through training
and technology for value addition and waste
minimization;
Restoration of degraded ecosystems;
Improved environmental governance including
capacity building for enforcement, compliance
and monitoring;
Spatial planning, identification of sensitive
areas, land capability mapping and integrated
coastal management all aimed at promoting an
integrated institutional approach in the
identification and design of activities and
influencing the type, scope and area of
operations to avoid sensitive areas.
Transboundary Besides the positive environmental impacts
mentioned above from improved MCS,
transboundary impacts include:
Illegal fishers from neighboring nations fishing
in Kenya‟s territorial waters without a license
(illegal fishing by traditional fishers from
Tanzania; and Somali pirates exploiting the rich
fishing grounds near the northern border with
Somalia);
Distant Water Fishing Nations exploiting the
migratory fisheries in the sub-region illegally
Projects on International
Waterways (OP/BP
7.50)
150
negatively impact the provisions of the UN
convention of the Law of the Sea, the UN
Convention on Biodiversity and the FAO Code
of conduct.
Localized and
Cumulative
Support for traditional fishing, small scale
quarrying, charcoal production, agriculture where
land or forest is cleared, small-scale irrigation,
borehole construction, small-scale roads.
These activities may have negative environmental
impacts of a localized nature. However, depending
of the scope of the support, the cumulative impact
could be quite significant.
Each micro-project will need to be screened and the
type of mitigation measure evaluated, as described
in the Process Framework. Resources will need to
be committed to implement the mitigation action.
Environmental
Assessment (OP/BP
4.01)
Natural Habitats
(OP/BP 4.04)
Forests (OP/BP
4.36)
Cultural Resources
(OP/BP 4.11)
Indigenous Peoples
(OP/BP 4.10)
Potentially Negative
Environmental and
Social Impacts
Restriction of access to fisheries through
improved management of the marine
conservation areas. Mitigation measures are
defined in the Process Framework;
Short-term reduction in income for traditional
fisheries engaged in illegal or unsustainable
fishing activities due to strengthened MCS
identified in the Process Framework;
Development impacts from sub-project
investments from CVF (covered above);
Cumulative impact of many new MSME near
environmentally sensitive areas that are
undertaking similar activities;
Restriction of access to livelihoods of
indigenous people through project activities.
[The Process Framework will apply to
community conservancies or co-managed
conservancies where access to resources will be
agreed upon by the communities or where
access may be restricted.]
Environmental
Assessment (OP/BP
4.01)
Natural Habitats
(OP/BP 4.04)
Forests (OP/BP
4.36)
Cultural Resources
(OP/BP 4.11)
Indigenous Peoples
(OP/BP 4.10)
Involuntary
Resettlement
(OP/BP 4.12)
Recommendations
During the preparation of the ESMF, IPPF, and PF, an evaluation was made of the
existing legal framework and institutional structure for monitoring and identifying
mitigation measures to minimize environmental and social impacts. The frameworks
covering environmental and social impacts, indigenous peoples, and potential restrictions of
151
access to resources are adequate. However, the capacity of almost all participating agencies
to monitor the safeguard policies is inadequate and requires strengthening during the first
year of the Project. Additionally, while the monitoring capacity may currently be adequate,
when the KCDP is initiated the workload for the participating agencies will increase
considerably. In that situation, the monitoring capability will likely be strained. In
MACEMP, Safeguards Specialists were engaged by both sides of the Union, Mainland
Tanzania and Zanzibar. Their responsibility is to routinely monitor project activities for their
impact on safeguard policies and the identification of mitigation measures and report to the
Monitoring and Evaluation Specialist. The M&E specialist would enter these inputs into the
main monitoring database. An arrangement similar to the one in the MACEMP is
recommended to ensure that the benefits from the project do not erode due to unidentified
negative environmental or social impacts.
Integrate safeguard mitigation measures into environmental, social and other sector
regulations: Examples include (i) the environmental screening procedures that will be
applied during the PRAs to identify impacts and recommend mitigating measures; (ii)
participatory spatial development plans implemented at the “local government” level. The
spatial plans will allow for cost efficient and proactive management of any cumulative
impact resulting from KCDP-induced MSME growth; (iii) land capability mapping to
identify vulnerable areas to influence the types and scope of the project interventions; and
(iv) integrated coastal management planning to ensure that environmental and social impacts
are minimized.
Synchronize the Information and Communication Strategy spatial planning and land
capability mapping. The ICZM process should inform beneficiaries about planning
frameworks and how they relate to minimizing potential environmental and social impacts.
It is recommended that environmental audits be carried out once a year to identify how the
spatial plans and land capability assessments are being utilized by project activities, assess
the potential for environmental and social impacts and recommend course corrections. The
findings should be incorporated into the annual reports to the Policy Steering Committee,
Technical committee and the World Bank.
Integrate recommendations in the IPPF design. The findings and mitigation measures
outlined in the IPPF should be integrated into activities under Components 2 and 3 to provide
guidance on dealing with indigenous people.
Ensure appropriate management of cultural heritage sites. The sites with national,
regional, or international importance that are within an area covered under KCDP should be
shielded by providing urgent protection and rehabilitation. The KCDP will provide the
needed support (legal and physical in terms of works and services) to ensure that properly
defined procedures for dealing with cultural property are applied. In undertaking this task,
the Project needs to ensure adherence to both the national and the UNESCO guidelines for
restoration of valuable cultural sites.
152
Figure 11.1: Map of the Kenyan coast showing the coastal districts and marine and terrestrial
protected areas. Source: Government of Kenya, KMFR.
153
Table 11.2: Cultural sites of Historical Significance along the Kenyan Coast
District/City Sites
Lamu Fort Lamu, Mkomani and Hidabu: tombs, ruined houses, collections in the
Lamu Museum, as well as old traditional carved wooden doors and molded
plasterwork, some dating back to the 18th Century.
Pate It is the largest site on the Coast. It has eight ruined mosques, ruined houses, and
tombs. This is one of the earliest sites on the Coast.
Diani Beach,
South Coast
The Kongo Mosque, which is maintained by the National Museums of Kenya
and still in use.
Gedi in Mida
area
This is a 15th Century Arab town. It has been declared a national monument and
boasts a great mosque, six minor mosques, numerous large houses, pillar tombs,
stone tombs and the town walls.
Jumba National monument with four mosques, numerous houses and some tombs, as
well as the Home of the Slave-Master
Tarkwa A fine Friday Mosque and 148 other coral-built structures, including houses, the
town wall with gatehouses, and a pillar tomb with an interesting inscription.
Ungwana National monument; eight mosques including an old and new Jamia and a
mosque of the Domed Mihrab; numerous houses and tombs and the old town
wall.
Malindi Jemadari Mosque in the north, the pillar tombs, and an old Portuguese chapel.
Mombasa Mombasa Old Town, Fort Jesus (built by the Portuguese in the 15th
Century),
Fort St Joseph, the Mbaraki pillar, the Mazrui Cemetery, the redoubts at the
present-day golf course, the ruins at Allidina Visram school and other minor
remains of great interest to tourists.
Mtwapa A large Friday Mosque, tombs, and the remains of over sixty houses, often well
preserved with fine architectural details.
Shanga Three mosques, ruined houses and tombs.
Mwana
Mchama
Several houses, one of which has fine doorways and niches of cut coral and a
mosque and tomb.
Omwe Two ruined mosques, and monumental tombs.
Ishkani Two mosques and various tombs of outstanding architecture at the main site, as
well as two outlying tomb groups with some of the finest funerary architecture
on the East African Coast.
Mwana A fine domed mosque, a crumbling Friday Mosque, a small mosque with carved
bosses, at least one other mosque, and houses spread over a large area, a group
of tombs.
Siyu The Siyu Fort, the old town including four mosques, many ruined houses and
tombs are significant.
Source: Government of Kenya, Department of Museums, 2010.
154
Annex 12: Project Preparation and Supervision
KENYA: Coastal Development Project
Timeline
Planned Actual
PCN review October 7, 2008 November 7, 2008
Initial PID to PIC January 14, 2008
Initial ISDS to PIC January 14, 2008
Appraisal February 22, 2010 February 22, 2010
Negotiations June 2, 2010 June 2, 2010
Board/RVP approval July 29, , 2010
Planned date of effectiveness October 29, 2010
Planned date of mid-term review October, 2013
Planned closing date October 29, 2016
Key institutions responsible for preparation of the project:
Ministry Department/s Role in KCDP
Ministry of Fisheries
Development
Fisheries Department and
KMFRI
Project coordination (KMFRI);
implementation: KMFRI and
Fisheries Department
Ministry of Environment and
Mineral Resources
NEMA Environmental and natural
resources governance
Ministry of Lands Department of Physical
Planning
Spatial planning and land
capability sub-components
Ministry of Forestry and Wildlife- KWS, KEFRI Forests and biodiversity (marine
and terrestrial)
Ministry of Northern Kenya and
other Arid Lands
ALRMP, which will
implement the Coastal Village
Fund
Major role in community
mobilization
Ministry of Regional
Development Authorities
CDA Active role in mainstreaming
project activities
Ministry of State For Planning
and National Development and
Vision 2030
Provincial Planning Active in mobilization at the
provincial and district level
Ministry of Tourism Provincial Tourism Active in mobilization of tourism
initiatives
Japan provided a PHRD grant to support project preparation activities in the amount of
US$650,000 (TF090633). GEF granted US$228,000 for project preparation. The recipient Kenya
Marine and Fisheries Research Institute (KMFRI) has used these funds to 1) hire consultants for
each component of the project; 2) conduct consultation workshops to transfer knowledge to and
survey the needs of the local stakeholders; 3) participate in training to gain knowledge in
program and project financial management, administration, and international procurement; 4)
155
conduct spatial surveys; and 5) send delegations to Tanzania to learn from MACEMP
implementation.
Bank staff and consultants who worked on the project
Name Job Title Role
Project Team
William Leeds Lane Sr. Environmental Spec. Team Leader
Xavier Vincent Sr. Fisheries Specialist Advise on Fisheries
Nyambura Githagui Sr. Social Development Specialist
Advise on social issues
Henry Amena Amuguni Financial Management Specialist Financial Management
Dahir Elmi Warsame Senior Procurement Specialist Procurement
Joel Munyori Procurement Specialist Procurement
Luis M. Schwarz Senior Finance Officer Finance
Christiaan Johannes Nieuwoudt
Financial Analyst Finance Analysis
Maria Elizabeth Carneiro Finance Assistant Finance Assistant
Clemencia R. Onesty Portfolio Officer Loan Accounting
Nightingale Rukuba-Ngaiza Senior Counsel Legal aspects
Stephen Mukaindo Counsel Legal Aspects
Extended Team
Patrice Talla Takoukam Counsel Legal issues in the EEZ
David Japp Consultant/Fisheries expert Fisheries
Rudy van der Elst Consultant/protected areas expert Protected Area management
Maria del Mar Polo FAO/CP economist Economic aspects and Indicators
Pawan G. Patil Senior Economist
Ladisy Komba Chengula Sr. Natural Resources Mgmt. Spec.
156
Funds spent to date in US$ for Preparation Support
Source Of Funding WPA Plan
Labor
Travel Other
Total
BB / Bank Admin fund 140,000.00 27,034.20 38,742.69 2,486.27 68,263.16
BBFAO / BB FAO 112,840.00 57,040.00 57,040.00
BB-Total 252,840.00 27,034.20 38,742.69 59,526.27 125,303.16
Grand Total 252,840.00 27,034.20 38,742.69 59,526.27 125,303.16
Supervision approach and Team Composition
The risk ratings suggest that the KCDP will need close and constant supervision by a
multisectoral team. The entire Task Team carry out a major supervision every six months. This
activity will be supplemented by mini-supervision missions that concentrate on one or two
specfic sectors, as needed, by members of the Task Team that are mainly resident in the Nairobi
or Tanzania Country Offices. The core Task Team will consist of a fisheries expert
(Washington-based TTL), a social specialist (Nairobi-based, co-TTL), a private sector
development specialist (Nairobi-based), a safeguard specialist (Tanzania-based), a forestry
expert (Nairobi-based) and a spatial planning specialist (Washington-based). Financial and
procurement supervision will be handled by staff from the Bank‟s Nairobi Country Office.
The KCDP and the Tanzanian MACEMP are linked projects. It is therefore important that the
Task Team also adequately supervise these linkages, from both the Tanzania and the Kenya side
of the border. The social specialist on the KCDP Task Team has been a member of the
MACEMP Task Team for several years. The safeguard specialist on the KCDP Task Team will
come from the Bank‟s Tanzania Country Office to facilitate and strengthen the supervision of the
transboundary aspects of these two projects..
Annual supervision costs are expected to be US$125,000, with funds drawn from both IDA and
the GEF.
157
Annex 13: Documents in the Project File
KENYA: Coastal Development Project
A. Bank Staff Assessments
Kenya: Country Partnership Strategy
Project Preparation Back to Office Reports and Aide Memoires
Draft Financial Management Assessment
Draft Procurement Capacity Assessment
Project Information Document
Integrated Safeguards Data Sheet
Financial and Economic Analysis
Project Appraisal Document for the Arid Lands Resource Management Project Phase
Two (May 2003)
Procurement Assessment of KCDP implementing agencies, 2010
Financial Management Assessment of KCDP implementing agencies, 2010
B. Other (Documents/studies Carried out by the Republic of Kenya and other relevant
studies)
Kenya forest service: Strategic Plan – 2009/2010 – 2013/2014
Kenya Forestry Research Institute: Coastal Eco-region Forestry Research Program
(KEFRI 2009)
Perceptions on Participatory Forest Management Impacts on Poverty for Selected Forest
Adjacent Communities in Kenya ( ARPIP KEFRI Project Report No. 1, June
2009)\Arabuko
Sokoke Forest: Strategic Forest Management Plan 2002-2027 (2002)
National Policy for the Sustainable Development of Arid and Semi Arid Lands of Kenya
(Office of the Prime Minister, Republic of Kenya, November 2009)
Arid Lands Resource Management Project (ALRMP II) Project Implementation Plan
(August 2003)
National Oceans and Fisheries Policy (Ministry of Fisheries Development, 2008)
Draft Sessional Paper No. 1 of 2007 on Forest Policy (Ministry of Natural Resources,
2007)
The Eastern African Marine Ecoregion Vision – A Large Scale approach to the
management of biodiversity ( WWF, 2004)
Kenya Wildlife Service: Strategic Plan (2008-2012): Our Heritage, Our Future
Strategic Plan 2008-2012 (Ministry of Regional Development Authorities, Coast
Development Authority) December, 2008
Kenya: Vision 2030 (RoK, 2007)
158
The Fisheries Act (Cap 378) (RoK)
The Fisheries Beach Management Unit Regulations (RoK, 2007)
The Coast Development Authority Act (RoK, 1990)
Kenya Coastal Development Project Stakeholders Reports (Coast Development
Authority, 2009)
KCDP - Environmental and Social Management Framework (RoK, 2010)
Process Framework (RoK, 2010)
159
Annex 14: Statement of Loans and Credits
Original Amount
in US$ Million
Project ID Project Name
Fiscal Year IDA Grant
Fiscal
Year IBRD IDA
GRAN
T Cancel. Undisb. Orig.
Frm
Rev'd
Undisbursed Original Frm Revised
P083250 KE-Cash Transfer for OVC 2009 50
P078058 KE-Dev Learning Centre LIL 2004 2.7
P111545 KE-Edu Sec Sup Project 2007 80
P078209 KE-Energy Sec Recovery Prj 2005 160
P072981 KE-GEF W KE Int Ecosys Mgmt SIL 2005 4.1
P083131 KE-Inst Reform & CB TA 2006 25
P072981 KE-NRM SIL 2007 68.5
P090567 KE-Natl STATCAP Dev 2007 20.5
P095050 KE-Northern Corridor Transport SIL 2004 460
P085414 KE-Tot War Against HIV/AIDS-TOWA 2007 80
P082615 KE-W Kenya CDD/Flood Mitigation 2007 86
P081712 KE-Water & Sanitation Srv Improv 2008 150
P074106 Kenya Agric Productivity & Agribusiness 2009 82
P85007 MSME Competitiveness 2005 22
Overall Result 1424.7 4.1
50.87249
0.77222
26.25541
121.1618
1.096661
20.6915
56.37877
18.55489
348.4185
60.64892
71.42032
118.9918
85.44855
15.18304
1027.885
-1.83733
0.396049
23.1528
31.75476
1.096661
18.90066
2.351658
13.85967
62.41932
66.17456
3.835137
14.89607
13.69675
211.7934
13.18133
-8.991
-13.0439
13.90414
2.797029
7.847569
160
Annex 15: Stakeholder Consultations
The KCDP was prepared over a one-year period of significant consultations and discussions that
included key ministries and departments mandated with the oversight of coastal and marine resource
use. Project preparation work supported and facilitated numerous workshops and seminars in
identifying the priorities to be included in the project, in determining the best options for addressing
poverty issues in the Coast and for assessing the potential for promoting growth, employment generation
and wealth creation. The work involved consultations at the village level and with the private sector in
determining the design of public/private partnerships. The Project will build on successful experiences
in Kenya as well as in the region, such as the successful Tanzania Marine and Coastal Environmental
Management Project, which might be considered a sister project to the KCDP. The Project will also
benefit from and build on the experience of SWIOF and the ASLME, both regional projects with
linkages to KCDP. During the many stakeholder consultations, the project design evolved from being a
conservation and development project into a development project that would be implemented within a
spatially planned and land use management framework. A significant investment is also being made in
the review, strengthening and harmonization of pertinent legislation and regulations with the aim that
the KCDP and other investments along the Coast abide by the strengthened regulatory framework. With
regard to community activities, the CDA has considerable experience working with communities and the
private sector in a public/private partnership. The poorer communities will benefit from the experience
of ALRMP II in getting resources and services.
Table 1: List of consultative meetings held within the framework of the KCDP project preparation
October 2008 – March 2010
DATE AIM OF MEETING VENUE
Oct. 2-3, 2008 Briefing of Stakeholders from the original
project formulation meeting held in Orchid
Bay in 2005
KMFRI Conference Room
Oct. 6-7, 2008 Discussions of VMS and licensing protocols
at Fisheries Dept. and SWECO with Vincent
Xavier (WB)
Fisheries Department
Oct. 13, 2008 Meeting with PS Ministry of Fisheries
Development and senior management staff
from KMFRI and Fisheries Dept. to discuss
prawn trawling and aquaculture
development
KMFRI Board Room
Oct. 27, 2008 Meeting of Component managers to discuss
project activities in each institution
KMFRI Conference Room
Oct. 30, 2008 Meeting between Dr. Uku and KWS staff to
discuss activities to be undertaken by KWS
KWS Coast Conservation
Area Headquarters
Nov. 18-28, 2008 World Bank mission meeting KMFRI Conference Room
Nov. 20-21, 2008 Stakeholder consultative meeting with all
components
Nyali Beach Hotel
Nov. 25, 2008 Consultative meeting at Coast Development
Authority between Dr. Mangale (CDA
CDA
161
CEO), Dr. Ruwa, Dr. Bill Lane and Dr. Uku
Nov. 27, 2008 Consultative meeting at Provincial
Commissioner‟s office between the E.
Munyi (PC, Coast), Dr. Kazungu, Dr. Ruwa,
Dr. Bill Lane, Mr. Ochiewo and Dr. Uku
PC‟s Office
Dec. 15-16, 2008 Component managers meeting to develop
activities and budgets according to the
guidelines provided in the Aide Memoire
KMFRI Conference Room
Jan. 28, 2009 Mission by Nyambura Githungui, Musabi
and Fatuma Abdikadir to discuss the
Community Driven Development Trust
Fund with Component manager
KMFRI Conference Room
Jan. 29, 2009 Consultations with Private Sector Players
concerning Public-Private Partnerships
CDA Board Room
Jan. 30, 2009 Field Excursion to North Coast (Gede) to
visit groups engaged in local cottage
industries led by KEFRI
Gede
Feb. 6-7, 2009 Consultative meetings at partnering
institutions and with a member of Interfaith
group to discuss project activities
KWS, Planning, Fisheries
Department, NEMA, CDA,
NCCK
Feb. 25-27, 2009 World Bank mini-mission meeting with Bill
Lane to discuss project progress with the
Project Coordination Unit and Component
managers
KMFRI Board Room
KMFRI Conference Room
May 11, 2009
Presentation made by Dr. Uku to the
Regional Advisory Committee (RAC) of the
African Union of the project‟s progress
Sun and Sand
May 15-19, 2009 Retreat for Component managers and the
Project Coordination team to develop project
activities, consultants TOR‟s and prepare for
the World Bank Mission to Kenya
Sun and Sand
June 5, 2009 Stakeholder consultations by Fisheries
Component in North Coast, Malindi
Eden Roc, Malindi
June 11, 2009
Meeting of PSs and Directors of the
component institutions at the First Policy
Steering Committee Meeting
Ministry of Fisheries
Development, Nairobi
June 8-19, 2009 World Bank Pre-appraisal mission KMFRI Conference Room
& Excursions to South
Coast
Aug. 17-18, 2009 KWS internal stakeholder meeting KWS, Malindi
Sept. 6-13, 2009 Trip to Tanzania by the Spatial Planning
group to visit the MACEMP Project
Tanzania
Sept. 10, 2009 CDA Stakeholder workshop in Mpeketoni to
discuss KCDP activities with Lamu
entrepreneurs, Ministry of Youth, Fisheries
Mpeketoni
162
Department, Ministry of Agriculture, CBOs,
NGOs, Coastal Development Authority,
Ministry of State for Planning, National
Development and Vision 2030 and the
Provincial Administration
Sept. 11-12, 2009 KWS Stakeholder workshop Lamu
Sept.14, 2009 KWS Stakeholder workshop Kisite Mpunguti
Sept. 15, 2009 KWS Stakeholder workshop Shimba Hills
Sept. 16, 2009 Trip by PCU staff to KEFRI‟s Gede regional
research center to participate in the opening
of a new office block and sensitization for
the KCDP project
KEFRI, Gede
Sept. 17, 2009 KWS Stakeholder workshop Gede
Sept. 18, 2009 KWS Stakeholder workshop Mombasa
Sept. 22-20, 2009
World Bank Pre-appraisal mission KMFRI Conference Room
& Excursions to Kilifi
Sept. 24, 2009 KWS Stakeholder workshop Mariakani
Oct. 13, 2009 NEMA Stakeholder workshop to discuss
governance issues in KCDP
Mombasa Beach Hotel
Oct. 14, 2009 CDA Stakeholder workshop in Kilifi to
discuss KCDP activities with Kilifi CBOs,
Kilifi Entrepreneurs, Ministry of Gender,
Ministry of Livestock, Fisheries Department,
Ministry of Agriculture and the media
Pwani University College,
Kilifi
Oct.15, 2009 CDA Stakeholder workshop in Kwale to
discuss KCDP activities with Kwale CBOs,
Kwale Entrepreneurs, KWS, KMFRI,
Ministry of Livestock, MYWO, MOA, Arid
Lands, Ministry of Cooperatives and World
Vision
Kwale Cooperative Hall
Oct. 21, 2009 Microfinance Institution Stakeholder
Workshop
CDA Headquarters
Oct.21, 2009 Stakeholder Sensitization by Fisheries
Department for the Prawn Trawling survey
Malindi, Ngomeni, Kipini
and Ozi
Oct. 22-23, 2009 Meeting to develop the IPPF and CVF at
KMFRI
KMFRI, Mombasa
Oct. 21, 2009 Meeting by Project Coordinator with the PS
Ministry of Fisheries Development and the
World Bank Country Director
Maji House, Nairobi
Dec. 7-11, 2009 Familiarization tour with the PAD consultant
to partnering institutions
Gede and Mombasa
Jan.22, 2010 Meeting with PAD Consultant to review the
1st draft of the KCDP PAD
KMFRI, Mombasa
Feb. 22–March 5,
2010
World Bank Pre-appraisal mission KMFRI Conference Room
163
Annex 15B: Statement of IFCs Held and Disbursed - Portfolio in US$ millions
Committed Disbursed
FY Company Loan Equity Partic. Loan Equity Quasi Partici.
2006 ABE-Kenya 6 0.5 0 0 0 0.5 0 0
1997 AEF Deras Ltd. 1 0 0 0 1 0 0 0
2004 BP Kenya 0 5 0 0 0 3.1 0 0
0 CfC Stanbic 0 0 10 0 0 0 10 0
7/8/1982 Diamond Trust 10 4.5 15 0 10 4.5 15 0
2005 I&M Bank 0.9 0 0 0 0.9 0 0 0
0 IPS(K)-Allpack 0 0.4 0 0 0 0.4 0 0
0 IPS(K)-Frigoken 0 0.1 0 0 0 0.1 0 0
0 IPS(K)-prem food 0 0.1 0 0 0 0.1 0 0
1996/99/09 K-Rep Bank 0 3.9 0 0 0 1.5 0 0
2006 Kingdom Hotel 20 0 0 0 0 0 0 0
2005 Kongoni 1.1 0 0 0 1.1 0 0 0
0 Mabati 5 0 0 0 0 0 0 0
2005 Magadi Soda Co. 0 0 0 0 0 0 0 0
2007 RVR 22 0 10 0 0 0 10 0
2009 Tel 7 0 0 0 0 0 0 0
1972 TPS EA Ltd. 0 0 2.2 0 0 0 2.2 0
2000/07 Tsavo Power Co. 4.1 0.8 0.4 6.4 4.1 0.8 0.4 6.4
Total
Portfolio
77.13 15.26 37.59 6.42 17.13 10.94 37.59 6.42
164
Annex 16: Kenya at a Glance
165
166
Annex 17: Governance
Background
1. A well-designed and implemented good governance plan addressing corruption and fraud is
essential to reach the development objective of the KCDP. The governance enhancement activities in
the KCDP are therefore meant to identify corruption risks and suggest mitigation measures beyond the
Bank‟s standard control systems. The Bank and the PCU/NPSC will review annually the actions
described below and modify them as necessary.
2. The risk of funds “leakage”, misappropriation and misuse are “high”. This is due to inadequate
financial management expertise at the district level; the highly centralized system of government in
Kenya where local accountability to an electorate is not strong; the implementing agencies‟
unfamiliarity with Bank processes and procedures (due to the low level of donor and government
investment in the Coast Province); and the lack of effective enforcement of procurement and financial
management processes.
3. The KCDP will be subjected to standard Bank supervision, but there are three major
aspects of the project that require specific “governance controls and feedback” to minimize the
high risk of misuse of funds. The three areas are: i) the operation of the Community Village Fund
under Component 3; ii) co-management of terrestrial and aquatic resources supported under
Components 1 and 2 (with particular focus on development and implementation of a transparent
licensing process of commercial foreign fishing vessels and for sharing of revenue from entrance and
concession fees and other levees related to use of managed and protected areas); and iii) fiduciary and
procurement management. The KCDP‟s enhanced governance program relies on additional formal
supervision of monitoring and evaluation and audit controls. It also relies on an independent program
that targets improved transparency over project activities allowing local stakeholders increased direct
input into project performance evaluation.
4. In establishing anti–corruption measures, lessons are drawn from World Bank Projects that have
experienced similar challenges Anti-corruption measures must have various stakeholders and place
communities at their center so that they can report on misuse of funds as well as the impact the resources
are having on the targeted areas of interventions. Two key areas are critical to this plan.
Mitigation Measures
5. Generally, the Project implementation will follow the Guidelines on Preventing and Combating
Fraud and Corruption in Projects Financed by IBRD Loans and IDA Grants dated October 15, 2006 (the
Anti-Corruption Guidelines). The following list summarizes the specific mitigation measures presented
in this document.
167
Significant
Weaknesses/Risk
Action/Risk Mitigation Measure Responsible
Person
Completion
Date
Poor accountability in
project management
and use of resources
Enhancing social accountability will entail
the following actions:-
Participation and empowerment of coastal stakeholders through information disclosure
on all aspects of the project. Some of the
disclosure features will be:
i) Posting of information in public
places, in particular, Provincial and
District Headquarters, Locations and
sub-locations.
ii) Creation of a project website on
which to publish information on funds
disbursed for various components and
their intended use. This website will
also facilitate feedback not only on funds
use but also on resources‟ impact.
University and research institutions will
be encouraged to provide feedback. As
such, information on how to access the
website will be posted in Universities
and local research institutions.
Iii9 The local media will also have
access to information on quarterly basis
for publication in the daily press.
iv) Local CSOs will participate in
carrying out a yearly social Audit. The
ensuing Report will be shared with the
Bank and the Permanent Secretaries.
v) A Citizen Report Card will be
prepared before the Project Midterm
Review. CADC to facilitate this.
Implementing
agencies and PCU
Complaint handling
mechanisms Complaints handling through the CADC. The CADC will host a toll-free line where
stakeholders can report matters they feel will
affect project performance. During the
Project launch and throughout the life of the
Project, stakeholders will receive guidance
on what kind of issues on which to report to
cover areas that will add value to the project
development objective.
168
Significant
Weaknesses/Risk
Action/Risk Mitigation Measure Responsible
Person
Completion
Date
Integrity enhancement
among Project staff
In collaboration with the Kenya Anti
Corruption Council (KACC), the Project will
provide staff with skills on corruption
prevention, corruption red flags and
corruption reporting. At least one integrity
workshop will be held per year.
PCU/
Implementing
agencies at all
levels
Specific sanctioning of
an institution
Wrongdoing in the Project implementation
unit will be made public and disbursement of
resources stopped in that particular
institution. The Project will be proactive in
supporting public debate on areas that
undermine project implementation. This will
be done through local media.
PCU
FINANCIAL RISKS AND ACTIONS
Significant
Weaknesses/Risk
Action/Risk Mitigation Measure Responsible
Person
Completion
Date
The several
implementing
agencies under
KMFRI pose an
accountability
challenge because of
inadequate capacity in
this area.
Poor accountability of
funds expenditure
leading to increase
possibilities of misuse
Implementation
delegation between
Min. Fisheries and
implementing partners
not clear
Hiring a FM and procurement consultant
for two years will enhance capacity at the
PCU level.
KMFRI will, not later than February
15, 2011, computerize its accounting
functions.
Setting low ceilings for the maximum
amount of money that subsidiary project
accounts and in the Regional
Development Authorities can hold (US$
100,000 max).
The Subsidiary agreement signed between
MoFD and Core Ministries should clearly
spell out duties and responsibilities and
the role of the PCU
PCU
KMFRI
ALL
Ministry of
Fisheries
Development
Within three
months of
Effectiveness
(through
MIP)
Effectiveness
Management of staff
imprests
No individual will be allowed to carry
imprest on behalf of groups, unless
PCU and ALL
169
specific exceptions have been requested
and approved by the PC – The Financial
and Procurement Section of the PIM
should contain direction.
No imprest can be taken to hire training
facilities for. This payment is made
directly from the Account holders in the
project.
Imprest to individual staff will be sent
directly to their accounts to avoid huge
cash handling and collusion.
Capacity building
workshops and
seminars
Training calendars are to be prepared in
advance and approved as part of the
Procurement Plan.
Payments for training are to be made
directly to the Training institutions and
participants booked full board without per
diem, unless specific exceptions have
been requested and approved by the PC.
Training activities are to be audited at
least once a year.
PIM to contain guidance on the above
PCU and ALL
Nepotism In order to tackle nepotism, there will be
no hiring of relatives using KCDP.
Persons violating this rule are subject to
dismissal. Any contracted staff will be
required to sign a disclosure form. Their
contract will contain this clause.
Fuel and fleet
management
Management should include monitoring
the cost of repairs per vehicle. A
mechanism to receive monthly returns for
vehicle management from all areas where
vehicles are stationed will be put in place
and described in the PIM.
170
PROCUREMENT RISKS AND ACTIONS
Risk Action Timeframe Responsibility
Inadequate
procurement capacity
at KWS, KEFRI, CDA
and MoF
CDA will set up a Project coordination
Unit staffed with a qualified procurement
officer conversant with Bank‟s
procurement procedures.
KWS and KEFRI will second to the
Project a senior procurement officer
conversant with Bank‟s procurement
procedures.
The Ministry of Finance (MoF) will
second a senior procurement officer to
the project conversant with Bank‟s
procurement procedures.
Development and follow up of a plan on
formal training program for all
procurement staff.
Conducting of procurement
clinics/training on Bank‟s procurement
procedures.
Before credit
effectiveness
Recipient /
IDA
Review threshold Prior review required for three additional
goods, works and consultants‟ contracts,
each of which are below the prior review
threshold, at random, each year of project
implementation.
During
implementation
of the Project.
IDA
Procurement planning Each Agency should develop and
regularly update a project-specific
Procurement Plan. KMFRI should
consolidate the Plan.
During
implementation
of the Project
Recipient
Procurement audit The Public Procurement Authority
(PPOA) will conduct procurement audits
for sub-projects in addition to Bank‟s
PPRs,
During
implementation
of the Project
Recipient
Inadequate record
keeping and filing
system
Creation of a procurement filing system
on a contract–by-contract basis.
During
implementation
of the Project
Recipient
Procurement oversight Establishment of all the relevant
procurement oversight committees in
accordance with the provisions of the law.
During
implementation
of the Project
implementation.
Recipient
Office space Providing adequate office and storage
space, equipment and access to internet
facilities.
During
implementation
of the Project.
Recipient
171
Other Mitigation Measures
6. Successful implementation of the CVF will be a two-part process that improves transparency
and accountability on disbursement of these funds. The KCDP Components 1 (fisheries), 2 (natural
resources and protected areas management), and 3 (leveraging private sector investment under CDA)
will work with their village counterparts to help them identify appropriate micro-projects in sectors
relevant to the objectives of the KCDP for funding under the CVF. Once micro-projects have been
approved, ARLMP will disburse relevant funds to communities and livelihood groups. ARLMP will
also provide training on and monitoring of implementation progress. The overall process is as follows:
1) KCDP identifies micro-projects; 2) micro-projects receive approval through the DSG process, as
developed by Arid Lands and adapted by KCDP to include its stakeholders; 3) micro-projects are
packaged into KCDP annual work plans approved by the KCDP Policy and Steering Committee; 4)
“quarterly-in-advance” funds are disbursed to the ARLMP to support approved micro-projects.
7. KCDP funds disbursed to Arid Lands through the Project Coordination Unit are to be the
subject of two separate audit s- one for the Arid Lands Project itself (cash receivable and linked
disbursements for micro-projects) and one related to the annual audit of the KCD (disbursement and
accountability through micro-project completion reports). The ARLMP will issue micro-project
completion reports to the KCDP PCU to justify fund expenditures, and it will justify, through its
financial records, funds received from the KCDP and then disbursed to community and livelihood
groups. Audits will check whether the completion reports on file in the KCDP PCU files correspond to
approved micro-projects that have received a specific allocation for a particular activity. The ARLMP
audit will verify if and to whom funds have been disbursed. The PCU will undertake periodic,
unannounced SOE checks of Arid Lands in association with the semi-annual supervision missions of the
Bank.
8. Other actions to manage governance risk in the CVF include:
Publicity. Publicity is necessary to inform community members and potential providers of
goods, works and services about project development and activities, and to enhance transparency
and competition in procurement processes. Publicity may take the form of information
campaigns notices or billboards placed in appropriate locations (e.g., local newspapers, village
councils), and community meetings, or any other form that the communities may so decide.
Peer Control. The beneficiaries‟ representatives (and the beneficiaries themselves) participate
directly and closely in the management of the funds allocated to the community sub-project(s).
This would provide a unique assurance that these funds will serve useful purposes and would
render the internal control system procedures as transparent as possible.
Community Involvement. Successful internal control requires that beneficiaries and other
stakeholders be kept well informed at all times and at all levels of their entitlements, rights,
obligations, and the Project‟s costs and benefits. This information should be provided in a
manner understandable to all interested parties. Where any of the beneficiaries are illiterate, it
may even have to be presented in pictures or other appropriate media. It is also good practice that
summaries of local project expenditures and procurement information be posted in a public place
(for example, outside of a village hall or meeting place), since this literally places the
information in the public domain.
172
Post Procurement Audit. A simple, inexpensive internal post procurement audit of community
sub-projects will be designed to confirm that funds have been spent on the intended purpose and
that the community has received value for money as a valuable addition to the quality and
internal control framework. An independent procurement agent will conduct this post
procurement audit, which will also link to the overall monitoring and evaluation of the
community sub-projects.
Community Record-Keeping. The community will maintain records for all procurement
transactions in a simple hand-written and/or printed record of procurement transactions, receipts
and payments. Local language may be used where appropriate and if circumstances so dictate.
Implementation Team Review. The sub-projects implementation team will regularly (for
instance, monthly or quarterly) review sub-projects‟ progress and budget, to monitor and adjust
them as necessary. During the review, the team will be required to make a public statement of
progress, including a public reading of a simple statement of accounts, status of procurement
activities and clarifications of any issues that may be raised.
Clear Sanctions and Remedies
9. It is essential that the Project Implementation Manual contain clear sanctions and remedies. The
principles upon which these are based include:
Any individual can be prosecuted if relevant, material and sufficient evidence is available and
Bank disbursement under KCDP will be dependent on action being taken in case proven misuse.
In all procurement contracts, evidence of corruption, collusion or fraud will result in termination
of the relevant contract, possibly with additional penalties imposed (such as fines, blacklisting
(including Government blacklisting in Hansard Records, etc.) in accordance with Bank
requirements and government laws and regulations.
Disbursement to any given location or project account can be frozen or stopped completely if
cases of abuse are not dealt with effectively. Furthermore, anyone hired under the program
including contractors and facilitators, will instantly dismissed if proven guilty of corruption,
collusion or fraud.
Program implementation activities and their implementation order will be phased and outcome-oriented
rather than driven solely by a set of implementation time schedules. Staff seconded into project
management roles under the KCDP will have their performance contracts address good governance
requirements and annual performance reviews will include this aspect.
173
Annex 18: Maps
Yat ta P lateau
Ndoto M
tns.
Lot ik ipi P lain
Mau Escarpment
Cherangany Hi l l s
ChalbiChalbiDeser tDeser t
Ngangerabel i P lain
Bi lesha P lain
Daniss
a Hi l l
s
Mt. KenyaMt. Kenya(5,199 m)(5,199 m)
E A S T E R NE A S T E R N
R I F T VA L L E YR I F T VA L L E Y
C O A S TC O A S T
N O R T HN O R T HE A S T E R NE A S T E R N
N YA N Z AN YA N Z AKarunguKarungu
LodwarLodwar
LokicharLokichar
KangatetKangatet
KitaleKitale
EldoretEldoret
ButereButere NyahururuNyahururuFallsFalls
KerichoKericho
NarokNarokLolgorienLolgorien
MagadiMagadi
NamangaNamanga
KonzaKonzaMachakosMachakos
KibweziKibwezi
VolVol
TsavoTsavo
KwaleKwale
GarsenGarsen
BodheiBodhei
KolbioKolbioBuraBura
NguniNguni
IkuthaIkutha
KituiKitui
MackinnonMackinnonParkPark
LokichokioLokichokio
KarunguKarungu
KakumaKakuma
EmbuEmbu
NanyukiNanyuki
ThikaThika
GilgilGilgil
MbalambalaMbalambala
Garba Garba TulaTula
MandoMandoGashiGashi
WajirWajir
El WakEl Wak
TarbajTarbaj
RamuRamu
BunaBuna
MoyaleMoyaleSololoSololo
MarsabitMarsabit
North HorrNorth Horr
South HorrSouth Horr
MaralalMaralalKapedoKapedo
MarigatMarigat
Archer’sArcher’sPostPost
IsioloIsiolo
ManderaMandera
KisumuKisumuNakuruNakuru
GarissaGarissaNyeriNyeri
KakamegaKakamega
NAIROBINAIROBI
CENTRALCENTRAL
WESTERNWESTERN
NAIROBINAIROBIAREAAREA
Karungu
Lodwar
Lokichar
Kangatet
Kitale
Eldoret
Butere NyahururuFalls
Kericho
NarokLolgorien
Magadi
Namanga
KonzaMachakos
Kibwezi
Vol
Tsavo
Kwale
Shimoni
Malindi
Garsen Lamu
Bodhei
KolbioBura
Nguni
Ikutha
Kitui
MackinnonPark
Lokichokio
Karungu
Kakuma
Embu
Nanyuki
Thika
Gilgil
Mbalambala
Garba Tula
MandoGashi
Wajir
El Wak
Tarbaj
Ramu
Buna
MoyaleSololo
Marsabit
North Horr
South Horr
MaralalKapedo
Marigat
Archer’sPost
Isiolo
Mandera
KisumuNakuru
Garissa
Mombasa
Nyeri
Kakamega
NAIROBI
CENTRALNAIROBI
AREA
E A S T E R N
R I F T VA L L E Y
C O A S T
N O R T HE A S T E R N
N YA N Z A
WESTERN
E T H I O P I A
SOMALIA
TANZANIA
UGANDA
SUDAN
Ng’iro M
ilgis
Suam
Turk
wel
Tana
Mara
Galana
Athi
Ewaso
Thua
Tsavo
Loga Bogal
Lak Dera
Lak Bor
INDIANOCEAN
Lake
Victor ia
LakeTurkana
To Murle
To Juba
To Dila
To Imi
To Kismaayo
To Bur Gavo
To Dar Es Salaam
To Moshi
To Arusha
To Seronera
To Musoma
To Kampala
To Mbale
Yat ta P lateau
Ndoto M
tns.
Lot ik ipi P lain
Mau Escarpment
Cherangany Hi l l s
ChalbiDeser t
Ngangerabel i P lain
Bi lesha P lain
Daniss
a Hi l l
s
Mt. Kenya(5,199 m)
34°E 36°E 38°E 40°E 42°E
34°E 36°E 38°E 40°E
2°S
0°
2°N
4°N
4°S
2°S
0°
2°N
4°N
KENYA
0 40 80 160120
0 40 80 120 Miles
200 Kilometers
IBRD 33426R
MARCH 2008
KENYASELECTED CITIES AND TOWNS
PROVINCE CAPITALS
NATIONAL CAPITAL
RIVERS
MAIN ROADS
RAILROADS
PROVINCE BOUNDARIES
INTERNATIONAL BOUNDARIES
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endo r s emen t o r a c c e p t a n c e o f s u c h boundaries.
