AFRICAN DEVELOPMENT FUND

Language: English Original: English

THE REPUBLIC OF KENYA

KIMIRA-OLUCH SMALLHOLDER FARM IMPROVEMENT PROJECT

APPRAISAL REPORT AGRICULTURE AND RURAL DEVELOPMENT DEPARTMENT NORTH, EAST AND SOUTH

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February 2006

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PROJECT INFORMATION SHEET Date: January 2006

The information given hereunder is intended to provide some guidance to prospective suppliers, contractors, consultants and all persons interested in the procurement of goods and services for projects approved by the Board of Directors of the Bank Group. More detailed information and guidance should be obtained from the executing agency of the Recipient.

1. COUNTRY : The Republic of Kenya

2. PROJECT TITLE : Kimira-Oluch Smallholder Farm Improvement Project

3. LOCATION : Western Kenya in Rachuonyo and Homa Bay Districts of Nyanza Province

4. THE BORROWER : Republic of Kenya

5. EXECUTING AGENCY : Ministry of Regional Development

6. PROJECT DESCRIPTION: The project comprises three components: (i) Irrigation System Development and Management; with two sub-components, Formation of Water Users Associations (IWUA). Irrigation infrastructure development, Environmental mitigation and supervision of scheme construction (ii) Marketing and Extension, with three sub-components, support to farmers, support to extension workers and development of market linkages and (iii) Project Coordination and Management. The capacity building of local service providers will ensure sustainable support to farmers. The project will be implemented over 6 years with the first irrigated blocks coming on stream in year 3 and the bulk of the construction work being finished by year 5.

7. TOTAL COST : UA 27.77 million Foreign Cost : UA 16.84 million

Local Cost : UA 10.93 million 8. BANK GROUP LOAN/GRANT ADF : UA 22.98 million Grant : UA 1.15 million 9. OTHER SOURCES OF FINANCE Government of Kenya : UA 3.15 million Beneficiaries : UA 0.49 million 10. DATE OF APPROVAL : To be determined

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11. ESTIMATED STARTING DATE AND DURATION : September, 2006, for 6 years 12. PROCUREMENT OF

GOODS ANDS WORKS : Goods and works will be procured according to Bank Rules of Procedures: International Competitive Bidding (ICB) for main irrigation infrastructure, National Competitive Bidding (NCB) for motor-vehicles and motorcycles, minor civil works, borehole drilling & rehabilitation, construction of IWUA storage sheds, and mosquito bed nettings, Community Participation in Procurement for miscellaneous items, which include compensation cost and National shopping for Office equipment, furniture, agricultural inputs including agricultural chemicals.

13. CONSULTANCY

SERVICES REQUIRED: Selection of long and short-term consultants (Technical Assistance - TA) will be through short-list. International TA:

Civil Engineer (60 pm). Legal adviser for IWUA (3.5 pm), Community mobilization expert (6 pm); Quantity surveyor (54 pm); Site inspectors (108 pm); Extension & Training experts (6 pm); and Marketing expert (30 pm). National TA: Project Manager (72 pm); Project Accountant (72 pm); Project Procurement Specialist (72 pm); and Project Monitoring and Evaluation Expert (72 pm).

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TABLE OF CONTENTS

Page No Project Information Sheet ii Table of Contents iv Weights, Measures and Currency vi Abbreviations and Acronyms vii Executive Summary ix Logical Framework Matrix xiii 1 INTRODUCTION ............................................................................................................................................ 1

1.1 ORIGIN AND HISTORY OF THE PROJECT..................................................................................................... 1 2 THE AGRICULTURE SECTOR................................................................................................................... 2

2.1 STRUCTURE AND PERFORMANCE .............................................................................................................. 2 2.2 LAND TENURE AND LAND USE.................................................................................................................. 3 2.3 SECTOR DEVELOPMENT CONSTRAINTS, POLICIES AND STRATEGIES........................................................ 4 2.4 MARKETING AND EXTENSION ................................................................................................................... 5 2.5 INSTITUTIONS ACTIVE IN MARKETING AND EXTENSION ........................................................................... 6

3 THE IRRIGATION SUB-SECTOR............................................................................................................... 7 3.1 OVERVIEW ................................................................................................................................................. 7 3.2 POVERTY, HEALTH ISSUES AND GENDER.................................................................................................. 7 3.3 INSTITUTIONAL FRAMEWORK.................................................................................................................... 8 3.4 IRRIGATION DEVELOPMENT CONSTRAINTS, POLICIES AND STRATEGIES ............................................... 10 3.5 LESSONS LEARNT AND REFLECTED IN PROJECT DESIGN ........................................................................ 11

4 THE PROJECT .............................................................................................................................................. 12 4.1 PROJECT CONCEPT AND RATIONALE....................................................................................................... 12 4.2 PROJECT AREA AND BENEFICIARIES ....................................................................................................... 13 4.3 STRATEGIC CONTEXT .............................................................................................................................. 14 4.4 PROJECT OBJECTIVES .............................................................................................................................. 15 4.5 DETAILED DESCRIPTION OF PROJECT COMPONENTS AND ACTIVITIES ................................................... 15 4.6 PRODUCTION, MARKETS AND PRICES ..................................................................................................... 20 4.7 ENVIRONMENTAL IMPACTS ..................................................................................................................... 20 4.8 ENVIRONMENTAL MITIGATION ............................................................................................................... 21 4.9 PROJECT COSTS ....................................................................................................................................... 23 4.10 SOURCES OF FINANCING.......................................................................................................................... 24

5 PROJECT IMPLEMENTATION................................................................................................................ 24 5.1 EXECUTING AGENCY ............................................................................................................................... 24 5.2 INSTITUTIONAL ARRANGEMENTS............................................................................................................ 24 5.3 SUPERVISION, IMPLEMENTATION AND EXPENDITURE SCHEDULES......................................................... 25 5.4 PROCUREMENT ARRANGEMENTS ............................................................................................................ 26 5.5 DISBURSEMENT ARRANGEMENTS ........................................................................................................... 28 5.6 MONITORING AND EVALUATION ............................................................................................................. 28 5.7 FINANCIAL REPORTING AND AUDITING .................................................................................................. 29 5.8 AID CO-ORDINATION ............................................................................................................................... 30

6 PROJECT SUSTAINABILITY AND RISKS............................................................................................. 30 6.1 RECURRENT COSTS.................................................................................................................................. 30 6.2 PROJECT SUSTAINABILITY....................................................................................................................... 31 6.3 CRITICAL RISKS AND MITIGATION MEASURES ....................................................................................... 31

7 PROJECT BENEFITS................................................................................................................................... 32 7.1 FINANCIAL ANALYSIS.............................................................................................................................. 32 7.2 ECONOMIC ANALYSIS.............................................................................................................................. 33

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7.3 SENSITIVITY ANALYSIS ........................................................................................................................... 33 7.4 SOCIAL IMPACT ANALYSIS ...................................................................................................................... 33

8 CONCLUSIONS AND RECOMMENDATIONS....................................................................................... 35 8.1 CONCLUSIONS.......................................................................................................................................... 35 8.2 RECOMMENDATIONS ............................................................................................................................... 35

Tables Table 4.1 Summary of Cost Estimates by Component 23 Table 4.2 Summary of Cost Estimates by Category of Expenditure 23 Table 4.3 Sources of Finance 24 Table 5.1 Expenditure Schedule by Components 26 Table 5.2 Expenditure Schedule by Source of Finance 26 Table 5.3 Procurement Arrangements 27 Annexes Annex 1. Map of Kenya showing the Project Area 1 Page Annex 2. Project Organizational Chart 1 Page Annex 3a. Provisional List of Goods and Services 1 Page Annex 3b. Major Civil Works Procurement Packages (Contracts) 1 Page Annex 3c. ADF and GoK Financing of Recurrent Costs 1 Page Annex 4a. Project Implementation Schedule 1 Page Annex 4b. Supervision Schedule during Implementation 1 Page Annex 4c. Civil Works Construction Tentative Schedule 1 Page Annex 5a. Assumptions used for Project Costing Analysis 2 Pages Annex 5b. Logical Framework Matrix (Grant Component) 3 Pages Annex 5c. Net farm income 1 Page Annex 6. Highlights of Project Preparation and Review Process 2 Pages Annex 7. Kenya: Status of Agriculture Sector Audit Reports and Project Completion Reports 1 Page Annex 8. Bank Group Operations in Kenya 1 Page Project Information Documents (PIDs) Working Paper 1: Project Detailed Cost Tables Working Paper 2: Water Resources and Summary of Scheme Design Outputs Working Paper 3: TA Terms of Reference

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WEIGHTS AND MEASURES

1 hectare = 10,000 m² 1 hectare = 2.47 acres 1 kilogramme = 2.2046 pounds 1 kilometre = 0.624 miles 1 metric tonne = 1,000 kg 1 metric tonne = 2,240 pounds

CURRENCY EQUIVALENTS (October, 2005)

UA 1 = Kshs 113.337 UA 1 = US$ 1.456

FISCAL YEAR July – June

This Appraisal Report was prepared by Hamadi Amadou Lam, Agronomist (Mission Leader); Grace Kyokunda, Agricultural Economist; Loretta Foran, Financial Analyst; Louis-Philippe Mousseau, Environmentalist; Consultant Farming Systems and Group Formation; and Consultant Irrigation Engineer following their mission to Kenya in October 2005. The report was peer reviewed by Lawal Umar, Livestock Specialist and Walter Odhiambo, Agricultural Economist. Further information on this report can be obtained from Mr. A. Beileh, Manager, ONAR.1 (Ext 2139).

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ABBREVIATIONS AND ACRONYMS ADB / AfDB African Development Bank ADF African Development Fund BMP Best Management Practices CPP Community Participation in Procurement CSP Country Strategy Paper DANIDA Danish International Development Agency DAO District Agriculture Officer DDO District Development Officer DIO District Irrigation Officer EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return EMCA Environmental Management and Coordination Act ERSWEC Economic Recovery Strategy for Wealth and Employment Creation ESA Environmental Sensitive Areas ESAP Environmental and Social Assessment Procedures ESIA Environmental and Social Impact Assessment EU European Union EURGAP European Good Agricultural Practices FA Force Account FAO Food and Agriculture Organisation of the UN FIRR Financial Internal Rate of Return FY Financial Year GDP Gross Domestic Product GoK Government of Kenya GPN General Procurement Notice ha Hectare(s) ICB International Competitive Bidding IDB Irrigation and Drainage Branch IDC Italian Development Cooperation IDRP Irrigation and Drainage Research Project IFAD International Fund for Agricultural Development IRR Internal Rate of Return (refer to FIRR) IS International Shopping IWUA Irrigation Water User Association (ex-WUA) JICA Japan International Co-operation Agency KARI Kenya Agricultural Research Institute KfW Kreditanstalt für Wiederaufbau (German Development Bank) kg kilogram km Kilometre(s) km2 square kilometre(s) KOSFIP Kimira-Oluch Smallholder Farm Improvement Project KRDS Kenya Rural Development Strategy Kshs Kenya Shillings (Local Currency) l/s litres per second (discharge) LA Local Account LBDA Lake Basin Development Authority LS Local Shopping M&E Monitoring & Evaluation MDG Millennium Development Goals mt Metric tonnes m.a.s.l meters above the sea level m/s metres per second (velocity) m³/s. cubic metres per second (discharge)

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Abbreviations and Acronyms (Cont’d)

MoARD Ministry of Agriculture & Rural Development MoC&M Ministry of Cooperative and Marketing MoLD&F Ministry of Livestock Development and Fisheries MoR&PW Ministry of Roads and Public Works MoW Ministry of Water MRDA Ministry of Regional Development Authorities MTR Mid-term Review NBI Nile Basin Initiative NCB National Competitive Bidding NEMA National Environment Management Authority NEPAD New Partnership for Africa’s Development NGO Non-Governmental Organisation NIB National Irrigation Board NS National Shopping NWMP National Water Master Plan O&M Operation and Maintenance PA Project Accountant PMCT Project Management and Coordination Team PCR Project Completion Report PIC Public Information Centre PIE Provincial Irrigation Engineer PIU Provincial Irrigation Unit PRSP Poverty Reduction Strategy Paper PSC Project Steering Committee PY Project Year QFPR Quarterly Financial Progress Reports QPR Quarterly Progress Report RDA Regional Development Authority RMC Regional Member Countries SA Special Account SISDO Smallholder Irrigation Scheme Development Organization SL Short List SRA Strategy for Revitalising Agriculture STD Sexually Transmitted Diseases t/ha tonne(s) per hectare TA Technical Assistance TOR Terms of Reference UN United Nations USAID United States Agency for International Development WB-OED World Bank – Operation Evaluation Department WMS Welfare Monitoring Survey WRMA Water Resources Management Authority WRUA Water Resources Users Associations WSRB Water Services Regulatory Boards WUA Water User Association (see IWUA) UA Unit of Account (ADB) UN United Nations USD/US$ United States Dollars

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EXECUTIVE SUMMARY

1. Introduction

1.1 Agriculture, comprising of crop production, livestock, fisheries and cooperatives, is the key productive sector in Kenya contributing 26% of the national GDP. It is estimated that up to 80% of the population is directly involved in and dependent on agriculture for their livelihoods. The sector provides 62% of formal employment, 60% of exports and 45% of government revenue. It has a large growth multiplier effect for the non-agricultural sector. Kenya ranks among the poorest countries in the world and has the third most skewed distribution of income amongst low-income economies. About 56% of the Kenyan people live below poverty of which 80% of them are in the rural areas. Meeting the millennium development goal of halving poverty by 2015 implies that programmes must be put in place to ensure sustainable and broad-based growth in the agricultural sector as part of the poverty reduction strategies. Improved productivity and competitiveness of agriculture is essential for generating higher economic growth, increasing employment and poverty reduction in Kenya. 1.2 The Government of Kenya (GOK) underscored the importance of agriculture in its Economic Recovery Strategy for Wealth and Employment Creation (ERSWEC) of 2003. Growth is the raison d’être of the Strategy for Revitalizing Agriculture (SRA) for the period 2004-2014. The SRA articulates the need for a paradigm shift for the sector. The overall objectives of the SRA are to raise household incomes, create employment and ensure food and nutrition security. 2. Project Background 2.1 According to the Poverty Mapping exercise of 2003/2004, Nyanza Province in western Kenya had the highest poverty incidence in the country. The province is densely populated, has unreliable rainfall and experiences frequent crop failures. Agriculture is the mainstay of the population. Thus interventions in agriculture that seek to increase household income have been identified as the number one priority in this area. Increasing irrigated agricultural-based incomes in such an environment, will ensure a secured production of staple and high value crops with better returns to farmers. 2.2 Between 2001 and 2002, studies were carried out in Nyanza Province which identified high potential for irrigation based on rivers Kiboun and Tende. From 2003 to 2004, the Bank funded detailed Preparation Studies, which indicated that the best option was to develop two gravity fed irrigation systems. Scheme designs were done in a participatory manner and the final design reflect farmer preferences which do not involve land redistribution or changes of land ownership. The block layout was according to the social clan criterion while the alignment of works was done to avoid major disruptions to farmer’s homesteads. The project’s main output will be the development of two irrigation schemes, for the production of staple and high value crops through gravity flow, provision of extension service and market services as well as establishment of farmer organisations that will own and manage the irrigation schemes. The project is in conformity with the government’s major policy reform as stipulated in the SRA, which is to promote market-based approaches to developing a competitive smallholder agricultural sector. The project will utilise affordable and easily sustainable irrigation techniques, as opposed to the capital-intensive ones common in government managed schemes. It is in this context that GOK in June 2004 requested the Bank to support the development of a farm improvement project whose core activity shall be the development of two gravity fed irrigation systems. The scheme would be owned and managed by farmers. In order to benefit from high value crops, market linkages will be established to enable farmers. This Appraisal Report was prepared following a Bank mission to Kenya in October 2005 to look into the feasibility of the Kimira-Oluch Smallholder Farm Improvement Project. The appraisal mission was preceded by a stakeholders’ workshop. The stakeholders validated and endorsed the proposed project activities and implementation modality.

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2.3 The proposed Kimira-Oluch Smallholder Farm Improvement Project supports Kenya’s current development strategy that focuses on growth and poverty reduction articulated in the ERSWC. The project is also in line with the Strategy for Revitalisation of Agriculture (SRA) which proposes various policy reforms including the development of irrigation and market access as a means of improving food security and income. The proposed project is anchored on Pillar II of the Bank Group’s Country Strategy Paper (2005-2007) for Kenya, which seeks to reduce vulnerability and improve equity through the improvement of agricultural productivity and competitiveness. It is in line with the Bank’s vision of supporting technological, institutional and policy changes as well as transforming rural economies in RMCs and empowering rural populations to improve their productivity and real incomes in an equitable and environmentally sustainable manner. The choice of the irrigation intervention is in line with the ADF X strategy of selectivity to boost production and productivity, food security and poverty reduction in RMCs. The Project will also contribute to the achievement of core MDG objectives of poverty alleviation and sustainable development and the comprehensive agriculture mandate of the NEPAD initiative. The project builds on the experiences gained from the various Bank financed projects in Kenya. 3. PURPOSE OF THE LOAN AND GRANT An ADF Loan amounting to UA 22.98 million representing 82.75% of the total Project costs will be used to finance 99.30% of foreign exchange and 57% of the local cost (UA 10.93 million). The ADF Grant of approximately UA 1.15 million representing 4.14% of the total project cost will finance about 4.30% of the costs covering environmental mitigation measures, monitoring activities and social infrastructures. 4. SECTOR GOAL AND PROJECT OBJECTIVES The sector goal is to enhance sustainable income levels for the rural households and thus help in alleviating poverty. It is also to improve agricultural production and productivity and the value of produce for poverty reduction and improve rural livelihoods in Kenya. The objectives are to develop sustainable and environmentally friendly smallholder irrigation schemes in the Kimira and Oluch sites and to increase household income and food security through irrigated smallholder agriculture. 5. BRIEF DESCRIPTION OF PROJECT OUTPUTS To achieve its objectives, the project will focus on the following activities: a) Irrigation Scheme Development and Management; b) Marketing and Extension; and c) Project Coordination. i) Irrigation Scheme Development and Management: Comprising two sub-components: a) Irrigation scheme development and management and b) Formation of Water Users Association. This component will involve the development of two irrigation schemes with associated drainages, road networks, civil and hydraulic structures. About 97 blocks covering about 1,474 ha of irrigated land will be developed. A total of about 88 km of feeder roads will be constructed. A total of 97 smallholder irrigation associations will be established and later combined to form two Irrigation Water Users Associations (IWUA), which will be trained to efficiently manage the schemes. ii) Marketing and Extension: Comprising three sub-components: a) Support to farmers including training farmers in entrepreneurial skills, good crop husbandry practices, quality control and irrigation system management. This will involve some 3000 households directly, and another 400,000 indirectly using the farmers field school approach; b) Support to extension workers where up to 120 extension staff (of which 40% will be women) will be trained based on the training needs assessment report; and c) Market linkages to enhance and incorporate small scale producers into local, regional and global supply chains through innovative technical interventions in the field as well as market analysis In addition, linkages with commercial buyers, training through partnerships with buyers using service

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providers with various skills. Provision has been made to ensure that farmers become aware of quality control standards requirements and timing of production to attain peak market prices. iii) Project Coordination and Management: The project will be implemented within the existing institutional framework at ministerial and district levels. To this effect, an overall Focal Point will be designated at the Executing Agency to act as a liaison officer. At the field level where actual project implementation will take place, a team of experts will be recruited to augment the capacity of the District administration. The team will comprise of a Project Manager, an Accountant, an Agronomist, a Rural Sociologist/Gender Specialist, a Monitoring and Evaluation Specialist, a Procurement Specialist, 3 Irrigation Engineers. The District Administration will work closely with the IWUA which will be involved in the day-to-day activities of the project. This is to ensure continuity and sustainability. 6. PROJECT COSTS The Project cost is estimated at UA 27.77 million of which UA 16.84 million (60.60%) will be in foreign exchange and UA 10.93 million (39.40 %) will be local currency. 7. SOURCE OF FINANCE The ADF, GoK and the beneficiaries will jointly fund the project. The ADF Loan amounting to UA 22.98 million (82.75% of total Project cost) will be utilized to finance the construction of irrigation schemes and its development, formation of Water Users Associations, marketing and extension support, support project management and cover 31.20% of the recurrent costs. An ADF Grant of UA 1.15 million (4.14%) will fund the costs of environmental mitigation, and monitoring and health and social infrastructure to reduce the incidence of water-borne diseases. GoK will contribute UA 3.15 million (11.34%) to cover the cost of acquiring an environmental license, water permit and part of recurrent costs, mainly salaries for Government staff. The beneficiaries will contribute approximately UA 0.49 million (1.76%) through provision of labour during construction period and as opportunity cost for forfeiting their land in the project. 8. PROJECT IMPLEMENTATION The Project will be implemented over a period of 6 years, starting from September 2006. The Executing Agency will be the Ministry of Regional Development Authorities (MRDA). A Focal Point will be appointed within the Executing Agency to act as a liaison between the Ministry and the project implementation team at the district Level. A team of experts headed by a Project Manager in consultation with the District Administration will manage the day-to-day activities of the Project. The team will in addition be in close consultation with the existing technical departments of the Ministries of Agriculture, Water, Cooperatives and Marketing, Livestock Development and Fisheries, Roads and Public Works and other key institutions including the Kenya Agricultural Research Institute (KARI) and the National Environmental Management Agency (NEMA). The Project Management will report to the Permanent Secretary, (MRDA) through the Focal Point. A Project Steering Committee (PSC) chaired by the Permanent Secretary of the Ministry of Regional Development Authorities will provide overall direction. 9. CONCLUSIONS AND RECOMMENDATIONS 9.1 Conclusions 9.1.1. Agriculture is the major driving force for economic growth in Kenya. GoK has recognised that this sector is critical if it has to realise the primary goal of poverty reduction as it can be a source of food security, employment, income generation for the majority of the poor who live in the rural areas. The Strategy for Revitalisation of Agriculture (SRA), in accordance with the ERSWC, proposed a number of policy reforms which include the development of irrigation and access to markets as a

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means of improving food security and income generation. The SRA also accords high priority to market-based approach to developing competitive smallholder agriculture. This is in line with the Bank’s mission and vision of poverty reduction and selectivity. 9.1.2 The Kamira-Oluch Smallholder Farm Improvement Project will develop two irrigation schemes which will improve land productivity and substantially increase smallholder farmers’ average income directly for some 3000 households. Additional 400,000 households within the vicinity will indirectly benefit from the Project through training, better access to markets and employment generation. The involvement of the IWUAs during planning, design and implementation of the Project activities has a built-in-mechanism for project sustainability. Contribution through participation and labour will cultivate a sense of ownership of the project which is critical during operation and maintenance of scheme infrastructure. Appropriate training and study tours will be provided to both farmers and staff and will sensitise them on lessons learnt and best practices. 9.1.3. Through increased production of traditional food crops and other high value crops, higher income will be accrued at household level. This will directly improve food security and result in better health and nutrition, especially for women and children. About 40% of the project beneficiaries are women. The project activities will empower women socially and economically to adopt modern methods of irrigated agriculture, create a sense of involvement and build confidence and self-respect. Women as members of IWUA will actively participate in the planning, and decision-making processes of the project. The development of scheme access and service roads will enable rural women to have better access to markets for small-scale trading activities. The provision of domestic water points will enable women and children to draw potable water at shorter distances for household use. This will free their time for other equally important activities as well as reduce water borne and water-related diseases within the community. 9.1.4. The Project is financially and technically feasible, environmentally sound and socially desirable. The economic rate of return for the project as a whole is estimated at 13.20%. 9.2 Recommendation It is recommended that a loan not exceeding UA 22.98 million and an ADF grant of UA 1.15 million be granted to the Republic of Kenya or the purpose of implementing the Kimira-Oluch Smallholder Farm Improvement Project as described in this Appraisal Report, subject to the loan and grant conditions.

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Kimira-Oluch Smallholder Farm Improvement Project Result-Based Logical Framework

Hierarchy of Objectives EXPECTED RESULTS by sector and theme

REACH PERFORMANCE INDICATORS SOURCE & METHOD

INDICATIVE TARGETS TIMEFRAME Main Assumptions/Risks

Sector Goal/Theme Sector/Theme Long term Outcome

Beneficiaries Verifiable Indicators Long Term outcome

Target Indicators and Timeframe

1. Contribute to enhance sustainably improved income levels for the rural households and thus help in alleviating poverty. 2. Improve agricultural productivity and value of produce

1. Increased rural income 2. Increase yield per hectare and better prices for farm produce

1. Rural households

1. Proportion of population living in poverty 2. Average income per capita Source: PRSP

1. Proportion of population living in poverty reduced from 56% to 26% by 2010 2. Average net farm income per household from Ksh15,000 to Ksh 153,000 3. Increase agricultural productivity by 3.1% by 2007

Assumption Continuity in GoK policy Risk mitigation: Gvt Policy decision taken to use Agriculture as the main vehicle for economic growth

Project Objective Sector/Theme: Medium Term Outcome

Beneficiaries Indicators Medium Term Outcome

Target Indicators and Timeframe Assumptions/ Risks

1. Increase agricultural productivity through support to farm households to make productive use of irrigation with appropriate and better crop husbandry systems. 2. Household income increased by

growing, processing and marketing irrigated crops.

3. More farmers learn better crop husbandry techniques

1. Increased land productivity through irrigation 2. Income from agriculture processing and marketing increased and average farm income will increase from about Ksh 15,000 to 153,000 Kshs/yr 3. Income from agriculture production both livestock and crop production increases

1. Smallholder farmers and farms households in project area

2. Some 3,000 households in the irrigation schemes and of these 40% are female headed

3. 400,000 households in Rqchuonyo and Homa Bay Districts

1.Iincrease in yield obtained by farmers from irrigation 2. Household income from agriculture increased Source: District Annual Reports, MoA Reports Methods: Project M&E and District Planning Office M&E

1.Yield increased 1t /ha to 6t/ha (maize); 1,3t/ha to 3,8t/ha (rice) ;12t/ha to 25t/ha (tomatoes); 9,3 t/ha to 25 t/ha (sweet potatoes); from PY1 to PY6

2.1 Net farm income per household income increased from Ksh 15,000 in 2006 to Ksh 153,600 in 2016. No gender difference 2.2 Average income per capita per annum increased from Ksh 28,000 at PY1 to 35,000 by 2011

Assumption - Hydrological discharge in river basin remain within normal levels - Cropping intensity improved Risk Mitigation - Discharge in river basin controlled and regularly monitored. -Access to markets enabled

Activities/Inputs Sector/Themes Short-Terms OUTPUTS

Beneficiaries INDICATORS Short-Terms outputs

TARGET INDICATORS TIMEFRAME

Assumption/statement and Risk Mitigation

A. Irrigation Scheme Development and Management

Irrigation Infrastructure Development and Mgt

Farmers WUA

Irrig .infrastructure developed and efficiently managed

A.1 Irrigation Development and Management

Irrigation Development

1. Construction of main infrastructure 2. Construction of in-field irrigation and drainage system 3. Layout of in-field system (blocks)

1. The upstream irrigation infrastructure (weir) is in place and functional; 2. The in-field irrigation and drainage system is in place and functional 3. Blocks constructed and connected

Smallholder farmers at the two command areas IWUAs

1.Type of infrastructures put in place ; 2. Length/number of in-field infrastructure put in place 3. Number of blocks constructed and connected by PY5

1. Kimira Oluch Intake weirs 1 1 Major Bridge 0 1 Night Reservoirs 4 6 Roads (acs/services) 11.7 16.8 km Block Infield roads 117 88.3km C/l –Domestic WS 4 4 2. M/Sec/ter. C/l 32 28km Drainage system 46 km 8.3km Infield ca/ls 118 133km In-field drains 44 46 km 3. A total of 97 blocks constructed and connected by PY5 for Kimira (44 blocks) and Oluch(53 blocks): PY3 : 12 blocks for Kimira; 12 blocks for Oluch; PY4: 20 blocks for Kimira; 20 blocks for Oluch; PY5: 12 blocks for Kimira; 21 blocks for Oluch.

- No exceptional flooding events during construction period.

xvHierarchy of Objectives EXPECTED RESULTS

by sector and theme REACH PERFORMANCE

INDICATORS SOURCE & METHOD

INDICATIVE TARGETS TIMEFRAME Main Assumptions/Risks

4. Supervise construction works (weirs, roads, distribution works). 5. Procure vvehicles and motorcycles

Civil works supervised to specifications Vehicles and motorcycles procured

Project Coordination Districts IWUA

Number of person-months provided Number of vehicles procured

1. A total of 222 person-months of provided from 2006 to 2011 PY1: 6p/m ; PY2 to PY5: 48p/m each year; PY6: 24p/m 2. Four ( 4) vehicles and 8 motorcycles procured in 2006/2007

A.2 Formation of WUA 1) Training of trainers 2) Support the establishment of two (2) separate WUA 3) Provide legal advice to the farmer organizations in accordance with Water Act 4) Facilitate the elaboration of constitution and by-laws by the farmer organizations 5) Training of farmers on

irrigation management 6) Farmers will establish a capital base (share capital) through saving for the functioning of the organization 7) Ensure Operational and maintenance procedures of irrigation schemes and proceed to hand-over to the farmer organisations; 8) Establishment of a system of water levy by which members pay water charges to cover the costs of operation and maintenance.

1) Staff trained as trainers 2) Two (2) functional WUA are in place and functioning 3) Legal advice provided on Water Act 4) Two (2) WUA established through block organizations 5) farmers trained In irrigation management 6) Capital based established 7) Irrigation schemes properly maintained and handed over to IWUA by Year 5 8) System of water levy established.

Front line staff Water Users Associations

WUA Idem

1. Number of trainers trained 2. Block organisations formed in two districts IWUA by year 2

3. No of person-months of TA provided

4. Structure, constitution and membership of WUA defined and approved. 5. WUA established, trained and responsibilities of members defined in all levels of WUA trained.

6. Share capital are paid

7. Operation and maintenance of irrigation schemes ensured by project and handed-over to farmer organisations; 8. A farmer-managed operation and maintenance system of water fees has been introduced.

1. 15 staff, of which at least 20% are women, trained during project implementation (5 in PY1; 5 in PY3; 5 in PY5). 2. 100% of holdings and farmers duly registered in land information system by year 2; 3. A total of 3.5 p/m of TA provided by end of project (1 in PY1; two (2) in PY6; and 0.5 in PY2). 4. Constitution and by-laws elaborated by year 2 5. Water users duly registered 6. Share capital has been paid by members: years 1 – 5: 10% per year; year 6: 30% 7. WUA key staff employed and trained by year 6 and handed over to WUA after registration. 8. Water charges are paid by members by year 7.

Assumption/statement WUAs structure and operational procedures are coherent with irrigation policy. Appropriate long term support can be given by line organisations and local NGOs after project completion Appropriate audit structures are functioning. Risk mitigations A PCT with a strong M&E

capability will be set up Assumption No change in Government policy with regard to the hand-over of management responsibility to farmer organizations Risk Mitigation: It is government policy now not to get involved in ownership and management of irrigation scheme.

Component Cost: (UA 18.32 million) Source: QPR , Supervision Reports

B. Marketing and Extension Marketing and Extension B.1 Support to farmers Support provided for advice in

agricultural production and marketing

Smallholder farmers No. of farmers trained 40,000 farmers trained (40% female) by end of year 2 and every year till year 6.

1) Establish irrigation training plots Irrigation training plots established

Smallholder farmers Number of irrigation demonstration and training plots established

2 plots for Kimira and 4 plots for Oluch are installed and operational by PY3

2) Provide “starter packs” Inputs provided and poor farmers able to make use of irrigation

Farmers without sufficient means to start irrigation

No of farm households who received “starter packs”

A total of 600 disadvantaged households (60 in PY3; 180/yr from PY4 to PY6) received an average of 11, 000 Ksh

3) Provide training through farmers field schools

Plots established and farmers trained through farmers field schools

Smallholder farmers No. of plots established and No. of farmers trained in specific topics and irrigation management

A total of 100 plots established (10 in PY3; 20 in PY4; 40 in PY5; 30 in PY6) and 6,000 farmers trained at field schools by end of project ( men and women participated equally)

4) Conduct block irrigation Efficiency study

Block irrigation efficiency study undertaken

Block Committee members

Amount budgeted for block irrigation efficiency study

A total of Ksh 243,000 budgeted for the studies from 2008 to 2011 PY3 : Ksh 20,000 ; PY4 : 50,000 ; PY5 : 76,000 ; and PY6 : Ksh 97,000

Density and quality of NGOs in the region remains at same level and Government service providers (extension, research..) continue to function

xviHierarchy of Objectives EXPECTED RESULTS

by sector and theme REACH PERFORMANCE

INDICATORS SOURCE & METHOD

INDICATIVE TARGETS TIMEFRAME Main Assumptions/Risks

5) Organize tours for farmers

Study tours organized to visit commercial farms

Farmers No. of visits organized and No of persons who benefited from the study tours

5 visits organized/yr from PY3 to PY6: A total of 360 farmers participated in the study tours, with at least 30% female .

6) Provide entrepreneurship training for farmers

Farmers trained and run farms as commercial business for income generation

Farmers engaged in commercial agriculture

Number of farmers trained

At a minimum a total of 4003,000 farmers trained by end of project

Idem

7) Provide sustainable farming training Sustainable Farming training provided

Smallholder farmers Number of smallholder farmers trained

1,000 farmers trained each year starting year 2006 with at least 40% of women participation

8) Provide training in Fodder production

Training in fodder production provided

Livestock farmers Number of livestock farmers trained

A total of 400 trained by end of project (100 each year starting PY3)

9) Conduct workshop in farm planning Workshop conducted Farmers Number of workshop organised A total of 5 workshops conducted by end of project (1/year from 2006 to 2010)

10) Provide training in Post Harvest handling

Training in Post Harvest handling provided

Farmers No of farmers trained A total of 4,000 farmers trained by end of project ( 2,000 in PY4; 2000; in PY5).

11) Provide short-term extension expertise

Short-term expertise provided Farmers Number of person/month provided A total of 12p/m of expertise provide by end of project (1p/m in PY1; 2 in PY2; 2 in PY3; 2 in PY4; 1 in PY5; and 15 in PY6).

12) Construct Post Harvest Handling facilities (storage and packing shed)

Post Harvest Handling constructed and functional

Kimira and Oluch Farmers

Number of Post Harvest Handling units constructed

2 units constructed by PY3

13) Provide Community-Based Mgt training in Water Supply and Hand pumps O&M

Community Based Management training conducted

Rural communities Number of training sessions organized

4 sessions organized by end of project (2 by in PY2 ; 1 in PY3; 1 in PY6).

B.2 Support to extension workers Support to extension workers 1) Procure motorcycles for extension

workers District extension

workers Number of motorcycles procured 14 motorcycles procured by end of project (6 in

PY1 ; 4 in PY4 and 4 in PY6)

2) Training for District Extension Workers in irrigation water management

1. 1 The upstream irrigation infrastructure (weir) is in place and functional; 2. The in-field irrigation and drainage system is in place and functional 3. Blocks constructed and connected

District Extension Workers

Number of extension workers trained

A total of 120 extension workers, of which at least 30% are women, trained by end of project (20 in PY1; 20 in PY2; 40 in PY3; 40 in PY4).

Source: Supervision reports, QPR

B.3 Marketing Linkages Marketing Linkages 1) Provide marketing expertise Marketing expert provided All farmers Number of person months provided A total of 30 person-months provided ( 6 person-

months each year from PY 2)

2) Conduct Marketing Study Marketing study conducted and market intelligence information made available

Farmers LBDA, DDO

Number of studies conducted 8 studies conducted during project implementation starting from PY3

Demand for vegetables will increase at least proportionately to demographic growth, Risk Mitigation : of diversification could compensate a temporary collapse of the market of one or another product by means

3) Training in Marketing , Product Quality Control and Phytosanitary

Training conducted Farmers/buyers Number of person trained About 80,000 farmers, and buyers of which 40% are women, trained by end of project

4) Construct storage sheds Storage sheds constructed Farmers Number of storage shed constructed 2 units storage sheds constructed by PY2 (1 for each scheme)

Component Cost UA 5.26 million

xviiHierarchy of Objectives EXPECTED RESULTS

by sector and theme REACH PERFORMANCE

INDICATORS SOURCE & METHOD

INDICATIVE TARGETS TIMEFRAME Main Assumptions/Risks

C. Project Coordination Project Coordination

1) Recruitment of PCT

Project Management established and staff recruited

Project Project Staff under ADF and Gvt made available

1 PC, 1 accountant, 1 M&E, 1 Procur. Specialist and staff provided by Gvt are in place first quarter PY1.

No delays project activities. Risk Mitigation: Qualified staff will be recruited and Participatory approach supported by policy

2) Establishment of office facilities in Homa Bay

Office facilities established Project staff Office facilities are made available for the Project

Office facilities are made available for the PCT by first quarter of PY1

3) Tender for the Procurement of goods

Goods procured Project Coordination

-Number of vehicles and motorcycles procured for extension

A total of 2 vehicles and 5 motorcycles procured by PY 6 ( PY1 : 1 vehicle, 3 motorcycles; PY5 : . 1 vehicle, 2 motorcycles)

4) Recruit TA and consulting services

TA and Consultancy services provided

Farmers, PC No. of person/month allocated for TA and No. of financial Audit produced

- A total of 288 person-months with 12 p/m per year/Expert for 6 years. - 1 Financial Audit report/yr produced.

5) Support to LBDA in financial management.

LBDA Capacity reinforced. LBDA Sound Financial management system established.

LBDA accounting system fully computerized and operational by PY4.

Gender and HIV/AIDS Conduct Socio economic and Gender analysis baseline study.

Socio economic and gender analysis study conducted

Farmers, communities.

Amount budgeted for the studies A total amount of UA 30,800 budgeted to conduct 3 studies (1 in PY1, 1 in PY3, 1 in PY6).

7) Conduct Gender and HIV/AIDS sensitization

Sensitization conducted for communities, extension workers

All stakeholders Number of sensitization campaigns organized

3 per year beginning 2006-2011

8) Develop Project Participatory M&E system

M &E system developed LBDA, Farmers DDO

A total amount of Ksh 3,202 budgeted for M &E

A M&E system established by PY2

Environment 1) Effective Implementation of compensation for houses and land affected by infrastructure Works.

No adverse environmental and social effects occurred

Homestead and other farmers who lost land

- Outline in ESMP/EMP and the AWP - compliance with the provisions stipulated in the Environmental License

Compensation paid for easement by PY1 An amount of UA 0.43 million have been budgeted for compensation of losses.

2) Implementation of mitigation measures for water borne diseases, malaria, and HIV/AIDS

Idem Population in project area

Water borne diseases and HIV/AIDS decreased

-Water borne diseases and HIV/AIDS level declined by 20% by PY6.

exposure to waterborne diseases and malaria and HIV/AIDS infection increase Risk Mitigation awareness campaigns and training of community leaders and extension staff.

3) Training - in soil erosion control and management - in Pest control and pest use 4) Drill Boreholes, filter hand pumps and train users 5) Conduct Audit for project environmental compliance

- Soil management workshops held- Training in Pest control conducted4 ) Boreholes drilled, hand pumps filted and users trained 5 ) Audit for Env. Comp. conducted

Farmers Idem Population in project area ; NEMA, Farmers

No. of workshops conducted No. of farmers/Groups trained in IPM Nb. of boreholes drilled Number of audit report prepared

- 10 workshops held by end of project (2 each year from 2006) - 52 groups trained in IPM by PY4 and 1350 farmers (40% women) trained by PY4 - 16 borehole water supplies available by PY2 - 1 audit report completed, submitted by PY6

- Drainage water quantity and quality remain the same

- River water flow at entry to lake remains the same at baseline levels

Baseline Surveys: Conduct Socio economic and Gender analysis baseline study

Socio economic and gender analysis study conducted

Farmers, communities, and other stakeholders

A baseline study conducted by PY1 Source: QPR, supervision Reports Method : M&E

Component cost: (UA 4.19 million) Project Total (UA 27.77 million) 1 2 3 4 5 6

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1 IN TR ODUC TION

1 .1 Orig in a nd His t ory o f th e Pro j ec t

1.1.1 Kenya ranks among the poorest countries in the world and has one of the most skewed distribution of income amongst low-income economies. About 56% of the Kenyan people live below the poverty line, most of who (80%) live in rural areas. The population of Kenya is currently estimated at 31.5 million with an annual growth rate of about 2.4%. Annual GDP growth rates in Kenya in the last five years have been less than 1.8%, which is below the population growth rate. Poverty is thus becoming more pervasive and has been accentuated by drought in certain years. The impact is most felt in rural areas where over 75% of the population is dependent on agriculture for livelihood. Meeting the millennium development goal of halving poverty by 2015 implies that programmes must be put in place to ensure sustainable and broad-based growth in the agriculture sector as part of the poverty reduction strategies.

1.1.2 Agriculture, including crops, livestock, fisheries and co-operatives, is the key productive sector in Kenya. The sector contributes directly 26% of GDP and another 27% indirectly through its links to other sectors. The sector provides 62% of formal employment, 60% of exports and 45% of government revenue. It has a large growth multiplier effect estimated at 1.64 as compared to 1.23 for non-agricultural sector. Availability of productive land is a major constraint to increased agricultural production. Kenya has a total area of about 587,000 square kilometers out of which 11,000 square kilometers is water. Of the 576,000 square kilometer landmass, only 16% is of high and medium agriculture potential with adequate and reliable rainfall. The remaining 84% is classified as arid, and semi-arid and not suitable for rain-fed farming due to low and erratic rainfall.

1.1.3 The small-scale farming sub-sector accounts for 75% of the total agricultural output and 70% of marketed agricultural products. Irrigation farming is still limited. It is mainly developed in form of large irrigation schemes for some crops such as rice. Large commercial farms account for 40% of irrigated land, while small scale and government-managed schemes account for 42% and 18% of irrigated land, respectively. This calls for agricultural intensification and substitution towards more high value products rather than by expansion of cultivated area.

1.1.4 The current government’s strategy for growth and poverty reduction, the Economic Recovery Strategy for Wealth and Employment Creation (ERSWC), is built on the foundations of the country’s Poverty Reduction Strategy Paper (PRSP). The strategy identifies agriculture, trade, Industry and tourism as the prime movers of the recovery program and places particular emphasis on sustainable agricultural growth as critical element in poverty reduction. The government has also launched the Strategy for Revitalizing Agriculture (SRA).

1.1.5 In line with the GoK initiatives, the Bank’s Result-Based Country Strategy Paper (RBCSP 2005-2007) proposed a program for re-engagement of the Bank Group with Kenya that is aligned with the ERSWC and rooted in the results based framework form which the RBCSP is drawn. The proposed project is anchored on Pillar II of the Bank Group’s Country Strategy Paper (2005-2007) for Kenya, which seeks to reduce vulnerability and improving equity through the improvement of agricultural productivity and competitiveness.

1.1.6 GoK commissioned a feasibility study in 2003 financed by ADB and the results indicated that irrigation development should be explored and the study proposed an irrigation project. Following the completion of the studies, GoK requested the Bank to finance the smallholder managed irrigation project. The government resolved to embark on the Kimira-Oluch Small holder Irrigation scheme in order to exploit the resource potential of the two river basins, Awach Kiboun and Awach Tende in order to integrate the smallholder farmers into commercial agriculture. These river basins are located in western Kenya, specifically Homa Bay and Rachuonyo districts of Nyanza Province. The Nyanza

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Province, according to the latest poverty status report, has the greatest proportion of its population living in poverty, up to 63%. The choice of the project site as well as the specific intervention in irrigation is to address the problem of poverty and improve the incomes and livelihood of the people of the area. 1.1.7 The project will build on previous Bank’s experiences in agriculture and rural development and existing investments in irrigation development in Kenya. Furthermore, the project will make strategic interventions to develop market linkages based on commodity clusters. The project will ensure that farming in the project area, is commercialized, it will encourage and develop the entrepreneurship and managerial skills of farmers through training, market linkages and active participation in farmers groups activities. It is in line with the core MDG objectives on poverty alleviation, and falls within the objectives of the Comprehensive Africa Agriculture Development Programme (CAADP) of NEPAD.

2 TH E A G R I CU L TU R E S E C T OR

2 .1 S tru c tu re a n d P er f orma n c e

2.1.1 The Kenyan economy is based on agriculture. All agro-ecological zones of the tropics can be found in Kenya. This diversity is compounded by a variety of land tenure arrangements, comprising large estates, smallholder farms (both mostly in high potential areas), and communal farming in the low potential rangelands. There are an estimated 3 million agricultural holdings in Kenya. They are mostly small family farms with areas between 0.2 to 12 hectares, which contribute about 70% to the marketed agricultural production. Estates dominate in tea, coffee, sisal, sugar cane and other export crops while the smallholder sector is more oriented towards food crops, vegetables and dairy production. Land scarcity is a common feature of smallholder production systems particularly in the high potential areas, whereas large tracts of land are still occupied by estates.

2.1.2 The annual production of traditional food grains (maize, millet, sorghum) and beans is estimated at about 4.5 million tones. Of this production, only a small amount of about 15% is marketed through boards or via commercial millers. The rest is consumed on-farm or marketed locally. The production is highly variable given the erratic rainfall patterns.

2.1.3 Basic imported food commodities are rice, sugar, maize, wheat and vegetable oil. In value, main staple food imports only constitute 10% of the value of all imports, and the value of all those food imports is still significantly lower. Average imports of basic food commodities are also insignificant in relation to the overall consumption requirements, contributing on average less than 10%, except for vegetable oil, where supplies rely strongly on imports. However, in years of poor maize harvests (e.g. 1994, 1997), imports are essential to maintain consumption at acceptable levels.

2.1.4 Kenya’s agriculture has three main production zones. First, is the high rainfall zone occupies less than 20% of the productive land, but has 50% of the country’s population. It is dominated by smallholder mixed farming with food crops including maize, rice, sorghum, potatoes, cassava, beans, and vegetables. The major cash crops are tea and coffee. The second is the medium potential zone in which crop cultivation and livestock production, including cattle, sheep and goats are reared. The third zone is the Arid and Semi-arid Lands (ASALs) where pastoralists dominate. Population pressure has led to significant outward migration from the high rainfall zone to the medium rainfall zone where cattle and other livestock are kept and drought tolerant crops are grown. While subsistence crops account for more than half of the agricultural output, tea and coffee remain important export commodities, although coffee production and exports have declined dramatically in recent times. At the same time, production of non-traditional exports such as fresh fruit, vegetables and flowers have increased significantly.

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2.1.5 Women play an important role in agricultural production in Kenya. They contribute up to 80% of all labor in food production and 50% in cash crop production while receiving only 7% of agricultural extension information. In addition to the labor contribution, women are increasingly becoming farm managers and heads of farm households. It is estimated that over 40% of all smallholder farms are managed by women. This is in addition to other activities such as collection of fuel- wood, poles for construction, fetching water for domestic use, cooking and feeding of the family.

2.1.6 Data on on-farm consumption and informal marketing are not always available and official statistics tend to underestimate the importance of the informal marketing sector. This holds especially for horticultural products like tomatoes, kales, green maize, peas and carrots. The horticulture sector has experienced significant growth in the last 10 years, particularly in the densely populated areas where farmers have opted for high value products in order to gain additional income.

2.1.7 The last decade has been characterized by significant developments in the agricultural sector. Food marketing is at present dominated by the private sector. The role of marketing boards has been significantly reduced. Markets are open to competition from neighboring countries, particularly since the COMESA agreement entered into force. The Ministry of Agriculture (MoA) has not been able to maintain service provision, particularly with regard to extension and research due to limited resources. NGOs and special donor funded projects have moved in to the fill the gap through the provision of extension services and other rural development activities in many rural areas.

2 .2 Lan d Tenu re an d Land Use

2.2.1 Three systems of land tenure exist in Kenya, namely: (i) individual (freehold), (ii) public and (iii) communal (customary). Individual title confers security of tenure by registering the absolute rights of ownership to the holders after adjudication. As such they encourage investment on land, make farmers more credit worthy, create a land market, and promote intensification of agriculture. The public tenure system applies to land owned by the government or associated statutory bodies. Under this tenure system, the right to control, apportion and use of such land is vested with the state, who may confer right of occupation and use for a given period, usually 99 years. This is generally subject to conditions of use and of payment of rent. Communal land tenure is found mainly in the ASALs. This is land held in trust by the respective county councils for different ethnic groups. Trust lands are governed by customary law, which does not provide for subdivision of land among individuals of the user communities or alienation and transfer for individualized use. Women in Kenya own 1% of the registered land, although they form 80% of the agricultural labor force. Given the patriarchal nature of Kenyan society, and the adherence to customary law in which land is communally owned but the right to use it is passed on through the male line, women’s access to and control of land is rather limited.

2.2.2 The shortage of high-quality arable land and the rapidly increasing population are two factors constraining the development of the agricultural sector in Kenya. Only about 16% of Kenya’s land mass of 576,000 km2 is considered to be high and medium potential land suitable for agricultural production. The rest is classified as ASALs. Crop and grazing lands occupy 31% and 30% of the high and medium potential land, respectively. Game parks (12%) and urban areas, homesteads and infrastructure cover the rest. Indigenous forest area is now less than 2% of country land area.

2.2.3 With over 80% of the population living in rural areas and depending directly or indirectly on land-based employment, the resultant high population density per km2 of agricultural land has put pressure on arable land. The escalating land pressures have consequently resulted in progressive subdivision of smallholdings and large group-owned farms, thereby increasing landlessness and migration into marginal areas. In addition, inheritance laws also tend to divide the already small non-viable pieces of land into smaller and less viable pieces of land for each beneficiary of the family.

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2.2.4 Farming Systems: The agricultural production system of the project area is characterized by low input farming, a high population density, and small holdings (average 1.3ha). Despite the very low use of inputs, land is intensively used with little fallow land and some farmers attempting double cropping in the long and short rains. Maize, sorghum, beans and groundnuts are the main crops, but many households have small seasonal vegetable plots as well. Nearly all farmers grow the staple crops. Crop failure and low yields are common due to irregular rainfall patterns. The cropping system is primarily based on the production of annual crops and horticultural crops.

2 .3 S ec t or D ev e l op m en t C on s tra in t s , Po l i c i e s a nd S t ra teg i e s

2.3.1. Constraints: Agricultural growth has been well below its potential as a result of the macro-economic environment, an unfavorable external environment for the major export crops, and an inappropriate legal and regulatory framework. Other factors include poor infrastructure, ineffective extension services, poor governance in the cooperatives and farmer organizations and a lack of market development. In the high rainfall zone, rising population density has reduced the size of holdings to uneconomically small units that are cultivated annually under poor soil fertility management regimes. In the ASALs, population increase is putting pressure on the fragile eco-system. As a result, many indicators of rural livelihood and ecosystem health have been deteriorating, indicating an increase in rural poverty and environmental degradation. This is especially acute in the project area which has a high population density and unreliable rainfall.

2.3.2 Policies and Strategies: The Government’s strategies to address the above constraints are to implement sound land use, water and natural resource management policies including developing irrigation. It is also to build an effective and efficient participatory extension and technology delivery service and to undertake affirmative action to ensure the participation of women in agriculture. The government also intends to establish an efficient rural finance and credit supply system for smallholders and rural primary agro-processors and to ensure an investor-friendly institutional and legal framework to facilitate long-term investments in farm improvements. It proposes measures to empower farmers by improving coordination of investment activities. Four documents have been elaborated to provide a road map for the future development of the country and the agricultural sector. These are: (i) the Economic Recovery Strategy for Wealth and Employment Creation (ERWEC); (ii) the Poverty Reduction Strategy Paper (PRSP); (iii) the Kenya Rural Development Strategy (KRDS); and (iv) the Strategy for Revitalizing Agriculture (SRA).

2.3.3 The Economic Recovery Strategy for Wealth and Employment Creation (ERWEC) for 2003-2007: The ERWEC is one of the main current strategies for reviving the economy and creating jobs. The Strategy spells out an ambitious goals over the next five years to: i) create 500 000 jobs annually; ii) reduce poverty level by at least 5% from the current 56.8% level; iii) raise GDP growth rate from 2.3 per cent in 2003 to 7% in 2007; and iv) contain the annual inflation rate to below 5%. The Strategy, covering 2003-2007, takes into account existing government policy documents, particularly the PRSP issued in 2001. Investment in Agriculture and Rural Development, including irrigation, has been highlighted in the IP-ERWEC, as a priority development need with an estimated cost of Ksh. 300 million in the Investment Programme 2003-007.

2.3.4 Poverty Reduction Strategy Paper (PRSP): The PRSP has the twin objectives of poverty reduction and economic growth. It has five basic policy objectives: i) facilitating sustained and rapid economic growth; ii) improving governance and security; iii) increasing the ability of the poor to raise their incomes; iv) improving the quality of life of the poor; and v) improving equity and participation. The PRSP also outlines a list of immediate priorities in governance through measures that include increasing transparency of procurement, accounting and audit procedures and raising the income opportunities of the poor through measures that include promoting rural non-farm employment.

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2.3.5 Kenya Rural Development Strategy (KRDS) 2001-2016: The principal objective of KRDS is to establish a road map to promote equitable growth, expand farm and non-farm income earnings to attain food security for all, reduce disease and ignorance and to achieve sustainable natural resource and environmental management. The strategy also addresses security, good governance, safety and rule of law, and improvement in the rural sector’s physical and social infrastructure. The strategy recognizes the participation of beneficiary communities with a wide spectrum of stakeholders in project implementation. It also recognizes the need to shift some of the burden of project planning and implementation from the civil service to institutions of elected representatives (local authorities).

2.3.6 Strategy for Revitalizing Agriculture (SRA) 2004-2014: This strategy paper focuses on resolving the two major challenges facing Kenya, namely, unemployment and poverty, through development of the agricultural sector. The aim is to raise production thereby increasing profits and employment by working on constraints such as infrastructure (mainly roads for market access), trade barriers, taxation and governance of farmer’s organizations, and, at the same time reforming the extension and research services to help farmers diversify and commercialize their enterprises.

2 .4 Ma rk et in g a nd E xt en s io n

2.4.1 Introduction of irrigation into the farming system implies a large increase in production because of the increased options for farmers. Increasing farm income is essential if farmers are to take over management and pay the operating and maintenance costs of the infrastructure. An effective marketing and extension system is thus essential.

2.4.2 Cereals and vegetables are staple foods in Kenya. There is thus a large market for these products. The rapid increase in the urban population is also indicative of a potential market for these products, especially vegetables. The challenge is to be able to competitively and profitably move produce from one area to the other. Prior to 1992, marketing of the main staple crops was in the hands of a few state institutions. Since liberalization, farmers are free to sell in the open market. The typical marketing chain is for farmers to sell at the farm gate to traders, or to act as farmer-traders by taking their produce to a local market. Most traders operate in the local retail market, but some act as wholesalers and also transport produce within the country where still a smaller number trade internationally. Horticultural products were always marketed through a supply chain of small traders and wholesalers. Studies have shown that farmers receive 70-80% of the final price of cereal crops but only 50% of the final price of horticultural products, less if the produce is transported to other areas of the country. A few large farms and producer organizations dominate the export market in horticultural products, supported by the Horticultural Crop Development Authority (HCDA).

2.4.3 The demand for vegetables such as cabbages, carrots, kales, onions, tomatoes and a wide variety of fruits is largely unmet in many locations. Thus any increase in output should be absorbed locally. As both population and incomes increase in the area, it is expected that this market will gradually expand and be able to take in more produce.

2.4.4 There is a large potential market in the districts and regions next to the project area as most of these regions are deficient in most agricultural products. Most districts are deficient of maize and vegetables. These should ideally provide important market outlets for any extra produce from the area. The higher potential areas around Kisii, which currently supply most of the produce to the area, can provide important market outlets in the dry season.

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2.4.5 The larger East African market, the East African Community (EAC), and the Common Market for Eastern and Southern Africa (COMESA) provide outlets for agricultural produce from Kenya in general and the project area in particular. Although there are no indications of saturation in Kenya’s external markets for fresh fruits and vegetables, the export of these products has increasingly become sophisticated and very competitive. While it is possible to export produce from the area to Europe and other traditional horticultural markets, issues of quality and costs, especially transport will have to be looked into. The notions of what constitute quality standards among farmers are far removed from established quality standards requirement for export, such as EUREP GAP.

2.4.6 Marketing was previously neglected in donor funded projects as there was the assumption that, since most areas were food deficit, a ready market existed. However, USAID has had considerable success in marketing promotion, showing that markets can be identified and targeted to greatly increase the value of commodities produced by farmers.

2.4.7 There are many community based groups, especially among women, but these are aimed at social functions or small scale savings for funeral etc. rather than production or marketing. Organized groups of young men control fish marketing from the landing beaches, but these groups impose a monopoly and exploitative control of both fishermen and traders. They make money from the fishermen and demand extra favors from the traders who are mainly women. They appear to have a negative impact on marketing in this sector.

2.4.8 Extension: The government remains the main source of extension services. However, increasingly arrangements are made at district level for the front line staff to work with other providers including private sector, donor funded projects, and NGOs who provide the means for them to work effectively on particular topics decided by that agency. Government front line extension staff is mainly from the Ministry of Agriculture, although some staff specializing in livestock is in the Ministry of Livestock Development and Fisheries at the district level. Their work is often supported and directed by donor led projects. Marketing has been identified as a key activity and one in which the extension service lacks capacity to intervene. However, a wide range of institutions with potential in this area have developed to provide this capacity. While the development of a multiplicity of agencies offering services, including marketing and entrepreneurial services to the farmer is a positive one, farmers outside of a particular project or programme cannot access such services.

2 .5 I ns t i t u t i on s ac t iv e in M a r ket in g an d Ex t en s io n

2.5.1 Kenya Federation of Agricultural Producers (KENFAP) grew out of the defunct Kenya National Farmers Union. KENFAP is a membership organization whose aim is supporting and training members and analysis and advocacy on agricultural issues at all levels of government and internationally. It has members in all areas of the country and local branches in 20 districts. It has considerable experience of training through farmer field schools.

2.5.2 Horticultural Crop Development Agency (HCDA), is a government agency that provides agronomic, post harvest handling, processing and marketing assistance to small holders both directly and through partnership with other agribusiness partners such as exporters, processors and input suppliers. HCDA has regional offices in all the regions including Nyanza Province.

2.5.3 Kenya Agricultural Commodities Exchange (KACE) is a private company offering market information and brokerage by facilitating contact between buyers and sellers. It collects market information and makes free weekly radio broadcasts. Access to more detailed information is on a payment basis with various service levels. Access is normally via the internet or an SMS service. USAID has funded programmes providing small scale producers with mobile phones and access to the SMS services with good results in improved marketing and profitability.

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2.5.4 Many NGOs provide extension services either through government front line staff or through their own staff. For example for Agro forestry, an international NGO working in areas adjacent to the Project area, it is funded by the Swedish Government and uses both government and its own recruited specialist and front line staff to provide extension advice in a participatory way concentrating on sustainable farming and conservation.

2.5.5 Farmer field Schools (FFS), these are platforms and “schools without walls” for improving the decision making capacity of farming communities and stimulating local innovation for sustainable agriculture. FFS offers community based, non-formal education to groups of 20-25 farmer’s through self discovery and participatory learning principles. The school brings together farmers who live in the same village/catchments and thus, are sharing the same ecological settings and socio-economic and political situations. The sites are normally located where the participants live so that they are able to attend weekly meetings and to maintain the field school. FFS are initiated by facilitators who can be extension workers from government ministries or NGO’s. The field is the classroom allowing farmers to gain from real life examples. The concept of FFS was developed in Asia by FAO and has been transferred to many parts of Africa to because of its success. In Kenya the methodology was introduced in 1995 and has been accepted by the Ministry of Agriculture. The FFS system in Kenya has been supported by various donors including IFAD, UNDP DANIDA and other NGOs. The Ministry of Agriculture and NGO staff has been trained in farmer field schools. At the moment FFS are developed in most parts of the country including Nyanza Province. FAO has registered several success case studies in Kenya and GoK is considering institutionalizing the model.

3 TH E I R R I GA T IO N S U B -S E C T OR

3 .1 Overv iew

Only 20% of the estimated 540,000 ha of irrigation potential area is under irrigation. National irrigation schemes established and managed by the National Irrigation Board (NIB) on a tenant-farmer system include Mwea, Hola and Perkerra, Ahero, West Kano, Bunyala and Bura schemes with a total area of 12,000 ha. Smallholder irrigation schemes managed by Irrigation Water User Associations (IWUA) have a total area of 47,000 ha whilst privately owned commercial irrigation schemes cover 50,000 ha. NIB’s Mwea scheme is gravity-fed and operates cost-effectively whilst the other schemes are pump-based and have major operation and maintenance problems. The national irrigation schemes have been performing sub-optimally since the Government subsidies were curtailed. The existing schemes were developed to respond to growing land scarcity, to facilitate production of high value crops, and to improve household food security. Apart from irrigation scheme development, irrigation and drainage research has been carried out by NIB and Kenya Agricultural Research Institute (KARI) in selected areas.

3 .2 Po ve r ty , Hea l t h I s s u es a nd Gen de r

3.2.1 Irrigation development is one of the strategies identified in the PRSP, ERSWC and SRA for alleviating poverty by increasing income from agriculture. However, if irrigation is to benefit the poor, it is vital that farmers not only are able to access irrigated land but also have the resources to make effective use of it.

3.2.2 More than 56% of the Kenyan population lives below the poverty line of one US dollar per day. Women are generally poorer than men and suffer more severely from the ill effects of economic down turn. An estimated 52.5% of Kenyan males in rural areas and 49.2% of those in urban areas live beneath the poverty line. In both instances the statistics for females is higher, 54.1% of rural and 63.0% of urban women and girls live beneath the poverty line. Only 50% of the rural population has access to potable water. In some areas, safe water is only available to 20% of the population. Water collection consumes up to 40% of a women's time, averaging from 3 to 5.25 hours daily.

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3.2.3 Poverty assessments through the Welfare Monitoring Surveys (WMS) carried out between 1991 and 1997 have shown that both the absolute numbers and the percentage of the population living in poverty were increasing. Three categories of poverty have been identified: i) food poverty in which the monthly adult expenditure on food was below Ksh 927 (USD 13.5); ii) absolute poverty where expenditure on all items was below Ksh 1,239 (USD 17); and iii) hardcore poverty where people could not meet their minimum daily food requirement even if they spent their entire income on food. A Poverty Mapping Exercise was carried out in 2003/4 and confirmed that poverty has continued to increase, rising from 48.8% to 56% by 2003, and that the average figures hide pockets of very high poverty which need urgent intervention. Non-income dimensions of poverty have also increased with life expectancy and child vaccination decreasing and increased maternal and child mortality. The proposed project will be located in Homa Bay and Rachuonyo Districts where welfare indicators are consistently below average.

3.2.4 Progress has been made in reducing the HIV prevalence rate among the working age group (15-49) from 14% experienced in 1998 to 6.7% at end-2003, with new infections dropping to around 80,000 each year. However, trends indicate that the annual number of AIDS deaths is still rising steeply and has doubled over the past six years to about 150,000 deaths per year. Since the emergence of HIV/AIDS in 1984 in Kenya, the scourge has had a devastating effect on Kenya economy. Apart from the health problems of HIV AIDS, malaria is also a debilitating ailment.

3.2.5 Gender is a key issue in access to land. In both agricultural and pastoral communities, women's position remains secondary to their husbands in decision-making, including those on the use of production resources, such as land. However, gender awareness has increased even amongst the rural population in recent years. Women are therefore likely to be the key users and beneficiaries of increased utilization of land through irrigation. The majority of the labor during land preparation is provided by women, as men tend to easily migrate in search of better income. Women are usually engaged in land preparation, and other household chores like collecting water for domestic use and tending to livestock, children and the sick. Due to the labor-intensive nature of work, especially during peak seasons, women tend to suffer from exhaustion, and can hardly earn extra income to cater for their families.

3.2.6 The Ministry of Gender, Sports, Culture and Social Services (MGSCSS) has the overall coordination role on gender issues in the sector as well as in the national policy framework. It has prepared and reviewed the existing national legal and institutional framework that has implications for ensuring a gender responsive law reform. It has been noted that the community level is one of the few spheres in which women are better able to mobilize resources as they are well organized at this level. This has not however translated into any substantial political or economic gains for women. The Ministry of Regional Development Authorities (MRDA) has a gender focal person who is in charge of mainstreaming gender issues into the department’s activities as well as coordinating with the districts on gender sensitive planning and reporting. However, the gender focal person needs further support in terms of training of technical staff and community members to effectively ensure integration of gender issues at the community level.

3 .3 I ns t i t u t i on a l Fra me wo rk

3.3.1 Ministry of Regional development Authorities: This Ministry was established to address development issues in the country through development authorities. Its functions are: i) Regional Authorities Development Policy, ii) Oversight, Management and Development Support for Regional Development Authorities and iii) Capacity Building and Support for Regional Development Authorities. To perform this responsibility it has setup several regional development authorities among which is the Lake Bassin Development Authority to cover the 27 districts in the Nyanza province. This Ministry has a broad mandate in Rural Development, which approaches irrigation development projects.

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3.3.2 Ministry of Agriculture and Rural Development: The Ministry has been restructured from the previous Ministry of Agriculture, Livestock Development and Marketing. Under the new structure and particularly under the National Agriculture Extension Policy, the vision of the Ministry is to facilitate the production of sufficient food and other commodities in ecologically sustainable ways with specific objectives on poverty alleviation and employment creation in the rural areas. In the agricultural sector, the Ministry of Agriculture is the main institution with extension and research offices at provincial and district levels. At the regional level, Regional Development Authorities are in charge of the Integrated Development Planning for the different regions. The Government extension services are weak.

3.3.3 Ministry of Water (MOW): In accordance with the Water Act (2002), the overall control of water resource lies with the MWI. The vision of the Ministry is to ensure water resource availability and accessibility to all. The mission is to contribute to national development by promoting and supporting integrated water management. The Ministry has the responsibility to promote the investigation, conservation and proper use of water resources throughout Kenya and for policy making including the formulation of and gazetting a national water resources management strategies. It discharges its responsibilities through the Water Resources Management Authority (WRMA) for water resources management and the Water Services Regulatory Board (WSRB) for water services. Irrigation and Drainage Branch (IDB) was established within the Ministry of Water (MoW) to oversee the smallholder irrigation sector and take charge of irrigation policy formulation, project planning and implementation. Although staffing is a challenge, IDB has Provincial Irrigation Engineer (Nyanza Province) with broad practical experience and District irrigation officers at Homa Bay and Rachuonyo.

3.3.4 National Irrigation Board (NIB): Is responsible for national/public irrigation schemes that were developed on public land. NIB is being restructured to tackle issues of farmer participation, scheme privatization, and rehabilitation of existing public irrigation schemes and cost recovery in operation and maintenance of the schemes.

3.3.5 Non-Governmental Organizations (NGOs): NGOs, like Care Kenya and PLAN International implement externally funded agricultural extension and other development projects. They have extensive knowledge in participatory approaches and group formation. The Smallholder Irrigation Scheme Development Organization (SISDO) was established to plan and implement smallholder irrigation projects. SISDO used the cost-recovery approach to irrigation development where new schemes were supposed to be financed from funds recovered from existing schemes. The approach did not work properly since after constructing few schemes (150 ha), the capital base started to dwindle due to poor management, poor contracts with financing banks, political interference and poor project preparation. NGOs are currently the most dynamic development actors.

3.3.6 Lake Basin Development Authority (LBDA): LBDA was established in 1979 by an Act of Parliament Cap 442, to spearhead development in the Lake Basin region. The region covers 39,000 km2 and consists of 27 districts in Nyanza, western parts of the Rift Valley Province in western Kenya. LBDA’s management board includes representatives from districts within the basin, Provincial Commissioner as ex-officials and Permanent Secretaries from line ministries. The Authority has technical professional staff (engineers, agriculturists, economist/planners, sociologists, environmentalists/hydrologist/geologist and forestry and fisheries experts).

3.3.7 The Kenyan Agricultural Research Institute (KARI): Has the mandate for conducting applied research for all crops except coffee, sugar cane, tea and tobacco. KARI conducts research with a view to improving agricultural productivity within a wide range of agro-ecological conditions in Kenya and operates 25 research stations throughout the country with its Headquarters in Nairobi. The Irrigation and Drainage Research Project (IDRP) was formed in 1977, within the Ministry of Agriculture which was, in 1990, transformed into a full research programme under the Kenya Agricultural Research

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Institute (KARI). KARI together with NIB has carried out operational research in agronomy and crop protection in national irrigation schemes.

3.3.8 The National Environment Management Authority (NEMA): The Environmental Management and Co-ordination Act 1999, which came into force in January 2000, established two administrative instruments to manage the environment in a holistic manner. The National Environmental Council has the responsibility of formulating policies, setting the framework for coordination among the stakeholders. The National Environment Management Authority supervises and coordinates overall matters related to the environment and is the principal overseer of implementation of all policies related to the environmental management. NEMA also functions as the ‘clearing house’ for the Convention on Bio-diversity. It acts as the central coordinating hub and facilitates the access to data and information by all stakeholders on natural resource management.

3 .4 I rr ig a t io n D e ve lo p m ent Co n s tra in t s , Po l i c i e s and S tra t eg i e s

3.4.1 Constraints: Irrigation development is faced with several constraints. These include: i) low funding for irrigation infrastructure development, restructuring of irrigation functions within the Ministry of Water; ii) delays in rolling out the policy including comprehensive legal framework for irrigation development; iii) weak farmers’ organizations and participation for sustainable irrigation development and management; iv) inadequate capacity in terms of human resources development and equipment; v) ineffective provision of support services, including inputs, credit, marketing and irrigation extension services; vi) weak monitoring and evaluation of irrigation and drainage systems, and vii) inadequate adoption of improved water management and modern agronomic practices and technologies.

3.4.2 Policies and Strategies: Irrigation in Kenyan lacks a clear cut policy. The draft National Irrigation and Drainage Policy has been prepared but it is still under review (September 2005). It is only when this policy is approved that irrigation policies covering all schemes will come into effect. The Irrigation Act (cap 347) concentrates only on the National Irrigation Board (NIB) and the associated national irrigation schemes without covering other types of irrigation schemes. The Government’s strategies include increasing area under irrigation, promotion of community managed systems, mobilization of adequate financial resources for the sector and providing relevant training to smallholder farmers.

3.4.3 The Government prepared the National Policy on Water Resources Management and Development (1999) and the Strategy Paper on Integrated Water Resources Management which recognizes people of Kenya as custodians of water. Emphasis is placed on involvement of water users in planning and management decision making. Water Resources Users Associations (WRUA) are responsible for cooperative management of water resources at sub-catchments level and all water user groups including IWUA will be members. WRUAs report to the Catchments Area Advisory Committees established at catchments level.

3.4.4 The Water Act (2002) makes a provision for the management and conservation of water resources by issuing water permits/rights. The Act provides for reforms in the water sector in areas of water resources management, strengthening the institutional framework and providing mechanisms for financing water resources and services. Through the Act, the Water Resources Management Authority (WRMA) was established to provide water resources management services, whilst the Water Services Regulatory Boards (WSRB) was formed to regulate all water supply and sewerage services. Consideration for issuance of water permit takes into account many factors, including allowance for satisfying the existing permit holders, downstream human and environmental requirements. The application for a water permit is subject to public consultation and, where applicable, an Environmental Impact Assessment (EIA) in accordance with the requirements of the Environmental Management and Co-ordination Act (1999).

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3.4.5 The IDB, through the Japanese International Cooperation Agency (JICA), produced in 2003, the “Guidelines for Smallholder Irrigation and Drainage Development Manual” and the “Framework for Formation and Management of (Irrigation) Water Users Association towards Sustainable Community-based Smallholder Irrigation and Drainage Development”. The manuals contain clear recommendations on development, operation and maintenance of smallholder irrigation and drainage schemes based on IWUA. Consequently, they will be promoted as the key instruments to all actors in the irrigation sub-sector.

3 .5 Les so n s L ea rn t a nd R ef l e c t ed in Proj e c t D e s ign

3.5.1 According to a recent report done to review the Bank Group assistance strategy to the agricultural sector in Kenya, the poor performance of most of the projects was attributed to various factors. The most significant was the low or poor farmer response due to, among other reasons, inadequate preparation and selection of appropriate technological packages. The important lesson here is the choice of appropriate technology through a rigorous analysis and assessment of different strategic options. This could enhance the relevance and rapid acceptance of the projects by local communities.

3.5.2 A related lesson is that farmers’ responses can also be enhanced through an early and active involvement in the project identification and promotion, in addition to focusing on the problems, constraints and opportunities that relate to their basic needs. The study findings were that most of the existing irrigation projects were developed using a top-down approach with limited farmer participation. Based on these lessons, the Kimira-Oluch Project has pro-actively promoted the involvement of the beneficiaries from the onset, during planning, design and implementation. During scheme design, any form of pumping was avoided and simple gravity-fed irrigation technology, in line with irrigation experience of beneficiaries, was adopted. This has assisted in building on local knowledge and customs, on building the farmers’ ownership towards the irrigation scheme and in strengthening, capacity building and created awareness in terms of scheme ownership. The beneficiaries have already started the process of forming IWUA which will be responsible for scheme operation and maintenance. The lessons learned from this portfolio of interventions clearly demonstrated that farmer-managed schemes implemented under the supervision of provincial structures have shown better results than national (public) irrigation schemes managed by NIB which were developed with minimal stakeholder interventions, ownership, and especially farmer organizations. In addition early identification of the issues of right of access for construction of infrastructure enabled the designing team to discuss with farmers issues to do with compensation and this was resolved.

3.5.3 Another lesson from the past ADF funded projects, especially Western Kenya Rain-fed Rice project and the Horticulture project, which has influenced the project design, is the need for greater focus on beneficiaries and effective monitoring and evaluation. The horticultural Development Project for example, had to be cancelled because the borrower failed to adhere to the loan conditions. Yet another lesson from the said projects has to do with long delays in fulfillment of conditions prior to first disbursement of project funds especially when the conditions required adjustment of the legal framework. In the current case, the necessary legal framework for irrigation development is already in place.

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3.5.4 Development Partners in Kenya have variously observed that weak performance in governance especially in public sector management adversely affects project performance in Kenya. Key governance problems have included the absence of an efficient, transparent and accountable decision making structure in the country’s public sector, weak economic and financial management, weak rule of law, inefficient service delivery mechanism and weak administration and practices. The current project design provides for capacity building for the district administration in form of technical assistance to mitigate the aforementioned shortcomings. A monitoring and evaluation system will be developed building on the existing government system. An M&E expert will be part of the technical assistance team.

3.5.5 Other lessons from other donor Interventions: The European Union (EU), the Netherlands Cooperation, the International Fund for Agriculture Development (IFAD) and NGOs implemented several additional smallholder irrigation projects, in Kenya, totaling 4,600 ha. The Italian Development Cooperation (IDC) funded the “Wei Wei Sigor Integrated Irrigation-Agriculture Development Project” with the objective of establishing a 275 ha gravity irrigation scheme targeting 256 farm families, including technical assistance, provision of agricultural machinery and social infrastructure (e.g. schools).. The Wei Wei project has been successful in establishing suitable and efficient irrigation infrastructure and has improved livelihoods of the beneficiaries. However its sustainability has been questioned since farmers do not have adequate funds, technical and managerial skills. There is thus need to put in place an effective productive and marketing system to ensure that farmers generate enough surpluses to sustain activities. The current project has taken specific steps in this direction.

3.5.6 IFAD funded the “Eastern Province Horticulture and Traditional Food Crops Project” covering small-scale irrigation, improvement of farmers’ income and food security whilst aiming at cost recovery by giving farmers a loan for infrastructure development channeled through Cooperative Bank of Kenya. The FAO, from 2003, has been up-scaling the Special Programme for Food Security through capacity building, priority setting and project formulation. FAO also funded the “pilot conservation agriculture and improved land management for enhanced livelihoods of smallholder farmers’ project” and the “expansion of farmer field schools programme”. USAID funded the “Kenya Horticulture Development Programme” whose objective are to increase incomes of the horticulture smallholder farmers through, new product development, domestic market interventions, marketing services, policy interventions and environmental management. German Development Cooperation, through KfW, funded the “Smallholder Irrigation Programme” in Mount Kenya region”, which provided loans for smallholder irrigation development, marketing and formation of farmer organizations. The project design took lessons from these and other donor interventions in the sector particularly the USAID horticultural development project which has so far been successful in linking farmers to market. The project will also utilize the existing infrastructure for market information technical assistance from this project.

4 TH E PR OJ EC T

4 . 1 Pro je c t C o n cep t a nd R at i on a le

4.1.1 Improvement of agricultural productivity and competitiveness through intensification and crop substitution towards high values products in poverty stricken rural areas of Western Kenya with high population densities is essential for poverty reduction.

4.1.2 The project will focus on agriculture intensification through developing irrigation infrastructure, empowering farmers to own and manage their schemes and improve productivity. The introduction of irrigation will help to increase the yields of the traditional crops and introduce new crops. Irrigation will also enable farmers to produce crops throughout the year, especially in the dry season when prices are high and when the region suffers from food-insecurity.

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4.1.3 The project has been designed after a thorough investigation of the technical options. The two proposed gravity irrigation schemes are most promising, cost-effective, easy to operate and easy to maintain alternatives for irrigation development in the area. The irrigation systems will be fed by two separate rivers, Kibuon and Tende, which have two separate catchments. Since the agricultural and water resources, technical and socio-economic situation of the two schemes are very similar, the two schemes will be developed concurrently as one single project under the same project management structure. This has the advantages of reduced overhead costs for project coordination, management and supervision, as well as a stronger and more widespread impact.

4.1.4 The project will build the capacity of community and other local institutions to identify and manage watershed management issues and implement conservation or mitigation measures. The project will also address the linkages between upstream and downstream land use practices through the development of community managed integrated ecosystem management plans.

4.1.5 The formulation of the proposed project took advantage of the lessons learnt from the successes and failures of past irrigation projects in the country. The project took into consideration the formulated guidelines for smallholder irrigation and drainage development, the elaboration of a training master plan for Irrigation Drainage Branch staff, and the framework for training and management of WUAs toward sustainable community-based smallholder irrigation and drainage development.

4.1.6 The project design was done through an extensive and unique participatory approach. Stakeholders including farmers of the two proposed schemes had a say in the design of the two schemes throughout all preparatory phases of the study. This will enhance ownership of the project once it is implemented. The project concept is to establish schemes that are entirely farmer-managed. Participation and empowerment are inherent in this concept as the farmers approved the design of irrigation blocks according to both technical and social acceptability. The project was conceived in a way that the capacity of farmer organizations to operate and maintain the irrigation systems is continuously reinforced throughout the whole implementation period.

4 .2 Pro je c t A re a an d Ben ef i c i a r i e s

4.2.1 Location: The Project will be implemented in Rachuonyo (Kimira site) and Homa Bay (Oluch site) Districts in Nyanza Province located between latitudes 0o 20' S and 0o 30' S and longitudes 34o 30' E and 34o 39' E along the shores of Lake Victoria (see Annex 1). Kimira site has a gross area of 1,790 ha out of which 808 ha will be developed whilst Oluch site has a gross area of 1,308 ha but only 666 ha will be irrigated.

4.2.2 Climate: Agro-ecologically, the area is sub-humid with mean annual rainfall ranging from 740 mm to 1,200 mm. The rainfall has a high variability on duration and amount making up two fairly distinct rainy seasons (long rains peaking between April and May and the short rains peaking between November and December). The mean annual maximum temperature is 31°C, while the mean annual minimum temperature is 18°C. Relative humidity varies between 60% and 75% and potential evapotranspiration rates range from 1,800 to 2,000 mm per annum.

4.2.3 Topography, Soil and Vegetation: The area is located on the lowland alluvial plains. The soils are generally fertile as they originate from nutrient rich alluvial deposits washed downstream but are susceptible to erosion since the silt content is high in relation to the clay content and some areas have cracking clays (vertisols) and montmorillonite (“black cotton soils”). The original Acacia-Balanites-Combretum woodland has been degraded over time due to human settlement and agriculture. Eucalyptus, Euphorbia, Aloe vera, elephant grass, striga weed, indigenous and exotic tree species also present. The wetlands are dominated by Sesbania sesban trees, papyrus, water hyacinth and water fern.

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4.2.4 Water Resources: The area has three existing water sources, viz Lake Victoria, groundwater and surface water from the rivers. Due to technical and financial consideration, the Kibuon (Kimira) and Tende (Oluch) rivers will be used to provide supply irrigation water. Kibuon River has a catchment area of 533 km2 with an average low discharge of 1.66 m³/s whilst Tende River has a catchment area of 400 km2 with an average low discharge of 1.41 m³/s.

4.2.5 Project Beneficiaries: The project will cover two districts of Homa Bay and Rachounyo which have a total of about 400,000 households. Though the irrigation scheme will directly benefit 3,000 households, more than 400,000 households in the two Districts will benefit from the marketing and extension activities. It is envisaged that this will substantially influence the incomes. The average household size is 4.8 persons. About 66% of the households have 4 members or more and about 40% of the households are female-headed out of which 30% will fully participate in Project activities though they rarely inherit land. Since women are dominant actors in smallholder farming, it follows that they will stand to benefit from the project by realizing higher yields and premium prices for their produce. By providing extension service and market information to women their yields are likely to increase by 10% according to a recent study. A typical farm household occupies a homestead area of about 1.3 ha. The majority of the farm households have cattle and small ruminants. They are involved in crop production such as maize, sorghum, cowpeas, few vegetables and fruit trees. Few households are often involved in off-farm activities such as regular employment and fishing.

4.2.6. Population in the area is predominantly of the Luo ethnicity. About 40% of the households are women headed households based on “clan elders”, which is important for mobilizing villagers, conflict resolution and are perceived as main representatives of villages.

4 .3 S tra t eg ic C ont ex t

4.3.1 The proposed Project supports Kenya’s current development strategy that focuses on growth and poverty reduction articulated in the ERSWC. The project is also in line with the Strategy for Revitalization of Agriculture (SRA) which outlines various policy reforms including the development of irrigation and market access as a means of improving food security and income. The proposed project will support the development of water resources of the area in the vicinity of the lakeshore between Kendu Bay and Homa Bay and by addressing the socio-economic and legal constraints to further irrigation development for an increase in agricultural production. The selected project area and beneficiaries have the highest poverty levels in the country. The implementation of the project in these areas will address the issue of poverty reduction and income generation. Increased production and productivity will be linked to markets as the country’s strategy includes market-based approach to increased productivity which is clearly stated in the SRA. This will enable smallholder farmers to build upon existing market linkages, as well as to diversify, intensify and commercialize their production.

4.3.2 The proposed project is anchored on Pillar II of the Bank Group’s Country Strategy Paper (2005-2007) for Kenya, which seeks to reduce vulnerability and improve equity through the improvement of agricultural productivity and competitiveness. The CSP has highlighted the importance of agriculture and rural development, on which most the livelihood of the poor in Kenya depend. Smallholder irrigation development has been selected a priority in the CSP 2005/2007. The Project is in line with the Bank’s vision of supporting technological, institutional and policy changes as well as transforming rural economies in RMCs and empowering rural populations to improve their productivity and real incomes in an equitable and environmentally sustainable manner. The Project will also contribute to the achievement of core MDG objectives of poverty alleviation and sustainable development and the comprehensive agriculture mandate of the NEPAD initiative. The project builds on the experiences gained from the various Bank financed projects in Kenya. The choice of this irrigation intervention is in line with the ADF X strategy on selectivity to boost production and productivity, food security and poverty reduction in RMCs

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4 .4 Pro je c t Ob j ec t iv es

4.4.1 Sector Goal: The sector goal is to improve income levels in a sustainable manner for the rural households and thus reduce poverty.

4.4.2 Project objective: The project objectives are to increase agricultural productivity through support to farm households to improve land productivity, adopt intensive production techniques and increase farmer’s incomes through accessing markets and better prices for their products. These would be achieved through two distinct approaches: i) development of sustainable irrigation systems; and ii) provision of market information and linkages and extension service. The other objective is to empower farmers through acquisition of entrepreneurial skills to manage the scheme once the project is completed. The project will also contribute directly to the welfare of women and children by reducing women’s workload in terms of time used to collect safe drinking water. The project will develop water points for household use. The project design also ensures that less work will be done in initial land clearance which is the main occupation of women in the project area. Land clearance will be done by the contractors.

4 .5 D et a i l ed D e sc r ip t io n o f P ro j ec t C o m p on en t s a n d A c t iv i t i e s

4.5.1 The proposed Project consists of three components: A) Irrigation Scheme Development and Management with two sub-components, Formation of Water Users Association and Irrigation Development and Management, B) Marketing and Extension, with Support to Farmers, Support to Extension Workers and Market Linkages sub-components; and C) Project Coordination and management.

A). Irrigation Scheme Development and Management: Comprises two sub-components: i) Formation of Water Users Association, ii) Irrigation Scheme Development and supervision of construction. This component is aimed at establishing two irrigation systems that will have a minimum of net irrigated land of about 1,474 ha. B). Marketing and Extension: Comprises three sub-components: i) Support to farmers this will include training farmers from 3,000 in irrigation farming techniques and soil management, training another group of farmers from 400,000 households in entrepreneurs skills marketing techniques, and provision of domestic water supply provision of 12 boreholes, construction of 12 canal-based domestic water points , ii) support to extension workers, this sub-component involves training up to 120 extension workers in the district, iii) Market Linkages. C) Project Coordination Management and Support: This component will ensure efficient and effective implementation of the Project through provision of national technical assistance to the existing District administration.

A. Irrigation Scheme Development and Management

A.1 Formation of Water Users Association (Irrigation Water Management)

4.5.2 Before the physical implementation of the scheme, the Project, through the MoW (IDB’s Provincial and District Irrigation Units), will facilitate formation and registration of IWUAs, one for each scheme, using the “Framework for Formation and Management of (Irrigation) Water Users Association towards Sustainable Community-based Smallholder Irrigation and Drainage Development”. The main constituents of the organization will include the General Assembly, IWUA management, Block and technical committee and registered individual farmers. Each IWUA will be registered and required to apply for a water abstraction permit thus complying with applicable legal requirements.

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4.5.3 At block level, the Project will facilitate formation of block committees, 44 in Kimira and 53 in Oluch, which will take care of all block activities and be reporting to the IWUA. Scheme-specific operation and maintenance (O&M) manuals will be developed and used for farmer training. The Project will produce overall scheme and block irrigation schedules which will be simplified for smallholder farmers’ use. Proper mechanisms will be put in place to minimize irrigation water losses especially during the critical period (September) by lining some sections of the canals, intensifying training and research in good irrigation water management, providing night water storage reservoirs and allowing for a 14-day drought period in the design. Apart from O&M fees, farmers will buy water shares at Kshs 2,000 per year (two cropping seasons) for each 0.5 ha irrigated with the aim of improving the water use efficiency. In Kenya smallholder surface irrigation fed by gravity is usually done during the day as it is more difficult to distribute water at night.

A.2 Irrigation Development and Supervision

4.5.4 Kimira Smallholder Irrigation Scheme: The Project will finance the construction of irrigation, drainage and road networks including structures which will initially support 44 cohesive irrigation blocks with a total net irrigable area of 808 ha serving 1,616 households. The abstraction of irrigation water, from Kibuon River, will require the construction of an intake weir to increase the water level. The design capacity for the intake weir is 902 l/s and water will be drawn into a side canal leading into sluices to allow flushing out sediments to the downstream of the weir. There is a provision for the fish ladder at the weir.

4.5.5 The Kimira scheme design was based on water conveyance by gravity with a surface irrigation method. In order to reduce costs, a lined open canal system was chosen due to the nature of the soil types in the area in order to avoid canal scouring/erosion and excessive water losses. Some sections will have siphons or PVC pipelines. Within the main irrigation canal systems, Kimira scheme will have 8,580 m of open rectangular lined canals, 2,197 m of trapezoidal canals, and 374 m of box profile and 2,878 m of pipelines including siphons. The secondary irrigation system will have 3,238 m of open rectangular canals, 445 m of trapezoidal open canals and 9,957 m of pipelines. The main and secondary canals have been provided with several civil and hydraulic structures including sand traps.

4.5.6 Apart from the irrigation canals, the main secondary and in-field drainage systems will evacuate flood and excess irrigation waters from the command areas. Kimira scheme will have 30,800 m of main drain, 14,400 m of secondary drains and 4,400 m of tertiary drains. In addition, improvement of natural drains will cover 4,700 m. In some cases, cut-off drains will be constructed to intercept water from upper surrounding areas to appropriate natural streams or artificial drains. Most of the drains will be earthen but on extremely steep sections. To avoid too frequent drops, the drains will be lined. Drop structures have been provided to minimize erosion. 600 and 900 mm culverts have been provided to drains where they cross roads. However, where stream tributaries and deep gullies exist, concrete box culverts or drifts will be used.

4.5.7 The Project will construct a total of 7.3 km of 5m and 6m-wide rural access roads, including spot gravelling and 4.42 km of 5m-wide service roads.

4.5.8 Oluch Smallholder Irrigation Scheme: The Project will facilitate construction of irrigation, drainage and road networks including structures which will initially supply 53 cohesive irrigation blocks covering 666 ha of net irrigable area serving 1,334 households. In addition, a bridge will be constructed over the Tende River to provide critical access to villages/areas on the other side of the river. Appropriate river-bank protection activities, on the meander section-upstream of the proposed weir site, have been included in Project. The water abstraction, from Tende River will entail construction of intake weir. The design capacity for the intake weir is 778 l/s. The weir design is similar to that of Kimira.

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4.5.9 Oluch’s main irrigation canal system will have 9,921 m of open rectangular lined canals, 1,812 m of trapezoidal canals, and 855 m of box profile and 1,587 m of pipelines including siphons. The secondary irrigation system will have 4,414 m of open rectangular canals and 8,456 m of pipelines. The main and secondary canals have been provided with several civil and hydraulic structures including sand traps.

4.5.10 Oluch scheme will have 14,500 m of main drains, 12,800 m of secondary drains and 4,100 m of tertiary drains. In addition, improvement of natural drains will cover 4,500 m. Cut-off, in-field drains and structures are similar to Kimira’s. The Project will also construct a total of 7.5 km of 5m and 6m-wide rural access roads, including spot gravelling and 9.3 km of 5m-wide service roads.

4.5.11 Block and In-field Systems: The block system, served by one tertiary canal, will comprise tertiary canal, in-field canals, in-field drainage, in-field road network and related structures which will be shared by farmers. In hydraulic terms, the structures are similar to those of the main and secondary canal systems but much smaller with higher quantities.

4.5.12 Kimira scheme will have 40,685 m of tertiary canals, 118,400 m of in-field canals, 44,100 m of in-field drains, 20,200 m of collector drains, 407 distribution boxes, 69,800 m of block access roads and 46,800 m of in-field paths with 184 drain crossings, 111 road crossings and 93 minor bridges/walkways. Oluch scheme will have 39,622 m of tertiary canals, 94,600 m of in-field canals, 40,200 m of in-field drains, 22,300 m of collector drains, 425 distribution boxes, 55,200 m of block access roads and 22,300 m of in-field paths with 213 drain crossings, 128 road crossings and 213 minor bridges/walkways.

B. MARKETING AND EXTENSION

B.1 Support to Farmers

4.5.13 The farmer field school approach, widely promoted by FAO in Kenya will be used to build farmer capacity both in technical knowledge of irrigation management on their farms and in growing specific irrigated crops for profit. To ensure sustainability, the local extension services will also be involved and participate in the field schools. Contracts will be awarded to NGOs to provide extension services and back-up on conservation farming, use of green manures and improved fallows to maintain soil fertility and ensure the sustainability of intensive farming.

4.5.14 Efficient water use within the blocks will be essential if the full area is to be developed. KARI will be contracted to study the water use efficiency in each block during its second year of operation. These studies will determine the cropping calendar and use of alternative planting times as well as irrigation timing and quantity. The research will be conducted with the farmers so that the results can be immediately applied in the fields to improved irrigation efficiency. During the training program, the poorest farmers will be identified. Special attention and priority will be given to women headed households, those who cannot afford to purchase the required inputs to maximize yields especially using the acquired knowledge from the training sessions. The poor farmers will be provided with starter packs each valued at about Kshs 11,000. The start-packs will include the recommended inputs like fertilizers, improved seeds, etc.

4.5.15 Appropriate farmer training based on the results of the training needs assessment will be provided by the Project. IWUA leaders training will cover group dynamics (including leadership and conflict management), public relations, accounting (basic book-keeping) and irrigation system operation and maintenance. Through the established IWUA and Block Committees, farmers will also be trained by the technical district and supervisory staff to participate in the construction of the associated water supply-related civil works by providing labor, and fish farming. On-site training would be provided for the beneficiaries, especially women, in group dynamics (including leadership and conflict management), and water system operation and maintenance.

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4.5.16 The Project will provide post harvest handling facilities, including a storage shed within both Kimira and Oluch for grading and packaging of the agricultural produce. Provision has been made to compensate farmers whose land will be used for construction of such facilities. A short term marketing consultant (TA) will be recruited for a total 12 man months during project implementation (TA) will be recruited to assist in setting up a marketing intelligence system and liaise with Government and private institutions to explore export market opportunities. Through intensive training, by to be contracted to private firms and local NGOs with expertise in the filed, the beneficiaries, at block level, will form cooperative societies with a major aim of facilitating the linkage between producers and buyers. The Ministry of Co-operatives through the Co-operative development Officers at District levels will facilitate the legal registration and promotion of the cooperatives.

4.5.17 The project will fund training of farmers in agricultural production, marketing, irrigation techniques and water management. The project will support training through Farmers Field Schools, study tours and short term training for front line staff and farmers. In addition, 222 person months of consultancy services in different disciplines would be provided under the project to assist in a variety of activities such as marketing, quality control and phytosanitary requirements, market research, extension and in filed research. To increase the quantity and quality of selected horticultural crops, the project will establish demonstration plots for a few selected high value crops like passion fruits, chilies, garlic, and exotic vegetables. It will also introduce the production of commercial horticultural crops like vanilla and spices in which case a vanilla multiplication facility will be established. The project will also train farmers on export standards to be able to supply the major exporters in Kenya. At least 30 farmers will be trained intensively every year during the project so that by year 5 they will be capable of producing for export.

4.5.18 Domestic Water Supply and Water for Livestock: The Project will contract a borehole drilling contractor to drill new boreholes (6 in both Kimira and Oluch) and rehabilitate existing boreholes (4 in Kimira) in areas with good quality water. The construction of pilot canal-based gravity domestic water supply system (2 in both Kimira and Oluch) and washing slabs 10 in both Kimira and Oluch for domestic purpose will be done by the scheme contractor. Potable water supplies will enable farmers, especially women to have access to good quality water within a reasonable distance from their homesteads. Construction of water facilities will be supervised by MoW (WSRB). The Project will facilitate construction of rainwater-harvesting domestic-animals watering ponds (4 in both Kimira and Oluch) along natural depressions and beneficiaries will provide labor. The Project will also provide support to the community members in terms of training in O&M of water points and hand-pumps, efficient utilization of domestic water and health/hygiene education.

4.5.19 Fish Farming/Aquaculture: The Project will construct night storage reservoirs within the irrigation network which will also be used for fish farming. There will be 4 reservoirs in Kimira network with a total active storage capacity of 32,500 m3 while Oluch will have 6 reservoirs with total capacity of 26,270 m3. One reservoir covers an average area of 0.8 ha and will be stocked with 2 tilapia fingerlings and 1 clarius (catfish) per m2. The Project will procure and distribute feeds to the beneficiaries (one season per reservoir) using credit in kind approach. After harvest, the beneficiaries will pay back the money into their own account and use of it for stocking the reservoir with new fingerlings and household use. Beneficiaries, using locally available materials, will construct a small one-roomed block near each reservoir to be used as an office and store room (tools and nets). The fish farming will be done by farmers who will lose land, through reservoir construction, and others appointed by the Block Committee with guidance from the Ministry of Livestock Development and Fisheries (District Fisheries Officer). Fish farming will not only provide extra income for farmers, but will also encourage farmers to assume ownership and maintain the storage reservoirs to avoid siltation.

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B.2 Support to Extension Workers

4.5.20 About 120 GoK extension workers from the two Project Districts will receive refresher courses in small-scale irrigation and agronomy of irrigated crops. JICA has suitable training facilities available in the region. Staff selected from the districts, LBDA and line ministries will benefit from the training on relevant areas where necessary. The emphasis would be on what the farmer can do with their own resources, starting with no extra cost technologies and offering a phased opportunity approach to technology transfer. A well functioning results tracking M&E system with a technical team for reporting, planning and trouble–shooting will be introduced.

4.5.21 Extension staff will also be facilitated to monitor the experience of the farmers in the initial blocks to enable lessons learnt to be rapidly disseminated.

B.3 Marketing Linkages

4.5.22 The project will facilitate the incorporation of smallholder farmers into local, regional and global supply chains through innovative technical interventions in the field as well as market analysis and linkages with commercial buyers. This will be a market–based approach consisting of continuous analysis on the latest trends. This activity will not only target the 3,000 households involved in irrigation but also the households in the two districts and a total of 400,000 households will benefit. Farmers will be encouraged to join the Kenya National Federation of Agricultural Producers (KENFAP) to access services on a sustainable basis. The Project will initially contract organizations in the project area to provide training in farm management and running a farm as a business. There are various companies and government agencies that are already involved in provision of technical assistance and market information to farmers like the HCDA. These will be contracted, through competition, to provide services to improve marketing. Market studies will be carried out once a year during the project life to identify niche markets and to develop and facilitate marketing strategies for horticultural crops. Producer groups will be encouraged to develop and become legally registered under the co-operative laws to enable efficient marketing and also purchasing of inputs.

4.5.23 Market systems of various crops that do not exist at the moment, including business oriented producer organizations to reach down to farmers, will be established to ensure quality products and sufficient volumes for sustainable market linkages. To build commercial smallholders, a quadruple focus will be applied including technology transfer, input support, output marketing, and financial services support. Promotion of cluster approach will be used to strengthen and integrate commodity chains. Promotion of livestock products will also be included. This will take place from PY4. Local Government extension agents will also be involved to ensure sustainable support, transport and field allowances will be provided by the Project.

C. PROJECT COORDINATION AND MANAGEMENT:

4.5.24 Project management would be based on a participatory management approach. Effective project management is essential to ensure the achievement of project outputs and impact, as well as providing financial accountability with due diligence, and conduct transparent procurement procedures in the award of contracts. The institutional arrangements for managing the project and for ensuring the sustainability of results build upon experience from lessons learnt in other ADF funded projects in the country. All stakeholders have been fully involved in the design of the current project and will participate in execution and management. The project will be implemented within the existing institutional framework at ministerial and district levels. A focal Point will be designated at the Executing Agency to coordinate project implementation activities. At the field level, a team of experts will be recruited to strengthen the capacity of the District administration. The team will comprise a Project Manager, an Accountant, a Monitoring and Evaluation Specialist and a Procurement Specialist. These will be recruited on a competitive basis. In addition, the government will appoint technical staff within the service and will include an agronomist, a rural Sociologist

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/gender specialist and 3 Irrigation Engineers (1 at the District Head Quarters in Homa Bay and 2 as site engineers). The agronomist, the rural sociologist/Gender Specialist, the irrigation engineers, and support staff will be provided by the Government from the existing staff of the various technical departments and LBDA. All the staff will be subject to a performance-based contract. The project will finance the project management costs.

4.5.25 The project will provide training for the staff involved in the implementation of the project at district, provincial and national levels. The capacity of LBDA will be strengthened in the area of financial management, project management.

4 .6 Pro d u ct ion , M ar k et s a nd Pr i c es

4.6.1 Production: The irrigated area will be developed gradually in terms of water becoming available as the infrastructure is constructed to more and more blocks, and with individual farms developing as the farmers become more experienced and the project interventions lead to a commercial orientation. In order to ensure maximum returns per household, the project will help farmers to target the following high value crops for the export market- passion fruits, Chili products (hot peppers, paprika, etc.), vanilla and spices, smallholder flowers, Tree crops, like mangoes. In addition, farmers will continue to produce local market vegetables lie onions, carrots, Cabbages and tomatoes. Average yields in the project area for various crops are presently low (Maize 1mt/ha, Rice 1.3mt/ha, Beans 0.274mt/ha, Kale 12.4mt/ha and Tomatoes 12.3mt/ha). This is linked to the production under rain fed conditions, the low input agriculture in which plot-specific events can have a large impact, such as specific soil conditions, different weeding practices, application of manure, occasional floods occurring in areas close to the rivers. On the basis of realistic assumptions, yield will increase and agricultural production is projected to increase from presently 3,438 tons to 34,685 tons resulting in increase of 31,246 tons after full development of the two irrigation schemes.

4.6.2 As irrigation water will be available throughout the year, there will be possibilities to grow crops at any period of the year. Farmers will thus be very flexible in determining the optimal planting time so that the harvest can be done outside of the high season for rain fed production. Farmers will also adjust and start producing high value crops like cowpeas, vanilla, chilies and Kales for export markets. The prices for the crops are as indicated in annex 5d. The farmers will be able to make full use of price differentials occurring within one year. Particularly prices of vegetables such as of tomatoes vary considerably during a year. The farm household survey done by the study showed that farm gate prices of tomatoes varied from 8 to 35 Kshs /kg in 2005. Parallel to that, wholesale prices of tomatoes on Kisumu wholesale market varied from 9 to 20Kshs /kg in 2005. In this context it has to be noted that wholesale prices are normally not so much subject to fluctuation due to a polygopolic demand and supply structure. Farm gate prices vary more within one year, but also between different years in the positive as well as in the negative sense. Higher returns in terms of prices will be realized in the project area due to: a) better quality due to sufficient water allocation; b) higher fertilizer input since farmers will no longer reluctant to invest in their crops; c) different times of harvest; and d) less need to immediately sell the produce to cover cash requirements due to a general higher family income (longer storage period to make use of higher prices.

4 .7 En v iro n m en ta l I mp a ct s

4.7.1 In accordance with the Bank Group’s Environmental and Social Assessment Procedures (ESAP), small-scale irrigation projects located in or near Environmental Sensitive Areas (ESAs) fall into Category 1 and would require an Environmental and Social Impact Assessment (ESIA) Study. In addition, pursuant to the Kenyan’s Environmental Management and Coordination Act (EMCA) of 1999 and the Environmental (Impact Assessment and Audit) Regulations of 2003, it is stipulated that the development of irrigation schemes must undergo an ESIA Study prior to project implementation. An ESIA Study was carried out during the feasibility and final project preparation and design of the Project. The Executive Summary of the ESIA Study report was posted on the Bank Group’s Public

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Information Centre (PIC) and distributed to the Board on November 25th, 2005.

4.7.2 The positive and negative impacts have been carefully considered during the project identification, feasibility and design stages of the project. Environmental and social impacts can occur at the construction and operational phases of the Project. Significant positive social impacts include creation of employment for the local communities, better crop yields, diversified agricultural base, extended cropping seasons, improved food security, reliable water supplies, health and sanitation facilities, and improved household income. Some 15,000 people in total will improve their income as a result of the project. The positive environmental impacts will be a reduction of the existing pressure and/or encroachment on the Environmentally Sensitive Areas (ESAs), including the protection of wetlands of national and international significance, through the promotion of irrigation practices as a more intensive type of agriculture and the restoration of agro-ecosystems and soil fertility and related productivity.

4.7.3 The negative social impacts relate mainly to an increase in the likely incidence of waterborne and water-related diseases, especially in the vicinity of the night water storage reservoirs and HIV/AIDS resulting from population and workers migration. Archeological and historical sites could also be impacted. The negative physical impacts include land conversion, including a loss of pasture for livestock, water logging, salinization and sodicity, soil erosion and sedimentation, direct reduction of downstream water flow changes in the rivers Kibuon and Tende and indirectly in the Winam Gulf of Lake Victoria. The potential downstream impacts of the water flow could result in an impairment of the aquatic ecology, wildlife and biodiversity habitats, interference with fish and bird migration and breeding patterns, and silting of the river channel because of insufficient velocity in the river to transport sediment loads. Pollution of water bodies could also result from use of agro-agricultural chemicals and fertilizers and affect water quality and fisheries. Nutrients, especially nitrates and phosphates, in surface waters may contribute to eutrophication of irrigation canals, rivers and the part of Lake Victoria in the vicinity of the project. Negative biological impacts include interference with wetlands, loss of natural habitats and biodiversity, including fisheries, and problems associated with invasive weeds. Many negative environmental impacts result directly from methods and practices adopted by construction contractors. Some effects are short-term while others can be more long lasting. The Code of Good Practices for Construction shall be included in the work contract to prevent, to the extent possible, any negative environmental impacts

4 .8 En v iro n m en ta l Mi t ig a t io n

4.8.1 Environmental mitigation and enhancement measures of the impacts can be applied at each stage of the project development. On the social side, health education programs of the local people are critical in order to prevent increased incidence of waterborne, water-related and sexually-transmitted diseases (STD) in the project area. Biological control of disease vectors can be also achieved by introducing predator fish, such as Tilapia zilli that prey on mosquito larvae. The incidence of diseases can be reduced through improved irrigation water management practices and careful planning and designing of irrigation canals and drainage system. These measures are also important to improve irrigation efficiency and avoid water logging. Efficient scheduling of water application can also avoid over-watering. Impacts of soil erosion and sedimentation can be addressed by adequate protection against scouring at culverts or control structures. The use of properly graded lined canals can minimize risks of sedimentation and the presence of aquatic weeds. Of particular concern are mitigation measures concerning diversion of water and changes in the hydrological regime of the rivers. Diversion of water shall cease when river flow falls below a threshold value of 30% of base flow, especially during the dry season to maintain the riverine ecology downstream of the intake weirs. A layout of drainage canals will be designed to take advantage of the purification of the wetlands to minimize siltation of the rivers and eutrophication of Lake Victoria. As well, careful use of agro-chemicals, including increasing the farmer’s awareness of Best Management Practices (BMP), particularly fertilizer and manure management, is important to minimize pollution and eutrophication of the rivers and lake. In order to avoid habitat and biodiversity loss, a screening analysis has been

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carried out to determine the existence of Environmentally Sensitive Areas (ESAs). These areas have been avoided in project sitting. Fish ladders will be constructed at the two intake points to allow for effective upstream passage of anadromous fish. The project will also facilitate the repairs and equipping at minimum levels two District clinics one in Rachounyo and another in HomaBay to enhance the health official’s ability to diagnose and treat Malaria and Bilharzias whose incidence are likely to increase due to this intervention. Provision will also be made to distribute mosquito nets to household who are within the irrigation catchment area. All the mitigation measures have been incorporated in the design of the project.

4.8.2 A senior environmental consultant will supervise the implementation of the mitigation and enhancement measures and the execution of the monitoring plan. He/she will document this compliance in a specific section of the Project’s Quarterly and Annual Progress Report. Other line ministries, LBDA staff (hydrology, sociology) and consultancy resources will be brought on board for the environmental management and monitoring plans according to specific needs. In a spirit of accountability and transparence, the National Environmental Management Authority (NEMA), in coordination with a District‘s Technical Advisory Committee on EIA, composed of the Ministries of Environment, Health and Water, will undertake oversight monitoring of the implementation of the ESMP every six months during project’s construction and operation activities.

4.8.3 During the participatory preparation work, smallholder farmers were pro-actively consulted throughout the irrigation, drainage and road design networks. In fact, the final designs reflect farmer’s preferences of no land redistribution or changes of ownership of block layout. Also, the organization of the irrigation division has been defined in accordance with the existing clan system in order to conserve social cohesion. Consequently, all efforts were taken to avoid any major disruption to farmer’s homesteads and lands. The farmers have already agreed, as in-kind contribution, not to receive any compensation for the right-of-way of the irrigation system on their lands. During the construction of the canals and the night water storage reservoirs, only 6 owners of houses and 10 farmers will be negatively affected. Full compensation will be provided to the house owners to rebuild their houses on their plots but further from the irrigation canals lining. As well, the 10 farmers affected by the loss of some of their lands will be compensated through financial assistance and through taking over the management of the fish farming in the reservoirs. The legal procedures defined in the Water Act will be use for the compensation of these 16 homesteads. A specific compensation amount of UA 0.43 million have been budgeted in the project cost for the construction of these houses and/or compensation for land losses. Prior to the start of the project, the Government will provide evidence that an environmental License has been acquired from the Kenya National Environment Management Authority. This will be a condition precedent to first disbursement of the grant. Finally, clearance was obtained by the Secretariat of the Nile Basin Initiative (NBI) to recognize the Kimira-Oluch Smallholder Irrigation Development Project as a national priority project.

4.8.4 Based on the social and environmental impacts of the project activities mentioned above, key social and environmental parameters have been selected to form the basis of the monitoring program. Social impacts (e.g. creation of employment, improved crop yields, etc.) will be monitored annually through socio-economic surveys. Demographic data in the project area should be obtained for assessment of changes of local population, fuel wood and fish consumption. Morbidity patterns from waterborne, water-related and STD diseases will also be recorded on a monthly and yearly basis. On the environmental side, monitoring of the size and floristic composition of wetlands, wildlife survey, avifauna census, fishery composition, distribution, sizes, breeding sites, habitats, production and marketing, and, finally, livestock monitoring are scheduled. Hydrological monitoring and water quality and quantity at the weir level in rivers and the lake will also be monitored. Methods, locations and frequency for the monitoring have already been established. The risks also of soil salinity, sodicity and erosion will be closely monitored during the project implementation and afterwards. Regular training of farmers on appropriate water scheduling, organic soil improvements, and deep ploughing will be made to mitigate these risks.

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4 .9 Pro je c t C o s t s

The total Project cost is estimated at UA 27.77 million including contingencies and excluding taxes. The foreign exchange component is UA 16.84 million, representing 60.60% of the total cost, while local cost is UA 10.93 million, or 39.40% of the total cost. Summaries of cost estimates by components and by category of expenditure are in Tables 4.1 and 4.2 respectively.

Table 4.1: Summary of Project Cost Estimates by Component

(Kshs Million) (UA ‘000) Item Description Local Foreign Total Local Foreign Total

% Foreign

Exchange

% Total Base Costs

A. Irrigation System Development And Management

Formation of Water User Associations 8.60 30.70 39.30 75.30 270.40 345.70 78 2 Irrigation Development 435.00 1,113.90 1,548.90 3,369.90 10,257.80 13,627.70 77 54 Environmental Mitigation 107.00 24.30 131.70 945.50 213.40 1,158.90 18 5

Sub-total Irrigation System Development and Management 551.10 1,168.90 1,719.90 4,848.60 10,283.70 15,132.30 73 66

B. Marketing And Extension Support to Farmers 90.30 99.60 189.90 974.50 876.00 1,670.50 52 7 Support to Extension Workers 45.60 16.50 62.10 262.70 283.90 546.60 52 2 Market Linkages 128.00 107.20 235.80 1,131.50 942.80 2,074.30 45 9

Sub-total Marketing and Extension 264.50 223.20 487.70 2,188.70 2,102.80 4,291.40 49 19 C. Project Management Support 210.70 191.30 402.00 1,496.80 2,o40.30 3,537.00 58 15 Total Base Costs 917.90 1,691.70 2,609.60 9,030.30 13,930.40 22,960.80 66 100

Physical Contingencies 72.90 149.20 222.20 641.40 1,312.90 1,954.30 67 9 Price Contingencies 117.50 206.90 324.40 1,033.80 1,820.80 2,854.60 64 12

Total Project Costs 1,108.30 2,047.90 3,156.20 10,928.80 16,840.90 27,769.60 66 121

Table 4.2: Summary of Project Cost by Category of Expenditure

(Kshs Million) (UA ‘000) Item Description Local Foreign Total Local Foreign Total

% Foreign

Exchange

% Total Base Costs

I. Investment Costs A. Civil Works

Main Irrigation Infrastructure & WUA Building 239.00 955.90 1,194.90 2,102.70 8,410.90 10,513.60 80 46

Domestic Water Systems and Storage Shed 5.90 23.70 29.70 52.20 208.70 260.90 80 1

Minor Works 87.90 101.20 189.10 774.30 889.70 1,663.60 76 7 Sub-total Civil Works 332.80 1,080.80 1,413.60 2,928.80 9509.30 12,438.10 79 54 B. Goods Vehicles 0.90 18.10 19.00 8.40 158.80 167.20 95 1 Vehicle Motorcycles 0.40 6.70 7.00 3.10 58.80 61.90 95 - Equipment 0.30 6.30 6.60 2.90 55.20 58.10 95 - Sub-total Goods 1.60 31.00 32.60 14.40 272.80 287.20 95 1 C. Services Training 177.40 177.40 354.70 1,560.50 1,560.50 3,121.00 50 14 Technical Assistance 63.60 267.90 331.50 559.60 2,357.40 2,917.00 81 1 Study 3.00 12.00 15.10 26.50 106.00 132.50 Financial Audit 1.80 7.20 9.00 15.80 63.30 79.20 Environmental Audit 1.70 6.90 8.70 15.30 61.00 76.30 Sub-total Services 247.50 471.50 719.00 2,177.70 4,148.30 6,326.00 73 28 D. Miscellaneous 92.50 - 92.50 814.10 - 814.10 - 3

Total Investment Costs 674.50 1,583.30 2,257.80 5934.90 13,930.40 19,865.40 73 86 II. Recurrent Costs

A. Personnel 111.60 - 111.60 1,077.80 - 1,077.80 - 4 B. Daily Subsistence Allowances 27.20 11.70 38.90 283.80 121.60 475.70 30 2 C. Operation And Maintenance Vehicles 37.90 88.50 126.40 333.70 778.70 1,112.50 70 5 Infrastructure 37.00 0.50 37.50 325.30 4.40 329.50 30 1 Sub-total Operation And Maintenance 74.90 89.00 163.90 658.90 783.60 1,442.00 54 6 D. General Operating Charges 29.70 7.81 37.40 261.00 68.40 329.40 21 1

Total Recurrent Costs 243.40 108.40 351.80 2,141.30 954.10 3,095.40 31 14 Total Base Costs 917.90 1,681.70 2,609.60 8,076.20 14,884.60 22,960.80 66 100

Physical Contingencies 72.90 149.20 222.10 641.40 1,312.90 1,954.30 67 9 Price Contingencies 117.50 206.90 324.40 1,033.80 1,20.81 2,854.60 64 12

Total Project Costs 1,108.30 2,047.90 3,156.20 10.928.80 16,840.90 27,769.60 66 121

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4 .1 0 S ou rc e s o f F in a nc in g

The ADF, the GoK and the project beneficiaries will finance the project. The ADF’s loan not exceeding UA 22.98 million will finance 82.70% of the total investment and some recurrent costs. ADF Grant of UA 1.15 million representing 4.24% of total Project cost will mainly finance cost of mitigating the negative impacts on the environment including compensation charges and community mobilization, health and sanitation activities and training on environmental best practices. The GoK will contribute UA 3.15 million (11.40%) of total costs covering salaries for Government technical staff, provision of offices at Homa Bay District headquarters to house the technical assistance team, the cost of environment license (NEMA), water permit and the initial cost of mobilizing farmers to form Irrigation Water Users Associations, registering the IWUA and payment for the water permit/right fees. Beneficiaries will contribute UA 0.49 million (1.70%) of total costs, which will include labor for construction of block and in-field works including minor ripping/land preparation. Table 4.3 shows the various sources of financing for the Project. Annex 3 (a) and 3(b) give the summary of sources of finance by categories of expenditure (list of goods and services) and by components. The details Project costs (Cost Tables) are included in the Project Implementation Document (Working Paper 1).

Table 4.3: Sources of Finance

(‘000 UA) (Kshs million) Source of Finance

Foreign Local Costs Total Costs

% of Total Foreign Local

Costs Total Costs

% of Total

ADF Loan 16,730.70 6,248.30 22,979.00 82.70 1,901.50 710.10 2,611.70 82.7 ADF Grant 110.20 1,043.20 1,153.30 4.20 12.50 118.60 131.10 4.2 Government of Kenya 0 3,152.60 3,152.60 11.40 0 358.30 358.30 11.4

Beneficiaries 0 484.70 484.70 1.70 0 55.10 55.10 1.7 Total 16,840.90 10,928.80 27,769.60 100 1,914.10 1,242.10 3,156.20 100

5 P R O J E C T I MP L E ME N TA T I O N

5 .1 Ex ecu t in g A g en cy

The Executing Agency will be the Ministry of Regional Development Authorities. The project will be implemented using the existing line structure from the central government in Nairobi to the two Districts of Homa Bay and Rachuonyo. The field implementation offices will be located in Homa Bay District Headquarters. A team of experts will be recruited and others seconded from government departments to strengthen the capacity of the districts to manage the project on a day-to-day basis.

5 .2 I ns t i t u t i on a l Ar r a n gem en t s

5.2.1. Actual project implementation will take place at District level where all activities will be conducted. The government of Kenya has placed emphasis on project identification and implementation at district level in line with its strategy for rural development which was designed to help overcome regional inequalities and to set the proper pace for rural development by involving local people directly in the development process. In order to build capacity of the district to undertake this assignment and considering the weaknesses identified, a team of technical experts comprising a Project Manager, an Accountant, a Monitoring and Evaluation Specialist, and a Procurement Officer will be recruited by the Project on a competitive basis. Additional technical staff will be provided by the Government and will include 3 Irrigation Engineers, (of which two will be site engineers) an Agronomist, and a Rural Sociologist/Gender Specialist. A senior environmentalist will be retained for a period of two month every year during project implementation to supervise the environmental mitigation and enhancement measures and the execution of the monitoring plan. He/she will document this compliance in a specific section of the Project’s Quarterly and Annual Progress Report.

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Availability of these technical experts was verified during appraisal and will not constitute a burden to the relevant line Ministries. The Project Manager will report to the Permanent Secretary (MRDA) through the Focal Point.

5.2.2 At the level of the Executing Agency, GoK will designate a Focal Point who will act as a liaison between the Ministry and the implementation team at the field level. The Focal Person will be responsible for the project start-up and afterwards ensure a continuous link between project activities in the field and the Executing Agency.

5.2.3. Project Steering Committee: At the national level, a Project Steering Committee (PSC) would be established to oversee project implementation. The PSC would be chaired by the Permanent Secretary, MRDA, and comprising representatives from the Ministry of Finance, Ministry of Environment and Natural Resources, Ministry of Water and Irrigation, Ministry of Agriculture, Ministry of Livestock and Fisheries Development, Ministry of Gender, Sports, Culture and Social Services, Director-General of National Environment Management Authority (NEMA) or his/her representative, the Managing Director of LBDA, 3 representatives from District Development Committees, (Homa Bay and Rachuonyo), 3 Kimira Farmers’ representatives (at least one lady farmer), 3 Oluch Farmers’ representatives (at least one lady farmer), and the Focal Point.

5.2.4 The main task would be to reviews and approve project’s annual work plans and related budget to ensure adherence to project development objectives. The PSC will also provide guidance to project management and resolve problems that might arise during project implementation. The PSC will also monitor performance of the project and advise it on policy issues. The Committee shall meet at least twice a year.

5 .3 Su perv i s io n , I mp le me n ta t i on an d Ex p end i t ure S ch ed u le s

5.3.1 Implementation and Supervision: The Project activities will be implemented within six years, starting from September 2006. Project activities will commence with the launching by the Bank, and establishment of the project coordination and managements mechanisms by the Borrower. The Project Manager will be responsible for overall implementation and supervision of all Project activities in collaboration with the two districts technical staff and concerned Government line Ministries. The Focal Point at the Executing agency will on the other hand ensure a constant link between the field activities and the Executing Agency through the Permanent Secretary. PY1 will mainly be used for community mobilization and formation of IWUAs, training, procurement of goods and services including civil works contractors and TAs. Major civil works construction will start from PY2 to PY5 whilst minor works will commence from PY3 to PY6. Partial scheme commissioning will be possible after a set of any five blocks are connected to the irrigation network and are operational. Partial scheme completion certificate will be issued and defects liability period effected accordingly. Crop production, in few connected scheme blocks, will start in PY 3. The service providers will enter into short-term contracts which will have specific and quantifiable monitoring indicators in line with the M&E system set up and closely monitored by Project Manager, the M&E Specialist and District officials. The M&E framework will be result based with clear milestones.

5.3.2. During Project implementation, the Bank will launch 2 supervision missions annually. A Mid-term Review (MTR) will be undertaken at the end of PY3. The Project Completion Report (PCR) will be prepared by the Borrower at the end of PY6. The Bank’s PCR will be prepared not later than six months after receipt of the Borrower’s PCR. The Project implementation and supervision schedules are in Annex 4.

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Expenditure Schedules: The expenditure schedules by component and by sources of finance over the Project period are shown in Tables 5.1 and 5.2, respectively.

Table 5.1: Expenditure Schedule by Component (UA ‘000) Total Including Contingencies Item Description 2006 2007 2008 2009 2010 2011 Total

A. Irrigation System Development And Management

Formation of Water User Associations 64.10 252.50 15.20 15.70 16.30 35.30 399.20

Irrigation Development 432.6 4,046.80 5,094.40 4,611.80 1,814.70 554.9 16,555.20 Environmental Mitigation 488.20 311.50 158.40 156.00 124.50 128.20 1,366.80

Sub-total Irrigation System Development And Management 984.80 4,610.80 5,268.00 4,783.50 1,955.50 718.50 18,321.10

B. Marketing And Extension Support to Farmers 46.30 56.00 96.00 684.20 742.70 409.10 2,034.30 Support to Extension Workers 132.20 94.80 118.60 122.90 84.00 87.10 639.50 Market Linkages - 29.30 206.10 875.40 907.80 569.00 2,587.60

Sub-total Marketing And Extension 178.50 180.10 420.70 1,682.50 1,734.40 1,065.20 5,261.40 C. Project Management Support 727.20 648.80 670.00 684.30 709.60 747.10 4,187.00 Total Project Costs 1,890.50 5,439.70 6,358.70 7,150.30 4,399.50 2,530.90 27,769.00

Table 5.2: Expenditure Schedule by Source of Finance (UA ‘000) Sources 2006 2007 2008 2009 2010 2011 Total % ADF Loan 1,203.42 5,045.14 5,784.86 6,221.78 3,294.87 1,428.91 22,978.99 82.7

ADF Grant 446.1 51 47.6 213 194.4 200.8 1,152.90 4.2

Govt of Kenya 240.98 334.59 416.58 493.68 791.55 875.17 3,152.56 11.4

Beneficiaries - 9 108.1 219.8 118.7 26 484.7 1.7

Total 1,890.50 5,439.70 6,358.70 7,150.30 4,399.50 2,530.90 27,769.60 100

5 .4 Pro cu re me nt A rra n ge me nt s

5.4.1 Procurement arrangements are summarized in Table 5.3. All procurement of goods, works and acquisition of consulting services financed by the Bank will be in accordance with the Bank's “Rules of Procedure for Procurement of Goods and Works” or, as appropriate, “Rules of Procedure for the Use of Consultants”, using the relevant Bank Standard Bidding Documents.

5.4.2. Civil Works: Procurement of civil works contracts totaling UA 12.68 million will be carried out under International Competitive Bidding (ICB) procedures as one contract with two Lots (Lot 1Kimira and Lot 2 Oluch), as shown in Annex 3c. The drilling of new boreholes and rehabilitation of existing ones for domestic water supply and construction of IWUA storage sheds totaling, in aggregate, UA 0.31 million will be procured through National Competitive Bidding (NCB) procedures since the contract sizes are small and the tenders are unlikely to attract international bidders. Also there are qualified national contractors to undertake the borehole drilling works and construction of the sheds. Minor civil works contracts for block and in-field scheme development and those relating to environmental mitigation measures expected to cost UA2.08 million will be carried out using the National Competitive Bidding (NCB) mode of procurement. These will be packaged into three lots for the blocks in Kimira (valued at UA 0.53 million) and those in Oluch schemes (valued at UA 0.36 million) in addition to the civil works related to environmental mitigation measures (valued ate UA 0.67 million) other small works valued at UA 0.71 million. All these small contracts will be carried out with full beneficiary participation. The size of these contracts is such that they may not attract foreign contractors.

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Table 5.3: Procurement Arrangements (UA ‘000)

Procurement Method Item Description International Competitive

Bidding

National Competitive

Bidding

Short list Other N.B.F Total

A. Civil Works Main Irrigation Infrastructure &

WUA Building 12,680.80

(12,680.80) - - - - 12,680.80

(12,680.80) Domestic Water Systems and

Storage Sheds - 308.00

(308.00) - - - 308.00

(308.00) Minor Works and tendering

process - 1,603.00

(1,603.00) - 481.00- 2,084.00

(1,603.00) B. Goods

Vehicle

- 187.30 (187.30)

- - 187.30 (187.30)

Motor cycles 69.40 (69.40)

69.40 (69.40)

Equipment - - 66.00 (66.00)

- 66.00 (66.00)

C. Services Technical Assistance - - 2,904.20

(2,904.20) 520.30√ ( 3,424.20)

(2,904.20) Training - - 3,568.80

(3,449.00) 240.50

(240.50) - 3,809.30

(3,689.60) Financial Audit and 92.00

(92.00) 92.00

(92.00) Environmental audit 90.20

(90.20) 90.20

(90.20) D. Miscellaneous - - 443.00

(443.00) 37.40 480.40

(443.00) E. Personnel

Personnel - - - 1,077.80 1,077.80

F DAILY SUBSISTENCE ALLOWANCE

475.70 (475.70)

475.70 (475.70)

G Operation & Maintenance - - - 2,078.80 (1,330.00)

140.90 2,219.70 (1,330.00)

H General Operating Costs (355.30) (355.30) Total 12,680.80

(12,680.80) (1,308.00) 6,823.30

(6,669.20) 4,097.30

(3,826.90) 2,116.50 27,769.70

(24,132.00) Notes:

1: Figures in parenthesis () are the respective amounts financed by the African Development Fund Loan. 2: “Other Procurement Mode” includes “International Shopping”, “Local Shopping”, and “Community Participation in Procurement”. √. NEMA(GOK) TO PROVIDE TA for environmental monitoring

5.4.3. Goods: Procurement of vehicles and motorcycles for supervision of civil works, support to extension service, market linkages, farmer training and project management and monitoring, all valued at UA 0.26 million will be through National Competitive Bidding. The NCB mode of procurement has been selected because most international motor vehicle manufacturers who are present in the continent have strong representatives in Kenya and this was seen to time saving.

5.4.4 Services: Procurement of consulting services (UA 2.90 million) will be through shortlist. These will include a civil engineering consulting firm to supervise of the major civil works (valued at UA 0.64 million), technical assistance, including technical experts to augment the capacity at the district. The project will also procure analytical studies though Short List (SL) in accordance with Bank’s “Rules of Procedure for the Use of Consultants” based on the technical quality with price consideration. The selection of services for annual financial and environmental audits will be carried out through a shortlist. The selection will be based on establishing the comparability of technical proposals and selection of the lowest financial offer. Routine Environmental Audit shall be carried out by NEMA.

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5.4.5 Miscellaneous: These activities will include compensation (valued at UA 0.43 million) for the 16 household whose houses will be affected by the canal and other construction works. In addition there will be awareness campaigns for prevention of water borne diseases , prevention of HIV/Aids and Environmental impact license valued at UA 0.05 million . These will be procured through community participation mode of procurement (CPP).

5.4.6 Post review: Contracts for procurement of works, whose values are below UA 100,000, will be subject to post-procurement review. Goods whose contracts are valued less than UA 50,000 each will be subject to post review. The Bank reviewed the capacity in the country in as far as procurement is concerned. The government has made efforts to reform the procurement regulations and has instituted appeals processes and introduced fair competition and accountability to a reasonable level.

5.4.7 General Procurement Notice (GPN): The text of a GPN will be discussed and agreed with the Borrower at negotiations and this will be issued for publication in “UN Development Business Journal” upon approval by the Board of Directors of both the Loan and Grant proposals.

5.4.8 Review Procedures: The following documents are subject to review and approval by the Bank before promulgation: General Procurement Notice; Specific Procurement Notice; Tender Documents/Requests for Proposals; Tender Evaluation/Evaluation of Proposals' Reports including recommendations for contract award; Draft contracts, if these have been amended from the draft contracts included in the Tender Documents; Studies/Research Reports and Technical Manuals.

5 .5 D is bu rs e m en t A rr an g em en ts

5.5.1 The direct payment method and the special account method will be used for disbursement. Disbursement for large contracts, such as those under civil works (including construction of irrigation infrastructure, supervision of civil works), training for the entrepreneurial skills, soil management techniques and vehicles and equipment will be undertaken under the direct payment method.

5.5.2 Disbursement relating to short-term consultancies, local costs related to training and operating costs would be affected through the special account method. One foreign currency interest-bearing special account (SA) and one local currency interest bearing account will be opened in Commercial Banks acceptable to the ADF. Funds coming from the Bank will be disbursed into the Special Account according to the work program. The ADF will replenish the SA after the Project has used at least 50% of the previous deposit and provided valid justifications for its use to the Bank. The opening of the special account and the local currency account will be a condition precedent to first disbursement.

5.5.3 When the project enters into force, the borrower should ensure that an internal control mechanism with an adequate accounting system is established for the project. The project will put in place an adequate accounting system and maintain records at all times of all disbursements made by the Bank and the Government.

5 .6 Mo n i to r i ng an d Ev a l u at io n

5.6.1 The monitoring and evaluation of project activities, including implementation progress and expenditure will be an integral part of the Executing Agency and the team of experts working with District officials as a regular management function through the PSC. Monitoring and evaluation activities have been clearly articulated and budgeted for due to the technical requirements associated with quantifying the benefits accruing to small holder farmers and the importance of measuring progress on the project’s objectives. The M&E system proposed for the project would provide information for directly assessing the outcomes and impacts of the project, and also refining working methodologies and procedures. The M&E system would, in addition to being responsible for project

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implementation, focus on two broad areas of impact: farmer’s ability to adapt new farming techniques, access to information and markets and environmental mitigation measures. The M&E would be carried out using a participatory mechanism, coupled with strong technical expertise. These would be developed to strengthen the M&E system that has been developed by the Government as duplicated at district level. There will be an M&E specialist attached to the district team to coordinate all activities.

5.6.2 The process will be based on key target verifiable indicators, including gender specific indicators, related to the project outputs and outcomes as stipulated in the Project Matrix. The monitoring and evaluation specialist will be assisted in the first year of the project by a consultant to establish a monitoring format, data collection techniques, and presentation tools. The M&E consultancy services will include establishing a Result-Based Management System and provide backstopping to ensure application and sustainability in line with the Result-Based Log frame.

5.6.3 The M&E process will also be anchored within the National Institutional Framework that is being implemented throughout the country through National Stakeholder forum, the District M&E Committees and Local Development Committees.

5.6.4 Prior to the end of the project, essential parts of the M&E system will be transferred to the two farmer organizations so that these organizations can collect data to allow long-term evaluation of the project impact. Environmental monitoring will be carried out on the basis of indicators provided in the Environmental Impact Assessment and the project Result-Based Matrix. The Fund will provide resources for monitoring and evaluation activities.

5.6.5 The Bank will closely monitor the implementation of the project through regular follow-ups, review and supervision missions. The latter would be undertaken at least 1.5 times a year. With the opening of the Kenya Country Office, there will be very close monitoring. The District Team with assistance of technical experts will also submit to the Fund regular quarterly progress reports, prepared as per the official Bank Group report guidelines, progress made on the implementation of the project components, as well as contain a comparison between the planned budgets versus actual expenditure. An annual work plans and budgets will also be prepared by the project.

5 .7 Fin a n c ia l R ep or t i n g an d Audi t i ng

5.7.1 The Project will maintain accounting records based on sound and acceptable accounting principles and in accordance with Bank guidelines. The project accountant will also ensure that the project is operating under an adequate control framework. Funds have been budgeted in the project for a short-term consultancy assistance related to project implementation. This consultant will write the operations manual for the project, and set up an appropriate accounting system, including the acquisition of an accounting software package (preferably one that allows for the customization of the chart of accounts). The project accountant will prepare regular accounting reports for management, which will be part of the quarterly reports, as well as consolidated annual financial statements for the project.

5.7.2 The project accounts will be audited annually by independent external auditors acceptable to the Bank in accordance with provisions of the Financing Agreement. These external auditors will be recruited based on the Bank’s standard terms of reference (ToR) and through a shortlist under the supervision of the Kenya Auditor General. The audit report will be reviewed by the Auditor General to ascertain conformity with the ToR before certification. Budgetary provisions for the annual audit have been included under the grant resources. The audited accounts, together with the auditor’s report, will be submitted to the Fund not more than six months after the end of the project’s fiscal year.

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5 .8 A id C o- ord i n at io n

5.8.1 Based on the emphasis that the ERS and SRA place on agricultural development, there is renewed donor interest in the sector. The poverty mapping exercise revealed that Nyanza Province has one of the highest proportion of its population (63%) living in absolute poverty. It also has the densest and poorest population, with up to 1200 persons /sq. km in some rural areas. The region is characterized by low agricultural productivity. The government therefore invited donors to contribute to the poverty situation in the region, in particular to increase agricultural productivity. Consequently, there are several donor funded projects under implementation or preparation which support smallholder irrigation development such as the Italian funded programme for enhancing horticultural production and market linkages and the Netherlands Government funded Smallholder irrigation project in Ahero. During project design a lot was borrowed from these two schemes and it hoped that farmers will also visit the two schemes to learn more. The World Bank is preparing the Western Kenya Community Driven Development and Flood Mitigation Project which is estimated to cost USD 80 million. The Western Kenya Integrated Ecosystem Management Project of USD 4.5 million is co-funded with GEF and covers part of the water catchments area where the two rivers Tende and Kiboun where the project schemes are to be built. The GEF programme will therefore supplement the intervention in Kimira-Oluch by conserving and ensuring continuous flow of water in the two rivers. The Other donors supporting the agricultural sector in the region include IFAD, EU, DFID and FAO who are preparing new operations aimed at improving agricultural productivity in Western Kenya in a bid to reduce poverty in the area.

5.8.2 Currently, DFID chairs and convenes the agricultural sector coordination group meetings. Other members are FAO, USAID, The Netherlands, GTZ, EU, JICA, CIDA, SIDA and the World Bank. These meetings are regular and have become formal, thus providing an opportunity for Donors to communicate with the Government of Kenya in order to evaluate and monitor development priorities. These meetings have become important in: (i) coordinating operations to reduce duplication; (ii) ensuring that there is coordination and learning from each other in identifying the best approach to invest in the sector; (iii) sharing information on the activities and performance of NGOs; and (iv) providing inputs into project formulation. Project Managers and NGOs under the sector are often invited to present their achievements and problems through these meetings. All the donor groups mentioned above were consulted during the preparation of this report and support and welcome the Bank’s interventions in this very crucial sub-sector.

5.8.3 The planned Project activities will be coordinated using the coordination group to avoid duplication and ensure proper collaboration and sustainability. The activities of the Group are in accordance with the Harmonization and Alignment Coordination set by the MDBs. With the opening of the Bank’s Country Office in Kenya in the near future, coordination with other donors on the ground will be reinforced and more effective. Project implementation and supervision mission reports will be made available to the donor groups.

6 PR OJ E C T S US TAI N A B I LITY A ND R IS KS

6 .1 R ecu rren t C o s t s

6.1.1 The recurrent costs are estimated at UA 3.77 million (approximately 14% of total Project costs) over the 6 year period, mainly consisting of salaries for Government extension staff, maintenance of PCMU offices (Homa Bay District), office operating expenses, operations and maintenance of motor vehicles and motorcycles. The recurrent costs will range from UA 0.40 million in year PY1 to UA 0.80 million in PY6. The Bank’s financing of recurrent costs will decline from 8% in PY2 to 3% in PY6. The Government of Kenya will gradually take over the financing of the recurrent expenditures during the project period by providing up to UA 2.60 million, refer to Annex 3d.

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6.1.2. The Government of Kenya has made an undertaking to include these provisions in the next budget cycle starting in July 2006. The Government of Kenya provided funds to LBDA for farmer group mobilization during the Project preparation period. This is an indication that the GoK is very committed to provide counterpart funding to cover the bigger portion of recurrent cost. Given that most of the funds, including salaries, relating to Government contribution are already included in the GoK budget, they will not be major difficulties in meeting their share of the recurrent costs. After completion, the Project recurrent costs will be fully absorbed by the Government through normal budgetary system and the IWUA through O&M and water share revenues collected from the farmers.

6 .2 Pro je c t S u s ta in a b i l i t y

6.2.1 The project has been designed to ensure sustainability in a number of respects. First, the participatory approach used from identification, preparation and design will foster ownership among the beneficiaries. Second, the management structure is designed to maximize the involvement of farmers and other stakeholders at project level through adequate representation and regular consultations. Thirdly, there is provision of continuous participatory planning during project implementation so that farmers are kept informed and are aware of the development in the project area and take full ownership. Some critical elements of the concept and design have been included in the formulation to increase the sustainability of the project. The irrigation system is based on gravity with low operation and maintenance costs. The project will assist in the establishment of farmer-managed water user association from the onset of the project.

6.2.2 A rural and group mobilization expert and legal experts will be hired to train farmers on how to manage the investment. There is provision for the IWUA to employ a salaried Scheme Manager, Accounting Technician, Irrigation Technician and several water guards. The training programmes and study tours for farmers and staff will enable them to strengthen their bargaining power to gain better terms and access to required resources. These organizations will take over full responsibility for the management, operation and costs of the schemes fully operate and maintain the scheme infrastructure.

6.2.3 The irrigated areas per beneficiary household will be a minimal of 0.5 ha to match the absorptive capacity of the household and the canals are lined canals with high water speeds to reduce the risk of silting and growth of weed. The design has excluded problem areas from the irrigation layout namely areas too distant from the intake weirs, areas with serious risk of salinity and areas used as grazing areas.

6.2.4. The project will initially focus on common crops already grown in the area for consumption (maize, beans, kale) allowing a gradual shift of farming system towards higher value crops such as; vanilla spices, passion fruits, kales , pepper (chilies and paprika). This will be ensured through a provision of extension and marketing support and training to empower the farmers. The linkages to markets will ensure the beneficiary’s financial returns are maximized.

6.2.5. Negative environmental impacts resulting directly from methods and practices used by construction contractors will be addressed by the inclusion of the Code of Good Practices for Construction the work contract to prevent, to the extent possible, any negative environmental impacts.

6 .3 C ri t i ca l R i s k s a n d M i t i ga t i on Mea s u res

6.3.1 Farmers’ capacity to compromise at block and scheme level with regard to compensation measures: Workshops and meetings with farmers held during the feasibility study have shown that farming communities have sufficient social cohesion and conflict management experience to work out solutions regarding the compensation for land loss due to new infrastructures. In order to ensure that there will be no disruption during implementation, a provision has been made in the project to compensate individuals whose homesteads would be damaged due to construction work. In addition

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before construction can commence there is a requirement that the IWUA will get an easement certificate whereby land owners would provide the “right of way” for the irrigation and drainage works and which will be legally binding.

6.3.2 A legal framework and a clear position of the Government with regard to the hand-over of management responsibility to farmer organizations at the end of the project is an important incentive for the farmers to eagerly acquire the necessary skills and to seriously collect water fees in order to be able to pay for the management of the scheme. It is also government policy now not to get involved in ownership and management of irrigation schemes.

6.3.3 Positive market development: Markets for vegetables have been evolving positively in the past ten years. It is assumed that the demand for such products will increase at least proportionately to demographic growth Farmers could compensate a temporary collapse of the market of one or another product by means of diversification.

6.3.4 Service and input delivery system: The existence of input delivery and service provision in the project area is essential. The project assumes that the input and service provision will continue at the same scale as at present. Besides District staff, NGOs or private service providers can be used for extension and marketing support.

7 PR OJ EC T BEN E FI TS

7 .1 Fin a n c ia l A na ly s i s

7.1.1 Financial analysis was undertaken on various household models. In computing the financial benefits, various models were considered and an optimal model was established using linear programming for purposes of projecting the benefits for various crops under different conditions i.e., non-flooded land, half year flooding, and land where there is no irrigation at all.

7.1.2 The highest return would be from tomatoes (25, 000, kg/ha) and the maize yield could be up to 6 t/ha. Based on the irrigated areas the incremental incomes for the 3,000 households will be about Kshs 450million. Gross margin calculations for individual households from the Preparation Report, HCDA and from Rachuonyo District were used and they ranged from 30,000 Kshs to 200,000 Kshs per ha depending upon the crop type without project. On the irrigated areas, farmers will be able to cultivate at least 2 crops per year and with additional technical assistance and linkages to markets the farmers will cultivate horticultural crops for export including cowpeas and pure stand kales. It is estimated that yields will increase from about 750 kg per ha to 25 mt per ha ( Ksh 43, 875). . In case of Kale which is mainly for export markets the increment would be from 12 mt /ha with a gross margin of Ksh 128, 898 to yields of 2111 mt per ha. In addition to farmers who will benefit directly from higher yields due to all year around cropping, an additional 400,000 households will have their incomes increased at least three fold due to access to better extension services, and markets.

7.1.3 Most of the households grow maize and tomatoes. The yield for tomatoes will increase from 12mt/ha to 24 mt/ha, resulting in increase income of Ksh 236, 679. It is anticipated that if farmers can adopt new techniques, the net benefits from growing for example vegetable (sweet corn) their incremental incomes over the first years will be 25mt/ha. The project’s Financial Internal Rate of Return is 12.39 %, on the basis of the assumed opportunity cost of capital of 10%, which is satisfactory.

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7 .2 Econ o m i c A n a ly s i s

It is anticipated that in the 1474 ha under irrigation, cumulative incomes will increase from Kshs 29.25 million (USD 0.426million) to Ksh 334.69 million (USD 4.78 million) with the project. In addition to the 3,000 households, it is expected that more than 400,000 households will have their incomes increase three fold on their acreages which range from 1.3 ha to 1.6 ha per household. The estimated EIRR over 20 years is 13.20% which is considered satisfactory.

7 .3 S en s i t i v i t y A n a ly s i s

Sensitivity analyses show that the rate of return for the project as a whole would decrease to 10.1% if there is an increase in the total cost by 10% and if there is a delay by 2 years in achieving yields the rate would be 9.2%. Two year delay in starting the in-field and getting the farmers to start production is a sensitive factor. In order to minimize this risk, and hasten implementation, tender documents and detailed designs have already been prepared. Field clearing and ripping will be done by the contractor along with the beneficiaries to ensure fields will be ready to start production without delays.

7 .4 S oc i a l I m p act Ana ly s i s

7.4.1 About 400,000 households will benefit from the Project interventions. Though the irrigation scheme will directly benefit about 3,000 households, more than 400,000 households in the two districts will benefit from the marketing and extension, and watershed management activities. It is hoped that this will substantially influence household incomes. The Project will directly contribute to improvement soil fertility, extended cropping seasons, through introduction of irrigated agriculture. The project will enhance food security, reducing the poverty level as well as augmenting commercial agriculture production in the two districts.

7.4.2 At full development, the project will contribute to about 13% of agricultural district gross production. Construction of civil and hydraulic works and subsequent annual scheme operation and maintenance activities as well as labor the intensive nature of agricultural activities will also provide significant incremental employment to the rural population. It is estimated that the incremental employment will amount to about 270,000 working days per year. This is an equivalent of about 1,000 full-time jobs in agriculture per year. Opportunities will also be available in marketing and processing of farm produce as well as for suppliers and transporters of agricultural inputs like fertilizers, improved seeds and chemicals.

7.4.3 The provision of domestic water supply will enhance the health of the farmers by having access to reliable water supplies, health and sanitation facilities. Construction of access and secondary roads will enhance transportation of agricultural inputs and outputs and improve communication within the Project Districts. Training of farmers in marketing will lead to increased marketing intelligence and skills coupled with improved quality control systems, agronomic and marketing practices.

7.4.4 Some secondary positive impacts include improved nutrition and welfare of the beneficiaries and creation of a conducive environment for small entrepreneurial off-farm income generating activities which will mainly be favorable to the youths and female headed households. Farmers will be trained in business and entrepreneurial skills which will contribute to establishing better and sustainable entrepreneurial activities. Such activities will lead to job creation for artisans. This will have a significant contribution to the social and economic development of the vulnerable sections through poverty reduction. The target population will benefit from an improved quality of life and community empowerment skills, including women’s training, gender awareness and sensitization.

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7.4.5 The immediate benefits to the community will be in form of increased agricultural output and employment of laborers during the construction of the irrigation infrastructure. This is despite the fact that initial investment is quite high because of the complexity of the design of the irrigation infrastructure in order to ensure that there is optimal utilization of water and to avoid displacing of homesteads. The operation and maintenance costs are low as the type of irrigation is gravity flow without pumping and it is planned as a wholly farmers managed scheme, implying that no major government structure will be required for managing the scheme after project completion. The long term economic benefits outweigh the high initial costs. The provision of market information and linkages further augments the farmer’s revenues even those who are not directly benefiting from the irrigation scheme. The need to provide for continuous environmental monitoring and other mitigation measures will ensure that the schemes will be useful over a long period of time but this has also increased the initial cost of the project.

7.4.6 Improvement of food security in the region which is densely populated with over 400,000 households living in the direct neighborhood of the scheme. The project will provide additional food to a growing population that already today, requires imports from other regions. A bridge that will be constructed between the two schemes will ease transport and improve market integration of the area. Provision of market linkages and training of farmers in business and entrepreneurial skills will help the transformation of agricultural production in the area from subsistence to commercially oriented farming

7.4.7 Women Participation: The Project will aim at reducing the gender gap by deliberately targeting women to fully participate in scheme activities including planning and decision-making. Women’s increased participation and access to better training and marketing opportunities will allow them to increase their incomes which will provide better nutrition, education and health for the household. The provision for initial ripping and in-field clearance to be done by contractors will ease women’s work load in form of bush clearance. The rural sociology and gender expert will monitor and ensure that women are trained thus benefiting through accessing market information and better crop husbandry practices.

7.4.8 The negative social impacts relate mainly to an increase in the likely incidence of waterborne and water-related diseases, especially in the vicinity of the night storage reservoirs and HIV/AIDS resulting from population and workers migration. The Project has included activities covering human health and hygiene, malaria and bilharzia vector control programs, prophylaxis previsions and awareness on HIV/AIDS. The dissemination of awareness and prevention messages to the community members will have a positive impact since it will contribute to preserving labor force by having a healthy population.

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8 C ON C L USI O NS AN D R ECO M ME N D A TI O NS

8 .1 C on c l u s i on s

8.1.1 Nyanza Province has the highest incidence of poverty in Kenya made worse by a fast growing population. The proposed Project will improve land productivity, promote intensive agriculture and substantially increase smallholder farmers’ average income, for the over 400,000 households in Homa Bay and Rachuonyo districts of Nyanza Province. It is estimated that for the 3,000 households who benefit from irrigated land, their incomes will increase from the present level of Ksh. 15,000 (USD 153) to Ksh. 153,650 (USD 2,000). To ensure sustainability, the Project was designed to ensure total beneficiary participation right from the initial phases through out implementation up to management phase. The involvement of the Irrigation Water Users Associations (IWUA) during planning, design and implementation of the Project activities has a built-in-mechanism for Project sustainability. Contribution through participation and provision of labor will cultivate sense of ownership of the Project which is critical during operation and maintenance of scheme infrastructure. Tailor made training and study tours will be provided to both farmers and staff.

8.1.2 The project will lead to increased production of traditional food and high value crops, resulting in higher income accrued at household level. This will directly improve food security and result in better health and nutrition, especially for women and children. Participation of women farmers in the Project activities will socially and economically empower them to adopt modern methods of irrigated agriculture, create a sense of involvement, confidence and self-respect. Female-headed households will also benefit through membership of IWUA, since it will reduce the labor constraint often associated with irrigation activities. A positive impact on women will be social and economic empowerment as well as improved household livelihood.

8.1.3 Development of scheme access and service roads will provide the rural women better access to markets, for small-scale trading activities. The provision of domestic water points will enable women and children to draw potable water at shorter distances for household use. This will also reduce water borne and water-related diseases within the community. The Project is financially and technically feasible, environmentally sound and socially desirable. The economic rate of return for the project as a whole is estimated at 13.20%.

8 .2 R eco mm end a t i on s

It is recommended that an ADF Loan not exceeding UA 22.98 million be granted to the Republic of Kenya for the purpose of implementing the Kimira-Oluch Smallholder Farm Improvement Project as described in this report, subject to the following specific conditions: A. Conditions Precedent to Entry into Force The entry into force of the Loan shall be subject to the fulfilment by the Borrower of the provisions of sections 5.01 of the General Conditions Applicable to Loan Agreements and Guarantee Agreements of the Fund. The entry into force of the Grant Agreement shall be subject to its signature by the Fund and the Recipient. B. Conditions Precedent to first disbursement of the Loan The obligations of the Fund to make the first disbursement of the loan shall be conditional upon the entry into force of the Agreement and the fulfilment by the Borrower of the following conditions. The Borrower shall:

(i) Provide evidence of the opening of one foreign currency Special Account (SA) and one local currency account in a Commercial Bank acceptable to the Fund. (Paragraph 5.5.1).

36

(ii) Provide evidence that the required technical staff have been appointed from the relevant line ministries comprising: a Focal Point Person based at the Ministry of Regional Development Authorities; 3 Irrigation Engineers, of which two will be site engineers; an Agronomist; and a Rural Sociologist/Gender Specialist, to be part of the District Project coordination and Management Team, whose qualifications and experience are acceptable to the Fund. This staff will also be subject to performance-based assessment (Paragraph 5.2.1); (iii) Provide evidence satisfactory to the Fund of the establishment of the Project Steering Committee to oversee project implementation, comprising the following members : Permanent Secretary of the MRDA (chairperson), representatives from the Ministry of Finance, Ministry of Environment and Natural Resources, Ministry of Water and Irrigation, Ministry of Agriculture, Ministry of Livestock and Fisheries Development, Ministry of Gender, Sports, Culture and Social Services, Director-General of National Environment Management Authority (NEMA) or his/her representative, the Managing Director of LBDA, 1 representative of KARI, 3 representatives from District Development Committees, (Homa Bay and Rachuonyo), 3 Kimira Farmers representative (at least one lady farmer), 3 Oluch Farmers representative (at least one lady farmer) (Paragraph 5.2.3); and

C. Undertaking: The Borrower shall also be required to acquire the Water Abstraction Rights (Permit) on the Two Rivers Tende and Kiboun as provided under the Water Act 2002 (Paragraph 3.4.4). D. Other Conditions Provide evidence that those technical experts to strengthen the capacity of the District Administration, as detailed in Paragraph 5.2.2, have been recruited through shortlist. These will include; a Project Manager, an Accountant, a Monitoring and Evaluation Specialist, and a Procurement Officer. E. Conditions Precedent to first disbursement of the Grant The obligations of the Fund to make the first disbursement of the grant shall be conditional upon the entry into force of the Protocol of Agreement and the fulfilment by the Beneficiary of the following conditions. The Beneficiary shall provide evidence:

i) of the opening of one foreign currency Special Account (SA) and one local currency account in a Commercial Bank acceptable to the Fund. (Paragraph 5.5.1); and ii) that an Environmental Licence has been acquired by the Beneficiary from the Kenya National Environment Management Authority (Paragraph 4.8.3).

Annex 1 Page 1 of 1

Kimira-Oluch Smallholder Farm Improvement Project Map of Kenya showing Project Area

This map has been drawn by the African Development Bank Group exclusively for the use of the readers of the KOSFIP Appraisal Report to which it is attached. The names used and the borders shown do not imply on

the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptable of these borders.

Annex 2 Page 1 of 1

Kimira-Oluch Smallholder Farm Improvement Project Project Organizational Chart

Ministry of Regional

Development Authorities Executing Agency

(Focal Point)

Homa Bay District: Administration and Technical Services

District Administration/Project Coordination and Management

Rachuonyo District: Administration and Technical Services

PSC Membership Rep from Ministries 7 District Dev Committee 3 Kimira Farmers 3 Oluch Farmers 3 KARI 1 LBDA M.D. 1 Total 18 PCT Co-ordinator will act as secretary (non-voting)

Kimira Irrigation Water Users Association

Oluch Irrigation Water Users Association

Project Steering Committee (PSC)

Annex 3a Page 1 of 1

Provisional List of Goods and Services (UA ‘000)

Item Description Government of Kenya African Development Fund Loan

African Development Fund Grant

Beneficiaries Total

Amount % Amount % Amount % Amount % Amount %

Foreign Exchange

Local (excl Taxes)

A. Civil Works

Main Irrigation Infrastructure & WUA Building

- - 12,680.80 100.00 - - - - 12,680.8 46.1 10,144.6 2,536.1

Domestic Water Systems and Storage Sheds

- - 308.00 100.00 - - - - 308.0 1.1 246.4 61.6

Minor Works and Tendering Process - - 1,592.30 76.60 7.00 0.3 481.60 23.1 2,084.0 7.6 1,667.2 416.8

Sub-total Civil Works - - 14,581.00 96.80 7.00 - 481.60 3.2 15,072.7 54.8 12,058.2 3,014.5

B. Goods Vehicle - - 256.70 100.00 - - - - 256.7 0.8 211.1 11.1 Equipment - - 53.20 80.70 12.70 19.3 - - 66.0 0.2 62.7 3.3

Sub-Total Goods - - 309.90 95.60 12.70 4.4 - - 288.1 1.0 273.7 14.4

C. Services

Technical Assistance 520.30 12.1 3,209.80 74.70 119.80 13.2 - - 4,311.3 15.7 3,576.3 735.1

Training - - 3,689.60 96.90 34.30 3.1 - - 3,809.3 13.8 1,904.7 1,904.7 Sub-Total Technical Assistance 520.30 6.40 6,899.40 85.10 - - 8,120.6 29.5 5,480.9 2,639.7

D. Miscellaneous 37.40 14.20 - - 979.50 85.8 - - 1,027.2 1.0 - 264.0

E. Personnel 1,077.80 69.40 - - - - 1,077.8 5.6 120.4 1,433.1

F. Operating Cost 889.70 40.10 1,330.00 59.90 - - - - 2,219.7 8.1 1,017.6 1,202.1

Total Project Costs 3,152.60 11.40 22,979.00 82.70 1,153.30 4.2 485.60 1.8 27,769.6 100.0 17,893.0 9,876.6

Annex 3b Page 1 of 1

Major Civil Works Procurement Packages (Contracts)

Item Number Major Items (based on the Designs) Procurement

Mode Contract #1 (Lot 1: Kimira & Lot 2: Oluch)

IWUA building, Intake weir/headworks (& bridge), main & secondary/tertiary conveyance system, main & secondary/collector drainage system, access roads and culverts, service roads and culverts, land preparation/major ripping and pilot canal-based gravity domestic water supply system

ICB

Contract #2 Borehole drilling and Rehabilitation

NCB

Contract #3 IWUA Storage Sheds

NCB

Annex 3c

Page 1 of 1

ADF and GoK Financing of Recurrent Costs (UA ‘000)

Sources 2006 2007 2008 2009 2010 2011 Total

ADF Loan 191.1 304.4 256.2 204.0 136.0 86.7 1,178.3

GoK 198.9 246.8 315.4 388.8 682.7 762.3 2,594.9

Total 390.1 551.2 571.6 592.7 818.7 849.0 3,773.2

Annex 4a Page 1 of 1

Project Implementation Schedule (September 2006 – August 2012)

No Activity Period Responsibility 1 Loan and Grant Approval May 2006 ADF Board 2 Loan and Grant Signature June 2006 ADF/GoK 3 Establish the Project Steering

Committee July 2006 EA

4 Hold Steering Committee 1st Meeting August 2006 EA 5 Open Special Accounts (Foreign and

Local Currencies) August 2006 EA

6 Loan/Grant Effectiveness September 2006 ADF 7 Procure TA for the PCMT September to December 2006 ADF/GoK 8 Loan/Grant Disbursement

Effectiveness September 2006 ADF

9 Project Launching and Start Up September 2006 ADF/GoK 10 Form of Irrigation Water Users

Associations By February 2007 EA

11 Obtain Environmental License By February 2007 EA 12 Obtain Water Permits/rights By February 2007 EA 13 Prepare Work Plan and Training

Programme January 2007 PCM

14 Prepare Procurement Plan and Tender Documents

February 2007 PCM

15 Procure Vehicles, Equipment and Project Inputs

March to July 2007 PCM

16 Recruit Short-term Consultancy Services

March 2007 PCM

17 Undertake Baseline Socio-economic Survey

July to September 2007 PCM/Consultants

18 Tender and Award Contract for Scheme Construction

January to April 2007 EA/PCM

19 Procure Long Term Consultancy Services (Civil Engineer/supervisor)

January to April 2007 EA/PCM

20 Recruit Consultant Civil Engineer (supervisor)

January to March 2007 EA/PCM

21 Tender and Award Contract for Borehole Drilling and Rehabilitation

January to April 2007 PCM

22 Tender and Award Contract for IWUA Storage Sheds Construction

July to December 2007 PCM

23 Recruit Financial Audit Firm June to August 2007 PCM 24 Recruit Environmental Audit

Consultant June to August 2007 PCM

25 Develop Result-based Monitoring and Evaluation System

June to August 2007 EA/PCM

26 Implement Project Activities September 2006 to August 2012 PCM/DO/NGOs/KARI/IWUA/ Private Institutions

27 Quarterly Progress Reports (Monitoring and Reporting)

15 days after end of each Quarter EA

28 Prepare Audit Reports 6 months after end of each Financial Year EA 29 Project Mid Term Review September 2009 EA/ADF 30 Prepare GoK Project Completion

Report July to August 2012 EA/GoK

31 Prepare Bank Project Completion Report

November to December 2012 ADF

Annex 4b Page 1 of 1

Supervision Schedule during Implementation

September 2006 Project Launching March 2007 Supervision September 2007 Supervision March 2008 Supervision September 2008 Supervision March 2009 Supervision September 2009 Project Mid-Term Review March 2010 Supervision September 2010 Supervision March 2011 Supervision September 2011 Supervision March 2012 Supervision December 2012 Project Completion Report Preparation

Annex 4c Page 1 of 1

Civil Works Construction Tentative Schedule (September2006 – August 2012)

ResponsibleNo Activities Unit Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Project Start-up (September 2006) ADF/GoK

A PREPARATORY PHASE

1.0 Process Tender & Award of Contract for Scheme Construction (consortium) PCMU2.0 Process Tender & Award Contract for Construction Supervision (TA - Civil Engineer) PCMU3.0 Process Tender & Award Contract for Borehole Drilling and Rehabilitation PCMU4.0 Process Tender & Award Contract for Construction of IWUA Storage Sheds PCMU

B CONSTRUCTION PHASE

1.0 Construction of Kimira and Oluch Irrigation Schemes1.1 Facilitate Site Possession (both sites - 1 day) PCMU1.2 Facilitate mobilisation of contractors (international & local) PCMU1.3 Facilitate Construction of Major Scheme Works (Kimira & Oluch) PCMU1.4 Facilitate Construction of IWUA Buildings PCMU1.5 Partial Hand-over: IWUA Buildings & start of Defects Liability Period (DLP) Contractor1.6 Connect 10 Irrigation Blocks per Scheme & Partial Hand-over (start DLP) Contractor1.7 Connect 20 Irrigation Blocks per Scheme & Partial Hand-over (start DLP) Contractor1.8 Connect 14 Irrigation Blocks per Scheme & Partial Hand-over - Oluch (start DLP) Contractor1.9 Connect 23 Irrigation Blocks per Scheme & Partial Hand-over - Kimira (start DLP) Contractor1.10 Facilitate Scheme Commissioning & start of DLP for Intake Weir and Main Canal PCMU1.11 Facilitate Construction of Minor Works (GoK Staff and Beneficiaries) PCMU

2.0 Borehole Drilling and Rehabilitation (Kimira and Oluch)

2.1 Facilitate Site Possession PCMU2.2 Facilitate Borehole Drilling and Rehabilitation Activities PCMU2.3 Facilitate Site Commissioning (start of DLP) PCMU

3.0 Construction of IWUA Storage Sheds (Kimira and Oluch)

3.1 Facilitate Site Possession PCMU3.2 Facilitate Storage Shed Construction PCMU3.3 Facilitate Site Commissioning (start of DLP) PCMU

4.0 Construction of Rain-water Harvesting Livestock Ponds (Kimira and Oluch)

4.1 Facilitate Construction of RWH Livestock Ponds (GoK staff and Beneficiaries) PCMU

Notes:i. Milestoneii. Q1 : First Quarter (July, August, September); Q2: Second Quarter (October, November, December); Q3: Third Quarter (January, February, March); Q4: Fourth Quarter (April, May, June)iii. All civil works construction works (contracts) will be followed by an appropriate defects liability period (DLP)iv. Scheme construction activities include irrigation, drainage and road networks & civil and hydraulic structuresv. Minor works will be carried out by GoK Staff and beneficiaries (under Force Account and Community in Participation Procurement)

FY6: 2011/12FY5: 2010/11Financial Year (FY)

FY1: 2006/07 FY2: 2007/08 FY3: 2008/09 FY4: 2009/10

Annex 5a Page 1 of 2

Assumptions used for Project Costing Analysis

1. Introduction The project comprises three components: (A) Irrigation System management and Infrastructure Development; (B) Marketing and Extension; and (C) Project Coordination and Management. The project will finance the construction of irrigation infrastructure. The project will support farmers in the provision of market information and linkages, and extension to maximize household income and ensure sustainable land use. It will assist farmers in creating the necessary organizational structures that are required for a take over of the full management of the schemes. The final component will ensure effective management of project implementation and the environmental and social management and environmental mitigation plans. Capacity building of local service providers will ensure sustainable support to farmers The project will be implemented over 6 years with the first irrigated blocks coming on stream in year 4 and the bulk of the construction work being finished by year 5.

2. Cost Estimates In estimating programme costs, the following basic assumptions have been made:

• The Project will be implemented over 6 years; Disbursement is over 6 years. • Costs are based on most recent updated prices, as determined during the Appraisal mission in

October 2005, excluding taxes. Costs are expressed in Kenyan Shillings, converted at Kshs 113.337 to the UA, rate for September, 2005.

• GOK will take care of all associated taxes and duties or the Project will obtain waivers where appropriate;

• Unit cost estimates for civil works are based on engineering design estimates as provided by the consultants and revised during appraisal in consultation with GOK officials.

• International Competitive bidding will be used for the procurement of major civil works contractors, while minor works will be procured under force account and community in participation.

• Local price increases in Kenya have been assumed at 5% all through project period, representing average rate of inflation for the past 5 years; price contingencies for foreign costs have been assumed at 5%;

• Cost estimates include physical contingencies of 5% of base cost; except for consultancy, specialist services, salaries and allowances;

• ADF will cover part of the investment and recurrent costs. • GOK will cover cost for environmental license, water abstraction permit, and preliminary

activities towards formation of IWUA, office maintenance and rent and salaries for government staff who will be providing technical support to the project.

• Farmers/Communities will contribute 1.7% of the total cost through provision of labour • Contract for the various TA’s and other training activities will be monitored and payment will be

made based on achievement of specific milestones. • The project will cover two District of Homa Bay Rachounyo which has a total of about

400,000 households. • Developing a model to estimate benefits is not easy because of soils of varying potential in

the schemes, the possibility of flooding reducing the area under double cropping and the probability of water shortages, due to drought, reducing the area under double cropping in some years. Households will start traditional crops and with Project support there will be a gradual move towards high value crops.

• Project benefits have been estimated based on farm models of an average size of 1.3 ha,

obtained from the representative sample household. Though irrigated area per farm should be

Annex 5a Page 2 of 2

Assumptions used for Project Costing Analysis (Cont’d)

on average 0.5 ha or about 38% of average holding size, the remaining 62 % will remain under rain fed cultivation, with a possibility to increase as farmers get acquainted with water management techniques, grazing of livestock will also be done on the unirrigated land. More income will be realized even on unirrigated land as a result of improved animal and crop husbandry and access to markets and better prices.

• Gross margin calculations for individual households from the Preparation Report, HCDA and from Rachuonyo District were used and they ranged from 30,000 Kshs to 200,000 Kshs per ha depending upon the crop type. During the preparation and feasibility study, cropping patterns were developed using linear programming model based on actual and future gross margins. Part of the irrigated area is subject to temporary flooding and no crops can be grown during the flood period, though it can be done with low yields. Accordingly the with-project situation cropping was estimated separately for three types of areas by taking into account flooding as an additional limitation. There will be an effect on a further 400,000 households in the two Districts who will benefit from extension and marketing advice and linkages. It is assumed that this will raise them from the ‘low’ model developed by Rachuonyo District to the ‘high’ model rain fed farming, giving an estimated increase in household income of 22,900 Kshs/ha or 26,000 Kshs per household with 1.3 ha per annum. Fish farming will generate additional revenue for the families involved; the returns may be similar to those they would have made from farming. Average farm income is currently 10,775 Kshs per annum, multiplying this over 10 times will have enormous implications for wealth generation within the community and a large number of households will benefit from the large knock on effect on trade and demand for services. The with-project gross margins were estimated with moderate yield and price levels. Individual “progressive” farmers in the project area already achieve similar yields albeit on small plots. Project benefits have been estimated based on farm models of an average size of 1.3 ha. The irrigated area per farm should be on average 0.5 ha or about 38% of the average holding size. On the irrigated areas, farmers will be able to cultivate at least 2 crops per year. It is anticipated that if farmers can adopt new techniques and for purposes of estimating the net benefits an assumption that the model farmer will grow vegetable (cow peas) the increment over the first years will be 21mt per year. About 62% of the farm land will thus remain under rain-fed cultivation, woodland or grazing.

• The project benefits result from higher yields and gross margins and from higher cropping intensities, as well as from a flexible irrigation system that allows farmers to grow a large range of crops, particularly high value crops. .The table below indicates estimated increases in farm income for the households.

Kenya Annex 5b Kimra-Oluch Smallholder Farm Improvement Project (Grant Component) Page 1 of 3

Result-Based Logical Framework Hierarchy of Objectives

EXPECTED RESULTS by sector and theme

REACH PERFORMANCE INDICATORS SOURCE & METHOD

INDICATIVE TARGETS TIMEFRAME Main Assumptions/Risks

Activities/Inputs Sector/Themes Short-Terms OUTPUTS

Beneficiaries INDICATORS Short-Terms outputs

TARGET INDICATORS TIME FRAME

Assumption/statement and Risk Mitigation

A. Environmental and Resettlement Issues (UA 0.69 million)

1. Soil Erosion 1.1 Conduct training in soil erosion control and management 1.2 Conduct field demonstration 1.3 Planting for protection

- Soil management workshops held - Field demonstrations conducted and validated - Riverbanks protected

- Farmers, Extension Workers, District’s Environmental Officers - Farmers - Farmers, Districts, KARI, Ministry of Agriculture

- No. of workshops conducted - No. of field demonstrations undertaken - Amount of funds allocated for soil protection

- 10 workshops held by end of project (2 each year from PY1 to PY5) - 10 field demonstrations conducted each year from PY1 to PY5 - 1,500,000 Ksh allocated for 5 years

2. Integrated Pest Management 2.1 Conduct training in IPM 2.2 Surveys and analysis 2.3 Provide pesticides handling and disposal of containers

- Training in Pest control conducted - Surveys in effective implementation of IPM - Secure disposal of empty containers

- Farmers, Extension Workers - Farmers, Districts - Farmers, District’s Environmental Officers, NEMA, Ministry of Agriculture, KARI

- No. of farmers groups trained - No. of surveys conducted - Amount of funds allocated for disposal containers

- 16 workshops conducted and 52 groups trained (40% women) in IPM by PY4 - 6 surveys conducted from PY1 to PY6 - 3,350,000 Ksh allocated

3. Prevention of Eutrophication 3.1 Conduct training on Best Management 3.2 Conduct field demonstration 3.3 Survey and analysis

- Agricultural best practices workshops held - Field demonstrations conducted and validated - - Surveys conducted

- Farmers, Water User Associations - Idem - Ministry of Agriculture, KARI

- No. of farmers groups trained - No. of field demonstrations undertaken - Amount of funds allocated for prevention of eutrophication

- 16 workshops conducted and 52 groups trained (40% women) in prevention of eutrophication by PY6 - 16 field demonstrations conducted each year from PY1 to PY5 - 6 surveys conducted from PY1 to PY6

4. Protection of Environmental Sensitive Areas (ESAs) 4.1 Provide fencing of ESAs 4.2 Conduct inventories 4.3 Environmental Education/Ecotourism

- Wetlands within the scope of the project are fenced - Annual census of the wildlife and avifauna - Annual Training in

- Local communities within the Project Area - Local communities, NEMA, KWS - Local communities,

- Ecosystem integrity of the wetlands - No. of census conducted - No of training sessions conducted

- Size and biotic composition monitored from PY 1 to PY6 - Census undertaken from PY1 to PY6 - Training sessions delivered from PY2 to PY6

Kenya Annex 5b Kimra-Oluch Smallholder Farm Improvement Project (Grant Component) Page 2 of 3

Result-Based Logical Framework Hierarchy of Objectives

EXPECTED RESULTS by sector and theme

REACH PERFORMANCE INDICATORS SOURCE & METHOD

INDICATIVE TARGETS TIMEFRAME Main Assumptions/Risks

4.4 Problem Animal Control

environmental education conducted - On-going montoring of pest animals surrounding the irrigation schemes

surrounding schools, etc. - Local communities, farmer associations, Water User Associations, NEMA, KWS

and manuals distributed - Cases of culture negatively affected by invasion of pest animals

- On-going monitoring and preventive measures from PY 1 to PY5

5. Prevention of Invasive Weeds 5.1 Conduct Awareness workshops 5.2 Consultancy for Evaluation surveys 5.3 Undertake mechanical, chemical and biological control of invasive aquatic weeds

- Awareness Workshop conducted - Evaluation surveys conducted - On-going monitoring and control of invasive weeds

- Farmers, Extension Workers - Farmer Association, Water User Associations, KARI - Farmer Association, Water User Associations, KARI, Ministry of Agriculture

- No. of workshops conducted - No. of survey conducted - Irrigation infrastructure and related water canals free of weeds throughout the project duration

- 10 workshops held by end of project (2 each year from PY2 to PY6) - 5 surveys (once a year conducted from PY 2 to PY6) - Allocation of 1,800,000 Kshs over six-year project duration

6. Promotion of Agro forestry 6.1 Conduct workshop in Agro-forestry 6.2 Set-up tree nurseries

- Agro-forestry workshop conducted - Tree nurseries in place

- Farmers, Extension Workers, Water User Association - Ministry of Agriculture (Forest Services), KARI

- No. of workshops conducted - No. of trees planted along the riverbanks as well as for windbreaks and still alive at the end of the project

- 10 workshops held from PY1 to PY6 - On-going tree planting around the irrigation schemes and along the river and lake banks from PY 2 to PY6

7. Promotion of Pisciculture 7.1 Training in pisculture 7.2 Provide fingerlings

- Pisciculture workshop conducted - Fingerlings made available to farmers

- Farmers, Extension Workers, Water User Association - Dpt of Fishery, KARI, K

- No. of workshops conducted - Survival rate of the fingerlings and yearly production of fish (in hundred of kilos)

- 4 workshops held from PY2 to PY 5 - Yearly allocation of 15,000 Ksks for re-introduction of fingerlings

8. Prevention of Water-Borne Diseases

8.1 Conduct awareness campaigns 8.2 Prepare Vector Control Programs and, if appropriate, distribution of prophylaxis

- Awareness workshop delivered - Annual control programs implemented

- Farmers, Extension workers, Water user Association, District Heath Officers - Ministry of Health, District Health Officers

- No. of workshops conducted - Annual review of incidence and prevalence of water-borne diseases

- 16 workshops conducted and 52 groups trained (40% women) in prevention of water-borne diseases by PY 6 - Allocation of 1,700,000 Kshs for prevention, control and curative prophylaxis

Exposure to waterborne diseases and malaria infection increase Risk Mitigation awareness campaigns and training of community leaders and extension staff. Drainage water quantity and quality remain the same River water flow at entry to lake remains the same at baseline levels

Kenya Annex 5b Kimra-Oluch Smallholder Farm Improvement Project (Grant Component) Page 3 of 3

Result-Based Logical Framework Hierarchy of Objectives

EXPECTED RESULTS by sector and theme

REACH PERFORMANCE INDICATORS SOURCE & METHOD

INDICATIVE TARGETS TIMEFRAME Main Assumptions/Risks

9. Prevention of HIV/AIDS 9.1 Awareness Campaigns 9.2 Provide Health Consultant for counselling and to Project 9.3 Implementation of mitigation measures for malaria, and HIV/AIDS

- Awareness workshop delivered by health consultant and District Health Officers - On-going professional services of a health resource-person - No adverse environmental and social effects occurred, thus decrease in water-borne diseases and HIV/AIDS

- Population in project area - Population in project area, Ministry of Health - Population in project area, Ministry of Health, NGOs

- No. of workshop conducted - No. of health visits and counselling provided - New cases of water-borne diseases and HIV/AIDS in line with national average

- Incidence of HIV/AIDS level within the scope of the project area declined by 20% by PY6 - On-going services during the six-year project duration - Allocation of 1,300,000 Kshs for the project duration

10. Protection of Archelogical Sites 10.1 Site mapping and fencing 10.2 Salvaging

- Sites within the scope of the project are fenced - Annual status of the integrity of the sites monitored

- Local communities within the Project Area - Local communities, NEMA, NMK

- integrity of the sites - No. of census conducted

- Site monitored from PY 1 to PY2 - Census undertaken from PY1 to PY2

11. Training on EIA and Env. Audit 11.1 Conduct EIA and Environmental Audit training

- Annual training on EA conducted and reports made available

- Project, Farmers, Districts, NEMA

- No. of training sessions conducted

Annual EIA and Environmental Audit sessions conducted from PY 2 to PY5

12. Compensation 12.1 Effective implementation of the compensation for houses (6) and owners of lands (10) negatively affected by infrastructure works

- Full compensation to all identified stakeholders

- Homesteads and farmers whose land properties are adversely affected

- Outline in ESMP/EMP and the AWP

- Compensation paid for easement by PY1 and PY2 all the 16 homesteads and farmers

B. Social infrastructure and facilities (UA 0.46 million)

Social infrastructure provide to to prevent water borne diseases Awareness Campaigns conducted

Hygiene and Health of population improved

Population in Project Area

No. of infrastructure provided

2 clinics repaired in the two districts (1 in each district) Water supply /boreholes constructed 30 training programmes conducted each for about 200 farmers throughout the project duration

Total Grant :( UA 1.2 million) 1 2 3 4 5 6

Annex 5c Page 1 of 1

Net farm income with and without project, in Kshs / 1.3 ha farm with 0.5 ha irrigated land

Area / Number

of farms (Kimira & Oluch aggregated)

Without project With project % increase

Non- flooded areas 740 ha / 1,480 households 10,775.- 153,659.- 1,426%Short-term flooded areas 373 ha / 746 households 10,775.- 98,208.- 911%Prolonged flooded areas 271 ha / 542 households 10,775.- 62,753.- 582%Total incremental income (whole irrigated area)

1,384 ha / 2,768 households

29,825,200.- 334,690,614.- 1,122%

Incremental production of main crops in metric tones / year

Maize, sorghum, beans, cowpeas 1,192 4,179 351%Rice 11 1,013 9,209%Kales 284 2,516 886%Tomatoes 180 8,753 4,863%Sweet potatoes 321 6,126 1,908%All crops and vegetables 3,222 32,084 996%

Annex 6 Page 1 of 2

Highlights of Project Preparation and Review Process

1. Project Identification

The proposed project whose main activity is the development or irrigation infrastructure was identified during a reconnaissance study carried out in 1985 by a Japanese consulting firm, Nippon Koei, under contract with LBDA. The reconnaissance study was a follow-up to the Integrated Development Master Plan for the LBDA region, carried out between 1984 and 1987 under the assistance of the Japanese International Cooperation Agency (JICA). The reconnaissance study concluded that both schemes have major potential for small-scale irrigation development based on gravity flow, by using water from the two rivers Awash Kibuon (Kimira) and Awach Tende (Oluch). The study recommended that a full feasibility study and detailed irrigation designs of the two selected schemes, Kimira and Oluch, be carried out for implementation.

2. Project feasibility study and Preparation

After the reconnaissance study, funding for the study was requested from the African Development Fund by GOK. The Terms of Reference for were elaborated during an ADF mission to the study area in 1998. An international tender for consulting services was carried out in 2001, which led to the selection of the consortium M/S GFA Terra Systems - CES - CAS. The consulting contract was signed on 25th March 2002. The first phase of the study, called the exploratory and planning stage, was completed with the first national seminar held in Kisumu in October 2002 and the submission of the Final Inception Report immediately thereafter.

The subsequent final feasibility report marked the end of the second phase of the study, the feasibility phase. The feasibility study report was built on both the findings contained in the Inception report and on subsequent design work and consultations with stakeholders and farmers. The feasibility study report was discussed during a further national seminar held in Kisumu in May 2003. The final feasibility report was approved on the occasion of an Inter Ministerial Steering committee (IMSC) meeting held in Kisumu on 23rd and 24th of June 2003. At the end of these processes of consultation, a series of reports (project preparation report, environmental impact assessment report, final design report and tender documents) were prepared according to the subsequent discussions with stakeholders after the feasibility report was tabled. The project preparation report was done in order to fine-tune the final feasibility report according to the stakeholders’ comments.

3. Project Appraisal

The project was appraised during September to October 2005 by a team comprising an Agronomist, Agricultural Economist, an Environmental Expert, a consultant Irrigation Engineer and a consultant Farming System and Group Formation Specialist. The ADB team worked closely with a team of experts seconded by the GOK during the duration of the mission. The team held meetings with the technical staff from the GOK; NGO’s and had separate meetings with various donors active in rural development sector in Kenya. The appraisal mission team also visited the two Districts of Rachuonyo and Homa Bay where the project is to be located and held consultative meetings with groups of farmers, District officials and NGOS operating in the area. The team had a special wrap-up meeting with all the stakeholders in the District on 30th

Annex 6 Page 2 of 2

Highlights of Project Preparation and Review Process (Cont’d)

September 2005 at the LBDA headquarters in Kisumu to further discuss the project design and implementation arrangements. There was another wrap-up meeting chaired by the Director External Resources in the Ministry of Finance where agreement was reached on the level of funding required, implementation arrangements among other issues. An environmental impact assessment was already done by the consultants and publicized with in Kenya for Comments and as per the laws of Kenya NEMA approved it.

4. Internal Working Group/Country Team meeting

The internal review meeting was held on 15 November 2005. A second IWG was held on 9 December 2005,

5. Interdepartmental Working Group Review

The IDWG was held on 19 December 2005. The comments provided by the participants as well as the extensive comments raised by Direct ONAR have been duly incorporated in the revised report.

6. Review by POPR

The report was submitted to POPR on Thursday 19 January, 2006 for review. POPR cleared the report with no comments on 26 January 2006.

7. Senior Management Committee

The SMC was held on 09 February 2006. Comments received were duly incorporated; the report has been submitted to SEGL for translation and distribution to the Board.

Annex 7 Page 1 of 1

Kenya: Status of Agriculture Sector Audit Reports

and Project Completion Reports As at January 2006, there were no PCRs or audit reports outstanding for Kenya in the agriculture sector.

Annex 8 Page 1 of 1