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Ministry of Foreign Affairs / Niamey Representation office File no.: 104.Niger.805-200. External Grant Committee Meeting: 13 May 2014 Agenda Item no.: 3

1. Title: Niger: Employment Generation and Green Growth in the Agricultural Sector

2. Partners: Swiss Development Cooperation; the World Bank (Competitiveness & Growth Support Project)

3. Amount : DKK 195.0 million (FY 2014) 4. Duration:

August 2014 – July 2019 (5 years)

5. Presentation to the Programme Committee:

11 April 2013

6. Previous grants: DKK 150 million (104.Niger.805, Agricultural Sector Programme in Niger, 2009-2013, approved 5 November 2009)

7. Strategies and policy priorities: "The right to a better life"; “The strategic framework for Growth and Employment”; and “Strategic framework for natural resources, energy and climate change (NEC);

8. Danish National Budget account code

06.32.01.06 Developing countries in Africa – Niger

9. Desk Officer Boubacar Gamatié (bougam@um.dk )

10. Head of Representation Winnie Estrup Petersen (winpet@um.dk) 11. Summary

Building on the experience and results of the current phase of the agricultural sector programme and the strategic directions of Nigerien and Danish development policies, the proposed programme promotes improved private sector led sustainable economic growth and job creation, based on agricultural value chains. The programme consists of two engagements. Within value chains of production systems in the regions of Zinder and Diffa, the first engagement aims to increase agricultural production and link this to markets by: i) promoting support services for farmers; ii) promoting green technologies; iii) developing the growth and competitiveness potential of specific areas; and iv) supporting sector coordination. This engagement will be delegated to Swiss Cooperation. The second engagement aims to increase the development of agro-food business in certain value chains by: i) promoting support services for enterprises; and ii) promoting green technologies. In addition, this engagement will help improve the business climate overall as well as specifically for the value chains. This engagement will be delegated to the World Bank (Competitiveness and Growth Support Project).

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National Context Niger is ranked last out of 187 countries in the 2012 UN Human Development Index. Poverty declined marginally from 63% in 1990 to 59.5% in 2008. With a GNI per capita of $370 (2012 World Bank), poverty can only be effectively reduced through inclusive economic growth. At the same time, with an overwhelmingly Muslim population threatened by regional violent extremism, it is of utmost importance that jobs are created and livelihoods improved for the 350,000 young people entering the labour market each year. In light of the recurrent food crises in Niger, most donors turn to funding food security and nutrition. Whereas this is highly relevant in the Nigerien context and there are ample opportunities for increasing the productivity of food crops, it will not be enough if Niger is to extract itself from the semi-permanent need for humanitarian aid as also concluded by a joint donor evaluation of aid to Niger in 2009. Furthermore, the present rate of population growth combined with climate change means that Nigerien self-sufficiency in food is probably unrealistic in the short term and it is to be expected that an increasing part of the population will need an income to buy food.

With a GDP of US$6.568 bio. per year (2012, World Bank), the Nigerien economy is characterized by little diversification, based as it is on the extraction of natural resources (uranium, gold and oil) and a largely rain-fed and subsistence-based agriculture. Over the 1990-2010 period, the economy recorded average growth of 3.8%, with a per capita growth of only 0.5 %, however. The 2000-2010 decade saw the relative contribution of the primary sector to GDP increase to 42.2%, while the tertiary sector stood at 40% and the contribution of the secondary sector gradually decreased. The main sources of growth were agriculture and trade. There is a strong preponderance of the informal sector, which contributed an average of more than 67% to GDP (1990-2010). The agricultural sector accounted for 44% of GDP and 30% of export earnings over the 2007-2011 period, employing 80% of the working population.

Although one third of the country is desert, Niger has considerable agricultural resources in the form of land and forest, as well as abundant underground and surface water resources. Despite the predominance of subsistence agriculture, a reasonable number of agriculture-based value chains are highly profitable and have strong market potential, with Niger being the leading regional exporter of livestock, onions, cowpeas and sesame (all unprocessed). Although the Nigerien urban market remains small, the sub-regional market, including that of Nigeria, presents important opportunities.

The business environment is extremely difficult, as reflected in the Doing Business Report 2013 which ranks Niger in a 176th place out of 185, one place lower than in 2012, thus demonstrating the need for reform if Niger is to attract investment for sectors other than natural resource extraction. The formal manufacturing sector constitutes 2% of national production. A total of 5,578 formal companies have been identified, 77% of which have fewer than 10 employees. These are faced with a number of constraints, such as complex public procedures, a high tax burden and competition from the informal sector. Other constraints, such as lack of competent human resources and of access to financing, as well as the high cost of inputs, are shared with the informal sector, particularly affecting small and medium sized enterprises (SMEs). Despite the bleak outlook, there are some positive developments, such as a National Charter for the promotion of the private sector, several new risk guarantee mechanisms and a private venture capital firm. Local banks are also starting to invest in agricultural enterprises.

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A large number of public institutions are involved in the agricultural and private sectors, including the High Commission on the 3N Initiative (HCI3N), the Ministries of Agriculture, Livestock, Industry, Commerce, Employment, Water and the Environment, as well as training and research institutes. However, capacities in the public sector remain limited. The HCI3N is the body responsible for implementing the President of the Republic’s commitments within the area of food security and sustainable agricultural development and is attached to the Presidency of the Republic. Under the Maputo commitment (2010), the Nigerien state has committed to allocating 10% of its budget to agricultural spending in 2015. In 2012, about 8% of the state budget was allocated to the sector. Investment capacity in the rural sector is dependent on external support.

The key private sector associations are state organisations based on the French model. The farmers are represented by the Regional Agricultural Chambers (CRA), set up as a network of agricultural chambers (RECA). Despite being established by law in 2000, the CRAs receive no financial support from the state and are democratically governed and run, seeking to ensure their financial viability by charging for the services provided. Their purpose is to represent and provide services their members. These bodies have, in part through Danida support, attained such a level of credibility that they are now key players. However, they are extremely fragile in terms of their organisation and financial sustainability.

The Chamber of Commerce, Industry and Crafts of Niger (CCIAN) was created by the State by decree in 1997. The CCIAN receives a substantial state subsidy and income from membership fees and has proven institutional capacity. The CCIAN’s human resources costs are covered by its own funds (9 staff members). A Maison de l’Entreprise (ME) was created in 2012 within CCIAN, also by decree, with the aim to promote enterprise creation and development. The ME comprises a ‘one-stop shop’ for business start-up, an Investment Promotion centre as well as management centres to provide companies with management and accounting support, tax advice and training. The ME was set up with the support of the World Bank-financed Competitiveness and Growth Support Project (PRACC).

By and large, all Niger’s bilateral and multilateral development partners are active in the rural sector, but work with little coordination other than geographical. The severe humanitarian crisis in 2011-2012 has particularly led multilateral organisations and the EU to prepare ambitious programmes on food security and nutrition. Only the World Bank and a few other donors support the private sector and agriculture with a value chain approach. The Government is currently undertaking initiatives to strengthen dialogue and coordination in the framework of the Nigerien Plan for Social and Economic Development. Danida has supported agriculture and natural resource management in Niger since 1999 and is presently the second largest bilateral donor to the sector.

The Human Rights-Based Approach The programme will be implemented with a strong framework for mainstreaming a Human Rights-Based Approach (HRBA) through integration of the principles of non-discrimination, participation and inclusion, transparency and accountability. Specific human rights issues will be taken into account during implementation, such as land rights (building on lessons learned from previous experience), association rights, decent working

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conditions, contract enforcement, contract farming, child labour, as well as issues related to access to water for production, which is often the source of conflict. Particular activities have been identified, including the implementation of matching grants respecting the four principles mentioned above. A matrix identifying the rights-holders and duty-bearers has been prepared for each engagement. A specific HRBA logical framework has also been developed for each engagement and will facilitate the monitoring of HRBA implementation.

Women’s rights will be a key strategic concern in the programme, in particular women’s access to economic activities and resources, which is limited in Niger by tradition and religion. The strategic choice of some value chains (paprika, peanut oil, milk) is based in part on women’s high level of involvement in simple processing activities in these chains. At national partner organisation level, women’s participation and the organisations’ capacity to target women will be strengthened.

Consideration for the environmental consequences In view of the situation of semi-permanent food insecurity, there is a risk that environmental aspects may be neglected, thereby jeopardizing resilience and future production potential. In the fragile environments prone to desertification, land degradation and water resource management issues are particularly important; however, mono-cropping of certain cash-crops is also becoming a concern. At the same time, the farmers’ resilience to climate change will be promoted, e.g. with seeds and support to small scale irrigation. In accordance with the strategic framework for natural resources, energy and climate change (NEC), the programme will promote green growth, primarily by encouraging and supporting both farmers’ and entrepreneurs’ initiatives for the efficient use of resources such as energy, water and land, including climate smart agriculture. Given the high cost of energy, introducing renewable energy or energy-saving measures to reduce production costs will be a priority. The programme will include a matching grant for the development of joint proposals for innovative solutions by private sector actors and research institutes. In addition, the programme will take environmental impacts into consideration in the production systems supported.

The Programme

Justification Given Niger’s agricultural resources, opportunities for a broad-based growth should be sought in agriculture-based value chains for the local and regional market to create income for farmers, entrepreneurs and employees. At the same time, it is important to lay the foundations for further growth by putting in place better framework conditions for the private sector. Denmark has valuable experience of enhancing agricultural production, as well as of supporting semi-industrial processing of value chains based on the production systems in Zinder and Diffa. This experience will be used not only to enhance the focus on the private sector in order to further increase productivity and the quality of cash crops in these regions, but also to place new emphasis on supporting enterprises involved in the processing and marketing of agricultural products, linking both to the market.

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Conscious of the need for economic growth and the creation of employment to sustainably reduce poverty, the Nigerien government has set out its ambitions in the Social and Economic Development Plan 2012-2015 (PDES). The PDES comprises five strategic priorities, one of which relates specifically to inclusive economic growth,1 and another to agricultural/rural development with a focus on food security2. The latter corresponds to the high-profile 3N Initiative for Food Security and Sustainable Agricultural Development, “Nigeriens Nourish Nigeriens” (I3N)3. However, to a large extent, both strategies still lack proper implementation mechanisms.

The two engagements of PECEA are complementary and strongly interlinked. The aim of engagement 1 is to strengthen the capacity of value chain actors to identify and implement projects that create value-added jobs and improve the standards of agricultural produce and semi-processed products in the value chains supported. Engagement 2 will focus on processing and marketing the products at a higher level while improving the business environment to enable these businesses to grow. This programme also complements other support provided by Danida to Niger, specifically the Water and Sanitation programme on the Integrated Management of Water Resources and the Good Governance programme that focuses on strengthening the human rights-based approach.

Box 1. Justification for programme design according to the OECD-DAC criteria

Relevance. The programme will address growth and employment, building on the convergence of Danish and Nigerien development policies and based on agricultural value chains. Due to the small number and size of the enterprises in each value chain, eight value chains have been selected, based on previous experience, high market potential, the involvement of women and other donors’ activities: red pepper/paprika; onion and sesame oil; livestock meat with a large potential for exportation; cowpea; livestock milk and poultry for import substitution at the local market; and groundnut oil for the local market. These value chains will be addressed progressively during programme implementation.

Given also the limited number of companies, a closely interlinked, dual entry approach is proposed: i) the first point of entry is to continue to support farmers/farmers’ groups in order to adapt the quality and quantity of production to the market; whereas ii) the second – and new - point of entry is to support processing and marketing enterprises.

Effectiveness. The programme will build on lessons learned from previous Danish experience on the potential of the agricultural sector and existing value chains, as well as on the dynamism of the private sector, including the farmers. Given the limited budget of DKK 195 million (2013-2018), the programme will focus on promoting private sector activities in selected value chains with the dual aim of improving services to both farmers and entrepreneurs, while at the same time improving the general and specific private sector framework conditions, including strengthening the private sector actors.

Given that access to financing is one of the greatest constraints for private sector development and as the programme budget is relatively limited, the programme has opted to use financing initiatives that mix credit and matching grants; an option supported by local

1 PDES Priority 4: Promotion of a diversified and competitive economy for an accelerated and inclusive growth 2 PDES Priority 3: Food security and sustainable agricultural development 3 I3N Priority 2: Regular supply of rural and urban markets with agricultural and food products

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banks and private sector organisations.

Expected results for development engagement 1: i) support and advice provided to more than 400 farmers' organisations (36,000 members), corresponding to more than 1,200 requests; 300 farmers' organisations (50% women) provided with investment financing support; farm productivity increased; ii) 27,000 jobs consolidated within self-employment in family farms; iii) the capacity of private sector institutions, in particular the RECA, CRA Zinder and Diffa, to provide services to their members is enhanced.

In addition, accompanying actions (research, green technologies, etc.) for developing specific value chains will be developed and managed under Public-Private Partnerships to encourage the emergence of clusters. Furthermore, the engagement will help improve the quality of support and advice services, as well as the capacity of public institutions to improve value chains’ framework conditions. The coordination, monitoring and evaluation of public policies in the agricultural and private sectors will be improved by building HCI3N capacities.

Expected results for development engagement 2: i) support and advice provided to more than 1,520 companies; 38 very small enterprises, 750 'informal' companies, nearly 41 SMEs and 15 "green" projects provided with investment financing support; more than 50% increase in the number of applications submitted by women entrepreneurs; almost 50% increase in the turnover / value added of these companies; ii) nearly 2,100 jobs created and consolidated in business; iii) Doing Business indicators are supported; iv) public/private dialogue is improved and developed through the National Council of Private Investors (CNIP), in particular.

Efficiency. It is important to take into account the particularly fragile environment in Niger, not only with regard to the security situation (jihadist in northern Mali and Libya, Boko Haram in Nigeria), political stability and environmental/climate change, but also as regards the limited human resource capacity. In addition, the physical and necessary logistical conditions mean that intervention costs are high and, therefore, ambitions must be realistic.

The programme will support and advise companies and farmers’ organisations. The programme will also focus on gender issues by supporting and advising women entrepreneurs and financing their investment projects; it will strengthen green growth through the promotion of renewable energy.

For one CFA Franc invested in advisory support from the matching grant, it is expected that two CFA Francs will be invested in a business venture. In the context of Niger, this ratio is deemed appropriate.

Through the PRACC project of the World Bank, the programme will support improvement of the overall Doing Business indicators in accordance with the government's action plan. The implementation of the two engagements through the Swiss Cooperation and the World Bank, respectively, as part of their programmes will enhance efficiency.

Impact. Under the overall coordination of the HCI3N, the programme will work closely with other development partners to enhance the impact and possibilities of synergy, in particular with the World Bank and its Competitiveness & Growth Support Project and its PRODEX project promoting agriculture-based exports, as well as with Swiss Cooperation, which is supporting the promotion of a growth cluster focusing on small-scale irrigation.

Sustainability. Support is being provided to permanent public and private institutions, which facilitates exit strategy planning. The support provided via the PRACC project to all public and private institutions involved in improving the business climate will primarily take

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the form of capacity-building. The aim of this support is to provide public institutions with the competencies required to sustain the project results when carrying out their respective duties. Thus, it is important for the exit strategy that sustainable and recognised state and private sector implementing bodies are selected. In addition, the engagement will improve the value chain environment by supporting the activities of those ministries involved in these value chains. This will ensure value chain sustainability and development. At the same time, the programme will support training of the managers involved in implementing the reforms. Sustainability in the Niger fragile context remains difficult to achieve.

Programme objective and summary of selected development engagements and strategic considerations

The development objective is to improve private sector led, sustainable economic growth and job creation, based on the agricultural sector.

The development objective of the engagement 1 is to: promote green inclusive economic growth, creating employment through the creation of added value in the agriculture sector

The Danish Development Cooperation strategy focuses on enhancing the value chain “from farm to fork” by incorporating actors from the value chains. This strategy takes human rights into account. It encourages green growth by focusing on the development of both the agricultural and private sector (through sustainable technologies) in accordance with the directions of priority 2 of I3N. This area focuses on creating added value by generating additional income for farmers and jobs through the local processing of products. To achieve this, it aims to: i) professionalise value chain actors; ii) improve the competitiveness of products; iii) develop clusters based on production systems; iv) improve the institutional and regulatory environment of value chains through support to specific Ministries; and v ) support HCI3N for the coordination of sector policies. The engagement focuses on the private sector to develop income and employment (business and "self-employment" for agricultural holdings).

The development objective of engagement 2 is to: improve the business climate and the framework conditions of private sector development.

To achieve this objective, the strategy of the engagement is two-fold: The engagement will support the development of agriculture based value chains at the level of processing and marketing with a focus on small and medium-sized agribusiness enterprises (SMEs) and enhance their possibilities to create growth and employment by improving the business environment through support to Niger’s action plan for improving the Doing Business indicators. The engagement thus aims to i) improving the competitiveness and promoting the investment in support of the selected value chains; (ii) providing Business Development Services to support enterprise development through a matching grants program; (iii) improve access to investment to the small and medium-sized agribusiness enterprises (SMEs) through a matching grants fund; and iv) improve the development of green technologies and market infrastructure in the Diffa and Zinder regions. The engagement is aligned to the policies and strategies developed by the Government of Niger, particularly the PDES 2012-2015 (priority 4: "economic diversification and competitiveness for accelerated and inclusive growth").

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A major effort will be made during the inception phase to update (with keys actors) the results framework of the two components to ensure consistency within and across components and to ensure that objectives and indicators at all levels are formulated in consistency with the expected results and vice-versa.

Development engagement partners, modalities, capacity building and technical assistance to engagement partners Development engagement 1:

Following the closure of the Danish Representation office in Niger and given the strong complementary nature of and synergy between the objectives pursued, it has been decided to delegate the daily management of Danish funds to the Swiss Agency for Development and Cooperation (SDC). Niger is a priority country for SDC which has been working in the Sahel region since 1977. The SDC’s aim in Niger is to contribute to improving food security for the population by targeting the mechanisms that generate poverty. The SDC focuses on supporting local development and agricultural sector stakeholders, including professional organisations targeted by the present programme.

Given the weaknesses of the national institutions and organisations involved in the programme and the introduction into the programme of innovative concepts (value chain, green growth, etc.), expertise is required to build capacities in these institutions. This expertise will focus on knowledge transfer, providing monitoring and evaluation support and improving the quality of reporting. It will be provided by specialists with international and national expertise. Technical assistance (TA) will be supplied til both RECA/CRA and HCI3N.

Development engagement 2: The activities included in the engagement are consistent with those being implemented as part of the World Bank’s Competitiveness and Growth Support project. In order to ensure maximum integration and synergy between the two initiatives and that activities are implemented effectively and efficiently, implementation will be delegated to the World Bank PRACC programme through a trust fund.

The ME has only recently been launched and is as such a new and fragile organisation although it is embedded in CCIAN which possesses notable experience. Technical assistance that focuses on technical support, knowledge transfer and “on the job training” will enable ME to fulfil its role effectively. Technical Assistance will be provided by national and international experts integrated into the ME.

A challenge of the program is to ensure that the linkages between the two components are maintained, i.e. that interaction between the actors throughout the agricultural value chains supported is effective. It is also necessary to ensure the organic link between institutional implementing actors of PECEA at both central and operational levels (regional). A national institutional Advisor with Danida competence will be recruited to the PRACC/WB team to strengthen synergies between the two engagements and ensure liaison with the HCI3N.

Outcome indicators for each of the development engagements

Engagement 1:

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Outcome indicator 1

Indicators from the National Institute of Statistics (INSN)

MDG 1: Proportion of the population living below the poverty line (%); Poverty incidence and depth of poverty

MDG 7: Proportion of forest areas

Baseline Year 2013 INSN report (in 2014)

Target Year 2019 MDG 1, Target 1A: Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day

MDG 7, Target 7A: Integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources

Engagement 2:

Outcome indicator 2

Indicators from the PRACC

Volume of investment improved

Level of improvement in the business environment in value chains

Improvement in Niger’s Doing Business ranking

Baseline Year 2013 PRACC baseline Doing Business ranking: 176th place out of 185

Target Year 2019 To be defined with the PRACC

Monitoring mechanisms Programme monitoring is to be carried out at two main levels: i) monitoring the effects, results and impact: progress towards the immediate objective and results will be monitored on a six monthly and yearly basis (activity reports, research reports, etc.); ii) monitoring of the implementation of operations: RECA/CRA, the CCIAN/ME, PRACC, HCI3N will regularly monitor the implementation of annual planned activities and budgets. Once the programme is launched, a monitoring and evaluation manual will be jointly developed and approved by the steering committees. The HCI3N and PRACC monitoring and evaluation systems are currently being developed and the ME business plan has not yet been finalised. Therefore, all indicators presented in the documents are indicative. Moreover, the programme has taken into account the "Standard for Measurement of Results for Private Sector Development" developed by the Donor Committee for Enterprise Development (DCED).

Budget at outcome level (million DKK)

Description Budget

Engagement 1

OI 1 Develop (through the chambers of agriculture and agricultural organisations) agricultural value chains based on production systems in Zinder and Diffa

36.0

OI 2 Enhance the competitiveness of value chains through the promotion of structural measures 16.9

Technical Assistance engagement 1: RECA 13.9

Technical Assistance engagement 1: HCI3N 7.1

Total Engagement 1 75.0

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Engagement 2

OI 1 Develop (through the ME and private sector organisations) agricultural value chains based on production systems in Zinder and Diffa

76.3

OI 2 Contribute to improving the business environment through greater private sector involvement in the implementation of reforms

15.4

OI 3 Support the implementation of institutional reforms aimed at promoting exports in general and agro products in particular

4.3

Total Activities engagement 2 96.0

World Bank Management Fees (5%) 5.4 Support to UGP/PRACC financial management 0.68

Technical Assistance engagement 2: ME 11.0

Total Engagement 2 113.0

Audits, reviews, studies, Danida Fellowship centre 5.0

Unallocated funds 2.0

Total Programme 195.0

Risk analysis summary The possibility that a deterioration of the security situation in the country could jeopardize programme implementation is a contextual risk. This risk is perceived as likely but possible to mitigate. Such measures will be further developed during the inception period with particular emphasis on ensuring adequate monitoring of programme activities implemented in the two regions of Diffa and Zinder. A further contextual risk is related to the fact that political instability and democratic back-lash cannot be excluded. This risk is currently perceived as unlikely, but if needed the programme is considered rather robust with its focus on implementation through private organisations.

The limited capacity of partners which could limit programme performance is a programmatic risk. This risk is perceived as likely but is mitigated by establishing a support system as well as considerable capacity-building and technical assistance activities. The risk that HCI3N may be disbanded after the elections is a real institutional risk. This risk is perceived as likely, but can be mitigated by redirecting the support to sector ministries.

Overview of management set-up at programme level The management set-up of the programme is pragmatic, responsive, lean and operational.

Programme level: Overall, the programme will be attached to the High Commission of the 3N Initiative. At a strategic level, the programme comes under the government-donor partners Steering Committee of priority 2 of I3N, which is chaired by the Ministry of Trade and Private Sector Promotion. At programme level, a management committee, chaired by the HCI3N, will be established with the mandate to monitor the overall progress, including tracking consistency and complementarity between the two engagements, approve the annual reports and consolidated budgets, monitor risk indicators, organize reviews, and approve reallocations and the use of unallocated funds. The committee is comprised of representatives of the SDC, Danida, the Ministry of Trade and Private Sector Promotion, and the Chairman of the PRACC Steering Committee.

Engagement 1: SDC will manage the engagement, including the Danish funds, at a day-to-day basis in accordance with Swiss Cooperation procedures. Danida will be invited to

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the steering committee meetings at engagement level and to state-development partner discussions as a key stakeholder.

RECA / CRA will ensure the implementation of the component based on their own administration, a committee for awarding grants and a fund manager based on annual plans approved by the programme steering committee.

The HCI3N ensures the implementation of the results 2.2 and 2.3 of the immediate objective 2 of the engagement. The HCI3N establishes plans and annual budgets approved by the programme steering committee.

Engagement 2: Danish funds will be transferred to the World Bank following the establishment of a trust fund. The engagement will be implemented by the PRACC management team in accordance with PRACC procedures. The PRACC management team reports to the PRACC steering committee, which in turn comes under the supervision of the Ministry of Planning. Danida will be invited to PRACC steering committee meetings and state-development partner discussions as a key stakeholder.

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ANNEX 1: PARTNERS – BRIEF DESCRIPTION

Swiss Agency for Development and Cooperation in Niger, SDC

Niger is a priority country for SDC, which has been engaged in the Sahelian countries since 1977. The objective of SDC Niger is to contribute to the improvement of food security of the population by addressing the causes of poverty as identified in Niger’s Accelerated Development and Poverty Reduction Strategy (PRRS 2008-2012). The SDC approach focuses on local development.

SDC plans to strengthen its commitment to Niger, increasing its budget of CHF 13 million (FCFA 6.5 billion) in 2012 to a budget of CHF 20 million (CFAF 10 billion) in 2016. It focuses its support on two priority geographical zones: Gaya in the Southwestern region of Dosso and the Maradi region in the Centre – Southern part of the country.

The main areas and fields of activities of the SDC program in Niger are:

Rural Development, including: i) Pastoralism (secure mobility and production); ii) Rural water supply and sanitation; iii) Support for farmers' organizations to support the family production; iv) Education and training; v) Non-formal adult and youth education; vi) Support for the quality of formal education and schooling of girls; vii) Basic vocational training.

Local governance is seen as a cross-cutting theme in the various areas of intervention of the SDC. When necessary, the SDC can provide humanitarian aid.

The Danish support will complement the Swiss Programme for production and promotion of irrigated crops under preparation. The Swiss programme will have an expected duration of 12 years (2014-2026) with a total estimated cost of CHF 30 million (DKK 184 million).

World Bank’s Competitiveness and Growth Support Project (PRACC)

The Competitiveness and Growth Support Project was approved in June 2012 with a total World Bank commitment of USD 50 million and a planned implementation until March 2019. The objectives of the project are to improve selected aspects of Niger's business environment and to support two value chains, the development of the meat industry and local business’s participation in the extractive industry sector. There are four components in the project. The first component is aimed at improving the investment climate, investment promotion and support for small and medium-sized enterprises (SMEs) within selected value chains. The objectives of this component are to help (i) improve the business environment; (ii) provide Business Development Services to support enterprise development primarily in the identified value chains (mining and meat) through a matching grants program; and (iii) support the Government effort for investment and export promotion. The second component is support to selected value chains. This component includes two sub-components: support to the extractive industries value chain, and support to the meat and butchery value chain. The third component is policy reforms, infrastructure and services to harness the relationship between Niger and Nigeria through the Kano, Katsina, and Maradi (K2M) corridor. The objective of this component is to help foster trade and regional integration with Nigeria and to attract private investment in the (K2M) corridor. Finally, the fourth component is project management.

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ANNEX 2: RESULTS FRAMEWORK AT OUPUT LEVEL

Development objective PECEA Indicators (from I3N):

Improved private-sector led, sustainable, economic growth and job creation, based on the agricultural sector

MDG 1: The incidence of poverty in rural areas reduced by XX% in 2013 to YY% in 2018 (figures to be confirmed)

Doing Business ranking

Objectives / Results Indicators Targets

Objective of the component: promote, green inclusive economic growth, creating employment through the creation of added value in the agriculture sector

Indicators I3N, Not yet operational

Indicators from the National Institute of Statistics (INSN)

MDG 1: Proportion of the population living below the poverty line (%) Poverty incidence and depth of poverty

MDG 7: Proportion of forest areas

MDG 1: Target 1A: Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day

MDG 7 Target 7A: Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources

Immediate Objective 1 : Develop (through the chambers of agriculture and agricultural organizations) Agricultural value chains based on production systems Zinder and Diffa

The PECEA will develop (in partnership with INSN) universal indicators according to DCED Standard for Measuring Results

Scale: Number of target enterprises who realize a financial benefit as a result of the programme’s activities per year and cumulatively.

50 TPE

1.000 informal enterprises

50 PME/PMI

400 OP

20 projects of R&D

Net income: Net additional income (additional sales minus additional costs) accrued to target enterprises as a result of the programme per year and cumulatively.

From 5 to 10%

Net additional jobs created: Net additional, full time equivalent jobs created in target enterprises as a result of the programme, per year and cumulatively. “Additional” means jobs created minus jobs lost. “Per year” comprises 240 working days.

2.100 in enterprises

27,000 self-employment in family farm • Self-employment is defined by INSN; it will integrate head of family and family workers whose employment is perpetuated by integrating the value chain

The PECEA will develop indicators at the firm level on the basis of initial diagnostics companies supported

Growth Rate by VA business / OP supported

Growth Rate by CA firms / OP supported

50%

50%

The PECEA use the indicators already collected by the INS Niger particularly at regional level

Employment / population ratio

Indicators related to services provided by RECA / CRA and ME

Quality of services to members Satisfactory Quality

Sustainability of services to members Financial sustainability achieved at least 50%

Result 1.1 : Chambers of agriculture and agricultural professional organizations offer services tailored to the

Number of member services 2 for RECA/CRA

10 AC devices for OP

2

Objectives / Results Indicators Targets

family farms and professional organizations involved in the Agricultural sector value chains

Result 1.2 : The professionalism of the value chain actors is enhanced through access to support and counselling services - non-financial (BDS)

Number of OP in value chain asking for support 1.212 OP

Number of OP in value chain have received advisory support and volume of grants

400 OP

% women who received support 20%

% young people who receive support 20%

% of informal OP to formalize 100% of supported OP

Number of radio programs (local) on human rights in private sector

100 formal OP

Number of awareness sessions on the use of renewable energy

100 formal OP

Result 1.3 : The competitiveness of value chain actors is reinforced by providing access to investment funds to develop their initiatives

Number of OP in value chain who requested financial support for investment (including those worn by women, youth)

400 OP

Number of OP in value chain have received financial support for investment and volume of grants (including those worn by women, youth)

300 OP

Number of projects co financed by bank credit 1.143

Increased turnover (revenue / expenditure) business 10% for all type enterprises

Increased productivity 10%

Number of "young graduates" recruited 13 including 6 girls

immediate Objective 2 : Enhance the competitiveness of value chains, through the promotion of structural measures

Competitiveness of enterprises selected in value chains Marketed products competitive at national and West Africa level

Number of clusters selected one cluster per value chain

Level of satisfaction of stakeholders on action of public services in the value chain

80% of users satisfied

Result 2.1 : Actions to support the structural improvement of the value chain (research, green technology, extension, training) are developed

Number of accompanying measures undertaken and by type of action

8 collectives actions of R&D

5 extension actions via NGO, public services

1500 trained in vocational training

10 actions of land tenure security

Result 2.2 : The institutional and regulatory environment of value chains is improved through structuring actions from Ministries implementing the 3N Initiative and their decentralised departments

Number of requests for support from ministries registered and validated

35 requests for support in the value chain

Result 2.3 : The ability to coordinate and monitor and evaluate policies in the agricultural sector has improved

Implementing:

Number of training requests made by departments

Number of training delivered

Number of staff trained

10 requests

10 training delivered

100 staff trained

Coordination :

Number of meetings and meeting steering bodies

Number of joint sector review organized

4 steering committee of I3N operational

1 annual joint sector review

Monitoring: 1 system of monitoring and

3

Objectives / Results Indicators Targets

A monitoring and evaluation system is operational

Number of sectoral monitoring and evaluation systems made coherent

Number of reports on implementation, monitoring and evaluation

evaluation of effects and impacts functional

1 budget program and monitoring and evaluation mechanism set up by each Ministry of the Rural sector

› Objective component 2 : improve the business climate and the framework conditions of private sector development.

Level of volume of investment improved

level of business environment improved in value chains

To be defined with the PRACC

Immediate Objective 1: Develop (through the ME and private sector organisations) agricultural value chains based on production systems in Zinder and Diffa

Level of classification of Niger in the Doing Business To be defined with the PRACC

Result 1.1 : The ME and private sector organisations offer services tailored to different categories of company involved in agricultural value chains

Number of member services At least 2 additional for ME

Result 1.2 : The professionalism of the value chain actors is enhanced through access to support and counselling services - non-financial (BDS)

Number of companies in value chain asking for support 152 TPE

3.030 informal enterprises

152 PME/PMI

61 project of R&D

Number of companies in value chain have received advisory support and volume of grants

50 TPE

1.000 informal enterprises

50 PME/PMI

20 project of R&D

% women who received support 20%

% young people who receive support 20%

% of informal enterprises to formalize 100% of supported enterprises

Number of radio programs (local) on human rights in private sector

100 formal enterprises

1.000 informal enterprises

Number of awareness sessions on the use of renewable energy

100 formal enterprises

1.000 informal enterprises

Result 1.3 : The competitiveness of value chain actors is reinforced by providing access to investment funds to develop their initiatives

Number of companies in value chain who requested financial support for investment (including those worn by women, youth)

50 TPE

1.000 informal enterprises

50 PME/PMI

20 project of R&D

Number of companies in value chain have received financial support for investment and volume of grants (including those worn by women, youth)

38 TPE

750 informal enterprises

41 PME/PMI

15 project of R&D

Number of projects co financed by bank credit 1.143

Increased turnover (revenue / expenditure) business 10% for all type enterprises

4

Objectives / Results Indicators Targets

Increased productivity 10%

Number of "young graduates" recruited 13 including 6 girls

Result 1.4 : Infrastructure related to the development of specific identified value chains is developed and managed

Number of Infrastructure identified by the actors of the value chain

20

Number of Infrastructure developed by the actors of the value chain

12 transport infrastructure / opening by critical point

40 commercial community facilities processing / marketing

4 infrastructure to the business environment

Other types of community infrastructure: electrification.

Number of Infrastructure managed by the actors of the value chain

X Public-Private-Partnership signed

Immediate Objective 2: Contribute to improving the business environment through greater involvement of the private sector in the implementation of reforms

Level of classification of Niger in the Doing Business To be defined with the PRACC

Result 2.1 : There is dynamic public - private sector dialogue to reform the business environment

Number of meetings involving the public and private sector within the framework of institutional reforms

Quality of the intervention of the private sector representatives

Number of text of laws passed at the end of this dialogue

To be defined with the PRACC

Result 2.2 : The institutional framework for improving and monitoring business climate indicators is supported

Level of annual changes in Doing Business indicators See details of indicators and their potential for growth indicator

Immediate Objective 3 : Support the implementation of institutional reforms aimed at promoting exports in general and agro products especially

Level of development of exports To be defined with the PRACC

Result 3.1: The ANIPEX business plan for the promotion of exports is implemented

Level of implementation of the business plan ANIPEX To be defined with the PRACC

5

ANNEX 3: BUDGET AT OUPUT LEVEL

Description Budget

Engagement 1

OI 1 Develop (through the chambers of agriculture and agricultural organisations) agricultural value chains based on production systems in Zinder and Diffa

36.0

R1.1 Chambers of agriculture and agricultural professional organisations offer services tailored to the family farms and professional organisations involved in the agricultural sector value chains

15.1

R1.2 The professionalism of the value chain actors is enhanced through access to support and counselling services - non-financial (BDS)

2.4

R1.3 The competitiveness of value chain actors is reinforced by providing access to investment funds to develop their initiatives

18.5

OI 2 Enhance the competitiveness of value chains through the promotion of structural measures 16.9

R2.1 Actions to support the structural improvement of the value chain (research, green technology, extension, training) are developed

6.1

R2.2 The institutional and regulatory environment of value chains is improved through structuring actions from Ministries implementing the 3N Initiative and their decentralised departments

4.0

R2.3 The ability to coordinate and monitor and evaluate policies in the agricultural sector has improved

6.8

Contingencies 1.0

Technical Assistance engagement 1: RECA 13.9

Technical Assistance engagement 1: HCI3N 7.1

Total Engagement 1 75.0

Engagement 2

OI 1 Develop (through the ME and private sector organisations) agricultural value chains based on production systems in Zinder and Diffa

76.3

R1.1 The ME and private sector organisations offer services tailored to different categories of company involved in agricultural value chains

10.5

R1.2 The professionalism of the value chain actors is enhanced through access to support and counselling services - non-financial (BDS)

9.0

R1.3 The competitiveness of value chain actors is reinforced by providing access to investment funds to develop their initiatives

29.3

R1.4 Infrastructure related to the development of specific identified value chains is developed and managed

27.5

OI 2 Contribute to improving the business environment through greater private sector involvement in the implementation of reforms

15.4

R2.1 There is dynamic public - private sector dialogue to reform the business environment 1.71

R2.2 The institutional framework for improving and monitoring business climate indicators is supported

13.7

OI 3 Support the implementation of institutional reforms aimed at promoting exports in general and agro products in particular

4.3

R3.1 The ANIPEX business plan for the promotion of exports is implemented 4.3

Total Activities engagement 2 96.0

World Bank Management Fees 5.4

Support to UGP/PRACC financial management 0.68

Technical Assistance engagement 2: ME 11.0

Total Engagement 2 113.0

Audits, reviews, studies, Danida Fellowship centre 5.0

Unallocated funds 2.0

Total Programme 195.0

6

ANNEXE 4: RISK MANAGEMENT MATRIX

Risk Likelihood:

Rare, Unlikely, Likely, Almost

certain

Impact: Insignificant, Minor, Major,

Significant

Risk response: 1) Avoidance, 2) Mitigation / Reduction 3)

Sharing or insuring (transferring), 4) Acceptance

Combined risk: Insignificant, Minor, Major,

Significant

Contextual Risk

Security situation deteriorating in the country

Likely Major Mitigation:

Collaboration with programs for peace / stabilization in the Sahel

Implementation and support AT device national skills

Minor

Uninsured Political Stability

Likely Major Mitigation:

Implementation by private structures

Setting existing political dialogue

Collaboration with sectoral ministries regardless of HC3N

Minor

Programmatic Risk

Limited capacity of partners which limits the performance

Likely Major Mitigation: Establishment of support system and capacity building: national frameworks, AT, training Acceptance: maintains national leadership

Minor

Limited capacity of the PRACC management unit which limits the performance

Unlikely Major Mitigation:

Support the CT / PECEA for setting consistency of the two components

A specialized framework reform business climate is recruited and reinforces the PRACC management unit.

Recruitment of two assistants for fiduciary management (procurement and accounting) to support the PRACC management unit.

Minor

Good governance partners unfulfilled

Likely Major Mitigation:

Capacity building and audits

approach based on human rights

Minor

Nuisance from PECEA (harm)

Unlikely Minor Mitigation: IES study, development of good practices of human rights

Minor

Lack of coordination and coherence among the components at central and local level

Probable Major Mitigation:

Recruitment of a CT PECEA with good knowledge of structures implementation and program design

Establishment of a coordinating committee steering PECEA under the HCI3N

Minor

Institutional Risk

Disappearance of HC3N after elections

Likely Minor Mitigation: Implemented by the private sector and support to sectoral ministries Acceptance: Respect for democracy

Minor

No consensus between the public and private on reforms

Unlikely Minor Mitigation:

extensive information,

Strengthening public / private sector dialogue.

Minor

7

ANNEX 5: SUMMARY OF RECOMMANDATIONS OF APPRAISAL

Note: The summary of recommendations below should be seen as complementary to the summary of recommendations developed in relation to the programme appraisal conducted in August 2013, which includes further issues related to country and policy context, programme design and modalities etc.

Title of Programme Programme for “Employment Generation and Green Growth in the Agricultural Sector in Niger 2014 – 2019”

File number 104.Niger.805.200.

Appraisal report date 22.04.2014

Grant Committee meeting date 13.05.2014

Summary of possible recommendations not followed (to be filled in by the Mission) All recommendations accepted by the Mission.

Overall conclusion of the appraisal The desk appraisal concludes that the programme may be presented to the Danida External Grant Committee for approval pending that the recommendations below are taken into account in the further development of the programme and its components during the inception phase.

Recommendations by the appraisal team Follow up by the Representation

1. Results Framework

1.1. The desk appraisal recommends that a major effort is made during the inception phase to update the results framework of the two components to ensure consistency within and across components and to ensure that objectives and indicators at all levels are formulated in consistency with the expected results and vice-versa.

1.1.The DRO agrees; integrated into the programme document

2. Programme management

2.1. The desk appraisal recommends that the descriptions of roles and mandates of the actors presented in the organisation charts in the two component documents be revised and that linkages presented in the organisation charts be described explicitly.

2.1. The DRO agrees; Organisation charts presented in the two component documents are symbolising a partnership relation. The HCI3N is the chairman of the “comité de gestion du PECEA”; the mandate of the CG is described in engagement 1 (page 20) and 2 (page 20); the role of HCI3N is also described in the engagement 1 (page 20)

8

3. Budget allocation

3.1 The desk appraisal recommends that the embassy in Ouagadougou engages in assessing the detailed budgets to be developed during the inception phase to ensure that there is full agreement on budget allocations.

3.1 The DRO agrees

4. Identified risks and risk management

4.1 The desk appraisal recommends that measures to mitigate the security risk should be further developed during the inception period with particular emphasis on ensuring adequate monitoring of programme activities implemented in the two regions of Diffa and Zinder.

4.1 The DRO agrees; integrated into the programme document

5. Other recommendations

I hereby confirm that the above-mentioned issues have been addressed properly as part of the appraisal and that the appraisal team has provided the recommendations stated above. Signed in Copenhagen on the 22.04.2014

Hanne Carus Team leader/TAS representative

I hereby confirm that the Danish Mission has undertaken the follow-up activities stated above. In cases where recommendations have not been accepted, reasons for this are given either in the table or in the notes enclosed. Signed in Niamey on the 29.04.2014

Winnie Estrup Petersen Ambassador/Head of Danish Mission

9

ANNEX 6: LIST OF SUPPLEMENTARY MARERIALS

Development Engagement 1 : description : Appui aux chaines de valeurs Agro-sylvo-pastorales dans les régions de Zinder et Diffa

Development Engagement 2 : description : Amélioration du climat des affaires et de la compétitivité des chaines de valeurs agricoles

Climate change and Environmental screening note

Human Rights Based Approach screening note

Assessment according to the five budget support principles

Minutes of the meeting of Danida Programme Committee, April 2013

Notits programme Committee

Desk-appraisal report, April 2014

Approved response by representation to summary of recommendations in the desk-appraisal report

Appraisal report, August 2013

Approved response by representation to summary of recommendations in the appraisal report

Rapport « Etude Sectorielle et études préliminaires du secteur Agricole et secteur privé »

Rapport « Etude pour l’identification des chaînes de valeur à appuyer dans le cadre du futur Programme »

Rapport » Analyse approfondies des chaines de valeur porte d’entrée du PECEA »

Rapport « Evaluation des capacités organisationnelles et institutionnelles »

Rapport sur l’actualisation de l’évaluation des capacités organisationnelles et institutionnelles capacités organisationnelles et institutionnelles des acteurs impliqués dans le PECEA,

Rapport d’Etude sur la mise en place de partenariats avec les Banques et les IMFs dans le cadre du PECEA

Document de l’étude de performance des microprojets de la facilité OP;

Plan de Développement Economique et Social (PDES) 2012-2015

Document de l’Initiative 3 N pour la Sécurité Alimentaire et le Développement Agricole Durable

Le document du Projet d’Appui à la Compétitivité et à la Croissance (PRACC de la Banque Mondiale)

Map of Niger (Zinder and Diffa areas)

Indicators of Doing Business (Niger)

Data Profile Niger