Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 43695-RW

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED GRANT

IN THE AMOUNT OF SDR 21.3 MILLION (US$35 MILLION EQUIVALENT)

TO THE

REPUBLIC OF RWANDA

FOR A

RWANDA SECOND RURAL SECTOR SUPPORT PROJECT

IN SUPPORT OF THE

SECOND PHASE

OF THE

RURAL SECTOR SUPPORT PROGRAM (APL)

June 2, 2008

Sustainable Development Department Agriculture and Rural Development Africa Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 31, 2008)

Currency Unit = Rwanda Franc (RWF) 545 RWF = US$1

US$1.64664 = SDR 1

FISCAL YEAR January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AfDB African Development Bank AFTAR Agriculture and Rural Development Unit, Africa Region AMT Alternative Means of Transport APL Adaptable Program Loan APN Agricultural Policy Note BNR Banque Nationale du Rwanda (National Bank of Rwanda) CAADP Comprehensive African Agriculture Development Program CAS Country Assistance Strategy CBO Community Based Organization CETSE Commercial Enterprise and Technical Support Entity CEPEX Central Projects and External Finance Bureau CFAA Country Financial Accountability Assessment CNF Conseil National de Femmes (National Women’s Council) CPIA Country Portfolio Investment Assessment CPIP Country Procurement Issues Paper CQS Consultants Qualifications DDC District Development Committee DDP District Development Plan DFID Department for International Development DRC Democratic Republic of Congo EA Environmental Assessment EDPRS Economic Development and Poverty Reduction Strategy EICV Enquête Intégrale sur les Conditions de Vie des Ménages au Rwanda

(Household Living Standards Survey) EMF Environmental Management Framework EMP Environmental Management Plan ERR Economic Rate of Return ESMF Environmental and Social Management Framework EU European Union FAO Food and Agriculture Organization of the United Nations FASDO Farmers Agricultural Services Delivery Organization FBE Farmer-based Extension FMU Financial Management Unit

FOR OFFICIAL USE ONLY

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

iii

FY Fiscal Year GDP Gross Domestic Project GEF Global Environment Facility GHG Greenhouse Gas ICB International Competitive Bidding ICR Implementation Completion Report IDA International Development Association IEG Independent Evaluation Group IFAD International Fund for Agricultural Development IFR Interim Financial Report IMCEP Integrated Management of Critical Ecosystems Project IMF International Monetary Fund IPM Integrated Pest Management ISAE Institut Supérieur d’Agriculture et d’Elevage

(Higher Institute of Agriculture and Animal Production) ISAR Institut des Sciences Agronomiques du Rwanda

(Institute of Agronomic Sciences of Rwanda) ISN Interim Strategy Note ISR Implementation Status Report JICA Japanese International Cooperation Agency KCal Kilocalories KWAMP Kirehe Community-based Watershed Management Project LCS Least Cost Selection LDF Local Development Fund LF Lead Farmer MDG Millennium Development Goals MDR Multilateral Debt Relief Initiative MINAGRI Ministry of Agriculture and Animal Resources MINALOC Ministry of Local Administration, Good Governance, Community

Development, and Social Affairs

MINECOFIN Ministry of Finance and Economic Planning MINICOM Ministry of Commerce, Industry, Investment Promotion, Tourism and

Cooperatives MININFRA Ministry of Infrastructure MINITERE Ministry of Lands, Environment, Forestry, Water, and Mines MIS Management Information System MTEF Medium Term Expenditure Framework NAP National Agricultural Policy NCB National Competitive Bidding NEPAD New Partnership for Africa’s Development NGO Non-Governmental Organization NISR National Institute of Statistics of Rwanda NPV Net Present Value NTB National Tender Board OBL Organic Budget Law O&M Operation and Maintenance OPI Overall Program Indicators PAC Program Advisory Committee

iv

PAD Project Appraisal Document PADEBEL Dairy Cattle Development Support Project PAPSTA Support Project for the Agricultural Transformation Strategic Plan PASDO Private Agricultural Services Delivery Organization PDO Project Development Objective PFI Participating Financial Institutions PFM Public Financial Management PHRD Policy and Human Resources Development PMP Pest Management Plan PIM Project Implementation Manual PRSG Poverty Reduction Strategy Grant PRSP Poverty Reduction Strategy Paper PSCU Project Support and Coordination Unit PSTA Plan Stratégique pour la Transformation Agricole (Strategic Plan for

Agricultural Transformation) QBS Quality Based Selection QCBS Quality and Cost Based Selection RADA Rwanda Agricultural Development Authority RAP Resettlement Action Plan RARDA Rwanda Animal Resources Development Authority REMA Rwanda Environmental Management Authority RF Results Framework RIF Rural Investment Facility RPF Resettlement Policy Framework RPPA Rwanda Public Procurement Authority RSS Rural Sector Strategy RSSP Rural Sector Support Program RSSP1 First Rural Sector Support Project RSSP2 Second Rural Sector Support Project RWF Rwandan Francs SBD Standard Bidding Document SLM Sustainable Land Management SOE Statement of Expenditures SWAp Sector Wide Approach USAID United States Agency for International Development WBI World Bank Institute WUA Water Users Association

Vice President: Obiageli K. Ezekwesili Country Director: Colin Bruce Country Manager Victoria Kwakwa Sector Manager: Karen McConnell Brooks

Task Team Leader: Michael Morris

v

RWANDA Rwanda Second Rural Sector Support Project

CONTENTS Page

I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1

A. Country and sector issues.................................................................................................... 1

B. Rationale for World Bank involvement.............................................................................. 2

C. Higher level objectives to which the project contributes.................................................... 4

II. PROJECT DESCRIPTION ............................................................................................. 4

A. Lending instrument ............................................................................................................. 4

B. Program objective and phases............................................................................................. 5

C. Project Development Objective and Key Performance Indicators ..................................... 8

D. Project components............................................................................................................. 9

E. Lessons learned and reflected in the project design.......................................................... 14

F. Alternatives considered and reasons for rejection ............................................................ 15

III. IMPLEMENTATION .................................................................................................... 16

A. Partnership arrangements.................................................................................................. 16

B. Institutional arrangements and implementation arrangements ......................................... 16

C. Monitoring and evaluation................................................................................................ 18

D. Sustainability..................................................................................................................... 21

E. Critical risks and possible controversial aspects............................................................... 22

F. IDA grant conditions and covenants................................................................................. 25

IV. APPRAISAL SUMMARY ............................................................................................. 25

A. Economic and financial analyses ...................................................................................... 25

B. Technical........................................................................................................................... 25

C. Fiduciary ........................................................................................................................... 27

D. Social................................................................................................................................. 28

E. Environment...................................................................................................................... 28

F. Safeguard policies............................................................................................................. 29

G. Policy exceptions and readiness........................................................................................ 31

Annex 1: Country and Sector or Program Background ......................................................... 32

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Annex 2: Major Related Projects Financed by the World Bank and/or other Agencies ..... 38

Annex 3: Results Framework and Monitoring ........................................................................ 39

Annex 4: Detailed Project Description...................................................................................... 48

Annex 5: Project Costs ............................................................................................................... 60

Annex 6: Implementation Arrangements ................................................................................. 61

Annex 7: Financial Management and Disbursement Arrangements..................................... 66

Annex 8: Procurement Arrangements ...................................................................................... 76

Annex 9: Economic and Financial Analysis ............................................................................. 86

Annex 10: Safeguard Policy Issues............................................................................................ 94

Annex 11: Project Preparation and Supervision ..................................................................... 99

Annex 12: Documents in the Project File ............................................................................... 101

Annex 13: Statement of Loans and Credits............................................................................ 102

Annex 14: Rwanda at a Glance................................................................................................ 103

Annex 15: Maps......................................................................................................................... 105

vii

RWANDA

RWANDA SECOND RURAL SECTOR SUPPORT PROJECT

PROJECT APPRAISAL DOCUMENT

AFRICA

AFTAR

Date: June 2, 2008 Team Leader: Michael Morris Country Director: Colin Bruce Sector Manager/Director: Karen Mcconnell Brooks

Sectors: General agriculture, fishing and forestry sector (50%); Irrigation and drainage (30%); Agricultural marketing and trade (20%). Themes: Rural services and infrastructure (P); Other rural development (P); Water resource management (S)

Project ID: P105176 Environmental screening category: Partial Assessment

Lending Instrument: Adaptable Program Loan

Project Financing Data [ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 35.00 Proposed terms: IDA Grant

Financing Plan (US$m) Source Local Foreign Total

BORROWER/RECIPIENT 2.00 0.00 2.00 IDA Grant 33.71 1.29 35.00 Beneficiaries contribution 1.99 0.00 1.99 Total: 37.70 1.29 38.99 Borrower: Ministry of Finance and Economic Planning (MINECOFN) P. O. Box 158 Kigali Rwanda Responsible Agency: PSCU-RSSP (MINAGRI) B.P. 6981 Kigali Rwanda Tel: +250 587226 Fax: +250 587226 email: rssp_pscu@rssp.gov.rw

viii

Estimated disbursements (Bank FY/US$m) FY 09 10 11 12 Annual 8.75 8.47 8.94 8.84 Cumulative 8.75 17.22 26.16 35.00 Project implementation period: Start October 31, 2008 End: April 30, 2012 Expected effectiveness date: October 31, 2008 Expected closing date: October 31, 2012

Does the project depart from the CAS in content or other significant respects? Ref. PAD I.C. [ ]Yes [X] No

Does the project require any exceptions from Bank policies? Ref. PAD IV.G. Have these been approved by Bank management? Is approval for any policy exception sought from the Board?

[ ]Yes [X] No [ ]Yes [ ] No [ ]Yes [ ] No

Does the project include any critical risks rated “substantial” or “high”? Ref. PAD III.E. [ ]Yes [X] No

Does the project meet the Regional criteria for readiness for implementation? Ref. PAD IV.G. [X]Yes [ ] No

Project development objective Ref. PAD II.C., Technical Annex 3 The Project Development Objective (PDO) is to increase agricultural production and marketing in marshland and hillside areas targeted for development under the Project in an environmentally sustainable manner. Project description [one-sentence summary of each component] Ref. PAD II.D., Technical Annex 4 The Project will have three components. Component 1. Marshlands and hillsides rehabilitation and development. The objective of Component 1 is to expand irrigated area in cultivated marshlands and increase use of sustainable land management practices on associated hillsides to accelerate the pace of agricultural intensification. Component 2. Strengthening commodity chains. The objective of Component 2 is to support the commercialization of smallholder agriculture in targeted marshland and hillside areas by intensifying production, promoting agricultural value addition, and expanding access to markets. Component 3. Project coordination and support. Component 3 will support the Project Support and Coordination Unit (PSCU) to ensure: (i) efficient execution of administrative, financial management, and procurement functions; (ii) coordination of Project activities among the various stakeholders; (iii) timely implementation and monitoring of environmental and land-use management frameworks mandated by World Bank safeguards policies; and (iv) establishment and operation of an effective monitoring and evaluation (M&E) system.

ix

Which safeguard policies are triggered, if any? Ref. PAD IV.F., Technical Annex 10 RSSP2 is an EA Category “B” project and triggers the following safeguard policies: Environmental Assessment (OP/OB 4.01) Natural Habitats (OP 4.04) Pest Management (OP 4.09) Involuntary Resettlement (OP 4.12) Projects on International Waterways (OP/BP 7.50) Significant, non-standard conditions, if any, for: Ref. PAD III.F. Board presentation: June 24, 2008 Board conditions: none Grant effectiveness: By the date of Project effectiveness, (i) a satisfactory Project Implementation Manual will be adopted by the Government, and (ii) the first installment of the Government counterpart fund will be deposited into the Project’s counterpart account. Covenants applicable to project implementation: n.a.

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I. STRATEGIC CONTEXT AND RATIONALE

A. Country and sector issues

1. The economy of Rwanda continues to recover from the effects of the 1994 genocide. As a result of extensive economic and governance reforms implemented beginning in 1995, GDP growth has averaged more than 7.5 percent per year during the past ten years. Yet even with the strong growth recorded in recent years, because the post-genocide starting point was so low, Rwanda remains one of the world’s poorest countries, with an average annual income of US$245 per capita. According to national poverty standards, more than one-third of all Rwandans (37 percent) live in extreme poverty (defined as earning less than RWF175 per day, the level of income needed to support daily food consumption of 2,500 KCal), and more than one-half (57 percent) live in moderate poverty (defined as earning less than RWF250 per day).1 Poverty in Rwanda is concentrated in the countryside and is strongly associated with agriculture, as reflected by a rural poverty rate of 67 percent.

2. Agriculture is the backbone of Rwanda’s economy, accounting for about 39 percent of GDP,2 80 percent of employment,3 and 63 percent of foreign exchange earnings.4 Because the agricultural sector is so large, its performance impacts powerfully on the performance of the overall economy. The contribution of agriculture to economic growth is amplified by the strong multiplier effects that extend from primary commodity production into post-harvest value-adding activities. Agriculture also contributes significantly to national food self-sufficiency, as more than 90 percent of all food consumed in the country is domestically produced.

3. Rwanda’s extremely high population density constrains future development options. The acute scarcity of land is a critical constraint facing rural households in Rwanda. The population of about 9 million people is distributed across an area of only 26,340 km², giving Rwanda the highest average population density in sub-Saharan Africa (approximately 355 inhabitants per km²). The average amount of agricultural land available per rural resident in Rwanda is about 0.3 ha, and the average amount of arable land (agricultural land net of permanent pasture) is about 0.2 ha. These figures are lower than those for most other countries in Africa, and they are comparable to those for the most densely populated countries in Asia, where a much larger share of agricultural land is irrigated, making it far more productive. With the land frontier effectively exhausted, future agricultural growth in Rwanda will have to come from productivity gains achieved through intensification. Mainly for that reason, the Government has targeted as an urgent priority the development for irrigation of 60,000 ha of marshlands, along with the sustainable development of surrounding hillsides.

4. In 2004, the Government of Rwanda formulated a National Agricultural Policy (NAP), the goals of which are to contribute to national economic growth, improve food security and the nutritional status of the population, and increase rural incomes. The NAP was operationalized in 2005 with the launching of the Strategic Plan for Agricultural Transformation (PSTA). The PSTA encompasses four broad program areas: (i) Intensification and Development

1 Enquête Intégrale sur les Conditions de Vie des Ménages au Rwanda (EICV), 2005-06. 2 National Institute of Statistics of Rwanda (NISR), 2005. 3 Enquête Intégrale sur les Conditions de Vie des Ménages au Rwanda (EICV), 2005-06. 4 Banque Nationale du Rwanda (BNR) / Ministry of Finance and Economic Planning (MINECOFIN), 2006.

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of Sustainable Production Systems; (ii) Support to the Professionalization of Producers; (iii) Promotion of Specialty Crops and Development of Agribusiness; and (iv) Institutional Development.

5. Rwanda’s agricultural growth strategy focuses on raising agricultural productivity and increasing production through a series of supply-side interventions: intensifying sustainable production systems, strengthening research and extension, improving input distribution, building capacity among farmer organizations and cooperatives, promoting commodity chain development, improving export competitiveness, and strengthening the institutions that support agriculture.

6. These measures are undeniably important, but agricultural growth cannot be sustained indefinitely with a supply-push strategy. Over the longer term, it will not be possible to sustain high rates of agricultural growth unless the increased production finds a ready market. Where will future demand come from? Potential sources of demand for Rwandan agricultural products were analyzed in the Agricultural Policy Note (APN).5 The study found that while regional and international markets may offer attractive opportunities over the longer run, in the short to medium term, strong demand will come from domestic food markets. Population growth of nearly 3 percent per year will combine with income growth and accelerating urbanization to fuel projected growth in demand for food of at least 5 percent per year through 2015 and beyond. Since Rwanda already faces a structural food deficit, the Government’s strong focus on sustainable development of marshlands for food crop production is clearly justified.

7. Implementation of the PSTA is being supported by several development partners including the World Bank, the African Development Bank (AfDB), the International Fund for Agricultural Development (IFAD), the European Union (EU), the UK Department for International Development (DFID), the US Agency for International Development (USAID), the governments of the Netherlands and Belgium, and the Japanese International Cooperation Agency (JICA). Working through the Rural Cluster, the Government and the development partners are moving toward a Sector Wide Approach (SWAp) in the agricultural sector oriented around a common Results Framework (RF) and a mutually agreed Medium Term Expenditure Framework (MTEF). An increasing proportion of development assistance is being provided in the form of budget support, with the World Bank setting the standard as lead donor. The goal is to move eventually toward complete budget support, but for now key pieces of the development agenda are still being funded through coordinated donor-supported projects and programs.

B. Rationale for World Bank involvement

8. A key component of the Government’s agricultural development strategy is the Rural Sector Support Project (RSSP), which is being implemented by the Project Supervision and Coordination Unit (PSCU) of the Ministry of Agriculture and Animal Resources (MINAGRI). Designed as a 15 year Adaptable Program Loan (APL) to be implemented nationally in three phases, RSSP aims at revitalizing the rural economy and improving the

5 Promoting Pro-Poor Agricultural Growth in Rwanda: Challenges and Opportunities. Report No. 39881-RW,

Washington, DC: World Bank. June 2007.

3

quality of life of the rural poor through the transfer of technical and financial resources for sustainable rural development.

9. The first phase of the APL (RSSP1) has focused on building capacity for sustainable intensification of marshlands and hillsides agriculture, as well as development of post-harvest value-adding activities. RSSP1 was launched in October 2001. During the initial years of project effectiveness, disbursement lagged, in part because the project design proved to be too ambitious for the limited local implementation capacity. In December 2005, following the Mid Term Review, the World Bank and the Government of Rwanda carried out a simplified restructuring of the Project, which left the Project Development Objectives (PDOs) unchanged but streamlined and simplified the project design. (See Memorandum dated November 29, 2005: Rwanda – Rural Sector Support Project (Credit No. 3483-RW) Request for Extension of Project Closing Date, Simplification of the Project Design, and a Reallocation of the Proceeds of the Credit and the document of the same date entitled Rwanda – Rural Sector Support Project (Credit No. 3483-RW) Amendment to the Development Credit Agreement and Project Agreement, in project files.) The main consequence of the restructuring was to focus the Project on a core set of activities centered around: (i) rehabilitation and development of irrigated marshlands; (ii) development and/or protection of surrounding hillsides; and (iii) strengthening capacity among the users of marshlands and hillsides production systems. Disbursement accelerated following the restructuring, and the Project began to achieve good progress. Implementation during the past 24 months has been rated Satisfactory, and RSSP1 is on course to meet its development objectives. It is anticipated that the assessment criteria for transition to Phase 2 will be satisfied, with virtually all of the relevant triggers met or exceeded.

10. The World Bank should support the second phase of the Project (RSSP2) for five main reasons:

(1) The Government’s vision for agriculture match the World Bank’s priorities as expressed in the Africa Action Plan (AAP), the Rural Sector Strategy (RSS), and the Interim Strategy Note (ISN) for Rwanda.

(2) The Government has demonstrated a clear vision and commitment to the development of the country’s agricultural sector through the development of coherent and complementary policies and strategies.

(3) As the lead donor in the agricultural sector and co-chair of the Rural Cluster, the World Bank plays a crucial convening role in setting the standard for ensuring a more harmonized approach among the development partners. The World Bank’s technical skills and financial resources are used by Government to mobilize additional resources from other development partners and from the private sector.

(4) The Government of Rwanda has specifically requested continued World Bank support for the sustainable development of marshlands and surrounding hillsides, an activity that by seeking to expand the area under production through intensification directly attacks the single greatest constraint facing Rwandan agriculture.

(5) The operation is conceived as the second phase of the successful ongoing RSSP1 operation that is supporting an important agenda which is still far from completed.

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C. Higher level objectives to which the project contributes

11. Rwanda’s first Poverty Reduction Strategy Program (PRSP) laid the foundation for sustainable peace in the wake of the 1994 genocide by helping to create a framework that enabled rapid progress toward the reconstruction of social capital, provision of basic infrastructure and services, modernization of the economy, and development of an effective state characterized by good governance. The first PRSP covered the period 2002-06 and focused primarily on sectors that would yield immediate growth benefits and build the human resource and infrastructure base. It outlined six priority action areas: (i) rural development and agricultural transformation; (ii) human development; (iii) economic infrastructure; (iv) good governance; (v) private sector development; and (vi) institutional capacity building. The first PRSP achieved substantial progress in structural reforms, improved social sector indicators, and increased allocation of spending to priority sectors, but the rate of poverty reduction did not meet expectations. The lower-than-targeted growth outcome in the agriculture sector—attributable in large part to the continued widespread use by rural households of traditional farming methods, with limited uptake of improved production technologies and modern inputs—is seen to be an important factor that has slowed the rate of poverty reduction.

12. Rwanda’s second PRSP, the Economic Development and Poverty Reduction Strategy (EDPRS), refocuses the country priority on growth and advocates an approach focused on decentralization and increased private sector involvement. The first PRSP was elaborated in a post-conflict environment where the primary emphasis was on managing a transitional period of rehabilitation and reconstruction. Having successfully negotiated this transitional period, the country is now poised to move into a phase focused on economic growth and poverty reduction. The EDPRS recognizes the key role of the private sector in accelerating growth to reduce poverty. In addition, emphasis is placed on consolidating and extending the decentralization of public spending, accompanied by robust accountability mechanisms.

13. The EDPRS provides a road map for Government, development partners, the private sector and civil society indicating where Rwanda wants to go, what it needs to do to get there, how it is going to do it, what the journey is going to cost, and how it will be financed. Extending from 2008-12, it provides a medium-term framework for achieving the Millennium Development Goals (MDGs) and realizing the country’s long term development aspirations. The priorities of the EDPRS are embodied in three flagship programs: (i) Sustainable Growth for Jobs and Exports; (ii) Vision 2020 Umurenge; and (iii) Governance. Under the first flagship (Growth for Jobs and Exports), the idea is to improve productivity and promote innovation through science and technology. Given the importance of agriculture for growth and poverty reduction, raising agricultural productivity and value added while ensuring food security are key priorities. As the Government’s main rural development project that directly addresses these priorities, RSSP2 will make a vital contribution to the growth and poverty reduction agenda.

II. PROJECT DESCRIPTION

A. Lending instrument

14. The reasons given in the Project Appraisal Document (PAD) for RSSP1 justifying the choice of the APL remain valid. RSSP1 has focused on building the technical and

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institutional capacities needed to support the generation and dissemination of efficient agricultural production and post-harvest activities. Capacity building activities have been coupled with investment activities aimed at establishing the infrastructure needed to support sustainable intensification of agricultural production. This has laid the groundwork for subsequent program activities. As envisioned in the RSSP1 PAD, RSSP2 will extend and deepen the technical and institutional support and raise the level of investment activities to accelerate the pace of intensification and commercialization of agricultural production. Once agricultural growth starts accelerating, Phase 3 of the project (RSSP3) would implement activities to promote diversification of economic activities in rural areas as a way of increasing and stabilizing incomes of rural households.

B. Program objective and phases

Programmatic objective

15. The long-term programmatic objective of the RSSP APL series is to help the Government of Rwanda achieve its strategic goal of unlocking rural growth in order to increase incomes and reduce poverty. Rural growth—specifically agricultural growth—has been shown to be up to four times as efficient in reducing poverty as growth in other sectors.6 The RSSP APL series is guided by the recognition that the most effective way to achieve agricultural growth is to raise the productivity and expand the employment of resources that the rural poor own or depend on for their livelihoods, primarily land and labor.

16. The RSSP APL series is seeking to achieve this objective through the sustained transfer of financial and technical resources to provide the technology, infrastructure, support services, and institutional capacity needed for faster growth in the rural economy. The programmatic approach is appropriate, because a sustained commitment is needed to achieve significant progress toward this long-term objective. The Government has had to start almost from scratch in starting to rebuild the institutional capacity needed to support productive activities in rural areas. The process of institutional reform has commenced, as evidence by the recent creation of a new set of agricultural and rural development agencies charged with implementing the PSTA, but much remains to be done.

Overall Program Indicators 17. The RSSP APL series has three Overall Program Indicators (OPI): (i) change in the average level of household incomes among Program direct beneficiary households; (ii) change in the percentage of Program direct beneficiary households under the poverty line; and (iii) change in the average level of rice yields per hectare in districts having marshlands rehabilitated or developed by the Program. The original Overall Program Indicators as described in the RSSP1 PAD were revised due to imprecise formulation or problematic measurement (see Annex 1 for the details of the revision). A Performance Indicators Update and Impact Assessment Study was commissioned in 2007, prior to the closing of RSSP1, to allow measurement of the Overall Program Indicators at the end of Phase 1 and establish baselines for subsequent phases of the RSSP series. Once the baselines are established, appropriate targets will be decided for the

6 Agriculture for Development. 2008 World Development Report. Washington, DC: World Bank. 2007.

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remaining phases. Under RSSP2 and RSSP3, the Overall Program Indicators will be tracked as part of the M&E plan.

Program phases 18. The RSSP APL series was designed to cover a period of 15 years and to be implemented in three phases. The first phase was extended by 24 months, so the series is now expected to cover 17 years in all.

• Phase 1: 2001-08: The emphasis during the first phase has been on building the institutional, technical, and human capacity needed to support the adoption of sustainable intensification technologies in developed marshlands and surrounding hillsides.

• Phase 2: 2008-13: During the second phase, the emphasis will be on broadening and deepening the support provided to accelerate the pace of intensification and commercialization of agricultural production.

• Phase 3: 2013-18: During the third and final phase, the stimulus resulting from faster growth in agricultural production will provide the basis for promoting diversification of economic activities in rural areas as a way of increasing and stabilizing rural incomes.

19. The staggered approach allows Project activities to be adjusted as experience is accumulated, knowledge is gained about the working of the rural economy, and the targeted beneficiaries develop new skills, adjust to new challenges, and exploit new opportunities. The incremental approach reduces risk and raises the likelihood of successful outcomes, because the later projects in the series can be designed and implemented on the basis of lessons learned and results achieved from the earlier projects.

20. The staggered approach also allows Project implementation arrangements to be adjusted as the Government develops increased capacity to assume responsibility for planning and implementation. For example, during the second phase, the Project’s management information system will be designed in a way that key functions can feed into and eventually migrate to the centralized management information system being developed by MINAGRI.

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Box 1: Highlights of accomplishments under Rural Sector Support Project 1

• Development or rehabilitation of more than 2,500 ha of irrigated marshlands through construction or rehabilitation of water storage structures (dams and reservoirs) and water control structures (irrigation and drainage canals, sluice gates, and interior bunds).

• Completion of technical design studies for more than 2,000 ha of Phase 2 marshlands rehabilitation and development works.

• Sustainable development or protection of more than 10,000 ha of hillsides through construction of simple soil and water conservation structures and planting of cover crops and trees.

• Promotion of smallholder commercial agriculture through construction of rural infrastructure including 25 km of rural access roads, 24 small bridges, 23 rural markets, 58 storage facilities, 108 grain drying facilities, and 4 farmer service centers.

• Strengthening knowledge and skills among project beneficiaries through provision of training to more than 6,000 Lead Farmers, more than 175,000 members of cooperatives, and more than 20 commercial enterprise and technical support entities (CETSEs).

• Increased supply of agricultural services through training provided to more than 5,000 farmer agricultural services delivery organizations (FASDOs) and more than 65 private agricultural service delivery organizations (PASDOs).

• Increased commercial activity in rural areas through provision of loans totaling more than US$32 million through the Project-supported Rural Investment Facility (RIF). These loans, which went to more than 4,250 borrowers, supported pilots and commercial projects in a range of sub-sectors, including smallholder dairy, maracuja, macadamia, moringa, vanilla, silk, and honey.

• Successful piloting of alternative means of transport (donkeys and oxen carts) used to convey agricultural commodities from rural zones that lack reliable access roads.

21. Progress achieved during RSSP1 toward achievement of the Phase 2 triggers is summarized in Table 1. Except for two triggers relating to coffee and tea export promotion activities, which were de-emphasized under RSSP1 after other donor-funded projects were launched specifically in these areas, all of the triggers for which baselines were established have been achieved. Progress cannot be reported against two triggers (numbers of people employed off-farm and income generated by off-farm activities) because no baselines were established.

22. Several of the Phase 3 triggers specified in the RSSP1 PAD have been updated. Given the evolution in the focus of the RSSP series, and in response to the narrowing of the Program’s focus following the mid-term restructuring, several of the original Phase 3 triggers are no longer as relevant as they were when the APL series was originally designed. Furthermore, several important objectives of RSSP2 are not adequately reflected in the original Phase 3 triggers. For these reasons, the original Phase 3 triggers have been updated, with an eye to reducing the overall number of indicators and making the indicators more relevant and more easily measurable. The original and revised Phase 3 triggers are summarized in Annex 1.

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Table 1. Progress achieved toward attainment of Phase 2 triggers

Phase 1 target

December 2007

Trigger achieved?

1. Marshlands rehabilitated or developed a 2,500 ha 2,518 ha Yes 2. Hillsides rehabilitated or protected b 7,500 ha 10,089 ha Yes 3. Crop yields in farmed marshlands/hillsides c + 50 % + 103 % Yes 4. Number of FASDOs supported 1,000 5,189 Yes 5. Number of PASDOS supported d 20 22 Yes 6. Incomes of CETSE-assisted farmers e + 20% + 35% Yes 7. Output of export crops in project area f + 25 % N/A N/A

8. Unit cost of production of export crops f - 10 % N/A N/A 9. Market facilities constructed 18 23 Yes

10. Appropriate means of rural transport Piloted Piloted Yes 11. Number of people employed off farm Not specified N/A N/A

12. Income generated by off-farm activities Not specified N/A N/A

13. Availability of output and outcome indicators Yes Yes Yes 14. Frequent evaluation throughout Phase 1 Yes Yes Yes

a Marshlands development target formally changed from 4,000 ha at the time of the 2005 restructuring.

b Hillsides rehabilitation / protection target formally changed from 5,000 ha to 22,000 ha at the time of the 2005 restructuring and then to 7,500 ha at the time of the 2006 extension.

c Based on difference between national average rice yields (3 t/ha) and average rice yields of RSSP direct beneficiaries (6.1 t/ha) as determined by Performance Indicators Update and Impact Assessment Survey carried out in early 2008.

d Mid Term Review noted target in original PAD (80) was clearly unrealistic and suggested change to 20.

e No baseline was collected at the beginning of RSSP1. However the Performance Indicators Update and Impact Assessment carried out in early 2008 revealed that at that time the incomes of Project direct beneficiaries were 35 percent higher than the incomes of Project non-beneficiaries. This suggests strongly that this trigger has been achieved.

f Export crops (coffee and tea) were de-emphasized in RSSP1 after other donor-funded projects began working intensively in the coffee and tea sectors.

TBD = to be determined through the Baseline Indicators Update and Impact Assessment Study

N/A = not applicable (non-measurable as defined or no longer relevant)

C. Project Development Objective and Key Performance Indicators

Project Development Objective

23. The Project Development Objective (PDO) is to increase agricultural production and marketing in marshland and hillside areas targeted for development under the Project in an environmentally sustainable manner.

Key Performance Indicators

24. Key Performance Indicators are presented in Annex 3 and include the following three PDO level indicators:

9

PDO Indicator 1: By the end of the Project, production of rice in marshlands rehabilitated or developed under RSSP2 has increased by 100 percent relative to the baseline.7 PDO Indicator 2: By the end of the Project, 50 percent of farmers in marshland and hillside areas developed or rehabilitated by the RSSP1 and RSSP2 have adopted sustainable marshland or hillside intensification technologies. (Adoption of sustainable intensification technologies is defined as adoption of at least two of the following practices: soil fertility management including appropriate use of organic and/or inorganic fertilizer, integrated pest management [IPM], conservation tillage, contour bunding, construction of erosion control structures including terraces, vegetation strips, and agroforestry practices.) PDO Indicator 3: By the end of the Project, at least 20 cooperatives having quality business plans and being supported by RSSP2 have increased their revenues from sales by 50 percent relative to the baseline

D. Project components

25. The Project will have three components—two technical components and one implementation support component. The two technical components, both of which include capacity building and institutional development activities, are fully aligned with the Strategic Plan for Agricultural Transformation (PSTA). Since the Project is the second phase of a planned three-phase APL, many of the proposed activities are designed to extend the reach or scale up the intensity of activities being implemented under the ongoing first phase. At the same time, several new activities will be added based on lessons learned during the first phase.

Component 1: Marshlands and hillsides rehabilitation and development

26. The objective of Component 1 is to expand irrigated area in cultivated marshlands and increase use of sustainable land management practices on associated hillsides to accelerate the pace of agricultural intensification. Using a watershed development approach, Component 1 will rehabilitate or develop irrigation infrastructure on at least 3,300 ha of marshlands, and it will promote adoption of sustainable agricultural intensification practices on at least 9,900 ha of associated hillsides. Performance indicators include the area developed for irrigation in marshlands, the area put under sustainable intensification practices on associated hillsides, and the recovery of irrigation operation and maintenance (O&M) costs by Water Users Associations (WUAs). Component 1 will include two sub-components.

Sub-component 1.1: Marshlands rehabilitation and development.

27. The Project will finance rehabilitation and development of gravity irrigation schemes in marshlands. The location of these schemes and their technical features will be decided based on transparent selection criteria: (i) the projected economic rate of return (ERR);

7 Although RSSP2 will work with several crops, the PDO indicator focuses on rice because rice is by far the most

important crop, economically as well as in terms of food security. Well over one-half of the marshlands development activities to be implemented under Component 1 and the commodity chain strengthening activities to be implemented under Component 2 will focus on rice.

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(ii) likely social impacts; (iii) likely environmental impacts; and (iv) likely contribution to the Government’s national food security objectives. The activities in Sub-component 1.1 will be implemented by competitively recruited consultants (firms and individuals) that will be contracted directly by the PSCU.

28. The Project will finance costs associated with stakeholder mobilization and capacity strengthening to ensure the sustainability of Project-supported irrigation development activities. Activities to be supported include: (i) establishment of WUAs in marshlands rehabilitated or developed by the Project; (ii) strengthening capacity of key stakeholders involved in irrigation development and management, including the Rwanda Agricultural Development Authority (RADA); (iii) establishment of capacity to carry out participatory M&E; and (iv) promoting the creation of a national association of irrigation professionals. These activities will be implemented by public agencies (e.g., RADA), public research institutes (e.g., Institut des Sciences Agronomiques du Rwanda, ISAR; Institut Supérieur d’Agriculture et d’Elevage, ISAE), public universities, non-governmental organizations (NGOs), and competitively recruited private consultants (firms and individuals). Service providers will be competitively recruited by the PSCU or supported through grants made through the Local Development Fund (LDF), a financing facility to be established under the Project and managed by the PSCU (for details on the operation of the LDF, see Annex 4).

Sub-component 1.2: Sustainable development of hillsides.

29. The Project will finance investments in improving the productivity of farming systems on hillsides associated with marshland irrigation schemes developed by the Project. Activities to be supported include: (i) promotion of cost-effective soil and water conservation technologies; and (ii) promotion of sustainable cropping practices on hillsides. By increasing agricultural productivity on hillsides, the Project aims to provide incentives to farmers to invest in sustainable land management practices and reduce land degradation. Critical hillsides ecosystems deemed unsuitable for intensive agriculture will be protected, rather than developed for productive agriculture. The activities in Sub-component 1.2 will be implemented by local communities with technical assistance from public agencies (e.g., RADA, ISAR, ISAE, public universities), NGOs, and private consultants (firms and individuals). Service providers will be competitively recruited by the PSCU or supported through grants made through the LDF.

30. The Project will finance costs associated with stakeholder mobilization and capacity strengthening to ensure the sustainability of Project-supported hillside development activities. Activities to be supported include: (i) organization of hillside farmers in catchments being rehabilitated or developed by the Project; (ii) strengthening capacity of key stakeholders involved in hillside development and management, including RADA; and (iii) establishment of capacity to carry out participatory M&E. These activities will be implemented by public agencies (e.g., Rwanda Environmental Management Agency [REMA], ISAR, ISAE, public universities), NGOs, and competitively recruited private consultants (firms and individuals). Service providers will be competitively recruited by the PSCU or supported through grants made through the LDF.

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Component 2. Strengthening commodity chains

31. The objective of Component 2 is to support the commercialization of smallholder agriculture in targeted marshland and hillside areas by intensifying production, promoting agricultural value addition, and expanding access to markets. This component will use a commodity chain approach, supporting rural entrepreneurs and assisting cooperatives to adopt sound business practices. The Project will use a holistic approach in addressing constraints along the entire commodity chain, including the upper (production), middle (processing), and lower (marketing) stages. The Project will focus on strengthening commodity chains for leading food staples, including rice, potatoes, and maize, but it will remain responsive to the broader proposals of farmers in marshlands and hillsides, including niche commodities, provided tangible marketing opportunities exist. Performance indicators will include: increased production, increased professionalism of farmers’ associations and cooperatives, increased value adding activity, and increased market participation of Project beneficiaries. Component 2 will include four sub-components, three of which target key stages in the commodity chain, and one of which will generate information and knowledge needed to support rapid commodity chain development. Selected activities will be financed through the LDF.

Sub-component 2.1: Strengthening farmer organizations and cooperatives

32. The Project will strengthen farmer organizations and cooperatives, with the goal of improving their governance mechanisms and instilling them with sound business practices. The Project will support two main target groups: (i) farmer organizations working in marshlands rehabilitated or developed by the Project (RSSP1 and RSSP2); and (ii) cooperatives having strong organizational capacity and exhibiting a clear business vision.

33. Sub-component 2.1 will support capacity building activities. These are expected to include: (i) organizational support and related training for farmer organizations; (ii) business planning and enterprise management training for commercially oriented cooperatives; (iii) organizational and operational support for associations of Lead Farmers (LF); and (iv) organizational support for national commodity associations.

34. The Project will provide training, technical assistance, and advisory services to build basic operating capacity in all of the farmer organizations and cooperatives with which it engages. Using participatory approaches to ensure engagement with the entire membership of each organization, the objective will be to rationalize organizational structures and functions, strengthen member commitment, and increase effective participation.

35. The Project will provide training, technical assistance, and advisory services to improve business planning and management capacity in a selected number of more commercially oriented cooperatives. Where attractive commercial opportunities are identified, the Project will provide training, technical assistance, and advisory services to support the preparation of business plans. The business plans will specify not only the details of proposed commercial activities, but also the mechanisms to be used for sharing costs and benefits of commercial activities among members. The training and advisory services provided will vary according to the business needs. Topics will include but will not be limited to budgeting and

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financial analysis, capital management, sales management and marketing, risk management, quality management, and personnel management.

Sub-component 2.2: Improving production technologies

36. The Project will finance activities to improve production and productivity of farming systems in the marshlands and hillsides where the Project intervenes. It will implement training activities, provide technical advisory services, and distribute production inputs, with the goal of disseminating best practices for sustainable soil and water management, increasing use of improved inputs (seed and fertilizer) and encouraging adoption of IPM. The main target groups will be the farmer organizations and cooperatives supported by the Project, especially in the marshlands developed and surrounding hillsides. The farmer-based extension (FBE) system will provide a convenient entry point for the activities under this component.

37. Project supported activities will include:

• Input support for demonstration plots. Working with farmer organizations and service providers, the Project will finance farming inputs for demonstration plots under the FBE system, such as seed, fertilizer and materials needed for IPM. The provision of these inputs will serve to raise awareness of their role in improving farming systems and thus facilitate their adoption at the farmer grassroots.

• Enhancing soil fertility. The Project will promote soil fertility assessments and actions, focusing on locations where soil nutrient imbalances have been identified as a major problem. Four main types of interventions are foreseen. First, the Project will carry out basic soil testing. Mainly this will be done by training district agronomists and providing them with soil testing kits, but in-country laboratories will be contracted to carry out more specialized soil testing when needed. This will allow farmers to access custom soil testing services to determine soil nutrient management needs. Second, the Project will promote integrated soil fertility management by training beneficiaries in the use of manure and crop rotation practices. Third, the project will finance or otherwise support innovative arrangements designed to facilitate farmers’ access to fertilizer, for example by providing start-up capital for fertilizer distribution outlets to be established in selected cooperatives and managed to benefit the entire membership. Fourth, the Project will link with government agencies involved in fertilizer procurement and distribution to ensure that farmers have access to the appropriate fertilizer products.

• Promoting use of improved seed and planting materials. Working through interested cooperatives, the Project will support the establishment of certified seed producers. This activity will be conducted in cooperation with RADA and wherever possible linked to ongoing seed projects.

• Promoting IPM practices. Working with farmer organizations and service providers, the Project will promote use of IPM practices in irrigated marshlands and surrounding hillsides being targeted by the Project. In particular, the Project will finance as follows: (i) production and distribution of IPM instructional materials developed under RSSP1; (ii) training of Lead Farmers in IPM practices; and (iii) establishment of pest monitoring programs in irrigated marshlands and surrounding hillsides being targeted by the Project.

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Sub-component 2.3: Rural investments for economic infrastructure

38. The Project will support productive rural investments by community-based organizations and occasionally Districts. Activities to be supported under Sub-component 2.3 will be financed through the LDF. The LDF will provide funding to farmer organizations, cooperatives, NGOs, and occasionally Districts, for strategic investments in public goods and services (e.g., community grain drying and storage facilities, rural roads). Activities supported by the LDF must be linked to other activities being supported by the Project.

Sub-component 2.4: Knowledge generation and dissemination

39. The Project will commission a limited number of knowledge generation and dissemination activities, including diagnostic studies, market surveys, and problem-focused applied research. The PSCU, together with stakeholders and partners, will identify issues about which additional knowledge is needed to inform development decisions. Activities to be supported under Sub-Component 2.4 will include but will not be limited to:

• Diagnostic studies. Currently there is a general lack of knowledge about the performance of commodity chains in Rwanda, which makes it difficult for public resources to be directed to areas where they can have maximum impact. The Project will commission a limited number of diagnostic studies where these can fill key knowledge gaps and contribute to the formulation of more effective commodity chain development strategies.

• Market surveys. Where farmer organizations and cooperatives being supported by the Project demonstrate clear potential to scale-up their marketing capacity, the Project will commission market surveys designed to identify potentially more lucrative outlets and support efforts to link the farmer organizations and cooperatives to potential buyers.

• Applied research. The Project will commission and finance applied research initiatives to solve technical problems that are certain to arise within the farmer organizations or within the commodity chains.

Component 3. Project coordination and support

40. Component 3 will support the PSCU to ensure: (i) efficient execution of administrative, financial management, and procurement functions; (ii) coordination of Project activities among the various stakeholders; (iii) timely implementation and monitoring of environmental and land-use management frameworks mandated by World Bank safeguards policies; and (iv) establishment and operation of an effective monitoring and evaluation (M&E) system. The Government and the World Bank have both expressed a strong commitment to the principles enshrined in the Paris Declaration on Aid Effectiveness, so implementation arrangements will be designed with a view to transitioning administrative and management functions currently being carried out by the PSCU to Government ministries and agencies, as these develop the necessary capacity.

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Table 2. RSSP2 project components

Project components Amount (US$ m)

1. Marshlands and hillsides rehabilitation and development 23.23

2. Strengthening commodity chains 5.58

3. Project management 5.61

4. Project Preparation Fund 0.58

TOTAL 35.00

E. Lessons learned and reflected in the project design

41. The project design reflects five important lessons learned under RSSP1 and highlighted in the Implementation Completion Report (ICR) that is currently under preparation.

42. The first lesson learned relates to the importance of maintaining a tight focus on an agenda that is manageable given the capacity constraints under which the Project operates. As initially designed and approved by the Board, RSSP1 included seven components and spanned a wide range of activities relating to rehabilitation and development of marshlands, protection of hillsides, management of critical ecosystems, promotion of export crops, establishment of post-harvest value-adding enterprises, generation of off-farm employment, and construction of rural infrastructure. The early implementation experience revealed that the scope of the original design was overly ambitious, however, as it soon became evident that the Government lacked the technical and institutional capacity needed to implement such a broad array of activities. The December 2005 restructuring successfully focused the Project on a core set of activities—rehabilitation and development of irrigated marshlands and surrounding hillsides, and capacity building among the users of those marshlands and hillsides. Following the restructuring, the performance of the Project improved dramatically. The same sharp focus is being maintained under RSSP2.

43. The second lesson learned relates to the importance of having clearly defined criteria to guide the selection of marshlands to be rehabilitated or developed by the Project. RSSP1 was constrained by the absence of a coherent and operational strategic framework for marshland development in Rwanda. As a result, RSSP priorities were not clearly identified, stakeholder involvement approaches were not clearly articulated, and opportunities were missed to develop irrigation in a cost-effective and sustainable way. The prioritization of investment opportunities under RSSP1 was not driven primarily by cost effectiveness, and dam construction in smaller marshlands has involved high investment costs that were not always justifiable on the basis of the value of additional agricultural production. Selection criteria are better defined under RSSP2, with a clear emphasis on the primacy of economic criteria.

44. The third lesson learned relates to the importance of making a sustained commitment to capacity building among Project beneficiaries. Impressive progress was made during RSSP1 in forming farmer organizations and cooperatives, but background studies

15

commissioned to inform the design of RSSP2 have revealed that many of these groups are not yet functioning effectively. Additional support needs to be provided to improve their performance so that other investments made by the Project (for example, investments in irrigation infrastructure) can be exploited effectively. Support to farmer organizations and cooperatives will be phased so that their growth and institutional evolution proceeds in tandem with the development of their commercial activities. Measures will be introduced to strengthen the commitment of individual members to participate.

45. The fourth lesson learned relates to the need to build capacity in the PSCU to ensure effective implementation of the four safeguards policies triggered by RSSP2 (OP/BP 4.01, OP/BP 4.04, OP/BP 4.09, OP 4.12). An Environmental Assessment (EA), an Environmental and Social Management Framework (ESMF), a Pest Management Plan (PMP), and a Resettlement Policy Framework (RPF) were prepared, reviewed, approved, and disclosed prior to appraisal. Measures will be needed to provide the PSCU with the capacity to implement these frameworks and plans effectively.

46. The fifth lesson learned relates to the need to review the objectives and design of the Rural Investment Facility (RIF). Evaluation of the RIF has been problematic because the RSSP1 PAD is vague about the objectives of the RIF. These apparently included: (i) promoting off-farm economic activity in rural areas; and (ii) improving access to finance in rural areas. The recent external evaluation of the RIF confirmed the positive impact of RIF-funded investments and concluded that despite some problems, the RIF was a valuable and high-impact intervention for Government and beneficiaries. RIF-financed investments generated important employment externalities and boosted incomes in more than 4,000 rural households. At the same time, it is clear that the performance of the RIF can be improved under RSSP2 through sharpening of the objectives, modification of the financing mechanism, and addressing the capacity constraints of Participating Financial Institutions (PFIs).

F. Alternatives considered and reasons for rejection

47. The original design described in the Project Concept Note called for three technical components: (i) Marshlands and Hillsides Rehabilitation, Development, and Protection; (ii) Sustainable Intensification of Marshlands and Hillsides Production Systems; and (iii) Development of Market-oriented Smallholder Agriculture and Agribusiness. The objective of the original Component 2 was to strengthen the upstream stages of selected commodity chains up to and including primary production activities, and the objective of the original Component 3 was to strengthen the downstream stages of the same commodity chains, beginning with post-harvest activities (drying, storage, processing) and continuing on down into the marketing chain. Components 2 and 3 in the original design were merged into a single component called “Strengthening Commodity Chains,” following discussions with a wide range of stakeholders and partners, and based on the strong recommendation of the consultants who carried out background studies to inform the design of RSSP2. The logic for merging the two components is that most of the farmer organizations and cooperatives served by the Project not only produce commodities but also process and market them, so it is more rational and efficient to engage with these groups through a single window. In addition, consolidation of the original Components 2 and 3 eliminated several overlaps in the initial project design. The PDOs, outputs, and outcomes, and performance indicators were not appreciably affected by the change.

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III. IMPLEMENTATION

A. Partnership arrangements

48. The RSSP APL series is an IDA-financed operation, and no other development partners are contributing directly. Other development partners are however supporting parallel operations that are pursuing similar objectives, including (i) rehabilitation and development of marshlands and hillsides; (ii) promoting sustainable intensification of farming systems; and (iii) building capacity among producer organizations and cooperatives. Development partner-financed projects that are most closely aligned with RSSP are listed in Annex 2.

B. Institutional arrangements and implementation arrangements

Institutional arrangements

49. Program Advisory Committee. A Program Advisory Committee (PAC) working under the direction of MINAGRI will provide general guidance regarding the implementation of Project activities. In addition to MINAGRI representatives, PAC members will include representatives from: (i) the Ministry of Finance and Economic Planning (MINECOFIN); (ii) the Ministry of Local Government, Community Development and Social Affairs (MINALOC); (iii) the Ministry of Lands, Environment, Forestry, Water, and Mines (MINTERE); (iv) the Ministry of Infrastructure (MININFRA); (v) the Ministry of Commerce, Industry, Investment Promotion, Tourism and Cooperatives (MINICOM); (vi) the National Women’s Council (Conseil National des Femmes - CNF); (vii) farmer organizations; and (viii) agri-business industry associations.

50. Project Support and Coordination Unit. The Project Support and Coordination Unit (PSCU), already established within MINAGRI, will be responsible for the management and coordination of Project activities, including the facilitation of support to implementing local agencies and beneficiary groups. In particular, it will be responsible for: (i) coordinating the planning and implementation of Project components; (ii) monitoring the work programs and budgets of service providers supported by the Project; (iii) establishing and operating a decentralized M&E system; and (iv) ensuring financial and administrative management of Project-supported activities. The PSCU will include a National Project Coordinator, a Head of Administration, a Head of Finance, a Head of Procurement, a Head of Monitoring and Evaluation, and a Head of Technical Departments. These senior staff will be assisted by appropriate numbers of relevant support staff. The PSCU, which already disposes of many technically skilled and experienced professionals, will strengthen its capacity in critical areas for which local staff cannot be recruited through the use of consultants recruited in accordance with World Bank guidelines. Subject to World Bank approval, the Project will consider supporting overseas graduate study of Project staff to build up their capacities in exceptional cases requiring specialized technical expertise that is not available locally (e.g., rural engineering).

51. Links to other departments, agencies, and line ministries. With the goal of ensuring close coordination between activities supported by the Project and related activities being implemented by other organizations, the PSCU will interact as appropriate with relevant technical departments and agencies in MINAGRI, other line ministries, and other public organizations.

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Project implementation arrangements (a) National level

52. As the official executing agency for RSSP2, MINAGRI will have overall responsibility for the implementation of the Project at the national level. MINAGRI has established the PSCU to ensure effective implementation of RSSP1. The PSCU will continue to serve as the lead implementing body for RSSP2. MINAGRI has established a Project Advisory Committee (PAC), chaired by the Secretary General of MINAGRI, which has general oversight of RSSP implementation. The RSSP National Project Coordinator serves as the Secretary of the PAC. The RSSP National Project Coordinator, working under the supervision of the PAC, will ensure day-to-day management of the Project.

(b) Provincial level

53. The PSCU will be represented at the provincial level by small teams based in provincial project offices. Each provincial project office will be headed by a Provincial Project Coordinator and will be staffed with (i) a Provincial Procurement Specialist and (ii) a Provincial M&E Specialist. One-half of the provincial project offices will be staffed with Provincial Accountants, each of whom is expected to cover two provinces. The Provincial Project Coordinators and their teams working out of the provincial project offices will oversee and monitor implementation of Project activities in each region they are covering. In addition to serving as the Project’s representatives in the regions, the Provincial Project Coordinators and their teams will be in charge of provincial coordination, provincial administration, provincial financial management, provincial procurement, and provincial collection and reporting of M&E data. PSCU staff based in the provincial project offices will work closely with District governments and their services. They will provide fiduciary, technical support and hands-on training to District governments’ services to build capacity at the District level and promote increased transfer of knowledge.

(c) District level

54. The PSCU will be represented at the District level by subject matter specialists. Most of the subject matter specialists are expected to be rural engineers, community development and gender specialists, or agribusiness specialists. The subject matter specialists will provide technical assistance to Project beneficiaries. They will be deployed only to Districts in which the Project is supporting an active work program, and they may be called upon to cover multiple Districts. Deployment at the District level will be vital for the success of the Project, since the subject matter specialists will serve as the first points of contact with most stakeholders and partners. As they have been doing under RSSP1, subject matter specialists will continue to participate regularly in activities of the District Development Committees (DDCs). By law, every District has a DDC, chaired by the Vice-Mayor for Finance, Economic Affairs, and Development. The DDCs review and approve the District Development Plans (DDPs) and also evaluate and approve sub-project requests submitted to RSSP for funding by community-based organizations. The DDPs are the aggregation of all the development activities being carried out within each District. Consistent with the Government’s ongoing decentralization initiative, each

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year the Project will provide to the Districts funds needed to pay for Project-supported activities that are included in the DDPs and for which procurement will be handled by the Districts.

(d) Local level

55. Many activities supported by the Project will be demand-driven and will be carried out at the local level by community-based organizations. Community-based organizations targeted by the Project include mainly farmer organizations and cooperatives. Since the funds used to support the Project are public funds, community-based organizations wishing to participate in Project-supported activities must be legally constituted as a civic association and recognized by local government bodies. Community-based organizations may identify, prepare, execute, and/or supervise sub-projects supported by the Project. These sub-projects will be screened to ensure their compatibility with the local DDP. For activities requiring specialized knowledge and skills, service providers will be engaged by the PSCU to provide needed technical support and training to community-based organizations and their members. For activities in which community-based organizations have already demonstrated proficiency (e.g., based on the training and capacity building they received during RSSP1), the procurement function will be entrusted to the organizations themselves. Community-based organizations will also be involved in monitoring and evaluation of Project activities, in line with the philosophy of the Project to promote participatory M&E.

C. Monitoring and evaluation

56. The monitoring and evaluation (M&E) system for RSSP2 has been redesigned, with an eye to overcoming problems encountered during RSSP1. The results framework for RSSP1 was overly ambitious and included an unusually large number of performance indicators. Some performance indicators were not clearly defined, making them difficult to measure, and the absence of baselines made assessment of progress difficult in some cases. Most of these issues were addressed during implementation, and the performance of the M&E system improved over time, but some problems (for example, the absence of baselines for some indicators) proved difficult to overcome late in the project cycle.

57. The results-oriented M&E system for RSSP2 has been designed with a focus on simplicity, clarity, and ease of implementation. The objectives of the M&E system are to: (i) foster accountability and transparency in Project management; (ii) set mutually agreed, realistic, and clear targets; (iii) engage stakeholders by sharing information on progress achieved, lessons learned, and improvements needed; (iv) highlight gaps between actual and targeted indicator values, as a way of drawing attention to problems; and (v) propose corrective measures.

58. The Project will support M&E activities at four levels: local, district, provincial, and national. The M&E system will build on the existing capacity within the PSCU central office in Kigali and will be strengthened through the placement of Provincial M&E Specialists in the four provincial project offices. Details about the roles and responsibilities of PSCU staff with regard to implementation of M&E activities at each of the four levels are provided in Annex 3. Quarterly M&E reports will be generated at the district, provincial, and national levels. The contents of the quarterly reports will be summarized in annual M&E reports whose release will be timed to coincide with the completion of the Project’s financial year. To avoid problems such

19

as those experienced under RSSP1, the Overall Program Indicators and Phase 3 triggers will be tracked regularly and reported as part of the M&E plan.

59. The results framework for RSSP2 (summarized in the table below) is well aligned with the results framework being proposed under the EDPRS for the agricultural sector. This is in line with the effort being made by the Government and the development partners to honor the Paris Declaration commitments. For example, several Key Performance Indicators for RSSP2 are identical to performance indicators being monitored by MINAGRI for the EDPRS. In addition, the management information system (MIS) that will be used by the PSCU to manage M&E data for the Project will use a software platform that will be compatible with the software platform to be adopted by MINAGRI. Use of common performance indicators and compatible MIS software will facilitate the transition of the RSSP2 M&E function from the PSCU to the MINAGRI Planning Unit, once adequate capacity has been established in the latter. It will also allow M&E data generated by the Project to be transmitted easily via MINAGRI to CEPEX.

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• In

put s

uppo

rt f

or d

emon

stra

tion

plot

s.

• E

nhan

cing

soi

l fer

tility

•

Prom

otin

g us

e of

impr

oved

see

d an

d pl

antin

g m

ater

ials

•

Prom

otin

g IP

M p

ract

ices

By

the

end

of th

e Pr

ojec

t, at

leas

t 3,

300

addi

tiona

l ha

of ir

riga

ted

mar

shla

nds

have

bee

n re

habi

litat

ed

or d

evel

oped

by

the

Proj

ect

(ED

PRS/

PST

A in

dica

tor)

B

y th

e en

d of

the

Proj

ect,

at le

ast

75 p

erce

nt o

f th

e fa

rmer

s in

ir

riga

ted

mar

shla

nds

reha

bilit

ated

or

dev

elop

ed b

y th

e Pr

ojec

ts

(RSS

P1 a

nd R

SSP2

) ar

e pa

ying

w

ater

cha

rges

thro

ugh

wat

er u

ser

asso

ciat

ions

B

y th

e en

d of

the

Proj

ect,

at le

ast

9,90

0 ad

ditio

nal h

a of

hill

side

s ha

ve b

een

sust

aina

bly

deve

lope

d by

the

Proj

ect (

see

Not

e B

bel

ow)

(ED

PRS/

PST

A in

dica

tor)

By

the

end

of th

e Pr

ojec

t, at

leas

t 80

coop

erat

ives

sup

port

ed b

y th

e Pr

ojec

t hav

e qu

ality

bus

ines

s pl

ans

unde

r im

plem

enta

tion

By

the

end

of th

e Pr

ojec

t, at

leas

t 5 a

dditi

onal

co

oper

ativ

es s

uppo

rted

by

RSS

P2 a

re

mar

ketin

g ce

rtif

ied

mai

ze o

r po

tato

see

d B

y th

e en

d of

the

Proj

ect,

with

at l

east

75

perc

ent o

f th

e ru

ral i

nfra

stru

ctur

e su

b-pr

ojec

ts

fund

ed th

roug

h th

e L

DF,

the

maj

ority

of

user

s ar

e sa

tisfi

ed o

ne y

ear

afte

r th

e su

b-pr

ojec

t was

co

mpl

eted

The

Pro

ject

Dev

elop

men

t Obj

ecti

ve (P

DO

) is

to in

crea

se

agri

cult

ural

pro

duct

ion

and

mar

keti

ng in

mar

shla

nd

and

hills

ide

area

s ta

rget

ed fo

r de

velo

pmen

t und

er th

e P

roje

ct in

an

envi

ronm

enta

lly s

usta

inab

le m

anne

r.

Not

es:

A. A

dopt

ion

of s

usta

inab

le in

tens

ific

atio

n te

chno

logi

es is

def

ined

as

adop

tion

of a

t lea

st tw

o of

th

e fo

llow

ing:

org

anic

and

/or

chem

ical

fer

tiliz

er, I

PM, c

onse

rvat

ion

tilla

ge, c

onto

ur b

undi

ng,

cons

truc

tion

of e

rosi

on c

ontr

ol s

truc

ture

s in

clud

ing

terr

aces

, veg

etat

ive

stri

ps, a

nd a

grof

ores

try

prac

tices

.

B. S

usta

inab

le d

evel

opm

ent o

f hi

llsid

es is

def

ined

as

occu

rrin

g w

hen

at le

ast t

wo

of th

e fo

llow

ing

prac

tices

hav

e be

en im

plem

ente

d: s

oil f

ertil

ity m

anag

emen

t inc

ludi

ng a

ppro

pria

te u

se o

f or

gani

c an

d/or

inor

gani

c fe

rtili

zer,

IPM

, con

serv

atio

n til

lage

, con

tour

bun

ding

, con

stru

ctio

n of

ero

sion

co

ntro

l str

uctu

res

incl

udin

g te

rrac

es, p

lant

ing

of p

erm

anen

t cro

ps o

r w

hen

the

area

is d

eem

ed

unsu

itabl

e fo

r pr

oduc

tive

use

and

prot

ecte

d th

roug

h pl

antin

g of

per

man

ent v

eget

atio

n.

Com

pone

nt 3

.

Proj

ect c

oord

inat

ion

and

supp

ort

• E

xecu

tion

of a

dmin

istr

ativ

e, f

inan

cial

m

anag

emen

t, an

d pr

ocur

emen

t fun

ctio

ns;

• C

oord

inat

ion

of P

roje

ct a

ctiv

ities

•

Impl

emen

tatio

n an

d m

onito

ring

of

envi

ronm

enta

l and

land

-use

man

agem

ent

fram

ewor

ks

• E

stab

lishm

ent a

nd o

pera

tion

of a

n ef

fect

ive

M&

E s

yste

m.

PD

O I

ndic

ator

s:

1. B

y th

e en

d of

the

Proj

ect,

prod

uctio

n of

ric

e in

mar

shla

nds

reha

bilit

ated

or

deve

lope

d un

der

RSS

P2 h

as in

crea

sed

by a

t lea

st 1

00 p

erce

nt r

elat

ive

to th

e ba

selin

e

2. B

y th

e en

d of

the

Proj

ect,

at le

ast 5

0 pe

rcen

t of

farm

ers

in m

arsh

land

and

hill

side

ar

eas

deve

lope

d or

reh

abili

tate

d by

the

RSS

P1 a

nd R

SSP2

hav

e ad

opte

d su

stai

nabl

e m

arsh

land

or

hills

ide

inte

nsif

icat

ion

tech

nolo

gies

(se

e N

ote

A b

elow

) 3.

By

the

end

of th

e Pr

ojec

t, at

leas

t 20

coop

erat

ives

with

qua

lity

busi

ness

pla

ns a

nd

supp

orte

d by

RSS

P2 h

ave

incr

ease

d th

eir

reve

nues

fro

m s

ales

by

50%

rel

ativ

e to

the

base

line

RSS

P A

PL

OV

ER

AL

L P

RO

GR

AM

IN

DIC

AT

OR

S:

(a)

Cha

nge

in a

vera

ge le

vel o

f ho

useh

old

inco

mes

am

ong

Prog

ram

dir

ect b

enef

icia

ry h

ouse

hold

s

(b)

Cha

nge

in p

erce

ntag

e of

Pro

gram

dir

ect b

enef

icia

ry h

ouse

hold

s un

der

the

pove

rty

line

(c)

Cha

nge

in a

vera

ge le

vel o

f ri

ce y

ield

s pe

r he

ctar

e in

dis

tric

ts h

avin

g m

arsh

land

s re

habi

litat

ed

or d

evel

o ped

by

the

Prog

ram

21

D. Sustainability

60. The Borrower’s strong commitment to the RSSP series has been amply demonstrated. The Government persevered with RSSP1 during the early years when implementation performance was poor and some people were calling for the Project to be abandoned. Determined to find a way to make RSSP1 succeed, the Government supported the mid-term restructuring and appointed a strong new management team that proved instrumental in turning the Project around. In a further sign of its commitment, the Government provided significant financial support above and beyond the amount that it was required to contribute. The Credit Agreement for RSSP1 called for a counterpart contribution of US$1 million equivalent, yet as of January 2008, the Government had contributed over US$2 million equivalent, or more than twice the legally required amount. The Government’s continuing commitment to the RSSP series was recently confirmed when the Minister of Finance identified RSSP2 as one of the priority projects targeted to receive additional IDA funding, in the event that additional funding becomes available.

61. Government is determined to see the activities being carried out under the RSSP series continue over the longer term, given the importance of the marshlands development agenda within the national agricultural development strategy. During the consultative process that underpinned the design of RSSP2, the Government emphasized its desire to ensure that the capacity that has been developed within the PSCU to plan and implement irrigation schemes be preserved and absorbed into MINAGRI. For this reason, the RSSP2 implementation arrangements have been designed to ensure close alignment with the MINAGRI processes and procedures, in anticipation of the time when implementation responsibility can be transferred to MINAGRI and its affiliated agencies.

22

E.

Cri

tica

l ris

ks a

nd p

ossi

ble

cont

rove

rsia

l asp

ects

Tab

le 3

. Cri

tica

l ris

ks a

nd m

itig

atio

n m

easu

res

R

isk

fact

ors

D

escr

iptio

n of

ris

k R

atin

ga of

ris

k M

itiga

tion

mea

sure

s R

atin

ga of

resi

dual

ri

sk

I. C

ount

ry- a

nd S

ecto

r-L

evel

Ris

ks

Mac

roec

onom

ic f

ram

ewor

k

Rw

anda

’s q

ualif

icat

ion

for

the

Mul

tilat

eral

D

ebt R

elie

f In

itiat

ive

(MD

R)

has

resu

lted

in

high

er a

id f

low

s to

the

coun

try.

How

ever

, m

anag

ing

larg

e in

ject

ions

of

liqui

dity

into

th

e ec

onom

y is

cha

lleng

ing

and

may

, as

has

happ

ened

in th

e pa

st, p

rese

nt s

igni

fica

nt

dile

mm

as f

or th

e G

over

nmen

t and

the

mac

ro-

econ

omic

situ

atio

n.

mod

erat

e

The

Wor

ld B

ank

and

the

Inte

rnat

iona

l M

onet

ary

Fund

(IM

F) w

ill c

ontin

ue to

su

ppor

t the

Gov

ernm

ent i

n m

anag

ing

mac

roec

onom

ic r

efor

m a

nd in

vest

ing

infr

astr

uctu

re d

evel

opm

ent t

o en

sure

co

ntin

ued

grow

th a

nd p

rodu

ctiv

ity.

low

Sect

or p

olic

ies

and

inst

itutio

ns

The

am

bitio

us s

cope

of

the

Gov

ernm

ent’

s ag

ricu

ltura

l pol

icie

s an

d pr

ogra

ms,

if

com

bine

d w

ith a

lack

of

coor

dina

tion

amon

g de

velo

pmen

t par

tner

s, c

ould

lead

to a

fr

agm

ente

d ap

proa

ch to

rur

al d

evel

opm

ent,

depr

ivin

g R

SSP2

of

need

ed s

uppo

rtin

g in

vest

men

ts (

e.g.

, agr

icul

tura

l R&

D,

agri

cultu

ral e

xten

sion

, rur

al in

fras

truc

ture

).

Wea

k ca

paci

ty in

line

min

istr

ies

and

at th

e di

stri

ct le

vel c

ould

slo

w d

ecen

tral

izat

ion

of

resp

onsi

bilit

y fo

r im

plem

enta

tion

of

agri

cultu

ral p

olic

ies

and

prog

ram

s.

low

The

Wor

ld B

ank

is a

ctiv

ely

supp

ortin

g pr

iori

tized

impl

emen

tatio

n of

PST

A, a

nd it

is

wor

king

to im

prov

e co

ordi

natio

n am

ong

deve

lopm

ent p

artn

ers

to e

nsur

e th

at

prio

rity

pol

icie

s an

d pr

ogra

ms

are

supp

orte

d.

The

Wor

ld B

ank

thro

ugh

the

PSR

G is

pr

ovid

ing

fina

ncia

l res

ourc

es a

nd te

chni

cal

assi

stan

ce to

str

engt

hen

the

Gov

ernm

ent’

s de

cent

raliz

atio

n in

itiat

ive.

low

Cou

ntry

ow

ners

hip

(inc

l. po

litic

al a

spec

ts)

Whi

le d

eter

iora

tion

in d

omes

tic p

oliti

cal o

r so

cial

out

com

es is

hig

hly

unlik

ely,

the

polit

ical

situ

atio

n in

the

Gre

at L

akes

reg

ion

rem

ains

vol

atile

. Any

fut

ure

dete

rior

atio

n of

th

e po

litic

al e

nvir

onm

ent w

ould

jeop

ardi

ze

fore

ign

inve

stm

ent a

nd p

ush

the

gove

rnm

ent

to r

epri

oriti

ze b

udge

t allo

catio

ns a

nd e

ffor

ts.

low

Ear

lier

this

yea

r, R

wan

da jo

ined

the

Eas

t A

fric

an C

omm

unity

whe

re B

urun

di,

Ken

ya, T

anza

nia,

and

Uga

nda

are

also

m

embe

rs. T

he e

nlar

ged

com

mun

ity is

ex

pect

ed to

boo

st c

ross

-bor

der

trad

e,

inve

stm

ents

and

tour

ism

, as

wel

l as

enha

nce

secu

rity

and

pea

ce. I

n ad

ditio

n,

cont

inue

d en

gage

men

t and

fur

ther

im

prov

emen

ts in

the

rela

tions

hip

with

D

emoc

ratic

Rep

ublic

of

Con

go (

DR

C)

will

dra

mat

ical

ly r

educ

e th

e ri

sk o

f in

crea

sing

tens

ions

.

low

23

Tab

le 3

(con

tinu

ed).

Cri

tica

l ris

ks a

nd m

itig

atio

n m

easu

res

R

isk

fact

ors

D

escr

iptio

n of

ris

k R

atin

ga of

ris

k M

itiga

tion

mea

sure

s R

atin

ga of

resi

dual

ri

sk

Cou

ntry

/sec

tor

gove

rnan

ce

Rw

anda

’s w

eak

capa

city

and

mon

itori

ng

syst

ems

cont

inue

to h

inde

r go

vern

ance

. A

lthou

gh r

ecen

t pol

icie

s ha

ve h

elpe

d im

prov

e tr

ansp

aren

cy a

nd in

cide

nts

of

corr

uptio

n ha

ve b

een

deal

t with

, a c

hang

e of

co

urse

wou

ld r

ever

se th

e pr

ogre

ss a

lrea

dy

achi

eved

and

in th

e le

ast,

impe

de

impl

emen

tatio

n of

pov

erty

alle

viat

ion

effo

rts.

low

Cor

rupt

ion

is c

urre

ntly

mon

itore

d an

d sa

nctio

ns a

pplie

d. G

over

nmen

t off

icia

ls

rece

ntly

exp

osed

on

corr

uptio

n ch

arge

s w

ere

impr

ison

ed s

o as

to s

end

a st

rong

m

essa

ge. F

urth

erm

ore,

a s

yste

m o

f ch

ecks

an

d ba

lanc

e ha

s be

en e

stab

lishe

d an

d is

op

erat

ing

thro

ugh

inst

itutio

ns s

uch

as th

e N

atio

nal T

ende

r B

oard

(N

TB

), O

ffic

e of

th

e O

mbu

dsm

an, a

nd th

e O

ffic

e of

the

Aud

itor

Gen

eral

.

low

Syst

emic

cor

rupt

ion

The

Gov

ernm

ent D

ecen

tral

izat

ion

Stra

tegy

ai

med

at m

ovin

g th

e de

cisi

on m

akin

g to

the

dist

rict

s so

as

to e

mpo

wer

loca

l com

mun

ities

to

mak

e de

cisi

ons

abou

t the

ir o

wn

deve

lopm

ent w

ill n

ot b

e su

cces

sful

and

may

cr

eate

adv

erse

eff

ects

(bo

ttlen

eck

of

impl

emen

tatio

n an

d pr

ocur

emen

t) if

not

su

ppor

ted

with

a s

tron

g co

mm

unic

atio

n ef

fort

and

cap

acity

bui

ldin

g at

the

loca

l le

vels

.

mod

erat

e

The

Gov

ernm

ent i

s im

plem

entin

g th

e D

ecen

tral

izat

ion

Stra

tegy

in g

radu

al s

teps

, en

suri

ng th

at a

ppro

pria

te m

echa

nism

s an

d in

fras

truc

ture

are

in p

lace

bef

ore

pow

er is

tr

ansf

erre

d to

the

com

mun

ities

. C

ongr

uent

ly, i

t is

enga

ged

in o

utlin

ing

a de

taile

d ro

adm

ap th

at in

clud

es m

odal

ities

fo

r ca

paci

ty b

uild

ing

and

com

mun

icat

ion

at th

e lo

cal l

evel

. Thi

s ro

adm

ap w

ill b

e su

ppor

ted

thro

ugh

the

PRSG

.

low

II. O

pera

tion

-spe

cifi

c R

isks

Tec

hnic

al /

desi

gn

Ach

ieve

men

t of

the

Proj

ect D

evel

opm

ent

Obj

ectiv

es (

PDO

s) c

ould

be

impe

ded

if

proj

ect i

mpl

emen

tatio

n ar

rang

emen

ts n

ot

alig

ned

with

the

Gov

ernm

ent’

s de

cent

raliz

atio

n st

rate

gy.

lo

w

The

Pro

ject

impl

emen

tatio

n ar

rang

emen

ts

will

be

alig

ned

with

the

Gov

ernm

ent’

s de

cent

raliz

atio

n st

rate

gy. P

SCU

mus

t be

read

y to

tran

sfer

adm

inis

trat

ive

func

tions

to

the

Gov

ernm

ent o

nce

capa

city

has

bee

n es

tabl

ishe

d in

the

Gov

ernm

ent.

low

Im

plem

enta

tion

capa

city

and

sus

tain

abili

ty

Del

ayed

eff

ectiv

enes

s co

uld

resu

lt in

loss

of

PSC

U s

taff

at c

entr

al a

nd d

istr

ict l

evel

s,

lead

ing

to a

dis

rupt

ion

in P

roje

ct a

ctiv

ities

. m

oder

ate

Proj

ect p

repa

ratio

n w

ill b

e ac

cele

rate

d to

en

sure

ear

liest

pos

sibl

e ef

fect

iven

ess

and

avoi

d a

gap

betw

een

the

end

of R

SSP1

and

ef

fect

iven

ess

of R

SSP2

low

Fi

nanc

ial m

anag

emen

t and

ac

coun

ting

arra

ngem

ents

O

vers

tret

ched

fin

anci

al m

anag

emen

t cap

acity

in

PSC

U c

ould

lead

to u

nsat

isfa

ctor

y fi

nanc

ial m

anag

emen

t of

Proj

ect a

ctiv

ities

. T

he e

xist

ing

info

rmat

ion

syst

em h

as s

how

n lim

itatio

ns, e

.g.,

inab

ility

to in

terf

ace

mod

ules

, han

dle

mul

tiple

cur

renc

ies.

low

The

PSC

U F

inan

cial

Man

agem

ent U

nit,

whi

ch is

per

form

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wel

l, w

ill b

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aint

aine

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d st

reng

then

ed.

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inte

grat

ed M

IS w

ill b

e in

trod

uced

to

inte

rfac

e al

l mod

ules

and

acc

omm

odat

e m

ultip

le la

ngua

ges

and

curr

enci

es.

low

24

Tab

le 3

(con

tinu

ed).

Cri

tica

l ris

ks a

nd p

ossi

ble

cont

rove

rsia

l asp

ects

R

isk

fact

ors

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ga of

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itiga

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sk

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ocur

emen

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pro

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men

t cap

acity

in P

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co

uld

lead

to le

ngth

y de

lays

in p

rocu

rem

ent.

mod

erat

e

The

PSC

U P

rocu

rem

ent U

nit,

whi

ch is

pe

rfor

min

g w

ell,

will

be

mai

ntai

ned

and

stre

ngth

ened

. The

Pro

ject

Im

plem

enta

tion

Man

ual w

ill b

e re

view

ed a

nd u

pdat

ed, a

nd

a th

ree-

day

proc

urem

ent t

rain

ing

cour

se

will

be

orga

nize

d.

low

So

cial

and

env

iron

men

tal s

afeg

uard

s

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shla

nd d

evel

opm

ents

cou

ld in

volv

e in

volu

ntar

y la

nd a

cqui

sitio

n, tr

igge

ring

OP

4.12

. M

arsh

land

dev

elop

men

ts c

ould

hav

e ne

gativ

e im

pact

s on

nat

ural

hab

itats

, wat

er

qual

ity a

nd e

nvir

onm

enta

l hea

lth, t

rigg

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g O

P 4.

01 a

nd O

P 4.

04.

Lik

ely

incr

ease

d us

e of

pes

ticid

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ith

irri

gate

d ag

ricu

lture

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r O

P 4.

09.

m

oder

ate

m

oder

ate

m

oder

ate

An

RPF

was

pre

pare

d fo

r ap

plic

atio

n on

al

l RSS

P-fi

nanc

ed m

arsh

land

de

velo

pmen

ts.

An

EA

was

car

ried

out

for

all

RSS

P m

arsh

land

dev

elop

men

t sch

emes

and

an

EM

P de

velo

ped

for

each

. A

n IP

M P

lan

was

pre

pare

d fo

r ap

plic

atio

n in

all

RSS

P-fi

nanc

ed d

evel

opm

ents

.

lo

w

lo

w

lo

w

O

ther

b

III.

Ove

rall

Ris

k (i

nclu

ding

Rep

utat

iona

l Ris

ks)

low

M

emo

item

s:

1.

CPI

A r

atin

gs (

over

all a

nd f

our

clus

ters

) 2.

IE

G r

atin

g (%

of

proj

ects

rat

ed u

nsat

isfa

ctor

y—M

U, U

, or

HU

—ov

er la

st f

ive

year

s bo

th f

or th

e co

untr

y po

rtfo

lio a

nd th

e se

ctor

) 3.

O

ther

gov

erna

nce

and

corr

uptio

n in

dica

tors

suc

h as

thos

e pr

epar

ed b

y W

orld

Ban

k In

stitu

te (

WB

I) a

nd T

rans

pare

ncy

Inte

rnat

iona

l a R

atin

g of

ris

ks o

n a

four

-poi

nt s

cale

acc

ordi

ng to

the

prob

abili

ty o

f oc

curr

ence

and

mag

nitu

de o

f ad

vers

e im

pact

. b O

ther

exa

mpl

es in

clud

e co

st e

scal

atio

n, p

reva

lenc

e of

fai

lure

s in

sim

ilar

proj

ects

, adv

erse

ext

erna

l dev

elop

men

ts a

ffec

ting

cost

s/be

nefi

ts o

f th

e pr

ojec

t, an

d ri

sks

spec

ific

to o

pera

tions

in c

onfl

ict-

affe

cted

are

as.

25

F. IDA grant conditions and covenants

Table 4. Project effectiveness conditions

Required actions Responsible party

1.

2.

By the date of Project effectiveness, an updated Project Implementation Manual satisfactory to the Association will be adopted by the Government

By the date of Project effectiveness, the first installment of the Government counterpart fund will be deposited into the Project’s counterpart account

MINAGRI

MINAGRI

IV. APPRAISAL SUMMARY

A. Economic and financial analyses

62. Activities financed through RSSP2 are expected to generate four main benefit streams. Some of these benefit streams lend themselves more readily to quantification than do others. For purposes of the economic and financial analysis, benefits were calculated for two benefit streams and for a portion of a third: (i) increased value of production in irrigated marshlands developed by RSSP2; (ii) increased value of production on hillsides developed by RSSP2 (based on projected yield increases, projected yield losses avoided, and projected reductions in greenhouse gas emissions); and (iii) returns to investment in small rural infrastructure (grain drying floors and grain storage facilities). Benefits were not calculated for one benefit stream: (iv) increased capacity among farmer organizations and cooperatives. The activities covered by the economic and financial analysis represent approximately 87 percent of the total Project investment.

63. Project-supported investments will generate substantial financial benefits for rural households in areas served by the Project, as well as substantial economic benefits for Rwandan society as a whole. Overall, the financial net present value (NPV) is projected to reach RWF 14.3 billion. Total economic benefits are expected to come to RWF 8.9 billion in NPV and to generate an economic rate of return of 20.3 percent. The largest share of Project benefits (57 percent of the total Project NPV) is expected to come from investments in sustainable land management (SLM) technologies in hillsides, including the off-site environmental benefits from reduced greenhouse gas (GHG) emissions. The second largest share of Project benefits (28 percent of the total Project NPV) is expected to come from investments in marshland irrigation. Sensitivity analysis shows the projected benefits depend critically on the size of the yield gains to be achieved in rice and on the unit costs of irrigation investments. Details of the methodology used to carry out the economic and financial analysis are presented in Annex 9, along with the complete results.

B. Technical

64. The design of the two technical components of the Project was informed by the findings of a series of specially commissioned background studies. Funded through a grant

26

from the Policy and Human Resources Development (PHRD) Trust Fund supported by the Government of Japan, these studies included:

• Irrigated marshlands development strategy • Rainfed hillsides development strategy • Sustainable agricultural intensification strategy • Capacity strengthening strategy • Environmental assessment and environmental management plans • Environmental management framework for local infrastructure • Pest management plan • Resettlement policy framework • Design of the Rural Investment Facility (RIF)

65. The simplified Project design reflects a desire to keep RSSP2 clearly focused on a well-defined set of priority activities while keeping the implementation requirements manageable. The terms of reference for the background studies, which were carried out by internationally and nationally recruited expert consultants, called for: (i) identification of key lessons learned during RSSP1; (ii) description of global best practices based on a review of the international literature; and (iii) delineation of alternative strategies to be considered for use during RSSP2. Many of the expert consultants who carried out these studies were present in Rwanda when the RSSP2 pre-appraisal and appraisal missions were conducted, and the team preparing RSSP2 was able to interact extensively with them and benefit from their thinking about the strengths and weaknesses of alternative project designs.

66. Component 1 includes activities relating to improving the productive potential of marshlands and hillsides. These activities will be supported through a combination of “hard” investments (e.g., rehabilitation or development of irrigation schemes in marshlands, construction of soil and water conservation structures on hillsides) and “soft” investments (e.g., improving the functioning of water users associations). Selection criteria to inform the choice of “hard” investments are spelled out in the PAD and are based on lessons learned during RSSP1, as well as global experience. Provision is made to encourage piloting of approaches that have not been used extensively in Rwanda but that have produced excellent results in other countries (e.g., use of small-scale pump irrigation in marshlands, use of soil and water conservation structures on hillsides). Guidelines for the implementation of the “soft” investments similarly incorporate innovative design features that have not been used extensively in Rwanda but that have proven successful in other countries (e.g., use of performance contracts with WUAs).

67. Component 2 includes activities relating to strengthening selected commodity chains. These activities also will be supported through a combination of “hard” investments (e.g., grain drying floors and storage facilities, produce collection centers, agro-processing machinery, access roads) and “soft” investments (e.g., training of producers and entrepreneurs, strengthening farmer organizations and cooperatives, provision of business advisory services). To ensure coherence of Project-funded activities and avoid fragmentation of effort, a commodity chain approach will be used focusing initially on a priority set of major food crops produced in the marshlands and hillsides systems being targeted by the Project. Building on the initial successes achieved under RSSP1 in organizing farmer organizations and cooperatives,

27

significant resources will be invested in building capacity within these organizations, so that they can operate effectively and deliver real benefits to all of their members. In a significant departure from the approach used under RSSP1, organizations wishing to engage with the Project will be required to demonstrate their commitment by accomplishing certain preliminary tasks (e.g., development of an action plan and one or more business plans).

C. Fiduciary

68. The Government has made good progress towards improving accountability under the ongoing initiative to reform project financial management policies and procedures. Notable recent achievements have included the adoption of the Organic Budget Law (OBL) and accompanying financial instructions, as well as measures taken to adapt institutional arrangements as a way of signaling the Government’s resolve to strengthen project financial management in the country. The budget preparation process has been strengthened with the introduction of the medium term expenditure framework (MTEF) and is now much more structured, with increased levels of stakeholder participation. With the help of technical assistance, the Government produced its first set of consolidated financial statements for 2006. These statements have been submitted to the Office of the Auditor General, and the audit report is to be submitted to Parliament.

69. The PSCU will be responsible for the Project’s procurement and financial management functions. Procurement and financial management procedures used by the PSCU will comply with IDA requirements.

70. Procurement activities will be coordinated by the Procurement Unit of the PSCU. The Procurement Unit will include two staff housed in the PSCU office in Kigali and operating at the national level. Of the two Procurement Unit staff housed in the PSCU, one will be a suitably qualified and experienced Head of Procurement, who will be responsible for overseeing all procurement-related activities (preparation of Terms of Reference, advertisement of Requests for Expressions of Interest and Requests for Proposals, technical and financial evaluation of proposals, management of the prior review process, etc.). Provincial Procurement Specialists based in the provincial project offices will work under the supervision of the Head of Procurement to provide assistance in carrying out procurement activities at the provincial and district levels.

71. Financial management activities will be coordinated by the Financial Management Unit of the PSCU. The Financial Management Unit will include three staff housed in the PSCU office in Kigali and operating at the national level. Of the three Financial Management Unit staff housed in the PSCU, one will be a suitably qualified and experienced Head of Financial Management, who will be responsible for overseeing all financial management-related activities (approving payments to contracted service providers, suppliers of equipment and goods, implementing agents and for submitting consolidated financial monitoring and audited financial statements to IDA, etc.). Provincial Accountants based in the provincial project offices will work under the supervision of the Head of Financial Management to provide assistance in carrying out financial management activities at the provincial and district levels.

28

72. The fiduciary oversight function of the PSCU will benefit from the services of an Internal Auditor. The Internal Auditor will review the financial monitoring reports and will carry out regular internal audit controls. These controls will include ex post verification of expenditure eligibility, as well as physical inspection of works and goods acquired during the implementation of the Project. The findings and recommendations of the Internal Auditor will be used by the PSCU to improve project implementation in areas related to financial management and procurement.

D. Social

73. Activities financed by the Project will be undertaken in an inclusive manner, so that they are more likely to lead to equitable and socially sustainable outcomes. Successful achievement of the desired social development outcomes of greater empowerment and social inclusion requires that activities financed by the Project be identified and funded in a participatory, transparent, and accountable manner. This implies active participation and decision making on the part of key stakeholders, including farmers, farmer organizations, cooperatives, other community-based organizations, and private entrepreneurs. In addition, the special concerns of women, youth, and other potentially vulnerable groups will have to be addressed through participatory, transparent, and accountable processes.

74. The gender-responsive approaches used under RSSP1 to ensure active participation of women in Project-financed activities will be maintained. The membership of most farmer organizations and cooperatives in Rwanda includes approximately equal representation of men and women, so by targeting farmer organizations and cooperatives as its primary beneficiary groups, RSSP1 has reached large numbers of men and women. (For example, approximately 40 percent of the Lead Farmers supported under RSSP1 have been women.) Women are generally underrepresented in the management structures of farmer organizations and cooperatives, so measures will be taken to ensure better gender balance in management structures. These measures will include sensitization of membership and provision of training designed to empower women and increase participation of women in management.

75. The Project will work proactively with local communities in extending the reach and scaling up the intensity of Project-financed activities, especially activities relating to the sustainable intensification of production systems in irrigated marshlands and surrounding hillsides. RSSP2 will do this by financing adaptive farmer-participatory research and by building capacity among farmer groups and local private operators of commercial value adding enterprises. Where relevant, government agencies will be called upon to take the lead in helping local authorities to promote stakeholder participation and decision making.

E. Environment

76. Measures will be undertaken under RSSP2 to ensure that Project-supported activities do not negatively impact the environment. First, the PSCU will continue the practice that has been established under RSSP1 of consulting with REMA to ensure that Project-supported infrastructure investments are undertaken only in areas that do not have high-priority conservation values. Second, the PSCU will ensure that in areas targeted for development, investments in irrigated marshlands are complemented with investments in surrounding hillsides

29

that allow agricultural intensification to take place in ways that will protect the natural resource base on which agriculture depends. Using a watershed-based approach, the focus will be on retaining as many as possible of the normal ecological functions of marshlands, for example by creating buffer zones that can filter out excess nutrients, and by ensuring that all irrigation schemes have adequate outflows to sustain downstream ecological integrity. Proposed developments at Kamiranzovu and Kibaya-Cyunzi marshlands will require special attention, since these marshlands perform particularly important ecological regulatory functions. Third, the PSCU will ensure that Project-financed investments in irrigated marshlands are closely monitored, so that emerging negative environmental impacts (including impacts on human health) can be identified quickly and addressed. Environmental Management Plans prepared for each Project-developed irrigated marshland call for regular water quality testing, as well as monitoring of the incidence of malaria in nearby communities.

77. Environmental management activities under RSSP2 will be participatory in nature. Farmer organizations, cooperatives, community-based organizations, and local governments will be tasked with and empowered to manage Project investments for both environmental sustainability and economic development. These “good practice” procedures introduced under RSSP1 will be maintained and strengthened under RSSP2 to ensure that environmentally critical ecosystems are protected from development and that less critical ecosystems are developed in environmentally friendly ways.

F. Safeguard policies

78. RSSP2 is an EA Category “B” project and triggers the following safeguard policies:

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment (OP/BP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [X] [ ] Pest Management (OP 4.09) [X] [ ] Physical Cultural Resources (OP/BP 4.11) [ ] [X] Involuntary Resettlement (OP/BP 4.12) [X] [ ] Indigenous Peoples (OP/BP 4.10) [ ] [X] Forests (OP/BP 4.36) [ ] [X] Safety of Dams (OP/BP 4.37) [ ] [X] Projects in Disputed Areas (OP/BP 7.60) [ ] [X] Projects on International Waterways (OP/BP 7.50) [X] [ ]

Environmental Assessment (OP 4.01) and Natural Habitats (OP 4.04)

79. An Environmental Assessment (EA) has been carried out for marshland investments planned under RSSP2, and Environmental Management Plans (EMPs) have been prepared for each subproject. These EMPs require users of irrigated marshlands and surrounding hillsides, with support from the Project, to develop and implement holistic plans for sustainable agricultural intensification. In addition, an Environmental and Social Management Framework (ESMF) has been prepared detailing how RSSP investments in small-scale rural

30

infrastructure (e.g., physical markets, grain drying floors, grain storage facilities, rural roads, culverts, bridges) are identified, planned, approved and implemented to avoid or minimize adverse environmental effects. The PSCU will collaborate closely with REMA to ensure that Project-supported activities comply not only with World Bank environmental safeguards policies, but also with national rules and regulations.

Pest Management (OP 4.09)

80. A Pest Management Plan (PMP) has been prepared for RSSP2, drawing on crop-specific IPM toolkits developed under RSSP1. The PMP assesses relevant pest issues in Rwanda and evaluates current farmer pest control practices. It calls for the use of IPM practices and details those IPM practices which have been shown to be effective in Rwanda. The PMP also provides guidance for limited and appropriate use of pesticides when non-chemical means are insufficient and chemical means are technically and economically justified. It includes training and practice modules on IPM for each major crop targeted by RSSP2. RSSP2 will not finance the purchase of pesticides.

Involuntary Resettlement (OP 4.12)

81. Measures will be taken under RSSP2 to ensure that Project-financed activities do not adversely affect the access of some population groups to natural resources or other economically important assets on which they rely for their livelihoods. When RSSP1 was prepared, the intention was to rehabilitate only marshlands and hillsides that were already under cultivation. For this reason, Operational Policy 4.12 on Involuntary Resettlement was not triggered, and no Resettlement Policy Framework was prepared. During implementation of RSSP1, it became evident that in some of the marshlands being developed by the Project, a small number of people were being negatively impacted, mainly though displacement from agricultural land or loss of access to watering points for livestock. A specially commissioned study determined that these people were adequately compensated according to Rwandan law and customary procedures—mainly through payments in cash or in kind, and/or through allocation of plots in irrigated areas.

82. To ensure that resource access issues are handled more systematically under RSSP2 and that World Bank safeguards standards are satisfied, a Resettlement Policy Framework (RPF) has been prepared and disclosed. The RPF sets the guidelines for the resettlement plans that would have to be prepared for any subproject that triggers the Involuntary Resettlement policy O.P 4.12. Potential resettlement impacts of Project-supported activities—such as construction of dams, irrigation channels and related infrastructure—could include temporary and permanent loss of access to land, crops, and structures, as well as loss of employment on the affected lands. Other potential social impacts that could result from civil works are adequately addressed in the provisions of the Environmental and Social Management Framework (ESMF), which outlines environmental and social screening processes to be applied to all sub-projects.

International Waterways (OP 7.50)

83. Because irrigation rehabilitation and development activities to be financed under the Project will affect the hydrology of catchments that drain into international waterways, the other riparians were formally notified about the Project and were supplied with Project details on May 5, 2008. The project will not have any adverse effects on the quantity or quality

31

of water flows to any of the other riparians. All comments received in response to the notification have been taken into account.

Borrower’s Capacity to Implement Safeguard Policies

84. PSCU technical staff have acquired substantial knowledge of World Bank safeguards policies, based on their experience implementing RSSP1, and having also assisted with the preparation of many of the safeguards-related assessments, frameworks, and plans described above (EAs, EMPs, PMP, RPF). Given adequate resources, and assuming they can count on technical assistance from REMA and the Global Environment Facility (GEF)-financed Integrated Management of Critical Ecosystems Project (IMCEP), they are capable of implementing the requirements of the World Bank’s safeguards policies.

Safeguards Consultations

85. All safeguards-related assessments, frameworks, and plans were prepared using a consultative approach. Preparation of the EAs and EMPs involved consultations with local residents concerning the environmental values that may be affected by Project-financed activities and how these values might be protected. Preparation of the PMP involved consultations with farmers to assess pest issues and evaluate current farmer practices. Preparation of the RPF involved local consultations about the appropriate compensation values, and previous compensation due to RSSP activities. The preparation of all RSSP2 investments in marshland and hillsides development or rural infrastructure will involve consultations with stakeholders regarding their needs and desires. Stakeholders’ preferences will be taken into account before sub-project designs are finalized. An important aspect of these consultations involves agreeing with the stakeholders how the investments will be locally managed after they have been completed.

Public Disclosure of Safeguards Documents

86. The EA, ESMF, PMP, and RPF documents were publicly disclosed in January 2008, prior to Project appraisal. Disclosure was done in Washington through the World Bank InfoShop and in Rwanda through the PSCU via notices placed in leading national newspapers.

G. Policy exceptions and readiness

Not applicable.

32

Annex 1: Country and Sector or Program Background

RWANDA: Rwanda Second Rural Sector Support Project Country Context

1. The economy of Rwanda continues to bounce back from the effects of the 1994 genocide. As a result of extensive economic and governance reform measures implemented beginning in 1995, GDP rates have averaged over 7.5 percent per annum during the past 10 years. Yet even with the strong growth recorded during the past decade, because the post-genocide starting point was so low, Rwanda remains one of the world’s poorest countries, with an average annual income of only US$245 per capita. According to national poverty standards, more than one-third of all Rwandans (37 percent) live in extreme poverty (defined as earning less than RWF175 per day, the level of income needed to support daily food consumption of 2,500 KCal), and more than one-half (57 percent) live in moderate poverty (defined as earning less than RWF250 per day).8 Poverty in Rwanda is concentrated in the countryside and is strongly associated with agriculture, as reflected by a rural poverty rate of 67 percent.

2. Agriculture is the backbone of Rwanda’s economy, accounting for about 39 percent of GDP,9 more than 80 percent of employment,10 and approximately 63 percent of foreign exchange earnings.11 Between 2001 and 2005, agricultural growth averaged 4.2 percent per year, below the target range of 5 to 8 percent set out in the Poverty Reduction Strategy Paper (PRSP). Because agriculture is the most important sector in terms of contribution to GDP, employment, and foreign exchange earnings, the performance of the agricultural sector impacts powerfully on the performance of the economy overall. Agriculture’s contribution to economic growth is particularly pronounced because of the strong multiplier effects extending from primary commodity production into post-harvest value-adding activities. Agriculture also contributes significantly to national food self-sufficiency, as more than 90 percent of all food consumed in the country is domestically produced.

Government Strategy

3. The Government’s strategy for reducing poverty and stimulating rapid and sustainable economic growth is laid out in the PRSP and further articulated in Vision 2020. In these two documents, the Government proposes an ambitious development program to transform Rwanda into a middle-income country by 2020. The bold targets of Vision 2020 include increasing per capita GDP from US$230 in 2000 to US$900 in 2020, reducing the proportion of the poor from 60 percent of the population to 25 percent, increasing life expectancy from 49 to 65 years, and increasing the literacy rate from 48 to 90 percent.

4. The agriculture sector is identified in the PRSP and Vision 2020 as a leading engine of future economic growth. According to Vision 2020, agricultural transformation is expected to boost growth in both the formal and informal sectors, with the effect of reducing the

8 Enquête Intégrale sur les Conditions de Vie des Ménages au Rwanda (EICV), 2005-06. 9 National Institute of Statistics of Rwanda (NISR), 2005. 10 Enquête Intégrale sur les Conditions de Vie des Ménages au Rwanda (EICV), 2005-06. 11 Banque Nationale du Rwanda (BNR) / Ministry of Finance and Economic Planning (MINECOFIN), 2006.

33

proportion of the population dependant on agriculture from the present 87 percent to about 50 percent in 2020. Because agricultural productivity is currently very low, there is considerable potential to achieve rapid income gains by increasing productivity at the farm level.

5. The agricultural policy objectives of the Government of Rwanda are enshrined in the Vision 2020 document and the first Poverty Reduction Strategy Paper (PRSP1). These documents set a target of 5 to 8 percent annual growth for the agricultural sector over the short and medium term. In recent years, this target has not been met: between 2001 and 2005, agricultural sector growth in Rwanda averaged 4.2 percent. This rate of growth falls short of the 6 percent target level to which all African Heads of State committed under the Comprehensive African Agriculture Development Program (CAADP) of the New Economic Partnership for Africa (NEPAD). Analysis carried out for the 2007 Agricultural Policy Note (APL) suggests that it also falls short of the level needed to achieve the country’s development objectives.

6. The Government of Rwanda has taken steps to align its agricultural policy and the associated implementation strategy with the objectives described in PRSP1 and Vision 2020. In 2004, it formulated a National Agricultural Policy (NAP) and later developed a Strategic Plan for Agricultural Transformation (PSTA) to operationalize the NAP. The PSTA was developed using a participatory methodology which included a series of thematic analytical studies and nationwide stakeholder consultations. The objective of the PSTA as articulated in the PSTA logframe is to make a “Sustainable contribution to poverty alleviation and economic growth through improved productivity of production factors, creation of added value, diversification of income-generating opportunities, and the preservation and conservation of natural resources.” Major thrusts called for under the PSTA include increased promotion of priority food crops; regional development of export and cash crops to reduce production costs and optimize comparative advantage; and strengthening of public-private partnerships to accelerate agricultural commercialization.

7. Increasing productivity in the agricultural sector will depend on maintaining successful implementation of the PSTA. To date, considerable progress has been achieved, and the process seems to be gaining momentum. Major institutional reforms called for under the PSTA have been completed, most notably the creation of RADA and the Rwanda Animal Resources Development Authority (RARDA). ISAR was also restructured to improve its representation in all agro-ecological zones, and a technology transfer unit was created to ensure that research products can move more rapidly into farmers’ fields.

8. The PSTA is being implemented against a backdrop of increasing decentralization. In 2006, for the first time earmarked budget transfers were made to Districts, in line with the PSTA and the national decentralization and territorial reform policy. The agricultural sector was one of many sectors that benefited from the 2006 transfers, with a portion of the money used to support terrace construction and animal disease control. Implementation responsibility for these activities was described in performance contracts signed between government agencies and districts, with technical oversight provided by RADA and RARDA. There is commitment within the sector to decentralize further, as evidenced by the 2007 and 2008 budgets, which include additional budget transfers to the Districts earmarked for agricultural development activities.

34

9. The early successes in implementing institutional reforms and decentralizing responsibility for implementation of activities must now be accompanied by greater investment in the sector, as well as further improvements in planning and budget execution. Since it was launched in 2006, the PSTA has influenced the planning, budgeting and reporting structures for the sector. Likewise, the MTEF for agriculture has been revised in line with the PSTA and its outcomes. Yet despite overall broad improvements in budget execution since 2002, recurrent investment in agriculture has remained static, averaging approximately 1.6 percent of all recurrent expenditure. Actual spending on agriculture, as a share of total public spending (including contributions from Government and from development partners) increased from 1.5 percent in 2002 to 4.2 percent in 2006 and averaged 3.1 percent over the period 2002 to 2006. External funding to the sector from development partners increased significantly over the period, while Government funding to the sector was more erratic. A recent agriculture public expenditure review concluded that the quality and efficiency of public expenditure (recurrent and capital) to the sector is improving, but much more needs to be done, particularly in terms of attracting domestic and foreign private sector investment.

Program Description

10. The RSSP APL series seeks to support implementation of the Government’s agricultural development strategy by contributing to the sustained transfer of financial and technical resources needed to provide the technology, infrastructure, support services, and institutional capacity that are required for faster growth in the rural economy. The programmatic approach is appropriate, because a sustained commitment is needed to achieve significant progress toward this long-term objective. The Government has had to start almost from scratch in rebuilding the institutional capacity needed to support productive activities in rural areas. The process of institutional reform has commenced, as evidenced by the recent creation of a new set of agricultural and rural development agencies charged with implementing the PSTA, but much remains to be done.

11. The RSSP APL series was originally designed to cover a period of 15 years and to be implemented in three phases. Mainly because of an initial lack of implementation capacity, the first phase was extended by 24 months, so the series is now expected to cover 17 years in all.

• Phase 1: 2001-08: The emphasis during the first phase has been on building the institutional, technical, and human capacity needed to support the adoption of sustainable intensification technologies in developed marshlands and surrounding hillsides.

• Phase 2: 2008-13: During the second phase, the emphasis will be broadening and deepening the support provided to accelerate the pace of intensification and commercialization of agricultural production.

• Phase 3: 2013-18: During the third and final phase, the stimulus resulting from faster growth in agricultural production will provide the basis for promoting diversification of economic activities in rural areas as a way of increasing and stabilizing incomes of rural households.

12. The staggered approach allows the RSSP APL series to adjust its activities as experience is accumulated, knowledge is gained about the working of the rural economy, and

35

the targeted beneficiaries develop new skills, adjust to new challenges, and exploit new opportunities. The incremental approach reduces risk and raises the likelihood of successful outcomes, as the later projects in the series can be designed and implemented on the basis of lessons learned and results achieved from the earlier projects.

13. The staggered approach also allows project implementation arrangements to be adjusted over time as the capacity of the Government to assume responsibility for project and program planning and implementation increases. During the second phase, the Project’s management information system will be designed in a way that key functions can feed into and eventually migrate to the centralized management information system being developed by MINAGRI.

Overall Program Indicators

14. The Overall Program Indicators for the RSSP APL series are designed to measure progress achieved against the Overall Program Objective. The Overall Program Objective was described in the RSSP1 PAD as follows:

The main purpose of the Rural Sector Support Program (RSSP) is significantly to contribute to the efforts of the Government of Rwanda to achieve its strategic goal of revitalizing the rural economy and thereby increasing rural incomes, reducing poverty, and reinforcing national stability. The proposed program and its mixture of interrelated and mutually reinforcing sets of activities are guided by the recognition that the most effective way to reduce poverty, and thus achieve the stability goal is to: (i) raise the productivity; and (ii) expand the employment of resources that the rural poor own or depend on for their livelihood, primarily land and labor.

15. The lack of precision in the definitions of the Overall Program Indicators as they appeared in the RSSP1 PAD made their measurement problematic (see Section II.B). No baselines and targets were specified, and for this reason the Indicators were not tracked.

16. To allow better assessment of the impact of the RSSP APL series, the Overall Program Indicators have been adjusted. The revised set of Overall Program Indicators is shown in the table below.

36

Table A1.1. Overall Program Indicators - Original and Revised

Original Overall Program Indicators Revised Overall Program Indicators

(a) Change, compared to the baseline, in the average level of household incomes

(a) Change in the average level of household incomes among Program direct beneficiary households

(b) Change in the percentage of population under the poverty line

(b) Change in the percentage of Program direct beneficiary households under the poverty line

(c) Change in the average level of crop yields per hectare (c) Change in the average level of rice yields per hectare in districts having marshlands rehabilitated or developed by the Program

(d) Change in the average returns per labor unit in the project areas.

Dropped (not directly relevant to Overall Program Objective)

Phase 3 Performance Triggers

17. Consistent with the evolution in the focus of the RSSP APL series, some of the performance triggers have been updated. Designed as an APL, RSSP is being implemented in three phases over a 17-year period. APL design requirements call for the specification of end-of-phase performance triggers, with transition from each phase of the APL to the next contingent on successful achievement of the triggers. Phase 2 performance triggers specified in the RSSP1 PAD, including targets and progress achieved by the time of appraisal, were summarized in Section II (B). Given the evolution in the focus of the RSSP series, and in response to the narrowing of the Project’s focus following the mid-term restructuring, several of the original Phase 3 triggers are no longer as relevant as they were when the APL series was designed. In addition, several important objectives of RSSP2 are not adequately reflected in the original Phase 3 triggers. For these reasons, the original Phase 3 triggers have been updated, with an eye to reducing the overall number of indicators and making the indicators more relevant and more easily measurable. The original and revised Phase 3 triggers are shown in the table below.

37

Table A1.2. Phase 3 Triggers – Original and Revised

Original Phase 3 Triggers Revised Phase 3 triggers

The total area of rehabilitated farmed marshlands reaches 8,000 ha by the end of Phase 2

1. By the end of Phase 2, the area of rehabilitated or developed marshlands has increased by 3,300 ha relative to the end-of-Phase-1 baseline

The total area of rehabilitated hillside areas reaches 4,000 ha by the end of Phase 2

2. By the end of Phase 2, the area of rehabilitated hillsides has increased by 9,900 ha relative to the end-of-Phase-1 baseline

The average crop yields on farmed marshlands/hillsides are 100 percent higher than the baseline at the end of Phase 2

3. By the end of Phase 2, average crop yields on farmed marshlands and hillsides developed under the Project are 100 percent higher relative to the beginning-of-Phase-1 baseline

Crop incomes of farmers assisted by CETSEs now are 50 percent higher than the baseline at the end of Phase 2

4. By the end of Phase 2, crop-derived incomes of farmers assisted by CETSEs are 50 percent higher relative to the end-of-Phase-1 baseline

5. By the end of Phase 2, at least 75 percent of farmers in irrigated marshlands rehabilitated or developed by the Project during Phases 1 and 2 are paying water charges through water user associations

6. By the end of Phase 2, at least 20 cooperatives with quality business plans and supported by RSSP2 have increased their revenues from sales by 50% relative to the baseline

The number of Farmer Agricultural Services Delivery Organizations (FASDOs) reaches 3,000 at the end of Phase 2

Dropped (the Government is encouraging consolidation of FASDOs, so increasing the number of FASDOs is no longer a relevant goal)

The number of Private Agricultural Services Delivery Organizations (PASDOs) reaches 60 at the end of Phase 2

Dropped (not directly influenced by RSSP)

The total number of constructed marketing facilities reaches 20 at the end of Phase 2

Dropped (already achieved during Phase 1)

Alternative Means of Transport (AMT) have been successfully disseminated during Phase 2

Dropped (no AMT-related activities planned under Phase 2)

The output of export crops in the project areas is 50 percent higher than the baseline by the end of Phase 2

Dropped (no longer relevant, because export crops being targeted by other projects)

The number of people employed in off-farm activities is Y% higher than the baseline at the end of Phase 2

Dropped (no baseline established, difficult to measure accurately)

The income generated by off-farm activities are Y% higher than the baseline at the end of Phase 2

Dropped (no baseline established, difficult to measure accurately)

Existence of a well-documented, up-to-date, and operational database of output and outcome indicators

Dropped (routine project implementation activity)

Publication of all monitoring and evaluation reports as specified by the Project Implementation Manual (PIM)

Dropped (routine project implementation activity)

38

Annex 2: Major Related Projects Financed by the World Bank and/or other Agencies

RWANDA: Rwanda Second Rural Sector Support Project

Latest Supervision (ISR) ratings Sector issue addressed Project

status Implementation progress (IP)

Development objective (DO)

Rwanda Agricultural and Rural Market Development Sectors: Agricultural Markets and Trade, Rural Services and Infrastructure

Completed S S

Rwanda Community Development and Reintegration Sectors: Central Government Administration, Community Development

Completed S HS

Integrated Management of Critical Ecosystems (GEF) Sectors: Agriculture, Forestry

Ongoing MS MS

Other agencies

African Development Bank / MINAGRI - Dairy Cattle Development Support Project (PADEBL) Sector: Agriculture

Ongoing N/A N/A

IFAD / DFID / MINAGRI – (PAPSTA) Sectors: Agriculture, Forestry, Central Government Administration

Ongoing N/A N/A

African Development Bank / MINAGRI - Bugesera Agricultural Development Support Project Sectors: General Agriculture, Forestry

Ongoing N/A N/A

Belgium - Development of Seed Production Capacity Sector: Agriculture

Ongoing N/A N/A

JICA - Study on Sustainable and Rural Development in Bugesera District, Eastern Province, Rwanda Sector: Agriculture

On going N/A N/A

Belgium- Project for Support to National Extension Services Sector: Agriculture

On going N/A N/A

IFAD – Kirehe Community-based Watershed Management Project (KWAMP) Sector: Agriculture, Community Development

Ongoing N/A N/A

FAO - Programme for the Development of Rice Production Sector: Agriculture

Under Formulation

N/A N/A

39

Annex 3: Results Framework and Monitoring

RWANDA: Rwanda Second Rural Sector Support Project

Table A3.1. Results Framework

Project Development Objective PDO Indicators Use of Outcome Information

1. By the end of the Project, production of rice in marshlands rehabilitated or developed under RSSP2 has increased by at least 100 percent relative to the baseline

Years 2-4: Assess Project effectiveness in increasing production of economically important crops

2. By the end of the Project, at least 50 percent of farmers in marshland and hillside areas developed or rehabilitated by the RSSP1 and RSSP2 have adopted sustainable marshland or hillside intensification technologies (see Note A below)

Years 2-4: Assess Project effectiveness in fostering the adoption of sustainable and improved production technologies in targeted marshlands and hillsides

The Project Development Objective (PDO) is to increase agricultural production and marketing in marshland and hillside areas targeted for development under the Project in an environmentally sustainable manner.

3. By the end of the Project, at least 20 cooperatives with business plans and supported by RSSP2 have increased their revenues from sales by 50% relative to the baseline

Years 2-4: Assess effectiveness of technical advisory services as well as institutional and financial assistance supported by the Project

Intermediate Outcome for each Component

Outcome Indicators for Components Use of Outcome Monitoring

By the end of the Project, at least 3,300 additional ha of irrigated marshlands have been rehabilitated or developed by the Project (EDPRS/PSTA indicator)

Years 2-4: Assess the Project’s effectiveness in rehabilitating and developing marshlands

By the end of the Project, at least 75 percent of the farmers in irrigated marshlands rehabilitated or developed by the Project (RSSP1 and RSSP2) are paying water charges through water user associations

Years 2-4: Assess farmers’ ownership and adoption of Project activities and outputs

Component 1

Marshlands and hillsides rehabilitated and sustainably developed

By the end of the Project, at least 9,900 additional ha of hillsides have been sustainably developed by the Project (see Note B below) (EDPRS/PSTA indicator)

Years 2-4: Assess the Project’s effectiveness in protecting hillsides

40

Table A3.1. (continued) Results Framework

Intermediate Outcome for each Component

Outcome Indicators for Components Use of Outcome Monitoring

By the end of the Project, at least 80 cooperatives supported by the Project have quality business plans under implementation

Years 2-4: Assess effectiveness of technical advisory services as well as institutional and financial assistance supported by the Project

By the end of the Project, at least 6 additional cooperatives supported by RSSP2 are marketing certified maize or potato seed

Years 2-4: Assess effectiveness of technical advisory services as well as institutional and financial assistance supported by the Project

Component 2

Strengthened commodity chains contributing to increased commercialization of smallholder agriculture

By the end of the Project, with at least 75 percent of the rural infrastructure sub-projects funded through the LDF, the majority of users are satisfied one year after the sub-project was completed

Years 2-4: Assess sub-projects relevance and implementation capacity of beneficiaries

Notes:

A. Adoption of sustainable intensification technologies is defined as adoption of at least two of the following: organic and/or chemical fertilizer, IPM, conservation tillage, contour bunding, construction of erosion control structures including terraces, vegetative strips, and agroforestry practices.

B. Sustainable development of hillsides is defined as occurring when at least two of the following practices have been implemented: soil fertility management including appropriate use of organic and/or inorganic fertilizer, IPM, conservation tillage, contour bunding, construction of erosion control structures including terraces, planting of permanent crops or when the area is deemed unsuitable for productive use and protected through planting of permanent vegetation.

41

Tab

le A

3.2.

Arr

ange

men

ts fo

r M

onit

orin

g an

d E

valu

atio

n of

the

Res

ults

Fra

mew

ork

T

arge

t Val

ues

Dat

a C

olle

ctio

n an

d R

epor

ting

B

asel

ine

End

of

proj

ect

YR

1 Y

R2

YR

3 Y

R4

Fre

quen

cy

of R

epor

ts

Dat

a C

olle

ctio

n In

stru

men

ts

Res

pons

ibili

ty

for

Dat

a C

olle

ctio

n

Cri

tica

l Ass

umpt

ions

and

Rem

arks

Pro

ject

Out

com

e In

dica

tors

By

the

end

of th

e Pr

ojec

t, pr

oduc

tion

of r

ice

in m

arsh

land

s re

habi

litat

ed o

r de

velo

ped

unde

r R

SSP2

has

incr

ease

d by

at l

east

100

pe

rcen

t rel

ativ

e to

th

e ba

selin

e

2,34

0 to

ns

4,68

0 to

ns

Bas

elin

e +

5 %

B

asel

ine

+ 20

%

Bas

elin

e +

40 %

B

asel

ine

+ 10

0 %

A

nnua

l R

evie

w o

f M

INA

GR

I st

atis

tics

MIN

AG

RI

RSS

P

Ric

e pr

oduc

tion

in

mar

shla

nds

reha

bilit

ated

or

deve

lope

d du

ring

the

last

ye

ar o

f th

e pr

ojec

t will

in

crea

se a

fter

pro

ject

co

mpl

etio

n.

Bas

elin

e va

lue

refe

rs to

the

696

ha a

lrea

dy id

entif

ied

to

be r

ehab

ilita

ted

or

deve

lope

d un

der

RSS

P2.

Bas

elin

e va

lue

will

be

upda

ted

once

the

rest

of

the

mar

shla

nds

to b

e re

habi

litat

ed o

r de

velo

ped

are

iden

tifie

d

By

the

end

of th

e Pr

ojec

t, at

leas

t 50

perc

ent o

f fa

rmer

s in

m

arsh

land

and

hi

llsid

e ar

eas

deve

lope

d or

re

habi

litat

ed b

y th

e R

SSP1

and

RSS

P2

have

ado

pted

su

stai

nabl

e m

arsh

land

or

hills

ide

inte

nsif

icat

ion

tech

nolo

gies

25 %

of

HH

50

%

of H

H

30 %

of

HH

35

%

of H

H

40 %

of

HH

50

%

of H

H

Ann

ual

Surv

ey

M&

E U

nit,

RSS

P

Ado

ptio

n of

sus

tain

able

in

tens

ific

atio

n te

chno

logi

es

is d

efin

ed a

s ad

optio

n of

at

leas

t tw

o of

the

follo

win

g:

soil

fert

ility

man

agem

ent,

IPM

, con

serv

atio

n til

lage

, co

ntou

r bu

ndin

g,

cons

truc

tion

of e

rosi

on

cont

rol s

truc

ture

s in

clud

ing

terr

aces

, veg

etat

ive

stri

ps,

and

agro

fore

stry

pra

ctic

es.

Bas

elin

e va

lue

base

d on

ad

optio

n ob

serv

ed a

mon

g R

SSP1

dir

ect b

enef

icia

ries

.

By

the

end

of th

e Pr

ojec

t, at

leas

t 20

coop

erat

ives

with

bu

sine

ss p

lans

and

su

ppor

ted

by R

SSP2

ha

ve in

crea

sed

thei

r re

venu

es f

rom

sal

es

by 5

0% r

elat

ive

to

the

base

line

0 co

ops

20 c

oops

0

coop

s 5

coop

s 10

coo

ps

20 c

oops

A

nnua

l

Rev

iew

of

data

an

d re

port

s fr

om th

e co

oper

ativ

es

M&

E U

nit,

RSS

P

Ass

umpt

ion

is th

at c

oops

w

ill b

e ab

le to

rep

ort t

heir

re

venu

es a

ccur

atel

y.

Bas

elin

e re

venu

es w

ill b

e de

term

ined

onc

e th

e co

ops

to b

e su

ppor

ted

are

chos

en

Due

to th

e di

ffic

ulty

of

pred

ictin

g th

e tim

e pa

th o

f th

is in

dica

tor,

the

chan

ge in

re

venu

e of

eac

h su

ppor

ted

coop

will

be

trac

ked

as

wel

l.

42

Tab

le A

3.2.

(con

tinu

ed) A

rran

gem

ents

for

Mon

itor

ing

and

Eva

luat

ion

of th

e R

esul

ts F

ram

ewor

k

T

arge

t Val

ues

Dat

a C

olle

ctio

n an

d R

epor

ting

B

asel

ine

End

of

proj

ect

YR

1 Y

R2

YR

3 Y

R4

Fre

quen

cy

of R

epor

ts

Dat

a C

olle

ctio

n In

stru

men

ts

Res

pons

ibili

ty

for

Dat

a C

olle

ctio

n

Cri

tica

l Ass

umpt

ions

and

Rem

arks

Inte

rmed

iate

Out

com

e In

dica

tors

Com

pone

nt 1

: Mar

shla

nds

and

hills

ides

reh

abili

tati

on a

nd d

evel

opm

ent

By

the

end

of th

e Pr

ojec

t, at

leas

t 3,

300

addi

tiona

l ha

of ir

riga

ted

mar

shla

nds

have

be

en r

ehab

ilita

ted

or

deve

lope

d by

the

Proj

ect

(ED

PRS/

PST

A

indi

cato

r)

3,09

3 ha

6,

393

ha

3,39

3 ha

4,

493

ha

5,79

3 ha

6,

393

ha

Qua

rter

ly

Rev

iew

of

data

fr

om R

SSP

tech

nica

l uni

t

M&

E U

nit,

RSS

P

By

the

end

of th

e Pr

ojec

t, at

leas

t 75

perc

ent o

f th

e fa

rmer

s in

irri

gate

d m

arsh

land

s re

habi

litat

ed o

r de

velo

ped

by th

e Pr

ojec

t (R

SSP1

and

R

SSP2

) ar

e pa

ying

w

ater

cha

rges

th

roug

h W

UA

s

N/A

75

%

of f

arm

ers

25 %

of

far

mer

s 50

%

of f

arm

ers

60 %

of

far

mer

s 75

%

of f

arm

ers

Ann

ual

Surv

ey /

revi

ew o

f W

UA

arc

hive

s

M&

E U

nit,

RSS

P

Cur

rent

ly th

ere

are

no

WU

As.

WU

As

will

be

esta

blis

hed

by th

e pr

ojec

t

By

the

end

of th

e Pr

ojec

t, at

leas

t 9,

900

addi

tiona

l ha

of h

illsi

des

have

be

en s

usta

inab

ly

deve

lope

d by

the

Proj

ect

(ED

PRS/

PST

A

indi

cato

r)

10,0

89 h

a 19

,989

ha

10,9

89 h

a 14

,289

ha

18,1

89 h

a 19

,989

ha

Qua

rter

ly

Rev

iew

of

data

fr

om R

SSP

tech

nica

l uni

t

M&

E U

nit,

RSS

P

Sust

aina

ble

deve

lopm

ent o

f hi

llsid

es is

def

ined

as

occu

rrin

g w

hen

at le

ast t

wo

of th

e fo

llow

ing

prac

tices

ha

ve b

een

impl

emen

ted:

so

il fe

rtili

ty m

anag

emen

t, IP

M, c

onse

rvat

ion

tilla

ge,

cont

our

bund

ing,

ero

sion

co

ntro

l str

uctu

res

incl

udin

g te

rrac

es, p

lant

ing

of

perm

anen

t cro

ps o

r w

hen

the

area

is d

eem

ed

unsu

itabl

e fo

r pr

oduc

tive

use

and

prot

ecte

d th

roug

h pl

antin

g of

per

man

ent

vege

tatio

n.

43

Tab

le A

3.2.

(con

tinu

ed) A

rran

gem

ents

for

Mon

itor

ing

and

Eva

luat

ion

of th

e R

esul

ts F

ram

ewor

k

T

arge

t Val

ues

Dat

a C

olle

ctio

n an

d R

epor

ting

B

asel

ine

End

of

proj

ect

YR

1 Y

R2

YR

3 Y

R4

Fre

quen

cy

of R

epor

ts

Dat

a C

olle

ctio

n In

stru

men

ts

Res

pons

ibili

ty

for

Dat

a C

olle

ctio

n

Cri

tica

l Ass

umpt

ions

and

Rem

arks

Com

pone

nt 2

: Str

engt

heni

ng c

omm

odit

y ch

ains

By

the

end

of th

e Pr

ojec

t, at

leas

t 80

coop

erat

ives

su

ppor

ted

by th

e Pr

ojec

t hav

e qu

ality

bu

sine

ss p

lans

und

er

impl

emen

tatio

n

0 co

ops

80 c

oops

10

coo

ps

40 c

oops

60

coo

ps

80 c

oops

Surv

ey /

revi

ew o

f co

oper

ativ

es

arch

ives

and

da

ta

M&

E U

nit,

RSS

P

Und

er im

plem

enta

tion

is

defi

ned

as th

e ex

ecut

ion

of

activ

ities

des

crib

ed in

the

busi

ness

pla

n. B

asel

ine

and

inte

rmed

iate

val

ues

will

be

upda

ted

once

the

coop

s to

be

sup

port

ed a

re c

hose

n

By

the

end

of th

e Pr

ojec

t, at

leas

t 5

addi

tiona

l co

oper

ativ

es

supp

orte

d by

RSS

P2

are

mar

ketin

g ce

rtif

ied

mai

ze o

r po

tato

see

d

4 9

4 5

6 9

Rev

iew

of

coop

erat

ives

ar

chiv

es a

nd

data

M&

E U

nit,

RSS

P

By

the

end

of th

e Pr

ojec

t, w

ith a

t lea

st

75 p

erce

nt o

f th

e ru

ral i

nfra

stru

ctur

e su

b-pr

ojec

ts f

unde

d th

roug

h th

e L

DF,

the

maj

ority

of

user

s ar

e sa

tisfi

ed o

ne y

ear

afte

r th

e su

b-pr

ojec

t w

as c

ompl

eted

N/A

75

%

75%

75

%

75%

75

%

Su

rvey

M

&E

Uni

t, R

SSP

A s

impl

e qu

estio

nnai

re h

as

been

dev

elop

ed to

ass

ess

the

achi

evem

ent o

f th

is

indi

cato

r

44

Tab

le A

3.3.

Arr

ange

men

ts fo

r M

onit

orin

g an

d E

valu

atio

n of

the

Ove

rall

Pro

gram

Ind

icat

ors

and

the

Pha

se 3

Tri

gger

s

D

ata

Col

lect

ion

and

Rep

orti

ng

Ove

rall

Pro

gram

Ind

icat

ors

B

asel

ine

End

of P

hase

2

Fre

quen

cy

of R

epor

ts

Dat

a C

olle

ctio

n In

stru

men

ts

Res

pons

ibili

ty f

or

Dat

a C

olle

ctio

n

Cri

tica

l Ass

umpt

ions

/Rem

arks

(a)

Cha

nge

in th

e av

erag

e le

vel

of h

ouse

hold

inco

mes

am

ong

Prog

ram

dir

ect

bene

fici

ary

hous

ehol

ds

5 ye

ars

Surv

ey /

im

pact

ass

essm

ent

M&

E U

nit,

RSS

P

No

base

line

was

pro

vide

d at

the

begi

nnin

g of

R

SSP1

. A s

urve

y w

ill b

e co

nduc

ted

by

Dec

embe

r 20

08 to

get

the

base

line

data

for

R

SSP2

(b)

Cha

nge

in th

e pe

rcen

tage

of

Prog

ram

dir

ect b

enef

icia

ry

hous

ehol

ds u

nder

the

pove

rty

line

5 ye

ars

Surv

ey /

im

pact

ass

essm

ent

M&

E U

nit,

RSS

P

No

base

line

was

pro

vide

d at

the

begi

nnin

g of

R

SSP1

. A s

urve

y w

ill b

e co

nduc

ted

by

Dec

embe

r 20

08 to

get

the

base

line

data

for

R

SSP2

(c)

Cha

nge

in th

e av

erag

e le

vel

of r

ice

yiel

ds p

er h

ecta

re in

di

stri

cts

havi

ng m

arsh

land

s re

habi

litat

ed o

r de

velo

ped

by

the

Prog

ram

5 ye

ars

Surv

ey /

im

pact

ass

essm

ent

M&

E U

nit,

RSS

P

No

base

line

was

pro

vide

d at

the

begi

nnin

g of

R

SSP1

. A s

urve

y w

ill b

e co

nduc

ted

by

Dec

embe

r 20

08 to

get

the

base

line

data

for

R

SSP2

Pha

se 3

Tri

gger

s

1.

By

the

end

of P

hase

2, t

he

area

of

reha

bilit

ated

or

deve

lope

d m

arsh

land

s ha

s in

crea

sed

by 3

,300

ha

rela

tive

to th

e en

d-of

-Pha

se-

1 ba

selin

e

3,09

3 ha

6,

393

ha

R

evie

w o

f da

ta f

rom

R

SSP

tech

nica

l uni

t M

&E

Uni

t, R

SSP

2.

By

the

end

of P

hase

2, t

he

area

of

reha

bilit

ated

hill

side

s ha

s in

crea

sed

by 9

,900

ha

rela

tive

to th

e en

d-of

-Pha

se-

1 ba

selin

e 10

,089

ha

19,9

89 h

a

Rev

iew

of

data

fro

m

RSS

P te

chni

cal u

nit

M&

E U

nit,

RSS

P

Sust

aina

ble

deve

lopm

ent o

f hi

llsid

es is

de

fine

d as

occ

urri

ng w

hen

at le

ast t

wo

of th

e fo

llow

ing

prac

tices

hav

e be

en im

plem

ente

d:

soil

fert

ility

man

agem

ent,

IPM

, con

serv

atio

n til

lage

, con

tour

bun

ding

, ero

sion

con

trol

st

ruct

ures

incl

udin

g te

rrac

es, p

lant

ing

of

perm

anen

t cro

ps o

r w

hen

the

area

is d

eem

ed

unsu

itabl

e fo

r pr

oduc

tive

use

and

prot

ecte

d th

roug

h pl

antin

g of

per

man

ent v

eget

atio

n.

45

Tab

le A

3.3

(con

tinu

ed) A

rran

gem

ents

for

Mon

itor

ing

and

Eva

luat

ion

of th

e O

vera

ll P

rogr

am I

ndic

ator

s an

d th

e P

hase

3 T

rigg

ers

Pha

se 3

Tri

gger

s

3.

By

the

end

of P

hase

2,

aver

age

crop

yie

lds

on

farm

ed m

arsh

land

s an

d hi

llsid

es d

evel

oped

und

er th

e Pr

ojec

t are

100

per

cent

hi

gher

rel

ativ

e to

the

begi

nnin

g-of

-Pha

se-1

ba

selin

e

Ric

e: 3

t/ha

Mai

ze: 0

.8 t/

ha

Pota

to: 8

.6 t

Ric

e: 6

t/ha

Mai

ze: 1

.6 t/

ha

Pota

to: 1

7.2

t/ha

Su

rvey

/

Impa

ct a

sses

smen

t

MIN

AG

RI,

M

&E

Uni

t, R

SSP

For

this

indi

cato

r, “

crop

s” a

re d

efin

ed a

s ri

ce,

mai

ze, a

nd p

otat

o.

Bas

elin

e va

lues

are

nat

iona

l ave

rage

yie

lds

repo

rted

by

MIN

AG

RI

for

2001

.

4.

By

the

end

of P

hase

2, c

rop-

deri

ved

inco

mes

of

farm

ers

assi

sted

by

CE

TSE

s ar

e 50

pe

rcen

t hig

her

rela

tive

to th

e en

d-of

-Pha

se-1

bas

elin

e

48,8

40 F

RW

73,2

69 F

RW

Surv

ey /

Im

pact

ass

essm

ent

M&

E U

nit,

RSS

P

The

Im

pact

Ass

essm

ent c

alcu

late

d th

e in

com

es f

or th

e di

rect

ben

efic

iari

es a

nd

incl

uded

the

follo

win

g cr

ops:

ban

ana,

ric

e,

whe

at, c

assa

va, m

aize

, mar

acuj

a, m

orin

ga

5.

By

the

end

of P

hase

2, a

t le

ast 7

5 pe

rcen

t of

farm

ers

in

irri

gate

d m

arsh

land

s re

habi

litat

ed o

r de

velo

ped

by

the

Proj

ect d

urin

g Ph

ases

1

and

2 ar

e pa

ying

wat

er

char

ges

thro

ugh

wat

er u

ser

asso

ciat

ions

N/A

75

%

of f

arm

ers

Su

rvey

/ re

view

of

WU

A a

rchi

ves

M&

E U

nit,

RSS

P C

urre

ntly

ther

e ar

e no

WU

As.

W

UA

s w

ill b

e es

tabl

ishe

d by

the

proj

ect

6.

By

the

end

of P

hase

2, a

t le

ast 2

0 co

oper

ativ

es w

ith

busi

ness

pla

ns a

nd s

uppo

rted

by

RSS

P2 h

ave

incr

ease

d th

eir

reve

nues

fro

m s

ales

by

50%

rel

ativ

e to

the

base

line

0 20

Rev

iew

of

data

fro

m

RSS

P te

chni

cal u

nit

M&

E U

nit,

RSS

P

Ass

umpt

ion

is th

at c

oops

will

be

able

to

repo

rt th

eir

reve

nues

acc

urat

ely.

Bas

elin

e in

te

rms

of r

even

ue w

ill b

e pr

ovid

ed o

nce

the

coop

s to

be

supp

orte

d ar

e ch

osen

46

1. Project Monitoring and Evaluation (M&E) activities will take place at four levels:

(a) National level

2. The Head of Monitoring and Evaluation, assisted by an M&E Specialist based in the RSSP Kigali office and four Provincial M&E Specialists based in the provincial project offices, will be responsible for collecting, validating, processing, and disseminating the data needed to track progress against the performance indicators. The Head of Monitoring and Evaluation will be responsible for producing M&E reports, both internal reports targeted at Project management, as well as external reports targeted at the larger community of Project stakeholders and others. In addition to managing regular ongoing Project M&E functions, the Head of Monitoring and Evaluation will organize and manage occasional project evaluations carried out by external consultants. Finally, the Head of Monitoring and Evaluation will be charged with making sure that Project beneficiaries are involved in M&E activities.

(b) Provincial level

3. The Provincial M&E Specialists assigned to the provincial project offices will be responsible for ensuring that M&E activities are carried out as planned in the Districts. They will work closely with the Subject Matter Specialists who will be deployed at the District level to ensure that M&E data are collected regularly in accordance with agreed upon policies and procedures. They will conduct regular field visits to the Districts to verify that M&E activities are being implemented properly and to engage directly with Project beneficiaries involved in M&E activities.

(c) District level

4. The subject matter specialists based at the District level will be responsible for collecting, aggregating, and validating M&E data submitted by Project beneficiaries. The subject matter specialists will manage a small data base for each District. M&E data collected by the subject matter specialists will be sent regularly to the Provincial M&E Specialists.

(d) Local level

5. Collection of primary M&E data needed to feed the district, provincial, and national M&E databases will start at the local level. Farmer organizations, cooperatives, other community based organizations, and private firms participating in Project-supported activities will be expected to assemble and report agreed-upon M&E data.

6. The RSSP national M&E database will be maintained at the PSCU Kigali office. The database will include three broad categories of data and information:

(i) Baseline data including information about initial conditions in marshlands and hillsides to be developed by the Project. These data will come mainly from the Performance Indicators Update and Impact Assessment Survey, to be completed in March 2008.

(ii) Planning data drawn directly from the annual work plans and consisting of targets or benchmarks to be achieved during a particular year or time period. These data will be

47

entered into the M&E system or the management information system (MIS) following the approval of each annual work plan.

(iii) Implementation data allowing assessment of progress achieved against the performance indicators. These will include primary data collected directly in the field, as well as secondary data obtained from other sources.

7. Quarterly M&E reports will be generated at District, provincial, and national levels. The contents of the quarterly M&E reports will be summarized in annual reports whose release will be timed to coincide with the completion of the Project’s financial year.

8. The results framework for RSSP2 is well aligned with the results framework being proposed under the EDPRS for the agricultural sector (see Annex 3). This is in line with the effort being made by the Government and development partners to honor the Paris Declaration commitments. For example, several Key Performance Indicators for RSSP2 are identical to performance indicators being monitored by MINAGRI for the EDPRS. In addition, the management information system (MIS) that will be used by the PSCU to manage M&E data for the Project (including financial management and procurement data) will use a software platform that will be compatible with the software platform to be adopted by MINAGRI. Use of common performance indicators and compatible MIS software will facilitate the transition of the RSSP2 M&E function from the PSCU to the MINAGRI Planning Unit, once adequate capacity has been established in the latter. It will also allow M&E data generated by the Project to be transmitted easily via MINAGRI to CEPEX.

48

Annex 4: Detailed Project Description

RWANDA: Rwanda Second Rural Sector Support Project Component 1: Marshlands and hillsides rehabilitation and development (US$23.23 million)

1. The objective of Component 1 is to expand irrigated area in cultivated marshlands and increase use of sustainable land management practices on associated hillsides to accelerate the pace of agricultural intensification. Using a modified watershed development approach, Component 1 will rehabilitate or develop irrigation infrastructure on at least 3,300 ha of marshlands, and it will promote adoption of sustainable land management practices on at least 9,900 ha of associated hillsides. Performance indicators include the area developed for irrigation in marshlands, the area put under sustainable land management practices on associated hillsides, and the recovery of irrigation operation and maintenance (O&M) costs by Water Users Associations (WUAs).

2. Component 1 will include two sub-components: 1.1 Marshlands irrigation infrastructure rehabilitation and development, and 1.2 Sustainable development of hillsides. Since the RSSP series is the primary vehicle for implementing the Government’s marshlands and hillsides sustainable development strategy, many of the intensification and capacity building activities supported by RSSP2 under Component 2 will be oriented around the marshlands and hillsides development activities supported under Component 1.

Sub-component 1.1: Marshlands rehabilitation and development.

3. The Project will finance rehabilitation and development of gravity irrigation schemes in marshlands. The location of these schemes and their technical features will be decided based on transparent selection criteria, including: (i) the projected economic rate of return (ERR); (ii) likely social impacts; (iii) likely environmental impacts; and (iv) likely contribution to the Government’s national food security objectives. The activities in Sub-component 1.1 will be implemented by competitively recruited consultants (firms and individuals) that will be contracted directly by the PSCU.

4. The projected economic rate of return will be calculated using realistic cost and revenue projections. Non-irrigation benefits of water storage facilities should be included in the analysis. Ceteris paribus, schemes with higher projected ERRs will be prioritized over schemes with lower projected ERRs. The minimum (threshold) ERR required for approval of proposed irrigation investments will be 15 percent.

5. Likely social impacts will be assessed taking into account both positive and negative impacts. Positive impacts include projected contributions to incomes of project beneficiaries, especially the poor and disadvantaged groups including women. Negative impacts include the impact of water abstraction on downstream riparians, and resettlement as a result of the investments.

6. Likely environmental impacts will be assessed taking into account both positive and negative impacts. Positive impacts include reduced soil nutrient mining, reduced soil erosion,

49

and protection of wetland habitats. Negative impacts include the impact of water abstraction on surrounding catchments, deterioration in water quality due to runoffs, and loss of wetland habitat.

7. Likely contribution to national food security will be assessed based on the quantity and reliability of water supply, other factors determining potential for intensification (e.g., soil fertility), and physical location. Food security considerations may under certain circumstances provide grounds for selecting a scheme with a lower projected ERR over a scheme with a higher projected ERR, as long as the minimum threshold projected ERR is met.

8. Selection of gravity irrigation schemes to be developed by the Project will proceed in three phases:

9. First, the PSCU will prepare an initial long list of investment candidates that satisfy selection criteria (ii), (iii), and (iv).

10. Second, consultants (individuals or firms) will be contracted to prepare preliminary feasibility studies for the long list of investment candidates. The main objective of the preliminary feasibility studies will be to identify alternative irrigation technologies that could be suitable in that location and to provide an estimate of the likely cost. For each investment candidate, the consultant will seek to identify two or more alternative irrigation technologies (e.g., gravity scheme with water storage, gravity scheme without water storage, pump irrigation). Preliminary cost estimates will be provided for the alternative irrigation technologies that show promise. For each investment candidate, only the most cost-effective alternative will be retained.

11. Third, the same or different consultants (individuals or firms) will be contracted to prepare detailed design studies. The design studies will be prepared with input from the projected beneficiaries. Assuming the detailed design studies do not reveal problems with the selection criteria, the schemes will be cleared for investment. Different consultants will then be engaged to construct the irrigation works and to supervise construction of the irrigation works.

12. Schemes for which detailed design studies have already been completed under RSSP1 will be screened retroactively by PSCU technical staff to ensure compliance with the selection criteria. In cases where the scheme does not meet one or more of the selection criteria, especially cases where the minimum ERR of 15 percent is not satisfied, consultants may be contracted to revise the design of the scheme to ensure compliance with the selection criteria.

13. The Project will consider small-scale piloting of affordable pump irrigation technologies, in cases where (i) pump irrigation in marshlands using shallow aquifers offers clear cost advantages over other types of irrigation, and (ii) this technology is not being provided through other projects.

14. The Project will finance costs associated with stakeholder mobilization and capacity strengthening, to ensure the sustainability of Project-supported irrigation development activities. Activities to be supported include: (i) establishment of water user associations in marshlands rehabilitated or developed by the Project; (ii) strengthening capacity of key stakeholders involved in irrigation development and management, including RADA; (iii) establishment of capacity to carry out participatory M&E; and (iv) establishment of and

50

support for a national association of irrigation professionals. These activities will be implemented by public agencies (e.g., RADA), public research institutes (e.g., ISAR, ISAE), public universities, NGOs, and competitively recruited consultants (individuals and firms). Service providers will be competitively recruited by the PSCU or supported through grants made through the LDF, with renewal contingent on the successful achievement of mutually agreed performance indicators.

15. Establishment of water user associations will be undertaken in accordance with existing legislation regarding non-profit associations. Incentives will be provided to secure membership of all water users associated with a given irrigation scheme.

16. Capacity strengthening of stakeholders will include participatory training in: (i) water management and irrigation system O&M; (ii) management and administration of the WUA; (iii) legal documents; (iv) participatory approaches; (v) construction and maintenance of soil and water conservation structures; and (vi) sustainable land management. District staff will be trained in providing demand-driven support to water user associations and individual water users. RADA staff will be trained in the implementation of the national irrigation policy and strategy, including updating of irrigation data, capacity to provide guidance on sectoral issues at the national level, and regulation of irrigation matters.

17. The Project will finance the piloting of participatory M&E at scheme level to provide a basis for farmer-managed performance monitoring and improvement. This will include the participatory identification of performance indicators, the conduct of annual user satisfaction surveys, M&E of O&M fees (audit), and ensuring that recommendations are fed-back into scheme O&M.

18. The Project will support the establishment of a national association of irrigation professionals. This association is expected to play an active role in championing irrigation in national debates related to economic development and to be a focal point and center of excellence related to irrigation. Support would include capacity strengthening of staff, preparation of a strategy to ensure viability and sustainability of the association, and preparation of an action plan. Partnering with private irrigation sector operators (national and international consultants, contractors, etc) will be encouraged to enhance sustainability. The Project will not provide continuing operational support once the organization has been established.

19. Project-supported activities carried out under Sub-component 1.1 will be implemented by different service providers. Activities related to the rehabilitation and development of irrigation schemes in marshlands will be implemented by competitively recruited private consultants (firms and individuals) that will be contracted directly by the PSCU. Activities related to stakeholder mobilization and capacity strengthening will be implemented by public agencies (e.g., RADA), public research institutes (e.g., ISAR, ISAE), public universities, NGOs, and competitively recruited consultants (individuals and firms). Support to public agencies and NGOs will be provided in the form of grants made through the LDF. Competitively recruited consultants (individuals and firms) will be contracted directly by the PSCU.

51

Sub-component 1.2: Sustainable development of hillsides

20. The Project will finance investments in improving the productivity of farming systems on hillsides associated with marshland irrigation schemes developed by the Project. Activities to be supported include: (i) promotion of cost-effective soil and water conservation technologies; and (ii) promotion of sustainable land management practices. By increasing agricultural productivity on hillsides, the Project aims to provide incentives to farmers to invest in sustainable intensification practices and reduce land degradation. This strategy is expected to have a much larger impact on sustainable management of hillsides than what can be achieved through an exclusive focus on conservation. Critical hillsides ecosystems deemed unsuitable for intensive agriculture will be protected, rather than developed for productive agriculture. In view of the positive impacts on hillside agricultural productivity, dissemination of the technologies is expected to be largely farmer-propelled.

21. The Project will promote cost-effective soil and water conservation technologies on hillsides for agricultural production. Technologies that will be promoted include progressive terracing, contour bunding in combination with planting of live hedges, planting of Napier grass, mulching, tied ridges, and others. In selected hillsides immediately upstream of irrigation infrastructure where much of the land degradation and erosion is concentrated, and where technically feasible, the Project may also pilot radical terracing.

22. The Project will promote and disseminate sustainable land management practices on hillsides immediately upstream of the irrigation investments, with the aim to increase fertility and organic matter in the soil profile. Technologies include conservation tillage (including zero till and minimum till), appropriate crop rotation and double cropping, furrow cultivation, use of nitrogen fixing plants such as legumes and Sesbania spss, and mulching, among others. The specific composition of the support packages promoted under this sub-component will depend on conditions at each site (soil, climate, slope, farmer interest, etc) and will be determined during implementation.

23. Project-supported activities to be carried out under Sub-component 1.2 will be implemented by local communities with technical assistance from public agencies (e.g., REMA, ISAR, ISAE, public universities), NGOs, and private firms. Service providers will be competitively recruited by the PSCU or supported through renewable grants made through the LDF, with renewal contingent on the successful achievement of mutually agreed performance indicators. Competitively recruited consultants (individuals and firms) will be contracted directly by the PSCU.

Component 2: Strengthening commodity chains (US$5.58 million)

24. The objective of Component 2 is to support the commercialization of smallholder agriculture in targeted marshland and hillside areas by intensifying production, promoting agricultural value addition, and expanding access to markets. This component will use a commodity chain approach, supporting rural entrepreneurs and assisting beneficiary cooperatives to acquire sound business practices. The Project will use a holistic approach in addressing constraints along the entire commodity chain, including the upper (production), middle (processing), and lower (marketing) stages. The Project will focus on strengthening commodity

52

chains for leading food staples, including rice, potatoes, and maize, but it will remain responsive to the broader proposals of farmers in marshlands and hillsides, including niche commodities, provided tangible marketing opportunities exist. Performance indicators will include: increased production, increased professionalism of farmers’ associations and cooperatives, increased value adding activity, and increased market participation of Project beneficiaries.

25. Component 2 will include four sub-components addressing different aspects of the commodity chain. These include: (i) strengthening farmer organizations and cooperatives; (ii) improving production technologies, notably by fostering increased adoption of new practices and the use of inputs; (iii) financing productive rural investments; and (iv) knowledge generation and dissemination.

Sub-component 2.1: Strengthening farmer organizations and cooperatives

26. The Project will strengthen farmer organizations and cooperatives, with the goal of improving their governance mechanisms and instilling them with sound business practices. The Project will support two main target groups: (i) farmer organizations working in marshlands rehabilitated or developed by the Project (RSSP1 and RSSP2); and (ii) cooperatives having strong organizational capacity and exhibiting a clear business vision.

27. Support will be provided to all farmer organizations working in marshlands rehabilitated or developed by the Project (RSSP1 and RSSP2). The support provided to farmer organizations working in marshlands will generally consist of training and advisory services designed to improve the general functioning of the organizations, technical assistance and material support designed to accelerate consolidation of the existing FBE system, and technical assistance and material support designed to promote commodity marketing activities.

28. Support provided to cooperatives will be concentrated on a limited number of cooperatives showing high potential for successful commercial development. Selectivity will be needed to ensure that the cooperatives with which the Project engages receive an adequate level and appropriate type of support. Cooperatives will be selected based on two main criteria: (i) demonstrated record of effective organization and management; and (ii) high quality proposal that is likely to lead to a successful business activity. Often the business activity will focus on one of the priority commodity chains being targeted by RSSP (rice, maize, and potatoes). It is anticipated that the Project will engage with 40-50 cooperatives that were previously supported under RSSP1, as well as 30-40 additional cooperatives to be engaged under RSSP2. These indicative targets will be revisited at the time of the Mid-Term Review and adjusted as necessary.

29. Sub-component 2.1 will support capacity building activities. These are expected to include: (i) organizational support and related training for farmer organizations; (ii) business planning and enterprise management training for commercially oriented cooperatives; (iii) organizational and operational support for associations of LFs; and (iv) organizational support for national commodity associations.

53

30. The Project will provide training, technical assistance, and advisory services to build basic operating capacity in all of the farmer organizations and cooperatives with which it engages. Using participatory approaches to ensure engagement with the entire membership of each organization, the objective will be to rationalize organizational structures and functions, strengthen member commitment, and increase effective participation. A major activity will be the development of action plans, formulated through a participatory process that builds capacity within the organizations to better plan and implement their activities. Successful completion of an action plan, which will form the basis for each organization’s future development, will constitute a condition for continuing to receive support from the Project.

31. General support provided to all cooperatives to help build basic operating capacity will be distinguished from specialized support provided to selected cooperatives to help strengthen their income-generating business activities. In many of the cooperatives supported under RSSP1, the people involved in the management of primary production support functions also play key roles in the management of business operations. This can place them in an undesirable “conflict of interest” position, for example when the time comes to set the price that the business wing of the cooperative will pay to purchase the primary commodity from producer-members of the cooperative. The issue is not simple, because many of the cooperatives supported under RSSP1 are very new, and often when a cooperative is led by a dynamic and entrepreneurial president, the same person is also the driving force behind the cooperative’s business development activities. It is desirable to have strong entrepreneurs involved on the business side, but only when this does not conflict with the “one person, one vote” principle of cooperative democracy. If the business decisions of a cooperative are excessively influenced by an individual leader or a small group of leaders, the notion that the elected leadership should represent the interests of all cooperative members can be undermined. In developed countries, this is why producer cooperatives usually transfer their business operations to separate companies, including at times companies having a different legal status (e.g., companies that issue stock). In the case of companies that issue stock, all of the active cooperative members can hold a minimum number of shares, but members who are particularly interested in the cooperative’s business activities or even non-members can have larger ownership positions.

32. The Project will provide specialized training, technical assistance, and advisory services to improve business planning and management capacity in a selected number of more commercially oriented cooperatives. Where attractive commercial opportunities are identified, the Project will provide training, technical assistance, and advisory services to support the preparation of business plans. The business plans will specify not only the details of proposed commercial ventures, but also the mechanisms to be used for sharing costs and benefits of commercial ventures among members. The training and advisory services will vary according to the business needs of the proposed commercial ventures. Topics will include but will not be limited to budgeting and financial analysis, capital management, sales management and marketing, risk management, quality management, and personnel management.

33. The activities in Sub-component 2.1 will be implemented mainly by NGOs and competitively recruited private firms, which will be contracted directly by the PSCU. Participating farmer organizations and cooperatives will be eligible to receive capacity-building grants provided through the LDF.

54

Sub-component 2.2: Improving production technologies

34. The Project will finance activities to improve production and productivity of farming systems in the marshlands and hillsides where the Project intervenes. It will implement training activities, provide technical advisory services, and distribute production inputs, with the goal of disseminating best practices for sustainable soil and water management, increasing use of improved inputs (seed and fertilizer) and encouraging adoption of IPM. The main target groups will be the farmer organizations and cooperatives supported by the Project, especially in the marshlands developed and surrounding hillsides. The FBE system will provide a convenient entry point for the activities under this component.

• Input support for demonstration plots. Working with farmer organizations and service providers, the Project will finance farming inputs for demonstration plots under the FBE system, such as seed, fertilizer and materials needed for IPM. The provision of these inputs will serve to raise awareness of their role in improving farming systems and thus facilitate their adoption at the farmer grassroots.

• Enhancing soil fertility. The Project will promote soil fertility assessments and actions, focusing on locations where soil nutrient imbalances have been identified as a major problem. Four main types of interventions are foreseen. First, the Project will carry out basic soil testing. Mainly this will be done by training district agronomists and providing them with soil testing kits, but in-country laboratories will be contracted to carry out more specialized soil testing when needed. This will allow farmers to access custom soil testing services to determine soil nutrient management needs. Second, the Project will promote integrated soil fertility management by training beneficiaries in the use of manure and crop rotation practices. Third, the project will finance or otherwise support innovative arrangements designed to facilitate farmers’ access to fertilizer, for example by providing start-up capital for fertilizer distribution outlets to be established in selected cooperatives and managed to benefit the entire membership. Fourth, the Project will link with government agencies involved in fertilizer procurement and distribution to ensure that farmers have access to the appropriate fertilizer products.

• Promoting use of improved seed and planting materials. Working through interested cooperatives, the Project will support the establishment of certified seed producers. This activity will be conducted in cooperation with RADA and wherever possible linked to ongoing seed projects.

• Promoting IPM practices. Working with farmer organizations and service providers, the Project will promote use of IPM practices in irrigated marshlands and surrounding hillsides being targeted by the Project. In particular, the Project will finance as follows: (i) production and distribution of IPM instructional materials developed under RSSP1; (ii) training of LFs in IPM practices; and (iii) establishment of pest monitoring programs in the irrigated marshlands and surrounding hillsides being targeted by the Project.

55

35. The activities in Sub-component 2.2 will be implemented by public agencies (e.g., RADA), public research institutes (e.g., ISAR), NGOs, farmer organizations and cooperatives, and private firms and individuals. Public agencies, NGOs, and farmer organizations and cooperatives will be supported with capacity-building grants made through the LDF.

Sub-component 2.3: Rural investments for economic infrastructure

36. The Project will support productive rural investments by community-based organizations and occasionally Districts. Activities to be supported under Sub-component 2.3 will be financed through the LDF. The LDF will provide funding to farmer organizations, cooperatives, NGOs, and occasionally Districts, for strategic investments in public goods and services (e.g., community grain drying and storage facilities, rural roads). Activities supported by the LDF must be linked to other activities being supported by the Project.

Sub-component 2.4: Knowledge generation and dissemination

37. The Project will commission and finance a limited number of knowledge generation and dissemination activities, including diagnostic studies, market surveys, and problem-focused applied research. The PSCU, together with stakeholders and partners, will identify issues about which additional knowledge is needed to inform development decisions. Activities to be supported under Sub-Component 2.4 will include but will not be limited to: (i) diagnostic studies; (ii) market surveys; and (iii) applied research needed to resolve emerging production and marketing problems.

• Diagnostic studies. Interventions designed to strengthen the commodity chains being targeted by the Project will be effective only if the constraints and opportunities facing each commodity chain are well understood. Currently there is a general lack of knowledge about the performance of commodity chains in Rwanda, which makes it difficult for public resources to be directed to the places where they can have maximum impact. The Project will commission a limited number of diagnostic studies where these can fill key knowledge gaps and contribute to the formulation of more effective commodity chain development strategies.

• Market surveys: Most of the farmer organizations and cooperatives with which the Project engages lack knowledge about the market opportunities for their products, not only domestically but also regionally and internationally. In the absence of such knowledge, they are relegated to selling to the most immediate buyer, who may not offer the most attractive prices. Where farmer organizations and cooperatives being supported by the Project demonstrate potential to scale-up their marketing capacity, the Project will commission market surveys designed to identify potentially more lucrative outlets and support efforts to link the farmer organizations and cooperatives to potential buyers.

• Applied research. The Project will commission applied research designed to solve problems that are certain to arise during implementation. These are likely to relate to: (i) primary production activities being undertaken by Project beneficiaries (e.g., poor performance of certain crop varieties, emerging pest and disease problems, revealed soil nutrient imbalances); and (ii) processing and marketing activities being undertaken by Project beneficiaries (e.g., inefficient harvesting, storage, and processing technologies;

56

inefficient packaging technologies; lack of information about marketing opportunities). Where appropriate, the Project will support applied research aimed at resolving these problems. The main focus will be applied research that emphasizes empowering the community (farmers and others involved locally in commodity chains) to identify problems and to contract for applied research with service providers.

38. The activities in Sub-component 2.4 will be financed both competitively and non-competitively. The studies, surveys and research will be commissioned either competitively (when multiple service providers are available) or non-competitively (when the proposed activity clearly lies within the field of competence of a particular public or national agency).

Component 3: Project coordination and support (US$5.61 million)

39. The objective of Component 3 is to ensure that Project activities are effectively managed and well coordinated. Component 3 will support the PSCU to ensure: (i) efficient execution of administrative, financial management, and procurement functions; (ii) coordination of Project activities among the various stakeholders; (iii) timely implementation and monitoring of environmental and land-use management frameworks mandated by World Bank safeguards policies; and (iv) establishment and operation of an effective monitoring and evaluation (M&E) system. Overall responsibility for implementation of the Project will reside with the PSCU, which already exists within MINAGRI and which is successfully implementing the first phase of the program (RSSP1). The PSCU will have a presence at three levels—national, provincial, and District.

40. At the national level, the PSCU will oversee overall implementation of the Project. The PSCU will prepare annual work programs, budgets, and statements of results. It will arrange the timely delivery of inputs to operational units, ensure that the necessary capacity is in place to support the sound implementation of Project activities on the ground, and ensure the transparent management of Project resources through careful monitoring of financial management and procurement procedures. The PSCU will also be in charge of collecting and analyzing M&E data and disseminating assessment results to the appropriate decision makers. The assessment results will be used by the PSCU and the World Bank to adjust Project implementation arrangements periodically to ensure that the Project is on track to meet its performance targets.

41. At the provincial level, provincial project offices will be maintained, consistent with the move to further decentralize responsibility for implementation of Project activities. Each provincial project office will be staffed by a Provincial Coordinator, a Provincial Procurement Specialist, and a Provincial Monitoring and Evaluation Specialist. One-half of the provincial offices will be staffed by a Provincial Accountant, each of whom will be responsible for two provinces. Project staff based in the provincial project offices will oversee and monitor the implementation of Project activities in the province(s) they are covering. In addition to serving as the Project’s representatives in the provinces, the Provincial Project Coordinators and their teams will be in charge of provincial coordination, provincial administration, provincial financial management, provincial procurement, and provincial collection and reporting of M&E data. PSCU staff based in the provincial project offices will work closely with District governments and their services. They will provide fiduciary, technical support and hands-on training to District governments’ services to build capacity at the District level and promote

57

increased transfer of knowledge. Particular emphasis will be put on training local government staff involved in procurement, financial management, and monitoring and evaluation, with the ultimate goal of eventually transferring full responsibility for these activities to the Districts.

42. At District level, the PSCU will be represented by subject matter specialists. Most of the subject matter specialists are expected to be rural engineers, community development and gender specialists, and agribusiness specialists. The subject matter specialists will provide technical assistance to Project beneficiaries. They will be deployed progressively only to Districts in which the Project is supporting an active work program and may be called upon to cover multiple Districts. Deployment at the District level will be vital for the success of the Project, since the subject matter specialists will serve as the first points of contact with many stakeholders and partners.

43. As they have been doing under RSSP1, subject matter specialists will continue to participate regularly in activities of the DDCs. By law, every District has a DDC, chaired by the Vice-Mayor for Finance, Economic Affairs, and Development. The DDCs review and approve the DDPs and also evaluate and approve sub-project requests submitted to RSSP for funding by community-based organizations. The DDPs are the aggregation of all the development activities being carried out within each District. Consistent with the Government’s ongoing decentralization initiative, each year the Project will provide to the Districts funds needed to pay for Project-supported activities that are included in the DDPs and for which procurement will be handled by the Districts.

Project financing mechanisms

44. Activities to be implemented under the Project will be supported with funding provided through two financing mechanisms: (i) contracting managed by the PSCU; and (ii) grants provided through the LDF. The LDF will provide grants to farmer organizations and cooperatives, NGOs, public agencies, and occasionally local governments to stimulate investments—generally for public goods and services—needed to support the strengthening of commodity chains.

(a) Contracting by PSCU

45. Some Project-supported activities will be implemented by private consultants (firms and individuals) that will be contracted directly by the PSCU. Such activities include the rehabilitation and development of irrigation schemes in marshlands, construction of selected soil and water conservation works on hillsides, and provision of services when these can be provided most efficiently by private firms and individuals (e.g., business advisory services, soil testing, input procurement). Whenever possible, firms contracted by the PSCU will be competitively recruited, and all will be selected in accordance with the procurement guidelines described in the Project Implementation Manual (PIM).

(b) Local Development Fund

46. The LDF will provide grants to allow Project stakeholders and beneficiaries to undertake sub-projects that conform to clearly defined criteria. Sub-projects to be supported with LDF grants will generate public goods and services that are unlikely to attract private

58

investors. Three main types of sub-projects are foreseen: (i) sub-projects designed to build capacity among farmer organizations and cooperatives, stimulate adoption of improved production technologies, or launch value addition initiatives; (ii) sub-projects proposed by districts to provide public infrastructure needed to realize the commercial potential of Project-supported commodity chains, such as markets, storage facilities, and access roads; and (iii) sub-projects designed to fill key knowledge gaps by promoting the generation and/or dissemination of information needed to ensure efficient functioning of the targeted commodity chains. The procedure for approving LDF grants will vary for each category.

47. Sub-projects proposed by farmer organizations and cooperatives will be screened at the District level before being submitted to the PSCU. Farmer organizations and cooperatives that are interested in receiving LDF funding will prepare proposals for sub-projects, prepared in accordance with established guidelines. The proposals will be submitted to the DDC for review and approval. After the proposal has been approved by the DDC, which will ensure that the proposed sub-project is compatible with the DDP, it will be forwarded to the PSCU for final review and approval.

48. Sub-projects proposed by Districts will be endorsed by the DDC before being submitted to the PSCU. The total amount of LDF funding used to support public infrastructure will be limited to US$1 million. Districts that are interested in receiving LDF funding will prepare proposals for sub-projects, prepared in accordance with established guidelines. After a proposal has been approved by the DDC, which will ensure that the proposed sub-project is compatible with the DDP, it will be forwarded to the PSCU for final review and approval.

49. Sub-projects designed to fill key knowledge gaps will be based on issues and problems identified by Project beneficiaries. In response to issues and problems raised by farmer organizations and cooperatives, the PSCU will identify a set of sub-projects consisting of studies, surveys, or applied research. Based on their nature, the PSCU will either tender on a competitive basis or contract with a specialized public agency having the relevant mandate and a clear competitive advantage (e.g., ISAR, ISAE).

50. All sub-projects financed through the LDF will be reviewed and approved by a technical committee constituted by the PSCU. The technical committee will be an internal PSCU structure and it will have a multidisciplinary nature. The technical committee will be composed of about 10 members drawn from the PSCU, MINAGRI, relevant government agencies, and academia, as well as independent specialists. Membership of the committee will be decided by the PSCU before every meeting and may vary depending on the proposals being reviewed. The technical committee will meet on a quarterly basis, usually for 2-3 days. Criteria to be used for the selection of each category of sub-project are described in detail in the PIM.

59

Tab

le A

4.1.

Sum

mar

y of

Pro

ject

fund

ing

mec

hani

sms

Fun

ding

m

echa

nism

F

undi

ng

mod

alit

y M

anag

ed b

y Im

plem

ente

d by

B

enef

icia

ries

A

ctiv

itie

s P

roje

ct

com

pone

nt

Am

ount

(U

S$ m

)

PSC

U

Firm

s N

GO

s G

over

nmen

t age

ncie

s

CB

Os

Rur

al c

omm

uniti

es

Mar

shla

nds

deve

lopm

ent w

orks

H

illsi

des

deve

lopm

ent w

orks

1.

1

1.2

23.2

Dir

ect

proc

urem

ent

Con

trac

ts

PSC

U

Firm

s C

onsu

ltant

s N

GO

s

CB

Os

Rur

al c

omm

uniti

es

Stud

ies,

sur

veys

, app

lied

rese

arch

2.

4 0.

2

Farm

er

orga

niza

tions

an

d co

oper

ativ

es

Firm

s C

onsu

ltant

s N

GO

s

Farm

er o

rgan

izat

ions

an

d co

oper

ativ

es

Cap

acity

-bui

ldin

g T

echn

ical

ass

ista

nce

Tec

hnol

ogy

tran

sfer

Su

ppor

t to

com

mer

cial

izat

ion

2.1

2.2

4.2

Dis

tric

ts

Firm

s R

ural

com

mun

ities

Pu

blic

infr

astr

uctu

re (

rura

l mar

kets

, ro

ads,

gra

in d

ryin

g an

d st

orag

e fa

cilit

ies)

2.

3 1.

0

Loc

al

Dev

elop

men

t Fu

nd

(LD

F)

Gra

nts

Res

earc

h in

stitu

tes

Res

earc

h in

stitu

tes

Farm

er o

rgan

izat

ions

an

d co

oper

ativ

es

Stud

ies,

sur

veys

, app

lied

rese

arch

2.

4 0.

3

60

Annex 5: Project Costs

RWANDA: Rwanda Second Rural Sector Support Project

Local Foreign Total Project cost by component and/or activity

US$‘000 US$’000 US$‘000

Financed by IDA

(%)

AmountIDA

US$‘000

1. Marshlands and Hillsides Rehabilitation and Development

Management rehabilitation and development 21,601.8 647.4 22,249.2

Hillsides rehabilitation and development 2,963.8 - 2,963.8

Environment and Social Safeguard Contingencies 1,300.0 1,300.0

Sub-total 25,865.6 647.4 26,513.0 87.6 23,228.8

2. Strengthening Commodity Chains

Strengthening farmer organizations and cooperatives 3,099.0 30.0 3,129.0

Improving production technologies 890.0 - 890.0

Investments for agribusiness 1,000.0 1,000.0

Knowledge generation and dissemination 267.0 250.0 517.0

Sub-total 5,256.0 280.0 5,536.0 100.0 5,576.0

3. Project Management

Management 5,059.0 204.9 5,263.9

Environment and Social Safeguard Activities 700.00 700.00

Monitoring and Evaluation 57.0 57.0

Consultant Services 48.0 135.0 183.0

Training 80.0 80.0

Sub-total 5,944.0 339.9 6,283.9 100.0 5,611.0

4. Project Preparation Fund (PPF)

Project Preparation Fund (PPF) 584.2 584.2 584.2

Total Baseline Cost 37,649.8 1,267.3 38,917.1 89.8 35,000.0

Physical Contingencies 43.6 20.5 64.1

Price Contingencies 7.2 3.1 10.3

Total Project Costs1 37,700.6 1,290.8 38,991.4

61

Annex 6: Implementation Arrangements

RWANDA: Rwanda Second Rural Sector Support Project 1. The project implementation arrangements for RSSP2 build on the successful implementation experience of RSSP1 while allowing the eventual migration of responsibilities and functions to MINAGRI and Districts. The goal is to preserve the considerable capacity that has been built up within the PSCU while at the same time responding to the need to establish a more active presence at the District level. By maintaining a lean and strategically staffed PSCU, it will be possible to ensure continuing effective oversight of key technical and administrative functions requiring high levels of specialization that are best performed centrally. By deploying PSCU staff in the Districts where the project activities will be carried out, it will be possible to engage more actively at the local level. This in turn will facilitate more regular and meaningful engagement with partners and stakeholders.

(a) National level

2. As the official executing agency for RSSP2, MINAGRI will have overall responsibility for the implementation of the Project at the national level. MINAGRI has established the PSCU to ensure effective implementation of RSSP1. The PSCU will continue to serve as the lead implementing body for RSSP2. MINAGRI has also established a Program Advisory Committee (PAC), chaired by the Secretary General of MINAGRI, which has general oversight of RSSP implementation. The RSSP National Project Coordinator serves as the secretary of the PAC. The RSSP National Project Coordinator, working under the supervision of the PAC, will ensure day-to-day management of the Project.

(b) Provincial level

3. At the provincial level, the PSCU will be represented by teams based in provincial project offices. Each provincial project office will be headed by a Provincial Project Coordinator and will be staffed with (i) a Provincial Procurement Specialist and (ii) a Provincial M&E Specialist. One-half of the provincial project offices will be staffed with Provincial Accountants, each of whom will cover two provinces. The Provincial Project Coordinators and their teams working out of the provincial project offices will oversee and monitor implementation of all the Project activities in each province they are covering. In addition to serving as the Project’s representatives in the regions, the Provincial Project Coordinators and their teams will be in charge of provincial coordination, provincial administration, provincial financial management, provincial procurement activities, and provincial collection and reporting of M&E data. PSCU staff based in the provincial project offices will work closely with District governments and their services. They will provide fiduciary, technical support and hands-on training to District governments’ services to build capacity at the District level and promote increased transfer of knowledge.

(c) District level

4. The PSCU will be represented at the District level by subject matter specialists. Most of the subject matter specialists are expected to be rural engineers, community development and gender specialists, or agribusiness specialists. The subject matter specialists

62

will provide technical assistance to Project beneficiaries. They will be deployed only to Districts in which the Project is supporting an active work program, and they may be called upon to cover multiple Districts. Deployment at the District level will be vital for the success of the Project, since the subject matter specialists will serve as the first points of contact with most stakeholders and partners. As they have been doing under RSSP1, subject matter specialists will continue to participate regularly in activities of the DDCs. By law, every District has a DDC, chaired by the Vice-Mayor for Finance, Economic Affairs, and Development. The DDCs review and approve the DDPs and also evaluate and approve sub-project requests submitted to RSSP for funding by community-based organizations. The DDPs are the aggregation of all the development activities being carried out within each District. Consistent with the Government’s ongoing decentralization initiative, each year the Project will provide to the Districts funds needed to pay for Project-supported activities that are included in the DDPs and for which procurement will be handled by the Districts.

(d) Local level

5. Many activities supported by the Project will be demand-driven and will be carried out at the local level by community-based organizations. Community-based organizations targeted by the Project include mainly farmer organizations and cooperatives. Since the funds used to support the Project are public funds, community-based organizations wishing to participate in Project-supported activities must be legally constituted as a civic association and recognized by local government bodies. Community-based organizations may identify, prepare, execute, and/or supervise sub-projects supported by the Project. These sub-projects will be screened to ensure their compatibility with the local DDP. For activities requiring specialized knowledge and skills, service providers will be engaged by the PSCU to provide needed technical support and training to community-based organizations and their members. For activities in which community-based organizations have already demonstrated proficiency (e.g., based on the training and capacity building they received during RSSP1), the procurement function will be entrusted to the organizations themselves. Community-based organizations will also be involved in monitoring and evaluation of Project activities, in line with the philosophy of the Project to promote participatory M&E.

6. Note on capacity constraints: The implementation arrangements for RSSP2 will build on the capacity that has been developed under RSSP1. While capacity is considered generally satisfactory at the central (PSCU) level, constraints are likely to be encountered during RSSP2 as responsibility for implementation is gradually transferred to the provincial and District levels, in line with the Government’s decentralization strategy. The RSSP1 implementation experience suggests that capacity constraints are most likely to affect the procurement function, as very few qualified procurement specialists can be found at the provincial and District levels, especially procurement specialists who are familiar with the procurement guidelines and procedures that must be used for World Bank-funded projects. The Head of Procurement working out of the national project office in Kigali will be expected to closely monitor and support procurement activities performed by the Provincial Procurement Specialists working out of the provincial project offices. The Provincial Procurement Specialists in turn will be expected to closely monitor and support procurement activities taking place at the District level. Thresholds for procurement activities that may be handled at the provincial and Districts levels will initially be

63

set conservatively and will be raised over time as capacity to carry out procurement activities is developed at each level.

7. Note on service providers to support capacity building activities for cooperatives: Compared to RSSP1, RSSP2 will significantly scale up its involvement in two areas of activity: (i) strengthening commodity chains; and (ii) building capacity among cooperatives to plan and effectively manage commercial enterprises. Since achieving success will depend on the availability of competent service providers, the appraisal mission conducted an informal stocktaking exercise to determine the capacity of the service providers currently operating in Rwanda having expertise in these two rather specialized areas. It was determined that while Rwanda has a wealth of service providers engaged in community mobilization and organizational strengthening (NGOs, private firms, and individual consultants), their competence in cooperative development and business practice is often weak. The appraisal mission identified a number of competent and experienced organizations and individuals that could assist with the implementation of Project activities. Although the number of these service providers is limited, there are enough to support the implementation of the capacity building activities that will be supported by the Project. To ensure consistency in approach, the Project will organize information-exchange and capacity-building events involving the likely service providers. The Task Force on Cooperatives, based in MINECOM, would be a key partner in this process.

64

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65

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66

Annex 7: Financial Management and Disbursement Arrangements

RWANDA: Rwanda Second Rural Sector Support Project 1. A financial management assessment was carried out in October 2007 in accordance with the Financial Management Practices Manual issued by the Financial Management Sector Board. The assessment had three main objectives: (i) to determine whether the PSCU has adequate financial management arrangements in place to ensure that Project funds will be used for the purposes intended in an efficient and economical way; (ii) to assess the likelihood that Project financial reports will be prepared in an accurate, reliable, and timely manner; and (iii) to assess the likelihood that Project assets will be safeguarded.

Country issues

2. The Country Financial Accountability Assessment (CFAA) prepared in 2005 documents the evaluation of the Public Financial Management (PFM) environment in Rwanda. Despite continuing weaknesses in the PFM system, the Government has made impressive progress towards improving accountability. The adoption of the Organic Budget Law and the implementation of accompanying financial instructions, along with continuing efforts to adapt institutional arrangements, signal Government’s resolve to strengthen PFM processes and procedures. There is evidence of Government action to address issues identified as problematic. The budget preparation process has been strengthened with the introduction of the MTEF. The process is much more structured, with increased levels of stakeholder participation, particularly of civil society and development partners. Government has also, with assistance from the accounting firm Pricewaterhousecoopers, submitted a draft of its first set of consolidated financial statements for the year ended 2006 to the Office of the Auditor General. These financial statements and the associated audit report are expected to be submitted to Parliament.

3. Despite the recent progress, continuing weaknesses in the financial accounting and auditing systems pose a fiduciary risk. The biggest challenge facing Government is the severe human resource capacity constraint. The ability to attract and retain technically trained and qualified financial management personnel is central to the sustainability of PFM reforms. There is still a disconnect between national strategic planning, the MTEF, and resource allocation through the annual budgets. The positive developments represented by the introduction of the MTEF are mitigated by the lack of sufficiently elaborated plans in many sectors.

4. The Government of Rwanda has adopted a number of measures designed to address the shortcomings indicated above. These mainly center on the creation of sufficient capacity to implement the provisions of the new legal and regulatory frameworks, ensuring the availability of sufficient guidance to PFM personnel, and commencing the regular preparation of financial statements. The Government has taken measures to enhance the procedures for budget preparation (e.g., by strengthening the alignment of budgets with strategies) and to tighten control over treasury resources. The Government carried out a needs assessment that identified needed financial management skills, including accounting and internal auditing. The Government has embarked on a recruitment exercise to fill the vacancies in these areas. Workshops have been conducted for existing personnel, and programs have been suggested in the PFM reforms that would provide annual refresher courses. The roles of the audit institutions have been clarified to remove previously existing redundancies. The Government has adopted

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International Public Sector Accounting Standards for accounting and financial reporting, and a Public Accounts Unit was set up.

Risk assessment and mitigation

5. The objectives of the Project’s financial management system are:

• to ensure that Project funds are used only for their intended purposes in an efficient and economical way;

• to ensure that Project funds are properly managed and flow smoothly, adequately, regularly and predictably to meet the objectives of the IDA grant;

• to enable the preparation of accurate and timely financial reports;

• to enable Project management to monitor the efficient implementation of the IDA grant; and

• to safeguard Project assets and resources.

6. The financial management arrangements for RSSP2 have been designed keeping in mind the features of a strong financial management system. These include:

• The Financial Management Unit should have an adequate number and mix of skilled and experienced staff.

• The internal control system should ensure the conduct of an orderly and efficient payment and procurement process, and proper recording and safeguarding of assets and resources.

• The integrated information system should support the Project’s requests for funding and meet its reporting obligations to fund providers including Government of Rwanda, IDA, other donors, and local communities.

• The system should be capable of providing financial data to measure performance when linked to the output of the project.

• An independent, qualified auditor should regularly review the Project’s financial statements and internal controls.

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7. The Risk Rating Summary identifies the key risks RSSP2 management may face in achieving the Project’s objectives and provides a basis for determining how management should address these risks. The results of the risk assessment from the Risk Rating Summary are shown in the table below.

Table A7.1. Financial Management Risk Rating Summary

Risk Risk

rating

Risk-mitigating measures Incorporated into the design of the

implementation arrangements

Condition of Negotiations,Board or Effectiveness

(Y/N?)

Inherent Risk

Country Level L

Entity Level L

Project Level H The project will hire two Provincial Accountants to support the increased activities.

N

Control Risk

Budgeting L

Accounting H

The project should obtain an integrated information system that will inter-phase all project modules; accommodate multiple languages and currencies. The project to hire more accounting personnel to support the envisaged activities.

N

Internal Control L

Funds Flow L

Financial Reporting L RSSP2 will need to have software programmed to produce reports directly.

N

Auditing M World Bank will provide technical support to RSSP2 in developing TORs and the selection of auditors.

N

Overall Risk Rating L

RSSP2 is a low risk project by virtue of the satisfactory performance of the Financial Management Unit under RSSP1. At least one on-site supervision will be conducted each year.

H – High S – Substantial M – Modest L – Low

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Financial Management Action Plan

8. The Financial Management Action Plan summarized in Table A7.2 (below) indicates the actions to be taken for the RSSP2 to strengthen its financial management system and the dates by which they are due to be completed.

Table A7.2 Financial Management Action Plan

Action Date due by Responsible

1. Hiring of two Provincial Accountants

Within one month of grant effectiveness

RSSP2

2. Terms of reference for external auditor agreed

Two months before the end of the fiscal year to be audited

RSSP2 and IDA

3. Improvement of MIS system One year after effectiveness RSSP2

Institutional and implementation arrangements

9. Staff of the PSCU, which will be responsible for the overall implementation of the project, are familiar with the World Bank financial management and disbursement guidelines and are currently implementing RSSP1. If additional training is deemed necessary, it will be arranged in consultation with the Financial Management Specialist in the Rwanda Country Office during the implementation of the RSSP2 activities

10. The PSCU will be responsible for coordinating Project-related financial management and procurement functions. It will be responsible for: (i) implementing Project-related financial management activities; (ii) implementing Project-related procurement activities; (iii) monitoring, reporting, and evaluating Project-related financial management and procurement activities; and (iv) managing contractual relationships with IDA.

Accounting Arrangements Books of accounts 11. PSCU will maintain adequate books of accounts, which shall include ledgers, journals, and various registers. The accounting system will be used to track, record, analyze, and summarize Project-related financial transactions and adequately capture those of the implementing agencies. Project accounts will be prepared on a modified cash basis in accordance with the Grant Agreement, the laws and regulations prevailing in Rwanda, and best accounting practice. The accounting system will allow for the proper recording of RSSP2 financial transactions, including the allocation of expenditures in accordance with their components, disbursement categories, and sources of funds.

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Staffing arrangements

12. Activities pertaining to financial management will be coordinated by the Financial Management Unit (FMU) of the PSCU. The FMU will include three staff housed in the PSCU and operating at the national level. Of the three FMU staff housed in the PSCU, one will be a suitably qualified and experienced Head of Financial Management, who will be responsible for approving payments to contracted service providers, suppliers of equipment and goods, and implementing agents and for submitting consolidated financial monitoring and audited financial statements to IDA. Two Provincial Accountants based in provincial project offices will work under the supervision of the Head of Financial Management to provide assistance in carrying out financial management activities at the provincial and district levels. The fiduciary oversight function of the PSCU will benefit from the services of an Internal Auditor. The Internal Auditor will review the financial monitoring reports and will carry out regular internal audit controls. These controls will include ex post verification of expenditure eligibility, as well as physical inspection of works and goods acquired during the implementation of the Project. The findings and recommendations of the Internal Auditor will be used by the PSCU to improve project implementation in areas related to financial management and procurement.

13. The FMU is already performing well. The capacity of the FMU was assessed during the appraisal mission. Key staff members that account for IDA funds have the minimum required qualification. Appropriate recommendations were made to further improve the performance of the FMU.

Information systems

14. The Government of Rwanda has initiated discussions with the goal of identifying MIS software for use with all Government-run projects, but no decision has been taken regarding which software will be adopted. The current MIS software being used by the Project, Success Software Management, was installed at the inception of RSSP1 and updated in 2006. While generally adequate, it has shown several limitations, such as the inability to interface different modules (Monitoring and Evaluation, Accounting, Human Capital Management, Procurement), the inability to handle multiple currencies, and the inability to support more than one language.

Financial reporting and monitoring

15. As they are under RSSP1, Interim Financial Reports (IFRs) will be prepared in a format that complies with World Bank guidelines. The IFRs will be submitted to the World Bank on a quarterly basis. They will be reviewed to ensure that they provide quality and timely information to Project management, implementing agencies, and various stakeholders monitoring the Project’s performance. The accounting policies and procedures adopted and notes to the financial statements will be disclosed in each IFR, which will include:

• A designated account activity statement. • A statement showing sources and uses of funds. • A description of uses of funds by Project activity.

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Audit arrangements

16. Annual financial statements of the Project will be audited by independent external auditors under terms of reference acceptable to IDA. Annual audit report including a management report will be submitted to IDA within six months following the end of each financial year. The auditors will provide a single opinion on the project financial statements, the designated accounts and statements of expenditures. They will be required to carry out a comprehensive review of the internal control procedures and provide a management report outlining any recommendations for their improvement. Terms of References will contain the audit scope to ensure the efficient use of funds for intended purpose and state whether the audit has been conducted in accordance with International Standards in Auditing. The hiring exercise will be conducted during implementation before the fiscal year ending to be audited.

Accounting and internal control

17. RSSP2 accounting systems will be used to track, record, analyze, and summarize the Project’s financial transactions. Appropriate controls over the preparation and approval of transactions will be put in place to ensure that all transactions are correctly made, recorded, and reported upon. The PSCU will ensure that proper books of account are maintained, a revised and updated chart of accounts is adopted, and appropriate accounting software is in place. The authorization and approval procedures will be sufficient to ensure that internal controls are systems are adequate.

18. The institutional arrangements to be adopted under RSSP2, which are modeled on those used under RSSP1, show a high level of internal control consciousness. Separation of duties is documented in the project’s organization chart. The Project Advisory Committee chaired by the Secretary General of MINAGRI will meet on a quarterly basis and extra-ordinary occasions to monitor financial management and procurement activities. Minutes of the quarterly meetings will be prepared giving recommendations to Project management. The committee members occasionally will make field visits to ground truth the information received in routine reports. Independent reviews by technical department will be carried out.

19. An internal auditor has been recruited under RSSP1 and reports directly to the National Project Coordinator and the Project Advisory Committee. The continued presence in RSSP2 of the Internal Auditor will provide management assurance on the adequacy and compliance with the established controls and procedures for Project implementation. The nature and extent of internal audit reviews will be documented via an internal audit plan and will be consistent with the risk associated with the Project activities. Clear timelines for the realization of the internal audit reviews will be documented in an internal audit plan.

Disbursement arrangements and methods

20. RSSP2 account signatories will be updated as necessary in the Accounting and Financial Management Procedures Manual. Authorized signatories will be designated in accordance with their positions. The current signatories include:

(i) For amounts in excess of FRW 5,000,000 (five million Rwanda francs), three signatures are required:

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• Secretary General, MINAGRI • National Project Coordinator, RSSP • Head of Financial Management, RSSP

(ii) For amounts below FRW 5,000,000 (five million Rwanda francs), two signatures are required:

• National Project Coordinator, RSSP • Head of Financial Management, RSSP

21. RSSP withdrawal applications submission procedures are also detailed in the Accounting and Financial Management Procedures Manual. The current authorized signatories for withdrawal applications to be submitted to the World Bank are as follows:

• Secretary General, MINAGRI • National Project Coordinator, RSSP

22. In the absence of one of the above-mentioned signatories, their signature is replaced by that of the Director General of CEPEX.

23. RSSP2 will continue to receive disbursements from IDA on the basis of incurred eligible expenditures (transaction-based disbursements). Upon Grant effectiveness, an initial advance (“Advance” method) will be disbursed from the proceeds of the IDA grant and will be deposited into a Project-operated Designated Account to expedite Project implementation. Actual expenditures will be reimbursed (“Reimbursement” method) through submission of Withdrawal Applications (at least monthly) supported by Statements of Expenditures (SOE). The Project will also continue to use the Direct Payment method, whereby IDA makes payments directly to a third party (e.g., a supplier, contractor, or consultant) at the Recipient’s request. Another acceptable method of withdrawing from the proceeds of the IDA grant is the Special Commitment method. Under this method, IDA may pay amounts to a third party for eligible expenditures under special commitment entered into, in writing, at the Recipient’s request and on terms and conditions agreed between IDA and the Recipient.

24. RSSP2 will maintain a Designated Account held in BNR and denominated in US dollars. The Designated Account ceiling is set at US$2,900,000, representing about four months of eligible project expenditures. In addition to the counterpart fund account denominated in local currency, the Project will also maintain four of the eleven existing provincial accounts; these accounts will henceforth be called provincial accounts. The provincial accounts, which will be restricted to a ceiling of FRW 2 million, will be used to finance eligible project expenditures in the provinces. Monthly bank reconciliations will be prepared by the accountant, reviewed by the Head of Financial Management, and approved by the Project Coordinator.

Flow of funds: IDA and counterpart funds

25. IDA will make an initial advance disbursement from the proceeds of the IDA grant by depositing funds into the RSSP2 Designated Account. The Government will deposit the counterpart funds into the Project account held at BNR in response to requests submitted by the Project. The payment of Project transactions, regardless of currency, will be done through the bank and converted at the day’s mean exchange rate.

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Uses of Statement of Expenditures

26. Disbursements for all expenditures should be made against full documentation, except for contracts valued at less than US$1,000,000 for works, US$500,000 for goods, US$200,000 for consulting firms and US$50,000 for individual consultants, as well as operating costs, which will be claimed on the basis of Statement of Expenditures (SOEs) without supporting documentation. Local government and community sub-projects, training, and operating costs will also be claimed on the basis of statement of expenditures (SOEs). All supporting documentation for SOEs will be retained at the PSCU, District, and community levels. They will be kept readily accessible for systematic review by the Financial Controllers on request. The supporting documentation will also subject to periodic review by IDA during supervision missions, as well as by the external auditors.

27. IDA will have the right to suspend disbursements should the Recipient fail to comply with reporting requirements specified in the Financing Agreement.

Allocation of Development Financing Proceeds

Table A7.3. Allocation of Development Financing Proceeds

Expenditure category Grant amount (US$m)

Financing percentage

1. Civil works 19.78 100 %

2. Goods 0.48 100 %

3. Consultant Services, Audits and Studies 6.15 100 %

4. Trainings and workshops 0.39 100 %

5. Grants for Sub-Projects 4.48 100 %

6. Operating Costs 3.14 100 %

7. Refund of the Project Preparation Fund (PPF) 0.58 Amount due

8. Unallocated

Total Financing Costs 35.0

Budgeting arrangements

28. RSSP2 will ensure that an all-inclusive system for proper planning for the implementation of its activities is in place to allow adequate budgeting arrangements. Currently under RSSP1, the FMU prepares weekly budget analysis and reports that are discussed every Friday during management meetings. Technical specialists are given an opportunity to explain any variances noted.

Conclusion of the Financial Management Assessment

29. The financial management arrangements reviewed through the Financial Management Assessment and described above satisfy the World Bank’s minimum

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requirements under OP/BP 10.02. RSSP will undertake to hire at least two Provincial Accountants within one month of Project effectiveness and to have the updated Accounting and Financial Management Procedures Manual duly approved as part of strengthening its financial arrangements to provide with reasonable assurance that the IDA funds will be used for the intended purposes.

Supervision plan

30. A supervision mission will be conducted once every year, commensurate with the low risk rating. The objective of the supervision missions will be to ensure that strong financial management systems are maintained for the IDA grant throughout the life of the Project. Reviews will be carried out regularly to ensure that expenditures incurred by RSSP2 remain eligible for IDA funding. The Implementation Status Report (ISR) will include a Financial Management Rating for the financial management component and will be arrived at by the Financial Management Specialist after an appropriate review.

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Annex 8: Procurement Arrangements

RWANDA: Rwanda Second Rural Sector Support Project A. General

Procurement environment

1. A Country Procurement Issues Paper (CPIP) was prepared for Rwanda in June 2004. The main recommendations made in the CPIP were incorporated in an action plan for procurement reform, which was discussed with and adopted by Government. Although Rwanda has followed pragmatic procurement practices under the National Tender Board (NTB), the legal, regulatory, and institutional frameworks need to be modernized to bring the national procurement system up to international standards as developed by OECD-DAC. Some actions have been undertaken to this end. For example, a new procurement code was adopted in April 2007. The legal text establishing the Rwanda Public Procurement Authority (RPPA) has been adopted and was published in March 2008. Templates for standard bidding documents were adopted and published on NTB website. However implementation of the procurement code is not yet complete. Some institutions created by the procurement code have not yet been established, and audit and appeals mechanisms still need to be implemented to ensure better control of the procurement system. Procurement guides and manuals still have to be developed and disseminated. However, since these reforms are still at an early stage, public procurement by implementing agencies is still subject to high risk.

Procurement guidelines

2. Procurement for the Project will be carried out in accordance with the World Bank publications Guidelines: Procurement under IBRD Loans and IDA Credits dated May 2004 (revised October 2006) and Guidelines: Selection and Employment of Consultants by World Bank Borrowers dated May 2004, revised October 2006, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the IDA grant, the Borrower and the World Bank will agree upon and record in the Procurement Plan the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.

3. Procurement of works: Works procured under the Project will include mainly works related to the rehabilitation and development of farmed marshland and hillside areas (e.g., construction of drainage and irrigation infrastructure, hillside terraces, and soil erosion control structures) and construction of small-scale rural infrastructure (e.g., grain drying floors and storage facilities, rural markets, access roads, and bridges). Procurement will be done using the World Bank's Standard Bidding Documents (SBD) and Standard Bid Evaluation Forms for all International Competitive Bidding (ICB). The procedures to be used for NCB and Shopping will be described in detail in the Project Implementation Manual (PIM). The PIM will be approved by the World Bank. Civil works estimated to cost US$500,000 equivalent per contract or more will be procured through ICB procedures. Civil works estimated to cost less than US$500,000 equivalent per contract will be procured through National Competitive Bidding (NCB)

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procedures. Minor works contracts estimated to cost less than US$50,000 equivalent per contract will be procured using Shopping. Direct contracting may be used when it can be justified that a competitive method is not advantageous and meets the requirements under Paragraph 3.6 of the Procurement Guidelines and after consultation with the World Bank. The prior review threshold for works contracts will be US$5,000,000 equivalent per contract. In addition, the first two (2) contracts for works estimated to cost less than US$5,000,000 equivalent as well as the first two (2) contracts for works estimated to cost less than US$50,000 for minor works will be subject to prior review. Pre-qualification of contractors will be used only for large contracts of more than US$10 million equivalent or in cases where special expertise is required due to the complexity of the packages.

4. Procurement of goods: Goods procured under this project will include furniture, equipment, vehicles, and computers to be used by the PSCU. Procurement will be done using the World Bank's SBD and Standard Bid Evaluation Forms for all ICB. The procedures to be used for NCB and Shopping will be described in detail in the Project Implementation Manual (PIM). Goods estimated to more than US$ 250,000 equivalent per contract will be procured through ICB procedures. Goods estimated to cost less than US$250,000 equivalent per contract will be procured through NCB procedures. Goods contracts estimated to cost less than US$50,000 equivalent per contract will be procured using the Shopping method. Direct contracting may be used when it can be justified that a competitive method is not advantageous and meets the requirements under Paragraph 3.6 of the Procurement Guidelines and after consultation with the World Bank. The prior review threshold for goods contracts will be US$500,000 equivalent per contract. In addition, the first two (2) contracts for goods estimated to cost less than US$500,000 equivalent as well as the first two (2) contracts for goods estimated to cost less than US$50,000 for minor goods and procured using the Shopping method will be subject to prior review.

5. Procurement of non-consulting services: Non-consulting services to be procured under the Project will include: venues for workshops and training; services of office machines and equipment; materials for workshops; services required for training events and project information campaigns. These services, which are likely not to exceed the equivalent of US$50,000 per contract, will be procured on the basis of at least three quotations.

6. Community-based procurement will be carried out at the local level by community-based organizations (CBOs) or at the District level by local authorities following procedures described in the PIM. All subprojects for which community-based procurement will be used will be cleared by the District Development Committees to ensure that they are in line with the District Development Plans. These subprojects will involve mainly construction of small-scale irrigation works, construction and rehabilitation of rural marketing facilities, and construction of all other small-scale rural infrastructure that may be selected by participating communities. Contracts will be awarded using simplified procurement procedures described in the PIM. These procurement procedures are based on best practice guidelines described in the World Bank publication Guidelines for Simplified Procurement and Disbursement for Community-Based Investments and taking into account lessons learned under RSSP1. Items costing US$35,000 equivalent or less procured for implementation of subprojects identified and appraised by CBOs will be procured by participating CBOs, with assistance from the Provincial Procurement Assistant, in accordance with the procedures described above. Items costing more than US$35,000 equivalent but less than US$70,000 equivalent procured for implementation of

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subprojects identified and appraised by CBOs will be procured by the Districts, with the assistance from the Provincial Procurement Assistant, in accordance with the procedures described above. Items costing US$70,000 and above procured for implementation of subprojects identified and appraised by CBOs will be procured by the PSCU.

7. Selection of consultants: The main consultancy services to be financed by the Project include: (i) supervision of civil works; (ii) studies on rehabilitation of marshlands; (iii) identification, preparation, and implementation of the subprojects, (iv) training for capacity building; (v) support of project implementation; (vi) financial management and procurement support, and (vii) various studies aimed to reinforce the capacity of the implementing agencies to fulfill their mandate and responsibility.

8. Consultancies estimated to cost US$200,000 equivalent or more will be advertised in the dgMarket and in at least one national newspaper having wide distribution.

9. The appropriate methods for consultant selection will be determined for each assignment or package of assignments in the course of preparing the procurement plan on the basis of the nature of the assignment and the provisions of the Consultant Guidelines.

10. Consultant services estimated to cost US$100,000 or more will be procured through the Quality- and Cost-Based Selection (QCBS) method.

11. Consultant services estimated to cost less than US$100,000 will be procured through one of several methods, depending on the nature of the assignment:

(i) Consulting firms or training institutions engaged to organize workshops and other activities geared towards institutional and capacity building will be selected using Consultants' Qualifications (CQS) procedures.

(ii) Consulting firms for carrying out standard or routine nature assignments such as audits will be selected through Least Cost (LCS) procedures.

(iii) Consulting firms for services that meet the requirements under Paragraph 3.2 of the Consultant Guidelines, including selection of institutions of higher learning, will be done on the basis of quality; therefore, the Quality Based Selection (QBS) method will be used.

(iv) The single source procurement method may be used where it can be justified and after consultation with the World Bank.

12. Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants, in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. Individual consultants would be selected on the basis of their qualifications, in accordance with Section V of the Consultant Guidelines

13. Consultancy services estimated to cost above US$200,000 equivalent per contract for firms and above US$50,000 equivalent per contract for individual consultants will be subject to prior review by the World Bank. The first two contracts for consultancy services (firms)

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estimated to cost less than the equivalent of US$200,000 will be subject to prior review. Single source selection of consultants will be subject to prior review by the World Bank.

14. Operating costs for the Project will consist of incremental expenditures for vehicle maintenance, fuel, equipment, office supplies, utility charges, consumables, communication charges, per diem and travel costs for staff when traveling on duty or while carrying out activities related to the Project. These costs will be financed by the project and procured in accordance with the PIM.

15. Other: The Project will also finance the cost of workshops, study tours, and various consultations with stakeholders regarding the Project. The training, workshops, conference attendance and study tours will be carried out on the basis of approved annual programs that will identify the general framework of training and similar activities for the year, including the nature of training/study tours/workshops, the number of participants, and the estimated cost.

B. Assessment of the agency's capacity to implement procurement

16. Procurement activities will be carried out by the PSCU. A procurement team is already in place within the PSCU. The PSCU procurement team disposes of both operations- and procurement-experienced staff that are already familiar with World Bank and national procurement procedures.

17. While there is considerable procurement capacity within the PSCU, elsewhere the situation is different. For example, at the District level procurement capacity is still generally very limited. As part of its decentralization strategy, Government has signaled its intention to recruit procurement staff for each procuring entity, but most Districts do not yet have experienced procurement staff. Under recent territorial reforms, some districts have brought in university graduates, but most are still unfamiliar with national and World Bank procurement procedures.

18. Procurement capacity is also quite variable within the public agencies and institutions that will play a role in Project implementation (e.g., RADA, ISAR, ISAE). Procurement staff in these agencies and institutions are generally very knowledgeable when it comes to national procurement processes, but they often are not familiar with World Bank procurement guidelines. The PSCU will sponsor initial orientation sessions as well as periodic procurement workshops to provide procurement staff of these agencies with the training and tools needed to conduct transparent procurement processes.

19. At the local level, procurement capacity is generally weak. Few of the community based organizations that will play a role in project implementation are familiar with national or World Bank procurement processes and procedures. The PSCU will sponsor initial orientation sessions as well as periodic procurement workshops to provide these organizations with the training and tools needed to conduct transparent procurement processes.

20. Based on the assessment carried out at appraisal, the overall Project risk for procurement is rated average. This rating is based on the following considerations: (i) under RSSP1, the procurement function was satisfactory; (ii) RSSP2 will inherit a team of operations- and procurement-experienced staff who are already familiar with World Bank and

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national procurement procedures; (iii) a procurement manual and bidding documents adapted to local conditions were developed under RSSP1 and have been disseminated; and (iv) national procurement regulations continue to improve, as evidenced by the fact that a new procurement code was adopted in April 2007, as a result of which standard bidding documents and other procurement-related documents were adopted and advertised on the National Tender Board website.

21. The assessment revealed that considerable procurement capacity exists at PSCU level, but the same capacity is not present at provincial, District, and local levels. Trained procurement staff are still lacking in many public agencies and community-based organizations that will be involved in the implementation of Project-supported activities. In order to reinforce procurement capacity at the provincial, District, and local levels, PSCU staff will have to work closely with the relevant counterparts. Capacity will be developed through a “learning by doing” approach, complemented by more formal learning activities such as procurement workshops and training courses. In addition, translation of existing simplified procurement documents can contribute to the strengthening of procurement processes at sub-national levels. These documents are currently available in English, but they need to be translated into French and Kinyarwanda.

22. To ensure the integrity of the procurement process under RSSP2, the following measures will be taken (see Table A8.1).

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Table A8.1. Schedule of actions to be carried out

Action to be undertaken Responsible body Time-frame

Preparing and submitting to IDA a procurement plan for the first 18 months of the Project

PSCU Prior to negotiations

Setting up a procurement record-keeping and filing system

PSCU During the first six months

of project effectiveness

Preparing and submitting to IDA the draft Project Implementation Manual with a section on procurement

PSCU Prior to effectiveness

Recruitment of four Provincial Procurement Specialists to work at the provincial level and provide support to the district offices

PSCU As need arises

Procurement training session program focused on procurement planning and contract management issues

PSCU Project launching workshop

Participation of PSCU procurement staff in World Bank workshops and/or training events

PSCU

Prior to effectiveness and as needed during the life of the Project, in accordance with an

approved annual training program

Translation into Kinyarwanda of the simplified procurement documents to be used at the district level

PSCU During the first year

of project effectiveness

23. The Government has recently taken actions to improve national procurement policies and procedures. The new procurement code adopted in April 2007 includes measures designed to improve the legal and institutional framework governing procurement activities. As a result of the Government’s commitment to reform, which among other things has resulted in more consistent application of World Bank procurement guidelines in World Bank-financed operations, many Government agencies including the PSCU are becoming increasingly familiar with the basic principles of open and fair procurement. This familiarity, combined with expected broad dissemination of information on new procurement procedures to all purchasing agencies, is expected to mitigate some of the remaining risks.

Procurement implementation arrangements

24. The PSCU will be responsible for all procurement activities, with the exception of eligible sub-project contracts for amounts below US$70,000 equivalent, which may be procured by beneficiary groups (all sub-components). With regard to procurement, the main task of PSCU will be the implementation of the rehabilitation and development of farmed marshland and hillside areas. PSCU will prepare and update the procurement plan, prepare

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bidding documents, participate in the bid evaluations, and monitor and manage the execution of contracts. PSCU will work closely with the various departments of MINAGRI and its associated institutions, as well as other representatives of the Ministries involved in the implementation of the Project.

25. Provincial procurement staff will be recruited by the Project and based in provincial project offices to oversee and monitor procurement activities involving Districts and community-based organizations. The provincial procurement staff will provide technical support and hands-on training to Government counterparts operating at the District level, with the goal of building capacity and promoting increased transfer of knowledge. The provincial procurement staff will play a similar role at the local level in working with community-based organizations. They will make sure that procurement done by these organizations is carried out in accordance with current procurement standards. They will make available and explain procurement standards documents and organize periodic workshops and training events as needed.

26. The NTB will be responsible for reviewing bidding documents, bid opening, evaluation, recommendation, and awarding of contracts above the thresholds required by the national procurement regulations. As the action plan launched following the implementation of the new 2007 procurement code takes effect, the regulatory role of NTB can be expected to strengthen further.

C. Procurement plan

27. The RSSP developed at appraisal a procurement plan for project implementation that provides the basis for the procurement methods. This plan will be updated, finalized, and submitted to the World Bank for approval before IDA grant effectiveness. The agreed plan will be available at the PSCU national project office and through the World Bank external website. The procurement plan will be updated in agreement with the Project team annually, or as required, to reflect the actual Project implementation needs and improvements in institutional capacity.

D. Publication of results and debriefing.

28. On-line publication of contract awards (for example, through dgMarket, UN Development Business, and/or Client Connection) will be required for all ICB, NCB, Direct Contracting, and Selection of Consultants for contracts exceeding US$200,000 or equivalent. With regard to ICB, and high-value consulting contracts, the Borrower will be required to assure publication of contract awards as soon as the World Bank has issued its “no objection” notice to the recommended award. With regard to Direct Contracting and NCB, publication of contract awards may be done in aggregate form on a quarterly basis. All consultants competing for the assignment involving the submission of separate technical and financial proposals, irrespective of the estimated contract value, should be informed of the result of the technical evaluation (number of points that each firm received) before the opening of the financial proposals. The PSCU will be required to offer debriefings to unsuccessful bidders and consultants, should such a debriefing be requested.

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E. Fraud and corruption

29. The procuring entity as well as bidders, suppliers, and contractors shall observe the highest standard of ethics during the procurement and execution of contracts financed under the Project, in accordance with paragraphs 1.14 and 1.15 of the Procurement Guidelines and paragraphs 1.22 and 1.23 o f the Consultants' Guidelines. F. Frequency of procurement supervision

30. In addition to the prior review supervision to be carried out from World Bank offices, the capacity assessment of RSSP2 has recommended that supervision missions visit the field once every six months to carry post-review of procurement actions.

G. Details of the procurement arrangements involving international competition

Second Rural Sector Support Project

Procurement Plan I. General 1. Project information Country: Rwanda Project Name: Second Rural Sector Support Project Project Implementing Agencies: MINAGRI-PSCU World Bank’s approval date for the procurement plan: 25 April 2008 Date of General Procurement Notice: (after Board approval) Period covered by this procurement plan: From July 2008 to December 2009 II. Goods and Works and Non-consulting Services 1. Prior Review Threshold: Procurement decisions subject to Prior Review

Procurement method

(category) Contract amount (US$ equivalent) Subject to Prior Review

1. ICB (Works) >= 5,000,000 All contracts 2. NCB or ICB (Works) < 5,000,000 First two contracts only 3. ICB (Goods) >= 500,000 All contracts 4. NCB or ICB (Goods) < 500,000 First two contracts only 5. Shopping (Goods and Works) Any amount First two contracts only 6. Direct Contracting Any amount All contracts

2. Prequalification: Bidders for civil works shall be prequalified in accordance with the provisions of

paragraphs 2.9 and 2.10 of the Procurement Guidelines.

3. Community-based Procurement: For community-based procurement activities to be supported through Local Development Fund grants, as per paragraph. 3.17 of the Guidelines: Community participation in procurement. Refer to Project Implementation Manual - Volume 2.

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4. Any Other Special Procurement Arrangements: N/A

Procurement Packages with Methods and Time Schedule

Ref. No. Contract description Estimated

Cost (US$) Procurement

Method P-Q Domestic Preference

World Bank

Review

Expected Bid

Opening

1. Works – Marshlands Rehabilitation and Development, Improving Productivity in Hillsides Production Systems

1. Rwagitima/Ntende works 2,233,800 ICB NO YES PRIOR 09/08

2. Rugeramigozi dam 685,000 ICB NO YES PRIOR 09/08

3. Gisaya works 234,500 NCB NO NO POST 10/08

4. Kinnyogo II works 651,000 ICB NO YES POST 10/08

5. Sagatare-Nyamazi-Rwabutazi works 552,200 ICB NO YES POST 03/09

6. Upper Kibaya works 851,300 ICB NO YES POST 03/09

7. Nyarubogo and Kinyegenyege works 2,100,000 ICB NO YES POST 11/09

8. Cyunuzi dam works 679,600 ICB NO YES POST 11/09

2. Goods

1. Support to Districts - Equipment 25,000 NCB NO NO PRIOR 08/08

2. PSCU – Server 30,000 NCB NO NO PRIOR 08/08

3. PSCU – Big photocopier machine 18,000 NCB NO NO POST 08/08

4. PSCU – Generator 36,000 NCB NO NO POST 08/08

5. GIS equipment for training engineers 12.000 NS NO NO PRIOR 09/08

6. Vehicles Pick-up 4x4 185,000 NCB NO NO POST 11/08

7. Support to Districts – Motorcycles 50,000 NCB NO NO POST 11/08

8. Professional cameras 10,000 NS NO NO PRIOR 08/09

Note. ICB: International Competitive Bidding, NCB: National Competitive Bidding, NS: National Shopping III. Selection of Consultants 1. Prior Review Threshold: Selection decisions subject to Prior Review by the World Bank, as stated

in Appendix 1 to the Guidelines Selection and Employment of Consultants:

Selection Method Contract amount (US$ equivalent) Subject to Prior Review

1. Quality and Cost-Based / Quality Based / Fixed Budget / Least Cost / Consultant’s Qualifications (firms)

>200,000 All contracts

2. Quality and Cost-Based / Quality Based / Fixed Budget / Least Cost / Consultant’s Qualifications (firms)

<200,000 First two contracts only

3. Single Source (SS) / Firms / Individual All All contracts

4. Individual Consultants (IC) >50,000 All contracts

5. Training (Annual Plan) ALL All contracts

All TORs regardless of the value of the contract are subject to IDA prior review.

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2. Short list comprising entirely of national consultants: Short list of consultants for services,

estimated to cost less than US$200,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.

3. Any Other Special Selection Arrangements: N/A

Consultancy Assignments with Selection Methods and Time Schedule

No. Description of Assignment Estimated

Cost (US$)

Selection Method

Review by the World

Bank

Expected Proposal

Submission

1. Works supervision in Sagatare/Nyamazi/Rwabutazi

55,220 CQS PRIOR 09/08

2. Works supervision in Rugeramigozi 68,500 CQS PRIOR 09/08

3. Works supervision in Rwagitima/Ntende 187,800 QCBS POST 10/08

4. Works supervision in Cyunuzi 15,480 CQS POST 10/08

5. Works supervision in Upper Kibaya 44,400 CQS POST 03/09

6. Works supervision in Kynnyogo II 25,820 CQS POST 03/09

6. Technical assistance in rural engineering 60,000 IC PRIOR 04/09

8. Financial audits 100,000 LCS POST 04/09

9. Works supervision in Gisaya 6,830 CQS POST 11/09

10. Works supervision in Nyarubogo and Kinyegenyege

210,000 QCBS PRIOR 11/09

Note. QCBS: Quality and Cost Based Selection; CQS: Selection Based on Consultants Qualification; LCS: Least Cost selection; IC: Individual Consultant

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Annex 9: Economic and Financial Analysis

RWANDA: Rwanda Second Rural Sector Support Project A. Conceptual framework for the economic and financial analysis 1. Activities financed through RSSP2 are expected to generate four main benefit streams. Some of these lend themselves more readily to quantification than others. For purposes of the economic and financial analysis, benefits were calculated for the first two benefit streams and for a portion of the third:

(i) Increased value of production in irrigated marshlands developed by RSSP2

(ii) Increased value of production on hillsides developed by RSSP2

(iii) Returns to investment in small rural infrastructure.12

Benefits were not calculated for one additional benefit stream:

(iv) Capacity building for farmers organizations and cooperatives

The activities included in the economic and financial analysis represent about 87 percent of the total Project investment (US US$35 million). The 87 percent figure includes a prorated portion of the cost of Component 3 (Project Coordination and Support).

2. Economic and financial analysis was carried out at the micro level and then aggregated up to the Project level to derive overall measures of Project worth. For the first two benefit streams, profitability measures were calculated at the level of individual farms. Representative farm models were developed drawing on the experience of RSSP1. Price data for the period November 2007 to January 2008 were used for the baseline analysis. During this period, there were no major policy distortions affecting the prices of inputs or outputs, so financial prices and economic prices for tradable goods were essentially identical. Trade barriers with major trading partners (Uganda, Kenya, Burundi, and Tanzania) are negligible following the accession of Rwanda to the East Africa Community customs union, and exchange rate distortions are minimal. With regard to factors of production, the shadow price of unpaid family labor was assigned a value of RWF 300 per day, which is 40 percent below the cost of unskilled hired labor used in agricultural production. Use of a shadow price was considered appropriate in view of the limited alternative employment opportunities for family labor. For the third benefit stream, profitability measures were calculated at the level of individual drying floors and storage facilities. Investment costs and technical parameters used for the analysis (quantities of grain dried and stored, yield losses avoided, price effects) were based on the experience of RSSP1.

12 Benefits were calculated only for grain drying floors and storage facilities. The Project will also support

investments in milk collecting centers, rural markets, and rural access roads, but the nature and scale of these investments will be demand-driven, so the benefit streams cannot be estimated priori. The level investment in these activities will be small and will not exceed 5 percent of the total investment.

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B. Increased value of production in marshlands developed by RSSP2

3. Project-supported investments in marshlands irrigation schemes will result in increased and more stable production of higher value crops, especially rice. RSSP2 will support rehabilitation or development of gravity irrigation schemes on at least 3,300 ha of marshland, as well as training of farmers who work in the marshlands.13 In the absence of irrigation, the major crop grown in marshlands is sweet potato, which is cultivated using traditional methods and harvested once per year. Project-financed investments will provide farmers with reliable access to irrigation, allowing them to shift to cultivation of two crops per year of higher-value crops, especially rice, which will be grown using improved production methods. Costs to be supported by the Project include marshlands rehabilitation or development costs, as well as the cost of training LFs, who will in turn train other farmers. Under RSSP2, 825 ha of marshlands will be developed for irrigation annually, at an average capital investment cost of US$6,000 (RWF 3.27 million) per ha. The estimated annual operation and maintenance (O&M) cost for marshlands irrigation systems is US$50 (RWF 27,250) per ha.

4. Project-supported investments in marshlands irrigation schemes will generate substantial financial and economic benefits. Over a 20-year time horizon (corresponding to the expected useful life of the irrigation investments), private benefits from marshlands irrigation investments are expected to total approximately RWF 4.54 billion in NPV (assuming a 12 percent discount rate). Including in the analysis capital investment costs that will be supported by the Government through RSSP2, economic benefits are projected at RWF 2.99 billion in NPV. The economic rate of return (ERR) to the Project investments is estimated at 18.4 percent.

5. Project-supported investments in marshlands irrigation schemes will also contribute to improved food security at the household and national levels by reducing production

variability. In the absence of irrigation, many marshlands in Rwanda are used for production of rainfed crops, especially sweet potato and maize. Because rainfed production is directly affected by climatic variability, yields of rainfed crops grown in Rwanda fluctuate considerably from year to year. Many experts believe that the extent of this variability is likely to increase in future with global warning. Following the introduction of Project-developed irrigation schemes, yields of crops

produced in irrigated marshlands will not only increase but also stabilize (Figure 1). Stabilization of crop yields can already be observed in irrigated marshland and is confirmed by the smaller coefficient of variation around trend of rice yields (4.8 percent) relative to the coefficient of variation around trend of sweet potato (6.3 percent) and maize (8.4 percent)

13 This is about 20 percent of the developed marshland area (16,500 ha) in Rwanda.

Index of yields of rain-fed crops (maize and sweet potato) vs. irrigated rice, Rwanda, 2000-2005

0.80

0.90

1.00

1.10

1.20

1.30

1.40

2000 2001 2002 2003 2004 2005

2000

=1

Source: FAOSTAT (2008).

Rice: CV = 4.8%

Maize: CV = 8.4%

Sweet Potato: CV = 6.3%

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yields.14 By mitigating the impacts of climatic variability, the irrigation systems developed by RSSP2 thus are expected to bring about more stable yields. The value of this benefit is difficult to quantify, so it was not included in the economic and financial analysis.

C. Increased value of production on hillsides developed by RSSP2

6. Project-supported investments on hillsides adjacent to irrigated marshlands will result in increased and more stable production of important food crops, especially maize, potatoes, and wheat. RSSP2 will finance investments to improve the productivity of farming systems on 9,900 ha of hillsides. Project-supported activities will include promotion of cost-effective soil and water conservation technologies and promotion of sustainable land management (SLM) practices. By increasing agricultural productivity on hillsides, RSSP2 aims to provide incentives to farmers to invest in SLM practices and reduce land degradation. Critical hillsides ecosystems deemed unsuitable for intensive agriculture will be protected, rather than developed for productive agriculture. Under RSSP2, 2,475 ha of hillsides will be developed annually, at an average capital investment cost of US$500 (RWF 0.27 million) per ha. Crops grown on hillsides include maize, potatoes, wheat, and Napier grass.

7. Project-supported investments will lead to increased productivity in hillsides cropping systems, not only by raising yields but also by averting yield losses that would have occurred in the absence of the Project. SLM practices promoted by RSSP2, including construction of soil and water conservation structures, planting of cover crops, and use of integrated soil fertility management practices, will lead to increased yields of crops grown on hillsides, including maize, potatoes, and wheat. The yield increases will be achieved gradually as

soil moisture content and nutrient levels improve over time following the adoption of improved technologies and management practices. Project-supported investments will also prevent yield losses that would have occurred as the result of continued cropping on exposed hillsides using current unsustainable management practices. Estimating the size of averted yield losses requires detailed information about rates of soil loss and the associated impacts on crop yields. A runoff plot

experiment conducted by ISAE in Busogo and Musanze districts of Rwanda during October-December 2004, which involved different crops (wheat, maize, soybean, peas, and potato) planted on a 12 percent slope, revealed soil losses ranging from 2.2 to 13.7 tons per hectare.15 Soil losses in farmers’ fields are often much higher, because the rate of soil loss depends critically on the slope. Many farmers’ fields are located on slopes greater than 55 percent, and 14 The Cuddy-LaValle index was used to estimate the variation of yields around trend. CLVI = CV (1-R2)0.5, where

CV is the unadjusted coefficient of variation and R2 is the coefficient of determination for the log-linear time trend regression over the same period. Cuddy, J. and P. A. Della Valle, 1978. Measuring the Instability of Time Series Data. Oxford Bulletin of Economics and Statistics 40(1): 79-84.

15 Esdras, N and Francois, U, 2005, Memoir on the “Effect of Common crops on Soil and water Losses at 12% Slope in Ruhengeri Region of Rwanda” - A case Study of ISAE Farm.

Erosion risk by land category, Rwanda

Low(6 - 13%)

Average(13 - 25%)

Very High(>55%)

High(25-55%)

Very Low(<6%)

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these experience annual losses as high as 50 tons of soil per hectare.16 These experimental results from Rwanda are consistent with findings from similar trials conducted in neighboring countries. One study from Uganda found that the median rate of soil erosion in the Southwestern Highlands, which are very similar to Rwandan hillsides, has been 20 tons of soil lost per ha per year, or about 15.4 cm per year.17 Studies carried out to quantify the impact of soil erosion on maize grain yield on Kenyan hillsides have estimated yield losses ranging from 1.3 to 5.2 percent per cm of soil lost. In a 100-year simulation involving two management scenarios (with and without the use of fertilizer and crop residues), predicted annual declines in maize yields were estimated as 2.5 percent and 3.8 percent. The yield loss in the first year is 5.5 tons per ha, but the rate of decline decreases over time as yields fall.18 Based on these studies, the economic and financial analysis very conservatively assumed that annual yield losses incurred on hillsides in Rwanda under the “without project” scenario would be 1.0 percent.

8. Project-supported investments to support adoption of SLM technologies on hillsides will additionally produce significant off-site environmental benefits, including greenhouse gas (GHG) mitigation. The links between land degradation and GHG emissions are numerous and complex, but studies from several countries suggest that SLM measures such as those to be supported under RSSP2 contribute to GHG mitigation by at least 0.5 tons per ha per year.19 Various approaches were considered for valuing this benefit. In Biocarbon Fund projects, activities that result in increased carbon sequestration are typically compensated at a level of US$4-5 per ton. This rate of compensation is equivalent to a financial price. Under RSSP2, GHG mitigation activities will not be compensated, so the benefits from reduced carbon emissions will accrue to global society. For this reason, an economic or social price was used for the analysis. The social price of carbon emissions is conventionally calculated as the pollution tax required to keep GHG emissions at the socially optimal level. Expressed in terms of global warming, the optimal level of GHG emissions is the level at which the incremental cost of GHG mitigation is equal to the value of averted damage due to climate change attributable to GHG. While the literature on carbon financing includes many different estimates of the social cost of GHG emissions, most recent estimates fall within the range of US$ 17-25 per ton.20 Using the approximate midpoint of this range (US$ 20 per ton) as the social price, and assuming that 0.5 tons per ha of GHG emissions will be averted in Project-developed hillside areas in which SLM practices are successfully adopted, the total economic value of GHG emissions that will be averted as a result of Project-supported investments comes to RWF 40 million per year. Over the 20-year period of analysis, the economic NPV of reduced GHG emissions is estimated at RWF 804 million.

16 S. Pande and M. Innocent (2008). Hillside Development Strategy under the Second Rural Sector Support

Program (RSSP2). Kigali: MINAGRI. For a comprehensive discussion of the link between land degradation and yield decreases in Rwanda, see D. Clay (1996). Fighting an Uphill Battle: Population Pressure and Declining Land Productivity in Rwanda. MSU International Development Working Paper 58. East Lansing: MSU.

17 Based on a conversion factor of 130 tons in one cm of soil per hectare. 18 Nkonya E., P. Gicheru, J. Woelcke, B. Okoba, D. Kilambya and L. Gachimbi. (2007). Economic and Financial

Analysis of the Agricultural Productivity and Sustainable Land Management Project, Kenya. 19 Kenya: Agricultural Productivity and Sustainable Land Management Project. Project Appraisal Document.

Washington, DC: World Bank. October 17, 2007. 20 Frankhauser, S. (1995). Valuing Climate Change: The Economics of the Greenhouse. London: Earthscan.

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9. Project-supported investments on hillsides adjacent to irrigated marshlands will generate significant economic and environmental benefits. Over a 20-year time horizon, these investments are projected to generate private benefits totaling approximately RWF 8.5 billion in NPV. Including in the analysis the off-site environmental benefits resulting from reduced GHG emissions and deducting the capital investment costs that will be supported by the government through RSSP2, Project-supported investments are projected to generate social benefits at approximately RWF 6.1 billion in NPV and 25 percent in ERR.

10. The estimated financial and economic benefits understate the total benefits of the Project. They do not include benefits generated by Project-supported activities that will be realized outside the marshlands and hillsides rehabilitated or developed by RSSP2. Based on the experience under RSSP1, many of the LFs trained under RSSP2 can be expected to transfer their knowledge to others in their communities who do not work in Project-supported irrigated marshlands and hillsides. The Project therefore can be expected to contribute to increased production of commodities in marshlands and hillsides not developed by RSSP2 but where farmers have adopted improved management practices as a result of the training they received from Project-supported LFs.

D. Returns to investments in small rural infrastructure

11. RSSP2 will finance investments in small-scale rural infrastructure used by producer organizations and cooperatives, including commodity drying floors and storage facilities. The third benefit stream generated by the Project will consist of the value addition generated through these infrastructure investments, which will vary depending on the type of investment.

12. Use of Project-financed drying floors will ensure faster, more complete, and more hygienic drying of crops, reducing storage losses and improving the quality of products so that they command higher prices in the market. The Project will support the construction of 12 drying floors per year. The capital investment cost is expected to average US$ 11,320 (RWF 6.2 million) per drying floor. Based on the experience under RSSP1, drying is expected to take place for two months each during the two main cropping seasons, for a total of four months per year. Each drying floor will be used to dry 125 tons of rice per month, which will avoid a 15 percent storage loss and a 15 percent price discount. Gross benefits for grain drying were calculated as [quantity of grain dried (t) * storage losses foregone due to improved drying (%) * output price (RWF / t)] + [quantity (t) * price premium due to improved drying (%) * output price (RWF / t)].

13. Use of Project-supported improved grain storage facilities will allow farmers to safely store their grain, reducing storage losses and allowing crops to be sold at higher prices compared to those prevailing immediately following the harvest. The Project will support the construction of 12 grain storage facilities per year. The capital investment cost is expected to average US$ 13,200 (RWF 7.2 million) per grain storage facility. Based on the experience under RSSP1, grain storage is expected to take place for three months following each of the two main cropping seasons, for a total of six months per year. At least 250 tons of grain will be stored every month, resulting in the avoidance of 15 percent losses from storage in unimproved facilities, as well as the realization of a 20 percent price premium due to selling at a more favorable time. Gross benefits for grain storage facilities were calculated as [quantity of

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grain stored (t) * storage losses foregone due to use of improved storage facilities (%) * output price (RWF / t)] + [quantity of grain stored (t) * price premium due to later sale (%) * output price (RWF / t)].

14. Investments in grain drying floors and storage facilities are extremely attractive, both financially and economically. Over a 20 year time horizon, Project-supported investments in grain drying floors and storage facilities are expected to generate private benefits valued at RWF 1.2 billion in NPV. Economic benefits are projected to total RWF 792 million in NPV and to generate an ERR of 42.2 percent.

E. Benefit stream not included in the economic and financial analysis

15. The value of benefits from training and capacity building activities directed at farmer organizations and cooperatives could not be estimated at appraisal and therefore is not included in the economic and financial analysis. This benefit stream will consist of the net revenues generated from the increased economic activity undertaken by these farmer organizations and cooperatives, mainly increased primary production of crops and livestock and increased post-harvest commercial activity (processing, marketing).

F. Total economic and financial benefits of the Project

16. Project-supported investments will generate substantial financial benefits for rural households in areas served by the Project, as well as substantial economic benefits for Rwandan society as a whole. Overall, the financial NPV is projected to reach RWF 14.3 billion (at 12 percent of discount rate). Total economic benefits are expected to come to RWF 8.9 billion in NPV and to generate an ERR of 20.3 percent. The economic and financial analysis thus shows that if Project implementation is effective and efficient, Project-supported investments will bring substantial financial and economic benefits to farming communities in the Project area and to Rwandan society in general.

17. The largest share of Project benefits is expected to come from investments in sustainable management of hillsides. These will account for 57 percent of the projected total Project NPV (Table 1). The second largest share of Project benefits is expected to come from the investments in marshland irrigation development (28 percent). Off-site environmental benefits from carbon emission reduction are expected to be relatively modest, at 7.5 percent of total project benefits (these were considered to be part of the hillsides benefits).

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Table A9.1 Structure of net economic benefits of the Project components

Benefits and Costs NPV (million RWF)

Share in total NPV (%)

ERR (%)

1. Net benefit from marshland investments 2,985 27.8 18.4

2. Net benefit from hillside investments

Value of increased crop production 6,143 57.3 25.4

Environmental benefit from reduced carbon emission 804 7.4

3. Net benefit from investment in rural infrastructure 792 7.5 42.2

4. Project implementation costs* 1,812

Total Project 8,912 20.3

Note: * Project implementation costs were included proportional to the share of the Project-supported investments that will generate each benefit stream. In total 74 percent of Project implementation costs were included.

G. Sensitivity analysis of economic benefits

18. Sensitivity analysis shows that Project-generated benefits are sensitive to changes in rice prices and rice yields, and also to changes in the cost of marshland irrigation schemes. The switching values of key variables affecting the economic analysis are shown in Table 9.2, listed in declining order of importance. Ceteris paribus, a 9 percent decrease in the price of rice or an 8 percent decline in average rice yields will turn the NPV of the marshlands development sub-component negative (Benefit Stream 1). Long-term declines in rice prices are considered unlikely, given projected strong growth in demand for food staples, as well as rising global commodity prices. Failure to achieve the projected average rice yield of 5 t/ha is also considered unlikely, given that this level has been achieved in virtually all of the marshlands developed under RSSP1. The NPV of the marshlands development sub-component is also sensitive to investment cost of marshlands irrigation schemes. If the average unit cost of investments in marshland irrigation schemes were to increase by 37 percent (from the projected US$ 6,000 per ha to US$ 8,200 per ha), these schemes would become unprofitable. Irrigation schemes whose unit investment costs exceed US$ 8,200 per ha therefore should be avoided.

19. Sensitivity analysis shows also that Project-generated benefits are relatively insensitive to changes in the prices of key inputs, or to the cost of hillside investments. Because fertilizer use is currently very low in Rwanda, fertilizer prices would have to increase by a very large 86 percent to nullify the expected benefits of the hillsides development component (Benefit Stream 2). The unit investment costs for hillside development would need to triple to nullify the benefits of the hillsides development subcomponent, which is considered very unlikely considering the types of mainly labor-intensive interventions that are proposed.

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Table A9.2 Switching values for economic benefits

Variable Switching Value (%)

Decrease in rice price (Benefit Stream 1) -8.7

Decrease in rice yield (Benefit stream 1) -8.0

Increase in irrigation investment costs (Benefit Stream 1) -32.0

Decrease in maize price (Benefit Stream 2) 41.7

Increase in fertilizer prices (NPK and urea) (Benefit Stream 2) 85.7

Increase in hillside investment costs (Benefit Stream 2) 300.0

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Annex 10: Safeguard Policy Issues

RWANDA: Rwanda Second Rural Sector Support Project 1. RSSP2-supported activities that generate safeguards concerns include mainly rehabilitation and development of irrigated marshlands, and associated activities to improve the productivity of surrounding hillsides. The concerns center on: (i) the need to conserve, as much as possible, the ecological services of the target catchments; (ii) the need to ensure that RSSP2 investments in small-scale rural infrastructure will not create undesirable adverse environmental impacts; and (iii) the need to ensure that any required land acquisition and restriction of access to resources is accompanied by adequate compensation of negatively affected resource users.

2. RSSP2 is an EA Category “B” project and triggers the following safeguard policies:

Safeguard Policies Triggered by the Project Yes No

Environmental Assessment (OP/BP 4.01) [X] [ ]

Natural Habitats (OP/BP 4.04) [X] [ ]

Pest Management (OP 4.09) [X] [ ]

Physical Cultural Resources (OP 4.11) [ ] [X]

Involuntary Resettlement (OP/BP 4.12) [X] [ ]

Indigenous Peoples (OP/BP 4.10) [ ] [X]

Forests (OP/BP 4.36) [ ] [X]

Safety of Dams (OP/BP 4.37) [ ] [X]

Projects in Disputed Areas (OP/BP 7.60) [ ] [X]

Projects on International Waterways (OP/BP 7.50) [X] [ ]

Environmental Assessment (OP 4.01) and Natural Habitats (OP 4.04)

3. The approach to environmental management issues being adopted for RSSP2 was informed by the lessons of experience. Under RSSP1, the PSCU recruited and further trained an Environmental Specialist to address environmental safeguards requirements. Consultant support was made available to the Environmental Specialist to assist with the analysis of marshland development issues and their remediation. These proactive measures succeeded in reducing some negative impacts of RSSP1-supported marshland and hillsides investments, and they helped to avoid other negative impacts by steering RSSP1 away from ecologically sensitive catchments. While the interventions of the Environmental Specialist were successful, initially the approach was overly ad hoc. To ensure that environmental issues related to RSSP1-financed investments are addressed more systematically in the future, Environmental Management Plans (EMPs) were prepared for all marshlands improved for irrigated agriculture by RSSP1.

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4. The approach to environmental management issues being adopted for RSSP2 formalizes and institutionalizes practices and procedures developed under RSSP1. An Environmental Assessment (EA) was carried out for all marshland investments planned under RSSP2, and Environmental Management Plans (EMPs) were prepared for each subproject. These EMPs require users of irrigated marshlands and surrounding hillsides, with support from the Project, to develop and implement holistic plans for sustainable agricultural intensification. The EMPs adopt a catchment approach. This allows environmental management concerns to be addressed in an integrated and holistic manner, and it facilitates identification of potential synergies between RSSP investments in marshland irrigation and hillside protection. For example, it encourages protection of exposed hillsides above irrigation reservoirs to prevent loss of water storage capacity through unchecked soil erosion leading to siltation, as well as establishment of protected buffer zones below cultivated areas of marshlands to filter out excess nutrients introduced under more intensive irrigated agriculture.

5. All RSSP2 investments will be made in marshlands that were previously farmed, but areas of natural habitats within catchment areas have been identified for protection or offset within the catchment. Importantly, ways are being explored to have farmer cooperatives and local governments empowered to sustain the environmental management measures RSSP builds into its marshland/hillside development investments.

6. Some marshlands will be especially sensitive to proposed RSSP2 investments. Kamiranzovu at the SE end of Lake Kivu is downstream of Nyungwe National Park, and RSSP2 and IMCEP intend to collaborate closely in this area. RSSP2 investment in Kamiranzovu should not be approved until the detailed biodiversity and hydrological studies recommended in the EA demonstrate that the investment can be made without significant conversion or degradation of natural habitats. There may be the need for a habitat "offset" pursuant to OP 4.04 if the investment goes ahead. The EA also notes that the marshlands of Kinyogo, Cyunuzi, Kibaya, and Sagatare confluence in the Kibaya-Cyunuzi marshland and then drain into Kagera River as one. EMPs have been prepared for each of the four schemes, but as yet there has been no assessment of their cumulative impact on the whole catchment, especially on the confluence marshland and the quantity and quality of water outflows into the Kagera River. This cumulative assessment must be done before any of the four schemes is approved. Again, biodiversity and hydrological studies will be important dimensions of this assessment.

7. For the proposed marshland irrigation investments, subproject-specific analyses are needed to assess the likely impact of water abstractions on the consequent water outflows and on downstream aquatic habitats and biodiversity. This analytical work should be undertaken by RSSP2 during the feasibility study of each subproject. RSSP will need to satisfy itself that: (i) abstraction volumes will be available for the anticipated agricultural use; and (ii) the remaining flows, plus irrigation return flows, will be sufficient to sustain downstream ecological integrity. Minimum outflows from RSSP2 dams and irrigation developments need to be specified, on a monthly basis.

8. In addition to the EMPs for irrigated marshlands, an Environmental Management Framework (EMF) has been prepared detailing how RSSP investments in small-scale rural infrastructure (e.g. road upgrading, bridges, markets, storages) are identified, planned, approved and implemented to avoid or minimize adverse environmental effects.

96

9. The PSCU will collaborate closely with REMA to ensure that Project-supported activities are in compliance not only with World Bank environmental safeguards policies, but also with national rules and regulations.

Pest Management (OP 4.09)

10. RSSP2 will not finance the purchase of pesticides. Farmers working in irrigated marshlands and hillsides developed by the Project will be encouraged to use IPM practices, however, and in some cases these may call for limited and appropriate use of pesticides.

11. A Pest Management Plan (PMP) has been prepared for RSSP2, drawing on crop-specific IPM toolkits developed under RSSP1, along with a Guide for Chemical Control of Pests. The PMP assessed relevant pest issues in Rwanda and evaluates current farmer pest control practices. It calls for the use of IPM practices and details those IPM practices which have been shown to be efficacious in Rwanda. The PMP also provides guidance for limited and appropriate use of pesticides when non-chemical means are insufficient and chemical means are technically and economically justified. It includes training and practice modules on IPM for each major crop targeted by RSSP2. The PMP specifies:

• RSSP2 implementation arrangements for promoting IPM and sound pesticide use, including required staff assignments and person-weeks, and a work program outline for the first year;

• A detailed awareness raising and training program for implementing the PMP, including refresher sessions, as needed, over the life of RSSP2. The program distinguishes and addresses the differing needs of RSSP2 staff, farmer cooperatives, district officers, etc. involved in implementing the PMP;

• A plan for monitoring and supervising the implementation of the PMP; and

• A budget for implementing the PMP, including core RSSP2 aspects (staff, person-weeks, travel, etc.) as well as costs for awareness raising/training sessions (venues, external trainers, communications, etc.).

Involuntary Resettlement (OP 4.12)

12. A Resettlement Policy Framework (RPF) has been prepared and disclosed that established procedures and standards for identifying, assessing, and mitigating negative impacts of Project-supported activities. Involuntary land acquisition was not anticipated for RSSP1, and for that reason an RPF was not prepared. As implementation proceeded, it became clear that in some of the marshlands and hillsides being developed by the Project, a small number of people were being negatively impacted, mainly though displacement from agricultural land or loss of access to watering points for livestock. A specially commissioned study determined that these people were adequately compensated according to Rwandan law and customary procedures—mainly through payments in cash or in kind, and/or through allocation of plots in irrigated areas. The purpose of the RPF is to ensure that similar occurrences are handled more systematically under RSSP2, and to satisfy World Bank and Government of Rwanda requirements and standards.

13. The RPF will guide the preparation and implementation of Resettlement Action Plans (RAPs) for subprojects that trigger the Involuntary Resettlement Policy (O.P. 4.12).

97

The policy is triggered not only when land acquisition is required, but also where there is no physical relocation but Project-supported activities impact assets, restrict access to other natural resources, or negatively impact on livelihoods. The RAPs would be prepared in consultation with the affected individuals and communities. Resettlement assistance and compensation for impacts will be determined through the same consultative process to ensure that no one is left worse off as a result of the Project.

14. The prescribed procedure for preparing the RAPs is based on existing Rwandan law as well as World Bank policy. Capacity building activities will be supported under the Project to equip local government institutions with the skills needed to screen Project-supported civil works for possible social impacts, prepare RAPs, and implement activities set out in the RPF and subsequent RAPs. The RAPs will be submitted to the relevant District Development Committee(s) and to the World Bank for approval prior to the commencement of Project-supported civil works. Similarly, all compensation will be completed prior to commencement of Project-supported civil works. Compensation and resettlement assistance activities will be funded just like any other Project-supported activity from government funds. A grievance mechanism is well laid out in the RPF and uses existing systems and structures from the lowest levels through the local government level. If all these channels for handling grievances fail, then the parties can resort to the Rwandan courts of law.

International Waterways (OP 7.50)

15. Because irrigation rehabilitation and development activities to be financed under the Project will affect the hydrology of catchments that drain into international waterways, the other riparians were formally notified about the Project and were supplied with Project details on May 5, 2008. In the Kagera basin (at Rusumo Falls), the expected effects of the increased water abstractions are to reduce the mean annual and average dry season discharges by up to 0.91 and 3.6 percent, respectively. In the Ruzizi basin (at the Lake Kivu source), the equivalent figures are 0.11 and 0.41 percent. Even though agricultural intensification and increased use of inputs (fertilizer, agro-chemicals) is an objective of the project, pre-project input use levels are very low and modest increases are not expected to have an adverse impact on water quality. In addition, environmental and pest management plans will be implemented to reduce any such impacts to minimal levels. Thus, the project will not have any adverse effects on the quantity or quality of water flows to any of the other riparians. The comments received in response to the notification were summarized and communicated to the Board of Directors of the World Bank.

Borrower’s Capacity to Implement Safeguard Policies

16. PSCU technical staff have acquired substantial knowledge of World Bank safeguards policies, based on their experience implementing RSSP1, and having also assisted with the preparation of many of the safeguards-related assessments, plans and frameworks. Given adequate resources, and assuming they can count on technical assistance from REMA and the GEF-financed IMCEP, they are capable of implementing the requirements of the World Bank’s safeguards policies.

98

Safeguards Consultations

17. The Project’s safeguards policies-related assessments, frameworks, and plans were prepared using a consultative approach. Preparation of the EAs and EMPs involved consultations with local residents in project areas concerning the environmental values that may be affected by Project-financed activities and how these values might be protected. Preparation of the PMP involved consultations with farmers to assess pest issues and evaluate current farmer practices. Preparation of the RPF involved local consultations about the appropriate compensation values, and previous compensation due to RSSP activities. The preparation of all RSSP2 investments in marshland and hillsides development or rural infrastructure will involve consultations with stakeholders regarding their needs and desires. Stakeholders’ preferences will be taken into account before sub-project designs are finalized. An important aspect of these consultations involves agreeing with the stakeholders how the investments will be locally managed after they have been completed.

Public Disclosure of Safeguards Documents

18. The EA, ESMF, PMP, and RPF documents were publicly disclosed in January 2008, prior to Project appraisal. Disclosure was done in Washington through the World Bank InfoShop and in Rwanda through the PSCU via notices placed in leading national newspapers.

Implementation and Supervision of the Agreed Plans

19. PSCU staff will supervise and monitor the application of the EMPs, PMP, and RPF as each sub-project proceeds through planning, design, and implementation. Funds for implementing the safeguards requirements are included in the RSSP2 budget. The budget includes core RSSP2 aspects (staff, person-weeks, travel, etc.) as well as costs for awareness raising and training (venues, external trainers, communications, etc.) at the local level.

References to Agreed Plans in Project Legal Documents

20. Borrower commitments to implement the provisions of the EA, EMPs, PMP and RPF will be included as specific covenants in the project legal document.

99

Annex 11: Project Preparation and Supervision

RWANDA: Rwanda Second Rural Sector Support Project

RWANDA Milestones for Second Rural Sector Support Project

Planned Actual

PCN review 07/24/07 07/24/07

Initial PID to PIC 07/31/07 08/10/07

Initial ISDS to PIC 07/31/07 08/15/07

Appraisal 02/05/08 02/05/08

Negotiations 05/01/08 04/23/08

Board/RVP approval 06/24/08

Planned date of effectiveness 10/31/08

Planned date of mid-term review 10/31/10

Planned closing date 10/31/12

World Bank staff and consultants who worked on the Project

Name Title Unit

Michael Morris Lead Agriculture Economist –TTL AFTAR Soulemane Fofana Operations Officer AFTAR Christine Cornelius Program Coordinator AFTAR John A. Boyle Sr. Environmental Specialist AFTEN Mary C.K. Bitekerezo Sr. Social Specialist AFTSC Sergei Zorya Economist AFTAR Loraine Ronchi Economist AFTAR IJsbrand de Jong Sr. Irrigation Specialist AFTWR Diego Garrido Martin Monitoring & Evaluation Specialist AFTRL Victoria Gyllerup Operations Officer AFTRL Marie-Louise Ah-Kee Procurement Analyst AFTAR Chantal Kajangwe Procurement Analyst AFTPC Pierre Morin Sr. Procurement Specialist AFTPC Otieno Ayany Financial Management Specialist AFTFM Sameena Dost Sr. Counsel LEGAF Aissatou Diallo Finance Officer LOAFC Wolfgang Chadab Sr. Finance Officer LOAFC Marie Jeanne Uwanyarwaya Program Assistant AFCRW Korotimi Sylvie Traore Language Program Assistant AFTAR Yasmine Umutoni Team Assistant AFCRW Aline Dukuze Team Assistant AFCRW Marie-Claudine Fundi Language Program Assistant AFTAR Patrice Sade Team Assistant AFTAR

100

World Bank staff and consultants who worked on the Project (continued)

Name Title Unit

Guillemette Jaffrin Financial Sector Specialist AFTFS Dean Mahon Consultant AFTAR Anne Ritchie Consultant AFTAR Anushika Karunaratne Consultant AFTAR Amadou Soumaila Irrigation Specialist FAO Josep Gari Community Development Specialist FAO Derek Baker Agribusiness Specialist FAO Michael Marx Rural Finance Specialist FAO Rodrigue Djahlin Consultant AFTAR

World Bank funds expended to date on project preparation:

1. Bank resources: $ 84,000 2. Trust funds: $ 228,000 3. Total: $ 312,000

Estimated Approval and Supervision costs:

1. Remaining costs to approval: $ 50,000 2. Estimated annual supervision cost: $ 100,000

101

Annex 12: Documents in the Project File

RWANDA: Rwanda Second Rural Sector Support Project A. Bank Documents

1. PHRD Grant Agreement (for grant to support background studies for RSSP2) 2. Project Concept Note 3. Project Information Documents (Concept Stage and Appraisal Stage) 4. Integrated Safeguard Data Sheets (Concept Stage and Appraisal Stage) 5. Minutes of the Project Concept Note Review Meeting 6. Pre-Appraisal Mission Aide-Memoire 7. Project Appraisal Document 8. Minutes of the Project Decision Meeting 9. Project Preparation Fund (PPF) Agreement 10. Minutes of the Negotiations 11. Legal Action Memo 12. OP 7.50 Notification Letters

B. Safeguards-Related Documents

1. Environmental Assessment of Marshland Developments 2. Environmental Management Plans for Marshland Irrigation Subprojects 3. Environmental and Social Management Framework 4. Pest Management Plan 5. Resettlement Policy Framework

C. Background Studies to Inform Project Design

1. Irrigated Marshlands Development Strategy 2. Hillsides Development Strategy 3. Sustainable Agricultural Intensification Strategy 4. Capacity Building and Assistance Strategy for Producer Associations and Other Rural

Community-based Organizations 5. Project Implementation Arrangements for RSSP2 6. Monitoring and Evaluation Systems for RSSP2 7. Evaluation of the Rural Investment Facility (RIF) 8. Performance Indicators Update and Impact Assessment

102

Annex 13: Statement of Loans and Credits

RWANDA: Rwanda Second Rural Sector Support Project

Original Amount in US$ Millions

Difference between expected and actual

disbursements

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d

P079414 2008 RW-Transport Sector Development Project 0.00 11.00 0.00 0.00 0.00 11.79 0.00 0.00

P098926 2007 RW-eRwanda TAL (FY07) 0.00 10.00 0.00 0.00 0.00 9.30 4.15 0.00

P060005 2006 RW-Urb Infrastr & City Mgmt APL (FY06)

0.00 20.00 0.00 0.00 0.00 9.69 1.90 0.00

P090194 2005 RW-Urgent Electricity Rehab SIL (FY05) 0.00 25.00 0.00 0.00 0.00 10.34 -2.82 0.00

P066386 2005 RW-Pub Sec CB TAL (FY05) 0.00 20.00 0.00 0.00 0.00 15.12 11.93 0.00

P074102 2004 RW-Decentr & Community Dev Prj (FY04) 0.00 20.00 0.00 0.00 0.00 8.13 1.08 -0.27

P071374 2003 RW-MultiSec HIV/AIDS (FY03) 0.00 30.50 0.00 0.00 0.00 1.37 -13.65 -6.05

P075129 2002 RW-Emerg Demobiliz & Reintegr (FY02) 0.00 25.00 0.00 0.00 0.00 1.93 -2.33 -2.33

P065788 2001 RW-Regional Trade Fac. Proj. - Rwanda 0.00 7.50 0.00 0.00 0.00 3.45 1.96 0.00

P064965 2001 RW-Rural Sec Supt APL (FY01) 0.00 48.00 0.00 0.00 0.00 5.86 -1.48 -1.98

P057295 2001 RW-Compet & Enterprise Dev (FY01) 0.00 40.80 0.00 0.00 0.12 11.29 -1.15 -1.15

P045091 2000 RW-Human Res Dev (FY00) 0.00 35.00 0.00 0.00 1.56 7.55 5.90 3.96

Total: 0.00 292.80 0.00 0.00 1.68 95.82 5.49 - 7.82

RWANDA STATEMENT OF IFC’s

Held and Disbursed Portfolio In Millions of US Dollars

Committed Disbursed

IFC IFC

FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.

Total portfolio: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic.

Total pending commitment: 0.00 0.00 0.00 0.00

103

Annex 14: Rwanda at a Glance

RWANDA: Rwanda Second Rural Sector Support Project

Sub-Key Development Indicators Saharan Low

Rwanda Africa income(2006)

Population, mid-year (millions) 9.2 770 2,403Surface area (thousand sq. km) 26 24,265 29,215Population growth (%) 2.3 2.3 1.8Urban population (% of total population) 20 36 30

GNI (Atlas method, US$ billions) 2.3 648 1,562GNI per capita (Atlas method, US$) 250 842 650GNI per capita (PPP, international $) 1,270 2,032 2,698

GDP growth (%) 5.3 5.6 8.0GDP per capita growth (%) 3.1 3.2 6.1

(most recent estimate, 2000–2006)

Poverty headcount ratio at $1 a day (PPP, %) 60 41 ..Poverty headcount ratio at $2 a day (PPP, %) 88 72 ..Life expectancy at birth (years) 44 47 59Infant mortality (per 1,000 live births) 118 96 75Child malnutrition (% of children under 5) 23 29 ..

Adult literacy, male (% of ages 15 and older) 71 69 72Adult literacy, female (% of ages 15 and older) 60 50 50Gross primary enrollment, male (% of age group) 119 98 108Gross primary enrollment, female (% of age group) 121 86 96

Access to an improved water source (% of population) 74 56 75Access to improved sanitation facilities (% of population) 42 37 38

Net Aid Flows 1980 1990 2000 2006 a

(US$ millions)Net ODA and official aid 154 288 321 576Top 3 donors (in 2005): United Kingdom 0 1 53 82 United States 7 13 23 63 Netherlands 5 11 20 28

Aid (% of GNI) 13.2 11.2 17.9 27.2Aid per capita (US$) 30 41 40 64

Long-Term Economic Trends

Consumer prices (annual % change) 7.2 4.2 3.9 8.8GDP implicit deflator (annual % change) 3.1 13.5 3.3 9.2

Exchange rate (annual average, local per US$) 92.8 82.6 389.7 551.7Terms of trade index (2000 = 100) .. 78 100 63

1980–90 1990–2000 2000–06

Population, mid-year (millions) 5.2 7.1 8.0 9.2 3.1 1.2 2.4GDP (US$ millions) 1,163 2,584 1,811 2,494 2.2 -0.3 5.0

Agriculture 45.8 32.5 41.4 41.0 0.5 2.6 3.6Industry 21.5 24.6 20.5 21.2 2.5 -3.7 6.2 Manufacturing 15.3 18.3 11.3 8.5 2.6 -6.0 3.0Services 32.6 42.8 38.1 37.8 3.6 -1.2 6.2

Household final consumption expenditure 83.3 83.7 88.2 84.9 1.2 1.2 3.7General gov't final consumption expenditure 12.5 10.1 10.5 13.5 5.2 -1.7 9.3Gross capital formation 16.1 14.6 17.5 21.4 4.3 1.4 6.7

Exports of goods and services 14.4 5.6 8.3 11.7 3.4 -3.8 11.9Imports of goods and services 26.4 14.1 24.6 31.5 2.6 5.0 6.7Gross savings 13.3 11.3 12.4 13.8

Note: Figures in italics are for years other than those specified. 2006 data are preliminary. .. indicates data are not available.a. Aid data are for 2005.

Development Economics, Development Data Group (DECDG).

(average annual growth %)

(% of GDP)

20 10 0 10 20

0-4

10-14

20-24

30-34

40-44

50-54

60-64

70-74

percent

Age distribution, 2006

Male Female

0

50

100

150

200

250

1990 1995 2000 2005

Rwanda Sub-Saharan Africa

Under-5 mortality rate (per 1,000)

-60

-40

-20

0

20

40

60

90 95 00 05

GDP GDP per capita

Growth of GDP and GDP per capita (%)

104

Rwanda at a Glance (continued)

Balance of Payments and Trade 2000 2006

(US$ millions)Total merchandise exports (fob) 90 142Total merchandise imports (cif) 328 438Net trade in goods and services -291 -494

Workers' remittances and compensation of employees (receipts) .. ..

Current account balance -90 -191 as a % of GDP -5.0 -7.7

Reserves, including gold 191 440

Central Government Finance

(% of GDP)Current revenue (including grants) 19.4 27.3 Tax revenue 9.3 14.1Current expenditure 12.6 18.5

Technology and Infrastructure 2000 2005Overall surplus/deficit 0.7 -0.5

Paved roads (% of total) 8.3 19.0Highest marginal tax rate (%) Fixed line and mobile phone Individual .. .. subscribers (per 1,000 people) 7 18 Corporate .. .. High technology exports

(% of manufactured exports) 0.6 25.4

External Debt and Resource Flows

Environment

(US$ millions)Total debt outstanding and disbursed 1,273 1,518 Agricultural land (% of land area) 68 78Total debt service 35 24 Forest area (% of land area) 13.9 19.5Debt relief (HIPC, MDRI) .. .. Nationally protected areas (% of land area) .. 7.9

Total debt (% of GDP) 70.3 70.7 Freshwater resources per capita (cu. meters) .. 1,051Total debt service (% of exports) 21.4 9.9 Freshwater withdrawal (% of internal resources) 1.6 ..

Foreign direct investment (net inflows) 8 8 CO2 emissions per capita (mt) 0.07 0.07Portfolio equity (net inflows) 0 0

GDP per unit of energy use (2000 PPP $ per kg of oil equivalent) .. ..

Energy use per capita (kg of oil equivalent) .. ..

World Bank Group portfolio 2000 2006

(US$ millions)

IBRD Total debt outstanding and disbursed 0 0 Disbursements 0 0 Principal repayments 0 0 Interest payments 0 0

IDA Total debt outstanding and disbursed 692 169 Disbursements 37 12

Private Sector Development 2000 2006 Total debt service 11 13

Time required to start a business (days) – 16 IFC (fiscal year)Cost to start a business (% of GNI per capita) – 188.3 Total disbursed and outstanding portfolio 2 0Time required to register property (days) – 371 of which IFC own account 2 0

Disbursements for IFC own account 0 0Ranked as a major constraint to business Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 0 0 Electricity .. 31.8 Tax rates .. 26.9 MIGA

Gross exposure – –Stock market capitalization (% of GDP) .. .. New guarantees – –Bank capital to asset ratio (%) .. ..

Note: Figures in italics are for years other than those specified. 2006 data are preliminary. 9/25/07.. indicates data are not available. – indicates observation is not applicable.

Development Economics, Development Data Group (DECDG).

0 25 50 75 100

Control of corruption

Rule of law

Regulatory quality

Political stability

Voice and accountability

Country's percentile rank (0-100)higher values imply better ratings

2006

2000

Governance indicators, 2000 and 2006

Source: Kaufmann-Kraay-Mastruzzi, World Bank

Short-term, 22

IBRD, 0Other multi- lateral, 382

IMF, 77

IDA, 980

Private, 0Bilateral, 58

Composition of total external debt, 2005

US$ millions

N O R T H

P R O V I N C E

W E S TP R O V I N C E

S O U T HP R O V I N C E

KIGALI CITY

E A S T

P R O V I N C E

Bugarama

Rwumba Kitabi

Ruramba

KigembeMunini

Karama

Karaba

Gatagara

Masango

Rusatira

Shyorongi

Muhura

Kinyami

Mbogo

Runda

Kigarama

Sake

Rukara

Kiziguru

GabiroNgarama

Gatunda

Rilima

GikoroBicumbi

Gashora

Kanzi

Rwesero

Bulinga

Ngaru

Mulindi

Muvumba

Kagitumba

Kirambo

Butaro

Nemba

Busogo

Muramba

Kagali

Nyondo

Kabaya

Mabanza

Murunda

Gishyita BwakiraNgoma

Kidaho

Gikongoro

Gitarama

Gisenyi

Ruhengeri

Butare

Kinihira

Nyanza

Kibuye

Rwamagana

Byumba

KIGALI

N YA G ATA R E

G AT S I B O

K AY O N Z A

RWAMAGANA

K I R E H EN G O M A

B U G E S E R A

GASABO

KICUKIRO

NYA

RUGEN

GE

B U R E R A

GICUMBI

R U L I N D OG A K E N K E

M U S A N Z E

RUBAVUN YA B I H U

NGOROREROR U T S I R O

K A R O N G I

N YA M A S H E K EN YA M A G A B E

N YA R U G U R U

R U S I Z I GISAGARA

H U Y E

NYANZA

R U H A N G O

MUHANGA

KAMONYI

D E M . R E P .O F

C O N G O

B U R U N D I

T A N Z A N I A

U G A N D A

Lake Kivu LakeIhema

LakeKivumba

LakeHago

LakeMikindi

LakeRwanyakizinga

LakeBurera

LakeRuhondo

LakeNasho

LakeCywambwe

LakeMpanga

LakeMugesera

LakeRweru

LakeCyohoha

Sud

Lake Muhazi

Kagera

Akany

aru

Kagi

tum

ba

Kagera

Nyabarongo

To Rutshuru

To Kisoro

To Kabale

To Kafunzo

To Lusahanga

To Kayanza

To Cibitoke

30°00'E 31°00'E29°30'E 30°30'E

29°00'E

29°00'E

30°00'E29°30'E 30°30'E

2°00'S

2°30'S

2°00'S

1°00'S

1°30'S1°30'S

Muvumba

Rwagitima

RugeramigoziDam

Nyegenyege

Nyarubogo

Kinnyogo II

Sagatare-Nyamzai-Rwabutazi

Gisaya

CyunuziDamUpper

Kibaya

RWANDA

0 10 20 30

0 10 20 30 Miles

40 Kilometers IBRD 36188

JUN

E 2008

RWANDA

SECOND RURAL SECTORSUPPORT PROJECT

SELECTED CITIES AND TOWNS

INTARA (PROVINCE) CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

AKARERE (DISTRICT) BOUNDARIES

INTARA (PROVINCE) BOUNDARIES

INTERNATIONAL BOUNDARIES

RSSP2 PROJECT ACTIVITIES*:

MARSHLANDS/HILLSIDES

RSSP1 COMPLETED PROJECT ACTIVITIES:

MARSHLANDS/HILLSIDES

MARKETS

CETSE

*Additional RSSP2 sites will be identifiedduring the course of project implementation.

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endo r s emen t o r a c c e p t a n c e o f s u c h boundaries.