World Bank Document€¦ · 3, provide a strong foundation upon which to prepare the proposed PforR operation. Both the RSSP and LWH projects achieved commendable results in helping

Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: PAD2732

PROGRAM APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 69.60 MILLION

(US$100 MILLION EQUIVALENT)

TO THE

REPUBLIC OF RWANDA

FOR THE

TRANSFORMATION OF AGRICULTURE SECTOR PROGRAM 4

PROGRAM-FOR-RESULTS PHASE 2

May 7, 2018

Agriculture Global Practice

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 April 30, 2018)

Currency Unit = SDR

SDR 0.69538128 = US$1

US$1 = RWF 865.0221

FISCAL YEAR

January 1 - December 31

ABBREVIATIONS AND ACRONYMS

ACCA AF AgPER

Association of Chartered Certified Accountants Additional Financing Agriculture Public Expenditure Review

ALIS Agriculture Land Information System ASWG Agriculture Sector Working Group BDF Business Development Fund BNR National Bank of Rwanda CAADP Comprehensive Africa Agriculture Development Program CGE Computable General Equilibrium CIAT International Center for Tropical Agriculture CIP COFOG

Crop Intensification Program Classification of the Functions of Government

COMESA CPS

Common Market for Eastern and Southern Africa Country Partnership Strategy

CRI DFID DLI DPF DPs

Core Results Indicator Department for International Development Disbursement-Linked Indicator Development Policy Financing Development Partners

EAC East African Community EBA Enabling the Business of Agriculture EDPRS ERR ESMFs

Economic Development and Poverty Reduction Strategy Economic Rate of Return Environmental and Social Management Frameworks

ESIM ESMS E&S

Environmental, Social Implementation Manual Environmental and Social Management Systems Environmental and Social

ESSA EU

Environmental and Social Systems Assessment European Union

FAO Food and Agriculture Organization GDP Gross Domestic Product

GHG Greenhouse Gas Ha Hectare HR Human Resource ICT Information and Communication Technology IDA International Development Association IFAD International Fund for Agricultural Development IFMIS Integrated Financial Management Information System IFPRI International Food Policy Research Institute INDC Intended Nationally Determined Contributions IPCC International Panel on Climate Change IPF Investment Project Financing LWH MDAs

Land Husbandry, Water Harvesting and Hillside Irrigation Project Ministry/Department/Agency

MDTF Multi Donor Trust Fund MFD MIC

Maximizing Finance for Development Middle-Income Country

MIFOTRA Ministry of Public Service and Labor MINAGRI MINECOFIN

Ministry of Agriculture and Animal Resources Ministry of Finance and Economic Planning

M&E MIS MTEF

Monitoring and Evaluation Management Information System Medium-Term Expenditure Framework

NAEB NAIPS NAP NPL

National Agricultural Export Development Board National Agribusiness Investment Promotion Strategy National Agricultural Policy Non-Performing Loans

NPPA NPV

National Public Prosecution Authority Net Present Value

NSIR National Institute of Statistics Rwanda NST National Strategy for Transformation OAG Office of the Auditor General OCIA Office of Chief the Internal Audit OD OECD-DAC OM OPRC p.a.

Organizational Development Organization for Economic Cooperation and Development’s Development Assistance Committee Office of the Ombudsman Operations Procurement Review Committee Per Annum

PAP Program Action Plan PDO PEFA

Program Development Objective Public Expenditure and Financial Accountability

PforR PFM

Program for Results Public Financial Management

PPPs Public Private Partnerships PSTA Strategy Plan for Agriculture Transformation RAB RAP RDB

Rwanda Agriculture and Animal Resources Board Resettlement Action Plan Rwanda Development Board

REMA Rwanda Environmental Management Agency RITA Rwanda Information Technology Authority RNFE RNRA RPFs

Rural-based Non-Farm Employment Rwanda Natural Resources Authority Resettlement Policy Frameworks

RSSP RWF SAI

Rural Sector Support Project Rwandan Franc Supreme Audit Institutions

SDG SEAS SME

Sustainable Development Goals Subsidiary Entities Accounting System Small-medium Enterprise

SPS Sanitary and Phytosanitary Standards SSA Sub-Saharan African TA Technical Assistance TIMPS TI-RW TSA

Technologies, Innovations, and Management Practices Transparency International Rwanda Treasury Single Account

UNFCCC United Nations Framework Convention on Climate Change USAID United States Agency for International Development WBG World Bank Group

Regional Vice President: Makhtar Diop

Practice Group Vice President: Juergen Voegele

Country Director: Diarietou Gaye

Practice Manager: Dina Umali-Deininger

Task Team Leader(s): Timothy D Robertson

BASIC INFORMATION

Is this a regionally tagged project? Financing Instrument

No Program-for-Results Financing

Bank/IFC Collaboration Does this operation have an IPF component?

No No

Proposed Program Development Objective(s) To promote the commercialization of agriculture value chains in Rwanda.

Organizations

Borrower :

Republic of Rwanda

Implementing Agency : Ministry of Agriculture and Animal Resources (MINAGRI)

COST & FINANCING

FIN_SUMM_WITH_IPF SUMMARY (USD Millions)

Government program Cost 3,700.00

Total Operation Cost 289.92

Total Program Cost 289.92

Total Financing 289.92

Financing Gap 0.00

Financing (USD Millions)

Counterpart Funding 189.92

Borrower 189.92

International Development Association (IDA) 100.00

IDA Credit 100.00

The World Bank Transformation of Agriculture Sector Program 4 PforR Phase 2 (P161876)

Page 6 of 110

Expected Disbursements (USD Millions)

Fiscal Year 2018 2019 2020 2021

Absolute 25.00 25.00 28.00 22.00

Cumulative 25.00 50.00 78.00 100.00

INSTITUTIONAL DATA

Practice Area (Lead)

Agriculture

Contributing Practice Areas

Finance, Competitiveness and Innovation

Climate Change and Disaster Screening

Yes

PRI_PUB_DATA_TBL Private Capital Mobilized Public Private Partnership

Yes Yes

Gender Tag Does the program plan to undertake any of the following? a. Analysis to identify Project-relevant gaps between males and females, especially in light of country gaps identified through SCD and CPF Yes b. Specific action(s) to address the gender gaps identified in (a) and/or to improve women or men's empowerment Yes c. Include Indicators in results framework to monitor outcomes from actions identified in (b) Yes

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)


Page 7 of 110

Risk Category Rating

1. Political and Governance Low

2. Macroeconomic Low

3. Sector Strategies and Policies Moderate

4. Technical Design of Project or Program Substantial

5. Institutional Capacity for Implementation and Sustainability Substantial

6. Fiduciary Fiduciary rating from IRT:

Substantial as of 07-May-2018

Substantial

7. Environment and Social Environmental Risk rating from IRT:

Substantial as of 14-Mar-2018 Social Risk rating from IRT:

Substantial as of 15-Mar-2018

Substantial

8. Stakeholders Moderate

9. Other

10. Overall Substantial

COMPLIANCE

Policy

Does the program depart from the CPF in content or in other significant respects?

[ ] Yes [✔] No

Does the program require any waivers of Bank policies?

[ ] Yes [✔] No


Page 8 of 110

Safeguard Policies Triggered

Safeguard Policies Yes No

Projects on International Waterways OP/BP 7.50 ✔

Projects in Disputed Areas OP/BP 7.60 ✔

Legal Covenants

Sections and Description LA, Schedule 2, Section I.D. 2(a), Without limitation on the generality of Part A of Section I of the FA, the Recipient

shall prepare, in form and substance satisfactory to the Association and no later than three (3) months after the

Effective Date, an operational manual containing detailed institutional, administrative, financial, environmental

and social, technical and operational guidelines and procedures for the implementation of the Program, including

a description of the PSTA4 and the roles and responsibilities of each of the Program Implementing Entities, and

thereafter, carry out the Program and cause the Program Implementing Entities to carry out the Program, in

accordance with such operational manual, as shall have been approved by the Association (“Program Operational

Manual”).

Sections and Description LA, Schedule 2, Section III.B.(a). The Recipient shall vest in the Office of the Auditor General the responsibility of

undertaking the verification of compliance of the DLIs/DLRs, which are set forth in the table in Section IV.A.2.

Sections and Description LA, Schedule 2, Section III.B.(b).The Recipient shall cause the Office of the Auditor General (“OAG”) to, not later

than thirty (30) days, after the verification of compliance of said DLIs/DLRs has been completed, prepare and

furnish to the Recipient and the Association, a report on the results of said verification of compliance process of

such scope and in such detail as the Association shall reasonably request.

Conditions

Type Description Effectiveness FA, Article V. Para 5.01 Subsidiary Agreements have been executed on behalf of

the Recipient and each of the Program Implementing Entities. Type Description Effectiveness FA, Article V. Para 5.02 Subsidiary Agreements have been duly authorized or

ratified by the Recipient and the respective Program Implementing Entities and are legally binding upon the Recipient and the respective Program Implementing


Page 9 of 110

Entities in accordance with their terms. Type Description Disbursement FA, Schedule 2, Section IV.B 1 (a). No withdrawal shall be made on the basis of

DLRs achieved prior to the Signature Date. Type Description Disbursement FA, Schedule 2, Section IV.B 1 (b). No withdrawal shall be made for any DLR, until

and unless the Recipient has furnished evidence satisfactory to the Association that said DLR has been achieved, including verification reports from the OAG, as the case may be, inaccordance with procedures and arrangements and verification protocols satisfactory to the Association.

Type Description Disbursement FA, Schedule 2, Section IV.B 1 (c). No withdrawal shall be made for any DLR

under Category (5), (6), (7) or (8), until and unless the Recipient has furnished evidence satisfactory to the Association that: (i) the private sector leveraging strategy, including a detailed environmental and social screening checklist for private sector or PPP investments, has been adopted by the Recipient, in form and substance satisfactory to the Association; and (ii) the necessary prior environmental and social permit and licenses for any Program investments have been obtained, in form and substance satisfactory to the Association.

Type Description Disbursement FA, Schedule 2, Section IV.B 2. Notwithstanding the provisions of Part B.1(b) of

this Section, the Recipient may withdraw: (i) an amount not to exceed SDR 17,400,000 as an advance; provided, however, that if the DLRs in the opinion of the Association, are not achieved (or only partially achieved) by the Closing Date, the Recipient shall refund such advance (or portion of such advance as determined by the Association in accordance with the provisions of paragraph (3) of this Part B) to the Association promptly upon notice thereof by the Association. Except as otherwise agreed with the Recipient, the Association shall cancel the amount so refunded. Any further withdrawals requested as an advance under any Category shall be permitted only on such terms and conditions as the Association shall specify by notice to the Recipient.

TASK TEAM

Bank Staff

Name Role Specialization Unit

Timothy D Robertson Team Leader(ADM Responsible)

GFA03

Mulugeta Dinka Procurement Specialist(ADM Responsible)

GGOPA

Enagnon Ernest Eric Adda Financial Management Specialist

GGOAE


Page 10 of 110

Antoinette Kamanzi Team Member AFMRW

Augustine Sangson Langyintuo

Team Member GFCA1

Belinda Mutesi Team Member AFMRW

Bremala Malli Team Member GFA06

Christopher Ian Brett Team Member GFAGE

Christopher Paul Jackson Team Member GFA12

George Bob Nkulanga Social Safeguards Specialist GSU07

Irene Bomani Team Member GFA07

Jamexis Denise Christian Team Member Operations Policy OPSIL

Maiada Mahmoud Abdel Fattah Kassem

Team Member WFACS

Nicoletta Feruglio Team Member GGOAE

Sofia De Abreu Ferreira Counsel LEGEN

Svetlana Khvostova Environmental Safeguards Specialist

GEN01

Valencia M. Copeland Team Member GFA03

Winston Dawes Team Member GFA07

Extended Team

Name Title Organization Location

Francoise Kayigamba Consultant World Bank Rwanda

Julien Labonne M & E Specialist World Bank United Kingdom

Maria Iskandarani FAO TCI M&E Consultant NA Germany

Tharcisse Musabyimana Social Development Consultant Lecturer & Researcher at the University of Rwanda,

Rwanda


Page 11 of 110

RWANDA

TRANSFORMATION OF AGRICULTURE SECTOR PROGRAM 4 PFORR PHASE 2

TABLE OF CONTENTS I. STRATEGIC CONTEXT .................................................................................................... 12

A. Country Context ................................................................................................................ 12

B. Sectoral (or Multi-Sectoral) and Institutional Context ...................................................... 13

C. Relationship to the CAS/CPF and Rationale for Use of Instrument .................................. 17

II. PROGRAM DESCRIPTION............................................................................................... 20

A. Government Program ....................................................................................................... 20

B. PforR Program Scope ........................................................................................................ 22

C. Program Development Objective(s) (PDO) and PDO Level Results Indicators ................. 29

D. Disbursement Linked Indicators and Verification Protocols ............................................ 29

III. PROGRAM IMPLEMENTATION ...................................................................................... 35

A. Institutional and Implementation Arrangements ............................................................. 35

B. Results Monitoring and Evaluation ................................................................................... 36

C. Disbursement Arrangements ............................................................................................ 37

D. Capacity Building ............................................................................................................... 37

IV. ASSESSMENT SUMMARY .............................................................................................. 41

A. Technical (including program economic evaluation) ........................................................ 41

B. Fiduciary ............................................................................................................................ 45

C. Environmental and Social .................................................................................................. 48

D. Risk Assessment ................................................................................................................ 51

ANNEX 1. RESULTS FRAMEWORK MATRIX ........................................................................... 53

ANNEX 2. DISBURSEMENT LINKED INDICATORS, DISBURSEMENT ARRANGEMENTS AND VERIFICATION PROTOCOLS .................................................................................................. 68

ANNEX 3. TECHNICAL ASSESSMENT ..................................................................................... 86

ANNEX 4. FIDUCIARY SYSTEMS ASSESSMENT ....................................................................... 96

ANNEX 5. ENVIRONMENTAL AND SOCIAL SYSTEMS ASSESSMENT ...................................... 100

ANNEX 6. PROGRAM ACTION PLAN .................................... ERROR! BOOKMARK NOT DEFINED.

ANNEX 7. IMPLEMENTATION SUPPORT PLAN .................................................................... 111


12

I. STRATEGIC CONTEXT

A. Country Context 1. Rwanda is increasingly recognized as a global example in the pursuit of the Sustainable Development Goals (SDG) and in preparing for the global challenges of climate change. Rwanda’s economy has been amongst the fastest growing in the sub-Saharan African (SSA) region. Despite remaining one of the poorest countries on the continent with per capita incomes of US$1,720 (2015, in purchasing power parity terms), the economy is nevertheless undergoing rapid structural transformation. Overall Gross Domestic Product (GDP) growth has averaged 7.6 percent per annum (p.a.) between 2000 – 2015, with urbanization rates of 7 percent p.a. over the same period. 2. After slowing to 6.1 percent in 2017, real GDP growth is expected to be, averaging 5.9 percent in 2018-2019, and inflation has increased above the National Bank of Rwanda’s (BNR) target ceiling of 5 percent.12 BNR has raised interest rates to prevent capital outflow and this will likely force a tightening of monetary policy in 2018. BNR has reduced the repo rate by 50 basis points to 5.5 percent to encourage commercial banks to lower lending rates to drive growth in private-sector credit and stimulate economic growth.3 Rwanda’s large current account deficit (16 percent of GDP in 2016) has been exerting downward pressure on the Rwandan franc (RWF). Higher oil and commodity prices (as well as large purchases including new planes for the national carrier) have seen the import bill increase, although this is expected to be mitigated by recovering commodity prices in tea, coffee and minerals – Rwanda’s three main exports. On the fiscal side, the fiscal deficit is expected to narrow from an estimated 4.7 percent of GDP in 2016-2017 to 4.4 percent of GDP in 2018-2019, financed by external project-based debt and some budgetary loans from development partners and multilateral institutions.4 Notwithstanding these emerging domestic and international trends, the Government of Rwanda’s (GoR) overall policy stance is likely to remain in line with the existing Economic Development and Poverty Reduction Strategy (EDPRS) (approved in 2013) and its successor to be finalized and approved in 2018. 3. Rwanda’s Vision 2050 sets an ambitious agenda for further improvements in the standard of living, targeting middle-income country (MIC) status by 2020. Parallel targets to reduce food insecurity and malnutrition and to further reduce poverty from 39 percent (according to the national poverty line; while the headcount rate is 63 percent according to the US$1.25 per day measure) are evidence of a deep political commitment to the twin goals of poverty reduction and shared prosperity. Except for the period between 2000-2001 and 2005-2006 when the Gini coefficient rose slightly, rapid growth has not been associated with an increase in equality. At the same time, the country has embarked on several flagship projects to promote a highly skilled service economy, notably around conferences, hospitality, and information and communication technology (ICT). 4. However, Government spending varies across programs. The increase in total public spending in 2013-2015 was exclusively for capital expenditures and net lending as recurrent expenditures held steady. The adjustment program of recent years to address growing external imbalances restrained the overall fiscal envelope. Health expenditures, for example, have declined both as a percent of GDP and in terms of their share in the budget. Going forward, resource availability will be further constrained because of a

1 EUI Country Report, January 2018. 2 NISR GDP National Accounts 2017 3 ibid 4 EUI Country Report, November 2017


13

continuing decline in external grant financing. Although the headline fiscal deficit will be more expansionary in FY18/19, the decline in grant financing will continue to depress the overall fiscal envelope. 5. The Government is also concerned by the emerging demographic trends and the rapidly expanding ambitions and expectations of new entrants to the labor market. Demographic projections suggest that by 2032, rural areas will be home to an additional 2.5 – 3.5 million Rwandans. Land is already so scarce (50 percent of rural farm households farm less than 0.35 ha) that few can be meaningfully accommodated in farming. With a working age population projected to increase from 5.2 million (in 2014) to 6.6 million – of which 4 million will be youth (14 – 35 years old), realizing labor productivity potential and meeting individual aspirations will require off-farm employment opportunities. This need not imply urban-based employment. Agriculture and the food system broadly (i.e. non-agriculture sector jobs such as retail, agro-processing, food logistics, etc.) can provide substantial rural-based non-farm employment (RNFE). Current economic modeling indicates around two-fifths of the 200,000 new labor market entrants annually could be gainfully employed in this sector. 6. Continued urbanization will present many challenges as well as opportunities for the agricultural sector. By 2050, Rwanda’s population is projected to reach 22 million of which 70 percent would reside in urban areas. Assuming similar patterns are observed elsewhere in the region, food preferences will change with increasing incomes, and increasing demand for more standardized and packaged or processed food, and food safety will become increasingly important. This will threaten existing supply chains for domestic producers, with likely upward pressure on the food import bill and foreign currency reserves. At the same time, tapping into this emerging market can be an important opportunity for expanding domestic value chains, diversifying out of food staples, and further value addition across the agriculture and food system. Meeting these challenges for the domestic market can serve as a launching pad for successfully penetrating regional and international markets.

B. Sectoral (or Multi-Sectoral) and Institutional Context

7. Notwithstanding, Rwanda’s impressive progress and likely future growth, the country remains largely agrarian with agriculture serving as the mainstay of jobs, income and livelihoods for much of the population. The sector continues to account for around one-third of GDP. Because of its forward and backward linkages, it remains a key driver of overall economic performance and poverty reduction (accounting directly for over one-third of the overall reduction in poverty from 59 percent in 2001 to 39 percent in 2013). 8. Historically, aggregate agricultural performance has been driven by productivity improvements and land expansion. Aggregate production of key food staples such as maize, beans, Irish potato, sweet potato etc. has increased steadily since the end of the Genocide. According to recent analysis by the International Food Policy Research Institute (IFPRI), agriculture’s aggregate growth rate of 5 percent p.a. in recent years has been made up of land expansion (2 percentage points), productivity growth (1.7 percentage points), and the remainder from increased labor productivity. Rwanda is already among the most densely populated countries in SSA and land expansion has been achieved through developing inland swamps and valleys with rapidly declining potential for further gains. 9. Despite productivity gains, yields remain below their potential. Crop yields have greatly increased since 2000, but yield growth started to plateau as of 2011. For instance, cereal and cassava yields have tripled and sweet potato yields have doubled, yet they have made marginal progress in the


14

last five years and remain at around 40 – 50 percent of their potential. Similarly, livestock productivity has remained consistently low over time due to the lack of good quality animal feed and poor husbandry management practices. Diversification into higher value crops has been limited to date, partly because of limited farmer knowledge and traditional risk aversion, and because the public-sector support services have been excessively focused on a narrow range of food staples under the Government’s flagship Crop Intensification Program (CIP). 10. Farm size is a major challenge. The average farm size is only 0.6 ha, with perhaps 0.12 ha per worker. Production on numerous small plots of land can impose technical inefficiencies related to water control and distribution, crop choice and interactions, and planting materials used, while limiting the potential for mechanized plowing. The government has made significant progress on land consolidation. Land under consolidated use rose from 28,788 ha in 2007 to 502,916 ha in 2012, primarily through consolidation of production rather than of ownership (World Bank, 2014). The consolidation process has not involved mandatory consolidation of ownership. Planting, cultivation and harvesting are still carried out by the individual land owners, albeit on a communal schedule (Pritchard, 2013). 11. The agriculture value chains face major constraints at every stage. Research and extension is led by public institutions. There are insufficient extension services to support both quantity and quality, and the linkages between research and extension could be strengthened. There is limited awareness of the advantages of quality inputs. Domestic seed production is low, and there is limited access to finance. Production potential is restricted by land size, subsistence and rain-fed farming, mono-cropping, and limited access to irrigation and mechanization. Post-harvest management is impacted by storage related issues and insufficient storage and drying infrastructure, such that food safety and the quality of produce are adversely affected. Processing is characterized by low capacity utilization -- less than 10 percent of total production is processed. The supply of raw material is irregular and limited. The agricultural workforce has a low level of technical skills. 12. The government has focused on extending the rural roads network to connect to regional markets and take advantage of existing opportunities for scaling up regional connectivity. A significant proportion of Rwanda’s rural population, whose livelihoods depend on agriculture, lacks access to rural transport facilities, including feeder roads. In 2015, only 13,350 km of roads were in good or passable condition. Rwanda’s target is to have 30,000 km of passable roads by 2028. Poor connectivity hampers agricultural development, and prevents farmers from increasing access to markets, enhancing their competitiveness, and improving their incomes and livelihoods. A national feeder roads strategy has been developed along with a feeder roads implementation framework. It provides clear-cut institutional responsibilities for different stakeholders in the feeder roads sub-sector, promotes labor-based technology in feeder roads development, and outlines mechanisms for funding feeder roads development and maintenance. 13. Rwanda’s proximity to many of the continent’s key food markets and increased global/regional consumption of key export crops, including bio-fortified staples, presents significant opportunities, especially through the East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA) for enlarged export markets, transport corridors and cross-border trade cooperation. While global and regional markets for higher-value agricultural items are becoming more demanding in terms of quality, food safety, and branding, they are also more remunerative. Rwanda is well-placed to benefit from expanding regional food markets, provided the facilitating investments in infrastructure and institutions are in place and the private sector responds.


15

14. Climate Change research indicates that rainfall patterns are becoming more irregular and unpredictable with shorter rainy seasons negatively affecting Rwandan agriculture. Crop-and livestock-suitable areas, the length of the growing seasons, and potential yields are all expected to decrease. Moreover, estimates from the Fourth International Panel for Climate Change (IPCC) Assessment Report indicate that the average surface temperature in Africa has increased by 0.2 to 2.0 °C in the last four decades (1970–2004), suggesting an overall increase in annual temperatures by 1.0° C–2.0° C over the next century (2010–2100) in Rwanda. Medium-term climate projections for Rwanda indicate a general increase in annual mean temperature by up to 1.5°C and in total annual precipitation rates by 2030. 15. Much of Rwanda’s farming practices are vulnerable to climate change. Agriculture is mostly rain-fed, and therefore more exposed to weather-related risks, especially to severe, frequent, and prolonged dry spells during the cropping seasons. Changes in climate conditions have impacted the prevalence of pests and diseases (e.g. a major Army Worm outbreak was linked to the 2017 El Niño). Outbreaks like these have greatly affected agricultural production throughout the country, triggering losses in yields and income. Furthermore, farmers in general, lack access to climate related products (e.g water efficient irrigation, improved seed varieties, etc), services and information. The sector’s infrastructure (e.g. cold storage, crop drying facilities, etc.) that supports the key value chains is insufficient. As a result, commodities are exposed to additional risks during extreme weather conditions. 16. As a response to increased food demand, Rwanda has, in some areas, expanded agricultural activities into more fragile environments, such as steeper hill slopes and wetlands. These actions have triggered a range of farming practices that have exposed production systems to climate change related risks. Examples include limited investment in soil protection mechanisms, unsustainable water management practices, and less efficient fertilizers and other key inputs application. 17. In addition, Rwanda remains challenged by malnutrition and pervasive food insecurity, especially among rural households with extremely small land holdings. The national rate of stunting remains high at 38 percent and around one-fifth of households remain food insecure according to the latest Comprehensive Food Security and Nutrition Survey (2016). The pattern of stunting and food insecurity is complex and not only related to food scarcity. Food insecurity is greatest in the western and northern areas and stunting is observed even in relatively non-poor areas due to inadequate child care and poor sanitation practices. A narrow focus on a few traditional food staples under the CIP resulted in limited dietary diversity, although there are emerging opportunities with bio-fortification. The Government’s existing kitchen garden program is reportedly contributing to broader nutritional intake, however further improvements are required. 18. In Rwanda the labor force is growing at a rapid pace annually with census projections showing that the working-age population will grow by about 240,000 per year for the next decade. This growth is substantially larger than the increase in jobs during the last 15 years. Acknowledging the demographic trends, the GoR’s ongoing Second Five-Year EDPRS-2 has an ambitious target of creating 200,000 off-farm jobs annually for which both the formal and informal sector will be important. The informal non-farm sector absorbed 70 percent of the new workers between 2006 and 2011, and will continue to absorb workers who seek a better living outside agriculture. Employment in the formal sector, while growing quickly, will remain low for the foreseeable future as it is starting from a low base. Even so, the sector remains important since most of the perceived ‘good’ jobs are created by the formal private sector. Increases in agriculture productivity and job creation in industries related to agriculture (agro-processing,


16

agribusiness) will also support employment positive outcomes for the most vulnerable, unskilled workers. 19. Women perform the bulk of the labor in the agriculture sector, putting in approximately 51 hours per week on farm and domestic duties compared to men who work 40 hours5. Most women farmers lack the means to purchase high-quality seeds and proper storage facilities to protect their crops. Many also never received education on effective farming methods to increase yields and to ensure that the soil on their land remains healthy. This creates a cycle of subsistence farming leaving very little or no profit from outputs for farmers to use as a source of income or capital. 20. Despite the observed growth from a small base, the non-farm enterprise sector maintains a limited presence. The number of business establishments has increased to 149,404 in 2014 – an increase of 18 percent since 2011. However, employment in business establishments represents only a small portion of overall employment in Rwanda, with agriculture still being the dominant activity. The enterprise sector provided employment to 6.2 percent of working-age Rwandans in 2014 (361,901 jobs of a labor force of 5,785,000). In addition, there is a limited presence of medium- and large-sized private firms, and vibrancy in the sector has yet to fully emerge. 21. Considering these trends and projections, Rwanda is committed to identifying and addressing the policies, regulations, and investment areas that will stimulate inclusive productivity growth for broadening nutritious food production and increasing private sector investment. Furthermore, there is commitment across the GoR to pursue new opportunities for farm income diversification to further reduce rural poverty, strengthen resilience against the impacts of climate change, and to transform the dominant subsistence farming sector into a competitive and market-led agriculture sector. Their objectives for the food and agriculture system mirror the scale of their broader national goals in terms of ambition and conviction to achieve them. 22. To codify these ambitions and articulate a road map to achieve them, MINAGRI revised and updated its National Agricultural Policy (NAP)6 in 2017. The NAP 2017-2030 responds to the changes facing agriculture and the food system nationally, regionally and globally. Under this policy, the role of government in agriculture is envisaged to fundamentally shift from making direct interventions in the sector – especially with a focus on production only – to a market enabler, thereby promoting enhanced farmer cooperation and private-sector-led development of the agri-food economy. The policy seeks to build upon Rwanda’s growing reputation as a supplier of high-quality, sustainably produced agri-food products, especially for the increasingly demanding consumers in Africa’s growing urban centers. It places added emphasis on principles of resilience to changes in climate and markets, and seeks to seize opportunities offered by advances in digitization and ICT, and to also leverage these for vocational-skills development and more effective sector administration. The policy also aims to promote inclusion through mainstreaming preferential treatment for better participation of women and youth in agriculture programs and development. 23. MINAGRI has prepared its fourth Strategic Plan for Agriculture Transformation (PSTA4), an articulation of how the Government proposes to implement the updated NAP. PSTA4 has four Priority Areas which are well aligned to the NAP. Priority Area 1: Innovation and Extension focuses on improving agronomic knowledge and technology in terms of basic research and innovation, development of efficient

5 One, Gender Report, 2016 6 Approved by the ASWG in 2017.


17

extension services, and promoting knowledge and skills of value chain actors. Priority Area 2: Productivity and Resilience focuses on promoting sustainable and resilient production systems for crops and animal resources. Priority Area 3: Inclusive Markets and Value Addition seeks to improve markets and linkages between production and processing. Priority Area 4: An Enabling Environment and Responsive Institutions focuses on fostering the appropriate regulatory framework, and defining and coordinating public sector involvement. In addition, although women and youth are mainstreamed across all priority areas, Priority Area 4 features specific measures and incentives to increase gender equity and introduce skilled youth to commercial farming and jobs along the agricultural value chains. PSTA4 builds on the experience of implementing the previous strategic plan (PSTA3) and provides a basis for future-proofing agriculture to prepare for risks such as those inherent in climate change, given the constraints and opportunities of Rwanda’s demographic, geographical and strategic conditions. 24. In addition to MINAGRI, key actors in the sector include the National Agricultural Export Development Board (NAEB) and the Rwanda Agriculture and Animal Resources Board (RAB). NAEB is responsible for implementing policies and strategies to promote and develop agricultural and livestock products for export. RAB is an autonomous body largely responsible for research and extension, strengthening the linkage with policy, and establishing efficiency in service delivery through institutional integration in the agricultural sector. 25. PSTA4 is also aligned with National Policies and Strategies including Vision 2050, Rwanda’s National Strategy for Transformation (NST 1), and relevant sub-sector strategies. The NST 1 was designed to address Rwanda’s commitment to the SDGs, Intended Nationally Determined Contributions (INDC’s) on agriculture, and the Paris Climate Agreement. The African Union has confirmed that PSTA4 is aligned with the goals of the Comprehensive Africa Agriculture Development Program (CAADP) and key regional programs. 26. The proposed Program for Results (PforR) operation will be nested within PSTA4. Reflecting emerging best-practice with PforR operations, the specifics of the PforR Program are drawn from the broader PSTA4 and nested within the Government’s strategy. PSTA4 is in the final stages of approval – led by a core team within MINAGRI and benefiting from a broad group of development partners, including the World Bank and CAADP institutions. It has been endorsed by the GoR and will be formally launched at the CAADP Business Meeting on June 28, 2018.

C. Relationship to the CAS/CPF and Rationale for Use of Instrument

27. The proposed PforR operation directly addresses the objectives of the World Bank’s engagement in Rwanda and capitalizes on the World Bank’s comparative advantage. The operation is designed to contribute to the World Bank Group (WBG) corporate objectives of ending extreme poverty and promoting shared prosperity in a sustainable way. It recognizes the importance of the agriculture sector in Rwanda as a key contributor to economic livelihoods, nutrition, food security and job creation for most of the population. It is aligned with the objectives of the Country Partnership Strategy (CPS) (FY2014 – 2020), particularly Theme 2: Improving the productivity and incomes of the poor through rural development and social protection, by supporting investments in activities that promote agricultural productivity, agribusiness and nutrition. 28. The World Bank has been supporting the development of Rwanda’s agriculture sector over the last decade. The World Bank brings substantial cross-country experience and regional knowledge to assist


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the GoR with its design and implementation of PSTA4. It is supporting the GoR to focus its limited resources on leveraging private sector financing, thereby mainstreaming the principles of the World Bank’s Maximizing Finance for Development (MFD) approach. The World Bank is well placed to support the GoR in improving its systems and processes for delivering its new government program given the depth of engagement it has had with MINAGRI from a series of Investment Project Financing (IPF) operations and two previous PforR operations, one on governance in the agriculture sector and the other in support of PSTA3. 29. Different financing instruments to support the government program were considered, including IPF, Development Policy Financing, and PforR. Drawing on lessons learned from engagement with PSTA3 and the support provided under the first Agriculture PforR operation, the government has requested assistance with the implementation of PSTA4. MINAGRI has developed a detailed results framework for PSTA4 with measurable targets and outputs, and it has requested targeted support on enhancing its capacity to deliver these results. Recognizing that actions are needed by various government actors in the agriculture sector to meet the key goals, the PforR instrument is most suitable for enhancing incentives and resources for these government actors to deliver, by periodically reviewing performance against the desired objectives and relating financial resources to the government’s achievement of agreed results through Disbursement Linked Indicators (DLIs). In addition, the PforR instrument is also appropriate for the core institutional focus of the program. As mentioned above, a key area of the government program is to improve coordination mechanisms in the sector and focus development efforts towards helping to build the necessary institutions to bring about and sustain transformative change. Through its focus on the use of program systems, the PforR instrument promotes strengthening and enhancement of sustainable institutional capacity. Furthermore, the PforR instrument serves as a platform for the alignment of activities and leveraging of financing from development partners to support the government program. 30. The proposed PforR operation draws on the achievements from the successful implementation of ongoing World Bank supported operations in the sector. The Land Husbandry, Water Harvesting and Hillside Irrigation Project (LWH) (P114931) and Rural Sector Support Project (RSSP) (P126440), phases 1-3, provide a strong foundation upon which to prepare the proposed PforR operation. Both the RSSP and LWH projects achieved commendable results in helping to transform Rwanda’s rural farming sector. Under RSSP 1 and 2 (now closed) and the ongoing RSSP 3, farmers have moved from low-value subsistence production to a more irrigated system. Under RSSP, impressive improvements have been made in marshland rehabilitation and protection of hillsides against erosion. Similarly, LWH has made significant contributions to raising rural incomes, increasing the productivity of hillsides, increasing crop yields, and improving the participatory approaches of farmers’ organizations. Gender issues were reflected in implementation of these key operations. 31. The PforR Program design has also integrated the experience of the Transformation of Agriculture Sector Program Phase 3 PforR (US$100 million IDA credit, FY14-FY16), which was the first PforR operation to be approved in the agriculture sector following the introduction of the PforR instrument. That PforR operation was designed to contribute to the financing of PSTA3 with a program development objective “to increase and intensify the productivity of the Rwanda agricultural and livestock sectors and expand the development of value chains”. It included four program areas: (1) agriculture and animal resource intensification; (2) research, technology transfer and organization of farmers; (3) private sector-driven value chain development and expanded investments; and (4) institutional results-focused development and agricultural cross-cutting issues. The PforR operation supported the delivery of the


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PSTA3 program by: (i) strengthening the achievement of key results, while focusing on the “core drivers” of agricultural growth; (ii) supporting a sound balance, composition and effective management of agriculture public expenditure for key “transformative” outputs/activities; and (iii) supporting the action plans for accomplishing the key results and areas where there might be implementation risks. 32. On February 28, 2017, an additional financing (AF) in the amount of US$46 million IDA credit and another US$10 million grant from the Multi Donor Trust Fund (MDTF)7 was approved for the original PforR Program. The closing dates for both the IDA Credit and MDTF were extended to September 30, 2018. The AF was to support: (a) the scaling up of targets for DLIs focused on improving the productivity of land and increasing the productivity of key crops; (b) rolling out the Management Information System (MIS) to 30 districts; (c) reviewing and, where necessary, adjusting the three sub-sector policies/strategies to ensure they were aligned with the new NAP; and (d) a new DLI focused on the production of an updated NAP. 33. The first PforR operation is expected to be completed on September 30, 2018 and has achieved several notable results. During the three years of support, targets were exceeded for DLIs related to improving productivity-related performance and results including: the protection of 168,592 hectares of land against soil erosion; irrigation of 15,757 hectares on hillsides and marshlands; development and introduction to farmers of 14 enhanced agricultural innovation technologies with an increase in the adoption rate from 25 percent to 61.8 percent; and the improvement of the average crop yield for cassava and coffee as well as average daily yields of milk per cow. MINAGRI also made steady progress on increasing agri-finance lending for farmers and agriculture enterprise investments, fully achieving the 7 percent target.

34. The first PforR operation was a learning experience for the World Bank and the GoR. It was independently and comprehensively reviewed in 2017. In general, the review gave the Program a positive rating, noting the following:

a. Supporting the Government’s program (PSTA3) provides a strong platform for effective

collaboration among key partners supporting the sector. b. Having a complementary MDTF enables more effective and timely provision of additional TA and

financing. c. Including policy development as a DLI helps in identifying priority areas for future engagement. d. Institutional assessment helps to identify bottlenecks to be addressed to enhance program

efficiency and effectiveness. e. Use of existing independent monitoring and evaluation systems within the government for

verification of DLI achievement is feasible, cost effective and sustainable. 35. The the first PforR operation has demonstrated how the instrument can have a positive impact on increasing institutional performance and productivity. Moving forward, the proposed PforR operation focus will include further improving data collection, Monitoring and Evaluation (M&E) systems and addressing institutional coordination bottlenecks.

7 The MDTF was funded by both the Department for International Development and Royal Netherlands Embassy.


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II. PROGRAM DESCRIPTION

A. Government Program

36. MINAGRI’s PSTA4 is the Sector Strategic Plan for Agriculture under Rwanda’s NST 18. Designed to guide public investments in agriculture during the period 2018-24, PSTA4 sets out the estimated required resources for the agricultural sector in those six years and contributes to the three NST Pillars of economic, social, and governance transformation toward the aspirations of Vision 2050. Vision 2050 emphasizes the importance of agro-processing and technology-intensive agriculture with a commercial focus under its Pillar III: Transformation for Prosperity. Furthermore, the PSTA4 is the implementation plan for the 2017-2030 NAP, which sets the policy framework for a productive, green and market-led agriculture sector towards 2030. The NAP responds to the rapid changes experienced in the sector and anticipates key trends and concerns including the pressure on land resources, the need to feed the cities9, the absorption of rural youth into the labor market, and the need to raise the productivity of smallholders. It encompasses agriculture development activities across all relevant institutions and implementing agencies. 37. MINAGRI’s PSTA4 is a continuation of PSTA3 and builds on its successes and lessons learned. To better respond to emerging and structural challenges, it presents a shift from PSTA3 in the following ways:

a. Stronger role of the private sector (including farmers) with government shifting from market

actor to market enabler. PSTA4 emphasizes the provision of public goods while downsizing the direct government involvement in production, processing, and marketing. Moreover, the GoR will explore new models to engage private sector investment in transformational activities such as infrastructure provision and management, innovation, and improved agricultural markets.

b. Focus on farm profitability and commercialization. PSTA4 recognizes that limited land resources and a growing population requires an increased focus on improving land productivity as this will be the key to increased returns on capital and labor. Land productivity and incomes will increase by introducing “land-saving technologies” to: (1) increase yields; (2) improve logistics and diminish post-harvest losses; (3) enhance access to new markets; and (4) encourage adoption of improved crops and animal products, generating higher returns on investment and labor.

c. Use ‘food systems approach’ for enhanced nutrition and household food security. In the PSTA4,

MINAGRI will collaborate with other stakeholders to improve food availability, accessibility, stability and utilization. Resilience and risk mitigation strategies for food production systems will continue to be developed, particularly at the household level. Making agriculture and food systems nutrition-sensitive necessitates acting to ensure the nutrient quality of each commodity is preserved and or enhanced throughout the entire value chain.

d. Enhance climate smart production. PSTA4 seeks to promote on-farm measures and enabling actions to increase productivity and resilience. First, maintaining and promoting farmers’ practice of mixing crop varieties mitigates certain risks, including the spread of pest and diseases

8 The NST follows the EDPRS 2, ending in June 2018, and will implement the last years of Vision 2020 and the first four years of the Vision 2050. 9The NTS targets urbanization to reach 35 percent by 2024 from 17.3 percent in 2014.


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as well as ensuring dietary diversity. Second, PSTA4 emphasizes alternative land management to complement terracing with comprehensive climate smart soil and integrated watershed management.

e. Focus on diversified higher value agricultural products (horticulture, vegetable, poultry, pork,

fisheries). PSTA4 focuses on facilitating private sector investment in fruit and vegetable production though the formulation of appropriate Sanitary and Phytosanitary (SPS) quality standards as well as supporting the demonstration of better technologies such as green houses, hydroponics and other small-scale irrigation solutions.

f. Strengthen Innovation and Extension. PSTA4 recognizes that agricultural transformation will require research and innovation at the central level (e.g. introducing new varieties, disease mitigation, etc.) as well as strengthening farmers’ knowledge and skills to support specialization, intensification, diversification, and value addition. Expanded use of ICT can increase the impact of extension and improve market information, service delivery, financial inclusion, climate risk adaptation, and farmer feedback.

g. PSTA4 seeks to also redefine the way MINAGRI works with key stakeholders in the sector. Specifically, efforts are focused on clarifying, adjusting or establishing coordination mechanisms that are required for more effective and efficient management of public investments and significant increases in private sector investment.

38. While MINAGRI and its implementing agencies RAB and NAEB play the central role, other institutions hold significant mandates under the strategy. PSTA4 is therefore a guiding document for stakeholders beyond MINAGRI and its agencies, as reflected in the focus on joint planning and budgeting for PSTA4 implementation. The strategy builds on achievements under PSTA3 and will introduce new ways of improving crop and animal resources productivity and production to increase the wealth in the agriculture sector. 39. PSTA4 is structured around the following 4 Priority Areas:

o Priority Area 1: Innovation and Extension is the knowledge base for Priority Areas 2 and 3. The focus is to improve agronomic knowledge and technology in terms of basic research and innovation, development of good extension services, as well as knowledge and information further down the value chain.

o Priority Area 2: Productivity and Resilience. The traditional core responsibility of MINAGRI is to

increase the production of crops and animal resources. PSTA4 will see increased attention to ensuring that production is nutrition sensitive, sustainable and resilient. Priority Area 2 feeds the value chains in Priority Area 3.

o Priority Area 3: Inclusive Markets and Value Addition improves value chains by focusing on

linkages between production and processing. This includes key input markets such as fertilizers, insurance and finance as well as upstream activities such as aggregation, promotion of value addition, market infrastructure, and export readiness.

o Priority Area 4: Enabling Environment and Responsive Institutions provides the regulatory


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framework and redefines public sector involvement. PSTA4 aims to improve evidence-based policymaking through better collection and handling of information and enhanced capacity for analysis and policy development, and to improve the planning process, particularly by addressing coordination between stakeholders.

40. Though the PSTA4 is a holistic strategic plan for the agriculture sector, it goes beyond the scope of MINAGRI and fully considers the driving role of private sector investments. The total program expenditure for the first half of the PSTA4 government program period (2018-2019 – 2020-2021), is RWF 279.9 billion (US$377.8 million).

B. PforR Program Scope 41. The responsibility of agriculture public sector institutions, and of MINAGRI in particular, to lead the national transformation process outlined in PSTA4 is clear. The achievement of this transformative agenda will require intense policy work, with a particular focus on how to promote and support agribusiness at all stages of key value chains, while balancing commercialization with poverty reduction and environmental sustainability in a complex, dynamic and risk prone national and regional context. The nature of this leadership will be less through the direct delivery of services and more through “thought leadership10”, problem solving, policy definition, capacity building, joint enterprise or strategic partnership, resource mobilization, regulation, coordination, information management and communication. 42. There have been several organizational reviews of agriculture sector institutions as well as review and reform exercises intended to inform the transformation of the public sector. In addition, various reports and evaluations, including the 2016 Agriculture Public Expenditure Review (AgPER) and the 2017 Mid Term Review of the PSTA3 Strategy have raised significant issues of an institutional nature. Furthermore, recent sub sectoral reports or strategies including the Agriculture Finance Diagnostic and the National Agribusiness Investment Promotion Strategy (NAIPS) make clear the need for institutional reform. 43. The PforR Program, which supports the first three years of the PSTA4, has incorporated the recommendations from these reviews and studies into its design. In addition, the design draws on the lessons learned from previous attempts to build capacity within MINAGRI, including the first PforR Program. Specifically, the attempts to undertake reforms without significant attention to a well-designed reform process, sustainably addressing Human Resource constraints, ensuring communication/coordination are prioritized, and ensuring new ways of working are well designed and appropriately incentivized, have limited their impact. As a result, the PforR Program takes a sequenced, focused and results based approach to the institutional change process central to its design.

44. The scale and complexity of the PSTA4’s institutional reform agenda is significant and will take time. It will take time for MINAGRI to fully establish and strategically apply its “thought leadership” capacity. Many of the expected outcomes will only be fully delivered, at the required scale, during the latter years of PSTA4 implementation. In that context, the PforR Program, which supports the first three years of PSTA4, is focused on a series of mutually reinforcing interventions - some of which are activities,

10 The term “thought leadership” refers to MINAGRI building a reputation as an agency with recognized capacity to analyze the strategic context, design solutions to challenges and broker the delivery of those solutions with relevant partners.


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that will deliver intermediate outcomes but, more importantly, will incentivize organizational reform, create new policy instruments, build increased capacity, and establish new systems that will build a sound institutional platform to enable MINAGRI to deliver PSTA4. 45. The PSTA4 period is focused on establishing a platform for change and new ways of working, including the way MINAGRI is structured. Therefore, the focus of the proposed PforR operation will be on strengthening MINAGRI’s capacity to promote increased private sector investment, and to enable the commercialization of key agriculture value chains in Rwanda’s agriculture sector. There is a possibility of supporting the final three years of PSTA4 through additional financing, subject and without prejudice to normal World Bank approval procedures. 46. The PforR Program design is consistent with the World Bank Group’s approach to Maximizing Financing for Development. The PforR Program is “MFD-enabling” as it is aims to strengthen MINAGRI’s capacity to increase private sector investment and to enable the commercialization of key agriculture value chains. These opportunities were identified through value chain diagnostics (further elaborated in the Technical Assessment Annex 4). The design also takes into consideration the World Bank’s comparative advantage with regard to the PSTA4 priority areas. The program will help facilitate the GoR’s plan to leverage private sector investment in the commercialization agenda, which is expected within three years of the project’s closing date. The PforR Program’s organizing framework is based on the following four results areas. 47. Results Area 1: Policy and Organizational Reform – is aligned with PSTA4 Priority Area 1 and 4. The PforR Program will seek to improve the structure and strengthen MINAGRI’s capability to undertake sector analysis, associated policy reforms and design/introduce relevant financing mechanisms/business models for attracting private sector investment. MINAGRI will demonstrate this new capacity by producing a Private Sector Leveraging Strategy to guide processes that will leverage private sector financing, foster innovation, while ensuring environmental and social standards are maintained. In addition, the foundations for digital data systems will be designed and implemented with the aim of improving management information and enabling greater innovation. Furthermore, a new mechanism will be established to enable greater inter-agency coordination (including key stakeholders such as Ministry of Trade, Financial sector actors, etc.) and communication. Most of the costs for this result area will be to support activities such as hiring consultants, staging events, rolling out training, and improving technology. 48. Results Area 2: Enabling Agriculture Commercialization – is aligned with PSTA4 Priority Area 4. The PforR Program Results Area focuses on specific interventions to improve the quality of public investments in essential value chain services to leverage commercial agriculture. This includes key areas such as infrastructure and research, by introducing new business models that will link public investments to commercial markets and leverage increased levels of private sector investments. In addition, the promotion of Productive Alliances (PA) will strengthen the linkages between producers, buyers and the public sector within agriculture value chains. PSTA4 advocates for maximizing the effectiveness and efficiency of public investment by leveraging increased private sector investment in service provision and delivery/management of agricultural infrastructure. Most of the costs for this result area will be to support activities that include building infrastructure, Productive Alliance events and training staff. 49. Results Area 3: Delivery of Improved Agriculture Value Chain Services – is aligned with PSTA4 Priority Areas 3 & 4. The PforR Program will support fostering competitive agricultural value chains, which


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requires the public sector to provide critical services to support production, processing, logistics, marketing and the like. This approach is consistent with MFD principles. The public function supported by the PforR Program is to introduce and accelerate the expansion of services that reduce the risk of agricultural investments by improving dialogue between private and public actors, increasing the use of private sector service delivery (e.g. out-grower schemes and productive partnerships), and expanding access to information and financial services. These measures will help achieve a key anticipated outcome from PSTA4 and will improve productivity and inclusiveness of agricultural market systems and increase value addition and competitiveness of diversified agricultural commodities, for domestic, regional, and international markets. Most of the costs for this result area will support activities such as contracting out service providers (extension staff, vets, etc.), staging events (public private), and training staff. 50. Results Area 4: Efficiency in Public Expenditures - aligned with PSTA4 Priority Area 4. The PforR Program seeks to incentivize the dual approach of supporting: (i) a very specific action that demonstrates improved efficiency in public expenditure of the core delivery agency RAB; and (ii) a more general effort to improve the overall expenditure among the three main agencies that account for the largest share of sector expenditure. Since RAB is the agency responsible for key services, improvements in the budget execution system will be undertaken with the goal of improving their delivery function. Standards for budget execution help to maximize the impact of government spending and the inability to meet such standards signals weaknesses that undermines value for money. It also undermines the argument for additional public resources since there are associated concerns over malfeasance in the execution that render the Ministry of Finance and Economic Planning (MINECOFIN) reluctant to allocate additional resources. Previous audits of RAB have not been approved because of non-compliance in several important areas. Prior qualified audits have highlighted in detail where weaknesses lie and both agencies are aware of where improvements are needed. Most of the costs for this result areas will be centered on consultants (including: procurement, financial management specialists, etc.), consultations, training, and technology. 51. Implementation of the PforR will be sequenced. Specifically, under Result Area 1 MINAGRI will

develop and seek approval for a Private Sector Leveraging Strategy (with sections on selection criteria for

private investments, contract governance, and environmental/social management). Approval of the

Private Sector Leveraging Strategy will enable MINAGRI to focus on the delivery of Result Areas 2 and 3,

and ensure that the Program will not be supporting Private Public Partnership (PPPs) that have not been

screened and followed the process that has been established through the Private Sector Leveraging

Strategy. Through the screening process, investments that would not meet the principles of the PforR

policy would be identified and would not be eligible for support under the PforR Program.

52. The Boundaries of the PforR Program are summarized below in Table 1.


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Table 1: Government program and PforR Program Boundary Comparison

Item Government program PforR Program

Title PSTA4 PforR Program

Objective

Transformation of Rwandan agriculture from a subsistence sector to a knowledge-based value creating sector, that contributes to the national economy and ensures food and nutrition security in a sustainable and resilient manner.

To promote the commercialization of agriculture value chains in Rwanda.

Timeframe 2018-2024 2018-2021

Program Cost

US$ 3.7 billion US$ 289.92 million

Program Areas

PSTA4 Priorities and Sub priorities Included in the PforR Results Area

1 Innovation and Extension

1.1 Research and innovation development YES 1

1.2 Extension and advisory services YES 3

1.3 Skills developed for agriculture value chain actors

YES 2

2 Productivity and Resilience

2.1 Sustainable land husbandry and crop production intensification

YES 2

2.2 Effective and efficient under Integrated Water Resource Management frameworks

YES 2

2.3 Animal resources and production systems NO

2.4 Nutrition sensitive agriculture NO

2.5 Mechanisms for increased resilience NO

3 Inclusive Markets and Value Addition

3.1 Market linkages fostered (incl. market and aggregation infrastructure)

YES 2

3.2 Agricultural market risks and financial services

NO

3.3 Quality assurance and regulation NO

4 Enabling Environment and Responsive Institutions

4.1 Agricultural Institutions Development YES 1 and 4

4.2 Evidence based policies development and regulatory framework

YES 1 and 4

4.3 Strengthened partnership in the commercialization of agricultural sector value chains products

YES 1 and 3

4.4 Planning, coordination and budgeting YES 4

4.5 M&E&L, Information Systems and Statistics YES 1

Geographic Scope

National National

53. The Program boundary for PforR financing provides a clear strategic focus to the PforR Program. There are areas of PSTA4 that will not be covered by the PforR Program. These include:

a. improved soil health and fertility; b. conservation of biodiversity; c. skills development;


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d. animal resources and production systems; e. nutrition sensitive agriculture; f. mechanisms for increased resilience; g. quality assurance regulation; and h. knowledge management.

54. The rationale for not incorporating these areas into the PforR Program are: (a) MINAGRI is in the process of securing both public and external resources for these areas (including regional IPF and Global Agriculture and Food Safety Program); (b) these areas are unlikely to provide an equivalent transformation impact; and (c) areas such as mechanisms for increased resilience (strategic grain reserves) and quality assurance for Sanitary and Phytosanitary (SPS) laboratory development and maintenance), require highly specialized and focused technical support are, therefore, less suited to the focus of this specific operation. 55. The PforR Program DLIs will support PSTA4 to address climate risks and vulnerabilities. A summary of these contributions can be found in Table 2 (see Technical Annex for full details).

Table 2: Disbursement Linked Indicators and Climate Change Intent

Disbursement-Linked Indicator Climate Change intent DLI 1: Organizational Development Plan successfully prepared and implementation on track.

The process of organizational change will enable MINAGRI to build increased capacity to introduce institutional reforms that will enable private sector investment. In addition, the reforms will include a climate smart investment plan for MINAGRI, which will include building the capacity to model, forecast and adapt as changes occur and greater evidence becomes available to hone down climate change forecasts and the relevant response. There is a specific Program Action Plan to support this activity.

DLI 2: Improved analytical and policy reform competencies demonstrated.

The development of new policies and strategies will demonstrate MINAGRI’s capacity to respond to new/emerging challenges and opportunities of climate change. Specific examples of how this increased capacity may be demonstrated include the following: The promotion of more energy efficient greenhouses. Increasing access to water efficient irrigation systems. Reforming fertilizer subsidies to increase the efficiency of use.

DLI 3: Digital information platforms designed and operational.

Improved local climate information services and medium/short-term forecasting (extreme weather events, rising temperatures, dry spells, etc.). This action will support adaptation planning and strengthening ability of producers and markets to cope with climate change and climate variability impacts.

Improvements to the collection and management of data related to land use and livestock will improve MINAGRI’s capacity to track climate-related risks and hazards such as trends in crop and livestock pests and diseases.


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DLI 4: Mechanism to strengthen agriculture public-private dialogues (Ag.PPD) and agriculture value chain platforms designed and implemented.

A stronger dialogue between the Public and Private Sector (including farmer associations and other stakeholders) will allow for knowledge exchange and greater awareness of climate risks. For example, there could be consensus on: (a) effectives ways to address cassava brown streak disease; (b) reform regulations to enable farmers in drought prone regions to have increased access to water efficient irrigation systems; or (c) options for improving energy efficiency in cold storage systems.

DLI 5: New irrigation area identified, developed and/or managed where commercial viability has been a determining appraisal criterion.

The investments in irrigation will reduce the risks of drought by promoting sustainable water management practices and improving water use efficiency.

DLI 6 New terracing area identified, developed and/or managed where commercial viability has been a determining appraisal criterion.

The establishment of sustainable terracing will enable farmers to increase soil fertility (introduction of organic matter), reduce degradation (protect run off) and invest in agro forestry.

DLI 7: Volume of private sector investment (in US$) matching public financing in PPP infrastructure projects.

Investments will support both improved adaptation and mitigation actions; for example, introduction of energy efficient greenhouses will reduce the impact of weather risks and costs, and energy efficient cold storage systems will reduce the impact of heat and reduce costs. Overall these investments will reduce risks and ensure business continuity during and after extreme weather events.

DLI 8: Private sector extension service models designed, launched and achieving positive response.

The introduction of market driven services should increase access to knowledge and services including those related to climate change, for example, increased awareness of pest outbreaks, management of livestock diseases, improved use of fertilizer, etc. The reduced reliance on the public sector as the primary service provider will enable public resources to be refocused towards supporting farmers who are at greatest risk from climate-related hazards.

DLI 9: Reform of RAB. The aim is to ensure the key public-sector service provider increases its efficiency and effectiveness to implement the relevant actions in the Climate Smart Investment Plan (see DLI2).


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Table 3: Program Financing

Source Amount

(USD Million)

% of Total

Counterpart Funding 189.92 65.78

Borrower 189.92 65.78

International Development Association (IDA) 100.00 34.22

IDA Credit 100.00 34.22

Total Program Financing 289.92

56. Role of the Development Partners. MINECOFIN and MINAGRI will be mobilizing additional resources to finance PSTA4. There are indications that the Department for International Development (DFID), European Union (EU), International Fund for Agriculture Development (IFAD), and United States Agency for International Development (USAID) will be providing finance via project based financing or programmatic financing. 57. DFID is considering providing support for the PforR Program. Once this is confirmed, the most appropriate mechanism for its co-financing will be established (i.e., parallel financing, co-financing, establishment of a multi-donor trust fund, etc.). To the extent that other development partners (DPs) participate in co-financing the PforR Program, it is understood that their funding would need to fit into the overall program envelope under the PforR financing and would be allocated to the same DLIs, according to a similar pattern of distribution (in agreement with the Common Framework of Engagement) of the MDTF, following all existing procedures of the PforR instrument (i.e., DLIs, verification protocols, PAP, Program Implementation). 58. DFID, EU, IFAD, USAID, Food and Agriculture Organization (FAO) and the Netherlands will continue to provide Technical Assistance (TA) to address the recognized capacity gaps within MINAGRI. These DPs are planning to continue TA support for the implementation of PSTA4. These same DPs are also part of the Agriculture Sector Working Group (ASWG), which provides an important forum to coordinate the complementarity of TA interventions, and is also part of the annual planning and budgetary processes. Discussions are underway to explore the most appropriate modalities to be followed. Having multiple DPs finance the PforR operation would streamline and reduce transaction costs for MINAGRI by having one mechanism with agreed upon results and a common set of DLIs. It would also simplify the financing to support strategic results, whether policies, impacts, outcomes, and/or outputs. DPs who wish to provide co-financing under the proposed PforR operation will follow the same procedures as the PforR Program.


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C. Program Development Objective(s) (PDO) and PDO Level Results Indicators

59. The Program Development Objective is to promote the commercialization of agriculture value chains in Rwanda. The following three PDO indicators will serve to measure achievement of the PDO.

a. PDO Indicator 1: Performance of MINAGRI and RAB in achieving the milestones established in their respective Organizational Development or Restructuring implementation plan (Percentage)

b. PDO Indicator 2: Improvements in the Enabling Business of Agriculture (EBA) Scores (Number) i. EBA Seed

ii. EBA Fertilizer iii. EBA Markets

c. PDO Indicator 3: Private investment in agriculture value chain services (US$)

D. Disbursement Linked Indicators and Verification Protocols

60. An assessment undertaken as part of PSTA4 identified key bottlenecks that have restricted MINAGRI’s progress to becoming a market enabler. These are as follows:

MINAGRI’s (including RAB and NAEB) organizational structure and its various specialties limits its capacity to completely fulfill its mandate in policy development, sector coordination, resource mobilization and M&E.

Access to key infrastructure (irrigation, post-harvest technology, etc.) remains limited. Levels of private sector investment have consistently fallen below targets set by MINAGRI. Input supply systems are not sufficiently responsive to the demands of production systems.

The state services/interventions are strongly supply driven. Most sector expenditures are channeled into production-focused extension tasks delivered by the state. Incentives for agribusinesses to collaborate with farmer groups are insufficient.

There is a need to maximize the impact of government spending for efficiency and improvements in the delivery of the public services budget process (including execution). Standards for budget execution are poor and the inability to meet such standards signals weaknesses that undermine value for money.

61. The PforR Program’s four Results Areas would address the above-mentioned bottlenecks. These areas reflect the MFD concept by focusing on the overall policy context (Results Area 1), recognizing that a key element of the new NAP/PSTA4 is leveraging private sector investment in the commercialization agenda (Results Area 2), but that there remains a need for the public provision of services alongside the greater use of private sector delivery mechanisms (Results Area 3), and that where public provision remains, improving the effectiveness of those public services – including value chain infrastructure – is key (Results Area 4).


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62. The selected DLIs represent key milestones in the achievement of Program outcomes. Indicators that help to address multiple Results Areas were given priority. To keep the number of DLIs manageable, some indicators were consolidated into one DLI.

Table 4: Summary of Disbursement Linked Indicators

Disbursement-Linked Indicator

Definition Target Total Amount

(US$ millions)

Responsible

Results Area 1: Policy and Organizational Reform

DLI 1: Organizational Development Plan successfully prepared and implementation on track

Organizational review, including capacity needs assessment of MINAGRI completed and new functional structures in place (year 1)

OD Plan for MINAGRI prepared and approved (year 2)

Upgrade of HR management function completed (year 3)

Yes Yes Yes

Total 10 4 4 2

MINAGRI

DLI 2: Improved analytical and policy reform competencies demonstrated

Private Sector Leveraging Strategy

with Implementation Plan published

(year 1)

Annual Report by MINAGRI on Public-

Private Investment in Agriculture

published (year 2)

Agricultural input subsidy schemes

reviewed, alternative models for

increasing efficiency assessed,

reforms agreed and implemented

(year 3)

Yes Yes

Yes

Total 10

4 2

4

MINAGRI

DLI 3: Digital information platforms designed and operational

A common data warehouse platform

is designed and ready for use,

whereby existing data in MIS and

Agriculture Land Information System I

(ALIS) are fully interfaced (at least

Yes

Total 8 2

MINAGRI


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down to the level of all districts) –

(year 1)

The Farmer registration application

and ALIS II are fully interfaced with

MIS and ALIS I in the common data

warehouse platform. Both, Farmer

registration and ALIS II, will hold data

covering all districts - (year 2)

The Livestock registration application

(holding cow data with national

coverage) will be interfaced with MIS,

ALIS I and II, Farmer registration

application in the common data

warehouse platform (Year 3);

Sector Performance Dash Board is in

place and publicly accessible online,

whereby it provides reports on

national agricultural macro indicators,

national Indicator of Food Security

and PSTA 4 results indicators

(year 3)

Yes Yes Yes

2 2 2

DLI 4: Mechanism to strengthen Agriculture Public-Private Dialogues (Ag. PPD) and Agriculture Value Chain Platforms designed and implemented

Two mechanisms designed, piloted, and budgeted: (1) National Ag. PPD on themes with strategic relevance and (2) Commodity value chain platforms (year 1)

Two national Ag. PPDs held and at least 3 Agriculture VC platforms established with operating plans (year 2)

Additional 2 Ag. PPDs held (year 3)

Agriculture VC platforms are fully functional and yielded evidence of satisfactory results (as per M&E of operating plan) (year 3)

100% 100% 100%

Yes

Total 8 2 2 2

2

MINAGRI


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Results Area 2: Enabling Agricultural Commercialization

DLI 5: New irrigation area identified, developed and/or managed where commercial viability has been a determining appraisal criterion

number of ha identified, developed and put under recognized PPP increased (year 2)


1260

1680

Total 10 5

5

RAB

DLI 6: New terracing area identified, developed and/or managed where commercial viability has been a determining appraisal criterion



745

2310

Total 10 5

5

RAB

DLI 7: Volume of private sector investment (in US$) matching public financing in PPP infrastructure project

Volume of private sector investment (in US$) matching public financing in PPP infrastructure projects

number of US$ Mil (year 2)

number of US$ Mil (year 3)

4.00 7.15

Total 20 10 10

RAB and/or NAEB

Results Area 3: Delivery of Improved Agricultural Value Chain Services

DLI 8: Private sector extension service models designed, launched and achieving positive response

number of farm households reached by private advisory services (non-out grower scheme) has increased (year 2)

number of additional farm households reached by private advisory services (non-outgrower-schemes (year 3)

6,000

8,000

Total 15 5

5

RAB


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number of new farm households participating in outgrower schemes has increased (Year 3)

10,000

5

Results Area 4: Efficiency in Public Expenditures

DLI 9: Reform of RAB

Implementation Plan for RAB Restructuring Order prepared and approved by its Board (year 1);

+/-3% Deviation between budget and out turn expenditure 2019/20 (year 2); and

Unqualified audit opinion on financial statement of RAB (year 3)

Yes

(+/-3%) Yes

Total 9 3

3 3

RAB

Rationale for the selection of the DLIs 63. Results Area 1: Policy and Organizational Reform. The DLIs seek to incentivize three key areas: (a) supporting MINAGRI to become more fit for purpose; (b) the delivery of relevant strategic outputs (private investment paper, subsidy policy reform, and flagship reports) that provide practical guidance for future decisions; and (c) new ways of working with key stakeholders who are operating inside and outside government. The Private Sector Leveraging Strategy with an Implementation Plan in DLI 2 Year 1 will influence the investment results targets in DLIs 5,6, 7 and 8 which occur in years 2 and 3 of the PforR Program. No support for investments intended under DLIs 5,6, 7 and 8 will take place unless the PPP investments have been screened by the mechanism outlined in DLI 2 year 1. 64. Results Area 2: Enabling Agricultural Commercialization. These DLIs seek to mainstream successful private public business models that have been piloted both by other agencies and projects. 65. Results Area 3: Delivery of Improved Agricultural Value Chain Services. The goal is to contribute to the de-risking of agriculture investments. In that context, the DLIs seek to expand the range of services being offered to the agriculture sector and increase access to higher quality services. 66. Results Area 4: Efficiency in Public Expenditures. The PforR Program seeks to incentivize the dual approach of supporting: (i) a very specific action that demonstrates improved efficiency in public expenditure of the core delivery agency RAB; and (ii) a more general effort to improve the overall expenditure among the three main agencies that account for the largest share of sector expenditure. DLI Verification Process 67. Building on the experience from the previous PforR operation, the proposed PforR Program introduces a more rigorous and transparent process by basing the verification on principles of international auditing practices, where ‘assurance engagement’ is being used as the overall guiding framework.


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68. Assurance engagement involves three parties: the auditor, i.e. Office of the Auditor General (OAG); the responsible Party, i.e., MINAGRI; and the intended user, i.e., MINECOFIN and World Bank. In such a framework, it will be MINAGRI’s duty to:

(i) prepare and present the DLI reports in accordance with the agreed protocols and reporting framework;

(ii) design, implement and maintain internal control relevant to the preparation and presentation of DLI reports that are free from material mis-statements, whether due to fraud or error; and

(iii) provide complete information to the OAG.

69. The OAG’s role is to provide assurance to MINECOFIN and the World Bank, that the subject matter is free from material mis-statements, and uses suitable criteria and sufficient appropriate evidence for arriving at a reasonable assurance engagement. 70. Detailed DLI data and evidence protocols were prepared during design, and will be applied by MINAGRI to monitor DLIs and provide comprehensive evidence information to the OAG. The auditor will use the same protocols and any other agreed requirements as a frame of reference/benchmark to evaluate the reported measure. 71. The OAG will prepare and share with the World Bank, an assurance report containing a conclusion that conveys the assurance obtained about the reliability of the internal control system and hence each DLI. The World Bank, as the primary intended user of the assurance engagement report, will make its disbursement decisions accordingly (see figure 1). 72. It is envisioned that after the first year and at the end of the PforR Program, the World Bank would commission an external quality assurance of the audit, to further strengthen the robustness of the process being implemented.

https://en.wikipedia.org/wiki/Materiality_(auditing)


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Figure 1: PforR Program DLI monitoring and verification process

III. PROGRAM IMPLEMENTATION

A. Institutional and Implementation Arrangements

73. The proposed PforR operation will rely on the existing PSTA4 institutional and implementation arrangements. The PSTA4 is focused on interventions strictly within the remit of the MINAGRI and its associated institutions RAB and NAEB. While MINAGRI is the GoR’s principal policy making entity for agriculture, RAB and NAEB have primary responsibility for service delivery. Accordingly, they command most of the resources allocated to the sector – 80 percent during the PSTA3 period. The relationships between these two institutions and MINAGRI is complex and requires new measures to enhance accountability and coordination. Investment in these areas will improve MINAGRI’s ability to deliver results in those areas where key actions are required by the two other agencies. In this context, the PforR Program seeks to strengthen the relationship between RAB, NAEB and MINAGRI. It also seeks to strengthen the functioning of RAB directly as a major recipient of public expenditures for the sector. 74. A new law governing RAB was passed on May 1, 2017 that anchors ongoing reforms and reconfirms its status as a non-commercial public institution and reasserts its broad mandate. The Law renames RAB the Rwanda Agriculture and Animal Resources Development Board (while retaining the original acronym). Importantly, the new Law confirms that RAB falls strictly under the supervisory authority of MINAGRI, but that “a Prime Minister’s Order determines the supervising authority of RAB”.


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Its Director General and Board of Directors are all appointed by the Cabinet. 75. The Planning Department in MINAGRI will be responsible for coordinating and monitoring Program implementation. The relevant lessons from the evaluation of the previous PforR Program are being applied to the current Program.

76. The Government is increasingly seeking to transfer responsibility for delivery to district-level authorities, even though the existing evidence indicates a trend of deconcentration rather than decentralized decision-making. The institutional assessment reported stakeholders’ views that district authorities were better placed to provide solutions to farmers’ problems. Yet the AgPER concludes that PSTA3 devolved largely peripheral functions to districts and that “decentralized expenditures have little discretionary or devolved content, despite official policy to the contrary and evidence that districts can take on greater responsibilities”. 77. Lessons from the previous PforR operation have been applied to the implementation arrangements for the current Program. Specifically, the PforR Program seeks to incentivize the processes of organizational development, increasing capacity building, and implementing a robust monitoring and evaluation framework. It also has a narrowed implementation arrangement under MINAGRI and its supporting agencies. Community Engagement 78. As of November 2016, the World Bank team started working with Transparency International Rwanda (TI-RW) to further strengthen community engagement in agriculture sector planning. This four-year project aims to increase farmers’ ownership of agricultural development processes, programs and projects through their effective participation in the planning, monitoring and evaluation of the district performance contracts “imihigo”; deepen cooperation between communities and government officials at district level; and integrate the lessons learned from pilot districts (Nyanza and Kayonza) into the agricultural sector policy design at the district and national levels. The PforR Program will be strategically linked to the TI-RW. Flow of Funds 79. PforR operations operate within government systems, and use procedures and funds flow arrangements which are allowed under their own systems and legislation. MINAGRI and, where appropriate, RAB and NAEB will ensure that PforR resources are properly incorporated into their respective annual budgets and disbursed in line with the expenditure framework to achieve the DLIs.

B. Results Monitoring and Evaluation

80. The proposed PforR operation’s M&E arrangements build on the lessons learned from the previous PforR and IPF operations. The PforR Program will have an M&E system that is embedded in MINAGRI’s MIS and the new digital platforms. It will facilitate the regular monitoring of project progress and results indicators as laid out in the: (i) results framework matrix (annex 1); (ii) Core Results Indicator (CRI) reference sheets (annex 1); and (iii) DLI definitions and verification protocols (annex 2). In addition, a web-based DLI data documentation and evidence repository application is envisioned, to help document and track DLI audit trails in a transparent and timely manner.


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81. As part of the restructuring of MINAGRI, it is anticipated that a M&E unit will be established in the Ministry. It will be responsible for coordinating PSTA4’s M&E, including: (i) designing, implementing and maintaining PforR related data collection systems and their quality control; (ii) semi-annual reporting on all DLIs and Core Results Indicators (CRIs); (iii) organizing M&E capacity development at MINAGRI, RAB and NAEB; and (iv) preparing ToRs for surveys, reviews and evaluations, and overseeing implementation.

C. Disbursement Arrangements

82. DLI Verification Process. While the verification protocol is formulated given the nature of the DLIs, for the majority of DLIs, MINAGRI’s Department for Planning will be responsible for gathering all data and evidence of completion of the PforR Program results and DLIs from RAB and NAEB by the end of each July (fiscal year is end-June). MINAGRI will present an annual report to MINECOFIN, which will then submit a package to OAG for verification. OAG will present a verification report to the World Bank, upon which the agreed full disbursement or portion thereof would be made to GoR. Annex 2 provides further verification protocol details. 83. Advances. The GoR has given priority to transforming the public sector’s support to agriculture. Specifically, MINAGRI and other key public agencies will be moving away from direct service provision towards becoming market enablers. These new ways of doing business will be defined by a Private Sector Leveraging Strategy and supported by a comprehensive process of organizational change and reforms. However, the GoR faces serious fiscal constraints and has requested upfront resources to finance initial activities and facilitate the achievement of Year 1 DLIs. These include: (1) commissioning and managing a comprehensive organizational review – the review will require further institutional analysis, dialogue and consensus building on the capacity needs, and MINAGRI’s functional structures; (2) MINAGRI will be required to work with partners across government, donors and private sector to develop a strategy for Leveraging Private Sector Investment. This process will include consultation workshops, reviews of global/regional best practice, preparation of key documents, peer reviews, and formal approvals; (3) MINAGRI will seek to improve the quality and efficiency of IT information systems. Specifically, a new digital data platform will be designed and systems ensuring the platform can be populated, accessed and managed. This will require a dedicated team of qualified staff and the training of existing staff; and (4) RAB is the largest public-sector service provider in the agriculture sector. A reform process of RAB is urgently required. In the first year, a reform package will need to be agreed on and the process of reforms undertaken. The reforms will range from procurement, to budget, to decentralization. As most of these activities are new initiatives planned by the Government, there is currently inadequate resource provision for them in MINAGRI’s budget. These activities are critical foundational blocks for the achievement of the Program results and cannot be undertaken without sufficient financial support. In the absence of other immediate financial resources, the GOR requires 25 percent of the total financing proceeds to be disbursed as a PforR Program advance to allow critical activities to be undertaken and to ensure achievement of key Program results.

D. Capacity Building

84. The PforR Program will build MINAGRI’s capacity to design, roll out, govern, and monitor ways to increase private sector investment. MINAGRI and its agencies recognize the need to play a leading role across the transformation agenda. In this context, ensuring that MINAGRI’s structure and capacity are enhanced, specifically in key areas such as environmental and social governance, are early priorities.


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85. The Government, principally through the leadership of MINAGRI, has recognized and will address the various challenges or bottlenecks to change. Resources and expertise have been made available through budget allocations in PSTA4. In addition, development partner assistance is being mapped and aligned to help incentivize the change process. 86. The approach towards building capacity will be participatory and an incremental process of engagement, dialogue and firming up of the change plan be undertaken, rather than one that, jumps to a “blueprint” that does not command widespread understanding or support. 87. It is important to recognize that this is not just about organizational structure, rather it is a process that overlaps with human resource dimensions and encompasses ways of working, team interactions, management style, communication, gender, culture and other aspects that impact on organizational performance. 88. There are lessons to be learned from previous capacity building programs. Past programs have either not been implemented, only partially or inconsistently implemented, or may have fallen victim to broader organizational restructuring. In any case, capacity review and capacity building are not something that stops once a specific intervention is completed but should be a continuous element of the normal dynamic and adaptive management process for any organization. 89. The capacity building program that is required now must be part of and supportive of the broader organizational change agenda. It should include not only the acquisition of additional technical knowledge (whether through recruitment or training), but should encompass softer aspects of team work, management competencies and contribute to rising motivation and sense of purpose at the level of both individuals and the organization. It is critical that the capacity building program is mainstreamed within the PSTA4 framework and that there is one consistent approach that encompasses all sources of external support, rather than a series of fragmented, uncoordinated and potentially duplicative or at worst conflicting interventions. 90. It is important that the relationship between different categories of human resources; core Ministry staff, contract staff, consultants11 and interns is reviewed. The role of consultants in capacity building could also be important. In general, development partners and their agents need to be reflective in their thinking – recognizing that they are part of and play a critical role in the system, although this role may diminish over the duration of long term plans. Program Action Plan (PAP) 91. A PAP has been prepared with specific Program actions related to technical systems, agency capacity, and performance, and includes risk mitigation measures to improve the Program based on the various assessments and key risk management measures proposed in the risk assessment. The technical, fiduciary, and environmental and social systems assessments highlighted a series of cross-cutting risks. The resulting key actions and risk mitigation measures form the basis of the PAP. While the overall PSTA4 is sound, these additional actions will facilitate effective implementation and meet and contribute to international good practice.

11 short and long term


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92. Review of Agriculture guarantees schemes. Supporting Matching Grants and PPPs serve as entry points into expanding private sector financing in the agriculture sector. However, further analysis of agriculture financing is required. Specifically, the Rwanda Agriculture Finance Diagnostic Report, 2017 highlighted the need to strengthen Business Development Fund (BDF) operations in general and enhance its agriculture sector domain knowledge and analytical capacity. The ongoing BDF reforms that aim to streamline its core services and strengthen its governance represent an opportunity to strengthen its role in providing key financial services to the agriculture sector. Of particular importance are efforts to improve the management of the BDF’s portfolio guarantees (because most agricultural loans are small loans for which individual loan guarantees would not be appropriate) and efforts to reduce the Non-Performing Loans (NPL) levels of the guaranteed portfolio (because the bulk of the NPLs are in the agriculture sector). In this context, the Diagnostic report recommended a comprehensive review of agriculture guarantee schemes. This review will provide important analysis for the PforR Program support to Matching Grants and PPPs more broadly. 93. Gender Mainstreaming. The GoR has made a strong political commitment to gender equality and is determined to see this reflected in government policies at all levels. MINAGRI, guided by its agriculture gender strategy, will continue to make concerted efforts to mainstream gender and engage in gender sensitive policy making and programming. Interventions under PSTA4 make specific gender-responsive provisions to target and include women, and design solutions that are tailored to their gendered needs and challenges. In addition to mainstreaming gender, specific activities are proposed to further women’s economic empowerment and engagement in decision-making processes. Special consideration is also given to youth to stimulate profitable engagement in agriculture and agribusinesses, through developing skills and promoting entrepreneurship. There will be dedicated staff in the M&E unit to ensure that gender and youth issues are addressed and mainstreamed.

94. Building Resilience to Climate Change. To ensure their inclusion in the planning and programming cycles, climate change issues were mainstreamed into the PSTA4 activities during its formulation. Moving to implementation, it is envisaged to develop internal capabilities for each of these topics and assign focal points in MINAGRI. These focal points would have a dual role: ensuring training throughout the sector and across relevant implementation institutions on these key issues, and verifying the integration on these issues in the sector program and projects. In parallel, a new set of climate and environment mainstreaming indicators will be agreed with the Rwanda Environmental Management Agency (REMA) for MINAGRI, linked to NST (sustainable agriculture) and Vision 2050.

95. Improving the alignment and strategic focus of Technical Assistance: While the Results Areas focus on the implementation of an OD strategy, there is a broader reform agenda within MINAGRI and associated agencies that is a pre-requisite for successful implementation of the whole PSTA4 program. This element of the PAP will also serve to underpin the strategic deployment of the externally-funded TA to support the PSTA4 transformation agenda and, where appropriate, facilitate the delivery of the key results areas.

96. Food Security and Nutrition Monitoring. While the proposed PforR Program focuses on efforts to leverage private activity in agriculture, the food security and nutrition agenda is a major priority for the GoR and a World Bank focus area. The PSTA4 sets out a multi-dimensional approach to food security and nutrition under its Impact Area 3 based on improvements in availability, accessibility, price stability and food utilization. It will be important to assess the impact of both private and public investment on vulnerability to shocks at the household level. Consequently, a transparent and accessible system for


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monitoring food security and nutrition is an important area where improved MINAGRI capacity should be demonstrated.

97. Medium-Term Expenditure Framework (MTEF) and a comprehensive Public Expenditure Review. To ensure effectiveness and sustainability of PSTA4’s reform agenda, approaches to budget, planning and execution should be strengthened and closely monitored. In this context, the commitment of public resources into PSTA4 should be monitored by reviewing the MTEF. In addition, a more comprehensive review should be undertaken in the form of a Public Expenditure Review to be completed by December 2020. 98. Annual Audit Action Plan. The audit opinion on RAB financial statements has been consistently qualified and signals an ineffective, inefficient use of public resources and could jeopardize the achievement of sector strategic objectives. The program is providing incentives via a DLI to improve the accountability at RAB and achieve a clean audit opinion during the third year of the program. This is complemented by a PAP with a sound annual action plan to address the weaknesses highlighted by the Audit committee, which will be submitted to the World Bank. 99. Environment and Social Compliance. The Private Sector Leveraging Strategy will draw on international and national best practice to describe the process for assessing private sector partners and to establish the selection and performance criteria for participating private sector entities. Selected private sector organizations, require adequate quality Environmental and Social Management Systems (ESMS) (as specified in section 4 of the Environmental and Social Systems Assessment [ESSA]) to be developed and adopted as a prerequisite to their participation in the Program. An environmental and social checklist will be developed to ensure that ineligible investments under the PforR Policy are not undertaken and that requisite approvals are taken before any scheme/intervention is financed. 100. Land Acquisition and Compensation. The Private Sector Leveraging Strategy will include conditions for PPP design, such as land acquisition and compensation management to be done by the public sector (continuing the good practices established under publicly financed MINAGRI projects). In preparation for the Strategy, a review of the quality and impact of Environmental and Social (E&S) assessments of the existing private sector investments will be conducted and recommendations on the scope of their inclusion into the Private Sector assessment process will be made. 101. Environmental and Social Implementation Manual (ESIM). The Private Sector Leveraging Strategy will contain a section on addressing environmental and social aspects of program implementation. This will include: cumulative impacts of new water management systems, protection of genetic diversity of crops, resettlement, equity and benefit sharing, social inclusion processes and procedures, roles and responsibilities of all stakeholders and sub-program cycle to facilitate planning, implementation and post implementation. The relevant sections of the strategy will draw on the ESIM developed under PSTA3. The ESIM will be subject to an annual review and, if necessary will be updated.

102. Environment capacity building and technical assistance. Training of national, district and private sector contractors to improve the understanding and application of the GOR’s Environment and Social (E&S) policies and the ESIM will be undertaken on an annual basis. An annual report on the training will be produced.


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103. Social and Environment Audit. The Office of the Auditor General will conduct an audit to ensure that activities were in compliance with environmental and social standards as mapped out in the Leveraging Strategy. 104. Grievances Redress Mechanism. The system established and made operational under PSTA3 will continue to operate. The mechanism will accept, resolve conflicts and document all grievances. An annual report will be produced.

IV. ASSESSMENT SUMMARY

A. Technical (including program economic evaluation)

105. A detailed technical assessment of the Program was undertaken during preparation of the PforR operation. A summary of the assessment findings is included in Annex 3. 106. Programmatic Strategic Relevance. PSTA4 presents a considerable departure from previous Strategies12 in that it explicitly establishes a new strategic orientation with clear principles for determining public investment. It is positioned explicitly as the strategic plan for implementing the NAP and restates the latter’s vision statement. Its objective is the “transformation of Rwandan agriculture from a subsistence sector to a knowledge-based value creating sector, that contributes to the national economy and ensures food and nutrition security in a sustainable and resilient manner.”

107. As described in section II, a summary of key areas where PSTA4 represents a change in the strategic direction for Rwanda’s Agriculture Sector are:

(i) Stronger role of private sector (including farmers) with government shifting from market actor to market enabler;

(ii) Focus on farm profitability and commercialization; (iii) Use of the ‘food systems approach’ for enhanced nutrition and household food security; (iv) Enhance climate smart production; (v) Focus on diversified higher value agricultural products (horticulture, vegetable, poultry, pork,

fisheries); (vi) Strengthen innovation and extension; and (vii) Emphasis on collaboration among stakeholders.

108. The PforR Program seeks to support the transformational aspects of the PSTA4 by focusing resources around the agenda that seeks to build a stronger role of the private sector (including farmers) with government shifting from market actor to market enabler. The Program design draws on a socially inclusive commercial agriculture model of investment and MFD by focusing on the overall policy context (Results Area 1), recognizing that a key element of the new NAP/PSTA4 is leveraging private sector investment in the commercialization agenda (Results Area 2), but that there remains a need for the public provision of services alongside the greater use of private sector delivery mechanisms (Results Area 3) and that where public provision remains, improving the effectiveness of those public services – including value chain infrastructure – is key (Results Area 4). See section II for a summary of the activities in each result

12 Previous Strategies include PSTA 1 [2004-2008], PSTA 2 [2009-2012] and PSTA 3 [2013-2018].


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area. 109. The World Bank’s Agriculture Global Practice has been supporting socially inclusive commercial agriculture through investment operations in countries across Africa including: Ghana, Zambia, Cameroon, Niger, Tanzania, Morocco, and Uganda. The content of the interventions in the PSTA4 that are being supported directly under the PforR Program draws upon this rich experience that has proven to be technically sound and has delivered results. 110. The PforR Program design also draws on innovation and experience of work being tested in Rwanda. For example, matching grants are being provided to farmers and agribusiness small-medium enterprises (SMEs) to stimulate technology adoption, increase input use, and links between private and public investments successfully explored.

111. In summary, elements of the PforR Program deployed in Rwanda previously, have been on a small scale and typically supported by external partners. The proposed PforR Program is innovative in: (i) scaling up these approaches; and (ii) integrating them into the Government program through the PforR instrument. 112. Expenditure Framework. The expenditure framework presents an adequate basis for the Program. To ensure effectiveness and sustainability of the Program, some areas should be strengthened and closely monitored: (i) commitment of the Government and translation of the Strategic Plan for Agriculture Transformation, 20018-2024 (PSTA4) into MTEFs and annual budgets; (ii) realistic planning and costing of the PSTA4 considering actual agriculture expenditure were significantly lower than in the PSTA3 (2013-2014 - 2017-2018); and (iii) clear alignment of budget inputs to outputs and outcomes to ensure, in the short term, the achievement of the Disbursement Link Indicators (DLIs) and the impact and leverage of the PforR Program on the government program. Furthermore, the Program should streamline institutional arrangements (central-local governmental intergovernmental fiscal relations and the proposed Agriculture Development Fund) and provide information to improve resource predictability, budget systems and alignment with government priorities in the agriculture sector, while creating complementarity with other Public Financial Management (PFM) projects supported by the World Bank. Finally, the recommendations of the expenditure assessment are closely aligned and complementary to those presented in the fiduciary assessment. 113. The Program boundaries. The PSTA4 has four priority areas and 16 sub-priority areas. The PforR Program is linked to 11 out of 16 sub priority areas of the strategy and this defines the Program boundaries. The PSTA4 is a six year strategy (2018-2024) while the PforR Program covers the period 2018-2019 – 2020-2021. The estimated PSTA4 cost for the overall period is RWF 2.756 billion (US$ 3.7 billion)13. The government expenditure framework is determined by selecting the budget sub-programs that relate to the implementation of the PSTA4. 114. The expenditure framework is based on the budget line items in the Chart of Accounts in the 2018-2019 – 2020-2021 government budget proposal14. Table 5 below shows the Total Program Expenditure, which is comprised of the planned medium-term expenditure from the 2019-2020 MTEF funded by the Government and other development partners. The total is 279.9 billion RWF (US$ 377.8

13 The government program expenditure framework for the entire six years of PSTA4 is currently not available. Costing was conducted as part of the preparation of PSTA4. 14 The MTEF 2018/19-2020/2021 has not yet been approved by Parliament.


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million).

Table 5: Government program expenditure framework for 2018-2019 – 2020-2021 (RWF billion)

MINAGRI-RAB-NAEB-DISTRICTS budget sub-programs

2018-2019 2019-2020 2020-2021 Total

RAB 0901EH01 Research and Innovation 4.03 9.29 17.81 31.12

MINAGRI EE01 Agriculture Sector Planning, Coordinator, Financing

3.31 4.85 4.86 13.02

DISTRICTS Agriculture Research and Extension (Extension Services and Technology Adaptation and Skills Development)

0.55 0.66 0.83 2.04

RAB 0901EH02 Extension Services and Technology Adaptation and Skills Development

0.11 0.10 0.10 0.31

MINAGRI 0900EE03 Crop Policies and Strategies Development

0.09 0.09 0.09 0.26

RAB 0901EG01 Sustainable, Diversified and Climate Smart Crop Production and Productivity

21.99 22.71 23.03 67.73

DISTRICTS Sustainable Crops and Animal Resource Production and Productivity (Area of land protected against soil erosion and productivity of the terraced area increased)

1.20 1.44 1.80 4.44

DISTRICTS Sustainable Crops and Animal Resource Production and Productivity (Agricultural productivity in the acidic soils of Rwanda increased)

0.94 1.13 1.41 3.49

DISTRICTS Sustainable Crops and Animal Resource Production and Productivity [Area developed through small scale technologies (SSIT) increased]

0.98 1.18 1.47 3.63

MINAGRI 0900EE02 Animal Resources Policy, Strategies Development

0.12 0.14 0.14 0.39

RAB 0901EG02 Sustainable Animal Resources Production and Productivity

2.29 2.38 1.75 6.42

DISTRICTS Sustainable Animal Resources Production and Productivity (Agricultural productivity increased through genetic improvement and vaccination)

0.32 0.38 0.48 1.18

RAB 0901EG03 Nutrition sensitive agriculture and Resilience Mechanisms

14.07 14.40 14.07 42.54

DISTRICTS Nutrition sensitive agriculture and Resilience Mechanisms (Malnutrition reduced among households)

7.12 8.54 10.68 26.34

RAB 0901EF05 Farmers -Market linkages infrastructures

2.50 2.50 2.50 7.49

NAEB 0902EF03 Export Diversification 4.19 5.08 6.19 15.46

MINAGRI 0900EF01 Food Systems for domestic market supply

3.21 3.76 4.84 11.81

NAEB 0902EF02 Traditional Export Crop Development

4.17 6.98 7.40 18.55


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MINAGRI 0900EF04 Quality Assurance and Regulation

0.05 0.05 0.26 0.36

MINAGRI 09000101 Administrative and Support Services

1.53 1.68 1.94 5.15

RAB 09010101 Administrative and Support Services

4.47 4.72 5.10 14.28

NAEB 09020101 Administrative and Support Services

1.22 1.30 1.44 3.97

TOTAL 78.45 93.34 108.17 279.97

Source: MINECOFIN

115. Table 6 below shows the total expenditure for the part of the Government program supported by the PforR Program15. This is constituted by the original planned medium-term expenditure from the 2018-19 - 2020-21 MTEF funded by Government and other development partners16plus increased allocation from the proposed PforR. The total estimated PforR budget is RWF 214.8 billion (US$ 289.92 million).

Table 6: The expenditure framework for the program supported by the PforR Program 2018-2019 – 2020-2021 (RWF billion)

MINAGRI-RAB-NAEB-DISTRICTS budget sub-programs 2018-2019 2019-2020 2020-2021 Total

MINAGRI EE01 Agriculture Sector Planning, Coordinator, Financing 6.8 8.3 8.3 23.4

DISTRICTS Agriculture Research and Extension (Extension Services and Technology Adaptation and Skills Development) 2.0 2.1 2.2 6.3

RAB 0901EH02 Extension Services and Technology Adaptation and Skills Development 0.4 0.4 0.4 1.3

MINAGRI 0900EE03 Crop Policies and Strategies Development 1.3 1.3 1.3 4.0

RAB 0901EG01 Sustainable, Diversified and Climate Smart Crop Production and Productivity 26.9 27.7 28.0 82.6

DISTRICTS Sustainable Crops and Animal Resource Production and Productivity (Area of land protected against soil erosion and productivity of the terraced area increased) 4.6 4.8 5.2 14.6

DISTRICTS Sustainable Crops and Animal Resource Production and Productivity (Agricultural productivity in the acidic soils of Rwanda increased) 2.6 2.8 3.1 8.5

15 A more disaggregated PforR Program expenditure framework at output and activity (budget line) level will be drawn during the implementation of the Program. 16 The PforR Program supports a subset of the PSTA4 strategy, as outlined in Table 1 above, therefore only the relevant budget sub-programs are considered.


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DISTRICTS Sustainable Crops and Animal Resource Production and Productivity (Area developed through small scale technologies (SSIT) increased) 2.6 2.8 3.1 8.6

NAEB 0902EF03 Export Diversification 7.3 8.2 9.3 24.9

MINAGRI 0900EF01 Food Systems for domestic market supply 5.7 6.2 7.3 19.2

NAEB 0902EF02 Traditional Export Crop Development 5.2 8.0 8.4 21.6

TOTAL 65.4 72.7 76.7 214.8 Source: MINECOFIN

116. Type of expenditures. The Government is funding ‘fixed and variable costs’. The ‘fixed costs’ include the operational costs of the relevant budget/spending agencies involved in the roll out of the PSTA4. These allocations enable the Ministry/Department/Agency (MDAs) to manage and roll out the strategy. Expenditure types include salaries and overheads. The ‘variable costs’ include expenditures like consultancy services, hardware, software training, etc. The PforR Program is funding only ‘variable inputs’ associated with the roll out of the PSTA4. Program Monitoring 117. The PforR Program incorporates DLIs which are driven by desired Program outcomes or outputs while reflecting the practical constraints of the Rwandan Government’s ability to measure, monitor and verify the achievement of results using – where possible – country program systems to measure progress. 118. The PforR Program will also support the improved collection and use of agriculture-related statistics and promote their use for sector monitoring, evaluation and learning as a means for improved sector monitoring of PSTA4 implementation. PSTA4 sub-program 4.5 on Knowledge Management statistics management recognizes that “continuous learning and knowledge building is crucial to the effective implementation of the [PSTA4]”. It is critically important that sector performance is presented candidly to foster meaningful policy discourse amongst stakeholders and to strengthen accountability in the allocation of scarce public resources to the sector. Moreover, as the lead agency for policy and strategy, MINAGRI has a core role in analyzing available data and drawing conclusions on the efficacy of interventions to make critical mid-course corrections to PSTA4 implementation, as necessary.

B. Fiduciary

119. A fiduciary systems assessment of the PforR Program was performed. The assessment is based on the World Bank Policy and Directive, Program for Results Financing. The Organization of Economic Cooperation Development’s Development Assistance Committee (OECD-DAC)’s “four pillars” approach was also used to define the risks in the procurement environment. The assessment covered the key institutions directly responsible for PforR Program implementation, namely MINAGRI, NAEB, RAB, and the Districts. 120. The fiduciary assessment entailed a review of the capacity of key participating entities on their ability to: (a) plan, record, control, and manage all Program resources and produce timely, understandable, relevant, and reliable information for the stakeholders; (b) follow and monitor procurement rules and procedures, capacity, and performance focusing on procurement performance indicators and the extent to which the capacity and performance support the program development


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objectives and risks associated with the Program; and (c) ensure that implementation arrangements are adequate and risks are reasonably mitigated by the existing framework. 121. The review concludes: (i) the fiduciary risk is substantial; and (ii) the procurement and financial management arrangements are compliant with World Bank Policy and Directives on PforR requirements. It is worth mentioning that the fiduciary performance of the ongoing PforR operation (P148927) has been rated satisfactory.

122. The budget planning framework is robust but the realism of the agriculture program medium-term expenditures framework and budget allocation is moderate. The ongoing MTEF (2017-2020) is not fully aligned with the PSTA4 strategic priorities and was based on the PSTA3. The comparison of the expenditures planned in the MTEF and the PSTA4 costing for the related periods demonstrated a significant deviance. In the past years of implementation of the PSTA3, there has been significant deviance between the MTEF and the budget, and low budget execution performance at RAB (68.70 percent budget execution rate for 2015-2016). Analysis suggests multiple underlining factors such as inadequate costing, changes in priorities, lack of planning capacity for complex projects, and inadequate revenue forecasts of externally financed projects. The improvements may come from a set of decisive measures to enhance: (i) planning and budgeting skills at the line Ministry and Budget Agencies (RAB, Districts), Public Investment Management; (ii) costing and budgeting methodology; and (iii) enforcement of collaboration and application of existing planning and budgeting rules. 123. The Treasury Single Account (TSA) framework is well designed. However, delays in cash releases to implementing entities were reported which could undermine service delivery. The reasons for the delay could be delayed revenue mobilization and suggest that cash planning and management should be improved. At the GoR program level, some mitigating measures of delayed cash releases could include: (i) a refined revenue collection forecasting model; (ii) improved expenditures cash flow needs estimated at budget entities level; and (iii) a refined quality assurance review of estimates. More specifically, for the PforR operation, the GoR may request an advance up to 25 percent of the total amount of the financing to enable the recipient to finance expenditures aiming at the achievement of agreed results. Once the results are achieved, reported and satisfactorily verified, a revolving advance can be provided. 124. The accounting and financial reporting standards are adequate but challenges remain at district level in terms of quality of reporting and respect of deadlines. At districts, expenditures at subsidiary entities level are not captured and included in the financial reports (general ledger) of the respective districts. To this extent the central government designed a template at the district level for subsidiary entities to provide financial information for disclosure, however it is not consolidated in the district financial statements. To address district and subsidiary entities level accounting and reporting weaknesses, MINECOFIN integrated the Subsidiary Entities Accounting System (SEAS) into the Integrated Financial Management Information System (IFMIS). This allows districts to prepare a comprehensive financial report which include revenue and expenditures at sub local entity level. 125. The internal controls framework is globally adequate but has some weaknesses to address. The GoR’s PFM regulation provides a clear segregation of duties between the Chief Budget Manager, the accountant and the Internal auditor, and clearly describes the procedures applied to budgeting, accounting and reporting chain. The main internal control weaknesses as identified in internal and external audit reports at RAB and Districts include: (i) non-compliance with procurement policy and guidelines; (ii) poor documentation and filing of accounting records; (iii) mis-postings and non-reconciled


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balances; (iv) some irregular and unauthorized expenditures; and (v) non-compliance to tax rules and regulations among others. The implementation of the PFM learning and development strategy and the roll out of IFMIS and eProcurement for sub national entities will contribute to addressing these weaknesses and enhancing internal controls. 126. The verification mechanism for achievement of the DLIs has been reinforced. Adequate resources will be provided to the OAG via budget appropriation to perform the verification on a timely basis. A World Bank multi-disciplinary team will also review before the confirmation of the achievement and the release of funds. The definition of the DLIs and the verification protocol are clearly detailed in the Legal Agreement. 127. The Internal audit function exists in all Program implementing entities with some gaps in capacity. MINAGRI, RAB and districts have Internal Audit Units with one, two and three internal audit staff respectively. RAB internal audit staff are currently studying towards the Association of Chartered Certified Accountants (ACCA) certification. Districts are required to have three Internal Auditors but most districts still have two leading to ineffectiveness in the audit function and inability to cover and monitor all risk areas. A further challenge at the district level is the inability to recruit and retain qualified accountants and internal auditors. Implementation of the retention and career development strategy for accountants and internal auditors would help address the issue. Finally, the quality of the risks matrix, the linkage of the internal audit medium term and annual plan, while the risk is low, will require further and continuous hands-on training. Allocation of adequate resources in quantity and quality to effectively implement the internal audit work program is critical to improve the effectiveness of the internal audit. 128. The audit committees are in place at all implementing entities, however their capacity needs enhancement to support the internal audit function and achievement of the entities strategic objectives, while adequately monitoring risks. The Office of the Chief Internal Audit (OCIA) oversees capacity building of the MDAs audit committees and organizes induction training for them on a periodic basis. The trainings are generic and will be complemented by tailored training based on specific issues encountered in the sectors or entities. An effective performance evaluation of the audit committees using a mix of peer review or an independent review method will pave the way for steady and continuous improvements. 129. The OAG has timely and satisfactorily audited entities involved in the Program. The Auditor General expresses an unqualified opinion (clean opinion) on the MINAGRI financial statements and on compliance. The audit opinion on RAB financial statements has been consistently qualified and signals an ineffective, inefficient use of public resources and jeopardizes the achievement of strategic sector objectives. The Program is providing incentives via a DLI to improve the accountability at RAB and achieve a clean audit opinion during the third year of the Program. This is complemented by a PAP on the development of a sound annual action plan to address the weaknesses, which should be endorsed by the audit committee and submitted to the World Bank. 130. The OAG capacity is adequate to audit the Program but could be undermined by emerging needs. The OAG has developed a five year strategy (2013-2018) supported by the GoR and DPs to enhance skills, methodology and infrastructure. The strategy has been successfully implemented and 85 percent of the GoR expenditures were audited in 2015-2016 compared to 82 percent in 2014-2015. A new strategy is under development with support from DFID. Notwithstanding this recent progress, there is still need to further increase and enhance OAG skills to cover all GoR expenditures and audit IT infrastructures, which


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are increasingly embedded in the GoR function, and which create opportunity for efficiency but also risks. This can be achieved by adequate budget allocation and timely release of funds to the OAG. Each fiscal year, the OAG will prepare the financial audit reports of MINAGRI, RAB and the Districts. The reports will be submitted to the World Bank by MINAGRI not later than 10 months after the end of the fiscal year. The reports will include a statement to confirm that no debarred firms (World Bank list) have been awarded contracts under the PforR Program. 131. Rwanda’s strides against corruption are noteworthy thanks to a robust regulatory and institutional arrangement to monitor fraud and corruption. Rwanda ranked 4th in the Africa in Corruption Perception Index (2017). The fight against corruption framework applies to the Program implementing entities i.e. MINAGRI, RAB and Districts. The institutions in charge of the fight against fraud and corruption are mainly the Office of the Ombudsman (OM), the National Public Prosecution Authority (NPPA) and the OAG. 132. The OM’s financial resources have been decreasing or stagnant in recent years and may hinder its capacity to deliver on its mandate. The OM mandate covers a wide area from investigation and prosecution of cases of corruption, to sensitization, and research on corruption. While the number of cases is increasing, the pending cases remain unresolved. Resources allocated to the OM’s budget have decreased from RWF 1.9 billion in 2012-2013 to RWF 1.4 billion in 2015-2016. There was an increase of 22 percent between 2016-2017 but it is expected to stagnate in coming years. Compared to Botswana, (1st country in Africa in the Corruption Perception Index), the budget allocation share in the GoR’s total expenditures is lagging behind (0.04 percent in Rwanda, and 0.09 percent in Botswana). The provision and maintenance of adequate financial and human resources capabilities is critical to ensuring and increasing the OM’s ability to deliver on its broad mandate. 133. The complaint handling mechanisms work reasonably well, though more still needs to be done to create a mindset change in reporting cases of corruption. There are multiple channels for making and recording complaints on fraud and corruption, including on procurement. There is also a reasonably good citizen’s engagement and complaints handling mechanism for fraud and corruption. The NPPA has a free hotline (3677) that allows anyone with information on corruption or a complaint to easily communicate it to the NPPA. The OM also has multiple means for receiving complaints, including hotlines, secure complaints boxes in most public organizations and the 30 districts, email and letters. The effectiveness of the mechanism depends in part on citizen engagement to systematically report cases of corruption. The Transparency International Bribery Index suggests that very low cases of corruption are reported (20 percent in 2015-2016).

C. Environmental and Social

134. The physical activities planned under this PforR Program follow the scope and nature of activities implemented under the previous PforR operation. Moderate adverse environmental and social impacts are anticipated to be site-specific and reversible. Identified impacts can be effectively mitigated, based on existing environmental and social systems and the solid recent track record of the implementing agencies compliance with both national legislation and World Bank Environmental and Social Policies. No anticipated Program activities are judged likely to have significant adverse impacts on the environment and/ or affected people that are sensitive, diverse, or unprecedented. However, key sector institutions such as, MINAGRI and RAB will require significant capacity building to enhance E&S systems and staffing to ensure effective implementation and monitoring of not only public sector, but also PPP initiatives. The


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capacity enhancement efforts for MINAGRI are included in the PforR operation supported by other donors. Based on the introduction of the new instruments and new types of collaboration with the private sector, the overall environmental and social risks of the PforR Program are rated as “Substantial”. 135. The previous PforR operation had several notable achievements. They include the development of a consolidated ESIM based on existing government guidelines; and national and district level capacity building on the application of the Manual and the establishment of a grievance redress call center. 136. Environmental Effects. The environmental impacts of the individual program activities are not anticipated to be large scale or irreversible. The results identified in the program do not require any civil works that may have high risks with large scale irreversible impacts on environment. Based on an analysis of the GoR’s regulatory system and previous activities implemented by MINAGRI within the World Bank supported portfolio, the program is unlikely to have significant impacts on natural habitats or create environmental pollution, with the exception of temporary localized construction phase impacts. The Program is also not expected to cause negative changes in land use pattern and/or resource use. Positive changes in resource use would be promoted through new sustainable irrigation schemes included in the operation. 137. With its many hills and rivers, Rwanda has a terrain vulnerable to environmental degradation from soil erosion. Good environmental practice needs to be closely monitored and mainstreamed into soil conservation programmes, watershed management, marshland irrigation schemes and the use of inorganic fertilisers and pesticides. Rural feeder roads must be rehabilitated with use of sustainable practices to minimize impacts from runoff and soil erosion. Climate change is expected to generate more extreme events in the region, including increased temperatures producing droughts and high rainfall producing floods and landslides. It is therefore vital to plan for adaptation measures to address the expected impacts of climate variability in all development investments. MINAGRI extension workers and local level staff need to include additional training in sound environmental management in agriculture related investments. 138. The ESSA notes that although the individual investments have an average moderate environmental and social risk, each needs to be screened for cumulative effects and potential sensitivities of each proposed investment site. The overall risk of this PforR Program is higher compared to the previous PforR operation, given the increasing participation of the private sector in land husbandry and irrigation schemes development and implementation. However, the risk can be readily measured by the GoR’s existing environmental and social systems, and diligent attention to monitoring and enforcement of the government policies. 139. Social Effects. There are a few potential social risksThese include: chance of physical resettlement and/or land acquisition related to program interventions; difficulty identifying relocation sites due to limited land availability; loss of income from land due to demarcation of buffer zones;acquisition of land for agro-processing and off farm activities; benefit sharing of commercial farming if land is rented; male capture of community institutions; obstacles for women and youth participation; difficulty purchasing agriculture input for the very poor due to limited access to micro finance; conflict over land ownership and use; weak participatory decision making; and lack of transparency. 140. Land requirements are minimal as the construction interventions under the Program are mostly either rehabilitation or require small portions of land. Rwanda’s legal/regulatory system and Land Policy


50

includes provisions for compensation for loss of assets at replacement cost and rehabilitation of adversely affected people. As per the Valuation Law, all people affected by expropriation must receive fair and just compensation. The calculation of fair and just compensation must be made by independent valuators. Whilst fair and just compensation is stipulated to be at market value for land and other assets, clarification of what this comprises is not made clear in the existing legislation (this is one of the issues that is being considered in the draft amended Expropriation Law). The GoR’s approach to land procurement is: (i) to use available public land; or (ii) buy private land at a negotiated market price. Under the PforR operation, it will be the responsibility of the GoR/Ministry of Land and Forestry to provide land for the program and follow the sequence of options mentioned above. The preferred method is to identify public land that is free from encumbrances. In the case of private land, MINAGRI will purchase the land at ‘replacement cost’. Land owned by vulnerable groups, and land with unresolved claims will not be considered. 141. The national policies and laws offer an enabling environment for decentralized decision making. Implementation remains weak as systems are not fully developed and implementing agencies lack resources. To ensure community participation and inclusion of all sections of community for decentralized decision, MINAGRI’s ESIM will be adjusted to incorporate lessons from the existing Lake Victoria Environmental Management Project (P165352).

142. The positive social effects of the proposed PforR Program are potentially significant, as the main objective of the program is to increase the productivity and commercialization of agriculture and improve quality and accessibility of agriculture services, and thus improve the incomes and overall welfare and quality of life of citizens, especially the rural poor and vulnerable. The proposed operation targets farmers groups, and focuses on poverty reduction and increasing food security. 143. Sustainability. The PforR Program responds to the GoR’s national strategy for stimulating rapid and sustainable economic growth and reducing poverty. The strategy is well articulated in Vision 2020, the national vision and policy framework with key priorities for the country’s development by the year 2020, and is further laid out in the EDPRS 2, which identifies the agriculture sector as a key sector and a significant engine of growth for the country. 144. The proposed PforR Program is designed as a programmatic results output-based agriculture sector-wide approach. It is based on government fiduciary systems and practices including contract and financial management, governance and anti-corruption systems, social and environmental regulations, and systems and technical capacity as demonstrated over the last 15 years in implementing World Bank supported programs in the sector. It is also designed to reinforce and strengthen the GoR’s own systems for delivery of key agriculture services. 145. The PforR Program commits to the needs of the future generation. With a strong focus on agricultural production and productivity, the program will contribute to the diversification of farm incomes, which is especially important for targeting the youth and very poor. 146. Capacity. Institutional arrangements for environmental management, including ESIAs, are mandated and established at all levels of government. The legal/regulatory procedures and policies for expropriation of land in the country adequately respond to the relocation and compensation for loss of assets, services, homes, and land. However, a common challenge is the ineffective implementation of these requirements and responsibilities due to lack of institutional capacity and financial resources at the local level. An assessment of specific capacity of the private sector will be incorporated into the

http://projportal.worldbank.org/servlet/secmain?menuPK=109012&theSitePK=213348&pagePK=112935&piPK=69345&PSPID=P165352


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development of the Private Sector Leveraging Strategy. More coordination efforts will need to be made by MINAGRI to ensure effective compliance monitoring of the PPP interventions. 147. The capacity-building program will continue from the previous phase and focus on improving the environmental and social management practices among the government agencies and private sector organizations. These include: (i) implementation and oversight of the environmental and social assessment system within the Program; (ii) sustainability aspects of site selection and technical designs of the land husbandry and irrigation activities; (iii) documentation of involuntary resettlement and project-affected people and vulnerability assessments, including, where necessary, preparation of Resettlement Action Plans (RAPs); (iv) screening of potential environmental and social impacts and public consultation; (v) enhancing gender-sensitive capacity building of local and national staff and service providers and gender responsiveness in agricultural service delivery; and (vi) good monitoring practices, including proactive use of grievance redress mechanisms; sampling of soil and water quality, and others. 148. OP 7.50 on International Waterways is triggered as the PforR Program activities will involve water extraction for irrigation activities from the streams flowing into international basins of the Nile and Lake Tanganyika. Following the practice of the RSSP (phases 1-3), the Bank has notified the following riparian states as part of Program preparation, Burundi, the Democratic Republic of Congo, Tanzania, Egypt, Eritrea, Ethiopia, Kenya, Sudan, South Sudan, Tanzania, and Uganda. As of May 4, 2018, the response date deadline, only Egypt, responded to the notification letter and stated its no-objection to the Program. The World Bank’s assessment is that the proposed Program activities will not result in any adverse impacts to the riparian countries. Irrigation development and land husbandry are not expected to have adverse impacts on water quality levels. Even though agricultural intensification and increased use of agricultural inputs are PforR Program objectives, pre-Program input use levels are very low, and modest increases and sustainability measures built into the Program design are not expected to have an adverse impact on water quality. In addition, environmental and pest management plans will be routinely implemented to mitigate such impacts. The PforR Program will not have any adverse effects on the quantity or quality of water flows to any other riparian states. 149. Communities and individuals who believe that they are adversely affected as a result of a World Bank supported PforR operation, as defined by the applicable policy and procedures, may submit complaints to the existing program grievance redress mechanism or the World Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed to address pertinent concerns. Affected communities and individuals may submit their complaints to the World Bank’s independent Inspection Panel which determines whether harm occurred, or could occur, because of World Bank non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and its Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate GRS, please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.

D. Risk Assessment

150. The technical risks to the Government program are substantial. PSTA4 sets out an ambitious and challenging agenda. The assumed response of the private sector to the policy reforms and incentives being provided by the PforR may not materialize on the scale needed to deliver the anticipated impact. This may be further harmed by continued dominance of large-scale and well-connected incumbent businesses. The

http://www.worldbank.org/GRM

http://www.inspectionpanel.org/


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technical competence of service providers (public and private) to deliver the kind of services required for this transformation agenda, include extension services for diversified especially higher-value agriculture and business development services for emerging agribusiness. The ability of MINAGRI to leverage itself depends upon supportive interventions from the wider GoR, including the necessary financial resources anticipated in the PSTA4 investment framework, the overall macro-economic policy framework, and the ability of district authorities to effectively absorb the new responsibilities being placed upon them as part of the decentralization agenda. The PforR Program uses DLIs and the PAP to build an institutional and policy foundation that will enable MINAGRI to address these challenges. 151. Environmental and Social risks are substantial. The PforR Program will be supporting activities carried out by private sector entities. The PPP infrastructure projects will require that agencies either develop new business models or scale up existing approaches. It will address this risk by establishing appropriate selection and performance criteria. These actions will be included in the DLIs and PAP.

152. Institutional capacity for implementation and sustainability risk is substantial. As an ambitious, transformative agenda, the change management required to fully achieve the PSTA4 objectives is substantial. At the same time, the demonstrated ability of MINAGRI and associated agencies to adapt and change needs to be further strengthened – to ensure increased capacity, and to establish the required internal incentives within the GoR system to encourage change. Indeed, it is for this reason that the World Bank is supporting the Government program for capacity building with the PforR Program. 153. Fiduciary risk is substantial. The last available audit report for RAB (year ended June 2017) was qualified. This reflects a general lack of adequate fiduciary capacity at RAB which could undermine implementation of the PforR Program. Mitigation measures include: (i) the ongoing implementation of a financial management action plan; (ii) technical assistance to support comprehensive improvement on procurement and financial management issues; and (iii) implementation of the recommendations of the agreed RAB restructuring which includes enhancing fiduciary capacity. Key actions are included in the PAP and the DLIs. 154. The overall risk for the PforR Program is “Substantial”.

.

The World Bank Transformation of Agriculture Sector Program 4 PforR (P161876)

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RESULT_FRAME_T BL_ PD O

PDO Indicators by Objectives / Outcomes DLI CRI Unit of Measure

Baseline Intermediate Targets (IT)

End Target

Y1 Y2

To promote the commercialization of agriculture value chains in Rwanda.

Performance of MINAGRI and RAB in achieving the milestones established in their respective Organizational Development or Restructuring implementation plan

Percentage

0.00 0.00 0.00 70.00

MINAGRI Percentage

0.00 0.00 0.00 70.00

RAB Percentage

0.00 0.00 0.00 70.00

Improvements in the Enabling Business of Agriculture (EBA) Scores

Number 0.00 0.00

Seed Number 20.20 24.20 28.40 32.00

Fertilizer Number 52.60 53.00 54.00 56.00

Markets Number 49.30 50.00 51.00 53.00

Private investment in agriculture value chain services (US$) Amount(USD)

101.50 150.00 175.00 200.00

.

ANNEX 1. RESULTS FRAMEWORK MATRIX


54

. RESULT_FRAME_T BL_ IO

Intermediate Results Indicators by Results Areas DLI CRI Unit of Measure

Baseline Intermediate Targets (IT)

End Target

Y1 Y2

Policy and Organizational Reform

Organizational Development plan successfully prepared and implementation on track.

DLI 1 Text None

Organizational review, including capacity needs assessment of MINAGRI completed and new functional structures in place

OD Plan for MINAGRI prepared and approved

Upgrade of HR management function completed

Improved analytical and policy reform competencies demonstrated.

DLI 2 Text NA

Private Sector Leveraging Strategy with implementation plan published

Annual Report by MINAGRI on Public-Private Investment in Agriculture published

Agricultural input subsidy schemes reviewed, alternative models for increasing efficiency assessed, reforms agreed and implemented

Digital information platforms designed and operational. DLI 3 Text NA A The The Livestock registration


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common data warehouse platform is designed and ready for use, whereby existing data in MIS and ALIS I are fully interfaced (at least down to the level of all districts)

Farmer registration application and ALIS II are fully interfaced with MIS and ALIS I in the common data warehouse platform. Both, Farmer registration and ALIS II, will hold data covering all districts

application (holding cow data with national coverage) will be interfaced with MIS, ALIS I and II, Farmer registration application in the common data warehouse platform

Sector Performance Dash Board is in place and publicly accessible online, whereby it provides reports on national agricultural macro indicators, national Indicator of Food Security and PSTA 4 results indicators

Mechanism to strengthen Agriculture Public-Private Dialogues and Agriculture Value Chain Platforms designed and implemented.

DLI 4 Text NA

Two mechanisms designed, piloted, and budgeted: (1)

Two national Agriculture PPDs held and at least 3 Agriculture VC

Additional 2 Agriculture PPDs held

Agriculture VC platforms are fully functional and yielded evidence of satisfactory results (as per M&E of operating plan


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National Agriculture Public-Private Dialogues (Ag. PPD) on themes with strategic relevance (2) Commodity value chain platforms

platforms established with operating plans

Improvement in functional performance of interagency coordination mechanisms.

Text 0.00 >20%

Enabling Agric Commercialization

Share of small scale farmers using improved seeds. Percentage

18.00 20.00 25.00 30.00

New irrigation area identified, developed and/or managed where commercial viability has been a determining appraisal criterion.

DLI 5 Hectare(Ha)

0.00 0.00 1,260.00 1,680.00

New terracing area identified, developed and/or managed where commercial viability has been a determining appraisal criterion.

DLI 6 Hectare(Ha)

0.00 0.00 745.00 2,310.00

Volume of private sector investment (in US$) matching public financing in PPP infrastructure projects.

DLI 7 Text 0.00 4.00 7.15

Delivery of Improved Agric Value Chain Services.


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.

Number of different models of service delivery contracts signed and pilot under implementation.

Number 0.00 1.00 3.00 5.00

Number of farm households reached by private advisory services (non-outgrower schemes) has increased.

DLI 8 Number 0.00 6,000.00 8,000.00

Number of new farm households participating in outgrower schemes has increased.

Number 0.00 10,000.00

Number of Productive Alliances under implementation. Number 0.00 25.00 50.00

Number of Productive Alliances under implementation in Livestock Value Chain.

Number 0.00 10.00 20.00

Number of Productive Alliances under implementation high value crops Value Chain.

Number 0.00 15.00 30.00

Business leader’s perceptions about agricultural investment climate in Rwanda.

Text NA >15%

Efficiency in Public Expenditures

Reform of RAB. DLI 9 Text NA

Implementation Plan for RAB restructuring order prepared and approved by its Board

+/-3% Deviation between budget and outturn expenditure 2019/20

Unqualified audit opinion on financial statement of RAB

Annual increase of earmarked transfers from MINAGRI to local government.

Percentage

0.00 2.00 4.00 5.00


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.

Indicator Name Performance of MINAGRI and RAB in achieving the milestones established in their respective Organizational Development or Restructuring implementation plan

Frequency Semi-annual

Data Source

Semi-annual OD implementation progress report

Semi-annual RAB Restructuring progress report

Methodology for Data Collection

Completion review of deliverables as per OD of MINAGRI /restructuring plan of RAB, staff surveys, commissioning of external assessments.

Organizational development area Max. performance score possible

Skills and competencies: e.g., 10

Knowledge management and learning 10

Leadership and management 10

Governance and transparency 10

Other- TBD 10

TOTAL 50

% of Total 100

Responsibility for Data Collection OD manager at MINAGRI, Office of the DG at RAB

Monitoring & Evaluation Plan: PDO Indicators


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Indicator Name MINAGRI

Frequency See Parent Indicator

Data Source See Parent Indicator

Methodology for Data Collection See Parent Indicator

Responsibility for Data Collection See Parent Indicator

Indicator Name RAB

Frequency See Parent Indicator

Data Source See Parent Indicator

Methodology for Data Collection See Parent Indicator

Responsibility for Data Collection See Parent Indicator

Indicator Name Improvements in the Enabling Business of Agriculture (EBA) Scores

Frequency Annual

Data Source World Bank EBA Country Profile Rwanda

Methodology for Data Collection Document review

Responsibility for Data Collection The World Bank EBA Team will provide MINAGRI Department of Planning with the annually updated scores for Seeds, Fertilizer and Markets


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Indicator Name Seed Frequency Annual




Indicator Name Fertilizer

Frequency Annual




Indicator Name Markets

Frequency Annual





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Indicator Name Private investment in agriculture value chain services (US$) Frequency Annual

Data Source RDB investment certification statistics and After care services


The indicator refers to the total actual private capital investment in a given year by all level 2 investments in agriculture.

There are two levels of company registration:

1. Business/company registration: This is done by all companies regardless of period of implementation or value of investment and it is free to register. At this level, the registered business is not eligible for investment incentives.

2. The second level of registration, the business can apply for an investment certificate where a company provides information related to shares, submits a business plan and an environmental impact assessment, and there is a minimum level of investment committed to be undertaken. At this level, businesses are eligible for incentives. These are investments that RDB reports annually as achievements while RDB does not report the first level of business registration.

Responsibility for Data Collection RDB (through key account managers)

.


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. Monitoring & Evaluation Plan: Intermediate Results Indicators

Indicator Name Organizational Development plan successfully prepared and implementation on track.

Frequency Annual

Data Source

Year 1: (i) Final review document released; and (ii) official management response to the review by MINAGRI.

Year 2: Final Organizational Development Plan (signed by the Minister of Agriculture and Animal Resources).

Year 3: Implementation of the Organizational Development Plan – Semi-annual performance report to management and oversight bodies.


Responsibility for Data Collection MINAGRI Indicator Name Improved analytical and policy reform competencies demonstrated.

Frequency Annual

Data Source

(1) (i) approved final Strategy and Implementation Plan; (ii) Peer-review of final draft Strategy document by the Agricultural Sector Working Group (ASWG), including World Bank; and (iii) formal government response on recommendations made by the ASWG.

(2) Annual Report by MINAGRI on Public-Private Investment in Agriculture published online and available on the MINAGRI Website.

(3) (i) Final Subsidy Review and Reform Package; (ii) Peer-review of final draft documents by Agricultural Sector Working Group, including World Bank; and (iii) formal government response on recommendations made.


Responsibility for Data Collection MINAGRI


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Indicator Name Digital information platforms designed and operational.

Frequency Annual

Data Source Common data warehouse platform at MINAGRI IT unit

MINAGRI webpage



Indicator Name Mechanism to strengthen Agriculture Public-Private Dialogues and Agriculture Value Chain Platforms designed and implemented.

Frequency Annual

Data Source

(1) Design and implementation plans with budget;

(2) Agenda of Ag. PPD held, list of participants, proceedings with action plan;

(3) VC platform operating plans and budget ; and

(4) Semi-annual VC platform report prepared by platform coordinating entity


Responsibility for Data Collection MINAGRI in collaboration with RDB Indicator Name Improvement in functional performance of interagency coordination mechanisms.

Frequency Baseline and year 3

Data Source Member/participant Survey

Methodology for Data Collection Web-based survey of members of each coordination mechanism

Responsibility for Data Collection External survey firm to be commissioned by MINAGRI


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Indicator Name Share of small scale farmers using improved seeds.

Frequency Annual

Data Source Seasonal Agricultural Survey 2018, 2019, 2020

Methodology for Data Collection Review of survey report released by NISR


Indicator Name New irrigation area identified, developed and/or managed where commercial viability has been a determining appraisal criterion.

Frequency Annually

Data Source Project appraisal documents and feasibility analysis, PPP agreements; business plans; performance reports by contractor; MINAGRI



Indicator Name New terracing area identified, developed and/or managed where commercial viability has been a determining appraisal criterion.

Frequency Annual

Data Source Project appraisal documents and feasibility analysis, PPP agreements; business plans; performance reports by contractor; MINAGRI




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Indicator Name Volume of private sector investment (in US$) matching public financing in PPP infrastructure projects.

Frequency Years 2 and 3

Data Source PPP agreements; Contract monitoring reports by Fund administrator on each PPP


Responsibility for Data Collection RAB and/or NAEB Indicator Name Number of different models of service delivery contracts signed and pilot under implementation.

Frequency Annual

Data Source



Indicator Name Number of farm households reached by private advisory services (non-outgrower schemes) has increased.

Frequency Annual

Data Source Contractual agreements, Performance reports by service providers, field monitoring data; MINAGRI/RAB

Methodology for Data Collection Contract performance monitoring

Responsibility for Data Collection MINAGRI Indicator Name Number of new farm households participating in outgrower schemes has increased.

Frequency Annual

Data Source Investment Certificate, RDB registry


Responsibility for Data Collection RAB


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Indicator Name Number of Productive Alliances under implementation.


Data Source Fund administrator; Business plans and Grants agreements


Baseline will be established during the first 6 months

Review of reports by the public fund administrator

Responsibility for Data Collection MINAGRI Indicator Name Number of Productive Alliances under implementation in Livestock Value Chain.


Data Source Grant agreements




Responsibility for Data Collection MINAGRI Indicator Name Number of Productive Alliances under implementation high value crops Value Chain.


Data Source Grant agreements






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Indicator Name Business leader’s perceptions about agricultural investment climate in Rwanda.

Frequency Baseline and Year 3

Data Source Survey


This indicator will require surveying business leaders that are potentially interested in or already engaged in the agricultural sector.

A similar approach to the perception survey undertaken by MINICOM and BNR should be used, please see:

https://www.bnr.rw/fileadmin/AllDepartment/Statistics/External/Foreign_Private_Capital_in_Rwanda_2017_.pdf

Responsibility for Data Collection MINAGRI commissions survey Indicator Name Reform of RAB.

Frequency Annual

Data Source Progress report on restructuring, approved budget, revised budget and budget execution report (as approved by parliament), financial audits by OAG


Responsibility for Data Collection RAB

Indicator Name Annual increase of earmarked transfers from MINAGRI to local government.

Frequency Annual

Data Source Budget execution report of districts, Auditor reports by OAG

Methodology for Data Collection Collect data on district expenditure and sources of finance

Responsibility for Data Collection Fiscal Decentralization Department in MINECOFIN .


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.

. .

Disbursement Linked Indicators Matrix

DLI 1 Organizational Development Plan successfully prepared and implementation on track.

Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount

Output No Text 10,000,000.00 3.45

Period Value Allocated Amount (USD) Formula

Baseline NA

Prior Results 0.00

2018/2019 Organizational review, including capacity needs assessment of MINAGRI completed and new functional structures in place

4,000,000.00 Total disbursement upon receipt of unqualified OAG report

2019/2020 Organizational Development (OD) Plan for MINAGRI prepared and approved


2020/2021 Upgrade of HR management function completed


DLI 2 Improved analytical and policy reform competencies demonstrated.


Output No Text 10,000,000.00 3.45

ANNEX 2. Disbursement Linked Indicators, Disbursement Arrangements and Verification Protocols


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Baseline NA

Prior Results 0.00

2018/2019 Private Sector Leveraging Strategy with Implementation Plan published


2019/2020 Annual Report by MINAGRI on Public-Private Investment in agriculture published


2020/2021 Agricultural input subsidy schemes reviewed, alternative models for increasing efficiency assessed, reforms agreed and implemented


DLI 3 Digital information platforms designed and operational.


Output No Text 8,000,000.00 2.76


Baseline None

Prior Results 0.00

2018/2019 A common data warehouse platform is designed and ready for use, whereby existing data in MIS and ALIS I are fully interfaced (at least down to the level of all districts)


2019/2020 The Farmer registration application and ALIS II are fully interfaced with MIS and ALIS I in the common data warehouse platform. Both,



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Farmer registration and ALIS II, will hold data covering all districts

2020/2021 The Livestock registration application (holding cow data with national coverage) will be interfaced with MIS, ALIS I and II, Farmer registration application in the common data warehouse platform

Sector Performance Dash Board is in place and publicly accessible online, whereby it provides reports on national agricultural macro indicators, national Indicator of Food Security and PSTA4 results indicators


DLI 4 Mechanism to strengthen Agriculture Public-Private Dialogues and Agriculture Value Chain Platforms designed and implemented.


Output No Text 8,000,000.00 2.76


Baseline NA

Prior Results 0.00

2018/2019 Two mechanisms designed, piloted, and budgeted: (1) National Agriculture Public-Private Dialogues (Ag. PPD) on themes with strategic relevance and (2) Commodity value chain platforms



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2019/2020 Two national Agriculture PPDs held and at least 3 Agriculture VC platforms established with operating plans


2020/2021 Additional 2 Agriculture PPDs held

Agriculture VC platforms are fully functional and yielded evidence of satisfactory results (as per M&E of operating plan)


DLI 5 New irrigation area identified, developed and/or managed where commercial viability has been a determining appraisal criterion.


Output Yes Hectare(Ha) 10,000,000.00 3.45


Baseline 0.00

Prior Results 0.00

2018/2019 0.00

2019/2020 1,260.00 5,000,000.00 Proportionally to verified area under recognized PPP



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Output Yes Hectare(Ha) 10,000,000.00 3.45


Baseline 0.00

Prior Results 0.00

2018/2019 0.00

2019/2020 745.00 5,000,000.00 Proportionally to verified area under recognized PPP


DLI 7 Volume of private sector investment (in US$) matching public financing in PPP infrastructure project.


Output Yes Text 20,000,000.00 6.90


Baseline NA

Prior Results 0.00

2018/2019 0.00

2019/2020 4.00 10,000,000.00 Proportionally to verified volume


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private sector investment

2020/2021 7.15 10,000,000.00 Proportionally to verified volume private sector investment

DLI 8 Private sector extension service models designed, launched and achieving positive response.


Intermediate Outcome Yes Text 15,000,000.00 5.17


Baseline NA

Prior Results 0.00

2018/2019 0.00

2019/2020 Number of farm households reached by private advisory services (non-outgrower scheme) has increased: 6000

5,000,000.00 Proportionally to verified number of farm households reached

2020/2021 Number of farm households reached by private advisory services (non-outgrower schemes) has increased: 8000 Number of new farm households participating in outgrower schemes has increased: 10,000

10,000,000.00 Proportionally to verified number of farm households reached

DLI 9 Reform of RAB.


Output No Text 9,000,000.00 3.10



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Baseline None

Prior Results 0.00

2018/2019 Implementation Plan for RAB Restructuring Order prepared and approved by its Board


2019/2020 +/-3% Deviation between budget and outturn expenditure 2019/20


2020/2021 Unqualified audit opinion on financial statement of RAB


.

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.

Verification Protocol Table: Disbursement Linked Indicators

DLI 1 Organizational Development Plan successfully prepared and implementation on track.

Description

(i) Organizational review, including capacity needs assessment of MINAGRI completed. Organizational review refers to a systematic assessment of the functional structure, business processes and staffing (i.e., staffing numbers, designations, team structures, competencies, salary scales), the organizational culture, the processes for building and managing work and teams (e.g., training, management processes, performance management, incentive structures and motivation), and the supporting infrastructure. The capacity needs assessment comprises an analysis of the current organizational and individual capacities and defines the capacities needed to fulfill the goals of the organization.

(ii) Organizational Development (OD) Plan for MINAGRI prepared and approved. Organizational Development is a planned, systematic approach to improving organizational effectiveness – one that aligns strategy, people and processes. The Organizational Development plan addresses:

• Purpose – strategy, vision, values, objectives;

• People Factors – leadership, behaviors & skills;

• Place Factors – logistics, infrastructure ;

• Systems/Processes – governance, HR, finance, information technology, communications; and

• Performance – performance indicators, benefits realization.

The OD plan will also address: (i) the approach and methods to be taken for OD; (ii) the timeline; (iii) assumptions, risks and risk mitigation measures; and (iv) a framework for monitoring and evaluation of progress and results.

(iii) Upgrade of HR management function completed. The scope of the upgrades to the HR management function by end of year 3, will be laid out in the OD Plan. Completion of the upgrade will be assessed against the milestones that MINAGRI has committed to in its OD plan.

Data source/ agency

Year 1: (i) Final review document released (ii) official management response to the review by MINAGRI; Year 2: Final Organizational Development Plan (signed by the Minister of Agriculture and Animal Resources); and Year 3: Implementation of the Organizational Development Plan – Semi-annual performance report to management and oversight bodies.

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Verification Entity Office of Auditor General (OAG)

Procedure

1. Task team makes available the following evidence material: Year 1: Copy of: (i) FINAL review document; and (ii) MINAGRI Management Response Letter; Year 2: Copy of final Organizational Development Plan signed by the Minister; and Year 3: Copy of Semi-annual performance report to management on the implementation of the Organizational Development Plan. 2. Internal Audit (IA) checks compliance of evidence with respect to completeness, and the absence of material misstatement; 3. MINAGRI submits DLI report to MINECOFIN; 4. MINECOFIN request OAG to verify DLI report; and 5. OAG conducts quality assurance assessment.

DLI 2 Improved analytical and policy reform competencies demonstrated.

Description

The output of capacity development interventions financed through the PforR Program will be improved competencies of MINAGRI staff in the area of macro-economic and policy analysis in order to strengthen the effectiveness of MINAGRI’s policy-making efforts. Applying the new skills and competencies is expected to result in tangible products that are instrumental for the policy-making process. The actually delivery of three products will be measured. For quality assurance purposes, it is expected that each product would have undergone a technical review process (also involving Agricultural Sector Working Group and the World Bank) before it is finalized.

(1) Private Sector Leveraging Strategy. The strategy document with implementation plan published will lay out how MINAGRI seeks to crowd in private investment to the sector, by detailing:

(i) regulatory reform priorities that are based on analytical work undertaken or commissioned by MINAGRI;

(ii) criteria for appraising proposed public investments for their capacity to generate private investment;

(iii) standards and guidelines for environmental and social risk assessment when involving private sector investors. The standards must draw upon the principles of PSTA3's Environmental and Social Implementation Manual (ESIM). Guidelines should include the process for: (i) identifying the type of projects that the PforR Program could support; (ii) the PforR Program’s mechanism to evaluate the private sector’s systems to implement the projects; and (iii) the PforR Program’s contractual requirements to be in place that will ensure the implementation of the investment project will follow proper E&S standards.

(iv) Public-Private engagement mechanisms (including the conceptual design and implementation arrangements for Public-Private Dialogues, VC platforms, Competitive Matching Funding Programs);

(v) Principles and guidelines for the design and implementation of competitive funding programs of public-private partnerships;

(vi) Feasibility (incl. mission, objective, financing, organizational structure and implementation arrangements) of a future Agricultural Investment Fund; and

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(vii) Analysis of opportunities for contracting private advisory service providers, including quality assurance mechanisms of private service delivery (e.g., performance standards, accreditation requirements, contractual models).

(2) Annual Report on Public-Private Investment in Agriculture published by MINAGRI. The report will outline MINAGRI’s performance (quantitative and qualitative) in: (i) leveraging private resources; (ii) improving the agriculture business environment; and (iii) regulatory and policy reforms to public sector services.

(3) Agricultural Input Subsidy Review and Reform package, composed of: (i) an agricultural input subsidy schemes review, including an assessment of alternative models for increasing efficiency and effectiveness; and (ii) a subsidy reform document approved by the Cabinet.

Data source/ agency

(1) (i) approved final Strategy and Implementation Plan: (ii) Peer-review of final draft Strategy document by Agricultural Sector Working Group (ASWG), including World Bank; and (iii) formal government response on recommendations made by the ASWG. (2) Annual Report by MINAGRI on Public-Private Investment in Agriculture published online and available on the MINAGRI Website. (3) (i) Final Subsidy Review and Reform Package; (ii) Peer-review of final draft documents by Agricultural Sector Working Group, including World Bank; and (iii) formal government response on recommendations made.


Procedure

1. Task team makes available: Year 1: (i) a copy of the published strategy document and implementation plan; (ii) copy of the official approval of Strategy document (e.g., cabinet decision note); (iii) technical (appraisal) documents supporting the strategy; and (iv) comments received through ASWG peer-review and detailed government response to recommendations made. Year 2: Public link to annual report on Public-Private Investment in Agriculture on MINAGRI website. Year 3: (i) copy of the agricultural input subsidy review document; (ii) copy of approved subsidy reform document; and (iii) ASWG peer review findings with government response. 2. Internal Audit (IA) checks compliance with evidence with respect to completeness and absence of material misstatement. 3. MINAGRI submits DLI report to MINECOFIN. 4. MINECOFIN request OAG to verify DLI report. 5. OAG conducts quality assurance assessment.

DLI 3 Digital information platforms designed and operational.

Description MINAGRI will install a Smart Agricultural Information System (SAIS), that integrate agricultural data management and analysis. During the first three years the key building blocks of the platform will be programmed and populated by using a data warehouse system. This also includes the installation of nationwide field data collection systems (e.g., gender

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disaggregated farmer register, livestock register, land profiles). MINAGRI also commits to making data from the platform publicly available through a web-based Sector Performance Dash Board, featuring national agricultural sector and food security information.

As such the delivery of the following products is expected:

• A common data warehouse platform designed and ready for use, whereby existing data in MIS and ALIS I will be fully interfaced (at least down to the level of all districts) – (year 1);

• The Farmer registration application and ALIS II will be fully interfaced with MIS and ALIS I in the common data warehouse platform; both, farmer registration application and ALIS II, will hold data covering all districts – (year 2);

• A livestock registration application (holding at least cow data with national coverage) will be interfaced with MIS, ALIS I and II, Farmer registration application in the common data warehouse platform – (year 3); and

• Sector Performance Dash Board is in place and publicly accessible online, whereby it provides reports on national agricultural macro indicators, national Indicator of Food Security and PSTA4 results indicators – (year 3).

Data source/ agency Common data warehouse platform at MINAGRI IT unit, MINAGRI webpage


Procedure

1. Task team makes available: (i) Manual of the data warehouse platform; (ii) descriptive statistical reports of farmer registration (gender disaggregated), land profiles, livestock registration; and (iii) public internet link to sector performance dash board. 2. Internal Audit (IA) checks compliance of evidence with respect to completeness and absence of material misstatement; undertakes spot checks, e.g. request the full list of farmers registered in one randomly selected enumeration area. 3. MINAGRI submits DLI report to MINECOFIN. 4. MINECOFIN request OAG to verify DLI report. 5. OAG conducts quality assurance assessment.

DLI 4 Mechanism to strengthen Agriculture Public-Private Dialogues and Agriculture Value Chain Platforms designed and implemented.

Description

Agriculture Public-Private Dialogues and Agriculture Value Chain Platforms are two mechanisms for strengthening engagement with the private sector and other stakeholders both for attracting new investment and retaining profitable businesses in the agricultural sector.

Value chain platforms aim to build cooperation, trust, and to streamline operations in the targeted value chains. VC Platforms develop a joint sub-sector vision, address specific challenges, ensure a coherent enabling environment and

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promote stronger market orientation in the targeted value chain. Platforms would support the PPD mechanisms whereby business-enabling factors and challenges are identified and addressed. The lack of services and inputs are primary themes for exploring business opportunity and investment promotion.

Data source/ agency (1) Design and implementation plans with budget; (2) Agenda of Ag. PPD held list of participants, proceedings with action plan; (3) VC platform operating plans and budget; and (4) Semi-annual VC platform report prepared by platform coordinating entity.


Procedure

1. Task team makes available the following evidence: (1) Design and implementation plans with budget; (2) Agenda of Ag. PPD held list of participants, proceedings with action plans; (3) VC platform operating plans and budget; and (4) Semi-annual VC platform report. 2. Internal Audit (IA) checks compliance of supporting evidence with respect to completeness and absence of material misstatement. 3. MINAGRI submits DLI report to MINECOFIN. 4. MINECOFIN request OAG to verify DLI report. 5. OAG conducts quality assurance assessment.

DLI 5 New irrigation area identified, developed and/or managed where commercial viability has been a determining appraisal criterion.

Description

The indicator refers to a defined share of the total new irrigation area to be developed under PSTA 4. The AREA (in ha) eligible for inclusion in the measure must be subject to a Public-Private Partnership (where commercial viability is a key characteristic). The development of the AREA was approved by the authorities based on a feasibility analysis that has met standards and criteria laid out in the new strategy for leveraging Private Sector Investment.

PPP: A long-term contractual arrangement between a public entity or authority and a private entity for providing a public asset or service in which the private party bears significant risk and management responsibility.

Project feasibility analysis: Refers to a series of feasibility or appraisal criteria against which the project is tested to assess its suitability as a PPP, and which includes the notion of sustainability both in terms of the scheme itself, its benefits to the ultimate users and its bankability. Such feasibility analysis is typically undertaken once the business case has been made for the proposed project to proceed as a PPP and the project has been designed to a preliminary level.

Commercial viability: The commercial viability of a PPP project describes the extent to which it has the potential to offer a private firm a sufficient financial return to enable it to recover any capital and operational costs as well as a suitable

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financial return on any investment given the opportunity cost involved.

Private partner in the PPP can be:

• a commercial farmer serving as a private irrigation operator, or as an outgrower farm scheme manager;

• Farmers/Water User Groups/Youth cooperatives formally made responsible for maintaining the tertiary irrigation network; or

• a private operator that is responsible for operating and maintaining the entire system, and farmers pay a tariff that covers operating and maintenance costs.

Main contractual forms

• Operation, Management and Maintenance (OMM) contract;

• Infrastructure concession;

• Farm service agreement; and

• Hub farm agreement.

Formally agreed ‘Productive Alliances’ would also fall under the category of a recognized PPP (see indicator reference sheets of core results indicators for more details).

Descriptions for each contractual form can be found here:

http://ppp.worldbank.org/ppp/ppp-sector/water-sanitation/ppps-irrigation

World Bank, How To Develop Sustainable Irrigation Projects with Private Sector Participation, 2016; https://ppiaf.org/documents/2864?ref_site=ppiaf

Linking Farmers to Markets through Productive Alliances : An Assessment of the World Bank Experience in Latin America; https://openknowledge.worldbank.org/handle/10986/25752

Data source/ agency Project appraisal documents and feasibility analysis, PPP agreements; business plans; performance reports by contractor; MINAGRI


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Procedure

1. Task team makes available the following evidence: (1) Table with: (i) all names of irrigation schemes being developed – indicating the ones with a PPP agreement; (ii) size of total area and PPP area in ha; (iii) status – identified, under development, operational; and (iv) reference to its commercial viability as per appraisal document, date of PPP signed; (2) Copy of irrigation appraisal document indicating the area size and commercial viability of the projects; (3) Copy of PPP agreements; and (4) Performance reports by contractors developing the sites. 2. Internal Audit (IA) checks compliance of supporting evidence with respect to completeness and absence of material misstatement. 3. MINAGRI submits DLI report to MINECOFIN. 4. MINECOFIN request OAG to verify DLI report. 5. OAG conducts quality assurance assessment.


Description

The indicator refers to a defined share of the total new terracing area to be developed under PSTA4. The AREA (in ha) eligible for inclusion in the measure must be subject to a Public-Private Partnership (where commercial viability is a key characteristic). The development of the AREA was approved by the authorities based on a feasibility analysis that has met standards and criteria laid out in the new strategy for leveraging Private Sector Investment.

PPP: A long-term contractual arrangement between a public entity or authority and a private entity for providing a public asset or service in which the private party bears significant risk and management responsibility.

Project feasibility analysis: Refers to a series of feasibility or appraisal criteria against which the project is tested to assess its suitability as a PPP, and which includes the notion of sustainability both in terms of the scheme itself, its benefits to the ultimate users and its bankability. Such feasibility analysis is typically undertaken once the business case has been made for the proposed project to proceed as a PPP and the project has been designed to a preliminary level.

Commercial viability: The commercial viability of a PPP project describes the extent to which it has the potential to offer a private firm a sufficient financial return to enable it to recover any capital and operational costs as well as a suitable financial return on any investment given the opportunity cost involved.

Private partner in the PPP can be:

• a commercial farmer serving as an outgrower farm scheme manager;

• Farmers/Water User Groups/Youth cooperatives formally made responsible for maintaining terracing structures; and

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• a private operator that is responsible for operating and maintaining the entire system, and farmers pay a tariff that covers operating and maintenance costs.

Main contractual forms

• Operation, Management and Maintenance (OMM) contract;

• Infrastructure concession;

• Farm service agreement; and

• Hub farm agreement.

Formally agreed ‘Productive Alliances’ would also fall under the category of a recognized PPP (see indicator reference sheets of core results indicators for more details).

Linking Farmers to Markets through Productive Alliances : An Assessment of the World Bank Experience in Latin America https://openknowledge.worldbank.org/handle/10986/25752.

Data source/ agency Project appraisal documents and feasibility analysis, PPP agreements; business plans; performance reports by contractor; MINAGRI


Procedure

1. Task team makes available the following evidence: (1) Table with: (i) all names of terracing areas being developed – indicating the ones with a PPP agreement; (ii) size of total area and PPP area in ha; (iii) status – identified, under development, operational, (iv) reference to its commercial viability as per appraisal document, date of PPP signed; (2) Copy of terracing appraisal document indicating the area size and commercial viability of the projects; (3) Copy of PPP agreements; and (4) Performance reports by contractors developing the sites. 2. Internal Audit (IA) checks compliance of supporting evidence with respect to completeness and absence of material misstatement. 3. MINAGRI submits DLI report to MINECOFIN. 4. MINECOFIN request OAG to verify DLI report. 5. OAG conducts quality assurance assessment.

DLI 7 Volume of private sector investment (in US$) matching public financing in PPP infrastructure project.

Description Private sector investment refers to the capital or development investment by private firms into the agricultural and food value chain. The basis for establishing the ‘volume’ of a private sector investment’ is the PPP agreement signed between the private firm and the government and brokered through a competitive financing program (established as per the

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Private Investment Strategy launched by MINAGRI). The unit of measurement is US$.

Public-Private Partnership (PPP) refers to a long-term contractual arrangement between a public entity or authority and a private entity for providing a public asset or service in which the private party bears significant risk and management responsibility.

Data source/ agency PPP agreements; Contract monitoring reports by Fund administrator on each PPP


Procedure

1. Task team makes available the following evidence: (1) table with: (i) names of PPPs, location, type of infrastructure project; (ii) volume of private investment for each PPP; (iii) volume of public investment for each PPP; (2) copy of all PPP agreements signed; and (3) Annual Report by the Fund Administrator. 2. Internal Audit (IA) checks compliance of supporting evidence with respect to quality and completeness. 3. MINAGRI submits DLI report to MINECOFIN. 4. MINECOFIN request OAG to verify DLI report. 5. OAG conducts quality assurance assessment.

DLI 8 Private sector extension service models designed, launched and achieving positive response.

Description

Private sector extension services can complement public extension service delivery. There is experience with a variety of partnership models between the public sector, farmers' organizations or communities, and private-sector providers, which will be assessed for possible adaptation opportunities to the Rwandan context. Commercially viable service delivery models (in partnership with public extension where suitable) will be identified, also taking into account clearly specified performance expectations and delivery standards.

Possible models of ‘private advisory service’ delivery are:

• Arrangements where a private firm, non-governmental organization, or a specific group of professionals (e.g., paravets) are contracted/accredited by government to provide fee-based advisory services to farmers; and

• certain types of contract farming (e.g., outgrower schemes).

Outgrower schemes, also known as contract farming, are broadly defined as binding arrangements through which a firm ensures its supply of agricultural products by individual or groups of farmers. Farm households participating in outgrower schemes will be tracked and reported separately from other forms of private advisory services.

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MINAGRI/RAB will reach out to possible service provider or specialized professional associations (e.g. the Rwanda Council of Veterinary Doctors), and explore interest in piloting a mutually negotiated service delivery model. Measure of success is the number of farmers reached by private advisory services (i.e., fee-based advisory services, certain types of contract farming).

Data source/ agency Contractual agreements, Performance reports by service providers, field monitoring data; MINAGRI/RAB

Verification Entity Office of Auditor General

Procedure

1. Task team makes available the following evidence: (i) copy of contractual agreements, including agreed performance measures for service delivery; (ii) performance report by service providers; and (iii) list of names of farmers serviced (disaggregated by outgrower-schemes and other type of service delivery) with geographic coordinates of household, and cell phone number (if available). 2. Internal Audit (IA) checks compliance of supporting evidence with respect to completeness; undertakes spot checks in the field. 3. MINAGRI submits DLI report to MINECOFIN. 4. MINECOFIN request OAG to verify DLI report. 5. OAG conducts quality assurance assessment.

DLI 9 Reform of RAB.

Description

RAB is in the middle of an institutional change process involving substantial governance and structural reforms. A Prime Minister Order on the restructuring of RAB is under preparation and is expected to be approved within this fiscal year. Key milestones in implementing the reforms are:

Year 1: A plan for the implementation of RAB’s restructuring prepared and approved by its Board;

Year 2: a more efficient planning, budgeting and execution process, resulting in no deviation between budget and outturn expenditure; and

Year 3: the use of good practices in financial management leading to an unqualified audit of RAB

The achievement of these three milestones will each trigger disbursements.

Data source/ agency Progress report on restructuring, approved budget, revised budget and budget execution report (as approved by parliament), financial audits by OAG


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Procedure

1. Task team makes available the following evidence: (i) link to the Prime Minister Order on the restructuring of RAB; (ii) Restructuring plan approved by its Board; (iii) copy of the budget execution report of RAB (prepared by MINECOFIN); and (iv) copy of the most recent financial audit of RAB (issued by OAG); 2. MINAGRI submits DLI report to MINECOFIN. 3. MINECOFIN request OAG to verify DLI report. 4. OAG conducts quality assurance assessment.

.


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ANNEX 3. TECHNICAL ASSESSMENT

Strategic Relevance 1. The Government’s approach to agriculture, the food system and rural development are conveyed in several policy documents and strategies that have been prepared or are being finalized. The four most important are listed in order of increasing specificity:

NTS 1 – follows from previous poverty reduction strategies and a Vision 2020 document that has framed Rwanda’s transformation over the last two decades;

The Government is partnering with the World Bank in preparing a new ambitious Future Sources of Growth Strategy with a time horizon of 2050 to input into the Vision 2050 and new NSTP 1;

The NAP has been updated (from the previous Agriculture Policy dated 2004) and is pending Cabinet approval in 2018. The NAP conveys the Government’s vision as “a nation that enjoys food security, nutritional health and sustainable agricultural growth from a productive, green and market-led agricultural sector towards 2030”; and

PSTA4 (2018 – 2024) provides the investment framework for public, private and donor resources. Its objective is the “transformation of Rwandan agriculture from a subsistence sector to a knowledge-based value creating sector, that contributes to the national economy and ensures food and nutrition security in a sustainable and resilient manner.”

2. PSTA4 presents a considerable departure from previous Strategies in that it explicitly establishes new strategic orientations in the following areas: (a) a stronger role of the private sector (including farmers) with government shifting from market actor to market enabler; (b) an increased focus on farm profitability and commercialization; (c) use of the ‘food systems approach’ for enhanced nutrition and household food security; (d) increased priority on climate smart production; (e) greater focus on diversified higher value agricultural products (horticulture, vegetable, poultry, pork, fisheries), strengthened Innovation and extension systems; and (f) ways of working that are centered on collaboration among stakeholders.

3. The PforR Program seeks to support the transformational aspects of the PSTA4. The Program design draws on a socially inclusive commercial agriculture model of investment and MFD by focusing on the overall policy context (Results Area 1), recognizing that a key element of the new NAP/PSTA4 is leveraging private sector investment in the commercialization agenda (Results Area 2), but that there remains a need for the public provision of services alongside the greater use of private sector delivery mechanisms (Results Area 3), and that where public provision remains, improving the effectiveness of those public services – including value chain infrastructure – is key (Results Area 4). Technical Soundness 4. The World Bank’s Agriculture Global Practice has been supporting models of socially inclusive commercial agriculture through investment operations in countries across Africa including Ghana, Zambia, Cameroon, Niger, Tanzania, Morocco, and Uganda. The content of the PSTA4 interventions


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directly supported under the PforR draws upon this rich experience that has proven to be technically sound and has delivered results. 5. The PforR Program design also draws on innovation and experience of work being tested in Rwanda. For example, matching grants are being provided to farmers and agribusiness SMEs to stimulate technology adoption, increased input use, and commercialization, with links between private and public investments successfully explored. 6. In summary, while elements of the PforR Program have previously been deployed in Rwanda, they have been on a small scale and typically supported by external partners. The PforR Program is innovative in: (i) taking these approaches to scale; and (ii) integrating them into the Government program through the PforR instrument. Program’s expenditure framework 7. The expenditure framework assessment includes the following dimensions: (i) fiscal sustainability and resource predictability; and (ii) selected management and efficiency issues. The assessment concludes with some recommendations on areas where public expenditure on agriculture could be strengthened to ensure effectiveness and medium terms sustainability for the Program.

8. The analysis covers the period 2011-2016 and is based on the 2016 AgPER data set. The assessment also makes extensive use of the 2016 Rwanda Public Expenditure and Financial Accountability (PEFA) framework. The assessment focuses on the appropriations and actual spending of MINAGRI, RAB NAEB and the Districts (excluding districts’ own revenue sources), given that: (i) the bulk of public agriculture resources are managed by these budget agencies; and (ii) the PforR operation will support interventions and specific expenditures implemented by these entities. Data limitations make it difficult to establish a complete picture of agriculture expenditures because donor-funded projects and the revenues of some agencies are either only partially or not included in the IFMIS, and are managed outside of the government’s budget. 9. The expenditure framework for the PforR Program appears to be adequate, but to be effective, it needs to consider the issues highlighted in the assessment and adopt mitigation measures. Realistic planning and costing of the PSTA4 activities will be vital to inform budget prioritization, while improved mapping between PSTA4 activities and the budget will strengthen expenditure monitoring. Furthermore, lessons learned from the PSTA3 implementation can be used to strengthen budget management issues in the agriculture sector. Past implementation performance shows the need for capacity strengthening when funding levels are substantially increased. The PforR Program’s support of the setup of a new Agriculture Development Fund offers the opportunity to streamline and strengthen this funding mechanism with central and local funding arrangements to enhance the efficient and effective use of the Program’s resources.

10. The World Bank will continue the dialogue with MINAGRI and MINECOFIN to ensure realistic costing and planning of the PSTA4 in line with the macro-fiscal framework. Furthermore, the World Bank will monitor preparation of the MINAGRI MTEF 2018-19 – 2020-2021 and 2018-2019 annual budget to ensure that Program supported interventions are duly reflected in budget line items and at sufficient granularity to link to the Program’s outcomes.


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11. PSTA4 programs should be mapped to the budget program and sub-program for prioritization and traceability’s purposes. The improved alignment between budget inputs and PSTA4 activities will facilitate the monitoring and achievements of the Program’s DLIs, and enhance its impact on the PSTA4 implementation. 12. Improvement in agriculture expenditure control will be vital to closely monitor execution challenges. Substantial budget deviations hamper expenditure control and may affect the Program's impact. Better reporting and monitoring, in particular of the non-treasury contribution, coupled with improved timely release of funds, could strengthen budget planning and implementation. 13. Districts have a substantive role in the implementation of some of the Program’s priority areas (terracing). Timely and reliable earmarked and inter-agency transfers’ arrangements should be strengthened to enhance alignment of Districts’ budgets and execution of PSTA4 activities. Results chain and logic for DLIs selection

14. The World Bank has been working with MINAGRI to define the platform and roadmap within the PforR Program that will help the Government achieve the long-term goals set out in PSTA4. The PforR Program is constructed around four results areas nested within PSTA4. These four results areas emerged during preparation based on the application of the following three-phase decision tree: (i) what are the most important constraints to MINAGRI delivering on the agenda set out in PSTA4 that can be realistically implemented within the three-year timeframe?; (ii) what specific solutions can the World Bank support17 that reflect the Bank’s comparative advantage and are not already being supported by other means – with a specific reference to the World Bank’s focus on private sector investment in agribusiness and the application of MFD principles?; and (iii) are there technical feasible solutions that are amenable to support by the World Bank under a PforR instrument?

15. The four results areas focus on a combination of policy and institutional elements, resource allocation decisions, and reconfiguring the role of MINAGRI to an enabling function rather than a direct intervenor in the sector. The associated problem statements and PforR Program solutions underpinning this strategic focus reflect a theory of change developed with technical inputs from MINAGRI, the World Bank task team and other key stakeholders, and are summarized in the table below.

17 It is expected that the operation will be co-financed by one or more DPs and their support will be acknowledged. However, consistent with co-financing modalities, additional financing DPs still leverages Bank competence and expertise.


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Table 1: Summary of PforR Program Results Areas

The Results Chain is structured into four Results Areas. These reflect the concept of MFD by focusing on the overall policy context (Results Area 1), recognizing that a key element of the new NAP/PSTA4 is leveraging private sector investment in the commercialization agenda (Results Area 2), but that there remains a need for the public provision of services alongside the greater use of private sector delivery mechanisms (Results Area 3) and that where public provision remains, improving the effectiveness of those public services – including value chain infrastructure – is key (Results Area 4).

Results Area 1: Policy and Organizational Reform – aligned with PSTA4 Priority Area 4

Problem Statement: MINAGRI’s (including RAB & NAEB) organizational structure and its various specialties limits the capacity of the ministry to completely fulfil its mandate in policy development, sector coordination, resource mobilization and M&E.

PforR Solution: Improved MINAGRI capability reflected in new organizational structure and internal/ external incentives that facilitate improved sector analysis and associated policy and investment responses by MINAGRI, NAEB and RAB. MINAGRI recognized within GoR for policy leadership on agriculture and food systems, including on how to leverage the private sector.

Results Area 2: Enabling Agricultural Commercialization - aligned with PSTA4 Priority Area 4

Problem Statement: Access to key infrastructure (irrigation, post-harvest technology, etc.) remains limited. Levels of private sector investment have consistently fallen below targets set by MINAGRI. Input supply systems are not sufficiently responsive to the demand of production systems.

PforR Solution: An investment framework promotes widespread utilization of new business models for delivering key services. Increased role for private sector in research, input markets and services based on clear and predictable rules and collaboration and the reform of subsidy regime.

Results Area 3: Delivery of Improved Agricultural Value Chain Services - aligned with PSTA4 Priority Areas 3 & 4

Problem Statement: The state services/interventions are strongly supply driven. Most sector expenditures channeled into production-focused extension tasks delivered by the state. Insufficient incentives for agribusinesses to collaborate with farmer groups.

PforR Solution: MINAGRI deploys a range of instruments to de-risk agriculture investments, including through key stakeholders. Greater use of private sector delivery agents and collaboration with agriculture research. Better use of scarce public funds to leverage private investment through a range of PPPs. Effective support for off-setting establishment costs of inclusive business models (e.g. out-grower schemes and productive partnerships).

Results Area 4: Efficiency in Public Expenditures - aligned with PSTA4 Priority Area 4

Problem Statement: Need for increased measurements of efficiency and improvements in the budget process (including execution). Centralized spending decisions encourage dislocation from end-users/beneficiaries.

PforR Solution: Improved efficiency in public spending. Targeted spending on areas unlikely to solicit private sector investments. Improved budget preparation and execution procedures. Calibration of intra-sector spending in line with NAP/PSTA4 policy priorities.


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16. The rationale for selection of the DLIs is as follows.

Results Area 1: Policy and Organizational Reform. The DLIs seek to incentivize three key areas: (a) supporting MINAGRI to become more fit for purpose; (b) the delivery of relevant strategic outputs (private investment paper, subsidy policy reform, and flagship reports) that provide practical guidance for future decisions; and (c) new ways of working with key stakeholders who are operating inside and outside government.

Results Area 2: Enabling Agriculture Commercialization. These DLIs seek to mainstream successful private public business models that have been piloted in other countries, agencies and projects.

Results Area 3: Delivery of Improved Agriculture Value Chain Services. The goal is to contribute to the de-risking of agriculture investments. In that context, the DLI seeks to expand the range of services being offered to the agriculture sector and increase access to higher quality services. Results Area 4: Efficiency in Public Expenditures. The PforR Program seeks to incentivize the dual approach of supporting: (i) a very specific action that demonstrates improved efficiency in public expenditure of the core delivery agency RAB; and (ii) a more general effort to improve the overall expenditure among the three main agencies that account for the largest share of sector expenditure.

Program’s results framework 17. MINAGRI has developed a detailed results framework for PSTA4 with measurable targets and outputs. Drawing on lessons learned from the implementation of PSTA3, alignment between the PforR Program Results Framework and the PSTA4 is clear and strong. Program’s governance structure and institutional arrangements 18. Rwanda’s agricultural sector is dominated by three primary institutions with a number of important subordinate institutions playing other important roles. MINAGRI is the apex policy institution with ultimate accountability for delivering results in the agricultural sector. RAB overseas research and extension in food crops; and the responsible for implementing policies and strategies to promote and develop agricultural and livestock products for export. Delivering on PSTA4 requires coordinated interventions from other parts of Government. Of note is the Rwanda Development Board (RDB) which has a mandate to support investments in agriculture and agribusiness, MINECOFIN and the Ministry of Public Service and Labor (MIFOTRA).

19. The required change in institutional roles of all stakeholders implied by the new approach will present a major challenge. An institutional assessment undertaken as part of World Bank support for the preparation of PSTA4 states clearly that “this transition will take time and will benefit from capacity building support”. 20. In addition, there are several other ministries, state agencies and other state organs that impact on agriculture outcomes. As reported in the AgPER, even applying a functional classification of


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expenditures as per the Classification of the Functions of Government (COFOG) nomenclature, expenditure data reveals a large number of ministries and agencies with some agriculture-related spending. Many of these have formal mandates that directly reference agriculture, while others will be responsible for cross-cutting issues that nevertheless have important agriculture-sector consequences. 21. The financial sector is also critical for agriculture, and the Government’s program seeks to expand existing efforts to provide financial services to farmers. While overall the credit-to-GDP ratio is around 20 percent, credit to agriculture (including agri-businesses) as a share of agricultural GDP is less than 5 percent. Economic justification of the Program 22. The proposed PforR operation will deliver a sustained positive impact on Rwanda’s economy. This can be quantified in terms of its anticipated impact on sector and aggregate economic growth, jobs and poverty reduction, and through the expected economic returns from major investments proposed under the PSTA4. The latter involves calculating economic rates of return for specific interventions based on the ‘with project/ without project’ scenarios and is static analysis. The former includes multiplier effects from upstream and downstream linkages using computable general equilibrium (CGE) techniques. This methodology cannot be estimated based directly on the costs and benefits of the defined PSTA4, but simulates the expected impacts on productivity as set out in the PSTA4 targets. Taken together, they provide comprehensive analysis of the anticipated impacts of the overall program and therefore the economic justification for the World Bank’s support. 23. Impact of the PforR Program on Economic Growth and Jobs. Agricultural development is demonstrably critical for Rwanda’s continued economic growth. The preferred methodology for projecting impacts of various scenarios for agricultural development is CGE modelling which allows for all the demand, supply and price effects within and between various sectors. IFPRI has constructed a detailed CGE model of the Rwandan economy which is used to estimate the impacts of alternative scenarios. Previous modelling of alternative agricultural growth strategies highlights several important points: (i) agriculture is a large share of the economy; therefore, even modest sectoral growth will drive overall economic growth; (ii) the nature of the sector means that forward and backward linkages between farm households and overall economy are substantial; therefore, modest improvements in productivity at the farm level – either from increased yields, diversification into higher value crops, and/or reduced post-harvest losses – drives substantial overall sector performance; (iii) that said, some subsectors have greater leverage than others; typically those with higher potential growth rates are starting from a low base and therefore their overall impact on the sector is more modest; and (iv) securing broad growth across a large number of subsectors is the most effective strategy for maximizing agricultural growth and therefore overall economic growth. 24. Economic analysis undertaken in preparation for the PSTA4 demonstrates the importance of agricultural growth for Rwanda’s continued economic growth, shared prosperity and poverty reduction. Modelling the impacts of productivity targets in the PSTA4 suggests agricultural GDP growth of 8.9 percent p.a. contributing to overall economic growth of 7.9 percent p.a. (over a time horizon through 2025). 25. Economic growth is critical for jobs which are sorely needed in the rural economy. Demographic projections confirm that by 20520 two-thirds of Rwanda’s population will reside in rural areas despite


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continued rural-urban migration. Currently more than 50 percent of rural youth are engaged in agriculture-only livelihoods and – given small farm size – many are under-employed. There are 200,000 new entrants to the labor market each year between now and 2020 and analysis shows that interventions to spur private sector-led growth could provide jobs for 60,000 – 80,000 of them. Diversification into higher-value crops and expansion of the agribusiness sector will be especially important for the rural youth. 26. Impact on shared prosperity and poverty reduction. Agricultural growth is shown to have substantial impacts on broad-based economic growth and poverty reduction. The largest number of poor are engaged in agriculture so sector growth will disproportionately benefit poor households. Moreover, agriculture has the strongest forward and backward linkages compared to other sectors, so for any given level of growth in agriculture, the dynamic effects across the entire economy will be substantial. Third, poverty is a function of prices, especially food prices which comprise the largest proportion of the consumption basket of the poor, so any productivity impacts that depress food prices will benefit the poor. Accordingly, the same IFPR modelling of PSTA4 productivity targets is shown to reduce poverty from 35 percent currently (2017 baseline) to 17 percent by 2025. 27. The PforR Program is expected to have positive impacts against both shared prosperity and poverty reduction. However, international experience is that households’ ability to benefit from increasing market-based opportunities differ and are dependent on household characteristics. Often, these characteristics are the same as those identified as determinants of poverty. As such, the PforR Program’s emphasis on private sector development in agriculture is unlikely to be the most effective instrument for reducing poverty amongst the extreme poor and marginalized – landless, for instance – but it is the most impactful for graduating the largest number of households close to but below the poverty line. The underlying Government strategy recognizes that not all small-holder farmers will be able to avail the opportunities from private sector-led agricultural development and therefore parallel effective social protection interventions will be required. In addition, non-farm rural employment will be an important route out of extreme poverty for these households and these are an important element of the Government’s overall program. 28. Economic returns from priority PSTA4 investments. The cost-benefit analysis of key PSTA4 investments also demonstrates the high economic rates of return from these investments. The economic assessment includes: (i) the rational for public sector financing; (ii) the World Bank value added; and (iii) a quantitative assessment of the PSTA4’s economic impact. The assessment suggests that the Program is economically viable. It covers only a few PSTA4’s subprograms for which baselines and targets are available. Nevertheless, focusing on agricultural production benefits, the results of the analysis show an economic net present value (NPV) of US$169 million and a sound economic rate of return (ERR) of 27 percent. The analysis is based on three cropping excel-based models developed to calculate the increases in productivity. It assumes an exchange rate of 741 RWF for US$1, a 12 percent discount rate and a time horizon of 25 years. 29. The PSTA4 will also contribute to poverty reduction through farm-level income growth. Increases in farm income per person will range between US$209 and US$1,140 on a 0.6 ha farm. Assuming an average farm household of five people per person, income increase constitutes about 1.1 to 5.9 times the poverty line for Rwanda or US$ 0.5-2.5 per person per day.


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Technical Risks 30. The technical risks to the PforR Program are significant. As an ambitious, transformative agenda, the change management required to fully achieve the PSTA4 objectives is considerable. At the same time, the demonstrated ability of MINAGRI and associated agencies to adapt and change is limited – reflecting weak capacity and the internal incentives within the GoR system that discourage such change. Indeed, it is for this reason that the World Bank is supporting the Government program with the PforR Program. Other specific technical risks include the following:

The external technical capacity to support MINAGRI to deliver PSTA4 is fragmented and focused on the agendas of individual agencies.

The assumed response of the private sector to the policy reforms and incentives being provided by the PforR Program on the scale needed to deliver the kind of anticipated impact. This may be further harmed by continued dominance of large-scale and well-connected incumbent businesses;

The technical competence of service providers (public and private) to deliver the kind of services required for this transformation agenda (including extension services for diversified especially higher-value agriculture and business development services for emerging agribusiness, for instance);

The ability of MINAGRI to leverage or depend upon supportive interventions from the wider GoR, including the necessary financial resources anticipated in the PSTA4 investment framework, the overall macro-economic policy framework, and the ability of district authorities to effectively absorb the new responsibilities being placed upon them as part of the decentralization agenda.

It will be important to assess the impact of both private and public investment on vulnerability to shocks at the household level.

Building Resilience to Climate Change. To respond to the challenges of climate change, MINAGRI will incorporate climate change cycles into planning and programming and ensure migration and adaptation measures are mainstreamed into the activities of PSTA4.

31. These risks are being minimized with the following actions by GoR/MINAGRI:

MINAGRI will take a more strategic approach to the alignment of relevant external technical support with the institutional challenges of transforming sector.

The role of private sector actors envisaged in the sector PSTA4 is consistent with observations of similar transformations in similar countries across Africa. Therefore, it is considered technically viable. It is likely to depend on early movers from the East Africa region, further improvements in economic integration within the EAC, and additional measures to ease doing business for regional companies will enhance the expected response. Similarly, stimulating private sector investment and entrepreneurship is a key recommendation from the Future Sources of Growth study and is likely to command significant high-level political support, which would further


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improve the overall environment for private sector actors. MINAGRI is also benefitting from other DPs’ programs that directly support the development of agricultural value chains and therefore assist the emergence/expansion of private sector in agriculture.

Continue to analyze the sector’s access to finance, specifically, the sector’s exposure to risk and trends that can impact its exposure. This will enable the key actors to not only strengthen the performance of key areas, e.g. guarantee portfolio in the sector, but also allow a stronger engagement between partners—both financial institutions, multilateral and bilateral projects. Improved knowledge would also allow alternatives to current models of financing to be developed. RAB and NAEB recognize the additional demands from more sophisticated clientele and are seeking to address this through structural reform to improve effectiveness (especially RAB via their ongoing reform program).

On the fiscal side, overall the Government is acutely aware of the limited fiscal space and

emerging debt concerns and, with World Bank and International Monetary Fund (IMF) support, is seeking to manage the macro-economy accordingly. Within the sector, MINAGRI will analyze the annual budgets and MTEF that cascade out of the PSTA4 investment framework to accommodate any fiscal shortfall. It is recommended the MTEF be reviewed in December 2018 to ensure that the budget reflects the transformational agenda characterized by the PforR operation and that MINECOFIN/MINAGRI jointly manage and complete a comprehensive Public Expenditure review of the Sector by December 2020. Demonstrating improvement of the effectiveness of agriculture-related public expenditures will strengthen MINAGRI’s claim to additional resources even within a fiscally constrained environment, relative to competing ministries and agencies.

A transparent and accessible system for monitoring food security and nutrition is an important area where improved MINAGRI capacity will be established.

32. MINAGRI is seeking to mitigate risks to the PforR Program specifically by: (i) supporting a parallel program of technical assistance funded by a MDTF – this will assist in the reorientation of MINAGRI, NAEB and RAB (and potentially other institutions); (ii) providing detailed analytical inputs on potential agricultural value chains most attractive for private sector investment as part of the agribusiness ‘deep dive’ under the ongoing Country Private Sector Diagnostic; and (iii) maintaining a close dialogue on the overall fiscal issues with MINECOFIN. Taking all these factors into consideration, the technical risk has been rated as Substantial. Program Action Plan 33. While the overall PSTA4 is sound, the below additional actions will facilitate effective implementation, and meet and contribute to international good practice:

(i) Review of Agriculture guarantees schemes. The Rwanda Agriculture Finance Diagnostic Report,

2017 highlighted the need to strengthen BDF operations in general and enhance its agriculture sector domain knowledge and analytical capacity. The ongoing BDF reforms that aim to streamline its core services and strengthen its governance represent an opportunity to strengthen its role in providing key financial services to the agriculture sector. Of particular importance are efforts to


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improve the management of the BDF’s portfolio guarantees (because most agricultural loans are small loans for which individual loan guarantees would not be appropriate) and efforts to reduce the NPL levels of the guaranteed portfolio (because the bulk of the NPLs are in the agriculture sector). In this context, the Diagnostic report recommended a comprehensive review of agriculture guarantee schemes. This review will provide important analysis for the PforR support to Matching Grants and PPP more broadly.

(ii) Gender Mainstreaming. The GoR has made a strong political commitment to gender equality and is determined to see this reflected in government policies at all levels. MINAGRI, guided by its agriculture gender strategy, will continue to make concerted efforts to mainstream gender and engage in gender sensitive policy making and programming. PSTA4 interventions make specific gender-responsive provisions to target and include women and design solutions that are tailored to their gendered needs and challenges. In addition, specific activities are proposed to further women’s economic empowerment and engagement in decision-making processes. Special consideration is also given to youth to stimulate profitable engagement in agriculture and agribusinesses, through developing skills and promoting entrepreneurship. There will be dedicated staff in the M&E unit to ensure that gender and youth issues are addressed and mainstreamed.

(iii) Building Resilience to Climate Change. To ensure their inclusion in the planning and programming cycles, climate change issues were mainstreamed into the PSTA4 activities during its formulation. Moving to implementation, it is envisaged to develop internal capabilities for each of these topics and assign focal points in MINAGRI. These focal points would have a dual role: ensuring training throughout the sector and across relevant implementation institutions on these key issues, and verifying their integration into the sector program and projects. In parallel, a new set of climate and environment mainstreaming indicators will be agreed with REMA for MINAGRI, linked to NST (sustainable agriculture) and Vision 2050.

(iv) Improving the alignment and strategic focus of TA. While the Results Area focuses on the implementation of an OD strategy, there is a broader reform agenda within MINAGRI and associated agencies that is a pre-requisite for successful implementation of the whole PSTA4 program. This element of the PAP will serve to underpin the strategic deployment of the externally-funded TA to support the PSTA4 transformation agenda and, where appropriate, facilitate the delivery key results areas.

(v) Food Security and Nutrition Monitoring. While the PforR Program focuses on efforts to leverage

private activity in agriculture, the food security and nutrition agenda is a major priority for GoR, as well as a World Bank focus area. The PSTA4 sets out a multi-dimensional approach to food security and nutrition under its Impact Area 3 based on improvements in availability, accessibility, price stability and food utilization. It will be important to assess the impact of both private and public investment on vulnerability to shocks at the household level. Consequently, a transparent and accessible system for monitoring of food security and nutrition is an important area where improved MINAGRI capacity should be demonstrated.


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ANNEX 4. FIDUCIARY SYSTEMS ASSESSMENT

1. As per the World Bank Policy and Directive on Programs for Results (2015), an assessment of the PforR Program’s fiduciary systems was conducted. The OECD-DAC “four pillars” approach was used to define the Program procurement risks. The assessment covered the key institutions directly responsible for program implementation, namely, the MINAGRI, the RAB, the NAEB and Districts. 2. The fiduciary systems assessment entailed a review of the capacity of key participating entities on their ability to: (a) plan, record, control, and manage all Program resources and produce timely and reliable information to the stakeholders for monitoring and decision making purposes; (b) follow and monitor procurement rules and procedures, capacity, and procurement related risks associated with the Program; and (c) ensure that implementation arrangements are adequate and fiduciary risks are reasonably mitigated. 3. The review concludes: (i) the fiduciary risk is “Substantial”; and (ii) the procurement and financial management arrangements comply with World Bank Policy and Directives on PforR requirements, and provide reasonable assurance that the proceeds of the financing will be used in an economical, effective and efficient manner to attain the Program’s development objective. It is worth mentioning that the fiduciary risk identified in the ongoing PforR operation does not prevent the achievement of the proposed program development objective. No high value contract with a value exceeding the Operations Procurement Review Committee (OPRC) thresholds is identified under the Program procurement plan. 4. The budget planning framework is robust but the realism of the agriculture program medium-term expenditures and budget allocation is moderate. The ongoing MTEF (2017-2020) is not yet fully aligned with the PSTA4 strategic priorities and was based on the PSTA3. The 2018-2021 MTEF is being prepared following a budget consultative process. The 2018-2019 draft budget gives reasonable assurance that the PSTA4 strategic priorities are being considered in the enacted budget. The comparison of the expenditures planned in the MTEF and the PSTA4 cost estimates for the related periods demonstrated a significant deviance. In the past years of PSTA3 implementation, there was significant deviance between the MTEF and the budget, and low budget execution performance at the RAB (68,70 percent budget execution rate for 2015-2016). Analysis suggest multiple underlining factors such as inadequate costing, changes in priorities, lack of planning capacity for complex projects, and inadequate revenue forecasts of externally financed projects. The improvements may come from a set of decisive measures to enhance: (i) planning and budgeting skills at MINAGRI, NAEB, RAB, Districts, Public Investment Management, and procurement planning; (ii) costing and budgeting methodology; and (iii) reinforcement of collaboration and application of existing planning and budgeting rules within available fiscal space.

5. The TSA framework is clearly designed but reported delays in cash releases to implementing entities could undermine service delivery. Among the reasons for the delays could be lower than predicted revenue mobilization. This suggests that cash planning and management need to be improved. At the GoR program level, some mitigating measures to delayed cash releases could consist of: (i) a refined revenue collection forecasting model; (ii) improved expenditures cash flow needs estimates at spending entities; and (iii) refined quality assurance review of cash estimates. More specifically, for the PforR


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operation, the GoR may request an advance of up to 25 percent of the total amount of the financing to enable it to finance expenditures aimed at achieving the agreed results. The request will be supported by adequate justification. Once the results are achieved, reported and satisfactorily verified, a revolving advance can be provided upon justification.

6. The accounting and financial reporting standards are adequate. Nevertheless, challenges remain at District level in terms of quality of reporting and respecting reporting deadlines. In the Districts, expenditures at subsidiary entity level are not captured and consolidated in the financial reports of the respective Districts. To this extent the central government designed a template for subsidiary entities to provide financial information for disclosure, however they are not consolidated in the district financial statements. To address District and subsidiary entity level accounting and reporting weaknesses, MINECOFIN integrated SEAS into IFMIS. This allows Districts to prepare a comprehensive financial report, including revenue and expenditures at sub local entities. 7. The internal control framework is adequate but areas for improvements remain. The GoR’s PFM regulations provide a clear segregation of duties among the Chief Budget Manager, the accountant and the Internal auditor, and clearly describe procedures applied to the budgeting, accounting and reporting chain. The main internal control weaknesses as identified in internal and external audit reports at RAB and Districts are: (i) non-compliance with procurement policy and guidelines; (ii) poor documentation and filing of accounting records; (iii) mis-postings and non-reconciled balances; (iv) irregular and unauthorized expenditures; and (v) non-compliance to tax rules and regulations among others. The effective implementation of the PFM learning and development strategy and the roll out of the IFMIS and eProcurement at sub national entities will contribute to the enhancement of the internal controls. 8. The verification process of achievement of the DLIs has been reinforced. The monitoring of the results achievement is overseen by the Prime Minister’s Office, however, the human resource capacity of this office is limited. Given the nature of the DLIs, the OAG will serve as the verification entity for the PforR Program and will perform an independent review to confirm achievement of the agreed results. Adequate resources will be provided to the OAG via budget appropriation to perform the verification on a timely basis. A sound planning of the verification assignment will be designed to allocate sufficient time to the OAG to complete the verification. The Internal auditors are not familiar with the PforR instrument therefore an induction training will be provided. A World Bank multi-disciplinary team will review achievement of agreed results before the release of funds. The definition of the DLIs and the verification protocol is clearly detailed in the Program document. 9. The Internal audit function exists at all Program implementing entities, however there is still a capacity gap. MINAGRI, NAEB, RAB and Districts have Internal Audit Units with one, two and three internal audit staff respectively. RAB internal audit staff are currently preparing for ACCA certification. Districts are required to have three Internal Auditors but some still only have two leading to ineffectiveness in the audit function and inability to cover and monitor all risk areas. Further challenges in the Districts include the recruitment and retainment of experienced or qualified accountants and internal auditors. The implementation of the retention and career development strategy for accountants and internal auditors would help address the issue. Finally, the quality of the risks matrix, the linkage of the internal audit medium-term and annual plan with the risks is moderate and will require further and continuous hands-on training. Allocation of adequate resources in quantity and quality to effectively implement the internal audit work program is important to improve the effectiveness of the internal audit.


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10. The audit committees are in place at all implementing entities however, their capacity requires continuous enhancement to support the internal audit function and achievement of the entities strategic objectives, while adequately monitoring risks. The OCIA oversees the capacity building of the MDAs’ audit committees and organizes periodic induction training for them. The trainings are useful, almost generic and will be complemented with tailored trainings based on specific issues encountered in the sectors or entities. An effective performance evaluation of the of audit committees using a mix of peer reviews or independent review method will pave the way for steady and continuous improvements. 11. The OAG has timely and satisfactorily audited the entities involved in the PforR Program. The Auditor General expressed an unmodified opinion (clean opinion) on the MINAGRI financial statements and on compliance. The audit opinion on RAB’s financial statements has been consistently qualified and signals an ineffective, inefficient use of public resources and hampers the achievement of sector strategic objectives. The PforR Program is providing incentives via a DLI to improve the accountability at RAB and achieve a clean audit opinion the third year of the program. This is complemented by a PAP on a sound annual action plan to address the weaknesses identified by the audit committee which will be submitted to the World Bank. 12. The OAG’s capacity is adequate to audit the PforR Program but could be undermined by emerging needs. The OAG has a 5-year strategy (2013-2018) supported by the GoR and DPs to enhance skills, methodology and infrastructure. The strategy has been successfully implemented and 85 percent of the GoR expenditures were audited in 2015-2016 compared to 82 percent in 2014-2015. A new strategy is being prepared with DFiD support. However, despite recent progress, there is a need to further increase and enhance OAG’s capability to cover all GoR expenditures and audit IT infrastructures, which are increasingly embedded in GoR functions, and which are creating opportunities for improved efficiency but also risks. This can be achieved with adequate budget allocations and timely release of funds to the OAG to support the implementation of the OAG strategy and action plan. 13. Every fiscal year, the OAG will prepare a financial audit report of the MINGARI, NAEB, RAB and Districts. The MINAGRI, NAEB and RAB reports will be submitted to the World Bank by the MINAGRI not later than 10 months after the end of the fiscal year. The report shall include a statement to confirm that no debarred firms (World Bank list) have been awarded contracts under the PforR. 14. The GoR’s strides against corruption is remarkable thanks to a robust regulatory and institutional arrangement to monitor fraud and corruption. Rwanda ranked 4th in the Africa in Corruption Perception Index (2017). The fight against corruption applies to the Program implementing entities i.e. MINAGRI, NAEB, RAB and Districts. The Institutions in charge of the fight against fraud and corruption are mainly the OM, the NPPA and the OAG. 15. The OM’s financial resources have been decreasing or stagnant in recent years and may hinder its capacity to deliver on its mandate. The OM mandate covers wide areas from investigation, prosecution of cases of corruption, to sensitization and research on corruption. The number of cases is increasing while the pending cases are unresolved. In contrary, the Office Budget has decreased from 1.9 billion in 2012-2013 to 1.4 in 2015-2016. There has been an increase of 22 percent since 2016-2017 but it is expected to stagnate in the coming years. Compared to Botswana, (1st country in Africa in Corruption Perception Index), the budget allocation share in total Government expenditures is significantly behind (0.04 percent in Rwanda, and 0.09 percent in Botswana). Providing and maintaining adequate financial and human


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resources capability of the OM is critical to ensure and increase its ability to deliver on its broad mandate. 16. The complaint handling mechanisms work reasonably well, however, more work is needed to create a mindset change to more proactively report cases of corruption. There are multiple channels of making and recording complaints on fraud and corruption, including on procurement: There is a reasonably good citizen’s engagement and complaints handling mechanism for fraud and corruption. The NPPA has a free hotline (3677) that enables anyone with information on corruption or has a complaint to easily report to NPPA. The OM also has multiple sources of receiving complaints, including hotlines, secure complaints boxes in public organizations and the 30 districts, via email and letters. The effectiveness of the above mechanism depends in part on the citizen engagement to systematically report cases of corruption. The Transparency International Bribery Index suggests that very low numbers of cases of corruption are reported (20 percent in 2015-2016). It has been agreed that the OM will report cases of corruption under the PforR Program to the World Bank on an annual basis.

Recommended Program Action Plan 17. Procurement Risk Management. The assessment indicates that procurement systems have strengths. However, procurement compliance has not been attained nationwide. The following non-compliances are found to be common with some procuring entities: (i) negotiating on contract prices when the offer of the winning bidder is above the planned budget (especially consultancy services); (ii) longer bidding processes and contract award than required by the law; (iii) staff capacity limitations to handle procurement of high value contracts; (iv) poor records keeping; (v) selection of consultants on “Open Competitive” basis by directly issuing RFPs without requests for expressions of interest; (vi) exclusion of World Bank debarred firms; and (vii) high staff turnover. To address these issues a procurement action plan will be developed as part of the PAP. 18. Annual Audit Action Plans. MINAGRI will be responsible for the development and implementation of annual Audit Action Plans. The plans will articulate clear actions, report on progress and indicate the agencies responsible.


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ANNEX 5. ENVIRONMENTAL AND SOCIAL SYSTEMS ASSESSMENT

1. An Environmental and Social Systems Assessment (ESSA) for the proposed PforR Program was undertaken by the World Bank per the requirement of the World Bank’s Policy Program for Results Financing. The aim of the ESSA was to review the capacity of existing government systems to plan and implement effective measures for environmental and social impact management, and to determine if any measures would be required to strengthen them. Such measures will be spelled out in the PAP. 2. Approach and Methodology. The ESSA is an update of the original assessment conducted by the World Bank for PSTA3 PforR support to assess the key implementing agencies: MINAGRI, RAB, NAEB, and other relevant stakeholders like the REMA, Rwanda Natural Resources Authority (RNRA), the District Technical Expert Teams and private sector representative agencies. The assessment evaluated institutional capacity to achieve environmental and social objectives against the range of environmental and social impacts that may be associated with the Program. It provides a review of relevant government systems and procedures that address environmental and social issues associated with the Program. It describes the extent to which the applicable government environmental and social policies, legislations, Program procedures and institutional systems are consistent with the six ‘core principles’ of the Program for Results Policy, and recommends actions to address the gaps and to enhance performance during Program implementation. National and District level consultations were organized with stakeholders for feedback on the implementation of provisions to enhance transparency and accountability, and other related environment and social issues. The consultations were also expected to provide detailed local information and views on experiences with transparency and the delivery of services through technology, from the key relevant stakeholders. 3. The ESSA preparation process was as follows:

Baseline Information Collection: The analysis of information and data covered the environmental and social context of the country, the current status of its Agriculture, Forestry and Rural Development programs, the experience of implementation of previous World Bank supported projects (PSTA3 PforR, LWH, RSSP, Lake Victoria Environmental Management Project [LVEMP] (P118316), and Landscape Approach to Forest Restoration and Conservation [LAFREC] (P131464)) through a review of ESMFs, Environmental and Social Impact Assessment (ESIAs), Resettlement Policy Frameworks (RPFs), RAPs, Social Assessments, Implementation Manuals and relevant GoR documents and publications.

Field Reviews and Study: Field reviews on environmental and social effects were undertaken as part of preparation and implementation support missions for World Bank supported projects. For example, the field observations reflected in the ESSA are based on visits to the districts undertaken by the World Bank’s Environmental and Social staff for similar types of activities under LAFREC, LVEMP, LHW, and RSSP.

Consultations: A formal consultation on the draft ESSA was conducted on April 4, 2018 and April 18, 2018 to validate the information presented and elicit inputs from the key stakeholders. A report on the consultation is annexed to the ESSA (Annex 1). Feedback from the


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GoR’s key stakeholders has been instrumental in identifying the actions that served as inputs into the PAP. This feedback was sought both through the formal consultation events, as well as through meetings held during World Bank missions.

Public Disclosure: The final ESSA was publicly disclosed on the World Bank and MINAGRI websites on April25, 2018.

4. Below is a summary of the analysis of the six ‘core principles’ of the PforR Policy. 5. Promote environmental and social sustainability in the Program design; avoid, minimize, or mitigate adverse impacts, and promote informed decision-making relating to the Program’s environmental and social impacts. Informed decision making relating to the environmental issues in the agriculture sector is evident in the GoR’s policies and programs. The GoR has well-defined legal/regulatory systems for safeguarding community interests and ecologically significant areas from pollution. The GoR’s approach for enhancing sustainability in agriculture investment planning is based on a technical assessment and community consultation. The revised and updated NAP includes sections on the protection of genetic diversity. However, addressing the environmental management needs in a national program depends on capacity building of the key sector organizations both in terms of human resources and training, and strong monitoring. Poor implementation of the strengthened environmental and social management rules and procedures, especially at the local level, is a possible risk. 6. Avoid, minimize, or mitigate adverse impacts on natural habitats and physical cultural resources resulting from the Program. The ESIA procedure applied to all civil works is well known to all project stakeholders. 7. There is an established procedure for the protection of physical cultural resources from the Ministry of Youth, Sport and Culture. In addition, the Genocide sites are protected, conserved and managed by the Rwanda National Commission for the Fight Against Genocide. Climate change issues should be mainstreamed into the activities in PSTA4 during its formulation. Several subprograms, including land husbandry, irrigation infrastructure, and value-chain infrastructure were identified to have potential impacts on natural habitats and physical cultural resources. The risks are related to the potential inability to apply practical and operationally feasible early screening practices for environmentally sensitive areas and chance finds or physical cultural resources during construction of civil works, which may lead to adverse impacts on ecologically sensitive areas and physical cultural resources. The risk is deemed to be minor if the Borrower applies appropriate site scoping and screening procedures in the early screening practices for site selection. This can be supported through the planned World Bank implementation support program for the PforR Program. 8. Protect public and worker safety against the potential risks associated with: (i) construction and/or operations of facilities or other operational practices under the Program; (ii) exposure to toxic chemicals, hazardous wastes, and other dangerous materials under the Program; and, (iii) reconstruction or rehabilitation of infrastructure located in areas prone to natural hazards. The GoR’s regulations include provisions for public and worker safety (for example, regulations on use of explosives, provision of barricades at construction site, use of personal protection gear by workers, disposal of construction debris and waste water, preventing creation of conditions conducive to disease vectors, etc.). The state has also issued guidelines/regulations on aspects concerning public and worker safety risks from


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construction/operation of facilities. The legal/regulatory system in the country includes provisions for safeguarding water resources and ecologically significant areas from pollution and is thus applicable to regulating the disposal of toxic chemicals, hazardous wastes, etc. Rwanda has developed “Small Dam Safety Guidelines”, providing support to projects undertaking construction of small irrigation structures. The guidelines were published under the LWH project in 2009 and updated in 2012. As part of the action plan under PSTA3 PforR, MINAGRI developed an ESIM as a reference guide for all program implementing agencies. However, the systematic implementation of these provisions requires enhancing awareness in the key sector organizations and strengthened monitoring. 9. Manage land acquisition and loss of access to natural resources in a way that avoids or minimizes displacement, and assist the affected people in improving, or at the minimum restoring, their livelihoods and living standards. The legal/regulatory procedures and policies for expropriation of land in the country adequately respond to the relocation and compensation for loss of assets, services, homes and land. There is a risk of insufficient capacity to ensure the fair process in assigning compensation and providing benefits of the program to the vulnerable households. 10. Give due consideration to the cultural appropriateness of, and equitable access to Program benefits, and give special attention to the rights and interests of the Indigenous Peoples and to the needs or concerns of vulnerable groups. The 2003 post genocide constitution prohibits all forms of discrimination based upon ethnicity, while guaranteeing all people equal rights. To expedite the delivery of justice, the Rwandan Government has returned to the traditional “Gacaca” Court system. The local Gacaca courts, meaning ‘justice on the grass’, combine traditional local justice with modern jurisprudence, with the aim of achieving truth, justice, and reconciliation. The Gacaca courts have been the most thorough process in bringing the rank and file of genocide to justice and to resolve any other local conflict. The legal/ regulatory system is robust enough to promote decentralized planning, implementation and social accountability. In addition, special provisions exist to safeguard the interest of the vulnerable and provision of subsidies to the vulnerable households. However, decentralized planning may encourage a bottom up approach, but the central control of budgets for implementation may erode the trust between the districts and the communities. 11. Avoid exacerbating social conflict, especially in fragile states, post-conflict areas, or areas subject to territorial disputes. The history of genocide in the country has led the GoR to ensure equality for all as citizens of Rwanda setting aside ethnicity. There are no conflicts or territorial disputes in the program area. 12. The overall environmental and social risks of the Program are assessed as Substantial. The overall environmental and social risks potentially associated with the PforR Program support for PSTA4 activities are anticipated to be substantial, due to the introduction of PPP infrastructure projects that will require agencies to either develop new business models or scale up existing approaches. The Program will address this risk by establishing appropriate selection and performance criteria. These actions will be included in the DLIs and PAP. 13. The ESSA concluded that the agriculture sector Environmental and Social systems in terms of policies and procedures are adequate for the Program implementation, albeit lacking in human and financial resources, especially for coordination and monitoring of activities at the local level. MINAGRI and RAB will utilize additional environmental and social expertise and continue capacity building efforts


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to strengthen the risk management capacity. With diligent management of the environmental and social risks and implementation of the identified actions to address the gaps, the Program implementing agencies can reduce environmental and social risks during implementation of the proposed PforR operation.

Actions to Address Identified Environmental Risks and Gaps

14. Summary of key environmental impacts, risks and gaps: The key environmental impacts, risks and gaps identified in the preceding sections are summarized below:

Potential Negative Impacts: impacts on ecologically sensitive sites, construction phase impacts during civil works, occupational health and public safety risks, dam safety issues, impacts on water resources due to increased use of agrochemicals. Certain hotspot areas are likely to present more risk with respect to these impacts.

Challenges in implementation of the existing legal/regulatory provisions due to multiple regulations and insufficient human resources at regulatory authorities requiring strengthening of the capacity of the implementing agencies to comply with the relevant regulations and stronger monitoring of the implementation of procedures at the District levels.

Need to mainstream the approach to sustainability planning with community involvement into all Program schemes.

15. The following key actions have been identified to address the identified environmental impacts, risks and gaps:

Exclusion of high-risk interventions: Activities that are judged likely to have significant adverse impacts, that are sensitive, diverse, or unprecedented on the environment and/or affected people, and activities that involve procurement of works, goods, and services under contracts whose estimated value exceeds specified monetary amounts (high-value contracts) and require mandatory review by the World Bank’s Operations Procurement Review Committee (OPRC) are not eligible for Program-for-Results financing, and are excluded from the Program.

Strengthening the existing GoR system for environmental management: The Program Action Plan includes measures on strengthening the GoR’s procedures and capacity for environmental management of the Program. This action is – ‘implement strengthened environmental management rules and procedures for the Program, supported by necessary capacity building measures to the sector institutions’.

Inclusion of ESIA, cumulative impact assessment and other environmental due diligence aspects into the project lifecycle.


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Summary of key social impacts, risks and gaps

16. The assessment identified gaps in capacity for implementation and monitoring social accountability and grievance redress at village level, and weaknesses in terms of capacity for effective management of a demand responsive approach. Accordingly it identifies actions to address the gaps captured in the integrated Program Action Plan along with environmental actions. 17. The agreed actions to mitigate/ manage identified social risks are as follows:

Application of the ESIM (developed under the PSTA3 PforR support) to inform Program implementing organizations about key aspects of social aspects such as: resettlement, equity and benefit sharing, social inclusion processes and procedures, roles and responsibilities of all stakeholders and sub-program cycle to facilitate planning, implementation and post implementation. The Ministry has a Resettlement Policy Framework and Process Framework prepared for other Agriculture projects which will remain relevant for this Program.

Establish systems to promote social accountability. The social audit function will be assigned to the existing Cell level committees to audit plans to ensure they are in compliance with inclusion, community consultations, land acquisition, benefit sharing and provision of services to vulnerable groups and households.

18. The key actions to be incorporated into the Program Action Plan are as follows:

Sub-action description Responsible party Completion measurement

Develop a continuous capacity building and training program on ESIM to improve the understanding and application of the GoR E&S policies, and adoption of good sector practices on environmental and social risk management and social accountability, at the National and District level. The audience should include any private sector entities participating in the program.

RAB, MINAGRI Increase in trained staff at the national and district levels.

A Compliance Checklist to ensure that activities that are not legally permissible are not undertaken and that requisite permissions are taken before any scheme/intervention is financed.

RAB, MINAGRI The Checklist should follow the criteria for ineligible infrastructure for financing under the PforR Program, presented in the ESSA.

As part of preparation of the Private Sector Leveraging Strategy, establish the selection and performance criteria for participating private sector entities, consistent with the ESIM and overall national environmental and social government regulations. For selected private sector organizations, require adequate quality ESMS (as specified

RAB, MINAGRI A mechanism to select private sector entities with sufficient capacity for diligent environmental and social management. Increase capacity of other private sector entities participating in the implementation of the program.


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in the section 4 above)18 to be developed and adopted as a prerequisite to their participation in the Program.

Private Sector Leveraging Strategy to include conditions for PPP design, such as land acquisition and compensation management to be done by public sector (continuing the good practices established under publicly financed MINAGRI projects). In preparation of the Strategy, review the quality and impact of E&S assessments of the existing private sector investments and provide recommendations on the scope of their inclusion into the Private Sector assessment process.

Design model for PPP investments that reduces potential negative environmental and social risks and continues good practices established by the Districts under MINAGRI publicly financed projects.

PPP Agreement to include a requirement to comply with ESIM through implementation.

RAB Establish a legal requirement to comply with established sectoral Environmental and Social risk management practices.

Conduct an audit to assess application of the private sector screening procedure and conduct a training course for RAB, MINAGRI and NAEB staff.

RAB, MINAGRI Assess effectiveness of the private sector screening to establish the quality and application of the environmental and social system of the participating private sector entities.

Recommendations for Risk Rating

19. Based on the ESSA findings and agreed-upon mitigation and improvement measures, the overall environmental and social risks of the Program are assessed as “Substantial”. The Program involves a number of physical activities and a new set of implementers. While most activities are envisaged to have moderate risk with limited potential environmental and social impacts, the level of risk is higher due to the unknown capacity to manage Environment and Social risks by the private sector organizations. MINAGRI and the environmental and social staff at the District level will have a responsibility to fully participate in the design and implementation of PPP activities to ensure appropriate management of the environmental and social risks, enforcement of the Government policies and regulations, and application of best practices and capacity building for private sector organizations to improve their E&S management systems.

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18 The ESMS shall be consistent with the GoR regulatory framework, and feature the following aspects: Identifying the organization’s environmental aspects and associated impacts; Developing and establishing programs to mitigate risks associated with the threats and opportunities; Identifying objectives and goals associated with programs; Identifying compliance obligations; Monitoring and measuring progress in achieving the objectives; and Ensuring employees’ environmental awareness and competence; and Reviewing progress of the ESMS and making improvements.


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ANNEX 6. PROGRAM ACTION PLAN

COUNTRY : Rwanda Transformation of Agriculture Sector Program 4 Phase 2

Action Description

DLI# Responsibility Recurrent Frequency Due Date Completion Measurement

Map external capacity support against priorities of Organizational Development of MINAGRI.

Organizational Development Plan successfully prepared and implementation on track.

MINAGRI No 01-Mar-2019 External Capacity Support Strategy prepared and approved by ASWG.

Assess current Agriculture Financial Guarantee Schemes.

Mechanism to strengthen Agriculture Public-Private Dialogues and Agriculture Value Chain Platforms designed and implemented.

MINECOFIN No 01-Sep-2019 Agriculture Guarantee Schemes Review undertaken and reviewed by ASWG.

Ensuring gender equity in all MINAGRI services and programs.

MINAGRI No 01-Sep-2019 Gender Mainstreaming Strategy developed, endorsed (by ASWG) and implemented.

MINAGRI strengthens the monitoring and reporting on Food Security and Nutrition.

MINAGRI No 01-Sep-2019 Food Security and Nutrition Monitoring system developed, endorsed (by ASWG) and displayed on MINAGRI Dashboard.

Annual financial Audit Action Plan for RAB

Reform of RAB.

MINAGRI Yes Yearly Annual action plan to address the weaknesses


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developed and endorsed by the Audit Committee.

identified in RAB financial audit developed and endorsed by the Audit committee and shared with the World Bank.

MINAGRI mainstreams Climate Change into the sector’s planning, budgeting, monitoring and implementation.

MINAGRI No 30-Sep-2018 Strategy developed with action plan (including a section MINAGRI on building capacity focal points, new staff, links to relevant Ministries, projects and staff training identified) approved by ASWG.

.

Stakeholders, beneficiaries using Grievance System and MINAGRI responding appropriately.

MINAGRI Yes Quarterly Report provides a summary of grievances received by MINAGRI and the response provided annually by June 30th.

Public Expenditure Review

MINECOFIN No 15-Jan-2020 A report providing detailed analysis of Sector spending among all key stakeholders.

Establish within MINAGRI a mechanism for assessing progress toward establishing systems for IT, Monitoring and Evaluation and Statistics.

MINAGRI Yes Yearly Annual report on the quality of information systems, key challenges and action plan to be provided annually by June 30th.

Systems for tracking the quality of coordination designed and

Organizational Development Plan successfully

MINAGRI No 01-Sep-2018 Methodology agreed action approved, and implementation plan agreed.


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operational. prepared and implementation on track.

Procurement Action Plan developed to address procurement risks.

MINAGRI and RAB No 30-Sep-2018 Procurement action plan addresses: exclusion of Bank debarred firms, negotiating on bid prices, delays in contract award, incomplete Program procurement records, and use of inappropriate selection methods.

Conduct an audit to assess application of the private sector screening procedure.

Office of the Auditor General

No 30-Jun-2021 Assess effectiveness of the private sector screening to establish the quality and application of the environmental and social system of the participating private sector entities.

Review of Medium Term Expenditure Framework.

MINAGRI and MINECOFIN

No 31-Dec-2018 Medium Term Expenditure Framework review completed.

Develop and implement capacity building training program on ESIM to improve understanding and application of GoR E&S policies for National and District level staff. Audience should include any private

RAB, MINAGRI Yes Yearly Increase in trained staff at the national and district levels.


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sector entities participating in the Program.

Compliance Checklist to ensure that activities that are not legally permissible are not undertaken and that requisite permissions are taken before any scheme/intervention is financed.


MINAGRI No 30-Jun-2019 The Checklist should follow the criteria for ineligible infrastructure for financing under the PforR Program, presented in the ESSA.

Private Sector Leveraging Strategy, establish selection/performance criteria for private sector consistent with ESIM & gov E&S regs. For selected private sector orgs, required quality ESMS developed & adopted prior to participation in PforR Program.


MINAGRI No 30-Jun-2019 Mechanism for selection of private sector entities with sufficient capacity for diligent environmental and social management. Increase capacity of other private sector entities participating in the implementation of the PforR Program.

Private Sector Leveraging Strategy to include conditions for GoR land acquisition and compensation management and exclude high risk investments financing.


MINAGRI No 30-Jun-2019 Design model for PPP investments that reduces potential negative environmental and social risks and continues good practices established by the Districts under MINAGRI publicly financed projects.


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PPP Agreement to include a requirement to comply with ESIM through implementation.

MINAGRI No 30-Jun-2019 Establish a legal requirement to comply with established sectoral Environmental and Social risk management practices.

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ANNEX 7. IMPLEMENTATION SUPPORT PLAN

1. A multi-disciplinary set of technical specialists along with fiduciary and environmental and social specialists will be needed to support the GoR in the overall implementation of the PforR operation. While results and DLIs are planned to be assessed as completed annually, a 6-month approach to implementation support, where a specific one to two-week implementation support mission would be carried out, will be employed. In addition, many technical specialists are based in the region, sub region, and country office, which will allow timely follow-up on specific issues and/or areas of concern if needed. 2. The PforR operation will require considerable, well-coordinated, and timely focused technical support from the World Bank team, particularly during the early stages of implementation. One challenge will be to coordinate the actions agreed in the PAP with operational activities on the ground, ensuring that information flows effectively and on a timely basis between policy makers and implementation agents (MINAGRI, RAB, NAEB, and districts). While channels of communication are generally good within Rwanda, there will be a continual flow of information to and between implementing entities during the Program relating to the implementation of PSTA4. The fact that the PforR Program support staff are highly decentralized, with the task team leader and key team members based in Rwanda, will facilitate overall implementation and timely communication with the GoR, and the various stakeholders involved in the implementation phase. 3. The focus of the World Bank’s implementation support will emphasize helping the results based incentive system work to its full potential. This will include: (i) reviewing implementation progress, including the PAP, achievement of Program results and DLIs; (ii) providing support on resolving emerging Program implementation issues and bottlenecks, and on building institutional capacity of the key actors at various levels; (iii) monitoring the adequacy of systems’ performance and monitoring compliance with legal agreements; (iv) supporting the GoR in monitoring and managing changes in the various types of risks; and (v) confirming that MINAGRI has prepared and is implementing the plan to enhance the relevant Technical capacity development gaps identified in the Technical Assessment. 4. Key to the World Bank’s effective implementation support will be its coordination and timing, aligned with critical points in the planning and verification of results for disbursement requests to the World Bank. The first implementation support mission will take place as soon as possible after effectiveness to provide direct and timely feedback on the quality of implementation plans (MINAGRI, RAB, NAEB, and districts) and the DLI verification process is in place. It is expected that at that stage initial progress will have been made towards achievement of the first set of results and DLIs, and achievement of many of the actions in the PAP. These will be reviewed during the first review mission. The first mission is therefore expected to include all team members (i.e., technical, institutional, private sector, environmental, social, and fiduciary specialists). Subsequent implementation support will have a stronger emphasis on verification/M&E skills and technical implementation expertise, varying according to the actual needs as specified in the PAP. The World Bank team’s support to the broader government program will be aligned with other DPs that are TA providers in the sector. It is anticipated that Trust Fund resources will be sought to augment the World Bank’s implementation support.

Main focus of Implementation Support


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Time Focus Skills Needed Resource Estimate Partner Role

First twelve months

Implementing the PAP; agreeing the private sector leveraging strategy establishing arrangements for credible verification of compliance with the DLIs; enhancing District and national planning and budgetary processes; strengthening the M&E system at various levels.

Legal, financial procurement, operations, M&E; technical (capacity building, private sector, fiduciary systems, economics, access to finance, and agriculture)

Two support missions 2 x 11 people x 2 weeks = 42 weeks Total 60 weeks over 12 months

DFID, USAID, IFAD, Netherlands. Providers of Technical Assistance in key areas (gender, CSA, Private Sector) EU Chair of the ASWG – coordinate and harmonize DP financing of PSTA 4. Technical Support in key areas (Financial Management, and decentralization)

12-48 months

Reviewing implementation progress; cross-checking linkages between planning, budgeting, and results; providing support in case of disputes relating to DLI verification

Legal, financial procurement, operations, M&E; technical (capacity building, private sector, fiduciary systems, economics, access to finance, and agriculture)

Two support missions 4 x 11 people x 2 weeks = 88 weeks Total 88 weeks over 12 months

Other

Task Team Skills Mix Requirements for Implementation Support (Template)

Skills Needed Number of Staff Weeks Number of Trips Comments

Legal Financial Management Specialist Environmental Specialist Procurement Specialist M&E Specialist Capacity building

2 8 8 8

1 6 6 6


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Specialist Private sector Specialist Fiduciary systems Specialist, Lead Ag economist, Access to finance Agriculture Specialist Operations

8 8 8 8 8 8 8

6 6 6 6 6 6 6


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ANNEX 8: MAP OF RWANDA


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Documents

World Bank Document€¦ · 3, provide a strong foundation upon which to prepare the proposed PforR operation. Both the RSSP and LWH projects achieved commendable results in helping