The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) REPORT NO.: RES39940 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF DRC - AGRICULTURE REHABILITATION AND RECOVERY SUPPORT APPROVED ON MARCH 30, 2010 TO DEMOCRATIC REPUBLIC OF CONGO AGRICULTURE AND FOOD AFRICA Regional Vice President: Hafez M. H. Ghanem Country Director: Jean-Christophe Carret Regional Director: Ede Jorge Ijjasz-Vasquez Practice Manager/Manager: Shobha Shetty Task Team Leader: Nora Kaoues The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) ABBREVIATIONS AND ACRONYMS AF Additional Financing CAFI Central Africa Forest Initiative DRC Democratic Republic of Congo GRM Grievance Redress Mechanism IDA International Development Association ONAPAC Offices of the National Agricultural Products Office of Congo PDO Project Development Objective PIU Project Implementation Unit REDD+ Reducing Emissions from Deforestation and Forest Degradation TF Trust Fund UNOPS United Nations Office for Projects Services The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) BASIC DATA Product Information Project ID Financing Instrument P092724 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 30-Mar-2010 23-Mar-2020 Organizations Borrower Responsible Agency DRC Ministry of Finance,Democratic Republic of Ministry of Agriculture,PARRSA PIU Congo,Democratic Republic of Congo Project Development Objective (PDO) Original PDO The project development objective (PDO) is to increase agricultural productivity and improve marketing of crops, and animal products by smallholder farmers in targeted areas. Current PDO To increase agricultural productivity and improve marketing of crops and animal products crops and animal products in targeted areas of the Recipient s territory. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IDA-59800 22-Mar-2017 19-Apr-2017 16-Feb-2018 16-Mar-2020 75.00 42.53 34.72 IDA-V0680 24-Feb-2017 03-Mar-2017 03-Mar-2017 30-Apr-2018 0 0 0 IDA-H5550 30-Mar-2010 20-May-2010 31-Dec-2010 30-Nov-2017 120.00 114.89 .12 The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING Background 1. The Agriculture Rehabilitation and Recovery Project Additional Financing (AF) of US$78.64 million (US$75 million IDA Credit and US$3.64 million from the Central Africa Forest Initiative (CAFI) Trust Fund (TF) was approved on March 22, 2017 as a three - year operation1. It became effective on February 16, 2018, eleven months later. It is currently scheduled to close on March 16, 2020. The Project development objective (PDO) is to increase agricultural productivity and improve marketing of crops and animal products by smallholder farmers in targeted areas.” It has three components: Component 1: Improve Agricultural and Animal Production; Component 2: Improve Market Related Infrastructure; and Component 3: Strengthening of Capacity Building and Project Management. Status 2. Progress towards achievement of the PDO, fiduciary and safeguards performance are rated “Moderately Satisfactory”. However, overall implementation progress is “Moderately Unsatisfactory”, downgraded 6 months ago from “Moderately Satisfactory”. Project implementation progress is significantly behind schedule, in particular key component 2 activities and the CAFI TF funded PIREDD activities (promotion of climate adaptation and community resilience through mitigation of emissions from deforestation and forest degradation). As of December 1st, 2019, US$42 million (54.5%) of the AF credit proceeds has been disbursed. There is an undisbursed balance of about US$35 million. Implementation of a detailed action plan to accelerate execution and improve overall project performance to ensure achievement of the PDO is ongoing. The Grievance Redress Mechanism (GRM) is operational and accessible to the project affected people. There are no outstanding audit reports for the AF as confirmed by the Project’s Financial Management Specialist on December 10th, 2019. Th Bank Project team confirms that no accidents or occupational health and safety incidents have been reported by the Project since the launch of project activities. 3. Overall, the Project has brought many benefits to the project areas, including the generation and dissemination of new knowledge and piloting of solutions to address systemic challenges facing the agriculture sector in a post conflict context still confronted by internally displaced persons, including refugees from the Central African Republic. Additional benefits include among others, improved animal husbandry practices and awareness for regular vaccination of small ruminants and poultry; and the introduction of community savings and loans to allow producers’ organizations to purchase inputs; integration of the needs of indigenous groups, rebuilding of social capital, voice and empowering small- 1 so that cumulatively the parent project and AF would not exceed 10 years The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) scale farmers. The AF is building on the achieved results of the parent project which included: (i) substantial increases in crop yields: e.g. cassava, from 7 to 19 tons per hectare and maize, from 0.8 to 1.5 tons per hectare; (ii) increased access to improved seeds; (iii) mobilization of more than US$400,000 equivalent in farmer savings benefitting 77,000 people; (iv) establishment of 16 village storage facilities amounting to a total storage capacity of 12,800 m3 which reduce post- harvest loss considerably; and (v) rehabilitation of 2,269 kilometers of rural roads compared to a target of 2,500 km (90 percent of target). 715 villages with a total of 1.1 million inhabitants have benefitted from the rural roads rehabilitation for transporting their agricultural produce and 50,000 jobs were created from the project civil works. 4. As of December 1, 2019, overall achievement of the RF indicator targets is as follows: (i) PDO level (5 indicators): the targt for indicator 1 (annual sales of crops and products in targeted markets/warehouses (average percentage increase in sales) can only be measured at project end. The target for indicator 2 (number of direct beneficiaries) has been surpassed – 156,000 as opposed to the initial target of 155,000; targets for indicator 3 (average seasonal yield of the 42 selected crops”) is on average above 80% for all crops; the target for indicator 4 (percentage of female project beneficiaries) is at 49% - the target is 60%. The target for indicator 5 (average annual production of select farm animals by targeted breeders) is at 47%. (ii) Intermediate level (18 indicators): 5 indicator targets have been fully met or surpassed, 4 are above 80% achievement; 3 targets are at 50%, 70% and 47% respectively; and the remaining indicators will be measured during the proposed extended timeframe. Rationale for Restructuring 5. The AF was designed and approved as a three - year project to expand and build on the positive results and achievements of the parent project, some of which are highlighted in the preceding paragraph. However, a number of challenges beyond the control of the World Bank, usurped almost two years of this timeframe and significantly impacted project performance and progress. Primarily the key challenges include: (i) the effectiveness delay of 11 months; (ii) an additional one - year delay from effectiveness in the government mobilizing its additional contribution funds for the compensation of people affected by the project for the AF expanded project areas – a safeguards pre-requisite for implementation of component 2, (the largest project component) and a continued feature of the parent project; (iii) long delays and challenges in implementation of the UNOPS contract, the sole implementing partner for component 2, as a result of its lengthy procurement and design review processes; (iv) impact of the 2018 elections which had a spill- over into 2019; (v) security issues in some of the project areas which also impacted staff recruitment and delayed implementation of some of the key project activities. As a result, and despite targeted measures by the World Bank and Government project teams to accelerate the implementation pace, there is insufficient time to complete the remaining ongoing project activities, in particular the civil works under component 2 (implementation of road construction and 2 Maize, cassava, rice, groundnuts. The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) maintenance works is at 81%, the number of market infrastructure built/refurbished is at 50%, kilometers of roads maintained is at 47%), and achieve the intended results by the current closing date of March 16, 2020. 6. The Government of the Democratic Republic of Congo (DRC) has requested a project restructuring to extend the closing date from March 16, 2020 to September 16, 2021 and to reallocate funds. World Bank internal preparation of the proposed restructuring for approval is proceeding per the DRC Country Management Unit’s concurrence provided in the most recent ISR approved on December 16, 2019.The proposed restructuring, with no additional funds, is intended to provide additional time and shift resources to: (a) adjust project commitments to improve performance and progress; (b) complete key activities critical to meeting the results targets and disburse the remaining funds; (c) consolidate project achievements of the parent project and AF; and (d) ensure achievement of the PDO within the recommended extended timeframe. The Project Implementation Unit (PIU) has prepared a revised project implementation and action plan for the proposed extension period. II. DESCRIPTION OF PROPOSED CHANGES 7. The proposed restructuring includes the following 4 main changes: (i) Extension of the closing date from March 16, 2020 to September 16, 2021. This is an extension of 18 months. (ii) Revised component costs (IDA Credit portion only). The component 1 total cost has been reduced from US$35,000,000.00 to US$33,000,000. This is due to: (a) a reduction in scope of a number of activities which cannot be implemented as originally envisaged during the AF preparation (e.g. coffee and cocoa seed multiplication activities intended to revive these value chains; construction of slaughterhouses in the three provinces; construction of small storage stores; construction/rehabilitation of the buildings of the provincial offices of the National Agricultural Products Office of Congo [ONAPAC]); and (b) elimination of the planned rehabilitation of hydro-agricultural developments in the Malebo/Kinshasa Pool in the Linkana valley – a small portion of targeted beneficiaries expected to provide private land, declined the investments due to uncertainty about potential future public use of the land – this, together with security issues, led to the withdrawal of the private hydro-agricultural development operators from the planned works. Component 3 total cost has been increased from US$10,000,000 to US$12,000,000. The additional funds will cover the coordination and management expenditures for the proposed extension period, as well as preparation of planned key evaluations such as food safety surveys and beneficiary satisfaction surveys. A detailed breakdown is provided in table 1 below and also summarized in Section IV. Table 1: Revised Component Costs (IDA Credit3) 3 Requested fund reallocation is only for the IDA Credit financing. Total component costs inclusive of CAFI TF funding are detailed in section IV. The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) Original Revised N° COMPONENT NAME allocation allocation 1. Improve agricultural and animal production 35 000 000 33 000 000 1.1 Improve production by providing seeds, planting materials and advisory services 22 500 000 28 954 751 1.2 Improve animal production capacity for small ruminant and poultry 10 000 000 4 000 000 1.3 Improve rice and vegetable production in Pool Malebo/Kinshasa 2 500 000 45 249 2. Improve market related infrastructure 30 000 000 30 000 000 2.1 Improve the rural road network 25 000 000 25 000 000 2.2 Rehabilitation/construction of marketing infrastructure 5 000 000 5 000 000 3. Strengthening of Capacity Building and Project management 10 000 000 12 000 000 3.1 Capacity building for strengthening public services 5 710 000 2 984 982 3.2 Project management, Monitoring and Evaluation and Communication 2 790 000 7 879 410 3.3 Project preparation funds 1 500 000 1 135 608 Total 75 000 000 75 000 000 (iii) Reallocation of funds. The revised component costs require a reallocation of funds among the expenditure categories as set out in schedule 2, section IV of the Project Financing Agreement (FA). The changes are detailed below in section IV of this Restructuring Paper; and (iv) Modifications to the Results Framework (RF). There are 5 changes in the RF. In light of the proposed project extension, the target end date for all the indicators has been changed to September 16, 2021 to align with the proposed new closing date. At the PDO level, the total number of direct beneficiaries has been adjusted up from 155,000 to 160,000. At the intermediate level, based on the substantial scaling down of coffee production related activities, the indicator to measure the “average seasonal yield per standard area for coffee” has been dropped. The “number of administrative sectors, territories and provinces with land use plans implemented” has been adjusted down from 100 to 25 to reflect only those directly targeted by the project. (see section IV of the RP). During preparation of the AF, a new indicator “kilometers of roads maintained” was added and is reflected in the AF Project Paper, however it was inadvertently not included in the revised AF Results Framework (RF) in the operations portal. It has now been added to the RF under this proposed restructuring as it is being measured under the Project. Furthermore, an indicator measuring the “increase in rice production in Pool Malebo” was added as part of the AF but was also inadvertently left out of the revised AF RF in the portal. It has been dropped from the project under this restructuring but does not require any changes in the portal as it was not originally included. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Disbursement Estimates ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1: Improve Component 1: Improve agricultural and animal 36.85 Revised agricultural and animal 34.85 production production The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) Component 2: Improve market Component 2: Improve market 30.00 No Change 30.00 related Infrastructure related Infrastructure Component 3: Strengthening of Component 3: Strengthening Capacity Building and Project 11.79 Revised of Capacity Building and 13.79 Management Project Management TOTAL 78.64 78.64 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IDA-59800 Effective 16-Mar-2020 16-Sep-2021 16-Jan-2022 31-Jan-2017, 30- IDA-H5550 Closed 15-Dec-2015 Nov-2017 31-Jan-2018, 30-Apr- IDA-V0680 Closed 31-Jul-2017 2018, 28-Jun-2018 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IDA-59800-001 | Currency: XDR iLap Category Sequence No: 1 Current Expenditure Category: GD, WK, NCS, CONS, TR, OP COST 33,100,000.00 14,110,744.62 33,100,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: GD, SCES AS SUBGRANT PART 1.1D,1.2D 3,000,000.00 1,786,966.51 3,000,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: GOOD, WORK, NCS, CS PART 2.1 18,600,000.00 17,027,554.36 18,600,000.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: PPF REFINANCING The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) 1,100,000.00 780,797.87 1,100,000.00 Total 55,800,000.00 33,706,063.36 55,800,000.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2010 0.00 0.00 2011 0.00 0.00 2012 0.00 0.00 2013 0.00 0.00 2014 0.00 0.00 2015 0.00 0.00 2016 0.00 0.00 2017 5,000,000.00 5,000,000.00 2018 27,400,000.00 27,400,000.00 2019 23,100,000.00 23,100,000.00 2020 23,140,000.00 13,500,000.00 2021 0.00 9,640,000.00 . The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) . Results framework COUNTRY: Congo, Democratic Republic of DRC - Agriculture Rehabilitation and Recovery Support Project Development Objectives(s) To increase agricultural productivity and improve marketing of crops and animal products crops and animal products in targeted areas of the Recipient s territory. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Increased capacity of small holder farmers to produce selected staple crops and small stock. Average annual production of specific livestock by targeted farmers: Poultry 0.00 75,000.00 100,000.00 150,000.00 180,000.00 180,000.00 180.00 (number produced per farmer) (Number) Action: This indicator has been Revised Average seasonal yield per standard area of specific 0.00 0.00 crops among targeted farmers (Metric ton) Action: This indicator has been Revised Maize (Metric ton) 0.50 1.50 1.80 2.00 2.00 2.00 2.00 The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Action: This indicator has been Revised Cassava (t/ha) (Metric 7.00 10.00 12.00 12.00 15.00 15.00 25.00 ton) Action: This indicator has been Revised Rice (t/ha) (Metric ton) 1.00 2.00 2.00 2.50 2.50 2.50 2.00 Action: This indicator has been Revised Groundnuts (t/ha) 0.00 1.50 (Metric ton) Action: This indicator has been Revised Coffee (t/ha) (Metric 0.00 450.00 ton) Action: This indicator has been Marked for Deletion Average annual sales of specific crops and products in targeted markets/warehouses 0.00 5.00 15.00 20.00 25.00 30.00 40.00 (average percentage increase of sale) (Percentage) The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 Action: This indicator has been Revised Direct project beneficiaries 0.00 160,000.00 (Number) Action: This indicator has been Revised Female beneficiaries 0.00 60.00 (Percentage) Action: This indicator has been Revised PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Improve agricultural and animal production Number of administrative sectors, territories and provinces with 0.00 25.00 land use plans implemented (Number) Action: This indicator has been Revised Number of hectares reforested or with increased tree cover 0.00 10,000.00 (Hectare(Ha)) Action: This indicator has been Revised Percentage of farmers reached with agricultural assets or 0.00 70.00 services (Percentage) The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Action: This indicator has been Revised Volume of savings mobilized (Amount(USD)) 0.00 500,000.00 Action: This indicator has been Revised Quantity of improved seed certified annually (Number) 0.00 3,500.00 Action: This indicator has been Revised Number of village cash boxes (Number) 0.00 2,500.00 Action: This indicator has been Revised Number of hectares rehabilitated/planted with coffee/cocoa 0.00 5,000.00 (Number) Action: This indicator has been Revised Improve market related infrastructure Number of markets infrastructure constructed/rehabilitated 0.00 8.00 (Number) Action: This indicator has been Revised Roads constructed or rehabilitated (cumulative) (Kilometers) 0.00 2,800.00 Action: This indicator has been Revised Percentage of direct female beneficiaries of rehabilitated roads 0.00 60.00 (Number) Action: This indicator has been Revised Reduced transport time for specific inputs\outputs (Hours) 0.00 5.00 Action: This indicator has been Revised Number of storage facilities constructed/rehabilitated (Number) 0.00 18.00 The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline End Target Action: This indicator has been Revised Number of direct beneficiaries of rehabilitated roads (Number) 0.00 1,500,000.00 Action: This indicator has been Revised Roads maintained (Kilometers) 1,122.00 7,000.00 Action: This indicator is New Strengthening of capacity building and project management Percentage of households in targeted areas satisfied with 0.00 80.00 agricultural advisory services received (Percentage) Action: This indicator has been Revised Number of producers adopting improved animal husbandry 0.00 30,000.00 practices (Number) Action: This indicator has been Revised Advisory services and agricultural research reform strategy 0.00 2.00 adopted by the central government (Number) Action: This indicator has been Revised Client days of training per annum provided by different service 0.00 180.00 providers (Days) Action: This indicator has been Revised Number of Farmers adopting improved agricultural technology 0.00 156,200.00 (Number) Action: This indicator has been Revised IO Table SPACE The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724) The World Bank DRC - Agriculture Rehabilitation and Recovery Support (P092724)