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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 46830-NG
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 100.7 MILLION
(US$150MILLION EQUIVALENT)
TO THE
FEDERAL REPUBLIC OF NIGERIA
FOR
COMMERCIAL AGRICULTURE DEVELOPMENT PROJECT
December 18, 2008
Agriculture and Rural Development
Sustainable Development Department
Western African Country Department 2
African 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.
ii
CURRENCY EQUIVALENTS
(Exchange Rate Effective {November 26, 2008}
Currency Unit = Naira
Naira 118 = US$1
US$1.49 = SDR1
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
AAA Analytical Advisory Activity
ADP Agriculture Development Project
ADPEC Agricultural Development Project Executive Council
AfDB Africa Development Bank
AFS Annual Financial Statements
ARMTI Agricultural and Rural Management Training Institute
AWPB Annual Work Plan Budget
BDS Business Development Services
BMPIU Budget Monitoring & Price Intelligence Unit
BPP Bureau of Public Procurement
CADA Commercial Agriculture Development Association
CADP Commercial Agriculture Development Project
CAS Country Assistance Strategy
CBO Community Based Organization
CDD Community Driven Development
CEDI Centre for Economic Development and Institutions
CFAA Country Financial Accountability Assessment
CGPs Competitive Grant Programs
CIG Commodity Interest Group
CMD Centre for Management Development
CPAR Country Procurement Assessment Report
CPS Country Partnership Strategy
CQ Consultant Qualifications
CRIN Cocoa Research Institute of Nigeria
CSO Civil Society Organization
DCA Development Credit Authority
DFID Department for International Development
DFRRI Directorate for Food Roads and Rural Infrastructure
DIER Department of International Economic Relations
EIA Environmental Impact Assessment
EIG Economic Interest Group
EIRR Economic Internal Rate of Return
EMCAP Economic Management Capacity Building Project
iii
EMIS Environmental Management Information System
EMP Environmental Management Plan
ERGP Economic Reform and Governance Project
ERR Economic Rate of Return
ESAMI Eastern and Southern Africa Management Institute
ESMF Environmental and Social Management Framework
ESW Economic Sector Work
FA Financing Agreement
FAO Food and Agriculture Organization
FGN Federal Government of Nigeria
FIRR Financial Internal Rate of Return
FIIRO Federal Institute for Industrial Research, Oshodi
FM Financial Management
FMAWR Federal Ministry of Agriculture and Water Resources
FMoF Federal Ministry of Finance
FMR Financial Management Report
FMS Financial Management System
FPM Financial Procedures Manual
FRR Financial Rates of Return
GDP Gross Domestic Product
GEMS Growth Enterprises and Markets Project
GIMPA Ghana Institute of Management and Public Administration
HVCs High Value Crops
IAR Institute of Agricultural Research
IAR&T Institute of Agricultural Research and Training
IAU Internal Audit Unit
IC Individual Consultant
ICB International Competitive Bidding
ICR Implementation Completion Report
ICT Information and Communication Technology
IDA International Development Association
IDF International Development Fund
IFAD International Fund for Agricultural Development
IITA International Institute of Tropical Agriculture
IPM Integrated Pest Management
IPSAS International Public Sector Accounting Standards
ISA International Standards on Auditing
ISDS Integrated Safeguards Data Sheet
ISR Implementation Status Report
IT Information Technology
LEEMP Local Empowerment and Environmental Management Project
LGA Local Government Area
LSFAA Lagos State Financial Accountability Assessment Report
M&E Monitoring and Evaluation
MARKETS Maximizing Agricultural Revenue and Key Enterprises in Targeted
States
iv
MDG Millennium Development Goal
MIS Management Information System
MOA Ministry of Agriculture
MOU Memorandum of Understanding
MPP Micro Projects Programme
MSME Micro, Small and Medium Enterprise
MTR Mid-Term Review
NACCIMA National Association of Chambers of Commerce, Industry, Mines
and Agriculture
NAP New Agricultural Policy
NAPRI National Animal Production Research Institute
NCAM National Centre for Agricultural Mechanization
NCO National Coordinating Office
NCRI National Cereals Research Institute
NEEDS National Economic Empowerment and Development Strategy
NEPAD New Partnership for Africa‟s Development
NFRA National Food Reserve Agency
NGO Non-Governmental Organization
NIHORT National Institute for Horticulture Research
NSPRI Nigerian Stored Product Research Institute
NPV Net Present Value
NSC National Steering Committee
OPRC Output and Performance Road Contract
PAD Project Appraisal Document
PCN Project Concept Note
PDO Project Development Objectives
PEM Public Expenditure Management
PEMFAR Public Expenditure Management and Financial Accountability
Review
PFM Project Financial Management
PFMU Project Financial Management Unit
PHCN Power Holdings Company of Nigeria
PHRD Policy and Human Resources Development Fund
PIM Project Implementation Manual
PIU Project Implementation Unit
PM Programme Manager
PMP Pest Management Plan
PMU Project Management Unit
PO Procurement Officer
PPP Public Private Partnership
PRA Participatory Rural Appraisal
PRSP Poverty Reduction Strategy Papers
QCBS Quality and Cost Based Selection
QER Quality Enhancement Review
RAMP Rural Access and Mobility Project
RAPs Resettlement Action Plans
v
RPF Resettlement Policy Framework
RUFIN Rural Finance Institutions Building Programme
RSS Rural Sector Strategy
SBD Standard Bidding Document
SCADO State Commercial Agricultural Development Office
SEEDS State Economic Empowerment and Development Strategy
SGCBP State Governance and Capacity Building Project
SMANR State Ministry of Agriculture and Natural Resources
SMOA State Ministry of Agriculture
SMOF State Ministry of Finance
SOE Statement of Expenses
SON Standards Organization of Nigeria
SP Service Providers
SPA Sub-project Agreements
SSC State Steering Committee
TA Technical Assistance
TOR Terms of Reference
TTL Task Team Leader
UNCITRAL United Nations Commission on International Trade Law
USAID United States Agency for International Development
WB World Bank
Vice President: Obiageli K. Ezekwesili
Country Director: Onno Ruhl
Sector Director Inger Andersen
Sector Manager: Karen M. Brooks
Task Team Leader: Lucas K. Akapa
vi
NIGERIA
COMMERCIAL AGRICULTURE DEVELOPMENT PROJECT
CONTENTS
Page
A. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1
1. Country and Sector Issues ................................................................................................... 1
2. Rationale for Bank involvement ......................................................................................... 2
3. Higher level objectives to which the project contributes .................................................... 2
B. PROJECT DESCRIPTION ................................................................................................. 3
1. Lending instrument ............................................................................................................. 3
2. Project Development Objective and Key Indicators ........................................................... 4
3. Project Components ............................................................................................................ 5
4. Lessons learned and reflected in the project design ............................................................ 9
5. Alternatives considered and reasons for rejection ............................................................ 11
C. IMPLEMENTATION ........................................................................................................ 11
1. Partnership arrangements .................................................................................................. 11
2. Institutional and Implementation Arrangements .............................................................. 11
3. Monitoring and Evaluation of outcomes/results ............................................................... 15
4. Sustainability..................................................................................................................... 17
5. Potential Risks and Possible Controversial Aspects ......................................................... 17
6. Loan/credit conditions and covenants ............................................................................... 20
D. APPRAISAL SUMMARY ................................................................................................. 20
1. Economic and Financial Analyses .................................................................................... 20
2. Technical ........................................................................................................................... 21
3. Fiduciary ........................................................................................................................... 22
4. Social................................................................................................................................. 24
5. Environment ...................................................................................................................... 25
6. Safeguard policies ............................................................................................................. 26
7. Policy Exceptions and Readiness...................................................................................... 27
vii
Annex 1: Country and Sector or Program Background ......................................................... 28
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 35
Annex 3: Results Framework, Monitoring and Evaluation .................................................... 36
Annex 3A: Arrangement for Results Monitoring .................................................................... 36
Annex 4: Detailed Project Description ...................................................................................... 46
Annex 5: Project Cost ................................................................................................................. 66
Annex 6: Implementation Arrangements ................................................................................. 67
Annex 8: Procurement Arrangements ...................................................................................... 89
Annex 9: Economic and Financial Analysis ............................................................................. 98
Annex 10: Safeguard Policy Issues .......................................................................................... 106
Annex 11: Project Preparation and Supervision ................................................................... 108
Annex 12: Documents in the Project File ............................................................................... 110
Annex 13: Statement of Loans and Credits ............................................................................ 112
Annex 14: Country at a Glance ............................................................................................... 114
Annex 15: Map .......................................................................................................................... 116
viii
NIGERIA
COMMERCIAL AGRICULTURE DEVELOPMENT PROJECT (CADP)
PROJECT APPRAISAL DOCUMENT
AFRICA
AFTAR
Date: December 18, 2008
Country Director: Onno Ruhl
Sector Manager/Director: Karen McConnell
Brooks
Project ID: P096648
Environmental Assessment: Partial Assessment
Lending Instrument: Specific Investment Loan
Team Leader: Lucas Kolawole Akapa
Sectors: Agro-industry (20%); Agricultural
marketing and trade (20%); Rural Infrastructure
(40%; General agriculture, fishery and forestry
sector (15%); Irrigation and drainage (5%)
Themes: Rural services and infrastructure (P);
Participation and civic engagement (P); Trade
facilitation and market access (P); Other rural
development (P)
Project Financing Data
[ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others:
Total Bank financing (US$M.): 150.00
Proposed terms: Standard International Development Association (IDA) terms: 40-year maturity with a
10-year grace period
Financing Plan (US$M)
Source Local Foreign Total
BORROWER/RECIPIENT
International Development Association (IDA) 123.90 26.10 150.00
Federal Government 8.00 0.00 8.00
State Government 18.80 0.00 18.80
Beneficiaries 8.20 0.00 8.20
Total: 158.90 26.10 185.00
ix
Borrower:
Federal Ministry of Finance,
Finance Building,
Ahmadu Bello Way,
Central Business District,
Abuja, Nigeria.
Responsible Agency:
National Food Reserve Agency (NFRA),
Federal Ministry of Agriculture and Water Resources (FMAWR),
Plot 223D, Mabushi District,
Cadastral Zone B6,
Abuja, Nigeria.
Estimated disbursements (Bank FY/US$M)
FY 09 10 11 12 13 14
Annual 1.50 25.00 33.50 35.00 35.00 20.00
Cumulative 1.50 26.50 60.00 95.00 130.00 150.00
Project implementation period: Start: April 16, 2009 End: June 30, 2014
Expected effectiveness date: April 15, 2009
Expected closing date: December 31, 2014
Does the project depart from the CAS in content or other significant respects?
Ref. PAD A.3 [ ]Yes [X] No
Does the project require any exceptions from Bank policies?
Ref. PAD D.7 Have these been approved by Bank management?
Is approval for any policy exception sought from the Board?
[ ]Yes [X] No
[ ]Yes [X] No
[ ]Yes [X] No
Does the project include any critical risks rated “substantial” or “high”?
Ref. PAD C.5 [X ]Yes [ ] No
Does the project meet the Regional criteria for readiness for implementation?
Ref. PAD D.7 [X]Yes [ ] No
Project Development Objective: Ref. PAD B.2, Technical Annex 3
The Project Development Objective is to strengthen agricultural production systems and facilitate
access to market for targeted value chains among small and medium scale commercial farmers in the
five participating states. These value chains are rice, oil palm, cocoa, fruit trees, poultry production,
aquaculture and dairy, with maize and rice as staples.
Project Description: Ref. PAD B.3, Technical Annex 4
Component 1: Agricultural Production and Commercialization:
a. Technology Demonstration and Adoption
b. Support to Staple Crop Production Systems
c. Market Facilitation
d. Capacity Building
x
Component 2: Rural Infrastructure
a. Network of Farm Access Roads
b. Rural Energy
Project Management, Monitoring, Evaluation and Studies
Which safeguard policies are triggered, if any? Ref. PAD D.6, Technical Annex 10
Three safeguard policies were triggered by this project:
(i) Environmental Assessment (OP/BP 4.01),
(ii) Pest Management (OP/BP 4.09), and
(iii) Involuntary Resettlement (OP/BP 4.12).
The three safeguard instruments of ESMF, RPF and PMP have already been prepared, reviewed,
approved and disclosed (in-country and at the Info shop).
Significant, non-standard conditions, if any, for: Ref. PAD C.7
Board presentation:
No non-standard Board approval conditions are envisaged at this point.
Loan/credit effectiveness:
The Project will be implemented over a five-year period, from April 16, 2009. The Project will close on
December 31, 2014. The planned Credit Effectiveness date is April 15, 2009.
There is only one condition for effectiveness, that is, One Subsidiary Agreement has been concluded
between the Recipient and at least one Participating State under terms and conditions satisfactory to
the Association.
Covenants applicable to project implementation: Standard requirements covering organization and
staffing of program units, management arrangements, provisions for procurement, and financial management
will be sufficient.
1
A. STRATEGIC CONTEXT AND RATIONALE
1. Country and Sector Issues
1. Agriculture employs about two-thirds of Nigeria‟s total labour force, contributed 42.2% of
Gross Domestic Products (GDP) in 2007; and provides 88% of non-oil earnings. The
agricultural GDP is contributed by crops (85%), livestock (19%), fisheries (4%) and forestry
(1%). More than 90% of the agricultural output is accounted for by small-scale farmers with less
than two (2) hectares under cropping. It is estimated that about 75% (68 million ha) of the total
land area has potential for agricultural activities with about 33 million hectares under cultivation.
Similarly, of the estimated 3.14 million hectares irrigable land area, only about 220,000 ha (7%)
is utilized.
2. Nigeria has diverse and rich vegetation capable of supporting a heavy population of
livestock as well as 267.7 billion metric tonnes of surface water and 57.9 billion metric tonnes of
underground water. The country is also blessed with a reasonably abundant rainfall as well as an
extensive coastal region that is very rich in fish and other marine products.
3. As articulated in its National Economic and Empowerment and Development Strategy
(NEEDS), Nigeria is seeking options to diversify into non-oil sources of growth and away from
over dependence on oil and gas. The agricultural sector is seen as one of the main sources of
growth and important option for the diversification. Development of commercial agriculture
affords at least in the short-to-medium term, the opportunity to increase employment and reduce
especially persistent rural poverty. Diversification into commercial agriculture is important for
making growth sustainable, to diffuse its benefits to rural areas, and to hedge against the shocks
from a single resource dependence on oil.
4. The performance of Nigeria‟s agriculture has been mixed. Productivity has not grown
sufficiently, due largely to underinvestment in new technology, slow adoption of existing
improved technologies, constraints associated with the investment climate, and lagging
infrastructure. Public interventions to accelerate agricultural growth, such as the quite successful
Fadama program, have targeted poor producers engaged in largely subsistence production with
modest interaction with markets. The present administration has recently signalled her interest in
according more attention to small and medium sized commercial producers, while retaining the
focus on the poor in the ongoing programs such as Fadama. In response, the Bank has worked to
prepare the Commercial Agriculture Development Project (CADP).
5. The project will help to improve access of participating small and medium scale
commercial farmers to technology, infrastructure, finance, and output markets. Evidence1 that
underpins this project suggests that the project is timely, and that interest in commercial
agriculture in Nigeria as an area for private investment is growing.
1 World Bank (2005). Getting Agriculture Going In Nigeria: Framework For A National Strategy, Report No 34618-
NG; Manyong,V.M.,A.Ikpi, J.K.Olayemi, S.A.Yusuf, B.T.Omonona, V.Okoruwa, and F.S.Idachaba.(2005).
Agriculture in Nigeria: Identifying opportunities for increased commercialization and investments. IITA, Ibadan,
Nigeria.159p; Daramola, A., S. Ehui, E. Ukeje, and J. McIntire (2007), “Agricultural Export Potential,” in Collier P.
and C. Pattillo (eds.), Economic Policy Options for a Prosperous Nigeria, Palgrave Macmillan.
2
6. Meeting the agricultural growth rate targets of 7-8 percent per annum for the NEEDS,
State Economic Empowerment and Development Strategy (SEEDS) and the 7-point Agenda of
President Yar‟Adua is important for Nigeria‟s overall economic development plans. However,
unless the key issues constraining the sector such as: (i) lack of access to productivity enhancing
technologies, (ii) poor market access, (iii) limited capacity building and technical know-how, (iv)
poor infrastructure (i.e. network of roads and electricity), (v) lack of access to credit and (vi)
poor policy environment, are addressed, it will be difficult to attain the growth target.
7. To assist in realizing agricultural potential, the strategic thrust of the proposed project is:
(i) to support access to productivity enhancing technologies, (ii) to improve market access, (iii)
to improve capacity building and technical know-how, and (iv) to improve access to rural
infrastructure (i.e. network of roads and electricity).
2. Rationale for Bank involvement
8. The rationale for Bank involvement in the proposed operation is fourfold. First, the Bank
has a long history in working with government and other stakeholders on economic growth
issues and the Bank is seen as a credible and capable sectoral partner. Thus the government has
requested Bank's assistance for this project.
9. Second, the Bank can bring global experience and knowledge on value chain development
and smallholder commercialization, including relevant positive lessons. Many past efforts of
governments to assist commercial agriculture have been captured by elites or diverted to other
purposes, and the Bank can make the Government fully aware of risks and approaches to
mitigate them.
10. Third, the Bank can use its convening power to bring in other potentially interested
partners to support commercial agriculture. The Bank‟s involvement is expected to encourage
other donors to invest in commercial agriculture in Nigeria.
11. Finally, the Bank has already worked with key stakeholders in the sector in identifying
challenges and opportunities for growth, and has established good working relationships with the
proposed participating states, both through the preparation of the NEEDS and SEEDS and in the
context of the Country Partnership Strategy (CPS) and the State/Donor Partnership
arrangements.
3. Higher level objectives to which the project contributes
12. The project will contribute to improved environment and services for non-oil growth
specifically by contributing to the CPS outcome of access to productive infrastructure and
improved agricultural technology. The Nigeria CPS seeks to secure the current rapid growth,
embedded in a more diversified economy, and broaden its distributional impact. The proposed
operation supports the CPS of the Bank and United Kingdom Department for International
Development (DFID) with emphasis on the second pillar; i.e., growing the private sector and
focusing on non-oil growth. The CPS recognizes Nigeria‟s federal structure and the need to carry
growth downward to the state level. Growth in the small and medium scale commercial
agriculture will create jobs, thus spreading benefits beyond the immediate group of participants.
3
13. Accelerating the growth of commercial agriculture is consistent with the Government‟s
objectives as expressed in several recent strategy documents: the National Economic
Empowerment and Development Strategy- NEEDS I, NEEDS II, State Economic Empowerment
and Development Strategy and President Yar'Adua‟s 7 Point Agenda. These policy documents
explicitly recognize the importance of the agricultural sector in economic development and
poverty reduction, including measures to enhance agricultural growth and development. The
project is starting with 5 states (Cross River, Enugu, Lagos, Kaduna, and Kano) to be funded by
IDA to the tune of US$150.0m over a period of 5 years. In addition, the Government has adopted
the model of the CADP for the implementation of a National Commercial Agriculture
Development Programme which will be implemented in all the 36 states of the federation and the
Federal Capital Territory. The programme will start with 18 states (including the 5 CADP states)
in the first phase while the other states will join depending on their readiness for implementation.
The Federal Government is supporting the programme with an initial amount of N104.5billion.
(40% contribution by the Federal Government and 60% from the states.
B. PROJECT DESCRIPTION
1. Lending instrument
14. The total project cost is US$185.00 million over the period of five years. The indicative
project cost is in Table 1.
Table 1: Indicative Project Cost by Component
(In US$ M)
Component
Indicative
Costs
% of Total
IDA
Financing
% of IDA
Financing
1. Agricultural Production and Commercialization 84.4 45.62 69.4 46.27
2. Rural Infrastructure
80.0
43.24
68.0
45.33
3. Project Management, Monitoring and
Evaluation, strengthening of relevant institutions at
Federal and State levels and Studies
19.6
10.60
11.6
7.73
Project Preparation Facility
1.0
0.54
1.0
0.67
Total Project Costs 185.0 100.00 150.0 100.00
Note. The Project also benefited from a Policy and Human Resources Development (PHRD) Grant in the
amount of US$ 800,000.
15. Project Scope and Targeted Beneficiaries The total number of beneficiaries expected to
directly participate in the project is estimated at 50,000 (i.e. 10,000 beneficiaries per state) over a
period of five years. Small and medium commercial farms will benefit directly while many
households will benefit indirectly through access to farm roads, energy and market. The
beneficiaries are already in business in the selected value chains with annual earnings of between
N250,000 and N5,000,000. The beneficiaries are already aggregated into informal Commodity
4
Interest Groups (CIGs). The project will support three value chains per state as follows: Cross
River (Oil Palm, Cocoa, and Rice), Enugu (Fruit Trees, Poultry, and Maize), Kaduna (Fruits
Trees, Dairy, and Maize), Kano (Rice, Dairy, and Maize) and Lagos (Poultry, Aquaculture, and
Rice). The value chains2 chosen by each of the participating states were based on the respective
comparative advantage and their contribution to agricultural growth. Based on an evaluation of
market equivalents during appraisal, the value chains selected are expected to have high demand
and markets have the capacities to absorb the additional production. The small-scale and
medium-scale farms are heterogeneous with respect to households‟ assets, human capital,
income generating potential, and livelihood strategies requiring differentiated strategies for their
value chains.
16. The number of direct beneficiaries is modest relative to the overall size of the project, and
will correspond to an investment per beneficiary of approximately US$3,700. Clearly, an
investment of this magnitude will be difficult to justify if the benefits were restricted to those
directly participating. However, in addition to the direct beneficiaries, others will gain from the
improved roads and power made possible under the project.
17. The eligibility criteria for beneficiary participation include: (i) having been engaged in
farming business for at least three years; (ii) being involved in one or more of the selected value
chains; (iii) having revenue of at least N300,000 a year; (iv) belonging to farmers/producers
organization; (v) has not been convicted for fraudulent activities; (vi) being located in a
participating state; and (vii) documenting availability of funds from own contribution to
matching grants for the adoption of technology and/or land development, as shown in a costed
business plan. The details are in Annex 4.
2. Project Development Objective and Key Indicators
18. Project Development Objective. The Project Development Objective (PDO) is to
strengthen agricultural production systems and facilitate access to market for targeted value
chains among small and medium scale commercial farmers in the five participating states. These
value chains are: oil palm, cocoa, fruit trees, poultry, aquaculture and dairy, with maize and rice
as staples.
19. Key Performance Indicators. The key performance indicators for the project are:
Percentage increase in total production and processing of targeted value chains
among participating small and medium scale commercial farmers (disaggregated by
rice, oil palm, cocoa, fruits trees, poultry, aquaculture, dairy and maize).
Percentage increase in total sales of agricultural products under the targeted value
chains among participating small and medium scale commercial farmers
(disaggregated by rice, oil palm, cocoa, fruits, poultry production, aquaculture, dairy
and maize).
2 State Economic Empowerment Development strategy for the five participating states, (SEEDS I, 2001, SEEDS II,
2008), Consumption of dairy products in Northern Nigeria by Hans.G, P.Jansen, 1990. Proceedings of the
symposium held in International Livestock Centre for Africa, Addis Abba, Ethiopia, November 26-30, 1990, Enugu
State Agricultural Policy Document, 2003, Agriculture in Lagos State: Publication of Lagos state Ministry of
Agriculture and Cooperatives, March, 2008.
5
The detailed Results Framework is in Annex 3.
3. Project Components
20. The project has two components, namely: (i) Agricultural Production and
Commercialization; and (ii) Rural Infrastructure.
21. The project components are summarized below and the detailed description of the
components can be found in Annex 4.
Component 1: Agricultural Production and Commercialization -US$84.4 m (of which
US$69.4m is financed by IDA)
22. This component will provide resources to facilitate the adoption of appropriate and
existing agriculture technologies. It will also support staple crop production systems to
complement the country‟s food security initiatives and develop domestic and export markets.
The activities supported under this component will focus primarily on the selected value chains.
The component has four sub-components.
(a) Technology Demonstration and Adoption (US$21.60m) - This sub-component will
finance, (i) demonstration and dissemination of technologies in the selected value chains to be
provided by a mixture of existing potential service providers from the public (i.e. research
institutes and Agricultural Development Programs (ADPs) and private sectors(US$6.60m) (See
Annex 4). It will finance the demonstration and dissemination of a variety of improved
technology packages identified by small and medium scale farms using the structures of the
CIGs and Commercial Agriculture Development Associations (CADAs), and will include:
propagation, use of high quality seeds and seedlings of improved, exotic, high yielding and pest
and disease resistant varieties, improved agronomic practices (water management, spacing,
pruning, grafting etc), cocoa beans drying, palm oil and kernel oil extraction, hatchery
development for fingerlings and day-old chicks, waste water management for aquaculture, feed
compounding using local materials using floating feed, fingerling stocking density, fish health
and disease management, water quality management for aquaculture (sustainable removal of
nitrogen from water system, water pollution reduction, and water recirculation and flow through
technology), technologies for egg and birds transportation, artificial insemination, milk hygiene
and cold chain; and (ii) Matching Grant (US$15.00m): The project will provide matching grants
of about US$15.0 million. The total amount for grant is US$15.00m out of which US$8.00m will
be in grants to support public goods elements under staples to be applied on 50:50 basis with the
project beneficiaries at the CIGs and CADA levels.
This is a one-time Capital Grant for investments needed to improve the adoption of existing
agricultural technologies by participating commercial farmers. The matching grant is to support
the adoption of known and superior technologies and build capacity of small and medium-scale
commercial agriculture farmers. This will enable them to take advantage of market opportunities
for their produce. The matching grant is open to all qualified/eligible CIGs and/or members of
CADAs. Four sets of criteria will guide the selection of proposals, and these are: Viable
technology, Public goods element and Economic and financial viability. The activities that could
be supported by the matching grant will include the following among others:
6
Aquaculture: Fingerling Production and Hatchery Development, Fish Feed Production
Technology, Fish Smoking, Drying, Packaging, Branding and Quality Control.
Rice: Seed Multiplication/Production, Processing, De-stoning Technology, Milling
Technology, Parboiling Technology, Packaging and Branding.
Dairy: Artificial Inseminations, Milking Technology, Milking Processing, Packaging,
Branding and Quality Control.
Fruit Trees: (Citrus, Mango, Guava, Pineapple, Passion and Cashew): Seedling
Multiplication/Production, Processing, Fruit Juice Production and Packaging, Quality
Control and Branding.
Oil Palm: Seed Multiplication, Production, Processing, Palm and Kernel Oil Extraction,
Processing, Packaging, Branding and Quality Control.
Cocoa: Seed Multiplication/Production, Processing, Cocoa Bean Drying Technology
Poultry: Hatchery Technology, Processing, Packaging, Branding and Quality Control,
Cold Chains.
Maize: Seed Multiplication/Production (hybrid and other improved open-pollinated
varieties), Processing, Flash Drying Technology, Quality Control, Packaging and
Branding.
The detailed description and implementation of the Grant mechanism is contained in Annex 4
and Project Implementation Manual (PIM), respectively. For adoption of new technologies, the
formula for the matching grant will be 50% to 20% contribution from IDA on a sliding scale at
the association level.
(b) Support to Staple Crop Production Systems (US$50.00m): The combined factors of climate
change and the recent fluctuations in crude oil prices have been associated with global soaring of
food prices. The impacts are being felt in Nigeria as in many other countries. However, to
compound the situation in Nigeria, the 2007 rainy season in the northern states which are the
food basket of the country, ended prematurely in early September and resulted in poor yield and
low harvest. The Federal Government of Nigeria has responded to the food crisis through
measures that are expected to increase the supply of food staples and arrest or at least reduce the
rise in prices. Some of these measures include the release of stocks from the Strategic Grains
Reserve which several State Governments are also doing. The Federal Government has relaxed
the tariffs and suspended import duties for rice. In addition, the Federal Government has
requested its donor partners to support its initiatives on combating the rising food prices in
Nigeria. In response to the explicit Government request that this project is used to support its on-
going initiative to address the issue of the rising food prices, the project will provide US$50.00m
out of the total project Credit of US$150.00m to support basic staple crops production of maize
and rice. The design of this sub-component is consistent with the main thrusts of the instruments
of Bank support under the Global Food Crisis Response Programme Framework, particularly on
enhancing domestic food production and marketing response. Using the approach stipulated in
(a) above, this sub-component will support mainly small-scale commercial farmers to rapidly
increase their staple crop production through the adoption of improved technology based on
intensification and expansion of their rice and maize land holdings. The sub-component will
finance development/preparation of existing land holdings for staples, seed multiplication to
increase the availability of improved rice and maize seeds, dedicated extension/advisory services
for rice and maize staples, soil and water management, animal traction and rotary cultivators, and
primary processing technologies. The sub-component will also finance post-harvest handling
7
centres and on-farm storage to reduce high post-harvest losses among small-scale commercial
farmers. These centres will be located in high production areas and will be operated under
public-private partnership arrangements where the centres are financed by the project but their
day-to-day management will be handled by the CADAs.
(c) Market Facilitation (US$7.90m): The sub-component aims at the creation of domestic
and export markets; this will support market development, awareness and knowledge sharing for
commercial farmers. It will finance market information system, including market price surveys,
website and information kiosks, market/financial linkages, (including promotion of products for
supply chain financing, use of crops as collateral) quality control measures and standards; food
safety, exchange programs, agricultural trade fairs and shows, local and international study tours.
(d) Capacity Building (US$4.90m): The sub-component will focus on the training of
commercial Commodity Interest Groups (CIGs) and Commercial Agriculture Development
Associations (CADAs) that will play a coordinating role in the project. The sub-component will
assist to develop the capacities of the CIGs/CADAs to plan and execute their projects. The
training will also include gender mainstreaming and social impacts. This sub-component will
finance the following activities: interactive sessions, discussions with experts, group dynamics,
investment plans, food safety, grading and quality standards, study tours and exhibitions,
production techniques and preventive maintenance of machines and equipment. In addition, it
will also facilitate linkages between commercial farmers to commercial banks, including
promoting the development of financing products such as using crops as collateral, warehousing,
supply chain financing, and use of crops for future markets.
Component 2: Rural Infrastructure- US$80.00m (of which IDA will finance US$68.00m)
23. There are positive relationships between access to infrastructure and agricultural
productivity and growth. This component will provide resources for construction of new roads,
rehabilitation of existing ones and maintenance of roads to communities and selected agricultural
activities. Depending on their location, length and standards, roads will be provided and
maintained using the various forms of performance-based contracting. It will be a requirement
that the respective states and local authorities take full responsibility of the roads after the project
by signing a Memorandum Of Understanding with the States and Local Government. The project
will also connect commercial farms to electricity grid. The rural infrastructure investments that
will be supported under Component 2 will be linked to the commercial agriculture activities
under Component 1 and will be concentrated in areas where a critical mass of project
participants will benefit. The investments in roads and energy will complement the investments
in the value chains, and will serve the participating small and medium commercial farmers, as
well as other residents in the area. Maps of areas of interventions showing the value chains,
energy and network of farm access roads have been identified and drawn. The maps also
indicate the geographic location of the CIGs that will participate in the project.
The component has the following two sub-components:
24. Network of Farm Access Roads (US$50.00m). This sub-component will finance the
construction and rehabilitation of farm access roads linking commercial farms to markets
through Outputs and Performance Based Road Contracts (OPRC). To reduce fiduciary risk from
OPRC, there will be a technical audit for independent certification of the outputs and
8
performance of contractors by the projects to ensure internal controls before payments are made
to the contractors. In addition to the technical audit, a financial audit of the OPRC will be
undertaken by the project. This sub-component will be closely coordinated with Rural Access
and Mobility Project (RAMP) and will not finance farm access road projects where RAMP is
operating to avoid duplication of efforts. A memorandum of understanding spelling out how the
two projects will complement each other is being finalized and the implementation modalities
will be detailed in the PIM. The sub-component will finance construction, rehabilitation and
maintenance of about 500 kilometres or 100 kilometres of network of farm access roads and
drainage structures per state (i.e. combination of surfaced and gravel/laterite roads as applicable)
concentrated in areas where a critical mass of project participants will benefit. In terms of
implementation of this sub-component, the RAMP team is already working with the states in the
provision of Technical Assistance (TA) on the assessment of the areas of interventions of the
project.
25. Rural Energy (US$30.00m). This sub-component will support the provision of electricity
to commercial farms where high transmission line exists. This is based on the survey on
commercial farms conducted by the Power Holding Company of Nigeria (PHCN). This project
will finance the rehabilitation and maintenance of rural electricity, including provision of
transformers and distribution, feeder lines, poles and accessories from the main transmission
lines to commercial farmers‟ facilities in collaboration with the Power Sector Reform Project.
The sub-component will also support the study of other sources of energy. The beneficiaries will
undertake to pay the electricity bills and put in place the mechanism to protect the investments.
In terms of implementation of this sub-component, the project will sign a memorandum of
understanding with the Power Holding Company of Nigeria (PHCN) on the assessment and
preparation of bidding documents for the areas of interventions with respect to rural energy and
also provide a guaranteed pre-agreed uninterrupted power of at least 5-8 hours supply to the
beneficiaries; and beneficiaries agree to set aside dedicated funds for supplied energy.
Project Management, Monitoring, Evaluation and Studies -US$19.60m (of which IDA will
finance US$11.60m).
26. The project will finance Project Management, Monitoring and Evaluation and selected
studies as follows:
(a) Project Management (US$8.80m3). This will finance:
(i) Incremental costs related to project implementation and management at the state
and federal levels (i.e. State Commercial Agriculture Development Office
(SCADO) and the National Coordinating Office (NCO) located at the National
Food Reserve Agency (NFRA);
(ii) Equipment;
(iii) Vehicles;
(iv) Operation and maintenance costs; and
(v) Minor civil works for rehabilitation of offices.
(b) Monitoring and Evaluation (US$2.80m) - The activities to be financed are:
3Project Preparatory Facility (PPF) (US1.00M) is included in the Project Management.
9
(i) Management Information System. The project will finance the establishment and
operation of a results-based monitoring and evaluation system (M&E), including
the maintenance and use of a Management Information System.
(ii) Impact evaluation and beneficiary assessment, including Mid-Term Review. This
will finance monitoring and evaluation of the project and beneficiary assessment,
including studies and consultant fees.
(iii) Monitoring of Environmental Management Plan (EMP). The project will finance
costs that are associated with the monitoring of the implementation of the
Environmental and Social Management Framework, Pest Management Plan and
Resettlement Policy Framework.
(c) Strengthening of relevant institutions at Federal and State levels (US$5.00m):
This will finance specialized Technical Assistance and training at the state and federal
levels aimed at developing capacity for coordination of implementation. The project will
support some Federal Institutions, (Federal Ministry of Agriculture and Water Resources,
National Food Reserve Agency and Federal Ministry of Finance and other relevant
institutions) in respect of capacity building; project monitoring, equipment and vehicle
support etc. In addition, the project will support relevant institutions in the participating
states in the areas of capacity building, project monitoring and equipment support in the
States‟ Ministries of Agriculture, the Agricultural Development Programmes (ADPs), the
Project Financial Management Unit (PFMU) and other relevant institutions.
(d) Studies (US$3.00m): This project will finance studies to evaluate relevant models of
commercial agriculture. In addition, it will finance technical assistance and a study on
Irrigation. Terms of Reference (TOR) for these studies will be approved by the Bank
before the commencement of such studies.
4. Lessons learned and reflected in the project design
27. Key lessons learned from the Bank and donor funded agricultural development projects in
Africa, Europe and Central Asia which are relevant to the project include: links with country‟s
Poverty Reduction Strategy Paper (PRSP), use of matching grants, provision of infrastructure
(farm access road and energy), and facilitating market development for agriculture
commercialization.
28. Links with PRSP. The project is consistent with CPS which recommended that project
support to states should be based on their priorities that are aligned to NEEDS/SEEDS. The
project design has therefore focused on small and medium holder agricultural commercialization
and is consistent with the Government‟s strategic priorities articulated in the NEEDS, SEEDS
and Economic Sector Work (ESW)/Analytical Advisory Activity (AAA) on Agriculture in
Nigeria. Lessons learned from similar projects do show that linking project development
objectives to the country‟s PRSP fosters ownership and enhances smooth project
implementation.
29. Matching Grants. Past experience from Nigeria and Zambia shows that ad hoc provision
of matching grants for productive and marketing assets for smallholders was often financially
10
unsustainable due to lack of business skills and access to markets. Effective use of matching
grants requires sound business plans and good linkage with provision of technical advice. In
addition, peer monitoring, including spot audits ex-post undertaken by an apex body has been
successfully applied in other apex body and IFAD financed projects in Nigeria. These factors are
taken into account in the design of the matching grant under this project.
30. Infrastructure (Farm Access Roads and Energy). There are positive relationships
between availability of infrastructure and agricultural productivity growth. Experience from
South Asia Region indicated that the key to private investments in high value production, or
simply agricultural marketing and processing is the availability of necessary infrastructure
(roads, markets, electricity, etc). For example, in one of the projects in South Asia Region, the
simple repair of half kilometre of road which the community identified as the major obstacle to
transportation, made all the difference in increasing the volume and value of products that were
marketed. In Fadama II in Nigeria, the repair of 12 kilometres of road in Eriti community in
Ogun State led to the reduction of 15% in transportation cost and increased the volume of
vegetable sales. In addition, earlier Nigerian rural road projects under the Directorate for Food,
Roads and Rural Infrastructure (DFRRI) in the 1980s indicated that lack of adequate provision
for the maintenance of roads was a major problem in the construction of rural roads. RAMP is
pioneering Output and Performance Road Contracts (OPRC) that has adequate mechanism for
post construction maintenance in Nigeria. Also, experience from Zambia shows that road
rehabilitation designs should include sufficient use of resources and practical arrangements for
post-rehabilitation maintenance, and particularly the use of OPRC. These lessons are embedded
in the design of this project.
31. Similarly, for rural energy, the conventional model of government-led rural electrification,
generally unsuccessful in sub-Saharan Africa, has to be complemented by private-sector led
commercially-oriented rural electrification program. Lessons from the Energy for Rural
Transformation Project in Uganda show that by providing some assistance during the
construction phase for rural energy on output-based aid will reduce the commercial debt
financing and associated risks. These measures are incorporated in the design of this project and
the project will employ these models and work closely with the Energy team both in the Bank
and the Government to take advantage of the Nigeria Power Sector Reform Project. The project
will sign a Memorandum of Understanding (MOU) with PHCN to guarantee pre-agreed
uninterrupted power (at least 5 hours) supply to beneficiaries especially areas with high
concentration of project beneficiaries while beneficiaries will also agree to set aside dedicated
funds for supplied energy.
32. Facilitating Market Development for Agriculture Commercialization. The experience
from donor funded smallholder commercialization projects in Zambia suggests that: (i)
channelling funds for smallholder mobilization and capacity building through industry
associations, agribusinesses and farmer organizations do have a lasting impact; (ii) entrusting the
decisions and functions of farmer capacity building, extension, and marketing on commercial
out-grower scheme operators to ensure their consistency with industry priorities and business
needs; (iii) supporting a more coordinated approach between development partners and the
smallholder out-grower sector results in greater impact of the assistance provided; and (iv)
clarifying the role of each partner from the onset is therefore very important. In addition, the
experience from Micro, Small and Medium Enterprises Project (MSME) and the Aquaculture
value chain report of June, 2008 indicated the need for market-driven development approach,
11
private over public leadership, use of performance grants, greater access to a range of key
services to MSME, and industry focus. These features are taken into account in the design of this
project. CADAs and CIGs, which are private sector entities, will be responsible for market
development and facilitation. In addition, during implementation, steps will be taken to ensure
appropriate coordination and collaboration between MSME and CADP including maximizing
synergies/impact of the two projects.
5. Alternatives considered and reasons for rejection
Two alternative approaches were considered and rejected:
33. Implementing the proposed project under Fadama III: Fadama III uses Community Driven
Development (CDD) methodology well suited to subsistence producers, but will not be as
effective with the target group of commercial farmers who have different needs for information
and finance. As noted in the World Development Report “Agriculture for Development”,
different client groups of farmers are best served by different types of interventions.
34. Combine the Growth Enterprises and Markets (GEMS) Project and the Commercial
Agricultural Development Projects: The proposed Growth Enterprises and Markets Project will
presumably not be primarily or entirely focused on agriculture. Commercial agricultural
production will benefit from any improvements in the business climate accomplished under it,
but the technical and staffing needs for the commercial agricultural operation differ from those
addressing private sector developments more broadly.
C. IMPLEMENTATION
1. Partnership arrangements
35. The Government of Japan has financed Technical Studies and Technical Assistance as part
of the preparation of the project through a Policy and Human Resources Development (PHRD)
Grant of US$800,000. Also, African Development Bank (AfDB) has given commitment to
support similar intervention in Nigeria at a future date. Such operation will be complementary to
this project.
2. Institutional and Implementation Arrangements
36. The proposed project will utilize the existing institutional structure of the Federal Ministry
of Agriculture and Water Resources (FMAWR), its federal and state level coordination offices
and those of the States‟ Ministries of Agriculture. In addition, the Federal Ministry of Finance
has oversight function on credit facilities through its Department of International Economic
Relations (DIER). The DIER will undertake joint monitoring and coordination with the Federal
and State Implementation Agencies to ensure efficient and effective utilization of funds for
intended purposes. The implementation arrangements include:
(i) overall coordination of project implementation entrusted to FMAWR and to be carried
out through NFRA;
12
(ii) establishment and maintenance of NSC, NCO, SSC and SCADO throughout the
implementation of the project with experienced and qualified staff in adequate numbers,
all satisfactory to the Association;
(iii) empowerment of farmers to enable them to establish their CIGs and CADAs as vehicles
to foster the sustainable development of commercial agriculture in the Participating
States; and
(iv) Terms and conditions for distribution of matching grants.
37. The detailed Institutional and Implementation Arrangements are in Annex 6.
38. Project Implementation Period. The Project will be implemented over a five-year
period, starting from April 16, 2009. The Project will close on December 31, 2014.
39. Executing Agency: The Federal Ministry of Agriculture and Water Resources (FMAWR)
will have overall responsibility for execution of the Project through the National Food Reserve
Agency (NFRA). The NFRA is the agency entrusted with responsibility for coordinating the
implementation of all agricultural sector projects in the country, including those that are
externally-funded. The NFRA, through the National Coordinating Office, will coordinate project
activities on behalf of the FMAWR. Most of the Project‟s administrative, financial and
implementation arrangements will be decentralized at the state levels. The beneficiaries,
especially the Commercial Agricultural Development Associations (CADAs) and the various
Commodity Interest Groups (CIGs) will be active in the project. Since no new coordination
structure will be created under this project, the NFRA will delegate the functions and
responsibilities of day-to-day implementation coordination to a semi-autonomous National
Coordinating Office which will now be called the NCO.
40. At the Federal level, coordination will be carried out by the National Coordinating Office
(NCO) and while the oversight, policy and strategic orientation functions will be performed by
the National Steering Committee (NSC) with 10 members as proposed by government. These
are: Permanent Secretary, FMAWR - Chairman, Ministries of Finance; Agriculture (Director of
Agriculture); Commerce and Industry; Women Affairs; National Planning Commission; CADA -
APEX; National Association of Chambers of Commerce, Industry, Mines and Agriculture
(NACCIMA); and the Executive Director, NFRA. The NSC will meet twice a year. The Vice
Chairman should come from the CADA and the NCO will serve as the secretariat.
41. The functions of the NSC are: oversight functions over the project at the federal level,
approve Annual Work Plan and Budget (AWPB) at the National Coordinating Office level,
review progress of project implementation across the participating states, encourage
collaboration among similar projects at the federal level and harmonization of Federal and State
Governments Policies on economic development and growth as it relates to commercialization of
agriculture.
42. The day to day implementation of the project at the National level will be the responsibility
of the National Coordinating Office. The staff complements of the NCO as proposed by the
Federal Government are: National Project Coordinator, Project Operations Officer, M&E
Officer, Project Accountant and Procurement Officer. Support Staff (Internal Auditor, Account
Officer, Administrative Officer and Rural Infrastructure Officer - Consulting. The Terms of
Reference for the staff positions will be in the PIM.
13
43. At the State level, coordination will be carried out by the SCADO of the participating
states while the oversight, policy and strategic orientation functions will be performed by the
State Steering Committee (SSC). The State Steering Committee will comprise of 12 members as
proposed by government, they are as follows: Permanent Secretary Ministry of Agriculture
(Chairman); Directors of relevant value chains in the Ministries of Agriculture (2), Finance (1),
Planning/Budget, Trade and Commerce, Women Affairs, Rural Development/Energy
Commission, Works, Chamber of Commerce and Industry, Commercial Agricultural
Development Associations (1); Project Manager (PM) of ADPs and SCADO. The Vice
Chairman will come from the private sector and SCADO will be the Secretariat. Invitations to
stakeholders are on need basis.
44. The functions of the SSC are as follows: Oversight functions over the project at the state
level, approve Annual Work Plan and Budget of the SCADO, review progress of project
implementation, guide and facilitate project implementation based on project design, periodic
monitoring with the state, screening and recommendation for approval of Annual Work Plan and
Budget to the Agricultural Development Project Executive Council (ADPEC) of the State,
(ADPEC is the highest policy making/approving body for agriculture in the State), and
encourage collaboration among similar projects in the states.
45. The day to day implementation of the project will be the responsibility of the State
Commercial Agriculture Development Office which will have the following staff complements:
State Project Coordinator, Procurement Officer, M&E Officer, Project Accountant, Agric
Productivity and Advisory Services Officer, Commercialization and Business Development
Officer, Rural Infrastructure Officer, and Support Staff (Internal Auditor, Cashier, Secretaries,
Administrative Officer, Environmental Officer and Project Office Assistant). In addition,
SCADO will have facilitators in the following subject matter areas: (a) Technology adoption in
each selected value chain; (b) Market facilitation and business development; (c) Road; (d)
Energy; (e) Management Information System (MIS)/Information Communication Technology
(ICT); and (f) Staple crops (maize and rice).
46. The SCADO will function as a semi-autonomous unit. All correspondence and reports to
the office of the Honourable Commissioner, NFRA and the World Bank (WB) should be copied
to the ADP PM.
47. At the Beneficiary level, critical decisions will take place within the CADAs and the
various CIGs which should be legally registered. The CADAs are apex organizations of
Commodity Interest Groups which have a common interest in agricultural commercialization.
The CADAs are already in existence. They will be responsible for the coordination of the
activities of the CIGs, including the management of the post-harvest handling centres under the
Public-Private Partnership (PPP) arrangements within the value chain associations. The CADAs
may facilitate co-financing of the sub-projects through commercial banks. The CIGs will have
responsibility for sub-projects implementation. Beneficiaries should belong to commodity
associations that support the value chain of their interest. SCADO should have a directory of
Service Providers that will provide services to the project beneficiaries. The Service Providers
will be screened by SCADO and their services will be certified by beneficiary and SCADO
officer/agent before full payment. Service Providers will be public and private sectors operators
and there should be a level playing field.
14
48. The beneficiaries will be responsible for the identification, preparation and execution of
their sub-projects. The beneficiaries especially the CIG members will be assisted on need basis
by advisers/facilitators in producing a simple investment plan that will show the total cost of the
sub-projects; the level of grants they are applying for and documentation/evidence of ability to
provide own contribution. The CIG will check the plans against the list of eligibility criteria and
aggregate them at the CIG level. The CIG application including the procurement plan then goes
to CADAs, which aggregates the plans and checks them for completeness before submitting
them for approval.
49. Once sub-projects are reviewed and approved by SCADO, CADAs can access a share of
the costs for design and implementation, in accordance with the guidelines stipulated in the PIM.
In order to be eligible to receive funding under the project, beneficiaries must belong to
registered constituted Commodity Associations. Disbursements to the service producers selected
by CADAs will occur through the preparation of Commercial Agricultural Development Plans
and Sub-Project Agreements (SPAs), as described in the Project Implementation Manual (PIM).
50. The farm access roads/energy sub-projects to be rehabilitated and maintained will be
selected through cross-sectoral (transport, energy and agriculture) participatory approach
undertaken together with Federal, State Governments, Local Government Areas (LGAs) and
similar projects (Rural Access and Mobility Project and Energy Reform Project) The basis for
selection will be prioritization of those segments of rural areas that are essential for supporting
the overall small and medium scale agricultural commercialization, value-addition and the
development objective of the project. The result of the selection process will be a network of all-
weather farm access roads providing access for the selected agricultural development areas over
a period of five years and energy connectivity to small and medium scale commercial farms.
Once the implementation plans are finalized, the sub-components will be implemented through a
memorandum of understanding with relevant agencies in the states (PHCN and Road
Management Agencies) under the guidance of RAMP and the Energy Reform Project teams at
the National and State levels.
51. Overall implementation of the project will be done according to detailed procedures
defined in the PIM. There is a direct relationship with the project and the existing ministerial
structures both at the National and State levels. The NCO is within the framework of the NFRA
while the SCADOs are within the framework of the states‟ ADPs. Project Implementation Units
(PIUs) will be set up for the NCO and SCADOs respectively.
15
3. Monitoring and Evaluation of outcomes/results
52. The NFRA, through the NCO will provide oversight support and coordination of M&E
while the SCADO will have overall responsibility for monitoring and evaluation, working in
close collaboration with the M&E officers at the state levels. These decentralized units will feed
project-related data from the states and LGAs directly to the NCO central M&E system, which
will consolidate the monitoring and evaluation reports and include them in the semi-annual and
annual progress reports. In addition, the NCO will provide feedback to the decentralized levels.
The system consists of self-monitoring at the Federal/State levels, input-output
monitoring/Management Information Systems (MIS), process monitoring system, outcomes,
efficiency, and impact evaluation, particularly on who benefited (small or medium farms, agro-
processors, women), which value chains received support and how, what has been the
comparative cost effectiveness, to what gains can they be attributed and to what extent have
external factors (such as weather events) contributed to the final outcomes. The outcome
indicators will be disaggregated to capture the following: farm categories, gender, value chain,
state and region. Performance indicators are provided in Annex 3. The indicators are linked
directly to the results-based CPS goals. The outcome indicators will be used to assess progress in
achieving the project development objectives. At the Federal level, NCO will assemble and
consolidate data on overall project implementation from the participating states, organize and
coordinate the Mid-Term Review (MTR). At the State level, the SCADO will collect data on the
sub-projects and maintain a database from which information on a quarterly basis is forwarded to
NCO. In addition to this, impact evaluation studies will also be conducted by external entities at
mid-term and project completion stage.
53. The project Monitoring and Evaluation (M&E) will be based on: (a) a survey; (b) building
on the findings of the baseline survey; and (c) monitoring at the State level.
54. The National Coordinating Office of the project housed at the National Food Reserve
Agency (NFRA), of the Federal Ministry of Agriculture and Rural Development (FMARD) will
have overall responsibility for consolidating reports from the states and sending them to the
Bank, select external consultants for the Mid-Term Review/Impact assessment at the close of the
project, organize the various studies for the project, and work in close collaboration with M&E
units at the States levels.
55. Input/Output Monitoring: The SCADO will be responsible for input/output monitoring
at all levels through a computerized MIS. A firm will be competitively contracted to develop the
MIS software, implement the program and provide operation and maintenance services. The MIS
will include the following: (i) profiles and inclusion of quantitative variables relating to the small
and medium scale commercial farms, including agro-processors, with the aim of improving the
capacity to evaluate project impact; (ii) inclusion of quantitative variable concerning sub-projects
with indicators for impact monitoring; (iii) complete on-line connection with state offices
(SCADOs) to strengthen decentralized supervision and improve efficiency through field entry at
the data collection point; (iv) extend MIS to allow comparison of planned versus actual
performance (i.e. physical and financial) in a format that can also be used in reports to be
presented to government and the Bank; (v) integrate Financial Management System (FMS); (vi)
insert new cells for analysis and decision-making functions; and (vii) launch the MIS on the
internet for public access, with the aim of promoting transparency. Through periodic processing
16
of the database information, combined with field visits and inputs from project supervision
missions, and project contracted studies and audits, the NCO/SCADO will monitor project trends
and performance, identify implementation challenges/problems and accomplishments and
undertake appropriate actions to improve project implementation.
56. Process Monitoring. The NCO and SCADO will contract with independent agencies,
supervised by SCADO to carry out process monitoring. Based on the MIS and using
Participatory Rural Appraisal (PRA) techniques, the independent assessments will judge the
quality of project implementation, particularly, in institutional development at the State level,
investment levels, beneficiary satisfaction with project inputs, and mechanisms to ensure
inclusiveness and participation. Monitoring will assess the extent to which gender issues are
included in the process of project selection, design, and implementation at the association levels,
focusing on the integrity and effectiveness of the CADAs‟ tool and process. The approach to
process monitoring will encourage self-assessment by the CADAs and the implementation
coordination teams. Semi-annual reports will be submitted to the government and the Bank for
review and appropriate action. The findings will be reflected in the biannual progress reports.
57. Impact evaluation will be carried out by an independent agency. A baseline survey
has already been completed to assess pre-project conditions in the participating states and project
areas. A Mid-Term Review will be undertaken during the project implementation period.
58. Reporting and Mid-Term Review. The NCO will submit quarterly reports, a bi-annual
progress report and an annual report to the World Bank, FMAWR and the participating states.
The quarterly reports will consist of progress achieved and implementation constraints for each
quarter. The bi-annual reports will consist of: (a) physical and financial expenditure data; (b)
performance indicators; (c) successes and problems encountered with possible remedial actions;
(d) socioeconomic and environmental impacts; (e) progress toward the Project Development
Objective (PDO) achievement, and (f) documentation on beneficiaries. The annual report will
cover all quantitative and qualitative aspects of implementation progress, including
implementation plans for the following year. An MTR will be held during the implementation of
the project, which will be an in-depth assessment of progress and an opportunity to change
course if and when appropriate. To prepare for the MTR, the NCO will engage consultants to
prepare a detailed progress report covering the entire period that the Project has been effective.
The report will include a comprehensive review of the implementation performance of all the
components of the project as well as assess impact on the ground, based on the findings of the
monitoring and evaluation studies and other sources of information. This report will also
highlight the progress made with respect to performance indicators.
59. A final evaluation/review at the end of the project will be carried out and an
Implementation Completion Report (ICR) will be prepared. The Project will support a
stakeholder ICR and validation process. No later than four months after the Credit closing date,
NFRA and NCO will prepare and provide to International Development Association (IDA) a
report on the execution of the project, its costs and current and future benefits to be derived from
it, to be attached to the Bank‟s ICR in accordance with IDA guidelines.
17
4. Sustainability
60. The sustainability of project benefits will depend on several factors, including, financial
sustainability of sub-projects, ownership and recipient commitment, capacity of beneficiary
associations and other enabling institutional environment.
61. Financial sustainability of the sub-projects. The sustainability of the project benefits at
the state level depends first of all on the financial soundness of the sub-projects. Commercial
Agriculture Development Projects in Africa and ECA have clearly demonstrated that with
technology adoption and advisory services, market facilitation, capacity building, provision of
network of farm access roads and energy, combined with capitalization is technically, financially
and economically sustainable. The rapidly expanding population, change in consumer taste, and
the increase in the supermarkets are guarantees for market demand from commercial agriculture
that will absorb incremental crop, livestock, and aquaculture productions.
62. Ownership and beneficiaries’ commitment. The existence of Commercial Agriculture
Development Plans will ensure that the beneficiaries‟ needs, perspectives and ownership are
guaranteed. The mainstreaming of the participatory approaches and decision-making will
enhance the ownership and commitment of the beneficiaries to the project through their
Commercial Agriculture Development Associations. This strategy will contribute to the social
mobilization and awareness creation for the project at the states.
63. Capacity of beneficiary associations. The sustainability of project benefits depends on
the durability of the CADAs and CIGs as well as the capacities of their leaders and members to
manage their own affairs. The Project will make significant investments in capacity building
efforts through training and Technical Assistance to build social capital and expand the
knowledge frontier.
64. Enabling institutional environment. Sustainability of commercial agriculture
development depends on the existence of an enabling institutional environment. The Public
Private Partnership strategy in commercialization of agriculture will enhance government
commitment to the project and its participatory rural development approach. Both the Federal
and State Governments are showing renewed interests and commitments in agricultural
commercialization. At Federal level, this commitment is already reflected in President
Yar‟Adua‟s 7-Point Agenda and in Government‟s macroeconomic and sectoral policies, such as
the Rural Sector Strategy and NEEDS. In addition, project support will be used to strengthen the
capacity of government at state and federal levels respectively.
5. Potential Risks and Possible Controversial Aspects
65. Sustainability. Sub-projects may not be technically sound and sustainable. Technical
Assistance and training will be provided to the CIGs/CADAs to ensure generation of sound sub-
projects.
66. Government commitment to the project approach may wane over time. The
participating states are highly committed to the project approach. Project activities are
mainstreamed into the functions of government at multiple levels, and private sector will be
18
explicitly responsible for sub-projects‟ generation and implementation. This will enhance
chances of project success, which are essential to sustaining government commitment.
67. Regular payment of counterpart contributions. This risk is high because the
Government has not systematically met its counterpart contributions in previous projects. To
address this risk, approval of the annual work programs of the beneficiary states is contingent
upon compliance with counterpart obligations. The participating states have demonstrated
commitment to the preparation of this project by contributing N20.00m each to fast track project
preparation and start up arrangements at the state level. In addition, provision has been made by
both the Federal and State Governments in their 2008/2009 budgets for counterpart fund
contribution, including agreement for upfront payment in subsequent years.
68. Potential elite capture and political interference. This is a major concern to the project,
especially the matching grant facility, will be captured by elites. Mechanisms for financial
management and accountability will be well publicized, as will systematic peer reviews and
sanctions for abuse. During project implementation, systems will be put in place for reporting
potential irregularities of fraud, collusion and diversion of funds, especially in procurement
operations and for enforcement of appropriate sanctions. In addition, the ceiling for the grant is
kept low to minimize interests among the elites.
19
Risk Mitigation Measures:
Risks Risk Mitigation Measures Risk Rating with Mitigation
To project development objective
Lack of sustainability of sub-projects
after the project has closed and/or the
grant is ended, and lack of maintenance
of infrastructure provided under the
project.
Government commitment to the project
falters due to change in policy and
orientation towards agriculture
commercialization.
Counterpart contributions not paid on
time, or are irregular.
Collusion and/lack of transparency and
accountability in the management of
funds at the beneficiary level.
Procurement Risks. Insufficient
knowledge and experience with Bank
procurement may cause delays in project
implementation
Attention to economic viability of the sub-projects
and maintenance of infrastructure through the use of
the OPRC approach in the design of the project.
Creation of innovative products through linking
commercial farms with financial institutions (i.e.
supply chain financing, future markets, crops as
collateral and graduation of the commercial farmers
from the Matching Grant Scheme).
Investment in public information, stakeholders
awareness raising and communication about the
approaches and results of the Project.
Federal Government and States agreed to
counterpart contributions and this will be closely
monitored during implementation.
Random audits ex-post will be conducted by CADA
in addition to the financial statement audit with
focus on the utilization of the matching grant that
funds spent on intended purpose and beneficiaries
will receive value for their money. Details of these
are documented in the FPM under community
participation. The TOR for the audit is included in
the PIM.
Random audits ex-post and spot-checks of accounts
by CADAs to confirm grants are used for the
intended purpose.
(i) Procurement and implementation training will be
provided to key staff during project implementation;
(ii) experienced Procurement Specialist will be
hired to assist and coordinate the states‟
procurement functions and provide on-the-job
training to the state officials; (iii) intensive
supervision of the agencies‟ staff by the Bank field
office Procurement Specialist.
M
M
H
M
M
Overall Risk Rating M
Note. Implementation of some of the risk mitigation measures have started particularly on awareness of
the project at the federal and state levels through television, radio and information leaflets, provision of
counterpart funds in the state budgets, and training on procurement.
20
6. Loan/credit conditions and covenants
Legal Covenants
69. Financial covenants are the standard ones as stated in the Financing Agreement Schedule
2, Section II (B) on Financial Management, Financial Reports and Audits and Section 4.09 of the
General Conditions.
Effectiveness Condition
70. One Subsidiary Agreement has been concluded between the Recipient and at least one
Participating State under terms and conditions satisfactory to the Association.
Disbursement condition
71. The conditions are:
(i) the Recipient has furnished to the Association evidence satisfactory to the Association that the
concerned Participating State has duly established its CADA in form and substance satisfactory to
the Association; and
(ii) the Association has received an opinion pursuant to Section 8.02 (b) of the General Conditions
that the Subsidiary Agreement has been duly authorized or ratified by the Recipient and the
concerned Participating State and is legally binding upon the Recipient and the Participating State
in accordance with its terms.
D. APPRAISAL SUMMARY
1. Economic and Financial Analyses
72. Based on the financial and economic analysis and conservative assumptions in Annex 9,
the Financial Internal Rate of Return (FIRR) of the sixteen (16) enterprises ranges between 14%
for citrus processing and 25% for pineapple production, with an overall project average of 20%;
while the Economic Internal Rate of Return (EIRR) of the enterprises is estimated to be between
12% for rice milling and 25% for cocoa production. Majority of the enterprises have FIRR
higher than 20% and EIRR that are higher than 18%. The overall project Economic Rate of
Return (ERR) is 17% which covers the agricultural production and commercialization,
and the rural infrastructure components of the project.
73. The results of sensitivity analysis are fairly robust to changes in key economic parameters
such as costs of production and output prices. A 10% decline in the prices of all products within
the project will reduce the ERR by two percentage points, while a 20% reduction will result in
four percentage points decline. An increase of 10% in costs will reduce ERR by one percentage
point, whereas a costs overrun of 20% will result in a decline of two percentage points in ERR.
For the switching value test, the project benefits will have to decline by as much as 28% from
the current level for the ERR to fall to the break-even-point of 12%.
74. The direct impact on project beneficiaries‟ income levels is estimated on the average to be
about 192%. The highest impacts on income levels are expected to come from broiler
production which is expected to be fivefold and earthen pond aquaculture which is estimated to
21
be in multiple of four, respectively. The smallest impact of 18% is contributed by citrus
production. This significant impact is expected to result from standard agronomic practices and
technology adoption by the Commercial farmers.
75. Out of the total net benefit accruable/expected from the entire project, 38.9% is
attributable to crop producers, 16.9% to livestock producers, 12.6% to processors, while 31.7%
is accounted for by the inputs supply sub-sector.
76. From the parameters obtained in this analysis, it is clear that this project is sufficiently
profitable to take advantage of opportunities for external financing if the participants desire
external financing from various credit sources, especially banks. The risks associated with
adoption of new technologies have also been sufficiently mitigated by the grant component of
this project.
77. Finally, it is important to note that the achievement of the financial and economic returns
parameters reported from this analysis will depend in part on favourable macroeconomic
conditions and investment climate in Nigeria that are outside the control of project management.
78. However, since the baseline studies, other pre-investment studies and monitoring are
within the project management control. If due diligence is observed in the operation of the
economic interest groups and with strict adherence to the eligibility criteria and conditions in this
financial analysis, the rates of return herein are achievable. The detailed Economic and Financial
Analysis is in Annex 9.
2. Technical
79. The design of the proposed project components utilized experiences from similar
components of projects in Zambia, Liberia, South Africa, and Madagascar. Extensive
consultations were carried out with Government and key stakeholders on this to improve the
technical integrity of the proposed design.
80. The experience with designing matching grants in Zambia has demonstrated that it is more
appropriate for supporting the provision of goods and services with high public good content.
The one-time capital grants sub-component 1 for investments needed for adoption of
technologies is an innovation designed into the project. Utilizing global experience, the
proposed matching grants will address specific value chain development, including market
research and market access activities, innovative extension and advisory services, and
development of business linkages between small and medium scale commercial farmers.
81. The sub-component dealing with rural network of roads construction, rehabilitation and
maintenance works will build on the experiences on road designs, technical specifications, and
standards developed under the Rural Access and Mobility Project. The implementation of the
sub-component will utilize the OPRC approach and it will also involve capacity strengthening of
the States Roads Maintenance Agency. During the process of identification of candidate farm
access road sections/networks critical to support agricultural development, cross-sectoral
(transport and agriculture) participatory approach was undertaken in the participating states.
22
3. Fiduciary
82. Financial Management. A review of implementation of Country Financial Accountability
Assessment (CFAA) (2000) recommendations in January 2005, further supported by 2006
PEMFAR for Nigeria, observed that the Federal Government has made a significant effort to
advance reform of the Public Expenditure Management (PEM) system since 2003. Major
achievements so far have been: (i) the adoption of an oil-based fiscal rule that has greatly
improved the quality of macroeconomic management; (ii) launching of significant steps toward
increased transparency of the budget process; (iii) more efficient cash management; (iv)
procurement reforms; (v) updating the legal framework for Project Financial Management
(PFM); (vi) reallocation of budget resources in support of Millennium Development Goal
(MDG) related government functions; (vii) strengthening monitoring and evaluation; and (viii)
introducing a more strategic longer-term focus in budget management. This has clearly helped to
reduce waste of public resources, particularly on the capital budget and payroll sides. The impact
of these early measures is also evident in significantly improved fiscal and broader
macroeconomic outcomes. There, is nevertheless, much more to do and PFM initiatives and
reforms are articulated in the Government‟s PRSP - NEEDS, which are supported under the
CPS, specifically through the three Bank-assisted projects i.e., Economic Management Capacity
Building Project (EMCAP) which closed in December 2007, State Governance and Capacity
Project (SCBGP) and the Economic Reform and Governance Project (ERGP). Besides the Lagos
State Financial Accountability Assessment which was carried out in 2004, the 2006 PEMFAR
reviewed PFM practices in several states. Also State Public Finance Studies have been carried
out. These studies revealed various weaknesses in PFM at the State level (e.g. weak capacity and
institutions and areas of audited financial statements).
83. Financial management services to the Federal and State level units responsible for the
implementation of the project will be provided by the FM unit of NCO and PFMU respectively.
The NCO FM unit is staffed by relevantly qualified accountants. The State PFMU will designate
appropriate professionally qualified accountant with responsibility for the CADP. As workload
necessitates, additional professionally qualified Project Accountants and Internal Auditors will
be recruited for the duration of the project. The FM arrangements for the project are designed to:
(i) ensure that funds are used only for the intended purposes; (ii) ensure the production of timely
information for project management and government oversight; and (iii) facilitate compliance by
the project with IDA fiduciary requirements. The overall FM risk in the project is substantial.
Various measures to mitigate FM risks have been agreed, including implementation of the
actions outlined to strengthen the financial management system. It is envisaged that with these
measures in place, the overall FM risk will be minimized to a residual moderate level, which is
manageable. The project Financial Manual will also detail the internal control framework and
risk management strategy that will apply in the project to keep the substantial risk attributed to
the project under constant check. The FM risks identified will be reduced with the
implementation of the mitigation measures recommended in Annex 7. In addition, the internal
audit unit will be adequately trained in risk based audit techniques which are very appropriate for
substantial FM risk project. Regular reporting arrangements and supervision plans will also
ensure implementation of the project is closely monitored and appropriate remedial actions taken
expeditiously.
84. Financial Management Arrangements. The PFMU and the financial management unit
of NCO will be responsible for ensuring compliance with the financial management
requirements of the Bank and the government, including forwarding the quarterly unaudited
23
interim financial reports and audited Annual Financial Statements (AFS) to IDA. The Project
will follow disbursement procedures described in the World Bank Disbursement Handbook.
Regarding flow of funds and banking arrangements, IDA will disburse the credit through DAs.
The PFMU and NCO FM unit will maintain adequate FM arrangements to support the
deployment of Project resources in an economic, efficient and effective manner to achieve the
stated development objectives. The arrangements will also provide relevant information to SSC
and NSC to facilitate the performance of their oversight functions. The detailed Financial
Management and Disbursement Arrangements are in Annex 7.
85. Procurement. Since Fiscal Year (FY) 2001, Nigeria has been implementing slowly a
procurement reform program based on the recommendations of the 2000 Country Procurement
Assessment Review (CPAR). A review of the progress made on the 2000 CPAR
recommendations as reflected in 2007 PEMFAR, shows that implementation of procurement
reform program has brought about substantial improvements in obtaining value for money in the
public sector expenditure. This has further introduced some level of transparency into the
country‟s procurement process. In this regard, the CPAR of 2000 has been a positive catalyst,
because it supported the agenda of financial sanitation of the current Government. Some of the
actions taken by Government to advance the procurement reform in Nigeria include (a) creation
of the Budget Monitoring and Price Intelligence Unit (BMPIU) around December 2002 as a Due
Process Unit located within the Presidency. The unit carries out due process reviews for the
certification of contract awards and payments. The recent PEMFAR report indicated that
contract prices were reduced substantially and have reportedly saved the Treasury a substantial
amount. Since the 2000 CPAR, collaboration between procurement and financial management
has been strengthened considerably. A Cash Management Team chaired by the Minister of
Finance, of which the Bureau of Public Procurement is a member, ensures that payments are
made only when certified by the BMPIU. The Public Procurement Act was promulgated in
Nigeria in June 2007 with a view to further sanitize public procurement system, which has often
been the subject of abuse and corruption. This will further bring significant improvement in the
existing procurement system in the public service and enhance transparency. However,
expectations are that it will take some time before the impact of the new legislation can permeate
to the project level. After discussions with Government, a decision was made to retain the
procurement responsibilities fully with the project management team, National Coordinating
Office (NCO) at the Federal level and State Commercial Agriculture Development Office
(SCADOs), while the Ministry of Agriculture will have the oversight function through the
National Steering Committee and State Steering Committee respectively.
86. At the beneficiary level, critical decisions will take place within the CADAs and the
various Commodity Interest Groups (CIGs) which should be legally registered. The Commercial
Agriculture Development Associations (CADAs) are apex organizations of Commodity Interest
Groups which have a common interest in agricultural commercialization. The CADAs which are
already in existence will be responsible for the coordination of the activities of the CIGs,
including procurement and management of the post-harvest handling centres under the Public-
Private Partnership (PPP) arrangements within the value chain associations. The CIGs will have
responsibility for sub-projects implementation. Beneficiaries should belong to commodity
associations that support the value chain of their interest. SCADOs should have a directory of
Service Providers that will provide services to the project beneficiaries. The Service Providers
will be screened by SCADOs and their services will be certified by beneficiary and SCADOs‟
officer/agent before full payment. Service Providers will be public and private sectors operators
and there should be a level playing field in the selection process which shall be detailed in PIM.
24
87. Procurement risk at the Agricultural Sector at Federal and State level: All the five
participating states and Federal agency have experience in implementing various Bank-financed
projects in Nigeria that date back to 1974. Twelve States are currently implementing the
FADAMA II Project while all the 36 States of the Federation will participate in FADAMA III
Project which will soon become effective. The two Agricultural Projects mentioned above have
some similarities with the Commercial Agricultural Project including contracting and making
funds available to beneficiary groups and communities. The complements of staff of the NCO
and SCADO which shall have responsibility of day to day implementation of the project will
include a Procurement Officer (PO). The PO, will further receive additional procurement training
on Bank financed procurement procedures from relevant training institutions, such as Lagos
Business School, Ghana Institute for Management and Public Administration (GIMPA), ESAMI,
etc. An experienced Procurement Specialist will be hired at the Federal level to assist and
coordinate the states‟ procurement functions and provide on-the-job training to the state officials.
The Curriculum Vitae of these Procurement Officers will be reviewed and cleared by the Bank to
ensure that appropriate, qualified and experienced procurement personnel are recruited by the
Borrower. The detailed Procurement Arrangement is in Annex 8.
4. Social
88. Summary of key issues relevant to the project objectives, and specific project’s social
development outcomes. A social assessment of Commercial Agriculture Development project
was undertaken in May/June 2008 in the five participating states as part of the preparation of the
project. The objective of the social assessment was to assess the likely social impacts of the
project on the beneficiaries and propose mitigation strategies against adverse impacts. The
findings of the study indicated that there was a general awareness about the project in the
targeted states; and that most of the beneficiaries got the information about the project from the
various meetings organized by the state ADPs. The Project contains strong social inclusion in the
sub-component activities to help commercial farmers adopt productivity enhancement activities
for improved returns. One key finding of the Social Assessment is on potential risk for
displacement, which has been reflected in the project through avoiding, minimizing, mitigating
and documenting micro-projects with risk potentials and the use of safeguard instrument of
Resettlement Policy Framework; and empowering beneficiary farmers through effective
participatory decision-making process. The project will be socially inclusive and culturally
sensitive to ensure that it builds on cultural practices and local knowledge and priorities in the
agricultural services delivery. Overall, the project is not expected to have any adverse social
impacts.
89. Participatory Approach: How will key stakeholders participate in the project? The
participating states and their key stakeholders have participated actively in the preparation of the
project. In December 07-08, 2005, a stakeholder‟s consultation was held at Abuja to discuss the
priorities of the states. In addition, between January 16 and February 02, 2006 and August 02-03,
2006, consultations were made in the five participating states. Furthermore, consultations were
also made in Abuja between November 26 and December 06, 2007 that were attended by the key
stakeholders from the participating states including commercial banks. The Project‟s objectives
and incentives which promote cross-cutting values on equity, partnership, participation, gender,
and transparency on commercial agriculture development will be openly expressed and will
guide project implementation. These values will become the standard by which implementation
activity is assessed, and is envisaged to change behaviour and attitudes of the stakeholders
25
during implementation. This is expected to result in reduced vulnerability, poverty, inequity, and
social conflict. The main thrusts of the project are improving access to basic infrastructure,
opportunities for social advancement, and participation in the development process; demand-
driven assistance; results-focused support; flexible implementation modalities; community
participation with social inclusion of the various value chain associations (CADAs and CIGs) in
overall project implementation; and greater transparency and accountability. These requirements
guided the design of the Project and will be incorporated in its implementation.
90. How does the project involve consultations or collaboration with Non Governmental
Organisations (NGOs) or other Civil Society Organizations? NGO consultation was an
integral part of the project preparation and will be enhanced during the implementation process.
CSOs will assist in discussing priorities with community groups, with a view to establishing
fairness and accountability in the process. The Project Management Unit (PMU) will ensure that
NGO/CSOs will participate in the project as facilitators and Service Providers (SP) as needed,
including strengthening CSOs‟ engagement process, which will strengthen communities‟
capacity to plan their own development in participatory manner.
91. How will the project monitor performance in terms of social development outcomes?
The project will measure changes or social impacts on the overall well being of beneficiaries by
using indicators such as changes in access, usage and satisfaction with infrastructure services,
changes in expenditures for services, change in the number of women participating in the project
activities and level of technological adoption compared before and after. The PMU will be
required to carry out regular community surveys to determine the most recent experience of
CADA members in the commercial agriculture process. Analysis of this type of information will
allow better implementation process, to ascertain whether specific objectives are being met, and
to determine whether the project has positive impact on the beneficiaries than before.
5. Environment
92. The Commercial Agriculture Development Project (CADP) was categorized as a Category
B project, and the environmental and social impacts of the project, for most part, are expected to
be minimal, site-specific and manageable to an accepted level. Details are in Annex 10. The
safeguards instruments comprising the Environmental and Social Management Framework
(ESMF), Resettlement Policy Framework (RPF) and Pest Management Plan (PMP) has been
prepared and disclosed in-country and at the World Bank‟s Info shop.
93. The potential environmental concerns as identified in the Environmental and Social
Management Framework (ESMF) are those associated with (i) rehabilitation and maintenance of
rural roads and energy, including provision of transformers and extension of power lines to
connect commercial farmers and agro-processing facilities; and (ii) agricultural development and
commercialization which will lead to increased production volumes and value added processing
and marketing capacity of agribusiness involved in commodity chains.
94. Intensification of agricultural activities could lead to increased use of pesticides and
herbicides; thereby triggering the Bank‟s Pest Management Policy. As due diligence, a pest
management plan was prepared and it has institutional framework to build capacity of the
commercial farmers and other stakeholders to address pest management concerns in an
integrated manner. Furthermore, project activities could trigger loss of land or restriction of
access to sources of livelihood, thereby triggering the involuntary resettlement policy, the RPF
26
will address the concerns and advise on steps to follow in order to prepare the Resettlement
Action Plans (RAPs) as and when necessary.
95. In addition, the ESMF contains a screening procedure for determining if a resettlement
plan is required for any particular investment according to the Resettlement Policy Framework
(RPF).
96. Anticipated sub-projects will include the following investments: farm power, farm
equipment and implements: livestock development for dairy, hides and skins; post-harvests and
handling equipment and means; technology and marketing at agro-enterprise level; and handling,
transportation, storage and processing assets improvements.
97. An environmental specialist who will be recruited and attached to the SCADO will be
responsible for following up environmental and social concerns during project implementation.
Reviews and clearances of Environmental Impact Assessments (EIAs) or Resettlement Action
Plans (RAPs) if applicable, will be handled by State Environmental Protection Agencies before
sending it to the Bank for approval.
98. Project staff, especially those charged will implementing safeguards instruments will be
given more in-depth training courses in environmental management. Skills of selected staff from
the State Environmental Protection Agencies, LGAs, ADPs, and CBO/NGOs will also be
strengthened through training, capacity and awareness building on environmental management
including legal requirements and EIA methodology. The safeguards instruments (ESMF, RPF,
and PMP) were disclosed on January 12, 2008 and at the Info-shop in January 22, 2008.
6. Safeguard policies
99. Three safeguard policies were triggered by this project: Environmental Assessment
(OP/BP 4.01), Pest Management (OP/BP 4.09), and Involuntary Resettlement (OP/BP 4.12).
The three safeguard instruments of ESMF, RPF and PMP have already been prepared, reviewed,
approved and disclosed (in-country and at the Info shop).
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment (OP/BP 4.01) [X] [ ]
Natural Habitats (OP/BP 4.04) [] [X]
Pest Management (OP 4.09) [X] []
Cultural Property (OPN 11.03, being revised as OP 4.11) [] [X]
Involuntary Resettlement (OP/BP 4.12) [X] []
Indigenous Peoples (OP/BP 4.10) [] [X]
Forests (OP/BP 4.36) [] [X]
Safety of Dams (OP/BP 4.37) [] [X]
Projects in Disputed Areas (OP/BP 7.60)* [] [X]
Projects on International Waterways (OP/BP 7.50) [] [X ]
* By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the
disputed areas.
27
7. Policy Exceptions and Readiness
100. Policy Exceptions: There are no policy exceptions.
Readiness: A draft Project Implementation Manual (PIM) has been prepared and will be
finalized before effectiveness.
Readiness Checklist Comments
Project Management Unit (PMU) The NCO is the National Coordination Office while the
States Project Management Units are the SCADOs.
TORs for the key staff have been prepared.
M&E System in Place M&E plan is in place.
Fiduciary (Procurement and Financial
Management Arrangements in Place)
First 18 month procurement plan agreed and prepared, draft
Procurement Manual, and draft Financial Management
Manual have been prepared.
Project Implementation Manual Draft has been prepared and being reviewed.
Counterpart Funding Counter fund provision has been provided for by the
Federal Government and the participating states in their
respective budgets.
Safeguards Addressed and Disclosed Disclosure requirements already met.
Institutional and Social Assessment
Completed and Applied
Institutional assessment of implementing agencies was
completed as part of project preparation. Social assessment
study has been launched.
28
Annex 1: Country and Sector or Program Background
Nigeria: Commercial Agriculture Development Project
Background:
1. Agriculture employs about two-thirds of Nigeria‟s total labour force, contributed 42.2%
of Gross Domestic Products in 2007 (GDP) and provides 88% of non-oil earnings. The
agricultural GDP is contributed by crops (85%), Livestock (19%), Fisheries (4%) and Forestry
(1%). More than 90% of the agricultural output is accounted for by small-scale farmers with less
than two (2) hectares under cropping. It is estimated that about 75% (68 million hectares) of the
total land area has potential for agricultural activities with about 33 million hectares under
cultivation. Similarly, of the estimated 3.14 million hectares irrigable land area, only about
220,000 hectares (7%) is utilized.
2. Nigeria has diverse and rich vegetation capable of supporting a heavy population of
livestock as well as 267.7 billion cubic metre of surface water and 57.9 billion cubic metre of
underground water. The country is also blessed with a reasonably abundant as well as an
extensive coastal region that is very rich in fish and other marine products.
3. As articulated in its National Economic Empowerment and Development Strategy
(NEEDS), Nigeria is seeking options to diversify into non-oil sources of growth and away from
over-dependence on oil and gas. The agricultural sector is seen as the source of growth and
important option for the diversification. Development of commercial agriculture affords the
opportunity for economic growth and reduces especially persistent rural poverty. Diversification
into commercial agriculture is important for making growth sustainable, to diffuse its benefits to
rural areas, and to hedge against the shocks from a single resource dependence on oil.
4. The agricultural sector contributes to national food self-sufficiency by accounting for a
large proportion of total food consumption requirements. With the exception of animal fats, milk,
and fish, Nigeria is close to self-sufficiency in most major food categories. The level of self-
sufficiency in cereals has been falling, however, resulting in rapid growth in the amounts of
cereals imports, especially rice imports, which increased to 130 percent in 2001 over the
previous five year average (FAO 2001). The proposed Commercial Agriculture Development
Project aims to increase rice production in the targeted states to reduce the rice imports and more
food self-sufficiency which is the interest of government.
5. In the past, agricultural commodities were the main source of export earnings. Following
the rise of the oil economy, that is no longer the case. Oil and Gas now accounts for 19.35% of
GDP in 2007. The low share of export earnings coming from non-oil exports, including
agriculture, reflects the heavy reliance of the Nigerian economy on a single non-renewable
resource and explains the strong emphasis in the NEEDS for diversification.
29
6. Nigeria‟s agricultural sector suffers from a series of inter-related constraints. Key among
these are lack of infrastructure, appropriate technology, weak advisory services, post harvest
losses, poor access to markets and lack of finance. The proposed project will address these
issues.
7. Nigeria faces serious poverty challenges. According to the Nigerian Living Standard
Survey of 2004, 54.4% of Nigerians live below the poverty line of $1 per day in income. The
rural areas are homes to more than 70% of the nation‟s poor. Development indicators for rural
areas lag behind those for urban areas: incomes are lower, infant mortality rates are higher, life
expectancy is shorter, illiteracy is more widespread, malnutrition is more prevalent, and greater
proportions of people lack access to clean water and improved sanitation services.
8. For the foreseeable future, the welfare of rural populations in Nigeria will be tied to
agriculture. Agriculture is the backbone of the rural economy, generating about 42.2% gross
domestic product and providing by far the largest source of rural employment. Growth in the
agricultural sector has been disappointing, however. Value added per capita in agriculture has
risen by less than 1% per year for the past 20 years. Food production gains have not kept pace
with population growth, resulting in rising food imports.
9. Nigeria‟s diverse agro-ecological conditions and rich endowment of land and water
resources confer a high potential for growth on the agricultural sector, but this potential is not
being realized. Productivity is very low and basically stagnant. Farming systems, which are
mostly small in scale, are still predominantly subsistence-based and for the most part depend on
the vagaries of the weather. The potential for irrigation remains largely unexploited. The vast
majority of farmers produce mainly food crops using traditional extensive cultivation methods,
while commercial agriculture based on modern technologies and purchased inputs remains
underdeveloped. The capacity of the agricultural research system has eroded in recent years, as
has that of the agricultural extension service. As a result, even when improved technology is
available, often it fails to reach farmers. Farmers‟ lack of technical knowledge is compounded by
deficiencies in distribution systems for purchased inputs, which limit the timely availability of
improved seed, fertilizer, crop protection chemicals, and machinery. Where inputs are available,
farmers‟ ability to acquire them is often compromised by a lack of production credit, because
rural financial institutions are in general, poorly developed. Farmers who produce marketable
surpluses lack reliable access to market outlets, and the high cost of transporting produce to
distant buying points over bad rural roads reduces their competitiveness.
10. The Federal Government of Nigeria has identified investment in agriculture as a major
priority. Former President Obasanjo, one of the founding members of the New Economic
Partnership for Africa Development (NEPAD), has repeatedly expressed a commitment to
meeting the NEPAD goal of investing at least 10% of the national budget in agriculture and
related activities. The National Economic Empowerment and Development Strategy (NEEDS)
also explicitly recognizes the strategic importance of the agricultural sector and lists a number of
special initiatives that the Federal Government intends to pursue in promoting increased food
and agricultural production. The NEEDS sets out a series of quantitative performance targets to
be achieved by 2007, including 6% annual growth in agricultural GDP, US $3 billion per year in
agricultural exports, and 95% national food self-sufficiency. The agricultural policy objectives
30
outlined in the NEEDS are complemented by those contained in the New Agricultural Policy
(NAP).
11. The NEEDS and the NAP present a vision of the future of Nigerian agriculture, but
neither document presents a detailed strategy for achieving that vision. In the absence of a
strategy, efforts to implement agricultural policies are proceeding in an uncoordinated and adhoc
manner. Many different agencies operating at the federal, state, and local levels are pursuing
activities related directly or indirectly to agricultural and rural development, as are a number of
donors and NGOs, but these activities are not being undertaken in the context of an overall
guiding framework characterized by a clear set of priorities, a well-defined and logical time line,
and clear assignment of mutually agreed roles and responsibilities among the various actors. As a
result, the agricultural development agenda has been slow to gain momentum, and it is
questionable whether the performance targets described in the NEEDS and the NAP will be
achieved.
12. This report summarizes the findings of the Nigeria Agricultural Sector Growth Strategy
Review (“the Review”) undertaken in June 2005, a collaborative study undertaken at the request
of the Government of Nigeria with the idea of accelerating the development and implementation
of a national agricultural growth strategy. The review is the analytical underpinning for the
Commercial Agriculture Development Project.
NIGERIA’S VISION FOR AGRICULTURAL DEVELOPMENT
13. Nigeria‟s vision for agricultural development is expressed in the NEEDS, the NAP, and
the Rural Sector Strategy (RSS). The overall strategic objective of the NEEDS and NAP is to
diversify the productive base of the economy away from oil and to foster market-oriented and
private sector-driven economic development with strong local participation. The NEEDS
provides an overall framework for a program of nationally coordinated sector strategies,
including those for agriculture, environment, health, education, water, and infrastructure. The
NAP aims at laying a solid foundation for sustainable growth in agricultural productivity. It
defines a series of productive and social objectives, identifies constraints to growth, and
describes tools and instruments that can help bring about the achievement of the government‟s
agricultural goals. The national policy on integrated rural development, as articulated in the RSS,
has as its overall objectives to develop rural areas, raise the quality of life of rural people,
alleviate rural poverty, and use rural development as a cornerstone for national development. The
intermediate objectives include reducing poverty, increasing productivity, reducing
unemployment, improving rural and urban food security and promoting competitiveness.
KEY CONSTRAINTS TO AGRICULTURAL GROWTH
14. What are the key constraints holding back growth in Nigeria‟s agricultural sector? Based
on a review of what has shaped the growth performance of Nigeria‟s agricultural sector in the
past as well as an analysis of the factors that are impeding growth in Nigeria‟s agricultural sector
today, six critical constraints are identified. These constraints must be directly targeted by a
national growth strategy if the ambitious growth targets set out in the NEEDS are to be achieved.
(i) Constraint 1. Inconsistent, uncoordinated, and inappropriate policies:
Nigeria‟s national agricultural growth targets will be difficult to achieve unless
31
the policy environment can be improved. Currently, three policy-related
constraints are discouraging agricultural growth: (i) a lack of consistency across
policies; (ii) weak policy coordination within the agricultural sector, between the
agricultural sector and other sectors, and among donors; and (iii) the
inappropriateness of some policies.
(ii) Constraint 2. Fragmented and overlapping institutions. Nigeria‟s national
agricultural growth targets will be difficult to achieve unless the performance of
the institutions responsible for agricultural development activities can be
improved. Public institutions in Nigeria face a number of constraints that
effectively limit their ability to promote growth in agriculture. The two most
important include (i) the lack of coordination between and within different levels
of government, and (ii) high cost and inefficiency.
(iii) Constraint 3. Low productivity of agriculture. Agricultural productivity will
have to improve dramatically if the national agricultural growth targets spelled
out in NEEDS and the NAP are to be achieved. For agricultural productivity to
improve, Nigeria‟s farmers need access to new technology. Technology alone will
not solve the problem of low productivity, but it is a vital and indispensable part
of the solution. Weak research and extension services, the low use of improved
genetics and purchased inputs, low levels of mechanization and irrigation, poor
access to production credit, and fragile natural and human resource bases, all
contribute to the low productivity of Nigerian agriculture and constrain
agricultural growth.
(iv) Constraint 4. Low profitability of agriculture. Individuals and firms will invest
in agriculture only if they are confident that their investments will generate
attractive returns. Yet, the profitability of Nigerian agriculture is currently very
low. In addition to low productivity, additional factors contributing to the low
profitability of Nigerian agriculture include: (i) high production costs, (ii) high
production variability, (iii) low output prices, (iv) the difficulty of accessing
domestic and export markets, (v) low levels of information and synergy within the
sector, and (vi) limiting sociological factors such as corruption and discrimination
based on gender.
(v) Constraint 5. Private underinvestment in agriculture. Private investment in
agriculture will have to increase significantly if the vision articulated in the
NEEDS and the NAP of a thriving, private sector-led commercial agricultural
sector is to be achieved. Private investment in agriculture, both in primary
production as well as processing, is currently very low. The most fundamental
cause of low investment in agriculture is the low expected profitability, which
was discussed in the previous constraint. Additional factors contributing to the
low level of investment include (i) an unfavourable business climate, (ii)
infrastructural deficiencies, (iii) limited access and use of long-term business
credit, and (iv) the high risk of investment.
(vi) Constraint 6. Non-competitiveness of the export sector. Nigeria‟s large
domestic market for food and fibre provides substantial potential for agricultural
growth in the short to medium term. Future growth in population and real incomes
32
should stimulate demand and provide additional opportunities for growth in the
agricultural sector. Once domestic production has expanded to fully meet
domestic demand, however, additional growth will have to come via expansion
into regional and international markets. Access to this source of growth, however,
is currently constrained by the non-competitiveness of Nigeria‟s export crops.
This non-competitiveness can be attributed to a number of factors, including (i) a
high production cost structure, (ii) domestic policy-related obstacles that
discriminate against exports, (iii) the difficulty of accessing regional and global
markets, and (iv) a challenging international trade environment.
PILLARS OF A NATIONAL GROWTH STRATEGY
15. The constraints analysis suggests that rapid and sustainable growth in Nigerian
agriculture will be achieved only when the productivity, profitability, and competitiveness of
agriculture can be improved. For that reason, an effective agricultural development strategy for
Nigeria must be based on six fundamental pillars.
(i) Growth Strategy Pillar 1. Developing markets and agribusiness. Rapid and
sustained agricultural growth leading to structural change and, eventually,
diversification of the economy will not happen without well-functioning markets
populated by a dynamic and innovative private sector. The single greatest
challenge facing Nigeria is how to foster the development of markets to serve
agriculture. This in turn implies strengthening the agribusiness sector. The
constraints analysis summarized earlier suggests that in Nigeria, market
development efforts will benefit most from public support in three priority areas:
(i) ensuring a favourable business climate; (ii) ensuring adequate infrastructure
that provides reliable and reasonably priced transport, communications, power,
and water services; and (iii) developing human capacity.
(ii) Growth Strategy Pillar 2. Reforming research and extension. Technology-
driven increases in agricultural productivity are critically needed to get Nigerian
agriculture going. While some new technologies can be imported and adapted to
local circumstances, the distinctive features of many of Nigeria‟s production
systems mean that much new technology will have to be generated domestically.
For this to happen, current national research and extension systems will have to be
reformed.
(iii) Growth Strategy Pillar 3. Strengthening input supply systems. Sustainable
intensification of Nigerian agriculture will not be possible without significant
increases in the use by farmers of purchased inputs, especially seed of improved
varieties; chemical fertilizer; crop protection chemicals including pesticides,
herbicides, and fungicides; and animal health-related products including vaccines,
medications, and nutritional supplements. Significant increases will also be
needed in the use of inputs, including enzymes used for fermentation, colorants,
and preservatives. These inputs will not be available in timely fashion and at
affordable prices unless input markets are working well. Strengthening input
supply systems therefore forms an integral component of the agricultural growth
agenda.
33
(iv) Growth Strategy Pillar 4. Expanding irrigation capacity. Productivity in
Nigerian agriculture is low in part because the low yield levels and high yield
variability associated with rain-fed agriculture discourage farmers from investing
in inputs such as improved seed, fertilizer, and crop protection chemicals. As was
shown by the Green Revolution in Asia, irrigation can serve as a powerful
stimulus to agricultural growth by raising biological yield potential and increasing
returns to investments in complementary inputs. Meeting Nigeria‟s agricultural
growth targets requires that irrigated areas be expanded from current extremely
low levels.
(v) Growth Strategy Pillar 5. Improving financial systems. The low level of
investment in agriculture in Nigeria can be explained in part by the weakness of
financial institutions and lack of access to financial services. Many investments
designed to enhance the productivity of agriculture are dependent on access to
appropriate financial services. At the production level, lack of financing for
agriculture constrains the ability of farmers to clear land or introduce irrigation;
purchase inputs such as seed and fertilizer; pay for machinery services; finance
harvesting, storage, marketing activities; pay for extension and information
services; bridge the pre-harvest income gap; avoid having to sell immediately
following the harvest at low prices; smooth seasonal income flows; and insure
against price or yield variability. At the post-harvest level, since agribusinesses
are unable to access financial services, this constrains their capacity to finance
and supply farmers, as well as their capacity to buy and process farm produce.
Strengthening rural financial systems is therefore needed to get agriculture going
in Nigeria.
(vi) Growth Strategy Pillar 6. Improving competitiveness. Agricultural growth can
be accelerated in Nigeria in the short-to-medium term by meeting the sizable
current and projected domestic production shortfall. Eventually, however, unmet
domestic demand will be exhausted. From that point on, further production
growth will be constrained unless new markets for Nigerian products can be
found. To sustain high rates of growth in agriculture beyond that point, it will be
necessary to seek markets outside the country. Improving the competitiveness of
Nigerian agriculture in international markets therefore will be crucial for
sustaining agricultural growth over the longer term.
RELEVANCE OF GROWTH STRATEGY PILLARS TO ONGOING ACTIVITIES
16. In some ways, these findings of the review are not new. The six growth strategy pillars,
as well as the constraints they target, are recognized in the NEEDS and the NAP. Since NEEDS
and NAP are policy documents, they state general objectives and directions for the sector, while
the growth pillars contribute more specific elements of a strategy, much in line with the RSS.
What remains to be done for a comprehensive Nigerian agricultural growth strategy is to target
and sequence these strategic elements, delineate roles and responsibilities, and establish cross-
sector linkages in order to overcome the current constraints to a strong and vibrant agricultural
sector in Nigeria.
34
IMPLEMENTATION RECOMMENDATIONS
17. With the six growth strategy pillars identified, the next major challenge will be to devise
a national agricultural growth strategy that can eventually be operationalized in the form of an
implementable action plan. Moving from analysis to strategy and action will require attention to
(i) targeting, (ii) definition of roles and responsibilities, (iii) sequencing, and (iv) cross-sector
linkages.
TARGETING
18. Translating the six growth strategy pillars into an effective national agricultural growth
strategy will require careful attention to targeting. In a country as big as Nigeria especially one
characterized by a wide range of agro-climatic conditions and many different farming systems a
blanket “one size fits all” approach that calls for parallel interventions in every state or geo-
political zone will not be effective. Interventions must be carefully tailored to recognize
geographical variability in potential for agricultural development.
19. Development of a national agricultural growth strategy and elaboration of an
implementation plan must therefore be grounded in the following principles:
Concentrate on high-potential areas
Prioritize crops destined for domestic markets
Pursue exports selectively
Recognize regional needs and priorities
Give attention to post-harvest activities
Implement safety nets as appropriate
35
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies
Major related projects financed by the Bank and other agencies are:
(a) The World Bank:
(i) Rural Access and Mobility Project - RAMP I FY08: US$50.00m.
(ii) Micro Small and Medium Enterprise Project (MSME) US$32m: The objectives of MSME in
Nigeria aim to increase the performance and employment levels of MSMEs in selected non-oil
industry sub-sectors.
(b) DFID: PropCom: The objective of the project is to improve the livelihoods of the poor by
facilitating the development of viable agricultural and service markets with special focus on rice
and soya value chains (Dec 04 – Dec 10) FY04, £17.5m.
(c) IFAD: Rural Finance Institutional Building Programme (RUFIN): The objective of the
program is to improve livelihood and living conditions of the poor by improving access to
microfinance on a sustainable basis, FY09, US$27.17m.
(d) USAID: Maximizing Agricultural Revenue and Key Enterprises in Targeted States
(MARKETS). The objective of MARKETS is to improve technologies and management
practices and strengthening market linkages and promoting responsiveness from farmers to
demand-driven, competitive production: FY05, US$ 25.1m.
36
Annex 3: Results Framework, Monitoring and Evaluation
Commercial Agriculture Development Project (CADP)
Annex 3A: Arrangement for Results Monitoring
Data Collection and Reporting
PDO Outcome Indicators Baseline YR1 YR2 YR3 YR4 YR5 Frequency
of Reports
Data
Collection
Instruments
Responsibility
for Data
Collection
1. To strengthen agricultural production systems for targeted value chains
1.1 Increase in total production of targeted value chains (Rice, Maize, Oil palm, Cocoa, Fruit trees, Poultry, Aquaculture and Dairy) among small and medium scale commercial producers and agro-processors (disaggregated by gender) relative to baseline. Crops: Cash crops Oil Palm Cocoa Fruit trees - Pineapple - Citrus - Guava - Mango Staple crops - Rice - Maize Poultry: Broiler Layer (eggs) Fisheries: Clarias spp Tilapia Gymnarchus
Dairy: Estimated No. of Dairy Cattle Estimated No. of Cows in Milk Estimated qty of milk/annum Estimated milk yield/cow/day Estimated net income/animal/day
5,366,265mt 566,637.125mt 175,000mt 1,625,000mt 1,368,750mt 2,812,500mt 469,085.2mt 1,164,280mt 3,571,400 birds/yr 5.83m crates of eggs 21,222mt 14,856mt 2,122 mt 4,244 mt 2,941,049 heads 1,113,515 heads 690.936m litres 1.7 litres N250.00
5% 5% 5% 5% 5% 5%
10% 10% 10% 10% 10% 10%
15% 15% 15% 15% 15% 15%
20% 20% 20% 20% 20% 20%
25% 25% 25% 25% 25% 25%
Annually Annually Annually Annually Annually Annually Annually
Survey Survey Survey Survey Survey Survey Survey
NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO
37
2. To facilitate access to market for participating small and medium scale commercial farmers
1.2 Increase in yield
of the
commodities in the value chain. Crops: Cash crops Oil Palm Cocoa Fruit trees - Pineapple - Citrus - Guava - Mango Staple crops - Rice - Maize Poultry: Broiler Layer (eggs) Fisheries: Clarias spp Tilapia Gymnarchus
Dairy: Estimated milk yield/cow/day 2.1 Increase in net sales by value of agricultural products under the targeted value chains relative to baseline (disaggregated by gender) Crops: Oil Palm - palm oil - palm kernel - palm kernel oil Cocoa - graded cocoa beans Fruit trees - Pineapple - Citrus - Guava - Mango
7.5mt /Ha FFB 0.5mt/Ha 35mt/ha 25mt/ha 13.5mt/ha 22.5mt/ha 2mt/ha 1.6mt/ha 1.8kg live wt @mkt 1 egg/hen/day 40kg/m
2 pond
1.7 litres 2,146,506mt 1,717,204.8mt 357,751mt 71,550.2mt 226,654.85mt 70,000mt 650,000mt 547,500mt 1,125,000mt
5% 5% 5% 5% 5% 5% 10% 10% 10%
10% 10% 10% 10% 10% 10% 20% 20% 20%
15% 15% 15% 15% 15% 15% 30% 30% 30%
20% 20% 20% 20% 20% 20% 35% 35% 35%
25% 25% 25% 25% 25% 25% 40% 40% 40%
Annually Annually Annually Annually Annually Annually Annually Annually Annually
Survey Survey Survey Survey Survey Survey Survey Survey Survey
NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO NCO and SCADO
38
Staple crops - Rice - Maize Poultry: Broiler Layer (eggs) Fisheries: Clarias spp Tilapia Gymnarchus
Dairy: Estimated No. of Dairy Cattle sold/yr Estimated quantity of milk sold/yr
187,634.08mt 465,712mt 1,428,560 birds/yr 2.332m crates/yr 8,488.8mt 5,942.4mt 848.8mt 1,697.6mt 1,176,420 heads 267.374m litres
5% 10% 5%
10% 20% 10%
20% 30% 20%
30% 35% 30%
40% 40% 40%
Annually Annually Annually
Survey Survey Survey
NCO and SCADO NCO and SCADO NCO and SCADO
Intermediate Outcome
Component 1: Enhancing
Agricultural Production and
Commercialization
1.1 Increased adoption of improved agricultural technologies
1.1 Increase in adoption rate of improved technologies for tree crops (disaggregated by gender). Oil palm i. Producers -Improved seedlings (varieties) -Spacing of oil palm trees ii. Processors -Palm oil extraction by Pressing -Hi technology palm oil extraction -Palm kernel cracking technology -Palm kernel oil extraction
Cocoa i. Producer -Improved varieties -Spacing/optimal population -Pruning Technology -Harvesting Technology -Fermenting & drying Technology -Grading and storage Technology
30% 15% 30% 20% 25% 30% 35% 20% 15% 20% 30% 10%
5% 10%
10% 20%
20% 30%
30% 40%
50% 50%
Annually Annually
Survey Survey
SCADO SCADO
39
Fruit trees -Pruning technologies -Transplanting technologies -Spacing / optimum plant population -IPPM -harvesting technologies -Processing technologies -Storage/preservation technologies -Packaging technologies 1.1b Increase in adoption
+ rate of
technologies in staple crops production (disaggregated by gender)
Maize -Land preparation (type, cost) -Improved seed (Qty /No. of
Farmers) -Use of Fertilizers -Use of Agrochemicals -IPPM Processing technologies -Solar drying -Electricity -Preservation/storage Harvesting technology -Manual -Mechanical -Packaging Rice - Land preparation (Type ,cost) - Improved seed(qty/No. of farmers) - Use of fertilizers - Use of Agro-chemicals - Spacing - IPPM Harvesting technologies -Manual Processing technologies -Solar drying -Electricity
20% 10% 15% 5% 10% 10% 5% 5% 20% 30% 40% 25% 5% 3% 5% 10% 10% 5% 5% 30% 20% 25% 20% 15% 10% 25% 20% 5% 15% 20%
10% 20% 10%
20% 30% 20%
30% 40% 40%
40% 55% 50%
50% 70% 70%
Annually Annually Annually
Survey Survey Survey
SCADO SCADO SCADO
40
1.2 Improved access to market information for agriculture products under the targeted value chains by commercial farmers
1.1c Increase in adoption rate of poultry technologies(disaggregated by gender) Poultry -Improved breeds -Quality feeds/feeding regimes -Standard housing -Management techniques -Vaccination and medications -Egg grading and packing -Processing technologies -Packaging technologies
1.1d Increase in adoption+ rate of
fisheries technologies (disaggregated by gender) Fisheries -Pond construction technologies - Improved feeding -Hatchery and fingering production -Improved pond management -Processing technologies Storage techniques/facilities -Preservation (smoking) tech.
1.1e Increase in adoption+ rate of
dairy technologies (dis-aggregated by gender) Dairy -Milking parlour -Use of milking machines -Cold chains for milk storage -Milk quality mgt. & control -Improved breeds -Housing technology -Improved feeding -Disease control
1.2 Number of farmers that have access to improved market information on activities in the targeted value chain (dis-aggregated by gender)
40% 30% 15% 10% 25% 10% 5% 5% 40% 2% 10% 2% 2% 5% 10% 5% 1% 5% 2% 10% 20% 15% 25% 30%
10% 5% 5% 20%
20% 15% 10% 30%
40% 20% 20% 40%
50% 25% 30% 50%
60% 30% 50% 60%
Annually Annually Annually Annually
Survey Survey Survey Survey
SCADO SCADO SCADO SCADO
41
1.3 Strengthened organizational capacity of commercial farmers
1.2b Number of farmers that have access to product market (disaggregated by gender). 1.3 Number of CADAs developing and implementing Business plans for sub- projects 1.3b Number of CADAs keeping farm records
20% N A N A
5% 15% 20%
10% 25% 30%
20% 35% 50%
30% 40% 60%
40% 50% 80%
Annually Annually Annually
Survey Survey Survey
SCADO SCADO SCADO
Component 2: Improving
Rural Infrastructure
2.1 Improved access to rural network of farm roads 2.2 Improved access to rural energy (electricity)
2.1 Decrease in travel time from farm to market of an average distance of 5 kilometers 2.1b Reduction in cost of transportation
+ of farm output.
2.2 Number of commercial farmers connected to electricity in target locations (disaggregated by gender)
1 hr N4,000/mt N A
0% 0% 0%
5% 5% 20%
10% 10% 30%
20% 20% 40%
25% 25% 60%
Annually Annually Annually
Survey Survey Administrative Records
SCADO SCADO SCADO and PHCN
Project Management,
Monitoring and Evaluation
3.1 Improved capacity to implement project 3.2 Strengthened project M & E system 3.3 Enhanced financial performance of the project
3.1 Number of Project workplans implemented within the targeted timeframe 3.2 Degree of compliance with collection and updating of MIS data on agreed performance indicators according to M&E plan 3.3 Timely preparation of progress reports 3.3b Level of adherence to Financial Management Guideline and cost table
N A N A N A N A
40% 40% 40% 50%
50% 50% 50% 70%
60% 60% 60% 80%
70% 70% 70% 90%
80% 80% 80% 100%
Annually Quarterly Quarterly Quarterly
Administrative data Administrative data Administrative data Administrative data
NCO/NFRA NCO/NFRA NCO/NFRA NCO/NFRA
Outputs
Component 1: Agric.
Production and
Commercialization
Technology packages demonstrated and disseminated
Number of technology packages demonstrated and disseminated
0
0
10
20
30
40
Bi-annually
Project Report
SCADO
42
Improved animal/seed varieties procured
Post-harvest handling
centers established
Trained commercial agriculture entrepreneurs
Developed commercial
agriculture product market
(disaggregated by aquaculture, rice,
dairy, fruit trees, oil palm, cocoa, poultry and maize)
Quantity of improved varieties procured (disaggregated by animals and
seeds) (tonnes)
Number of post-harvest handling
centers established.
Number of commercial agriculture entrepreneurs (disaggregated by gender) trained in management skills -
business planning/feasibility studies,
financial management, human resource management and marketing
(disaggregated by Commodity Interest
Groups and Commercial Agriculture Development Associations)
Number of commercial agriculture
producers (disaggregated by gender) with access to information on product
markets (disaggregated by domestic and export markets)
0
0
0
0
0
0
0
50
10
5,000
100
10
10,000
100
15
20,000
158
15
15,000
Bi-annually
Bi-annually
Bi-annually
Annually
Project Report
Project Report
Project Report
Survey
SCADO
SCADO
SCADO
SCADO
Component 2: Rural
Infrastructure
Constructed/Rehabilitated Rural Roads
Commercial Agriculture
farms connected to electricity
Distance of Rural Roads Constructed/Rehabilitated (Km)
Number of Commercial
Agriculture farms connected to
electricity
0
0
0
0
50
100
125
200
150
200
175
200
Annually
Annually
Project Report
Project Report
SCADO
SCADO
Project Management,
Monitoring and Evaluation
Trained project staff
Effective monitoring and
evaluation system
Number of staff (disaggregated by gender) trained on project
management skills like procurement,
financial management and M&E as a proportion of the number planned
Number of M&E reports produced
as a proportion of the number planned
0
0
0
0
50
20
100
20
150
20
150
20
Quarterly
Quarterly
Project Report
Project Report
SCADO
NCO
43
Note: The various target levels were chosen based on field findings during the Baseline Survey across the CADP States. It was also based on records and data of
completed projects such as FADAMA 11, ADP CAYS and Evaluation Reports and on best practices. The 25% for production and 40% for marketing are indicative
estimates or averages bearing in mind that that variations are expected for the different commodities in the value chains in the five participating states. These
percentages are achievable given the improvement in production technology and improved farm access roads for the transportation of agricultural produce as a result of
the project. The above percentages are not expected to add up because other intermediate activities/operations such as processing account for the shortfall or deficit.
Other assumptions are:
An estimated 40% of the value chain commodities are marketed or sold
25% of the produce are consumed
15% of the produce are estimated to encounter loss on account of damage, spoilage/decay or mortality in case of livestock/fisheries as well as theft, etc
20% of the produce are distributed proportionately for gifts, planting material for the next planting season as well as insurance against risk (e.g. food
insecurity, cash squeeze, flood/erosion etc), among others.
N A – Not Applicable
44
Annex 3B Results Monitoring Framework
NIGERIA: COMMERCIAL AGRICULTURE DEVELOPMENT PROJECT
Project development
objectives
Project outcome indicators
Use of project outcome information
1. To strengthen agricultural
production systems for targeted
value chains (Rice, Oil palm,
Cocoa, Fruit trees, Poultry
production, Aquaculture and
Dairy)
2. To facilitate access to
markets for targeted value chains
1. increase in total value of production of
targeted value chains among participating small
and medium-scale commercial farmers
(disaggregated by Rice, Oil palm, Cocoa, Fruit
trees, Poultry production, Aquaculture and
Dairy)
2.1 increase in yield of the commodities in
the value chain
2.2 increase in net sales by value of
agricultural products under targeted value
chains.
1. It will be used to assess the
appropriateness of the project design and the
quality of project implementation at the end of
project
2a. It is assumed that increased yield will
lead to increased income for the farmers.
2b. It is also indicative of the additional
income to commercial farmers arising from the
project.
3. This will be used to assess the
effectiveness of the provision of market
information, market performance structure
Component 1: Agricultural
Production and
Commercialization
1. Increased adoption of
improved agriculture
technologies in existence
2. Improved access to market
information on targeted value
chains
3. Strengthened organizational
capacity of targeted small and
medium-scale commercial
farmers
1.1 increase in the number of participating
small and medium-scale commercial farmers
adopting improved agriculture technologies
relevant to the targeted value chains
2.1 participating small and medium-scale
commercial farmers have access to improved
market information in targeted value chains
2.2 farmers have access to product market.
3.1 CADAs developing and implementing
business plans for sub-projects.
3.2 CADAs keeping farm records.
1. This will help measure the efficacy of the
matching grant mechanism in the project
2. They will help measure the effort of the
project to facilitate access to market
information and products
3. It is expected that the business plans will
be developed in a participatory manner, thereby
encouraging the beneficiaries to organize
themselves.
Component 2: Improving
Rural Infrastructure
1. Improved access to network
of feeder roads in the five
participating states
1.1 reduction in travel time from farm to
market of an average distance of two (2)
kilometres.
1.2 reduction in cost of transportation of
farm output
1. This is an indication of progress in the
effort to remove one of the major constraints
faced by commercial farmers.
45
Project development
objectives
Project outcome indicators
Use of project outcome information
2. Improved access of
participating small and medium-
scale commercial farmers to
electricity
2.1 commercial farmers connected to
electricity in target locations.
2. This is an indication of progress in the
effort to remove one of the major constraints to
commercial agriculture production
Project Management,
Monitoring ,Evaluation and
Studies
1. Improved capacity to
implement projects.
2. Strengthened Project
M&E system.
3. Enhanced financial
performance of the project
1.1 project work plans implemented within
the targeted timeframe.
2.1 80% compliance with collection and
updating of MIS data on agreed performance
indicators according to M&E plan.
3.1 timely preparations of progress
reports.
3.2 adherence to Financial Management
Guideline and cost table
1. These will be used to determine the
readiness of the States to implement the project.
2. It will help in assessing project
performance status.
3.1 This is indicative of project
implementation achievements.
3.2 This indicator will help to determine
the level of project accountability and
transparency.
46
Annex 4: Detailed Project Description
NIGERIA: Commercial Agriculture Development Project
1. The Project Development Objective is to strengthen agricultural production systems and
facilitate access to markets for targeted value chains among small and medium scale commercial
farmers in the five participating states. The project has two components, namely, (i) Agricultural
Production and Commercialization; and (ii) Rural Infrastructure. The project will also finance
Project Management, Monitoring and Evaluation and Studies.
Component 1: Agricultural Production and Commercialization (US$84.40m of which IDA
will finance US$69.40m).
2. The objective of this component is to improve the adoption of existing agricultural
technologies by commercial farmers. The component has four sub-components:
(a) Technology Demonstration and Adoption (US$21.60m): This sub-component will
finance:
(i) Demonstration and dissemination of technologies (US$6.60m) in the selected value
chains will be provided by a mixture of existing potential service providers from the
public (i.e. research institutes and ADPs) and private sectors. A value chain approach and
Matching Grants will be used for the implementation of this sub-component using the
structure of the CIGs/CADA. This sub-component will finance a variety of packages
identified by the stakeholders. The packages will include: propagation and use of
improved exotic quality seedling, high yielding varieties of crops, pest and disease
resistant varieties, improved agronomic practices (water management, spacing, pruning,
grafting etc), cocoa beans drying and palm oil and kernel oil extraction, hatchery
development for fingerlings, feed compounding using local materials to produce floating
feeds, fingerling stocking density, fish health and disease management, waste water
management and water quality management for aquaculture (sustainable removal of
nitrogen from water system, water pollution reduction, and water recirculation and flow
through technology), technologies for egg and birds transportation, artificial
insemination, milk hygiene and cold chain.
(ii) Matching Grant (US$15.00m) -The project will provide matching grants of about
US$15.0million to finance activities on sub component (a) and (b). For adoption of new
technologies (a), the formula for the matching grant will be 50% to 20% contribution
from IDA on a sliding scale basis at the association level. In the case of the staples (b) it
will be a ratio of 50% IDA and 50% contribution by the beneficiaries (GIGs/CADAs).
The total amount for grant is US$15.00m out of which US$8.00m will be in grants to
support public goods elements under staples.
This is a one-time Capital Grant for investments needed for adoption of technologies to
improve the adoption of existing agricultural technologies by participating commercial
farmers. The matching grant is to support the adoption of known and superior
47
technologies and build capacity of small and medium-scale commercial agriculture
farmers. This will enable them to take advantage of market opportunities for their
produce. The matching grant is open to all qualified/eligible Commodity Interest Groups
(CIGs) and/or members of Commercial Agriculture Development Associations
(CADAs). Four sets of criteria will guide the selection of proposals, and these are: Viable
technology, Public goods element, and Economic and Financial viability.
3. The main objective of the matching grant is to support the adoption of known and
superior technologies and build capacity of small and medium scale commercial agriculture
farmers. This will enable them take advantage of market opportunities for their produce. The
grant will serve as a catalyst to spur investments in commercial agriculture. Therefore, the
overarching majority of the activities‟ financing has to be from own/non-grant sources,
mobilized through either savings or loans.
4. Investment proposals to be supported with matching grants will range from 50% to 80%
contributions from the beneficiaries. The mechanism for determining the level of the matching
grant aims at ensuring that the recipient CIGs/individual members invest in viable businesses and
activities, whether jointly in a single enterprise or in sub-groups in several activities. Efforts will
ensure that the grant has an impact on a wider society than the immediate recipient farmers and
demonstrate clear long-term economic and financial viability. The matching grants will also be
based on a formula as stipulated in the Table 4.1. Investments above N5.00m (about US$42,000
equivalent) are considered large and excluded from support grant. It is expected therefore, that
grant will be less attractive and thereby minimize the elite capture.
Table 4.1: Formula for the Matching Grant
Cost of Activities (=N=) Beneficiary Contribution (%) Matching Grant (%)
Up to 250,000 50 50
250,001-500,000 60 40
500,001-1,000,000 70 30
1,000,001-5,000,000 80 20
5. Beneficiary Selection Criteria. The matching grant is open to all qualified/eligible
Commodity Interest Groups (CIGs) and/or members of Commercial Agriculture Development
Associations (CADAs). The entities should be financially sustainable with capacity to initiate
and implement acceptable/viable proposals; commodity interest groups/associations must belong
to commercial agriculture development association (CADA) and must show evidence of funds
(including own funds or other sources) to match the grant. The eligible beneficiaries should have
the following attributes:
The farmer/beneficiary should be engaged in commercial agriculture production
Should be member of a Commodity Interest Groups (CIG) for at least 6 months, and
The CIG should be member of the commercial agriculture development associations
(CADA)
48
6. The individual farmers and the CIG collectively identify specific investments that will
improve their operations. Subsequently, each individual farmer produces a simple proposal
showing (a) the total cost of proposed investment; (b) documentation showing details of sources
of own funds (i.e., total cost of proposed investment less matching grant). The individual plans
are of varying sizes both in terms of size of investments and the level of matching grant. The
CIG aggregates them, and checks each item against a simple check list of eligibility (see Table
4.2). The CIG application then goes forward to the CADA. Another round of aggregation takes
place at the CADA level. The CADA checks the submissions of the CIGs to be sure that all are
complete, approves and then submits them to the project for payment. In addition, spot audits
ex-post will be undertaken by CADAs to confirm that the grants are utilized for the intended
purpose. This formula is chosen because it is being applied successfully in other Bank and IFAD
financed projects in Nigeria.
7. The approved business proposals are sent to the Project Financial and Management Unit
(PFMU) with an instruction to make payments directly to the equipment suppliers. . The service
provider supplies the technology needs of the CIG once the eligible CIG meets its financial
obligations. The same process would also be followed if the needs of the CIG are capacity
building for accessing technology or to take advantage of market opportunities. The flow of
funds for the grant scheme is presented in Figure 1 below:
Figure 1: The Flow of Funds under the Grant
8. Detailed operational modalities of the Matching Grant Scheme, including its management
and disbursement arrangements are contained in the PIM.
49
Table 4.2 Issues on technologies required, sources, testing and dissemination
N Commodity Technologies Where available Beneficiary
awareness
about
technology.
Who is responsible
for Testing?
Who provides
advice?
Who decides on type
of advice?
Capital
Grant
Needed In-country Imported
1. Aquaculture Fingerling production
(Hatchery Development):
- Purchase of Brood stock
- Collection of eggs and
purchase of hormones
In-country
In-country
In-country
-
√
Yes, but
require
capacity
building
√
Farmers
Small Medium
Scale fisheries
Farmers
Yes
Fish feed production
Fish feed extrusion
technology
Yes available in
country
-
Yes
Service Providers in
aquaculture
- Durante-Ibadan;
Chivita Lagos
Service provider Demand Driven Yes for
Technical
Assistance
from
China and
Israel
Hybridization in Catfish/
Heterobranchus
Yes
Yes Agricultural
Development
Programs/Research
Institutes
Agricultural
Development
Programs/
Nigerian Institute
for Oceanography
and Marine
Research, National
Institute for Fresh
Water Research
Institute
Commercial
Agriculture
Development
Association/
Farmer
None
Smoke–drying and
packing
Yes - Yes Agricultural
Development Program
Agricultural
Development
Program, Nigerian
Institute for
Oceanography and
Marine Research,
National Institute
for Fresh Water
Research Institute
Commercial
Agriculture
Development
Association/
Beneficiaries
50
N Commodity Technologies Where available Beneficiary
awareness
about
technology.
Who is responsible
for Testing?
Who provides
advice?
Who decides on type
of advice?
Capital
Grant
Needed In-country Imported
2. Rice
Production
and
Processing
High quality seed, animal
traction implements and
hand held cultivators
In-country
National Seeds
Service,
National
Cereals
Research
Institute, Seed
Companies
-
Yes Agricultural
Development
Programs (tests of
viability) Research
Institutes
Agricultural
Development
Programs and
Research
Institutes, Local
Service Providers,
National Seed
Service, National
Cereals Research
Institute, Seed
Companies
Farmers, CIGs/CADAs
3. Parboiling Available at
National Cereal
Reserve
Institute,
Badeggi and
Henigha,
Kaduna
- Yes Agricultural
Development
Programs/Farmers
National Cereals
Research Institute/
Agricultural
Development
Program
Farmers and Farmers
Associations,
Parboilers‟ Association
Mechanical Flash rice
dryer
In-country Imported Yes Agricultural
Development
Programs/ National
Centre for Agricultural
Mechanization,
Centre for Economic
Development and
Institutions
National Centre
for Agricultural
Mechanization,
Centre for
Economic
Development and
Institutions
Demand Driven
Packaging and Branding In-country Yes Bag Company of
Nigeria
Bag Company of
Nigeria
Demand Driven
4. Dairy Artificial insemination
-Purchase of semen
-Equipment
Imported
from
Holland
Yes but no
capacity on
utilization
Land-O‟lake in
America, National
Animal Production
Research Institute/
Agricultural
Development
Program/Farmers
Land O‟lake, USA Commercial
Agriculture
Development
Association Farmers
-Purchase of Exotic bull
for cross breeding
Yes but not
pure breeds
Import Yes, limited
capacity
Maizube farms, Minna
Niyya Farm, Kaduna,
Farm fresh, Jos
Service Provider Commercial
Agriculture
Development Project
51
N Commodity Technologies Where available Beneficiary
awareness
about
technology.
Who is responsible
for Testing?
Who provides
advice?
Who decides on type
of advice?
Capital
Grant
Needed In-country Imported
Standard milking parlor
and machines
-Technology
- Imported
from
India,
Holland
and China
Some are
aware but
Require
capacity
building
National Animal
Production research
Institute, Fan Milk,
Agricultural
Development
Programs, Commercial
Agriculture
Development
Association
National Animal
Production
Research Institute,
Fan Milk
Commercial
Agriculture
Development Project
Milk processing
- fresh milk
- yogurt
Local - Yes Maizube
Niyya farms
Fan Milk Commercial
Agriculture
Development Project
5. Fruit
production
and
processing
Fruit juice production
packaging
Quality Control
Locally - Yes,
Capacity
Building
required
National Agency for
Food, Drug
Administration and
Control,
Federal Institute for
Industrial Research,
National Horticulture
Research Institute,
Standards
Organization of
Nigeria, Sheda Science
and Technology
Complex
Service Provider/
Agricultural
Development
Programs
Commercial
Agriculture
Development Project
6.
Oil-palm
Palm Kernel oil extraction
Locally
National
Institute for Oil
Palm Research
Kernel
Cracker
from
Malaysia
Yes
National Institute for
Oil Palm Research,
Agricultural
Development Program
Service Provider,
National Institute
for Oil Palm
Research, Okomu
Oil
Commercial
Agriculture
Development Project
Farmers
7. Cocoa and
fruit trees
Drying racks,
Grafting technology,
Appropriate Pruning
Diseases and Pest control
Marketing
Cocoa
Research
Institute of
Nigeria,
National
Horticulture
Research
Institute
Yes,
Capacity
Building
required
Cocoa Research
Institute of Nigeria,
National Horticulture
Research Institute
Agricultural
Development
Programs, Cocoa
Research Institute
of Nigeria,
National
Horticulture
Research Institute,
52
N Commodity Technologies Where available Beneficiary
awareness
about
technology.
Who is responsible
for Testing?
Who provides
advice?
Who decides on type
of advice?
Capital
Grant
Needed In-country Imported
Linkage to
processing
plants
Processing
Companies
(Spectra, Foods
Agege Lagos,
Olam, Lagos,
Marx
International)
8. Poultry Disease control and
linkage
Yes - Yes,
develop
linkage with
existing
organization
National Veterinary
Research Institute,
Vom
Demand Driven
- Hatchery
Incubation Tech.
Yes - Yes Procurement of
hatchery for Enugu
State
Farmers Farmers,CIGS/CADAs Yes
-Processing, packaging,
Quality Control
Yes Package
for Export
Yes National Agency for
Food Drug
Administration and
Control,
National Animal
Production Research
Institute, Fast Food
biz
National
Veterinary
Research Institute,
Vom, National
Animal Production
Research Institute
Veterinary
Departments of
Universities
Farmer (Demand
Driven)
9. Maize
production
and
processing
Seed
Multiplication/Production
technologies,
Seed Packaging
Quality Control
Technology
Branding Technology
Yes - Yes National Agricultural
Seed Council, Institute
of Agriculture
Research, Agricultural
Development
Programs
Service Providers
Agricultural
Development
Programs
Farmers, CIGS/CADAs Yes
53
(b) Support to Staple Crop Production Systems (US$50.00m): The combined factors of
climate change and the recent fluctuation in crude oil prices have been associated with global
soaring of food prices. The impacts are being felt in Nigeria as in many other countries.
However, to compound the situation in Nigeria, the 2007 rainy season in the northern states
which are the food basket of the country, ended prematurely in early September and resulted in
poor yield and low harvest. The Federal Government of Nigeria has responded to the food crisis
through measures that are expected to increase the supply of food staples and arrest or at least
reduce the rise in prices. Some of these measures include the release of stocks from the Strategic
Grains Reserve which several State Governments are also doing. In addition, the Federal
Government has requested its donor partners to support its initiatives on combating the rising
food prices in Nigeria. In response to the explicit Government request that this project is used to
support its on-going initiative to address the issue of the rising food prices, the project will
provide US$50.00m out of the total project Credit of US$150.00m to support basic staple crops
production of maize and rice. The design of this sub-component is consistent with the main
thrusts of the instruments of Bank support under the Global Food Crisis Response Programme
Framework, particularly on enhancing domestic food production and marketing response. . Using
the approach stipulated in (a) above, this sub-component will support mainly small-scale
commercial farmers to rapidly increase their staple crop production through the adoption of
improved technology based on intensification and expansion of their rice and maize land
holdings. The sub-component will finance development/preparation of existing land holdings for
staples, seed multiplication to increase the availability of improved rice and maize seeds,
dedicated extension/advisory services for rice and maize staples, soil and water management,
animal traction and rotary cultivators, and primary processing technologies. The sub-component
will also finance post-harvest handling centres and on-farm storage to reduce high post-harvest
losses among small-scale commercial farmers. These centres will be located in high production
areas and will be operated under public-private partnership arrangements where the centres are
financed by the project but their day-to-day management will be handled by the CADAs. The
matching grants to be applied on 50: 50 contributions by IDA and beneficiaries (GIGs/CADAs)
will only cover land development, production system, and on-firm primary processing.
The sub-component will finance:
(i) Land development (US$12.50m):- This sub-component will support small scale
commercial farmers to increase the area under cultivation on existing land holdings. The
CIGs/CADAs have tenure on their land. It is estimated that additional 10,000ha
(i.e.2000ha per state, which translate to 400h/year/state) will brought under cultivation
under existing holdings. This estimate is modest and can be exceeded by the project. The
project will provide Matching Grants to the CIGs/CADAs on a 50: 50 contribution by
IDA and beneficiaries for this sub-component. Also, special attention will be given to
women farmers to expand the area under-cultivation on their holdings; and this support
will be closely monitored during project implementation.
(ii) Input support system (US$11.60m):- One of the constraints to staple crop production is
the issue of availability of high quality foundation seeds. This sub-component will
finance on a contractual basis the production of quality foundation seeds of maize (hybrid
and open pollinated) and rice (i.e. SUWAN1, NERICA1and2, WITA4, FARO44,
SIPI692033) by some Research institutes in Nigeria (i.e. International Institute of
Tropical Agriculture, National Cereals Research Institute, Institute for Agricultural
54
Research, and Institute for Agricultural Research and Training) These foundation seeds
will be made available to seed companies to multiply.. The National Seed Council will
certify the seeds produced by the seed companies before they are sold to farmers at
market price. There will be a three party Memorandum of Understanding between the
project, research institutes and the seed companies that the seeds produced will be sold to
participating commercial farmers. The need of the CIGs/CADAs will first be met before
surplus seeds are sold to others. It is estimated that about 108,000 kilograms of maize and
300,000 kilograms of rice seeds are expected to be produced at the end of the project life.
(iii) Production systems (US$13.80m):- In order to substantially intensify production of
staples, support will be provided for animal traction. This sub-component will finance
mainly animal traction using locally manufactured implements and hand-held cultivators.
The support under this sub-component will be provided through the structure of the
CIGs/CADAs. This model is similar to IFAD-Community Based Agricultural and Rural
Development Project in Nigeria. The project will provide Matching Grants to the
CIGs/CADAs on a 50: 50 contribution by IDA and beneficiaries for this sub-component
(iv) On-farm primary processing (US$5.80m):- The project will finance on-farm primary
processing and storage to minimize post-harvest loses. by providing threshing machines
and two-tonne storage bins to CIGs/CADAs on Matching Grant basis. The project will
provide Matching Grants to the CIGs/CADAs on a 50: 50 contribution by IDA and
beneficiaries for this sub-component.
(v) These are locally fabricated threshing and storage bins which are tool goods. The
CADAs will manage the systems and charge fees for the provision of threshing and
storage services.
(vi) Post-harvest handling centres (US$6.30m):- Post-harvest losses account for about 30
percent of production costs as a result of poor post-harvest handling of produce. The
project will support the establishment of post-harvest handling centers that will be
equipped with appropriate facilities and machineries to promote value addition to various
products in the targeted value chains and managed by the CADAs. The centers will also
provide services to farmers and clients at a fee to support the operations and management
of the centers by the state CADAs. These are tool goods which will be publicly provided
and privately managed by the CADAs. The project will support the creation of a one-
stop multi-purpose post-harvest handling centers in major areas of staple production in
the states. The centers will be run by CADAs and provide value addition services for
stakeholders through their CIGs on commercial basis. Each state will identify suitable
facilities which will be rehabilitated and equipped to serve this purpose. The centers will
provide facilities such as weighing, cleaning, drying, preservation, fortification, milling,
packaging, sorting and grading, quality control, and training halls for farmers. It is
envisaged that each state will have ten of such centers which will be strategically located
to meet the needs of beneficiaries and other stakeholders. Additional value to production
serves to encourage continued and increased production. The post-handling centers will
create job opportunities and contribute to increased income and economic activities. To
guarantee year-round utilization of the centers, off-season activities will be encouraged
such as using the centers for the training of farmers.
55
(c) Market Facilitation (US$7.90m): This sub-component aims at the creation of domestic
and export markets which will support market development, awareness and knowledge sharing
for commercial farmers. It will finance market information system, including market price
surveys, website and information kiosks, market/financial linkages (such as promotion of
products for supply chain financing and use of crops as collateral), quality control measures and
standards; food safety, exchange programs, agricultural trade fairs and shows, local and
international study tours.
(d) Capacity Building (US$4.90m): This sub-component will focus on the training of
commercial farmers, organized producer/commodity associations/Apex organization of
Commercial Agriculture Development Associations (CADAs) that will play a coordinating role
in the project. The sub-component will assist to develop the capacities of the CADAs to plan and
execute their projects. The training will also include gender mainstreaming and social impacts.
This sub-component will finance the following activities: interactive sessions, discussions with
experts, group dynamics, investment plans, food safety, grading and quality control and
standards, exhibitions, production techniques and marketing strategies for the selected value
chains in the states and preventive maintenance of machines and equipment.
Some of the specific aspects of the capacity building to be financed are shown in the table 4.3
below.
Table 4.3 Capacity Building activities
S/N Skills Required Type of
Training to
fill the gap
Target Beneficiary Training Organization
and Location
1 Hatchery Development and
Hybridization of Catfish/
Heterobranchus
On-the-Job Farmers Associations,
Agriculture Development
Project, Subject Matter
Specialists and Project
Officers
National Institute for
Fresh Water Fisheries
Research, Nigerian
Institute for
Oceanography and
Marine Research and
Service providers
2 Artificial Insemination and
Improvement of Local
Breeds
Formal,
On-the-Job
Farmers, Project Officers,
Service Providers and
Subject Matter Specialists
of Agricultural
Development Programs
Overseas
National Animal
Production Research
Institute and Service
providers
3 Pests and Diseases Control
in Crops and Livestock
Formal,
On- the-Job
Farmers, Project Officers,
Service Providers and
Subject Matter Specialists
of Agricultural
Development Programs
National Animal
Production Research
Institute e.g. National
Animal Production
Research Institute,
National Veterinary
Research Institute,
International Institute of
Tropical Agriculture,
etc
4 Product Quality Control and
Packaging e.g. Fruit Juice,
Fresh Milk, etc
Formal,
On-the-Job
Farmers, Processors,
Project Officers and
Service Providers
National Institute for
Horticultural Research,
National Agency for
Food Drug
Administration and
56
S/N Skills Required Type of
Training to
fill the gap
Target Beneficiary Training Organization
and Location
Control, Fan Milk,
others
5 Market Development and
Strategies
Formal,
On-the-Job
Farmers and
Associations,
Project Officers and
Service Providers
Training Consultant
6 Information Technology
and Services
On-the-Job Farmers
Associations and
Project Officers
Agricultural and Rural
Management Training
Institute,
Training Consultant
7
Group Dynamics On-the-Job Farmers
Associations and
Project Officers
Agricultural
Development Programs,
Training Consultant
8 Environment Improvement;
including:
- Safety Standards
- Assessment Procedures/
Screening
Formal,
On-the-Job
Farmers,
Associations and Project
Officers
Training Consultant
9 Inputs Sourcing,
Management and
Utilization
Formal,
On-the-Job
Farmers,
Association and Project
Officers
Centre for Management
Development and
Service Providers
10 Financial and Procurement
Management Procedures.
On-the-Job Farmers, Associations
and Project officers
Centre for Management
Development,
Training Consultant
11 Participatory Monitoring
and Evaluation
On-the-Job Farmers, Associations
and Project officers
National Food Reserve
Agency, Federal
Ministry of Finance,
World Bank, Training
Consultant
12 Pre Start-up Work plan
Development and
Budgeting
On-the-Job Farmers,
Associations and Project
Staff
National Food Reserve
Agency, World Bank
and service providers
13 Rice par-boiling and drying
technology
On-the-Job Farmers and Rice
Processors
National Cereal
Research Institute,
Agricultural
Development Programs
and Service providers
14 Aquaculture best practices
training
On-the-Job Farmers and Project
Officers
Service Providers
15 Improved Maize Seed
Production
On-the-Job
Farmers and Project
Officers
Institute of Agricultural
Research, Institute of
Agricultural Research
and Training,
International Institute of
Tropical Agriculture,
Seed Companies
16 Reducing Post-Harvest
Losses in Maize
On-the Job Farmers and Project
Officers
Nigeria Stored
Products' Research
Institute, International
Institute of Tropical
Agriculture
17 Value-Addition to Maize On-the-Job Farmers and Project
Officers
Nigeria Stored
Products' Research
57
S/N Skills Required Type of
Training to
fill the gap
Target Beneficiary Training Organization
and Location
Institute , International
Institute of Tropical
Agriculture
18 Quality Control/Standards Formal,
On-the Job
National Agency for
Food, Drug
Administration and
Control/Standards
Organisation of Nigeria
Officials/Farmers and
Project Officers
University of
Agriculture Abeokuta,
International Institute of
Tropical Agriculture
7. Access to IDA resources under the three sub-components will be through the preparation
of Commercial Agriculture Development Plans by CADAs.
Component 2: Rural Infrastructure (US$80.00m of which IDA will finance US$68.00m)
8. The project will assist to close the infrastructure gaps to enhance agricultural
commercialization by providing resources for the rehabilitation and maintenance of network of
selected farm access roads using the Output and Performance Based Road Contracts (OPRC)
concept and connecting commercial farms to rural electrification. This component covers two
sub-components: (i) Network of Farm Access Roads; and (ii) Rural Energy.
(a) Sub-Component 2.1 Networks of Farm Access Roads. (US$50.00m). Substantial
evidence exists that investments in roads and road connectivity have positive effects on
agricultural productivity and output. Better road connectivity increases crop production, reduces
transport costs of goods and services, and raises producer prices of crops. This sub-component
will link feeder roads to State and Federal roads through Outputs and Performance Based Road
Contracts. Investments will address construction, rehabilitation and maintenance of farm access
roads concentrated in areas where a critical mass of project participants will benefit. This sub-
component will be closely coordinated with the Rural Access and Mobility Project. The guiding
principle for the design of farm access roads for CADP will include: technical and financial
viability, well articulated to Rural Access and Mobility Project (RAMP), meets the needs of the
target group, fits in the overall state development strategy and it is sustainable.
9. The objectives are to enhance the profitability of agricultural activities in recipient rural
communities by: increasing productivity, ensuring better processing and marketing for small and
medium scale farmers and agro-processors. The project will link farm access roads to state and
federal roads through OPRC approach involving construction, rehabilitation and maintenance of
farm roads located in areas to serve critical masses of beneficiaries. To mitigate fiduciary risk in
OPRC contracts, the output and performance will be certified by competent independent
specialist prior to payment. The technical consideration will include: ownership now and in
future, acceptability of technical interventions. Some of the options to be considered are:
long/short road sections, laterite/bitumen sealed wide/narrow but adequate, avoidance of major
river crossings.
10. Financial considerations and assumptions for the network of road interventions include:
(a) $1.8m is estimated for feasibility, design and supervision and other related studies per state;
58
(b) the unit cost of construction and rehabilitation of roads was estimated at $120,000 per
kilometre for sealed roads and $52,000 per kilometre for gravel/laterite roads (based on RAMP
unit costs), (c) the maintenance cost per year per kilometre was estimated at $2,500 or $7,500
for three years using various forms of performance based contracting approach, (d) two-thirds of
the roads will be constructed to gravel/laterite standards, and (e) the average unit cost of
construction and maintenance over three years will be $82,500 per kilometre. It is expected that
the maximum number of roads under the project will be about 500 or 100 kilometres per state.
11. In each state, there will be two groups of roads; the normal relatively long roads forming
part of the existing network and connecting communities and farms, and the short (up to 2
kilometres) roads linking specific farm activities to existing roads. In Kaduna, where RAMP is
assisting with the latter type of roads, it is expected that CADP will concentrate mainly on the
short agricultural activity-specific roads. For planning purposes, it is expected that in the other
states, the average proportions of the normal to short roads will be 2:1 and on this basis, the
following distribution of the resources is anticipated.
Table 4.4 Summary of network of farm access roads
Road Type Road
Group
Kano Kaduna Enugu Cross
River
Lagos Sub
Totals
C/R and M
Unit cost
$/kilometre
Total cost
Paved
Normal 22 10 22 22 22 98 82,500 8,085,000
Short 11 23 11 11 11 67 82,500 5,527,500
Gravel/Laterite
Normal 45 34 45 45 45 214 82,500 17,655,000
Short 22 33 22 22 22 121 82,500 9,982,500
Sub-totals 100 100 100 100 100 500 82,500 41,250,000
12. All the roads will not be identified prior to commencement of the project but the initial
set of roads in each state including the start and end points are as follows:
59
Table 4.5 Network of farm access roads by states
Road Type Road
Group
KANO
Name Length
(kilometres)
Paved Normal Tamburawa - Challawa Road 15.0
Shanono - Tsaure Road 8.0
Kura - Azare (Bakin Kogi) Road 9.0
Tamnurawa - Karfi - Gundutse Road 5.0
Short Diggol – Tsallaka 5.0
Bye pass - Yanshana Road 5.0
Dorawar Sallau - Kadawa – Farm
Centre Road
3.5
Gravel/Laterite
Normal
Watari Main central Road 13.0
Garko - Garun Alli Road 10.0
Short
Watari Kiyawa (Zagon Shekauru)
road
7.0
Tiga Junction - Sata Road 2.5
Sub-Totals 83.0
Road Type
Road
Group
KADUNA
Name Length
(kilometres)
Paved Normal Laduga Main Road 23.0
Gravel//Laterite Normal Fada Farm Road 12.0 Laduga Lateral Road 1 10.0 Laduga Lateral Road 2 10.0 Laduga Lateral Road 3 10.0 Short Alheri Vine Road 5.0 Quin Tills Road 1.0 Mai Doki Road 1.0 Ingawa Farm Road 5.0 Kargi Farm Road 2.0 Alfa Farm Road 2.0
Sub-Totals 81.0
Road Type
Road
Group
ENUGU
Name Length
(kilometres)
Paved Normal Agwu-Imeama-Enyimba Amoli
Road
7.5
Akor Mke-Demako Farm Roads 7.0
Amalla-Umritodo-obollo-Eke Road 7.0
Oji-Ogbuakpulu-Obinofia Ndiagu
Road
3.0
Short Ngwo-Phinomar Farm Road 1.5
Ngwo-Efifi-Ozokwor Farm Road 1.2 Edem-Amaenu Edem Road 4.0 Udi Native Authority-Ngo-Owo
Farm
1.0
Ette Community Farm Road 5.0 Orie Emene-Ugwuomu Farm Road 5.0 Umuno-Agu ukehe Farm Road 4.5 Onuogba Nike-Muna Poultry farm 2.3 Ehamufu-Amede Farm Road 1.2
60
Akpuoga-Nike-Niger Farm 1.0 Okufu-Ibagwe-Agu Road 5.5 Eha-Alumona-Mbu-Akari Road 1.8 Adani-Ihekaniga farm Road 2.0 Ugwuogo Nike-Ogbeke Poultry
farm Road
1.4
Ikem Umuaram-Ebia road 2.1 Oghe-cashew farm Road 1.5 Eziani-Trof Over Poultry Farm 2.5
Sub-Total 68
Road Type Road
Group
LAGOS
LAGOS
Name Length
(kilometres)
Paved Short Africa Independent Television Road
linking Kolllington
3.0
Tee Ess Farm Road, Igando 2.0
BT Fish Farm Alakuko 2.0
Egan Oriomi–Ese Ofin Road 2.0
Ajara Farm Settlement 4.0
Ibeshe Farming Community 2.0
Ipara–Pota Road 3.5
Ayedoto Fobb Cams–Ojo 3.0
Bama Farm Road Afero 3.5
Oke–Osho Road–Epe 2.0
Oguntimehin Farm and others– Igboye 1.5
Araga Farm Settlement–Epe 2.5
Okun Ajah–Igbo–Effon Road 4.0
Big Fish Farm Road Ab Ltd–
Sangotedo
3.0
Oshoroko Poultry Farm Road 0.4
Westfam Road Ayeteju, Ibeju-Lekki 0.2
Coaster Road, off Eleko–Lekki 0.5
Ebute Ota Road–Alhaji Akanni Farm 1.0
King Farm Road, off Agbowa 1.0
Creative Farms and Agura/Gberigbe 4.0
Imota Farm Settlement 3.0
Odogunyan Farm Settlement– Ikorodu 3.0
View Valley/Rhyss Farm Road
Ikorodu
3.0
Eyita Ojo Koro Road–Ikorodu 3.0
Oke–Eletu/Gberigbe–Link 2.0
A.O Delight Farm Road Igbe 2.0
Agunfoye–Oreyo Road Igbegbo 2.0
Agbede Road, Ikorodu 4.0
Taiwo Farms, Yeguda Road, Epe 5.0
Sub-Total 72.1
Road Type Road
Group
Name Length
(kilometres)
Paved Short Akwa-Ibami (Uyanga) 4.0
Ibiae-Small Idoma 3.0
Ibogo-Iko-Esai 3.0
61
CROSS RIVER
Effraya-Agbokim-Mgbabor 5.0
Ejago-Kura-Ekimkon 4.0
Akparbong-Ikanatchang 3.0
Okondi-Etomi 3.0
Abu-Ekpu (Idum Mbube) 4.0
Ikaptang (Ishibori)-Nkimkul 4.0
Gravel/Laterite Short Nyanga-Akwa-Ibami 4.0
Ehom-Ekpiriko 5.0
Assiga Old Town-Onyenekpende-
Ofodua
4.0
Anong-Ekori 4.0
Ochon-Ogamba-Oberenyi 4.0
Ofodua-Obuben-Ahaha 4.0
Arobom-Iyamitet-Okamurotet 4.0
Ogbudu-Bunyia-Esho Enya 4.0
Okongbe-Borum 4.0
Beteriku-Beebo 3.0
Bendeghe-Etomi 4.0
Okuni-Omonbeach 3.0
Abachor-Okpotudu 4.0
Idikuitega Okpudu – Okpudo 4.0
Olachor-Adiero-Udaga 4.0
Alege-New Jerusalem 4.0
Bedia-Ibong Okoshie 4.0
Sub-Total 100.0
Grand Total (Five States) 404.1
13. The needs of the target groups will be assessed and bid packages will be prepared with
consideration for sustainability, ownership and maintenance beyond the project life circle.
14. The key issues are cost allocations among sub-components, capacity to prepare the roads
component – Procurement of consultants and readiness prior to Board.
(b) Sub-Component 2-2 Rural Energy. (US$30.00m). This sub-component will finance the
rehabilitation and maintenance of rural energy, including provision of transformers and extension
of lines from the main transmission lines to commercial farmers and agro-processing facilities in
collaboration with the Power Sector Reform Project. The key issues for rural energy include:
identification of investment needs in rural energy in the participating states, the specific
item/activities to be financed by the states and the locations, who should be responsible for
decision (private or government), responsibility for maintenance, the flow of funds and
disbursement mechanisms, linkage and synergy needed to be developed between the project and
the Energy Reform Project, and cost estimates of the interventions. These issues have been
addressed during project appraisal. Memorandum of Understanding have been prepared for the
assessment and bid preparation for the rural energy between the project and the Power Holding
Company of Nigeria.
15. Access to IDA resources under the three sub-components will be through the preparation
of a Commercial Agriculture Development Plans by the beneficiaries.
62
Project Management, Monitoring and Evaluation and Studies (US$19.60m of which IDA
will finance US$11.60m)
(a) Project Management (US$8.80m). This component will finance Project Management
and Monitoring and Evaluation, including the Management Information System, impact
evaluation and beneficiary assessment, Mid-Term Review, and final evaluation.
(b) Monitoring and Evaluation (US$2.80m). This sub-component will support Management
Information System, Impact Evaluation and Beneficiary Assessment and Monitoring of
Environmental Management Plans.
(c) Support to relevant Federal and State Institutions (US$5.00m). The project will support
some Federal Institutions (Federal Ministry of Agriculture and Water Resources, National Food
Reserve Agency and Federal Ministry of Finance and other relevant institutions) in respect of
capacity building, project monitoring and other activities. At the state level, the project will
support the States Ministries of Agriculture, Agricultural Development Projects (ADPs), the
Project Financial Management Unit (PFMU) and other relevant institutions such as Veterinary
and Animal Health, Cooperatives and Agriculture Insurance, Produce Inspection and Standards
Organization of Nigeria in the areas of capacity building and project monitoring.
(d) Strategy and case studies on Commercial Agriculture (US$3.00m). The Government
has requested resources under this component to develop a strategy for development of
commercial agriculture. Case studies of relevant models of commercial agriculture will be
reviewed, along with other lessons, including those that emerge from implementation of the
project. In addition, this sub-component will finance Technical Assistance/Pilots/Studies on
Irrigation Sub-Sector.
16. Access to IDA resources under the two sub-components will be through the preparation
of Annual Work Plan and Budget (AWPB) by the implementing agencies at the Federal and
State levels.
17. The National/State Steering Committees and project management teams and their
responsibilities are as follows:
National Steering Committee
Permanent Secretary, FMAWR - Chairman
Federal Ministry of Finance (Public)
Federal Ministry of Agriculture and Water Resources - Director (Public)
Federal Ministry of Commerce and Industry (Public)
Federal Ministry of Women Affairs
National Planning Commission (Public)
CADA - APE - (Private)
NACCIMA (Private)
Executive Director, NFRA - Member
National Coordinating Office - Secretary
** Membership - 10
63
Permanent Secretary FMAWR to Chair while the Vice Chairman will come from CADA
and NCO as Secretariat
Functions of National Steering Committee
Oversight functions over the project
Approve Annual Work Plan and Budget
Review progress of project implementation
Advisory Support to project implementation based on project design
Encourage collaboration among similar projects
Harmonization of Federal and State Governments Policies on economic development and
growth
Frequency of Meetings
Twice a year
National Project Team (National Coordinating Office)
Project Coordinator
Project Operations Officer
M&E Officer
Project Accountant
Procurement Officer
Support Staff -
o Internal Auditor
o Account Officer
o Administrative Officer
o Rural Infrastructure Officer
o Environmental Officer
o Training Officer
o Communication Officer
State Steering Committee
Permanent Secretary, Ministry of Agriculture – Chairman
Directors of relevant value chains in the Ministry of Agriculture (2)
Ministry of Finance
Planning/Budget
Ministry of Trade and Commerce
Ministry of Women Affairs
Rural Development/Energy Commission
Ministry of Works
Chamber of Commerce and Industry
CADA (1)
Project Manager of ADP
SCADO – Secretary
** Membership = 12
64
Permanent Secretary, State Ministry of Agriculture and Natural Resources (SMANR) to Chair
while the Vice Chairman will come from the private sector and SCADO as Secretariat and
invitations to stakeholders (commercial banks etc) will be on need basis.
Functions of Steering Committee
Oversight functions over the project
Approve Annual Work Plan and Budget
Review progress of project implementation
Guide and facilitate project implementation based on project design
Periodic monitoring across the State
Encourage collaboration among similar projects
Frequency of Meetings
To meet quarterly
State Commercial Agriculture Development Office (SCADO)
Project Coordinator
Procurement Officer
M&E Officer
Project Accountant
Agricultural Productivity and Advisory Services Officer
Commercialization and Business Development Officer
Rural Infrastructure Officer
Support Staff:
o Internal Auditor
o Cashier
o Administrative Officer
o Project Office Assistant
Eight Facilitators in the following subject matter areas
Technology Adoption in value chain one
Technology Adoption in value chain two
Technology Adoption in value chain three
Market facilitation and Business Development
Roads
Energy
MIS/ICT
Training Officer
Communication Officer
65
Status of SCADO
SCADO will function as a semi-autonomous unit.
All correspondence and Reports to the office of the Executive Director, NFRA and the World
Bank should be copied to the ADP PM.
Funds Flow
From IDA CADP Account with PFMU CADA Apex Account Beneficiary Account
66
Annex 5: Project Cost
Nigeria Commercial Agriculture Development Project
(Naira Million) (US$ '000)
Local Foreign Total Local Foreign Total
A. Agricultural Production and Commercialization
Technology Adoption 2,386.54 74.62 2,461.16 20,225.00 632.40 20,857.40
Support to Staple Crop Production System 5,457.50 442.50 5,900.00 46,250.00 3,750.00 50,000.00
Market Facilitation 670.64 171.32 841.96 5,683.40 1,451.90 7,135.30
Capacity Building 508.56 21.02 529.58 4,309.80 178.20 4,488.00
Sub-total: Agricultural Production and Commercialization 9,023.24 709.46 9,732.70 76,468.20 6,012.50 82,480.70
B. Rural Infrastructure
Network of Farm Access Roads 4,720.00 1,180.00 5,900.00 40,000.00 10,000.00 50,000.00
Rural Energy 2,690.40 849.60 3,540.00 22,800.00 7,200.00 30,000.00
Sub-total: Rural Infrastructure 7,410.40 2,029.60 9,440.00 62,800.00 17,200.00 80,000.00
C. Project Management, Monitoring and Evaluation
Project Management 708.97 147.73 856.70 6,008.20 1,252.00 7,260.20
Monitoring and Evaluation 262.93 35.91 298.84 2,228.30 304.40 2,532.70
Strengthening of Institutions at State and Federal Levels 590.00 590.00 5,000.00 0.00 5,000.00
Studies 354.00 354.00 3,000.00 0.00 3,000.00 Sub-total: Project Management, Monitoring and Evaluation 1,915.90 183.64 2,099.54 16,236.50 1,556.40 17,792.90
D. Project Preparation Facility 0.00 118.00 118.00 0.00 1,000.00 1,000.00
Total Baseline Costs 18,349.54 3,040.70 21,390.24 155,504.70 25,768.90 181,273.60
Physical Contingencies 125.48 28.41 153.89 1,063.40 240.80 1,304.20
Price Contingencies 269.69 16.26 285.95 2,285.50 136.70 2,422.20
TOTAL PROJECT COSTS 18,744.71 3,085.37 21,830.08 158,853.60 26,146.40 185,000.00
Notes:
1. Policy and Human Resources Development (PHRD) Grant in the amount of US$800,000.
2. Identifiable taxes and duties are US$6.250m and the total project cost, net of taxes, is
US$178.750m. Therefore, the share of project cost net of taxes is 96.6%.
67
Annex 6: Implementation Arrangements
NIGERIA: Commercial Agriculture Development Project
1. The proposed Project will utilize the existing institutional structure of the Federal
Ministry of Agriculture and Water Resources (FMAWR), that is, it‟s federal and state level
coordination offices.
2. Project Implementation period. The Project will be implemented over a five-year
period, start: April 16, 2009; End: December 31, 2014.
3. Executing Agency. The Federal Ministry of Agriculture and Water Resources
(FMAWR) will have overall responsibility for execution of the Project through the National
Food Reserve Agency (NFRA). The NFRA is the agency entrusted with responsibility for
coordinating the implementation of all agricultural sector projects in the country, including those
that are externally-funded. Most of the Project‟s administrative, financial and implementation
arrangements will be decentralized at the state levels. The beneficiaries, especially the
Commercial Agricultural Development Associations (CADAs) and the various Commodity
Interest Groups (CIGs) will be active in the project. Since no new coordination structure will be
created under this project, the NFRA will delegate the functions and responsibilities of day-to-
day implementation coordination to a strengthened National Coordinating Office (NCO), which
will now be called the NCO.
Project Coordination and Oversight
4. At the Federal level, the NFRA, through the NCO, will coordinate project activities on
behalf of the FMAWR. At the federal level, there will be a National Steering Committee
(NSC) with 10 members as follows: Permanent Secretary, FMAWR - Chairman, Ministries of
Finance; Agriculture – Director of Agriculture; Commerce and Industry; Women Affairs;
National Planning Commission; CADA - APEX; NACCIMA; and the Executive Director,
NFRA – Member/Secretary. The NSC will meet twice a year. The Vice-Chairman should come
from the CADA and the NCO will be the secretariat.
5. The functions of the NSC are: oversight functions over the project approve Annual Work
Plan and Budget, review progress of project implementation, advisory support to project
implementation based on project design, encourages collaboration among similar projects and
harmonization of federal and state governments‟ policies on economic growth and development.
6. The day-to-day implementation of the project at the National level will be the
responsibility of the National Coordinating Office (NCO). The proposed staff complements of
the NCO are: Project Coordinator, Project Operations Officer, M&E Officer, Project Accountant
and Procurement Specialist. Support Staff (Internal Auditor, Account Officer, Administrative
Officer, Rural Infrastructure Officer, Training Officer, and Communication Officer. The TORs
for the staff positions will be in the PIM.
7. At the State level, coordination will be carried out by the State Commercial Agriculture
Development Office (SCADO) of the participating states while the oversight, policy and
strategic orientation functions will be performed by the State Steering Committee (SSC). The
State Steering Committee will comprise of 12 members as follows: Permanent Secretary,
68
Ministry of Agriculture – Chairman, Directors of relevant value chain in the Ministries of
Agriculture (2), Finance (1), Planning/Budget, Trade and Commerce, Women Affairs, Rural
Development/Energy Commission, Works, Chamber of Commerce and Industry, Commercial
Agricultural Development Associations (1) PM of ADPs, and SCADO – Secretary. The Vice-
Chairman will come from the private sector and SCADO will be the Secretariat. Invitations to
stakeholders (commercial banks, etc) are on need basis.
8. The functions of the SSC are as follows: oversight functions over the project, approve
Annual Work Plan and Budget, review progress of project implementation, guide and facilitate
project implementation based on project design, periodic monitoring across the State, and
encourage collaboration among similar projects.
9. The day-to-day implementation of the project will be the responsibility of the State
Commercial Agriculture Development Office which will have the following staff complements:
State Project Coordinator, Procurement Officer, M&E Officer, Project Accountant, Agricultural
Productivity and Advisory Services Officer, Commercialization and Business Development
Officer, Rural Infrastructure Officer, Training Officer, Communications Officer, Environment
and Natural Resources Officer, and Support Staff (Internal Auditor, Cashier, Administrative
Officer, Environment Officer and Project Office Assistant).
10. The SCADO will function as a semi-autonomous unit within the ambit of the state ADPs.
All correspondence and Reports to the office of the Executive Director NFRA, and the World
Bank should be copied to the ADP Project Manager.
11. At the Beneficiary level, critical decisions will take place within the CADAs and the
various Commodity Interest Groups (CIGs) which constitute them. The Commercial Agriculture
Development Associations (CADPs) are apex organizations of economic interest groups which
have a common interest in agricultural commercialization. Beneficiaries should belong to a
registered commodity association that supports the value chain of his interest. SCADO should
have a directory of Service Providers that will be providing services to the project beneficiaries.
The Service Providers will be screened by SCADO and their services will be certified by
beneficiary and SCADO officer/agent before full payment. Service Providers will be public and
private sectors operators and there should be a level playing field.
12. Capacity building will be available for project staff, beneficiaries and service providers.
A team of facilitators and other specialists will be deployed to provide related and necessary
Technical Assistance and training support. Once sub-projects are approved for financing by the
SCADO, and successfully screened by the CADA for consistency with state strategy and
compliance with the applicable project guidelines of CIGs, funds equivalent to their share of the
costs for design and implementation are deposited directly to the bank account of the service
provider by the Project Financial Management Unit. The CADA will use participatory planning
process and establish a management committee, consisting of a chairperson, secretary, treasurer,
commercial agriculture development officer (including disadvantaged groups) and
communications/public relations officer as the core management team who will be
democratically elected, and three ex-officio members from the subcommittees on procurement,
maintenance and operations of rural infrastructure component, and supervision and M&E. The
CADAs will choose projects that are economically viable and rely on beneficiary participation to
achieve the goal of viability and sustainability. Consistent with this Project's emphasis on a
balanced treatment of gender, at least one-quarter of the total membership of the CADA
69
management committee are expected to be women. The management structure will include
rules, procedures and guidelines for performance incentives and penalties as well as a system of
checks and balances to prevent possible abuse of public trust. The candidate farm access
roads/energy sub-projects to be rehabilitated and maintained must have been selected through
cross-sectoral (transport, energy and agriculture) participatory approach undertaken together with
Federal and States Governments, LGAs and similar projects (RAMP and Energy Reform
Project). The basis for selection will be prioritization of those segments of rural areas that are
essential for supporting the overall small and medium scale agricultural commercialization,
value-addition and the development objective of the project. The result of the selection process
will be a network of all-weather rural roads providing access for the selected agricultural
development areas over a period of five years and energy connectivity to small and medium
scale commercial farms and agro-processors. Once the implementation plans are finalized, the
sub-components will be implemented through a memo of understanding with relevant agencies
in the states (PHCN and Road Management Agencies) under the guidance of RAMP and the
Energy Reform Project teams at the National and State levels.
13. Disbursements to the project will occur through the preparation of Commercial
Agriculture Development Plans and Sub-project Agreements (SPAs), as described in the PIM.
Each sub-project cost will not exceed $100,000.
14. The total number of beneficiaries expected for the project is estimated at 50,000 small
and medium commercial farms and agro-processors (i.e. 10,000 per state). These beneficiaries
will be selected to reflect the priority commodities or value chain identified by each state. The
eligibility criteria for selecting beneficiaries into the project are attached in Annex 4.
15. Overall implementation of the Project will be done according to detailed procedures
defined in its PIM.
Sub-project cycle
16. The sub-project cycle is organized as follows:
A state-wide information campaign, to be implemented with effect from the project
preparation phase, will increase awareness as well as improve attitude and behaviour
change about the Project and its potential benefits and facilitate comprehension of the
criterion which will be used in the selection of beneficiaries;
Organized Commercial Agriculture Development Associations (CADAs) will
undertake a Needs Assessment of their CIGs and use this to collectively decide on
their local investment priorities, based on their own choices and information provided
concerning the state‟s development objectives and priorities as defined in the Project
Appraisal Document (PAD) or relevant document;
CIGs prepare sub-projects proposals assisted by the Facilitators and local consultants
for activities to be funded under the various project components and sub-components;
Sub-projects‟ proposals from CIGs are submitted to CADAs where they undergo
initial screening against an agreed check-list to determine completeness of the
documentation;
70
The screened sub-project proposals are then submitted to the SCADO, where the
proposed sub-projects are prioritized and approved, based on the associated indicative
resource envelopes;
Sub-projects will comply with the environmental guidelines established in the Project
Implementation Manual (PIM);
Sub-projects‟ Agreements (SPAs) are signed between the CADAs and the SCADOs.
These agreements spell out the terms and conditions for the funding, execution,
ownership, operation and maintenance of the approved sub-projects, including
agreement that the beneficiaries' associations will contribute to sub-project costs,
either in cash or in kind (i.e., labour and/or materials). The minimum level of
contributions will be specified in the respective sub-projects and in the PIM;
Resources, equivalent to the Project‟s share of the cost of the design and
implementation of the sub-projects are then transferred directly from the Project to
the Service Providers‟ bank account. The transfer will be payment against contracts.
Documentations supporting such transfers are as indicated in the FPM under invoice
related payments. These documents will include the approved Commercial
Agricultural Development Plan, SPAs, service provider‟s invoice and
document/report by the beneficiary and SCADO officer/agent certifying the service
of the service provider;
CADAs/SCADOs are responsible for contracting goods, works and Technical
Assistance for sub-project execution, unless otherwise specified in the PIM and the
Financing Agreement (FA). The CADAs may be required to provide an insurance
performance bond or guarantee to be eligible for the disbursement. Beneficiary
associations also bear responsibility for operation and maintenance of all sub-project
investments; and may request Technical Assistance to improve their capability to
manage these investments;
Sub-project irregularities: When fraud or irregularities are committed, the project
will enforce sanctions varying from suspension of disbursements, recovery of the
disbursed funds and prosecution.
71
Implementation Arrangements for the Project
NSC
M&E
M&E
CADPS
SCADP
OSAG
PFMU/SA
Review & approve annual work programs
& budgets of NFRA / NCO
FEDERAL
STATE
STATE BENEFICIARIES
CADAs: Commercial Agriculture Development Associations
NCO: National Coordinating Office
CADPs: Commercial Agriculture Development Plans OSAG: Office of the State Accountant General
CADPs: Commercial Agriculture Development Plans
NFRA: National Food Reserve Agency, Federal
Ministry of Agriculture
PFMU: Project Financial Management Unit
SA: Special Account
SSC: State Steering Committee
SCADO: State Commercial Agriculture
Development Office
Note:
Dotted lines represent flow of funds
SCADO Advisory
Service
Providers
IDA
Contracting
M&E
Contracting
Diagram 1
Sub-projects
Review & approve annual work programs &
budgets of SCADPO/ Review and approval of Sub-projects.
NFRA/NCO/SA
SCADO/CADPS:
Review & approval of
Sub-project
Facilitators/Consultants
Commercial Agriculture Development Associations
72
Annex 7: Financial Management and Disbursement Arrangements
NIGERIA: Commercial Agriculture Development Project
Introduction
1. The financial management assessment, in line with the Financial Management Practice
Manual (FMPM) (November 2005) of the Financial Management (FM) Board, has the objective
of determining whether the implementing entities have acceptable financial management
arrangements, which will ensure: (i) that funds are being used only for the purposes intended in
an efficient and economic way; (ii) the preparation of accurate, reliable and timely periodic
financial reports; and (iii) safeguarding of the entity‟s assets. The Financial Management
arrangement in participating states is based on the PFMU, a robust multi-donor and multi-project
FM platform, which was established in all states from 2002 through the joint efforts of the Bank
and the government and form an integral part of the FM country systems at State level. These
PFMU features strong and robust systems and controls that are not possible in individual ring-
fenced project FM. They were assessed by the Bank and found to be acceptable for the
implementation of Bank-assisted projects. An evaluation is planned in later part of calendar year
2008 to assess their continued effectiveness in the channelling and management of project
resources. Because State PFMUs are responsible for the FM arrangements of on-going projects,
they are reviewed regularly and supported with training on an ongoing basis. At the federal
level, NFRA is presently implementing two IDA assisted projects - PHRD grants for the
preparation of CADP and FADAMA III, and has acceptable FM arrangements based on the
assessment conducted. The most recent reviews showed that these FM arrangements are
adequate for the implementation of this Project at the federal and state levels. The FM
assessment of the federal component indicates that FM risk is moderate. The overall FM risk for
the Project is rated as substantial. However, this will be mitigated by the strong PFMU
arrangement, timely implementation of the FM action plan (Table 2 in Annex 7), and inclusion
of a technical review in the Project as well as substantial follow-up and implementation support.
Country Issues
2. A review of the implementation of the recommendations of the Country Financial
Accountability Assessment (2000) in January 2005, and a 2006 PEMFAR for Nigeria, observed
that the Federal Government of Nigeria has made a significant effort to advance reform of the
PFM system since 2003. Major achievements so far have been: (i) the adoption of an oil-based
fiscal rule that has greatly improved the quality of macroeconomic management; (ii) launching
of significant steps toward increased transparency of the budget process; (iii) more efficient cash
management; (iv) procurement reforms; (v) updating the legal framework for PFM; (vi)
reallocation of budget resources in support of the MDG-related government functions; (vii)
strengthening monitoring and evaluation; and (viii) introducing a more strategic long-term focus
in budget management. These have clearly helped to reduce waste of public resources,
particularly on the capital budget and payroll. The impact of these early measures is also evident
in significantly improved fiscal and broader macroeconomic outcomes. There is, nevertheless,
much more to do and PFM initiatives and reforms are articulated in the Government‟s NEEDS,
and further articulated in the 7-Point Agenda by the government which sets out policy priorities
that will strengthen the reforms and build the economy so that the gains of reforms are felt
widely. These are supported under the Country Partnership Strategy (jointly developed by IDA
and the United Kingdom‟s Department for International Development, DFID), which are
supported under the CPS specifically through the three Bank-assisted projects (i.e., EMCAP
73
closed December 2007, ERGP, and State Governance and Capacity Building Project). Apart
from Lagos State Financial Accountability Assessment (LSFAA) which was carried out in 2004
and had assessed the overall risks to public funds as high, no other accountability assessment has
been carried out for any other state in Nigeria. However, the SGCBP is assisting some states to
address public financial management issues.
3. Government is in the process of developing a comprehensive National Strategy on Public
Service Reform through a participatory process, aligned with the nation‟s ambition to be one of
the leading economies in the world by the year 2020. The draft strategy has as one of its pillars,
consolidation of public financial management reforms to ensure strategic and efficient allocation
and use of resources, fiscal discipline and value for money in a transparent and accountable
manner through timely financial reporting.
4. Following the Lagos State Financial Accountability Assessment (LSFAA) which was
carried out in 2004 and had assessed the overall risks to public funds as high; the Lagos
Metropolitan Development and Governance Project (LMDGP) is supporting Lagos State in
budget preparation and expenditure management reform, and expenditure tracking in specific
sectors. Other States are now assessing their PFM systems. In February 2008, The Kaduna State
Governments conducted a Public Expenditure and Financial Accountability (PEFA) self
assessment assisted by consultants appointed under the State and Local Government Programme
(SLGP), financed by the UK Department for International Development (DFID). The assessment
noted that some improvements to the PFM system are underway; overall fiscal control has
improved but progress at integrating Kaduna State Economic Empowerment and Development
Strategy (KADSEEDS) with the State‟s PFM systems has been slow and gradual progress is
currently being made. The Ekiti State Public Expenditure Review (PER) report issued in
February 2008 noted that the Ekiti State PFM system has a large scope for improvement. The
Anambra State PEFA report issued in July 2008 shows a very weak PFM system. The state has
however concluded a number of important studies and reviews, which are necessary pre-
requisites for reform. These include a state-wide public expenditure review, participatory
budgeting, design of new chart of accounts and citizen‟s scorecard.
74
TABLE 7.1: Risk Assessment and Mitigation
Risk Risk
Rate
Risk Mitigating Measures
Incorporated into Project Design
Condition for
Negotiation,
Board or
Effectiveness
Residual
Risk
Rating
Inherent Risks
Country Level:
Funds may not be
used in an efficient,
accountable and
transparent way.
H The Country Partnership Strategy
(CPS) that supports Nigeria‟s NEEDS
aims to achieve improved
transparency and accountability for
better governance which minimize
opportunity for corrupt practices. This
has translated into various projects at
the federal and state levels
respectively, focusing on improving
accountability, good governance,
transparency and fighting fraud and
corruption. Reforms in budgeting, FM
systems, procurement and auditing are
being supported.
Robust financial management
arrangements have been established at
the federal and state levels for the
project and these were designed to
mitigate the Country level risk.
None S
Entity Level:
Weak institutional
capacity to
implement the
Project components
and to effectively
monitor progress and
embrace full
accountability for
results.
S The project will be implemented in the
selected states by the SCADO in the
State Ministry of Agriculture
(SMOA). The SSC will perform
oversight, policy and strategic
orientation functions. At the Federal
level, NCO in FMAWR will
coordinate project activities and NSC
will perform oversight function over
the project, approve Annual Work
Plan and Budget at NCO and review
progress of project implementation
across the participating states.
None M
Project Level:
This CADP is the
first (of its kind)
type of agriculture
project by the Bank
H Beneficiaries must meet the eligibility
criteria for participation and should be
legally registered.
Disbursement will occur through the
preparation of CADPs and SPAs.
Disbursement
condition
S
75
Risk Risk
Rate
Risk Mitigating Measures
Incorporated into Project Design
Condition for
Negotiation,
Board or
Effectiveness
Residual
Risk
Rating
Inherent Risks
in Nigeria, no
previous experience
in project
implementation.
NSC will review progress of project
implementation across the
participating states. SSC will conduct
periodic monitoring within the State.
CADAs will undertake spot audits ex-
post to confirm that matching grants
are utilized for the intended purpose.
Adequate training of FM staff at the
federal and state levels.
SCADO should have a directory of
Service Providers that will provide
services to the project beneficiaries.
The service providers will be screened
by SCADO and their services will be
certified by beneficiary and SCADO
officer/agent before full payment.
Budgeting:
Failure to properly
prepare
comprehensive
budget and
effectively monitor
the budget.
M Project budgeting to be synchronized
carefully with government‟s own
budget, time-wise, taking into account
the CADPs from the CADAs
participating in the Project.
Budget execution to be monitored
through quarterly Interim Financial
Reporting (IFRs).
Computerized accounting system at
the federal and state levels includes
budget modules.
Un-audited
quarterly
Interim
financial
report (IFR)
arrangements
and formats to
be agreed
during project
negotiations.
L
Accounting:
Failure to account
for Project funds
adequately and
provide full
supporting
documentation.
M Robust FM arrangements at the
federal and state levels, including the
use of PFMUs to manage project
funds.
Accounting and internal control
procedures established and
documented in project Financial
None L
76
Risk Risk
Rate
Risk Mitigating Measures
Incorporated into Project Design
Condition for
Negotiation,
Board or
Effectiveness
Residual
Risk
Rating
Inherent Risks
Procedures Manual (FPM).
Independent and effective internal
audit function that is focused on risk
management approaches.
Internal Control:
Inadequate
documentation of
transactions,
ineligible
expenditures and
non-retirement of
advances.
M Internal control is strengthened by
using the PFMU arrangement at the
state level – the arrangement features
strong controls.
Robust FPM and staff are familiar
with this FPM.
Independent and effective internal
audit that will focus on risk in its audit
plan.
Adequate follow-up by Bank FM team
on supervision mission findings as
well as provision of further training
for project staff.
None L
Funds Flow:
a. Delays in
release of funds
b. Delays/non
release of
counterpart funds
L
S
Funds flow procedures are fully
documented in the FPM and staff are
familiar with these procedures.
Adequately qualified and competent
FM staffs are available in the PFMUs
and NCO.
Adequate appropriation in government
yearly budget and cash backed.
None L
M
Financial Reporting:
Delayed preparation
and submissions of
quarterly IFRs and
annual audited
financial statements
M Project reporting guidelines included
in FPM.
Implementation to be monitored by
NSC.
None L
77
Risk Risk
Rate
Risk Mitigating Measures
Incorporated into Project Design
Condition for
Negotiation,
Board or
Effectiveness
Residual
Risk
Rating
Inherent Risks
Use of computerized FMS to generate
financial reports (IFRs) and account
for project activities at the federal and
state levels.
PFMU and NCO staff have adequate
experience in Bank reporting
requirements.
Auditing:
Delay in the
submission of audit
report and
inadequate audit
reports.
M Auditors General will be encouraged
to allow use of private sector
accounting firms which will be hired
as external auditors to carry out an
independent audit of the project
financial statements based on TOR
acceptable to IDA.
FMS will ensure external auditor is
acceptable to the Bank.
None L
Overall FM Risk
Rating
S The overall gross risk exposure is
considered substantial for this project.
This will be mitigated by measures
described above, thus reducing the
risk rating to moderate.
M
H-High S-Substantial M-Moderate L-Low
Strengths
4. The use of existing PFMUs in all the participating states is a significant FM strength in
the project that has been identified. The PFMUs are experienced in the implementation of IDA
assisted projects, the staff are trained in Bank fiduciary requirements, they are professionally
qualified and the PFMUs are equipped with computerized FM systems and FPMs. At the Federal
level, staffs of the NCO/NFRA are equally experienced in the implementation of IDA-assisted
projects. The NSC will be responsible for project-oversight function, approve Annual Work Plan
and Budget at the Federal level, and review progress of project implementation across the
participating states. SSC will exercise similar oversight functions as NSC at the state level.
78
Action Plan Addressing the Weak Areas
5. Table below indicates the actions to be taken for the project to further strengthen its
financial management system:
Ref
No. Action Date due by Responsible
1 Agreement of Interim Un-Audited
Financial Report (IFR) formats and
Annual Financial Statement
formats, and external auditors
Terms of Reference.
Negotiations State Ministry of
Agriculture/State
Commercial Agriculture
Development Office and
Federal Ministry of
Agriculture and Water
Resources/National
Coordinating Office with
support and guidance of
International
Development Association
task team.
2 Upgrade the Financial Management
System at National Coordinating
Office and Project Financial
Management Unit and update the
Federal and State Financial
Procedures Manuals.
Before the Board date State Commercial
Agriculture Development
Office in the participating
states and National
Coordinating Office
3 Open Designated Dollar Account,
Current Draw-down account in
Naira, Current (Project) Account
and Naira Counterpart Fund
Account by National Coordinating
Office and State Commercial
Agriculture Development Offices
and IDA advised of authorized bank
signatories
Prior to disbursement
of International
Development
Association credit
proceeds
State Commercial
Agriculture Development
Office in the participating
states and National
Coordinating Office
4 Extension and expansion of
contract/Terms of Reference of
external auditors to cover
Commercial Agriculture
Development Project.
Within 90 days after
Effectiveness.
State Commercial
Agriculture Development
Office in the participating
states and National
Coordinating Office
5 Agreement on Memorandum of
financial services and service
standards between Project Financial
Management Units and the
Agencies.
Negotiations. State Commercial
Agriculture Development
Office/Project financial
Management Units
79
Implementing Entities
6. At the Federal level, the NFRA, through the NCO, will coordinate Project activities on
behalf of the FMAWR, who has overall responsibility for execution of the project. The NSC will
be responsible for project oversight, approval of Annual Work Plans and Budget at the NCO
level, and reviewing progress of project implementation across the participating states. The day
to day implementation of the project at the National level will be the responsibility of the NCO.
7. At the State level, coordination will be carried out by the State Commercial Agriculture
Development Office (SCADO) of the participating states while the oversight, policy and
strategic orientation functions will be performed by the State Steering Committee (SSC). The
SSC will have oversight functions over the project, approval of annual work plans and budget,
review progress of project implementation, guide and facilitate project implementation based on
project design, periodic monitoring across the state and encourage collaboration among similar
projects. The existing PFMUs in each of the participating states will be responsible for
managing the financial affairs of the project at that level. Specifically, the PFMUs will be
responsible for (i) preparing activity budgets, monthly project bank account reconciliation
statement, quarterly Statement of Expense (SOE) Withdrawal Schedule, quarterly Interim
Financial Reports (IFRs), and annual project financial statements; and (ii) ensuring that the
project financial management arrangements are acceptable to the Government and IDA. It will
also forward the reports and statements to State Ministries of Agriculture and Finance and IDA.
8. At the Beneficiary level, critical decisions will take place within the CADAs and the
various Commodity Interest Groups (CIGs) which constitute them. The Commercial Agriculture
Development Associations (CADAs) are apex organizations of economic interest groups which
have a common interest in agricultural commercialization. They will be responsible for the
coordination of the activities of the CIGs within the value chain associations. The CIGs will have
responsibility for sub-project implementation. The beneficiaries should belong to a registered
commodity association that supports the value chain of their interest. SCADO should have a
directory of Service Providers that will provide services to the project beneficiaries. The SPs will
be screened by SCADO and their services will be certified by beneficiary and SCADO
officer/agent before making full payment. Service Providers will be public and private sectors
operators and there should be a level playing field. Once sub-projects are reviewed and
approved by SCADO and successfully screened by the CADA for consistency with their state
strategy and compliance with the applicable project guidelines of CIGs, funds equivalent to their
share of the costs for design and implementation are deposited directly to the bank account of the
service provider by the Project Financial Management. The transfer will be payment against
contracts. Documentation supporting such transfers will be indicated in the FPM under invoice
related payments. These documents will include the approved CADP, SPAs, service providers‟
invoice and document/report by the beneficiary and SACDO officer/agent certifying the service
of the service provider. Financial statements are required to be maintained by CIGs/CADAs
members who receive grants. To mitigate fiduciary risk in OPRC contracts, the output and
performance will be certified by competent independent specialist prior to payment. In order to
be eligible to receive funding under the Project, beneficiaries should be legally registered.
Disbursements to the project will occur through the preparation of Commercial Agricultural
Development Plans and Sub-project Agreements (SPAs), as described in the PIM. The CADA
will use participatory planning process and establish a management committee, consisting of a
chairperson, secretary, treasurer, commercial agriculture development officer (including
disadvantaged groups) and communications/public relations officer, as the core management
80
team, who will be democratically elected, and three ex-officio members from the subcommittees
on procurement, maintenance and operations of rural infrastructure component, and supervision
and M&E.
Planning and Budgeting
9. Cash budget preparation will follow the government procedures. Financial projections or
forecasts for the life of the Project (analyzed by year) will be prepared. On an annual basis, the
Project Accountant in NCO and PFMUs (in consultation with key members of the implementing
unit) will prepare the cash budget for the coming period based on the work program. The cash
budget should include the figures for the year which is analyzed by quarter. The cash budget for
each quarter will reflect the detailed specifications for project activities, schedules (including
procurement plan), and expenditure on project activities scheduled respectively for the quarter.
All annual cash budgets will be sent to the Task Team Leader (TTL) at least two months before
the beginning of the project fiscal year.
10. Detailed procedures for planning and budgeting have been documented in the FPM.
Internal Control and Internal Auditing
11. Internal control comprises the whole systems of the control framework, financial or
otherwise, established by the NCO and SCADO in order to: (i) carry out the project activities in
an orderly and efficient manner; (ii) ensure adherence to policies and procedures; (iii) safeguard
the assets of the project; and (iv) secure the completeness and accuracy of the financial and other
records.
12. The key elements to ensure a sound internal control system will include:
Internal control environment;
Risk assessment;
Control activities;
Information and communication; and,
Monitoring.
13. Project activities will be periodically reviewed by the Internal Audit Unit (IAU) of the
PFMUs and NCO. The Head of Internal Audit Unit in the PFMU will report to the Project
Manager whilst the Head of IAU in NCO will report to the Director NFRA and at a minimum
they will (i) carry out periodic reviews of project activities, records, accounts and systems; (ii)
ensure effectiveness of financial and accounting policies and procedures, as well as compliance
with internal control mechanisms;(iii) review SOEs; (iv) physically verify purchases and assets;
and (v) carry out other functions as stated in their approved charter. The internal auditors in the
PFMU and at NCO are accountants. They will under-go training in the Bank‟s financial
management and disbursement procedures, as well as training on risk-based auditing.
81
Accounting
14. IDA and Counterpart Funds will be accounted for by the Project on a cash basis,
augmented with appropriate records and procedures to track commitments and to safeguard
assets. Accounting records will be maintained in dual currencies (that is, Naira and Dollar).
15. The Chart of Accounts will facilitate the preparation of relevant monthly, quarterly and
annual financial statements, including information on the following:
Total project expenditures;
Total financial contribution from each financier;
Total expenditure on each project component/activity; and
Analysis of total expenditure into civil works, various categories of goods,
training, consultants and other procurement and disbursement categories.
16. Annual financial statements will be prepared in accordance with relevant International
Public Sector Accounting Standards (IPSAS).
17. All accounting and control procedures will be documented in the FPM and regularly
updated by the Project Accountants and approved by the SCADO and NCO and shared with IDA
and the Government.
Financial Reporting
18. Within the NCO and SCADO, the project managers will ensure that the project accountant
prepares Interim Financial Reports (IFRs) i.e. monthly and quarterly and Annual Financial
Statements, on a timely basis to be submitted by the NCO and PFMU. In compliance with
government reporting requirements, Monthly returns will be made to the Federal and States
Accountants General for incorporation in the governments accounts, as described in the FPM.
These reports and financial statements are outlined below. Quarterly and Annual reports are to be
submitted respectively to: (i) NSC, NCO, SCADO, SSC, State Ministry of Finance (SMOF),
SMOA, FMAWR and Federal Ministry of Finance (FMOF); and (ii) IDA – for the purpose of
monitoring project implementation.
Monthly Reports: On a monthly basis, the NCO and PFMUs will prepare and submit the
following reports to the Project Coordinators:
A Bank Reconciliation Statement for each bank account
A Monthly Statement of Cash Position for project funds from all sources, taking
into consideration significant reconciling items
A Monthly Statement of Expenditures classified by project components,
disbursement categories, and comparison with budgets, or a variance analysis; and
A Statement of Sources and Uses of funds (by Credit Category/Activity showing
IDA and Counterpart Funds separately).
82
Quarterly Reports: The following interim financial report will be prepared by the NCO and
PFMUs (i.e. each state separately) on a quarterly basis and submitted to IDA and the Project
coordinators:
Financial Reports, which include a statement showing for the period and cumulatively
(project life or year to date) inflows by sources and outflows by main expenditure
classifications; opening and closing cash balances of the project; and supporting
schedules comparing actual and budgeted expenditures. The reports will also include
cash forecasts for the following two quarters as well as analysis of disbursements
against contracts.
SOE withdrawal schedule, listing individual withdrawal applications relating to
disbursements by the SOE method, by reference number, date and amount; and
Designated account statement reconciliation, showing deposits and replenishments
received, payments supported by withdrawal applications, interest earned on the
account and the balance at the end of the reporting period.
Each PFMU will submit a copy of the quarterly Project Interim Financial Report to the SCADO.
Capacity of the NCO will be supported under the project should it need to be boosted.
19. Indicative formats for the reports are available in a Bank guideline called “Financial
Monitoring Reports: Guidelines to Borrowers”. The format of IFRs has been agreed at
negotiations.
Annual Financial Statements: The annual Project Financial Statements, which will be prepared
by the NCO and PFMUs, (i.e. each state separately) will include the following:
A Statement of Sources and Uses of funds (by Credit Category and Activity showing
IDA and Parallel Funds separately);
A Statement of Cash Position for Project Funds from all sources;
Statements reconciling the balances on the various bank accounts (including IDA
Designated Account) to the bank balances shown on the Statement of Sources and
Uses of Funds;
SOE Withdrawal Schedules listing individual withdrawal applications relating to
disbursements by the SOE Method, by reference number, date and amount;
Notes to the Financial Statements. Each PFMU will submit a copy of the Project
Financial statements to the SSC. Also, it will forward a copy to NCO. NCO will
submit the financial statements to NSC.
83
Auditing
20. The IDA Financing Agreement will require the submission of audited Annual Financial
Statements for the project, within six months after year end.
21. Relevantly qualified, experienced and independent external auditor appointed for the
PFMU and NCO will audit the project activities based on TOR acceptable to IDA.
22. The auditor will express an opinion on the Annual Financial Statements in compliance
with International Standards on Auditing (ISAs). In addition to the audit report, the external
auditors will prepare a Management Letter giving observations and comments, and providing
recommendations for improvements in accounting records, systems, controls and compliance
with financial covenants in the Financing Agreement.
Financial Management Supervision Plan
23. The financial management arrangements will be reviewed periodically as part of project
and/or PFMU and NCO supervision missions. The first FM review will be carried out after 6
months of project implementation. This detailed review will cover all aspects of FM, internal
control systems, reviewing the overall fiduciary control environment and tracing transactions
from the bidding process to disbursements as well as SOE review. The supervision intensity will
be based on risk, initially on the PAD FM risk rating and subsequently on the updated FM risk
rating during implementation. Reviews will be as follows: FM supervision visits based on risk;
review of quarterly IFRs; review of audited Annual Financial Statements and management letter
as well as timely follow up of issues arising; annual SOE review which will be jointly done with
the post audit review by the procurement unit; participation in project supervision missions as
appropriate; and updating the financial management rating in the Implementation Status Report
(ISR). The Banks project team will play a key role in monitoring the timely implementation of
the action plan.
Fund Flows and Disbursement Arrangements
Bank and IDA Accounts
24. The overall project funding will consist of IDA credit, counterpart funds from the Federal
and State governments and contributions from beneficiaries. IDA will disburse the credit
proceeds through a US$ Designated Account (DA) consisting of: (a) one DA for the federal
component managed by NCO (Account A); and (b) one DA for each participating state which
will be managed by the PFMUs (Account B).
25. Specific funding, banking and accounting arrangements are as follows:
A US$ domiciliary account will be opened in a reputable commercial bank acceptable
to IDA to which the initial deposit and replenishments from IDA funds will be
lodged;
A Current (US$ Interest) Account with a reputable commercial bank acceptable to
IDA to which interest on the DA will be credited;
84
A Current (Drawdown) Account in Naira with bank X to which draw-downs from the
DA will be credited once or twice per month in respect of incurred eligible
expenditures, maintaining balances on this account as close to zero as possible after
payments;
A Current (Project) account in Naira with bank X to which Counterpart Funds will be
deposited;
A Current (Naira Interest) Account in Naira with bank X to which interest on
Counterpart Funds will be credited.
26. All bank accounts will be reconciled with bank statements on a monthly basis by the NCO
and PFMUs. A copy of each bank reconciliation statement together with a copy of the relevant
bank statement will be reviewed monthly by the Project Accountant who will expeditiously
investigate identified differences. Detailed banking arrangements, including control procedures
over all bank transactions (e.g., check signatories, transfers, etc.) will be documented in the
FPM.
27. Additionally, they will each maintain an IDA Ledger Loan Account in US
Dollars/Naira/SDR to keep track of withdrawals from the IDA credit. The account will show (i)
deposits made by IDA, (ii) direct payments by IDA, and (iii) opening and closing balances.
28. NCO and PFMUs will maintain a cumulative record of draw-downs from the IDA credit
that will be reconciled monthly with the Disbursement Summary provided by the Bank.
29. The contributions of the beneficiaries for component 1, sub-component (a) (Technology
Demonstration and Adoption) will be defined in the sub-project agreement between SCADOs
and CADAs. The contribution will be regarded as part of the counterpart contribution for the
project. Simple records will be maintained by the CADA Management Committee to record
contributions in cash, materials and labour and will be subject to both internal and external audit.
The format will be documented in the PIM.
30. The NCO and PFMUs will be responsible for preparing and submitting consolidated
applications for withdrawal, to the Bank as appropriate. Appropriate procedures and controls,
which will be documented in the FPM, will be instituted to ensure disbursements and flow of
funds is carried out in an efficient and effective manner.
85
Funds Flow Diagram
IDA Government Budget
Designated Account (A) Designated Account (B) Project (Naira counterpart
($) NCO ($) SCADO funds) A/C
Draw-down (zero balance) Draw-down (zero balance) Counterpart Fund A/C
Naira A/C Naira A/C Expenditures
NCO Expenditures Matching grants to Other DA Expenditures
CIGs
86
The Flow of Funds under the Grant
Disbursement Methods
31. Disbursement arrangements and use of funds. Proceeds of the financing will follow the
standard Bank procedures for Investment Lending for use by the Borrower for eligible
expenditures as defined in financing agreement. Disbursement arrangements have been designed
in consultation with the Borrower after taking into consideration the assessments of Borrower‟s
financial management and procurement arrangements, the procurement plan, cash flow needs of
the operation and the Borrower‟s prior disbursement experience. Additional instructions for
disbursements have been provided in a Disbursement Letter issued for this project.
32. Disbursement methods. This Credit will be disbursed through various disbursement
methods, including advances, reimbursements, direct payments and special commitments.
Advances will be disbursed into a multiple Designated Account(s) (DAs), one each for the
project management agency at the National Coordination Office (NCO), Federal Ministry of
Agriculture and Water Resources and each Participating State (PFMU). Direct payments are
authorized for payments to larger value contracts, including all Output and Performance based
Roads Contracts (OPRC).
33. The Designated Accounts will be designated in US Dollars and will be segregated from
other financing partners. Considering the cash flow requirements and project design, a flexible
ceiling will be determined for the DAs for the operation, based on 50% of expenditure forecast
as provided in Annual Work Plans and Budgets as approved by IDA, separately for federal
implementing agency (FMAWR) and each Participating State. The first Application from each
Participating State should include as an attachment a copy of the Subsidiary Agreement duly
executed between the Recipient and the Participating State, in form and substance satisfactory to
the Association.
87
34. Reporting on use of Financing. Supporting documentation will be requested along with
withdrawal Applications as specified in the Disbursement Letter. This will comprise Statements
of Expenditure (SOE) for payments made by Borrower from the amounts advanced to the
Designated Accounts and requests for reimbursements for eligible expenditure. Copies of
original documents or records shall be requested only for certain categories of expenditures
above financial thresholds specified in the Disbursement Letter. The following additional
information will be requested in the Statement of Expenditure:
(i) For disbursement of matching Grants to communities, information on the identity of the
Beneficiary, the identity of the Commodity Interest Group (CIG) and/or the Commercial
Agricultural Development Association (CADA) with the date of its legal registration and
the date of the Grant Agreement with the beneficiary.
(ii) For all payments made to Commercial Agricultural Development Association (CADA) at
Participating States, the reference number/date of Sub-Project agreement between the
SCADO and the CADA.
(iii) In case of „matching grants‟ that are co-financed by beneficiaries and eligible expenditures
that are co-financed by Federal or State Government agencies, the SOE shall indicate for
each expenditure item reported with the Application a) the total amount of expenditure, b)
the amount that has been financed by sources other than IDA, such as Beneficiaries and
counterpart funding from Federal or State Governments, and c) the balance that is eligible
for IDA financing in accordance with the financing agreement.
(iv) For requests for Direct Payment: records evidencing eligible expenditures, e.g., copies of
receipts, supplier invoices, and documentary evidence of delivery/completion of contracted
goods or service. For payments under all Output and Performance based Roads Contracts
(OPRC) an independent verification report of the outputs shall also be provided with each
Application.
Copies of Bank statements and reconciliation statements shall be requested with each
Withdrawal Application.
Counterpart Funding
35 The Government must make all necessary arrangements to ensure the timely mobilization
of the counterpart funds needed for project implementation.
Monthly Replenishment Applications
36. The DAs will be replenished through the submission of Withdrawal Applications on a
monthly basis by the PFMUs and NCO and will include reconciled bank statements and other
documents as may be required until such time as the Borrower may choose to convert to report-
based disbursement.
Disbursements by Category
37. Table 7.2 overleaf sets out the expenditure categories and percentages to be financed out
of the Credit proceeds. Allocations to disbursement categories have been made based on the
project's work plans. Disbursements will be based on the work plans agreed annually with the
Bank. In order to provide maximum flexibility and disbursement based on implementation
88
performance, about 9.46 percent of project funds will remain in the unallocated category until the
mid-term review when they can be allocated as needed to each category under the project.
Table 7.2- Disbursement Categories
Category Amount of the Credit
Allocated
(expressed in SDR)
Percentage of
Expenditures to be
Financed
(1) Civil works 29,600,000 100%
(2) Goods and equipment 35,500,000 100%
(3) Training and
workshops
4,200,000 100%
(4) Consultant services 9,100,000 100%
(5) Grants 10,000,000 100%
of amounts disbursed
to the Beneficiaries
(6) Operating Costs 2,600,000 100%
(7) Refund of Preparation
Advance
700,000 Amount payable
pursuant to Section
2.07 of the General
Conditions
(8) Unallocated 9,000,000
Total Amount 100,700,000
Conclusion Statement:
39. The Financial Management Assessment conclusion is that subject to the recommended
mitigation measures and the recommended action plan being implemented as per agreed time
frame, the project has met the minimum FM requirement in accordance with OP/BP 10.02.
Further, this objective will be sustained by ensuring that strong financial management systems
are maintained for the project throughout its duration. Detailed Financial Management reviews
will also be carried out regularly, either within the regular proposed supervision plan or a more
frequent schedule if needed, to ensure that expenditures incurred by the project remain eligible.
89
Annex 8: Procurement Arrangements
NIGERIA: Commercial Agriculture Development Project
A. General
Country Environment
1 Since Fiscal Year (FY) 2001, Nigeria has been implementing slowly a procurement reform
program based on the recommendations of the 2000 Country Procurement Assessment Review
(CPAR). A review of the progress made on the 2000 CPAR recommendations as reflected in
2007 PEMFAR shows that implementation of procurement reform program has brought about
substantial improvements in obtaining value for money in the public sector expenditure. This has
further introduced some level of transparency into the country‟s procurement process. In this
regard, the CPAR of 2000 has been a positive catalyst, because it supported the agenda of
financial sanitation of the current Government. Some of the actions taken by Government to
advance the procurement reform in Nigeria include (a) creation of the Budget Monitoring and
Price Intelligence Unit (BMPIU) around December 2002 as a Due Process Unit located within
the Presidency. The unit carried out due process reviews for the certification of contract awards
and payments. The recent PEMFAR report indicated that contract prices were reduced
substantially and have reportedly saved the Treasury substantial amount. Since the 2000 CPAR,
collaboration between procurement and financial management has been strengthened
considerably. The Public Procurement Act was promulgated in Nigeria in June 2007 with a view
to further sanitize public procurement system, which has often been the subject of abuse and
corruption. This will further bring significant improvement in the existing procurement system in
the public service and enhance transparency. The Act adheres to the principles of the
UNCITRAL model law, and outlines the principles of open competition, transparent
procurement procedures, clear evaluation criteria, award of contract to the lowest evaluated
tender, and contract signature. The legislative framework is applicable to all procurement
categories (suppliers, contractors, consultants) and must be applied for all public funds regardless
of value. The Act has provisions for exceptions to competitive tendering, which are the
exception rather than the rule. Also, Government has already prepared relevant implementation
Regulations, Standard Bidding Documents (SBD) and Manuals for the Procurement of Goods,
Works and Consulting Services, which describes the minimum contents of the tender and
proposal documents. The essential elements are in line with internationally acceptable
procurement standards. The Procurement Act also presents for complaints and appeals
mechanism to be established to enhance accountability.
2. Procurement Risk at the Country level: Substantial progress in procurement reforms has
recently been made at the Federal Government level. A Bureau of Public Procurement (BPP) has
been established while a procurement professional Cadre has been established in the public
service. The BPP has organized series of trainings and awareness workshops to sensitize this
cadre of professionals with the current procurement processes. Currently, the Government
Procurement Reform Program is being supported by an IDA Credit-ERGP with a substantial
component focusing on procurement reforms. There are also three IDF Grants, to assist Federal
and two State Governments address the weak procurement capacity in the public sector and to
build appropriate partnership with the private sector. The project instrument has been used by the
government to prepare the relevant procurement tools mentioned above. On the other hand,
90
Government is also reforming the Customs practices to modernize and make it more effective,
thereby enhancing private sector confidence in public procurement processes.
3. Procurement risk in the Agricultural Sector at Federal and State levels. All the five
participating states and Federal agency have experience in implementing various Bank-financed
projects in Nigeria that date back to 1974. 12 States are currently implementing the FADAMA
II Project while the 36 States of the Federation will participate in FADAMA III Project which
will soon become effective. The two Agricultural Projects mentioned above have some
similarities with the Commercial Agricultural Project including contracting and making funds
available to beneficiary groups and communities. The complements of staff of the NCO and
SCADO which shall have responsibility of day to day implementation of the project will include
a Procurement Officer (PO). The PO, will further receive additional procurement training on
Bank financed procurement procedures from relevant training institutions, such as Lagos
Business School, Ghana Institute for Management and Public Administration (GIMPA), ESAMI,
etc. An experienced Procurement Specialist will be hired at the Federal level to assist and
coordinate the states‟ procurement functions and provide on-the-job training to the state officials.
The Curriculum Vitae of these Procurement Officers will be reviewed and cleared by the Bank to
ensure that appropriate, qualified and experienced procurement personnel are recruited by the
Borrower.
4. During the implementation of the previous Agricultural projects and ongoing Fadama II
projects, weaknesses identified were addressed by providing adequate guidance and capacity
building initiatives. A contract management workshop was organized specifically for FADAMA
II project teams to militate against identified weaknesses in the contract management and
monitoring of sub-projects. Significant improvements have been noticed in most of the Fadama
II states as reported in the just concluded PPR exercise. However, these need to be strengthened
and sustained in the CADP.
B. Implementation Arrangements
5. The FCADO will integrate project implementation into the regular day-to-day management
activities of its existing (or new units where identified) organizational units as associated with
their respective mandates, under the direction of the Permanent Secretary for the organizational
chart for project implementation arrangements. Partial implementation of the Project will also be
the responsibility of the beneficiaries (e.g., Commercial Agriculture Development Associations
(CADAs), civil society and the private sector groups), who will be involved in the
implementation of the Project through the SCADO. Project management and implementation
arrangements can be summarized as follows:
6. National Coordinating Office (NCO): The Federal Ministry of Agriculture and Water
Resources (FMAWR) will have overall responsibility for execution of the Project, through the NCO
in the National Food Reserve Agency (NFRA). 7. The NCO will serve as the secretariat for National Steering Committee (NSC) and be
responsible for day-to-day federal level coordination. It will also be responsible for ensuring that
Bank‟s procurement guidelines and procedures are followed.
91
Project Coordination and Oversight
8. National Steering Committee (NSC): At the highest level in FMAWR, a National Steering
Committee will be established in accordance the descriptions in Annex 6 of the PAD. The NSC will
however, have no procurement management function but will be responsible for project oversight,
overall policy guidance, coordination with other projects, providing strategic direction and review
and approval of the annual work program and budget of the NCO.
9. State Commercial Agriculture Development Office (SCADO): At the State level, the
SCADO will be responsible for the coordination and implementation of the Project including
procurement while the State Steering Committee will perform the oversight, policy and strategic
orientation functions.
10. Beneficiary level: At the beneficiary level, critical decisions will take place within the
CADAs and the various Commodity Interest Groups (CIGs) which should be legally registered.
The Commercial Agriculture Development Associations (CADAs) are apex organizations of
Commodity Interest Groups which have a common interest in agricultural commercialization.
The CADAs which are already in existence will be responsible for the coordination of the
activities of the CIGs, including procurement and management of the post-harvest handling
centres under the Public-Private Partnership (PPP) arrangements within the value chain
associations. The CIGs will have responsibility for sub-projects implementation. Beneficiaries
should belong to commodity associations that support the value chain of their interest. SCADO
should have a directory of Service Providers that will provide services to the project
beneficiaries. The Service Providers will be screened by SCADO and their services will be
certified by beneficiary and SCADO officer/agent before full payment. Financial and technical
audits of the contracts under OPRC will be undertaken as internal controls before payments are
made to contractors and service providers. Service Providers will be public and private sectors
operators and they should be a level playing field in the selection process which shall be detailed
in PIM.
C. Guidelines
11. Procurement for the proposed Project will be carried out in accordance with the World
Bank‟s "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004; and
revised in October, 2006; "Guidelines: Selection and Employment of Consultants by World
Bank Borrowers" dated May 2004, and revised in October, 2006; and the provisions stipulated in
the Legal Agreement. The various items under different expenditure categories are described in
general below. For each contract to be financed by the Loan/Credit, the different procurement
methods or consultant selection methods, the need for pre-qualification, estimated costs, prior
review requirements, and time frame has been agreed between the Borrower and the Bank in the
Procurement Plan. The Procurement Plan will be updated at least annually or as required to
reflect the actual project implementation needs and improvements in institutional capacity.
12. Procurement of Works: Major works procurement under this project will take place at
each SCADO. The works procured will include: rural network of feeder roads, power lines,
transformers, poles and accessories etc. Procurement will be carried out using the Bank‟s
Standard Bidding Documents (SBD) for all International Competitive Bidding (ICB) contracts
and National SBD agreed with or satisfactory to the Bank. By applying Output and
Performance-based Contracting (OPRC), the procurement will differ from traditional works
92
contracts. While in a traditional contract the scope of works is clearly defined and payments are
made in accordance with the measured amount of works, OPRC pays the contractor as long as he
performs, i.e. complies with the Level of Service requirements. Contract periods of five years are
envisaged, combining initial rehabilitation and maintenance. The procurement will be done
based on the Bank‟s Sample Bidding Document for OPRC under International Competitive
Bidding (ICB) procedures satisfactory to the Bank. An experienced consulting firm will assist
each State with the design and preparation of bidding documents and will further assist in the
evaluation of bids. Contractors for the road packages will be pre-qualified.
13 However, minor civil works estimated to cost less than US$50,000 equivalent per contract,
which are labour intensive, spread over time, and which do not lend themselves to grouping are
therefore unlikely to attract foreign bidders. Such works may be procured under shopping
procedures as detailed in paragraph 3.5 of the “Guidelines: Procurement under IBRD Loans and
IDA Credits” May, 2004 and June 9, 2000 and the Memorandum “Guidance on shopping” issued
by the Bank.
14. Procurement of Goods: Goods procured under this Project will include furniture,
Environmental Management Information System (EMIS), project vehicles, computers and
accessories, software, communication and office equipment, etc. Goods procurement will be
done using the Bank‟s SBD for all ICB and National SBD designed on the basis of Bank
Standard Bidding Documents. Procurement for readily available off-the-shelf goods that cannot
be grouped, or standard specification commodities for individual contracts of less than
US$50,000 equivalent, may be procured under shopping procedures as detailed in paragraph 3.5
of the "Guidelines: Procurement under IBRD Loans and IDA Credits" May, 2004, and the
“Guidance on Shopping Memorandum" issued by IDA, June 9, 2000. Such contracts will be
awarded on the basis of written quotation obtained from at least three qualified suppliers in
response to a written invitation. The invitation will include a detailed description of the goods,
including basic specifications, quantities, quotation submission deadlines, completion dates, a
basic form of agreement, and any other relevant information. The Procurement Plan details out
where such method will be applicable. Also, minor civil works may be implemented by the GIGs
using procedures based on the Africa Region‟s Guidelines - Simplified Procurement and
Disbursement Procedures for Community-Based Investments.
15. Selection of Consultants: Consultancy services will among others, include the following:
(i) Technical Assistance, (ii) Technical support for implementation of project management, (iii)
Financial Management and Procurement, and (iv) Prioritization of OPRC intervention areas, and
Feasibility, design and preparation of OPRC biding documents. Consultants will be selected
using Request for Expressions of Interest, short-lists and the Bank‟s Standard Requests for
Proposal, where required by the Bank‟s Guidelines. Short-lists of consultants for services
estimated to cost less than US$200,000 equivalent per contract may be composed entirely of
national consultants in accordance with the provisions of paragraphs 2.7 through 2.8 of the
Consultant Guidelines. Research Institutes, public training institutions and NGOs may be hired
to carry out specific researches, training, distribution and monitoring services in accordance with
paragraph 1.11 (b – d) and 3.16 of the Consultant Guidelines.
16. Operating Costs: The operating costs shall include staff travel expenditures and other
travel-related allowances with prior clearance from IDA; equipment rental and maintenance,
vehicle operation, maintenance and repair, office rental and maintenance, materials and supplies,
utilities and communication expenses and bank charges. Operating Costs financed by the project
93
will be procured using the implementing agency‟s administrative procedures which is acceptable
to the Bank.
17. Trainings, Workshops, Seminars and Conferences: Training, workshops, seminars and
conferences attendance and study tours will be carried out on the basis of approved annual
programs that will identify the general framework for training and similar activities for the year,
including the nature of training/study tours/workshops, the number of participants, and cost
estimates. The participants and beneficiaries of such programs will, in general, be required to file
a report within a stipulated period upon resumption of duty.
D. Assessment of the agency’s capacity to implement procurement
18. An assessment of the capacity of the Implementing Agency to implement procurement
actions for the project was carried out in accordance with Procurement Services Policy Group
(OCSPR) guidelines dated August 11, 1998. The assessment reviewed the organizational
structure for implementing the project and the roles of the key actors in project implementation.
The detail assessment is in the project files.
19. The assessment revealed that the Agricultural Sector at both the Federal and State levels
has a long history of implementing various Bank-financed projects which date back to 1974.
Lagos State which is one of the participating States in this project is currently implementing
Fadama II, while all the five States will also participate in the recently approved Fadama III
project. During the assessment, it was observed that some of the teams that implemented
previous Bank-financed projects have been seconded to work on other programs, therefore
creating gaps in such state‟s procurement capacity. Recently conducted Post Procurement
review identified insufficient knowledge of procedures for selection and employment of
consultant, poor documentation – inadequate record keeping, non adherence to procurement
scheduling and insufficient contract management skills as major procurement weakness in the
Agriculture sector in the participating states. For instance, the later resulted into non payment for
some contracts executed since 1996 under the Cross Rivers Agric Dev. Programme. Capacity
building initiatives under the CADP will focus attention on these lapses. Therefore, Sector
Specific contract management workshop will be organized for project teams not later than six
months of project implementation. To further strengthen the efficient and effective utilization of
Credit fund, the following action plans were agreed with Government during project appraisal.
94
Table 1: Procurement Action Plan
Action Responsibility Due Date Remarks
1 Strengthening of NCO capacity to
manage and coordinate Bank financed
projects.
Bank and NCO On a continuous
basis
Experienced
Procurement
Specialist to be
engaged to
strengthen NCO.
2 Procurement Plan for the first 18
months prepared and agreed with the
Bank
NCO and
participating
states
By Appraisal
Completed.
3 Preparation of Project Implementation
Manual PIM including adoption of the
Generic Procurement manual for Bank
financed Projects in Nigeria.
NCO, SCADO
and Bank.
By Negotiation
Completed.
4 Adoption of the Bank Standard
Bidding Documents for use under
NCB in lieu of lack of National
Standard Bidding Document
NCO and Bank By Appraisal Completed.
5 Training of SCADO on contracting
and monitoring arrangement to
promote accountability and
transparency.
Bank and NCO Not later than 2-
3 months of
project
implementation.
Training to be
repeated by NCO
and SCADO in
each participating
states periodically.
6 Hold periodic meetings with business
communities within the project
environment and organize open
meetings with NCO and SCADO.
NCO and
SCADOs
Not later than 3
months of
project
implementation.
On a continuous
basis.
7 Establish a central complaint
database/website/internet and or hot-
lines
NCO and
SCADOs
Not later than 2
months after
project
implementation.
To reduce the risk
of misuse of project
funds.
8 Establish proper procurement filling
system and develop procurement
tracking system.
NCO and each
SCADOs
During project
implementation
period.
To ensure easy
retrieval of
information/data
and enhance
accountability.
95
Action Responsibility Due Date Remarks
9 Publication of Contract awards and list
of beneficiaries
NCO and
SCADOs
on quarterly
basis
On a continuous
basis.
10 Conduct Independent Technical Audit
(separate from annual external
financial audit
Bank Annually To reduce the risk
of misuse of project
funds.
11 Organize specific Sector Contract
Management training for project
teams of participating States
NCO/Bank First at the
beginning of
project
implementation
and 2nd
run at
MTR.
To improve project
staff cont. mgt.
skills.
E. Procurement Plan
20. The Borrower has prepared procurement plan for project implementation which will
provide the basis for the procurement methods for each participating State. This plan was
reviewed and agreed between the Bank and the Project Team at appraisal and negotiations
respectively, and was made available to the participating States Ministries of Agriculture. It is
also available in the Project‟s database and in the Bank‟s external website. The Procurement
Plan will be updated in agreement with the Project Team annually or as required to reflect the
actual project implementation needs and improvements in institutional capacity.
F. Frequency of Procurement Supervision
21. In addition to the prior review supervision to be carried-out from Bank offices, the
capacity assessment of the Implementing Agency has recommended at least two supervision
missions to visit the field to carry out post-procurement review every year. An Independent
Procurement Audit will be conducted to contribute to the mid-term review exercise.
G. Publication of Results and Debriefing
22. On-line (DG Market, UN Development Business, and/or Client Connection) publication of
contract awards will be required for all ICB, NCB, Direct Contracting and the Selection of
Consultants for contracts exceeding a value of US$200,000. In addition, where prequalification
has taken place, the list of pre-qualified bidders will be published. With regard to ICB, and
large-value consulting contracts, the Borrower will be required to assure publication of contract
awards as soon as IDA has issued its „no objection‟ notice to the recommended award. With
regard to Direct Contracting and NCB, publication of contract awards could be in aggregate form
on a quarterly basis and in local newspapers. All consultants competing for an assignment
involving the submission of separate technical and financial proposals, irrespective of its
estimated contract value, should be informed of the result of the technical evaluation (number of
points that each firm received), before the opening of the financial proposals. The PSU will be
required to offer debriefings to unsuccessful bidders and consultants, should the individual firms
request such a debriefing. All approved CAS/GIGs sub-projects details shall also be published
widely in public media and on a quarterly basis at the NCO web-site and each State Agency
web-site where one exists.
96
H. Details of the Procurement Arrangements Involving International Competition
23. Goods, Works, and Non Consulting Services
(a) List of contract packages to be procured following ICB and direct contracting:
1 2 3 4 5 6 7 8 9
Ref.
No.
Contract
(Description)
Estimated
Cost
“000”
Procure
ment
Method
P-Q
Domestic
Preference
(yes/no)
Review
by Bank
(Prior/Post)
Expected
Bid-
Opening
Date
Comments
4x4 WD Jeep's,
4x4 WD DC Pick-
Ups & Mini-Buses
1,215.00 ICB NO YES PRIOR MARCH 05,
2009
Post Harvest
Processing
Equipment
6,250.00 ICB NO YES PRIOR MAY 21,
2009
Foundation
Seedlings I & II,
Certified Seeds,
Fertilizers, Agro-
chemical etc.
2,912.50 ICB NO YES PRIOR APRIL 16,
2009
Production
Equipment
Tractors, Animal
Traction, Soil &
Water Testing
Kits, Soil Tillers
9,852.50 ICB NO YES PRIOR JULY 28,
2009
Processing
Equipment
Threshers, Storage
Bins, Squeezers,
freezers etc. for
Fruit, Palm Oil,
Rice, Maize,
Cocoa, Fish, Daily
& Poultry etc.
3,244.30 ICB NO YES PRIOR AUGUST
27, 2009
Construction of
Rural Access
Roads/Rehabilitati
on of Rural
Roads/Road
Maintenance
20,000.00 ICB NO YES PRIOR FEBRUAR
Y 26, 2009
For the 5
Participating
States
Land Development 6,250.00 ICB NO YES PRIOR APRIL 07,
2009
For the 5
Participating
States
(b) ICB contracts estimated to cost above US$500,000 per contract and all direct contracting will
be subject to prior review by the Bank.
97
24. Consulting Services
(a) List of consulting assignments with short-list of international firms.
1 2 3 4 5 6 7
Ref. No.
Description of
Assignment
Estimated
Cost
Selection
Method
Review
by Bank
(Prior / Post)
Expected
Proposals
Submission
Date
Comments
CADP/CQ/BM
/01
Development of
Business Manuals for
Small and Medium
Commercial Farms.
375.00 QCBS PRIOR April 15,
2009
CADP/CQ/TA/
01
Technical Assistance
and Feasibility Study
for testing and
adoption of new
technologies for the
identified value
chains.
375.00 QCBS PRIOR May 20,
2009
CADP/CQ/WP
D/01
Web Portal
Development &
Establishment of
Commercial
Agriculture
Information Kiosks.
300.00 QCBS PRIOR April 20,
2009
(b) Consultancy services estimated to cost above US$200,000 per contract and single source
selection of consultants (firms) for assignments estimated to cost above US$100,000 will be
subject to prior review by the Bank.
(c) Short-lists composed entirely of national consultants: Shortlists of consultants for services
estimated to cost less than US$200,000 per contract may be composed entirely of national
consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.
98
Annex 9: Economic and Financial Analysis
NIGERIA: Commercial Agriculture Development Project
9. 1 Overview of the Methodology
1. The Financial and Economic analysis was carried out for the major enterprises under the
eight CADP-focused value chains namely: Oil Palm, Fruit Trees, Rice, Cocoa, Aquaculture,
Dairy, Poultry and Maize. The enterprises include Milk Production, Layers Production, Paddy
Rice Production, Pineapple Production, Cocoa Production, Palm and Kernel Oil Extraction,
Citrus Production, Earthen Pond Aquaculture, Palm fruit Processing, Rice Milling, Pineapple
Processing, Citrus Processing, Broiler Production, Fingerlings Production, Maize Production and
Day-Old-Chicks Production. The objective of this analysis is to ascertain the financial and
economic viability and sustainability of the proposed Nigeria Commercial Agriculture
Development Project. The project is expected to be financially viable to the extent that it will
increase the net financial benefits to participants. Economic viability will be assessed based on
the ability of the project to generate net positive externalities to the agricultural sector of the
participating states. The sustainability objective is to ensure that the interventions proffered by
this project are sustained for at least 10 years after the end of the project.
9.2 Assumptions for Financial Analysis
2. The computation of the financial rate of returns for this project is based on the following
assumptions:
i. The project will directly benefit about 40,000 medium scale enterprises and 10,0004 small
scale enterprises based on the proportions stipulated in the PAD for the agricultural
production and commercialization and the rural infrastructure components of the project.
ii. The project is expected to result in yield increase of a modest 30% over the project life.
This target is expected to start within the first year of project up to the optimum specified
for the value chain of interest. Yield increase is expected from the adoption of improved
technology of production, increased availability of energy, and accessibility to high
quality inputs.
iii. The project will result in reduced unit cost of production and increased capacity
utilization. The reduction in costs will result from improved technology adoption.
Another source of unit cost reduction is the expected decline in energy and transportation
costs due to the project activities in the area of infrastructural development. A capacity
utilization of 60 percent is assumed for processing enterprises based on standard practice
in the industry.
iv. It is assumed that all outputs are sold at the prevailing market prices.
v. Investments by project beneficiaries are partly from equity and partly from borrowed
funds. The PAD has made provision for external financing of beneficiaries.
vi. Project life is 5 years but cash flow projection is for 15 years.
vii. The unit of analysis is the enterprise module which varies according to the enterprise.
4 The PAD of CADP specifies a ratio of 80:20 except for Maize staple crop which is reversed.
99
9.3 Assumptions for Economic Analysis
3. The computation of economic rates of returns for this project is based on the following
assumptions:
i. The output and input markets are competitive; therefore this analysis used the
international market prices of tradable goods as the true reflection of opportunity costs.
ii. The analysis used domestic market prices of non-tradable goods as true reflection of
opportunity costs.
iii. Costs and benefits are adjusted for foreign exchange premium to account for foreign
exchange market distortion5.
iv. There is a 15% increase in the size of the business of the average participating
commercial producer, processor, or input supplier over the life of the project. It also
assumes a 0.3% increase in labour use for every 1% expansion in production capacity.
These formed the basis for generating the employment impact of the project.
v. The project will directly benefit an average of 3,125 participants under each of the
modelled 16 enterprises. The distribution of beneficiaries is done along enterprises and
not on participating states‟ basis.
vi. The average size of commercial enterprises at the steady state of the project is expected
to be: 25 hectares for crop production, 30 cattle heads for dairy, 3,000 birds for poultry
production, 1.35 hectares for aquaculture, and 3,000 tonnes per annum for processing.
vii. Fertilizer prices are currently subsidized to the tune of 25% by the Federal Government
of Nigeria, consequently; their prices are adjusted for the subsidy.
viii. For the purpose of this analysis, the economic analysis treats tax and subsidies as transfer
payments. For financial analysis, such adjustments are unnecessary because taxes have
been treated as costs and subsidies as revenue.
ix. The distribution of project costs over the life of the project is presented in the cost tables.
x. The project implementation period is 5 years but the streams of costs and benefits are
extended over 15years period for all the value chains with a total project cost of
US$185.00M.
9.4 Description of Data
4. The following were used as inputs into the financial and economic analysis:
i. Input-output technical coefficients of all relevant enterprises in the value chains.
ii. Domestic market prices of all relevant value chain inputs and outputs are at 2008 constant
prices.
iii. Macroeconomic indicators and policy variables such as interest rates, Composite Price
Index, inflation rates, foreign exchange rates and transfer payments.
iv. Project costs.
5 Foreign exchange premium over the project life of 5 years was computed based on disparity between CPIs and
Inflation rates of Nigeria and the US.
100
9.5 Analytical Procedure
9.5.1 Computation of Financial Rate of Returns
5. The financial analysis starts with the construction of modules of on-farm and off-farm
enterprise budgets for all relevant enterprises in the project value chains. All costs and revenues
were prepared for a production year cycle which may involve multiple cycles of production per
year for some enterprises.
.
i. The financial analysis is done for „without project‟ and „with project‟ scenarios.
ii. Incremental net benefits are estimated for each enterprise module and financial rate of
return, benefit-cost ratio and Net Present Value (NPV) computed for each enterprise
module.
iii. Incremental net benefits stream for the average producer under each of the 16 enterprise
models were estimated by assuming a target production capacity for the average project
beneficiary. The analysis assumed the following average business sizes for project
beneficiaries: crop production (25 hectares of land), poultry production (3,000 birds), and
aquaculture (1.35 hectares of pond area), dairy production (30 heads), processing
capacity (3,000 tonnes/annum). See Table 9.1 below.
iv. The net incremental benefits obtained for the average beneficiary was aggregated to
obtain the flow of incremental net benefits for the projected 50,000 project participants.
v. Financial Rate of Return and NPV were estimated for the entire project.
Table 9.1: Estimated Average Business Size for Project Enterprise Groups
Enterprise
group
Small Scale Producers Medium Scale
Producers
Average
Producer *
Range Mean Range Mean
Crop
production
(Hectares)
2-10 6.25 10-50 30 25
Poultry
production (No
of birds)
500-1000 750 2000-5000 3500 3000
Aquaculture
(Hectares)
0.5-1.0 0.75 1-2 1.5 1.35
Dairy
production
(Heads)
10-15 12.5 20-50 35 30
Processing
(Metric Tonnes)
<2000 1000 2000-5000 3500 3000
*The average producer is a weighted average of small and medium scale commercial producers.
20% are assumed to be small-scale producers and 80% to be medium scale producers based on
information from the PAD.
101
9.5.2 Computation of Economic Rate of Return (ERR)
i. ERR is computed from the economic cash flow analysis.
ii. Relevant elements of financial analysis are re-valued to reflect their economic
(opportunity cost) values.
iii. The stream of incremental net economic benefit from each model enterprise is estimated
for all project beneficiaries.
iv. These figures are carried into the economic accounts for the project and all project costs
are incorporated.
v. The economic NPV and ERR of the project were then estimated.
9.5.3 Estimation of Job Creation and Impact on Income
i. The analysis assumes a 15% expansion in productive capacity of the average beneficiary
over the period of the project. It also assumes a 0.3% increase in labour use for every 1%
expansion in productive capacity.
ii. Using this assumption, the additional jobs to be created over the 15 year-period was
estimated.
iii. The expected impact of project on income levels of beneficiaries was computed on
enterprise basis. This impact was calculated as the percentage increase in the NPV of
project over the net benefit of the “without project” year.
9.5.4 Sensitivity Analysis and Switching Value Test
6. In agricultural projects like the CADP, it is important to test for the effects of probable
changes in prices and costs on earning capacity. Four scenarios were modelled under the
sensitivity analysis; these are 10%, and 20% reduction in output prices as well as costs overruns.
The tests were performed on the aggregate model to determine their effects on the earning
capacity of the project.
7. The switching value analysis was performed to determine the proportion by which the
benefits from the project will have to decline before the NPV falls to zero (break-even-point) and
Benefit Cost ratio (BCR) to 1, and project becomes unfavourable. The switching value was
found to be 28% for this project. At this point, the ERR was equal to the opportunity cost of
capital invested.
9.6 Economic and Financial Analysis
8. The analysis adopts the modular approach for all the enterprises that are captured by the
value chains under this Commercial Agriculture Development Project (CADP). The estimation
of direct project impact on the income of beneficiaries was estimated using the net present values
for each enterprise.
9. The financial analysis presented herein is adequate to estimate the profitability of the
enterprises under the eight (8) value chains of interest to this project. It has established the
measures of project worth and also the likelihood that the entrepreneurs and their EIGs can
access credit through further evaluation of creditworthiness by banks and other credit sources.
102
10. The analysis compared „with‟ and „without‟ project scenarios. There are indirect benefits
to non-project beneficiaries arising from almost all the project components especially technology
diffusion, rural access roads and energy (with respect to processing). For example, neighbouring
farmers will adopt new technologies being used by project farmers. Similarly, roads constructed
by the project will be beneficial to all and sundry with direct impact on transportation cost and
indirect impact on firm-level efficiency gains and profitability levels. Table 9.2 below contains
the direct impact of the project on income of beneficiaries.
Table 9.2 Estimated Project Impact on Beneficiaries’ Income Levels and Employment
Enterprises
Employment
Creation
(No of Jobs)
Impact on
Income Levels
(%)
1 Dairy Production 13.70 18.18
2 Layers Production 1325.38 215.84 3 Rice Production 11.34 228.71 4 Pineapple Production 11.34 502.10 5 Cocoa Production 11.34 52.21 6 Palm Fruit Production 11.34 113.47 7 Citrus Production 11.34 40.76 8 Earthen Pond Aquaculture 606.53 497.50 9 Palm Fruit Processing 1347.84 193.14
10 Rice Milling 1347.84 63.01 11 Pine Apple Processing 1347.84 106.19 12 Citrus Processing 1347.84 104.58 13 Broiler Production 1325.38 574.5 14 Fingerlings Production 4.13 23.45 15 Day Old Chicks Production 1325.38 65.99 16 Maize 4.94 65.19
Aggregate 10053.50 191.55
11. The direct impact on project beneficiaries‟ income level is estimated to vary between
18.18% for Milk production and 575% for broiler production. The indirect impact of project
activities on income levels of non-project beneficiaries is expected to make the project impact
even higher. These impacts are expected to come from rural access road and energy that will
help in reducing transportation and production costs.
12. Besides the effect on income levels, the project will also have significant impact on
employment, which is expected to increase by at least 10,053.5 new jobs over the fifteen year
period of analysis. The jobs to be created will equally have some multiplier effects on the society
through poverty reduction and contribution to aggregate increases in national incomes.
13. The sixteen prototype enterprises included in the financial analysis were treated as on-
going concerns because the project document stipulates that participants must have been in
business for a minimum period of three years. All the enterprises show profitable financial and
economic rates of return as presented in Table 9.3 below.
103
Table 9.3: Estimated Financial and Economic Rates of Return on Value Chain Enterprises.
Enterprises
Estimated
ERR
(%)
NPV*
(Econ)
(US$’ Million)
Estimated
FRR
(%)
NPV (Fin)*
(US$’ Million)
1 Dairy Production 0.19
42.26 0.18 36.19
2 Layers Production 0.22
72.57 0.22 72.57
3 Rice Production 0.19
22.69 0.20 26.22
4 Pineapple Production 0.13
4.62 0.25 51.18
5 Cocoa Production 0.25
203.07 0.18 73.91
6 Palm Fruit Production 0.19
71.18 0.21 89.04
7 Citrus Production 0.20
190.04 0.21 207.91
8 Earthen Pond
Aquaculture 0.20
90.68
0.20 95.16 9 Palm Fruit Processing
0.14
9.40 0.16 22.55 10 Rice Milling
0.12
0.71 0.22 66.45 11 Pine Apple Processing
0.14
17.51 0.16 33.92 12 Citrus Processing
0.13
0.14 0.14 22.30 13 Broiler Production
0.23
18.88 0.22 17.31 14 Fingerlings Production
0.20
71.55 0.22 81.01 15 Day Old Chicks
Production 0.17
247.23
0.23 467.90 16 Maize
0.19
13.04 0.15 5.51
Aggregate
1088.10 1369.13
*Conversion rate is N120 to US$1.00
14. Empirical evidence from the two measures of project worth namely; FRR and NPV as
reported in Table 9.3 indicate that there is sufficient incentive for the participants to embark on
any of the enterprises within the value chains.
15. The estimated financial rates of return (FRR) for the enterprises range between 14% for
citrus processing to 25% for pineapple production. The profitability of many enterprises is
further reinforced by the high net present values as shown in Table 9.3.
16. Fifty thousand direct beneficiaries are targeted for the five-year duration of this project
from a total investment amount of US$185 million.
104
17. The overall Economic Internal Rate of Return for this project is 17%.
Table 9.4: Financial and Economic Cash Flows (US$ 000)
Financial Analysis Yr 01 Yr 02 Yr 03 Yr 04 Yr 05
1 No. of Participants
(without phasing)
50000 50000 50000 50000 50000
2 Investment Costs 6354.6 5632.7 3963.8 2659.8 1360.7
3 Pre-investment Costs 1000.0 - - - -
4 Technical Assistance,
Management and
Monitoring
5074.9 3844.7 2914.6 2605.6 3136.2
5 Total Project Costs 59030.1 50783.2 35946.1 24771.0 14475.0
6 Net Cash Flow (2989870.0) 690700.0 549420.0 449380.0 565530.0
7 Financial Internal Rate of
Return
0.21 - - - -
8 Net Present Value (12%) 1502240.0
Economic Analysis Yr 01 Yr 02 Yr 03 Yr 04 Yr 05-15
9 Net Cash Flow (3161230.0) 670590.0 532520.0 382590.0 509480.0
10 Economic Internal Rate of
Return
0.18
11 Net Present Value (12%) 1204720.0
9.6.3 Sensitivity Analysis
18. The advantage of economic and financial analysis is that they can be used to test what
happens to earning capacity of the project if assumptions made during planning about prices,
costs, become invalid by circumstances in the real world.
19. For the purpose of this analysis, the sensitivity test assumes a ten and twenty percent
increase in costs and reduction in prices of outputs.
20. Sensitivity analysis was carried out on both the financial and economic rates of return
which were estimated to be 20% and 17%, respectively. The first scenario was analyzed by
estimating the effect of 10% reduction in output prices. The FRR and ERR dropped to 18% and
15% respectively. The second scenario assumes a 20% reduction in output prices and this
resulted in a decline of FRR and ERR to 16% and 13%, respectively. In the third scenario, a
10% increase in all costs resulted in a decline of FRR to 19% and ERR to 16%. The fourth
scenario involves a 20% cost overrun which resulted in the decline of FRR to 18% and ERR to
15%. These are the worst-case scenario that the project is likely to experience.
21. The switching value test determines the proportion by which the benefits will reduce
before the NPV becomes zero. Benefits will have to decline by 28% from the current level for
the project to be at break-even point. The zero NPV achieved makes the corresponding ERR
105
(12%) equal to the opportunity cost of capital and also makes the Benefit/Cost Ratio to be equal
to one (BCR=1).
22. The rates of return are also dependent on macroeconomic conditions and investment
climate in Nigeria that are outside the control of project management. However, the baseline
studies and other pre-investment studies are within the project management control. If due
diligence is observed in the formation of the economic interest groups and with strict adherence
to terms and conditions in this financial analysis, the rates of return herein are achievable.
9.6.4 Distribution of Benefits
23. The distribution of benefits among the four categories of the value chains is presented in
Table 9.5 below.
Table 9.5: Distribution of Benefits (US$ Million)
Net
Benefit
Yr 01 Yr 02 Yr 03 Yr 04 Yr 05 Yr 06-15 Total %
Contribution
Crops
Producers
(799.07) 40.01 81.21 126.65 189.10 309.21 2730.03 38.88
Livestock
Producers
(388.96) 0.99 35.70 97.74 126.80 131.69 1189.16 16.94
Processors
(744.21) 129.60 130.99 132.41 130.9 136.08 881.91 12.56
Inputs
Suppliers
(1173.12) 469.55 253.7 64.75 31.83 260.89 2220.48 31.62
Total
(3105.37) 640.15 501.63 351.25 243.63 837.87 7021.57
24. From the breakdown of net incremental benefits among the various players within the
eight value chains, the livestock producers (having 4 representative enterprises) have the lowest
amount of US$1,189.16 over the fifteen-year period of analysis. The crops producers consisting
of 6 enterprises have the highest net incremental benefit of US$2,730.03 over the same period.
25. Out of the total net benefit accruable/expected from the entire project, 38.88% is
attributable to crops producers, 16.94% to livestock producers, 12.56% to processors, while
31.62% is accounted for by the inputs supply sub-sector.
106
Annex 10: Safeguard Policy Issues
NIGERIA: Commercial Agriculture Development Project
Potential Long-Term Impacts
1. This project falls into Environmental Category B as no adverse long term impacts are
anticipated. No long-term adverse impacts were identified in the prepared safeguards
instruments: Environmental and Social Management Framework (ESMF); Resettlement Policy
Framework (RPF); and Pest Management Plan (PMP). This project will not fund activities that
will cause an adverse effect on the environment or any form of land acquisition or restriction of
access to sources of livelihoods.
2. The proposed project development objective is to strengthen agricultural production
systems and facilitate access to market for targeted value chains among small and medium scale
commercial farmers in the five participating states. These value chains are: oil palm, cocoa, fruit
trees, poultry, aquaculture and dairy, with maize and rice as staples.
3. The project has two components, namely: (i) Agricultural Production and
Commercialization; and (ii) Rural Infrastructure.
4. The ESMF, PMP and RPF carried out during project preparation have provided
mechanisms to identify impacts beyond the generic ones for which standard mitigation measures
are built and to be applied during the implementation phase. The safeguards impacts identified
are not expected to have any long-term or cumulative impacts. The potential environmental
concerns as identified in the Environmental and Social Management Framework (ESMF) are
those associated with (i) rehabilitation and maintenance of rural roads and energy, including
provision of transformers and extension of power lines to connect commercial farmers and agro-
processing facilities and (ii) agricultural development and commercialization which will lead to
increased production volumes and value added processing and marketing capacity of
agribusiness involved in commodity chains. Environmental protection clauses will be included in
the contract documents for small-scale infrastructure like rehabilitation and/or construction of
rural access roads. The rural access roads rehabilitation and maintenance are expected to have a
limited negative environmental impact since the works will follow the existing alignments.
Project Location and Salient Physical Characteristics Relevant to the Safeguard Analysis
5 It is expected that the project operations will be in five states: Lagos, Kano, Kaduna,
Enugu and Cross River. However, a repeater project is planned to expand to other states after the
closure of this operation.
Measures Taken by the Borrower to Address Safeguard Issues
6. Since the locations and potential negative localized impacts of the future sub-projects were
not known at appraisal, the Borrower has prepared an Environmental and Social Management
Framework (ESMF), a Pest Management Plan (PMP), and a Resettlement Policy Framework
(RPF) for the purpose of identifying and mitigating potential negative environmental and social
impacts at the sub-project planning stage.
107
7. In order to avoid or minimize impacts associated with activities to be funded under the
proposed project, mitigation measures will be implemented as part of sub-project construction
and operation to ensure compliance with national and international environmental and social
guidelines and standards. The ESMF outlines the environmental and social screening process for
sub-projects and proposes capacity building measures, including cost estimates. The ESMF
includes (i) an Environmental Management Plan; (ii) Environmental Guidelines for Contractors;
and (iii) an environmental and social checklists for sub-projects screening.
8. The RPF outlines the policies and procedures to be followed in the event that sub-projects
require land acquisition. The RPF was prepared to minimize and mitigate the potential negative
impacts resulting from project investments. Experience shows that the environmental and social
impacts of infrastructure rehabilitation and maintenance projects are considerably lower than that
of new construction. The RPF provides the overarching framework by which potential
resettlement issues will be addressed. The PMP shows the procedures and steps to be undertaken
to address pest management concerns including capacity building in Integrated Pest Management
(IPM).
9. The three instruments of ESMF, PMP and RPF were discussed in-country on January 12,
2008 and at the Info shop on January 22, 2008.
10. The State Commercial and Agriculture Development Office (SCADO) will be responsible
for the implementation of the ESMF, PMP and RPF. Consultants will be engaged to prepare
Resettlement Action Plans and Environmental Management Plans (EMPs) or Environmental
Impact Assessments (EIAs) as and when necessary. The SCADO will have in place an
environmental officer. This specialist will be responsible for implementing the recommendations
contained in these safeguards instruments, and he/she will be complemented with short-term
national social/environmental safeguards consultants as and when the need arises.
108
Annex 11: Project Preparation and Supervision
NIGERIA: Commercial Agriculture Development Project
Planned Actual
PCN review 09/20/2007 09/20/2007
Initial PID to PIC 10/06/2006 10/17/2006
Initial ISDS to PIC 09/26/2007 09/25/2007
Appraisal 03/24/2008 07/21/2008 – 08/08/2008
Negotiations 09/30/2008 11/26/2008
Board/RVP approval 01/15/2009
Planned date of effectiveness 04/15/2009
Planned date of mid-term review 04/15/2012
Planned closing date 12/31/2014
Key institutions responsible for preparation of the project:
(i) National Food Reserve Agency of the Federal Ministry of Agriculture and Water Resources
(ii) State Agricultural Development Programmes/Ministries of Agriculture from Kano, Kaduna,
Lagos, Cross River and Enugu states
(iii) Federal Ministry of Finance
(iv) Federal Ministry of Environment and Works
(v) National Planning Commission
(vi) African Development Bank
(vii) Food and Agriculture Organization of the United Nations
(viii) Department for International Development
(ix) United States Agency for International Development
(x) Mars International
Bank staff and consultants who worked on the project included:
Name Title Unit
Lucas Akapa Task Team Leader AFTAR
Simeon Ehui Lead Economist/Sector Leader AFTAR
Adubi Abimbola Senior Agricultural Specialist AFTAR
Nwanze Okidegbe Consultant ARD
Vijayasekar Kalavakonda Senior Insurance Specialist FPDSN
Justin Runji Senior Transport Specialist AFTTR
Waqar Haider Senior Energy Specialist AFTENG
Mohua Mukherjee Senior Energy Specialist AFTENG
Ismail Radwan Senior Private Sector Development Specialist AFTFP
Modupe Dayo Olorunfemi Team Assistant AFCW2
Aisha Kaga Team Assistant AFCW2
Azra Lodi Senior Program Assistant AFTAR
109
Name Title Unit
Hawanty Page Senior Program Assistant AFTAR
Wendy Wiltshire Operations Analyst AFTAR
Sidi Jammeh Consultant AFTAR
Rosemary Cubagee Consultant AFTAR
Subramaniam Janakiram Consultant ECSPS
Jeanette Sutherland Consultant AFTAR
Thomas Muenzel Economist FAO/CP
Michael Morris Lead Economist AFTAR
Poonam Gupta Senior Monitoring and Evaluation Specialist AFTRL
Akinrinmola Oyenuga Akinyele Financial Management Specialist AFTFM
Adenike Oyeyiola Senior Financial Management Specialist OPCFM
Sunday Acheneje Procurement Analyst AFTPC
Bayo Awosemusi Senior Procurement Specialist AFTPC
Mary Asanato Procurement Specialist AFTPC
Macmillan Ikemefule Anyanwu Operations Officer AFTRL
Iain Shuker Lead Agriculture Economist EASRE
Foluso Okunmadewa Lead Social Protection Specialist AFTH3
Stephen Mink Peer Reviewer AFTSN
Dina Umali-Deininger Peer Reviewer SASDA
Eustacious Betubiza Peer Reviewer ECSSD
Steven Jaffee Peer Reviewer ARD
Chukwudi Okafor Senior Social Development Specialist AFTCS
Obadiah Tohomdet Communication Officer AFREX
Africa Olojoba Senior Environmental Specialist AFTEN
Henry Bagazonzya Senior Financial Sector Specialist SASFP
Pierre Werbrouck Consultant LCSAR
T. Mpoy-Kamulayi Lead Counsel LEGAF
Rajiv Sondhi Senior Finance Officer LOAFC
Bank funds expended to date on project preparation:
1. Bank resources: US$762,000.00
2. Trust funds: PHRD US$800,000.00
3. Total: US$1,562,000.00
Estimated Approval and Supervision costs:
1. Remaining costs to approval: $5,000.00
2. Estimated annual supervision cost: $150,000.00
110
Annex 12: Documents in the Project File
NIGERIA: Commercial Agriculture Development Project
1. Request for Co-financing of Fadama III and Commercial Agriculture - Letter from the
Federal Ministry of Agriculture and Water Resources to the Federal Ministry of Finance, 2007
2. Request for IDA Credit to Finance Fadama III and Commercial Agriculture - Letter from the
Federal Ministry of Agriculture and Water Resources to the Federal Ministry of Finance, 2007
3. Extension - NIGERIA: Japanese Grant for Preparation of Proposed Commercial Agriculture
Development Project - Extension of Closing Date of PHRD Grant, TF057799, 2007
4. Potential Beneficiaries for CADP in Kano State, 2007
5. Integrated Safeguards Data Sheet (ISDS) Concept Stage, 2007
6. Kaduna Map (Intervention Site for Commercial Agriculture Project), 2007
7. The PHRD Grant Package - Request, Letter Agreement and the Disbursement Letter, 2007
8. Project Appraisal Document Data Sheet, 2007
9. Commercial Agriculture (Kano) - Submission of Stakeholders workshop completion report,
2007
10. Letter from the Federal Ministry of Agriculture and Rural Development Re: Indication of
Interest to Participate in the Proposed CADP in the States of Cross River, Enugu, Kaduna, Kano
and Lagos, 2007.
11. Application for Project Preparation Technical Assistance Grant FY 07 Round 1 Japan PHRD
Technical Assistance Program, 2007
12. Letter from Lagos State Government - Re: Expression of Interest to Participate in the
Commercial Agriculture Development Project.
13. Draft Project Implementation Plan (PIM)
14. Project Cost Tables
111
15. Safeguard Documents:
(i) Environmental and Social Management Framework (ESMF)
(ii) Pest Management Plan (PMP)
(iii) Resettlement Policy Framework (RPF)
16. Bank Staff Assessments:
(iv) Project Concept Note (PCN) Minutes
(v) Quality Enhancement Review (QER) Report
17. Studies under PHRD Grants:
Technical Studies
(vi) Baseline Studies
(vii) Supply Chain Assessment
(viii) Business Development Support (BDS) Market Analysis
(ix) Commodity Feasibility Assessment
(x) Environmental and Social Impact Assessment
(xi) Awareness Raising and Private Sector Mobilization
(xii) Commodity Supply Chain Assessment
(xiii) Project Implementation Manual (PIM)
18. Grant Scheme
19. Maps of areas of Interventions in the Participating States.
20. Assessment of rural network of roads and energy.
112
Annex 13: Statement of Loans and Credits
NIGERIA: Commercial Agriculture Development Project
Original Amount in US$ Millions
Difference between
expected and actual
disbursements
Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev‟d
P103189 2007 3A-Africa Stockpiles1 MMT GEF (FY07) 0.00 0.00 0.00 13.40 0.00 9.12 0.00 0.00
P094103 2007 3A-Telecommunications APL (FY07) 0.00 144.40 0.00 0.00 0.00 166.36 0.00 0.00
P094084 2007 3A-W.Af Agric Prod Prgm APL WAAPP
(FY07)
0.00 45.00 0.00 0.00 0.00 45.85 0.00 0.00
P094917 2006 3A-WAPP APL 1 (CTB Phase 2) Project 0.00 60.00 0.00 0.00 0.00 60.45 0.00 0.00
P094916 2006 3A-WAPP APL 2 (OMVS Felou HEP) 0.00 75.00 0.00 0.00 0.00 75.36 0.00 0.00
P093826 2006 3A-SRB M. Water Res. Dvpt. APL (FY06) 0.00 91.96 0.00 0.00 0.00 107.84 -4.00 0.00
P083751 2006 3A-West and Central Afr Air Tran TAL (FY06)
0.00 11.97 0.00 0.00 0.00 31.98 -1.65 0.00
P075776 2006 3A-W Africa Stockpiles 1 GEF (FY06) 0.00 0.00 0.00 21.74 0.00 5.12 3.49 0.00
P079734 2006 3A-E Afr Trade and Transp Facil (FY06) 0.00 184.02 0.00 0.00 0.00 167.29 24.48 0.00
P092473 2005 3A-Afr Emergency Locust Prj (FY05) 0.00 59.50 0.00 0.00 0.00 39.28 14.44 -4.14
P080413 2005 3A-HIV/AIDs Great Lakes Init APL (FY05)
0.00 0.00 0.00 0.00 0.00 15.83 3.66 0.00
P080406 2005 3A-ARCAN SIL (FY05) 0.00 0.00 0.00 0.00 0.00 5.03 1.12 0.00
P075994 2005 3A-WAPP Phase 1 APL 1 (FY05) 0.00 40.00 0.00 0.00 0.00 36.72 6.89 0.00
P070547 2005 3A-GEF Grndwtr and Drght Mgmt TAL
(FY05)
0.00 0.00 0.00 7.00 0.00 6.35 1.68 0.00
P082613 2004 3A-Regional HIVAIDS Treatment Prj (FY04)
0.00 0.00 0.00 0.00 0.00 27.95 22.94 0.00
P074850 2004 3A-HIV/AIDS Abidjan Lagos Trnspt (FY04)
0.00 0.00 0.00 0.00 0.00 1.84 0.40 0.00
P074525 2004 3A-WAEMU Capital Markets Dev FIL
(FY04)
0.00 96.39 0.00 0.00 0.00 98.46 76.91 45.59
P070256 2004 3A-GEF Niger River Basin (FY04) 0.00 0.00 0.00 13.00 0.00 3.90 4.20 0.00
P069258 2004 3A-Southern Afr Power Mrkt APL 1 (FY04)
0.00 178.60 0.00 0.00 0.00 192.44 168.57 0.00
P064573 2004 3A-GEF Senegal River Basin (FY04) 0.00 0.00 0.00 5.26 0.00 2.67 4.70 0.00
P070252 2003 3A-GEF Lake Chad Basin (FY03) 0.00 0.00 0.00 2.90 0.00 1.72 2.90 2.32
P072881 2003 3A-BEAC Reg Payment System (FY03) 0.00 14.50 0.00 0.00 0.00 8.03 5.07 0.00
P070073 2003 3A-GEF Nile Transbound Env Action (FY03)
0.00 0.00 0.00 8.00 0.00 8.04 13.74 0.00
P063683 2001 3A-Trade Facil SIL (FY01) 0.00 5.00 0.00 0.00 0.00 4.85 -0.31 0.62
Total: 0.00 1,006.34 0.00 71.30 0.00 1,122.48 349.23 44.39
113
STATEMENT OF IFC‟s
Held and Disbursed Portfolio
In Millions of US Dollars
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.
1999 AIF 0.00 16.83 0.00 0.00 0.00 0.31 0.00 0.00
1999 AIF (Mgmt) 0.00 0.06 0.00 0.00 0.00 0.00 0.00 0.00
2003 AIFH 0.00 18.25 0.00 0.00 0.00 0.03 0.00 0.00
2005 Afren 0.00 0.84 0.00 0.00 0.00 0.80 0.00 0.00
2005 Africa Re 0.00 0.00 10.40 0.00 0.00 0.00 10.40 0.00
2002 Africap 0.00 1.48 0.00 0.00 0.00 1.06 0.00 0.00
2006 Cape II 0.00 9.62 0.00 0.00 0.00 3.00 0.00 0.00
2005 Celtel 0.00 11.83 0.00 0.00 0.00 11.83 0.00 0.00
2005 LFI 0.00 2.02 0.00 0.00 0.00 0.27 0.00 0.00
2004 Olam 30.00 5.60 0.00 0.00 30.00 5.60 0.00 0.00
2002 Osprey 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00
2001 PAIP 0.00 27.27 0.00 0.00 0.00 8.62 0.00 0.00
2002 SABCO 0.00 10.00 0.00 0.00 0.00 10.00 0.00 0.00
2006 SABCO 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2006 Standard Bank GR 0.00 0.00 75.00 0.00 0.00 0.00 0.00 0.00
2004 Tullow 0.00 14.40 0.00 0.00 0.00 14.40 0.00 0.00
2006 Veolia Water AMI 44.62 31.87 0.00 0.00 0.00 0.00 0.00 0.00
Total portfolio: 94.62 150.08 85.40 0.00 30.00 55.93 10.40 0.00
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic.
2006 ARECO 0.00 0.02 0.00 0.00
2006 Brait IV 0.00 0.03 0.00 0.00
2004 BusPartners 0.00 0.00 0.00 0.00
2003 African Lakes 0.00 0.01 0.00 0.00
2006 CCS 0.02 0.00 0.00 0.00
Total pending commitment: 0.02 0.06 0.00 0.00
114
Annex 14: Country at a Glance
NIGERIA: Commercial Agriculture Development Project
Sub-
POVERTY and SOCIAL Saharan Low-
Nigeria Africa income
2007
Population, mid-year (millions) 148.0 800 1,296
GNI per capita (Atlas method, US$) 920 952 578
GNI (Atlas method, US$ billions) 136.3 762 749
Average annual growth, 2001-07
Population (%) 2.4 2.5 2.2
Labor force (%) 2.5 2.6 2.7
Most recent estimate (latest year available, 2001-07)
Poverty (% of population below national poverty line) .. .. ..
Urban population (% of total population) 48 36 32
Life expectancy at birth (years) 47 51 57
Infant mortality (per 1,000 live births) 99 94 85
Child malnutrition (% of children under 5) 27 27 29
Access to an improved water source (% of population) 47 58 68
Literacy (% of population age 15+) 69 59 61
Gross primary enrollment (% of school-age population) 96 94 94
Male 105 99 100
Female 87 88 89
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1987 1997 2006 2007
GDP (US$ billions) 23.4 36.2 146.9 165.5
Gross capital formation/GDP .. .. .. ..
Exports of goods and services/GDP 28.6 45.0 43.2 40.3
Gross domestic savings/GDP .. .. .. ..
Gross national savings/GDP .. .. .. ..
Current account balance/GDP -7.4 7.8 9.5 2.1
Interest payments/GDP 2.6 1.5 0.2 ..
Total debt/GDP 123.8 78.5 5.2 ..
Total debt service/exports 14.1 8.9 10.6 ..
Present value of debt/GDP .. .. 4.7 ..
Present value of debt/exports .. .. 10.8 ..
1987-97 1997-07 2006 2007 2007-11
(average annual growth)
GDP 4.0 5.4 6.2 5.9 7.9
GDP per capita 1.0 2.8 3.7 3.6 5.7
Exports of goods and services .. .. .. .. ..
STRUCTURE of the ECONOMY
0
5
10
15
02 03 04 05 06 07
GCF GDP
Growth of capital and GDP (%)
Nigeria
Low-income group
Development diamond*
Life expectancy
Access to improved water source
GNI
per
capita
Gross
primary
enrollment
Nigeria
Low-income group
Economic ratios*
Trade
Indebtedness
Domestic
savings
Capital
formation
1987 1997 2006 2007
(% of GDP)
Agriculture .. .. 32.0 32.6
Industry .. .. 41.9 39.3
Manufacturing .. .. 2.6 ..
Services .. .. 26.1 28.1
Household final consumption expenditure .. .. .. ..
General gov't final consumption expenditure .. .. .. ..
Imports of goods and services 24.7 37.8 28.1 29.7
1987-97 1997-07 2006 2007
(average annual growth)
Agriculture .. 7.0 7.4 7.4
Industry .. 3.8 -1.0 -2.9
Manufacturing .. .. .. ..
Services .. 14.3 12.4 12.9
Household final consumption expenditure .. .. .. ..
General gov't final consumption expenditure .. .. .. ..
Gross capital formation .. .. .. ..
Imports of goods and services .. .. .. ..
Note: 2007 data are preliminary estimates.
This table was produced from the Development Economics LDB database.
* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will
be incomplete.
0
5
10
15
02 03 04 05 06 07
GCF GDP
Growth of capital and GDP (%)
115
Nigeria
P R IC ES and GOVER N M EN T F IN A N C E
1987 1997 2006 2007
D o mestic prices
(% change)
Consumer prices 11.3 8.3 8.3 5.5
Implicit GDP deflator 50.1 1.4 19.6 5.1
Go vernment f inance
(% of GDP, includes current grants)
Current revenue .. 20.0 34.1 29.2
Current budget balance .. 11.6 13.5 8.4
Overall surplus/deficit .. 1.0 7.7 1.4
T R A D E
1987 1997 2006 2007
(US$ millions)
Total exports (fob) 7,532 15,539 59,113 64,047
Fuel 6,994 14,850 53,464 56,577
Liquified natural gas .. .. 4,602 6,110
M anufactures .. 40 .. ..
Total imports (cif) 6,392 10,246 30,911 38,944
Food 671 1,219 .. ..
Fuel and energy 27 143 .. ..
Capital goods .. .. .. ..
Export price index (2000=100) 64 71 229 261
Import price index (2000=100) 89 109 125 126
Terms of trade (2000=100) 71 65 182 207
0
20,000
40,000
60,000
80,000
01 02 03 04 05 06 07
Exports Imports
Expo rt and impo rt levels (US$ mill.)
0
10
20
30
40
02 03 04 05 06 07
GDP def lator CPI
Inf lat io n (%)
B A LA N C E o f P A YM EN T S
1987 1997 2006 2007
(US$ millions)
Exports o f goods and services 7,757 15,661 62,613 67,225
Imports o f goods and services 6,689 12,448 40,766 49,641
Resource balance 1,068 3,213 21,847 17,584
Net income -2,770 -2,215 -11,254 -17,531
Net current transfers .. 1,841 3,400 3,414
Current account balance -1,727 2,840 13,994 3,467
Financing items (net) 1,649 221 -97 6,037
Changes in net reserves 78 -3,061 -13,897 -9,503
M emo :
Reserves including go ld (US$ millions) .. .. 41,830 51,333
Conversion rate (DEC, local/US$) 4.6 81.1 127.4 125.8
EXT ER N A L D EB T and R ESOUR C E F LOWS
1987 1997 2006 2007
(US$ millions)
Total debt outstanding and disbursed 29,021 28,455 7,693 ..
IBRD 2,939 2,373 534 381
IDA 32 410 1,541 1,929
Total debt service 1,106 1,416 6,805 ..
IBRD 332 519 244 201
IDA 1 4 33 35
Composition of net resource flows
Official grants 14 27 11,383 ..
Official creditors 378 -267 -4,276 ..
Private creditors 425 -258 -1,502 ..
Foreign direct investment (net inflows) 611 1,539 5,445 ..
Portfo lio equity (net inflows) 0 0 0 ..
World Bank program
Commitments 71 0 255 685
Disbursements 385 260 362 335
Principal repayments 125 339 230 196
Net flows 260 -79 132 139
Interest payments 209 183 47 41
Net transfers 52 -262 85 99
Note: This table was produced from the Development Economics LDB database. 9/24/08
-15
-10
-5
0
5
10
15
01 02 03 04 05 06 07
C urrent acco unt balance to GD P (%)
G: 3,893
A: 534
D: 777
B: 1,541
F: 673
E: 275
A - IBRD
B - IDA
C - IM F
D - Other mult ilateral
E - Bilateral
F - Private
G - Short-term
C o mpo sit io n o f 2006 debt (US$ mill.)
116
Annex 15: Map
MAP TO BE INSERTED HERE
